News Column

Miami: The Capital of Latin American E-commerce

Jan 31 2001 4:03PM

By Derek Reveron

January/February 2001 - California has Silicon Valley. New York has Silicon Alley. Texas has Silicon Prairie. Now Florida has Silicon Playa, the Spanish phrase meaning Silicon Beach.

Silicon Playa is an 80-mile stretch of real estate from West Palm Beach to Miami that has emerged as the prime Internet hub for Latin America. Overall, the number of technology companies in South Florida grew from 4,351 in 1996 to 5,806 in 2000, a 33 percent jump, according to the Technology Forum of South Florida. Among the companies are dozens of dot-coms targeting Spanish- and Portuguese-speakers worldwide.

Many of these Internet firms relocated to Silicon Playa from Latin America.
“Miami is the natural and logical location for our office, because the primary focus is pan-regional sales,” says Alex Aberg-Cobo, director of U.S. operations for portal site El Sitio. “Access to the region is very important to us, because El Sitio is a network of sites in eight countries in Latin America. And we are closely integrated.”

As Silicon Playa residents see it, if you are Hispanic and you want to create the Spanish-language Internet of the future, then South Florida is the place to be. “There is a critical mass of people here who spend all of their time thinking about and producing Web sites for Hispanics,” says Jeordan Legon, managing editor of elHerald.com, the Spanish-language online version of the Miami Herald.

The list of dot-coms with headquarters or offices in South Florida includes AOL Latin America (a joint venture between America Online and the Cisneros Group of Venezuela), DeRemate.com, Fiera.com, Eritmo.com, Yupi Internet, El Sitio, Patagon, Starmedia Networks, Salud.com, Todobebe.com, Ehola.com, Terra Networks, Salutia.com, SportsYa.com, Gringolandia.com, GarageLatino.com, Mundonet.com, IFX (www.unete.com), and Mercadolibre.com. Many of the firms are located in Miami Beach, especially along the trendy Lincoln Road promenade.

South Florida also hosts a range of B2B sites that target Latin America. Todoplasticos.com, for instance, sells resins and machinery parts and provides leads on manufacturing contracts. FuturoSeguro.com sells insurance in Spanish, Portuguese, and English.

Hispanic Internet executives cite several reasons for the growth of Silicon Playa:

* Miami is the financial, business, and trade hub of Latin America. It has more foreign-owned banks than any city in the United States except New York. South Florida is home to the Latin American offices of more than 100 multinational corporations, many of which maintain Web sites. Miami also accounts for 30 percent of all U.S. trade with South America and 43 percent of the nation’s trade with Central America.

* Latin America is the world’s fastest-growing market for online services, with more than 500 million potential customers. The Latin American Internet services market will increase by 42 percent a year over the next four years, according to International Data Corp.

* For Latin American Internet operators, the United States provides economic and political stability as well as better access to venture capital and the latest technology. “Having a presence in Miami has helped the company gain credibility with investors, advertisers, partners, and users,” says El Sitio’s Mr. Aberg-Cobo. “We frequently meet with executives from other dot-coms or entertainment companies located in Miami Beach, and we therefore are able to establish strategic alliances with them.” In October 2000, El Sitio announced plans to merge with the Internet properties of the Cisneros Group to form Claxson Interactive Group.

* Florida has a lower cost of living than places such as Los Angeles and New York, and it has no state or local income taxes.

* Miami offers proximity to Spanish-speaking customers in the United States as well as Latin America. The city has more flights to Latin America than all other U.S. airports combined. Hispanics account for about 55 percent of Miami-Dade County’s 2.1 million residents. The area provides a home-grown supply of well-educated bilingual employees and attracts others from throughout the United States and Latin America.

“We chose Miami because it is the most purely Hispanic market in the United States,” says Ignacio Vidaguren, the U.S. country manager of Mercadolibre. The company relocated from Buenos Aires in January 2000, favoring Miami over New York and Los Angles.

The management at Mercadolibre decided South Florida would be the best place to launch a limited pilot test of its Web site and advertising campaign before launching a nationwide rollout, Mr. Vidaguren says. So far, U.S. Hispanics account for about 10 percent of Mercadolibre’s traffic. The remainder comes from Argentina, Brazil, Colombia, Chile, Uruguay, Mexico, Venezuela, and Spain.

Another reason Mercadolibre selected Miami is that it offers opportunities to network with top Internet players and keep up with the latest technology. “I can give you several examples of things that help our business that we probably would not know about if we had not come to the United States,” says Mr. Vidaguren. For instance, a Silicon Playa acquaintance told him that representatives from a new company that insures online auction transactions would attend a technology conference in San Francisco. Mercadolibre executives went to the conference and hired the firm shortly thereafter. “There are no dot-coms like that in Latin America,” Mr. Vidaguren notes.

Andre Vanyi-Robin is another Internet executive who founded his company in Latin America but soon decided that it would fare better in Miami. He relocated Visualcom, a Latin America-focused Internet consulting firm, from Caracas in 1997. “Miami provided easier access to capital, a better technology infrastructure, and better access potential to U.S customers,” says Mr. Vanyi-Robin.

He recently sold Visualcom to another Miami-based dot-com, Fusion Networks, after finding it difficult to raise additional venture capital because of the Nasdaq plunge. At the time of the sale, Visualcom’s customers were evenly split between the United States and Latin America. Mr. Vanyi-Robin is now the chief strategic officer of Nasdaq-traded Fusion Networks (FUSN), which specializes in software and content in Spanish, Portuguese, and English.

