Welcome to our brand new Latin America newsletter! I’m glad you made it, because the region’s been straining to get even its closest neighbors to pay attention to it for a while now. And in a way, it makes sense. Compared to (the rest of) the “rest of world,” the region is in a worrying place.
Covid-19 hit Latin America hard, but the issue seems to be more structural. Just look at the economy. China’s average annual growth since 2010 has been 7.9%. India’s was 6.2%. Sub-Saharan Africa grew at an annual average of 3.8% over the same period. Latin America, meanwhile, grew at a paltry 2%.
But something’s quietly changing around here, and people from all walks of life are beginning to take notice. My wager is that you’re here because you know what it is: the tech industry. Let’s break it down.
First, take the spike in the adoption of consumer tech products. The stat most commonly brandished has been that Latin America was the region with the greatest e-commerce adoption globally in 2020. Regionally, 52 million people made their first purchase online last year, and the trend seems to be holding up in 2021, and across sectors like fintech, telecomms, and more.
Widespread adoption has led to massive growth for tech companies. Latin America’s unicorn count — that is the number of billion-dollar startups in the region and, for many, the measure of a thriving tech ecosystem — went from two to over 34 in four years.
A cynic may well point out that these concentrations of wealth are merely the latest reflection of Latin America’s dire inequality, with the poor and middle classes transferring their money to the few, company-owning, rich. Some have even ventured that the inequality created by startups and tech is, in some ways, more benign.
There is some merit to the idea that technological disruption can create “good inequality” by standing out from traditional solutions and by providing for customers. It’s the reason Brazil’s Nubank is now the world’s-biggest neobank after its founder saw an opportunity waiting hours to open a bank account. The success of companies like Nubank has helped drum up support for the region and attract new startup capital. But, even that success is a double-edged sword.
A flood of money washed into the region this year, chiefly thanks to SoftBank’s Latin America-focused Vision Fund. That has, in turn, led to a hiring flurry, pushing “data analyst” and “AI specialist” to the top of a list of the most desirable skill sets.
But that’s had another impact: As tech companies scramble to poach the region’s small pool of software engineers from one another, they inflate wages. The newly-rich and incumbent giants win, leaving smaller startups in the lurch.
One Mexican startup founder talked about her struggle to find talent at decent rates. Her conclusion was that she might as well just hire someone in the U.S., who would likely have more experience and charge the same.
It is a take that is somewhat opposed to the sort of tech messianism that has migrated from Silicon Valley to Latin America recently. Tech may well help Latin America out of its lethargy, but it equally could exacerbate its worst ills. For now, the region is at a crossroads, and the hope is you’ll be joining me every couple of weeks as we find which way Latin America will ultimately go.