Making Money in South America

[Parlay44]

[I'm preaching this as I have a gorgeous brown skin, long black hair, Latina waiting in my bed:baller:]

Mixx ...Welcome back!!

 

[DarkTriad]

I'm sure it sounds like a joker post, but it isn't. With such a negative reaction, it didn't seem like a thread worth defending, and probably best for those that have such ambitions to learn the hard way (well, at least learning down there is fun).

A few tidbits of experience:
- I spent two years down there trying to build a business
- Some older guys I know told me they tried doing the same thing in the 90s to no avail and gave caution
- I was convinced that my go at it would be different, but in the end it wasn't
- I had every advantage at my disposal, and my key point of mentioning prior success in my post is that it wasn't like I was going down there naked, with a weak network, and no cash in my pocket...I went fully loaded

What I learned:
- Trying to make money down there is time consuming, expensive, and ultimately doesn't have a payoff anywhere close to what you would get in the USA, even if everything worked perfectly
- Everything moves so much slower in business (compounding point above about time consuming , expensive, and lousy payoff)
- Finally, I thought there would at least be some grease in permitting, regulations, and labor laws...nope...and I thought California had red tape...

I'm still committed to living several months a year down there, but learned that I need to go about it a different way. Just like the old dogs told me (actually played out exactly as they said). One thing we were in deep agreement about is that it was a fun pursuit. (But, given the investment maybe would've been better spent just boondoggling and skipping the business part).

My final assessment of how to make money in South America: You can't.

Well, there are a few exceptions I'm sure, most notably guys like Tim Ferris that sell you books on how you can do this. That sell you on the vegabond lifestyle. They sell you on their success. But, the news flash is that the guru types are funding a lifestyle on selling stuff to those that want to hear what they want to hear.

I guess if your idea of living a cool life in SA is working a shitty job just for the sake of getting to live there, then maybe you can make it work. But, even shitty jobs look hard to come by and the labor laws seem quite protectionist.

But, no reason to listen to me because this is a cold hard truth that most don't want to swallow.

For me, I will just split my time and roll the way I like to roll (with no need to fully slow down because my business focus will be in the USA, and despite its flaws, is still a great place to make money).

"Well, there are a few exceptions I'm sure, most notably guys like Tim Ferris that sell you books on how you can do this. That sell you on the vegabond lifestyle. They sell you on their success. But, the news flash is that the guru types are funding a lifestyle on selling stuff to those that want to hear what they want to hear."

That's inaccurate and unfair. Tim Ferris was a Trust Fund baby, and had his lifestyle set before hawking his business or book.

 

[anonymous123]

@Champ - I completely agree with all of what you said and think you summed things up quite nicely.

A few tidbits:

My final assessment of how to make money in South America: You can't.

This is obviously an exageration as plenty of people make money here.

- True, but I was preaching from the context of opportunity cost for myself (and a lot of people in the USA). I know people making money in SA, I just don't know very many people from the USA making money there...and as such I'm putting this in the "too hard" pile.

- South America is not a homogeneous region. Chile is pretty business friendly, Argentina is impossible, Brazil is somewhere in the middle.

Very true. But, the way it was explained to me was that you are best to either focus on Brazil, or find somewhere in the "everywhere else" of SA or Central America. The quote I received was "Brazil might as well be Hong Kong." And their economic might and advancements alone puts Brazil in a category where one should either commit to Brazil, or go elsewhere.

- The following thoughts are based on my experience in Brazil.
- Bureaucracy is stifling. This makes it especially hard for start-ups, but it also serves as a barrier to entry once you've established yourself.

Amen. And likewise true in many other countries in SA (and was my experience where I was focused).

- Nothing happens as fast as people think / say. Brazilians have a terrible habit of overpromising and saying what you want to hear. As an anecdote: I was in a meeting with some PE investors, they asked me a timeline, I said 2 years, they laughed and said "you're obviously not Brazilian. A Brazilian would have said 2 months".

Amen again. That was my experience and the reason for my "café, café con leche anyone?" comment about business dealings.

- Given the above, and fact that OP was only here for 2 years, it's easy to see why his venture didn't work out. He didn't put in the time necessary to make it happen.


Very true, and don't disagree. The big difference here is that I should have been more clear that this is from the vantage point of someone coming from the USA. I totally agree that I needed to stick it out, and think I would have eventually been successful. But, I didn't pull out just because of the burn rate and painfully slow it is to achieve progress. I finally took a step back and said "what if I'm successful, what is the payoff?" I then compared that payoff to what I could achieve in the USA.

