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Marcos Galperin

From Wikipedia, the free encyclopedia

Marcos Galperín
Marcos Galperin y Alec Oxenford.jpg
Marcos Galperin in 2009
Born (1971-10-31) October 31, 1971 (age 49)
Alma materUniversity of Pennsylvania (BS 1994)
Stanford University (MBA 1999)
OccupationChairman, President & CEO of MercadoLibre.com
Known forCo-founder of MercadoLibre.com
Net worthIncreaseUS$6.2 billion (November 2020)[1]
Children3

Marcos Galperín (born October 31, 1971) is an Argentine businessman, who is best known as the co‑founder, Chairman, President and CEO of MercadoLibre.com.

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  • The Evolution and Growth of MercadoLibre
  • Marcos Galperín y Hernán Kazah | Red Innova Buenos Aires 2015
  • Marcos Galperín en Human Camp 2014

Transcription

Hi everyone it's a pleasure to be here thanks [inaudible] for that introduction. I'm not a national hero, you have to play soccer and do it well to be national hero. But it's really a pleasure to be here. As [inaudible] was saying Mercado Libre basically started in Stanford almost exactly eleven years ago; it was in March and I was attending a class, a finance class taught by Jack McDonald who is still teaching and I used my silver bullet, I don't know if you still have silver bullets or not. But I had used my silver bullet to attend his classes and he had, one day it was before Google and Google images. I always came to class and sat in the first row, I didn't study that much, well at Stanford but I really enjoyed coming to class and to lectures and meeting the people that came to present. And one day I came in early and a guy was sitting there and I didn't recognize him and he said 'hello I'm Joe Doe [inaudible] I'm just dressed up like Warren Buffet today. I obviously didn't understand the joke so I said aha and I said alone in a class wit Warren Buffet for five minutes; I didn't say a word to him. And the guy actually was Warren Buffet so after that I decided that I had to use Jack McDonald's contacts and I was preparing my business plan for Mercado Libre which was an idea that I had, basically having lunch and dinners with friends here at school. And I asked him to introduce me to someone he thought might be interested in investing in a project like mine. And he never said who is coming to class, partly to insure that everyone comes to every class. And he said don't say this to anyone but John Muse was one of the founders of Hicks Muse, will be coming to class in a month and I will tell him about your project during lunch and I will set it up so you can drive him to the airport after the class. So he did and before the trip two of my classmates stepped into the car, they already had like ten job offers, I didn't have anyone because I wasn't looking for a job; I knew what I wanted to do. But they were the type friends that like to be near well known people etc and they monopolized the conversation during the trip and I was getting really nervous. We were going down 101 and he had a private plane so it wasn't a problem if he was there late. And so kind of half way through the trip he asked me so what are you going to do after you graduate? And then I started with my pitch which I had rehearsed a hundred times but I knew I wouldn't have the time to deliver all of it, so I had to take the wrong exit and took him to the commercial airport first, pretending that I didn't know he had a private plane. This was also before 911, so after that we went to the private airport, in those days you went with the car to the plane. And he stepped of the car which was parked right next to the plane and took his luggage and walked up into the plane and I was standing there with my two friends and he left the luggage and he walked all the way down and he told me next to my ear 'your story is fantastic and I'm fascinated by it and I want to invest. Obviously my two friends didn't quite hear what happened and they were extremely anxious that I was still so angry with them I refused to tell them. And I had already bought tickets to go to Europe with my girlfriend after graduation, so I got home and I told my girlfriend 'I'm sorry but the trip has been cancelled' and we ended up going to Europe six years later. But that's how Mercado Libre started and it's a true story and it happened here in March of 1999. So with that, the idea today is to give you a brief overview of Mercado Libre and make this very interactive so feel free to interact with questions as we go along. And afterwards if you don't, the presentation will be over in less than probably 20, 25 minutes maximum. And then we'll have time for Q & A. So the origins of Mercado Libre as I mentioned; they started in June of 1999. This trip was in March of 1999, we started the company in June and we launched in August as an online auction service in Argentina but we quickly expanded regionally. We then did two rounds of financing. We did a first round of financing in October of '99 where John Muse, Hicks muse invested, it was around 4.7 million dollars and they were joined by Chase Capital at the time. And then we did a second round of financing in May in 2000 for 46.5 million dollars which was led by Goldman Sachs. And obviously the first round investors also participated and we had a few other investors like GE Capital. So during 1999 and 2000 basically we expanded regionally, hired a great team, many classmates from Stanford, leading each one of our different subsidiaries. In 2001 we partnered with Ebay. They had acquired a European company that had a subsidiary in Brazil that was a competitor of ours and in exchange for almost 20% of Mercado Libre, they gave us that subsidiary and we signed our five year strategic partnership and non competition agreement, In 2002 we bought a Brazilian competitor called [inaudible], which