A Sleeping Giant vs. the Startup Nation: How Brazilian fintech squares off against Israeli know-how

Fintech cheerleaders talk all the time about how finance is globalizing, but the truth is, it’s still so local. I’ve experienced it. Based in Israel, I’ve had a chance to consult to or work for some of the top fintech companies in the world. My most recent gig, though, may be the biggest challenge of my career: leading growth for a Brazilian online business lender.

This isn’t the first time I’ve worked across borders. I grew up in the U.S. and early in my career, worked internationally for a high end executive search firm. After moving to Israel in the early 2000s, I’ve spent a lot of time on airplanes, working internationally in fintech. But, working between Israel and Brazil is the first time I’ve experienced such a disparity in market opportunity and culture.

What makes Israel the Start-Up Nation

In “Start-Up Nation: The Story of Israel’s Economic Miracle”, authors Dan Senor and Saul Singer defined the seminal characteristics that have made Israel such a successful exporter of technology companies.

Between mandatory military training for all young adults, a vibrant immigrant population, a culture that embraces innovation and risk taking, and one large dose of shameless audacity, called chutzpah in Hebrew, Israel leads the world in startups per capita. Israel routinely creates valuable startups that go public or are acquired by larger international firms.

Israel is David competing in the global Goliath of the financial industry.

Different market opportunities

Israeli fintech entrepreneurs are entirely focused on the opportunity abroad. With 8 million local residents, Israel is rarely the target market for upstart fintech firms. Startup Nation firms are focused on trying to scale into foreign markets quickly and efficiently. Doing business locally is seen as just a stepping stone to getting a few reference accounts and customer testimonials on the way to going global.

The two leading invoice financing companies in the U.S. both have Israeli roots. Bluevine and Fundbox don’t lend a single shekel in the Holy Land — their factoring and line of credit products were created solely for U.S. business customers. Building an Israeli fintech means managing multiple international offices, a lot of frequent flyer miles, and product-market testing abroad.

Brazil is an entirely different animal. With over 200 million citizens, there are more Brazilian businesses than there are people in Israel. This isn’t lost on fintech entrepreneurs, as the Brazilian fintech ecosystem is estimated to be growing by almost 50 percent per year.

Brazilian consumers and businesses routinely pay some of the highest interest rates in the world. This means fat margins have made Brazilian banks very profitable. Incumbent banks control an approximate 80 percent of the market, creating a big target and challenge for fintechs trying to change the status quo.

Brazilian fintechs don’t need to look to Latin America or further abroad to build their business plans. Fintech lenders like Nubank and Geru on the consumer side and Biz Capital on the business side have the potential of building massive companies by staying at home and battling the banks.

Cultural differences

There are distinct cultural differences I’ve noticed working in fintechs in the different countries. Israelis shoot first and ask questions later. Grounded in their military training, fintech employees in Israel tend to rush in to new products, new strategies, new partners without sufficiently thinking things through. Be a hero by moving fast and breaking things. This behavior pushes Israeli entrepreneurs not to rest or be complacent with the present. It’s what propels them to disrupt.

This same aggressiveness colors partnership building. I’ve seen negotiations soured by Israelis going for the jugular when doing the partnership dance. When you’re aggressive and move quickly, there isn’t sufficient time given to the human element of business.

Contrast this to Brazilian business culture. In Israel, we frequently eat at our desks like our American colleagues. But in Brazil, I’ve been privy to two hour-long lunches ,where business is discussed only after sufficient conversation takes place. And hugs. In America and Israel, only close friends hugs. But in Brazil, it’s very common for employees to hug each other to start the day and to end it.

Getting the cultural norms right means putting people first. With my marketing team, we drive home the fact that even in B2B, a customer buys from a person. It takes time to build a relationships with people who value them. This impacts the pace and frequency of communication we send in our Brazilian fintech. In Israel, we might move more quickly to a sale. In Brazil, I’m learning that spending more time educating and communicating with prospects upfront pays off bigger in the future.

There isn’t really a global village. In fintech, where money is involved, it still takes time to change financial behaviors, even if there isn’t a lot goodwill towards incumbents. So while marketers can learn from case studies in one country, they must translate those learnings to adapt to their own local markets. Brazil and Israel provide an interesting contrast in fintech.

Zack Miller is the Chief Growth Officer of WEEL, a leading Brazilian online business lender.