It wasn't easy to decide to cut bait. Despite what they teach in business schools, walking away from "sunk cost" is easier said than done. And, I probably could've walked away from "sunk cost" just fine. What really hit home for me was when I objectively took a step back and tried to asses "what would be the outcome if I poured these same efforts and resources in the USA, what is the reward vs. the exact same in SA?" Doing the back of the envelope math made me think I had the wrong strategy.

But, who knows? I just know that in starting a business, 2 years is a good place to stop and reassess.

- Labor laws are a huge risk. Fucking ridiculous. It's frequently better to keep an unproductive employee on the payroll than to fire them.

This is the one that really hit home for me. For some reason I thought things would be more lax. I think the same goes for permitting and regulation...I thought it would be easier...not even close. I will re-use your description: "fucking ridiculous".

 

[anonymous123]

"Well, there are a few exceptions I'm sure, most notably guys like Tim Ferris that sell you books on how you can do this. That sell you on the vegabond lifestyle. They sell you on their success. But, the news flash is that the guru types are funding a lifestyle on selling stuff to those that want to hear what they want to hear."

That's inaccurate and unfair. Tim Ferris was a Trust Fund baby, and had his lifestyle set before hawking his business or book.

@DarkTriad - it looks like you are just bolstering my point here...(which may indeed be your point!)

 

[worldwidetraveler]

"Well, there are a few exceptions I'm sure, most notably guys like Tim Ferris that sell you books on how you can do this. That sell you on the vegabond lifestyle. They sell you on their success. But, the news flash is that the guru types are funding a lifestyle on selling stuff to those that want to hear what they want to hear."

That's inaccurate and unfair. Tim Ferris was a Trust Fund baby, and had his lifestyle set before hawking his business or book.

Instead of crying "not fair", try to learn what he is doing and duplicate. Regardless what you or I think of the guy, he sold a lot of shit and that had nothing to do with his trust fund. It isn't like selling stuff that people want is some novel idea. It is done everyday in plenty of markets.

 

[champ]

Very true. But, the way it was explained to me was that you are best to either focus on Brazil, or find somewhere in the "everywhere else" of SA or Central America. The quote I received was "Brazil might as well be Hong Kong." And their economic might and advancements alone puts Brazil in a category where one should either commit to Brazil, or go elsewhere.

Might, definitely. Advancements, not so sure about that.

I do agree that it's Brazil or everyone else. Primarily because the sheer size of the domestic economy (might) means you can achieve plenty of scale before you need to start looking outside of the country, Brazil's protectionism makes it hard to enter as a foriegn company, and the language & cultural differences complicate cross border transactions a bit.

- Bureaucracy is stifling. This makes it especially hard for start-ups, but it also serves as a barrier to entry once you've established yourself.

Amen. And likewise true in many other countries in SA (and was my experience where I was focused).

The ease of doing business rankings by the World Bank can give you an idea of what you're getting into. Brazil comes in at a pathetic 116 between economic heavyweights DR & Guyana.

Very true, and don't disagree. The big difference here is that I should have been more clear that this is from the vantage point of someone coming from the USA. I totally agree that I needed to stick it out, and think I would have eventually been successful. But, I didn't pull out just because of the burn rate and painfully slow it is to achieve progress. I finally took a step back and said "what if I'm successful, what is the payoff?" I then compared that payoff to what I could achieve in the USA.

It wasn't easy to decide to cut bait. Despite what they teach in business schools, walking away from "sunk cost" is easier said than done. And, I probably could've walked away from "sunk cost" just fine. What really hit home for me was when I objectively took a step back and tried to asses "what would be the outcome if I poured these same efforts and resources in the USA, what is the reward vs. the exact same in SA?" Doing the back of the envelope math made me think I had the wrong strategy.

This is an excellent point and one I reflect on at times. I haven't started a business here (yet), but as an employee and investor I haven't covered my opportunity cost (at least financially) versus staying in the US. After three years on the ground I have some pretty good momentum and if things break right in the next three years my potential pay off is higher than the status quo (but also riskier). Of course my motive for expatting wasn't pure financial gain.

- Labor laws are a huge risk. Fucking ridiculous. It's frequently better to keep an unproductive employee on the payroll than to fire them.

This is the one that really hit home for me. For some reason I thought things would be more lax. I think the same goes for permitting and regulation...I thought it would be easier...not even close. I will re-use your description: "fucking ridiculous".

Another anecdote: a friend of mine works for a large corporation which recently went through merger. As is always the case the new firm looked to reduce redundant workforce. Only problem is the employees that were laid off are winning judgements against the firm of 3-5x their annual salary. Now, employees that remain are basically asking to be laid off.