As a major broadcast center, Miami embodies the concept of media synergy. Mr. Aberg-Cobo notes that El Sitio’s merger to form Claxson Interactive will seek to combine content from the Internet, radio, television, and pay TV channels. “We will be able to offer cross-media packages to our advertisers, and also the best content and interactive features to our users,” he explains. “It’s better to be physically in the same place to achieve the synergies that we are thinking about.” Mr. Aberg-Cobo expects a consolidation of media operations in Miami as the integration proceeds.

Thousands of Spanish-speaking Internet executives, programmers, network administrators, content editors, and Web designers from around the world flock to South Florida. “Between the locals, Hispanics from elsewhere in the United States, and Latin Americans who left their countries for various macroeconomic reasons, you have the cream of the crop in Miami,” says Mr. Vanyi-Robin.

As a result, Silicon Playa brims with a melange of Latin Americans who understand the needs, language, culture, and customs of Hispanics. More than three-quarters of elHerald.com’s 20-member content staff hail from Latin America or Spain, and half of the 60 employees at New York-based Starmedia’s Miami operation are from Latin America.

At Mercadolibre, 15 of the company’s 180 employees worldwide are based in Miami. Among them are natives of Colombia, Mexico, Nicaragua, Peru, Argentina, Paraguay, Spain, Venezuela, and Cuba. About one-third of them transferred from Latin America, while the remainder had already relocated to South Florida. “The mix helps us serve the Latin market,” says Mr. Vidaguren.

Despite the plethora of Hispanic talent, brick-and-mortar companies in Miami have long complained of a shortfall in the number of professionals who are truly bilingual. Now some dot-coms are facing a similar shortage. “It is very difficult to find people who can speak, read, write, and edit both languages with the same ease,” says Mr. Legon. True bilingual abilities are not necessary for many jobs at Latin American-oriented dot-coms, however, and some employees speak little or no English.

In terms of networking, many of Silicon Playa’s executives know each other socially and professionally. “On a senior level, there is camaraderie,” says Yupi spokesperson Nerea Alvarez. “Our CEO, Oscar Coen, interacts with other executives and has offered advice to some who have started dot-coms after he did. Still, competitive and confidentiality issues keep up some walls,” Ms. Alvarez adds.

Says Betsy Scolnik, Starmedia’s senior vice-president of strategic corporate development in Miami, “We certainly have gotten to know each other, because we are constantly on flights together. The amount of flying I do is unspeakable. I travel about 70 percent of the time.”

Familiarity and proximity have helped South Florida dot-coms form strategic connections. Mr. Legon, for example, points to elHerald.com’s alliances with three other sites for provision of editorial content – Terra, a successful portal; Salud.com, a health site; and Todobebe.com, a site for expectant and new parents. Yupi has teamed up with Eritmo.com, a Latin music e-tailer. Other Yupi partners include job search site LatPro.com, which offers a free job-seeker service. El Sitio has formed a partnership with Salutia.com, while SportsYa! and Starmedia have announced a strategic alliance to produce a co-branded sports channel through Starmedia.

Growth in the Silicon Playa zone has boosted Miami’s economy and image. Dot-coms represent diversification of the region’s tourism-dominated economy and have added numerous jobs – the recent round of tech company cutbacks notwithstanding. The technology boom has created a cadre of Hispanic Internet executives, managers, and investors who pump money into the local economy, notably in real estate.

Silicon Playa also gives Miami a certain intellectual cachet that it previously lacked, owing to its reputation as a sun-and-fun capital. “Dot-coms are a cerebral endeavor that dovetails with Miami’s service-oriented economy,” says Yupi senior vice-president Gustavo Morles.

Seeking to capitalize on Silicon Playa, Florida economic development officials are touting the Miami area as the e-business capital of Latin America. The State of Florida has created an Internet task force to help lure businesses to the region and has launched a Web site, www.bienvenidosalaflorida.com, which supplies state government forms in Spanish to allow Latin American companies to incorporate their businesses directly over the Internet. The site also helps companies find workers, venture capital, and business service providers. Meanwhile, South Florida dot-com executives have formed the Miami Internet Alliance to promote e-commerce companies doing business with Latin America.

The future-looking dot-com industry has plans for improving Florida’s technical and financial infrastructure to handle Silicon Playa’s traffic. Downtown Miami is slated for a Network Access Point (NAP), the sixth of its kind in the United States. The NAP will serve as a hub for high-speed Internet connections to Latin America. The privately funded $250 million project is expected to start functioning in 2002. On the venture capital front, Florida Atlantic University has opened a new high-tech incubator, while Boca Raton-based Cenetec focuses on bringing new Internet companies to market within six months.

Perhaps the best indication that Silicon Playa has found its identity is the debut of Punto-Com, a new monthly magazine for the region’s Web-savvy beachcombers. The magazine also has a Web site, of course – in both Spanish (www.punto-com.com) and Portuguese (www.ponto-com.com).

Biggest Player on the Beach

Many recognizable names in Hispanic cyberspace started out in Latin America and later opened offices in South Florida. But one with links to the Old World has established itself as a dominant player: Terra Lycos Inc.

Terra Lycos is the result of Spain-based Terra Networks’ acquisition of the U.S. search engine Lycos. The $12.5 billion stock swap was finalized in October 2000. With Lycos under its wing, the combined company calls itself the “the first truly global Internet company,” with operations in 37 countries, according to a company statement. Thanks to a traffic load of 175 million page views per day, Terra Lycos projects annual revenues of about $500 million.

In conjunction with the merger, Spain’s Telefonica, which owned 67 percent of Terra, sold off rights to its holdings for $1.9 billion. Those proceeds, plus a five-year, $1 billion advertising deal with German media conglomerate Bertelsmann, will provide Terra with approximately $3 billion in cash. That makes it one of the most highly capitalized Internet companies in the world – and the financial powerhouse of Silicon Playa.



Source: Hispanic Business magazine


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