was a strong local competitor in Brazil. In 2003, four years after the launch, we really started to see some growth in the business. Before that it was all financing and marketing and focusing on product but not really that much traction in the business. So that's a big change from what you see today; companies like Groupon that went from nothing to rumors say three billion dollars in revenue this year in two three years, it's a much bigger internet and many of the bottle necks that existed eleven years ago have been solved, like payments for example. In 2004 we launched our payments platform and we learned a specific business model for classified. In 2005 we broke even and we acquired [inaudible] which was a regional competitor which was launched right when we launched by a group of Harvard MBA's so that was a huge battle, that's also something I enjoy telling Stanford grads. Specially when they ask me to call admins that have been added to both schools, I tell them the story; it works quite well. But it's a fascinating story because they were all Harvard MBA's and we were all Stanford MBA's and we were competing in all of Latin America. And we built a great company and they got acquired by us in 2005 for 12 million dollars we bought half of the operation and in 2008 we bought the other half for 50 million. And today Medcado Libre is valued at almost 3 billion; so Standford is better than Harvard. In 2007 we IPO'ed, we did a three hundred and thirty three million dollar IPO which was a huge event because there weren't any tech IPO's those days and the day that we priced was the first time since 911 that the European central bank, the FED and the Japanese central bank, together had to intervene to provide liquidity to the markets because it was when the sub prime crisis was already at full speed and there was a huge financial mess, which lasted obviously for several more months. We were quite unlucky, however the IPO was very successful, unfortunately we priced at 18 that day and the stock closed at 28; so we left a lot of the money on the table there. And it's been going up since then. In 2008 we also acquired a classifieds player called tu carro that is very strong in Venezuela and Columbia. And more recently in 2009 we launched two new businesses called Mercado Clics and Mercado shops. As you can see we're very original with our names. Let me talk briefly about Latin America. It's a very interesting region, the one that we operate in. it has a very good combination of actually GDP; population size and expected growth. We have almost six hundred million people in the region with a GDP per capita of close to nine thousand dollars and a total GDP close to five trillion dollars. In terms of internet we are seeing very strong growth but importantly we believe we will continue to see very strong growth going forward because in relative the internet penetration and broadband penetration is still quite low in the region. But it's growing very fast. So we believe in the next ten years we will continue to see very strong growth in our business and in our industry. So this is the projection for e-commerce growth in relative terms. Latin America is still quite small but growing very fast relative to the other regions in the world and we believe this is going to continue being the case. Mercado Libre basically covers all of the region, it's most important and largest markets and the objective is to cover all the region as our focus is mainly Latin America. We are the largest e-commerce site in the region and we are the largest e-commerce site in everyone of the countries that we operate as well. We are the eleventh largest retail site in the world; this is according to Comscore. The largest is Ebay, second Amazon, in terms of unique visitors, very close to Ebay is Amazon, then Apple, Alibaba; that's a Chinese site and we are the eleventh largest in the world. In Latin America we are the first; we are three times larger than the second. Similar in Brazil, we're the first e- commerce site and Brazil is our largest market in the region as well and we're the leaders there and we're the leaders in every single country where we operate as well. We're also one of the top internet destinations in the region. We're the eight largest destination in terms of unique visitors. So Microsoft is first, Google, Facebook and we're eighth and in Brazil we are the ninth; so we are also a popular destination there. The way we have implemented our business; we have four eco systems, what we're trying to create is a very powerful eco system made up of four smaller eco systems that feed each other. The largest businesses, our marketplace business and I will review each one of these briefly. Then we have our payments business and our advertising and web stores business. Our marketplace is basically the Ebay or Amazon type of marketplace. It's interesting because we started being an auction site of used stuff and today ninety six percent of what is sold on our platform is fixed price and seventy five percent is new stuff. So we have evolved the model quite a bit; much closer to the Amazon marketplace. Having said that we're also very strong in C to C, combine the Amazon marketplace with craigslist, we're very strong in C to C as well. The 25% that is not new is used stuff sold by individuals where we are also leaders there. And that is also a very attractive business to be in; the C to C. We will the evolution of the figures so let me show you. This is prior to 2002; we were embarrassed to show the metrics but you can see very strong growth since last year, we recently announced out yearly results. Last year we had 39 million transactions; that's an annual growth rate of 52% during the eight years. I think this is close to twenty times what we were in 2002. Last year we had fifteen million buyers and sellers actively using our marketplace and that's a figure that to me is very important. We had 4 million people selling on our platform and we had 52,000 people who make a living selling on our platform. So that's something that for me I'm very proud of. Typically when I go to one of our subsidiaries I go and visit several of our sellers and recently I've been very surprised by the size and the professionalism that these sellers have. Recently I was in Brazil with a seller who has 160 employees. And they solely sell on our platform, so we are already enabling very large businesses. You have a question? [Inaudible] So the question is why is there such a big jump in paid listings in the last year? We have paid listings and we have free listings because more recently we introduced the ability for sellers to list something completely for free without any sort of fees and it has been a great move. It was risky at first because we didn't know how much it would cannibalize out own business and it turned out that we obviously grew listings a lot but we also grew revenues a lot because what we're doing is we' re convincing sellers to list for free initially, to try the platform but then to upgrade to paid listings. So it has worked very well and we also improved our product quite a bit in 2009 and 2010 and that enabled listing on our platform much easier than what we used to do in the past. In terms of gross merchandise volume; which is the value of the stuff sold on our platform; we grew from 55 million in 2002 to 3.4 billion last year. This is like 60 X or 67% compounded annual growth rate. So those are some metrics that are interesting. Obviously the businesses continue to grow very fast and as I was saying before, because of the characteristics of our industry, will continue to grow very fast for many years and that's one of the reasons we introduced free listings. Because there are millions of new users coming onto to the internet in Latin America this year. Which is not what you find for example in more mature markets like the States where everyone has already been using the internet for a while. In Latin American; you have millions of people that are accessing the internet for the first time. So we didn't want to have any barrier between these people and our platform. So we are happy to have them list for free and then the free listings have less traffic so if we that those listings don't convert, we email them and tell them hey why don't you try upgrading to a listing that has more visibility? Our second business model, our second eco system is our payments platform; that operates very much like Paypal. It used to be a closed platform, that it was only useful inside Mercado Libre and it had an escrow component and the buyers had to pay for the service because of the escrow service. We've transformed that in our largest markets; Brazil, Mexico and Argentina, to a Paypal type of model where it's free for the buyers to use and it's growing very rapidly both inside out platform and outside of our platform. In the past, with the old version that we still have in our smaller markets, you could not use out payment system outside of our platform. So we believe this is going to be a business that has the potential to be bigger and we believe this business will be bigger than Mercado Libre and we're seeing very rapid growth there. It's a very competitive business as well. We have local competitors and regional competitors here. These are some metrics for Mercado Pago you can see a very big jump in the number of transactions processed and the total payment volume in the last two years as we transformed our business model and we improved our product. There's also a big jump in the adoption with the percentage of listings within Mercado Libre that offer Mercado Pago. A big change that we did is we used to be like Paypal, that's optional for the sellers to accept Paypal or not; now in the countries where we have our new platform, it's compulsory to use Mercado Pago and it doesn't have a cost for the seller. The cost is imbedded in the Mercado Libre fee but every seller has to offer Mercado Pago because we believe it's a much better experience for the buyer and our objective is to have 100 % of the transactions. We're at 20% currently or this was the average for 2010, Q4 was closer to 30%. Yes? [Inaudible] It's hard to test some of these things. What we typically do is we try it in a market and we see what happens, we obviously look a lot at what's going on around the world and if you look at the most successful marketplaces which in my opinion is Itunes and the Amazon marketplace and more recently the Android marketplace. In those marketplaces when you buy you pay; there isn't a difference between buying and paying. And in the Ebay marketplace and our marketplace still today; there is a difference between buying and paying. You buy and then you figure out with the seller how you wish to pay and that creates a lot of friction, a lot of hassle, it creates very high customer service cost for the seller and for us. So it was quite obvious to us that this is the way to go and we're going there but it creates a lot of noise. When you have a big platform; four million people selling on it and you create a big change like this, it creates a lot of noise and you have to be able to maintain your decision despite your noise. Ebay had a lot of those problems some years ago when they started to do some changes. I think Facebook is great at that, they make up their minds about something and they do it and everybody complains and they say, if they realize it's a mistake they go back. But if you have an eco system with millions of participants, you always hear lots of noise and you have to be careful to separate the noise between what is actually long term best for all the participants. So this is our payment platform and very briefly Mercado Clics and Mercado shops which are our two latest launches. Mercado Clics is basically an adwords type of service. In the past it was almost heresy to let people go outside of our platform. So we didn't want anyone that was in Mercado Libre to leave our site. With the model we were very successful at attracting small and medium size sellers to our platform. But we were never really successful at attracting and retaining larger brands to our platform, because they didn't want to list on our platform next to the small and medium sized businesses that competed with them and they also wanted to control the overall buying experience. But through Mercado Clics, we have been able to build very good relationships with very large retailers that are happy to be on our platform. And we also believe we are offering a better buying experience to the buyers who are now able to see in once place the small and medium size sellers and the abilities to also click away from there and buy in the large retailer if they want to. Sometimes they prefer to buy in large retailers because of price, guarantees, brand recognition or special offers that they may have. So it has worked very well for us. We're obviously smaller than Google in the region but we are growing very rapidly and we have over 11,000 advertisers already, so this is a business that we believe has a huge potential as well. And finally we launched Mercado Shops which is a web front, web store solution and it's also growing extremely rapidly, we launched it in the second half of 2010 and we have already over 5000 web fronts, web stores active. And this is basically the ability for anyone to do e-commerce online and it comes integrated with Mercado Pago, Mercado Libre and Mercado Clics; so it's very easy to generate traffic to that store, if you have some inventory that you want to sell in Mercado Libre because you're not selling it in your platform; it's very easy to transfer the inventory to Mercado Lbre and sell it there and vice versa. And again it's a vision of having this full eco system where each one of the parts helps the other. And finally some financials for Mercado Libre in 2005, we didn't dare go beyond 2005 so imagine what our revenues were our first five years of operations; not very substantial. But last year we had almost 220 million dollars of revenues and 56 million dollars of net income. And recently in our last earnings quarter we announced our first quarterly dividend and the policies to pay out 25% of the prior year's net income to the share holders. So it's a great feeling eleven years later to give back to out shareholders; some of the money that they have invested. So that concludes the presentation and we can now open it up to questions. When you created the company what were the major tweaks that you created compared to the Ebay model? Well we covered several of those but for the first few years we really tried to recreate Ebay but then we saw that several things didn't work. First of all people preferred fix price to auctions so we moved to auctions very rapidly. We've been at 90% plus fixed prices for the last eight, nine years and Ebay is only at 60% fixed prices, going up because they were three years ago at 40%. So I would say fixed prices is a big one. The recent changes that we have done with the payments; making Mercado Pago compulsory to other sellers and we're moving forward to make the usage compulsory, also to buyers I think it's going to be a big difference. The way that we approach classifieds, we quickly realized that people were not buying cats in auctions even though they might or they were doing it in the US, we didn't think that was the right model so we very rapidly did a completely different business model for classifieds with different pricing, different navigation, different search and it worked very well. We are the leaders in motors in every country and that's not the case for Ebay in the US. There are very strong vehicle sites here in the US. So I think those probably are the biggest tweaks. Sorry, finally the free listings and the way that we have been able to remain very strong and I would say leaders in classifieds. Here you have craigslist which is very big and very strong. You don't have anything, nowhere near to craigslist in Latin America, even though free classifieds have existed there for many years and I believe the reason is that we captured the C to C segment better than what Ebay here. And more recently allowing free classifieds, free listings has been a good part of that. Meg Whitman was actually here on Tuesday and she called a decision to join venture with you as opposed to try and go into the market; one of her best decisions as CEO of Ebay. I was wondering from your perspective, what were the pros and cons of receiving a secret investment from Ebay than having them as a fairly significant shareholder? Yeah I was with Meg last night and she told me she was here a few days ago. So it was, for us it was a very big win to partner with Ebay. When we signed, we knew it was going to be good, we weren't sure why but we were willing to do it almost at any price and we were lucky that Ebay didn't want to consolidate our losses into their PNL. They wanted to be under 20% of ownership. But we were willing to do it, not ay any price, but we really wanted to a do a deal, we didn't know exactly why, when we did it. We signed a best practice sharing agreement and a non compete agreement. And the best practice sharing which we didn't value that much at the time ended up being extremely valuable. Because coming to the quarterly meetings with Ebay and sharing knowledge with them, learning from the things they were doing right and the things that they were doing right was very advantageous for us and I think it was also very helpful for them because we didn't need their approval to do anything so we would go and do things radically different to them and they would learn from that as well. So I think it was mutually convenient. Obviously the [inaudible] o would prefer to not to get diluted 20% but there's a price to everything. [Inaudible] Obviously the partnership has evolved a lot. When we signed it we were almost like a subsidiary of Ebay. And the non competing competition agreement expired five years ago, it lasted five years 2001 to 2006. And now we compete, we compete with their classified, we compete with Paypal. We have a very good relationship with them; they're our largest minority shareholder but they don't have a board seat. And we have a very good relationship but we are also competitors. Which is not unusual in our industry, we are partners with Google, we are also competitors with Google and Facebook etc. You touched briefly on the tension between C to C and B to C, can you talk some more on your strategy of how to keep the marketplace open for C to C as [inaudible] Yeah I don't see those two things as conflicting even though intuitively they look very conflicting; you say I have this used mouse to see, how will anybody see that mouse if there are 5000 mice being sold by Best Buy or other large retailers? It's interesting but it gets sold anyhow. If you have the right place. Obviously C to C have a way for them to gain market share within our marketplace is to lower prices. But the way the internet works, people don't necessarily do a search and go page by page until they find inventory. They access inventory through natural search in Google. I don't know how they do it but they get to the inventory and the 75/25 % mix has been relatively stable across the different countries. So there is good liquidity in the C to C marketplace as well even though free listings are the ones that you see last as a buyer when you do a search. Question: I understand that the model is shifting a little towards the Amazon business model. If this is true how are you going to, are you going to warehouses to work more on the logistics of the business? That's a great question. We are not into logistics today and we do not have plans to get into logistics ourselves, yet. But that's something that we are looking at closely and we' ll see what we need to do as the market evolves. But currently what we are going to be doing is partnering with the people that do logistics in the region and having them do logistics for us but we plan to get involved much more significantly in the shipping process than what we are today. Today we're letting the seller solve shipping, each seller might have a different solution; there's an opportunity to get in the middle and negotiate better prices on behalf of all of sellers and whenever there's a problem have ourselves interacting with the logistics provider rather than the different sellers. So there is an opportunity to improve what we are doing and that's what we are going to be working on in the next two years. Basically with e-commerce there are two very large friction payments. One is payments and the other one is shipping. We believe payments; we are very close to solving it with these things I was telling you were are doing with Mercado Pago. And shipping is the next big thing for us to solve. And we intend to solve it using a similar approach to the one we have been using with payments. Do you believe the Amazon model is feasible in Latin America? Basically because sometimes infrastructure, especially postal services tend not to be as solid and if you were to apply it would you partner with people that are already doing logistics? I've seen that Mercado Libre is tweaking ever model and bringing it to Latin America, what would be the necessary tweaks to make it work? Well logistics in Latin America has many issues particularly unions. So we are happy not to logistics and I think it's going to be very difficult to get into logistics in Latin America when you add the unions factor. Logistics unions are very powerful in some of the countries. So we initially are not intending to do it ourselves. Whether or not it's feasible, I don't know. It's a question for someone like Amazon to solve. Question: Many of us are thinking of starting internet companies after graduation. What are some of the common mistakes that you would think we will make in our first year of being in business? Well I can tell you the ones we made. We thought we were going to grow much faster than what we did. And it was probably a consequence of the days when we launched, as I said before, today things have changed dramatically, you see companies like Groupon and [inaudible] really scaling very fast because the internet is much bigger and many of the bottle necks like payments have been solved for them already. But we thought we were going to scale much faster. One thing I would do if I were to start again is whenever you do a round of financing, secure more funding than you think you might need, in case you don't grow as fast or you have to spend more that what you thought. They be very careful as to how you spend the money. I think one things we did right, relative to everyone else in the region is we really saved the money for the rainy days and then when the bubble burst and no one was able to access capital any longer and the business wasn't there because, when we launched internet penetration, the region was 3%, today it's close to 40%. So E-commerce which was 10% of the 3% is really very small, so all o four competitors ran out of cash and we still had 40 million dollars in the bank. So that was important and I think the key, the most important thing for technology start ups is to focus on the product and get the product right and if there is something I regret it's not having a stronger technology background, it's something that I think Stanford should provide the GSB. You graduate here knowing accounting and you can interact with an auditor and discuss a PNL with them but you cannot interact with a developer and discuss the way they have written code so that's a big handicap for technology start ups. So I you don't have that background like I did, I think it's important to find a partner that has a very strong technology background. Because that's the most important thing; the product. When you decided to start your company how did you go about the decision process of incorporating [inaudible] as opposed to going back to Argentina [inaudible] Well it's a way you want to live your life. There's no right or wrong there. I was with my girlfriend, we wanted to go back to Argentina so that's why we decided to go back. But obviously it's an amazing place to live and do business in. it's obviously more competitive as well, much more competitive. How are you overcoming the volume from Latin American consumers to train online or to give their personal information to an online platform. [inaudible] tons of data from your consumers, what are you as a company actually doing to limit that? And [inaudible] So the barriers, it's time and it's product. If you have a good product people buy online and they don't see any virus. Now with the new payments platform, the second time you buy online, you do three clicks and your credit card is stored there, your shipping address is stored there and it's really easy, you see buyer's protection and people feel very safe doing it and we have a very high repeat ratio of buyers that come and buy again. So having a good product is helpful and then it's time. Some people need some time, they hear from their friends, I bought this on Mercado Libre, it's really easy, it's very simple. An internet penetration increases those barriers come down. And in respect to the data, I think we could do a much better job using our data. We don't intend to monetize the data, selling it to third parties or things like that but one of the big things we are starting to look at is doing the famous 'people who have seen this have also bought that and people who have bought this has also bought that' and we're just in the very early days of that but to do that well you need to catalogue, structure all the data. And our data was unstructured, our marketplace data. So we've done a very big effort in building our own catalogue of products trying to structure that data so we know that people that bought exactly this mouse bought exactly this monitor and not just any other monitor. So once you have the catalogue, it's much easier to do those recommendations. What are the things that you did different from other markets that made a difference? As I said before, I think we focused much more on product; less on PR and marketing, they are very good at that, we're not good at that so we focused on product and we saved our money and they spent it all. I think overall we had a long term vision of building a company. And that's what I would encourage anyone's who is thinking of doing a startup is to have a long term vision of building a company, because you have many difficulties along the way and if your motivation is just to do an IPO or have an exit or sell the company, it's not enough. Sometimes you need a lot of patience like we needed and we had a long term vision of building a company that added value to millions of people. I think that was very powerful [Inaudible] Well we have a huge challenge because the technology industry is incredibly competitive. So whatever you did right in the past is probably a weakness today because you have lots of legacy and we have lots of legacy. If you look at the players in the US, there are very few internet companies that started in 1999 when we started, that are successful today and that's because technology wise it was hard for them to adapt and we're in the process of adapting. We have re-written all of our code to have an open platform with API's and to enable third parties to develop on top of our platform. That's something we didn't have, it's still not live today and that's going to be a major change. So basically transforming our technology is a big challenge and if we do that well I think we have tremendous potential because I believe the growth in next years is going to be much faster than the growth in the last years. So with Mercado shops, you've kind of gone away from your own destination site to more of a distributed model. What are your thoughts of that in the future? Is it going to consolidate more or is it going to go more in the direction of commerce everywhere out there? Where is it going to go? It's going to go in the latter. Commerce everywhere. So if you look at it Mercado Shops, Mercado Clics and Mercado Pago, the [inaudible] is also that so while Mercado Libre continues to grow very rapidly and is our largest business, we believe it's going to go towards and open model and that's why we launched Mercado Shops. Mercado shops acts if you will as a distributor of our payments platform and Mercado Clics, our traffic generation platform. And also as Mercado Libre because you can very easily transfer inventory from one to the other. So Mercado Libre is becoming more and more of an open platform as well. And with API's etc, the vision is to have, let's say you list an item on our platform, it's like listing a video on Youtube, then that item can appear as a video on Youtube, anywhere, in any blog , you can see that item anywhere and buy it. So that's a vision that we have for Mercado Libre and that's the part of transforming our technology that we're doing. Rather than going to Mercado Libre to see this item or video you can see anywhere, you can embed that item anywhere and even buy it anywhere; from a mobile phone, from a tablet etc. [Inaudible] what are you doing to raise those very raise those very difficult barriers to allow commerce to flow? There's very little cross border trade today. Payment is a big part of solving that. But it's highly regulated and the people doing it are not public companies that need to comply with all the laws that we do. It's very complex to transfer money from Argentina to Peru or from Argentina to Chile without having many licenses in the region. So and then obviously there are duties and customs. That's not our focus. Our focus is the e-commerce that happens in each one of the countries and we believe it's a huge market for that. Hi. I wanted to know about how you started actually I mean you can find the technical founder and as you said before you need someone on your team that is technical. And do you develop a prototype or something like that to show? Yes, my cousin has a technical background and he started the company with me. That's a fun story. We bought an auction software from a company that was called 'OpenSite' it was eventually bought by a larger player, I can't remember who. They were in North Carolina and we bought it for 15,000 dollars. It was a terrible technology but it enabled us to launch, we knew we were going to have lots of competition and in the meantime we had our own developers doing our own platform. But initially we bought an off the shelf software, which we installed in the servers and we started with that. You mentioned one of your goals is present in all of Latin American countries. I was wondering why you have not penetrated the few counties we se in Central America? Partly it's because the technology that we have, that we are changing, it's costly for us to do each country. Each new country is costly so typically to add one feature in Brazil has a better payoff than launching in Bolivia. But that's the reason why we are completely overhauling our technology so that we are able to launch in many more companies and move much more rapidly than we have been in the past. I get the sense that you move really fast. [inaudible], I want to know if you were here today as a student and you got an idea, you need to run as fast again or will you wait? I mean it's case dependent... If you're going to be in the technology industry you need to run faster than you can. And that's why you need a great team and basically it's very stressful and it doesn't stop, it's always like that. [Inaudible] if you setup the last ten years most of the largest countries in Latin America are [inaudible] how do you see the next ten years [inaudible] proven business models here and there or is it to invest in new business models? I don't know it's a hard question to answer but what I will say is it's very hard to replicate a business model in the region because you cannot replicate it you need to adapt it. There are many differences so that's what I would say. [Inaudible] Well there are many. Obviously the group buying stuff is extremely hot and it's working very well over there as well. Games on the internet; we do some payments for some gaming companies in the region and they are growing very fast. The biggest platform is [inaudible] in Brazil but Facebook is growing very fast in the region and in Brazil. So I see people doing very well in those spaces and.... [Inaudible] It's very tough to build it because you need to create scale and it's very difficult to reach scale. I think that its easier, well Check out now for Android for example and Facebook credits, well they don't use real money, they just use Facebook credit so in one way it's complimentary. [Inaudible] I don't know. I think there might be more than one but probably the largest will have a substantial share of the value created if you will. So probably there is going to be more than one. If you look at the credit cards industry, that's probably similar to what will happen online. Within the technology sector or maybe beyond the technology sector [Inaudible] what is your opinion about that? I see a lot more entrepreneurship in the region, endeavor this foundation that selected us in 1999 has been doing an amazing job in the region, through universities and working with governments and everyone is very aware of how valuable it is to have entrepreneurs in a country because they generate mobile progress, mobility within a society and innovation and jobs and so there's a very big focus on entrepreneurship in other countries and I see many people doing stuff so I think the environment is very good. And there is venture capital, obviously it is not Silicon Valley but it's a big change from what it was eleven years ago. Talking about eleven years ago, I remember seeing the first advertisement for Mercado Libre and I don't think I even knew what online shopping was. And there really was a lot of players, what was the strategy to differentiate yourself and launch a brand when most people, even middle class had no idea what online shopping was? So I think what we wanted to do is do enough advertising to make sure we would be amongst the survivors but do as little as we could to save as much money as possible because we knew that we were just throwing money out the window because it was like saying, advertising something and then when people go to the supermarket it's not there. Internet penetration was 3% and TV, you target a 100% of the population so straight away you're wasting 97% of the money. We did very little TV but we did enough so that, because interestingly enough the venture capital, I know the financial community were the ones asking, pushing for people to spend money, so we were like ok we have to do something otherwise they won't invest in our round of financing because they won't think we will survive. But we know that this is not the way to go. I would definitely save that money. It was a waste of money. We have time for one more question if there is? Thank you.

Personal life

Marcos Galperín was born in Buenos Aires, Argentina, to a wealthy family, owners of SADESA, one of the largest leather companies in the world. He attended Saint Andrew's Scots School in Olivos. In 1990, after graduating from high school, he traveled to the United States to study finance at The Wharton School of the University of Pennsylvania. There, he became friends with José Estenssoro, YPF president's son. In 1994, he joined this company when he finished college and returned to Argentina.

In 1997, he returned to the United States and he enrolled at Stanford Graduate School of Business and in 1999 he earned his M.B.A.

Mercado Libre

Marcos began the company while still in business school at Stanford University. Finance professor Jack McDonald had been helping Marcos to contact potential investors and asked John Muse (businessman), an invited speaker and co-founder of the Hicks Muse private equity fund, if Marcos could drive him to his private plane. Before boarding his plane, Muse expressed his desire to have his fund invest in the idea and soon thereafter the company started. MercadoLibre received funding from JPMorgan Partners, Flatiron Partners, Hicks Muse Tate and Furst, Goldman Sachs, GE Capital and Banco Santander Central Hispano. In September 2001 eBay acquired 19.5% of MercadoLibre in exchange for eBay's recently acquired Brazilian subsidiary of Ibazar.com.br. In this transaction, MercadoLibre also became eBay's exclusive partner for the Latin American region.

He is considered one of Argentina's internet entrepreneurs. As result of this he received a Konex Award in 2008 and a Platinum Konex Award in 2018 as the most important businessmen of the last decade in Argentina.[2] In 1999, he was selected as an Endeavor Entrepreneur and currently serves its Argentina's Board of Directors. Endeavor (non-profit) is a global non-profit that selects and supports entrepreneurs in emerging markets. Additionally, he serves on the Board of Directors at Onapsis, in business application security, and is also an investor at COR, a project management tool that predicts and tracks profitability in real time.[3][4][5]

In addition to his duties at MercadoLibre, Mr. Galperín also sits on the board of directors at Globant.[6]

References

  1. ^ "Marcos Galperin". Forbes.
  2. ^ "Marcos Galperin - Platinum Konex Award".
  3. ^ "Marcos Galperin, CEO of MercadoLibre, Joins Onapsis Board of Directors". Retrieved 2018-11-02.
  4. ^ "MercadoLibre's Marcos Galperin Joins Board of Argentina Entrepreneur Company Onapsis - Endeavor". Endeavor. 2014-11-18. Retrieved 2018-11-02.
  5. ^ "Archived copy". Archived from the original on 2014-12-07. Retrieved 2014-12-11.CS1 maint: archived copy as title (link)
  6. ^ "Globant Board of Directors".
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