BayBrazil 5.0 – Challenges and Progress in the XXI Century

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Margarise Correa and her excellent group successfully brought off the Fifth Annual BayBrazil Start Up Conference at the Google Campus in Mountain View on Friday, Sept. 16. Here is the link to the program and speakers. http://www.baybrazilconference.org/#new-page

Most new companies and organizations close their doors before reaching year 5 and Bay Brazil deserves kudos for this milestone. With this track record of success, BayBrazil has a bright future. Like the past conferences, attendance was in the hundreds with executives, decision makers, representatives of start-ups, venture capitalists, investment bankers, attorneys and business consultants from both Brazil and the USA.  There were many repeat attendees and there seemed to be an increased contingency of Brazilians flying to the Bay Area for the event.

An interesting thing about the start up culture is its optimism and vibrancy. So, I was not surprised to hear that Brazil was “bottoming out”, “improving”, reaching “critical mass” for new business growth and VC support. However there is also a bit of isolation and groupthink and it is a bit of stretch to learn that “Everyone in Brazil wants to be an entrepreneur” as one very optimistic speaker stated. In reality, people in Brazil still recognize that the best job is a state sinecure and surveys show that 85% of the secondary level students hope to work in the public sector. Obviously, this dependency on the state reduces the pool of entrepreneurs. Still Brazil is large and many want to create their own opportunities especially as people recognize the limitations and the restrictions of being tied to the government.

While working in a challenging environment, BayBrazil bridges and creates space for a blend of cultural contacts among established and new entrepreneurs with different backgrounds, challenges and stories. This alone makes the event worthwhile and fascinating. Innovative and smart Brazilians look to the examples in Silicon Valley and the valley reciprocates by attracting good thinkers and innovators who recognize that Brazil is too big to ignore.   Every year, the conference demonstrates that Facebook, Linked In, Uber, Snapchat, Alibaba, Instagram, Google and many, many other, large and small, are connected to Brazil for its size, growth, potential and human resources. Bay Brazil’s program was replete with executives and operators leading these companies not only in Brazil, but also in the USA and the rest of the world. In this sense, there truly is a bridge between Silicon Valley companies and start-ups in Sao Paulo, Rio, Belo Horizonte and other Brazilian places.   Face to face interaction at the congress offers opportunity and incentive to Brazilians and provides access to knowledge, capital and an environment favorable to new endeavors.

Brazil, in spite of the ongoing recession, continues to lead the venture capital market. According to the Latin American Venture Capital Association (LAVCA) there were 39 deals with outlays of 110 million in 2015. LAVCA’s Julie Ruvolo, as well as the other VC panelists, noted the main areas are: finance, online retail, logistics, health, agricultural and IT services. Certainly, there were Brazilian and international companies present at the conference in each of these areas.

In the context of Brazil’s recession of the last years, the seminar showcased two fantastic success stories: Beleza Natural and Wine.com.br. Both of these companies had their start in the mid-90’s and are great examples of resilience demonstrating strong growth to date in spite of the crisis and environment of malaise. Beleza Natural identified early on a niche market focusing on beauty services and products for women of African descent. Because of Brazil’s social hierarchy and the perceived benefits of “whitening”, Beleza Natural innovated by emphasizing how women of color can be themselves and is naturally beautiful by valuing their hair and styles without necessarily making concessions to the dominant cultural model. Beleza Natural focused on top level customer service for a clientele that is typically treated poorly in the traditional retail beauty and hair treatment sector  By rolling out the red carpet to black and brown women and by valuing the lower rings of Brazil’s consumption ladder, the company created and dominates a market other companies failed to see.

Wine.com.br also followed a counter intuitive plan by perceiving that wine had a totally elitist and very limited consumer group in Brazil. Spirits and beer represented until recently almost 99% of Brazil alcoholic beverage market. The owners of Wine believed that per capita consumption of wine could double and triple with the appropriate marketing emphasis and strategy. So the company popularized wine drinking by making the beverage accessible, fun and much less snobbish.

Wine.com.br cut out the middlemen by using the Internet to sell and then structured an innovative and tightly run technology driven logistics system. Beleza Natural also recognized the role of Internet and mobile phones with related apps in communicating its inviting and open business strategy to attract new middle class consumers of color. Both companies have sales of around 100 million US dollars per year and their revenues to continue to grow at a very healthy pace. Certainly these stories inspired the audience and gave heart to the possibilities and potentialities latent in the Brazilian market.

Rogerio Salume, the principal of Wine stated correctly regarding Brazil, “We are a crisis.” But his success, the achievements of Beleza Natural and the ongoing hard work of BayBrazil in promoting Brazil in Silicon Valley, California and beyond all show how good ideas and hard work can create and overcome. The stories presented at BayBrazil bode well for the future and confirm the vision that Magarise and BayBrazil have consistently promoted over the past 5 years.

 

 

 

In with the Old

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Institutional gymnastics in Brazil deserve a gold medal. Politicians orchestrated a slick maneuver that led to President Dilma’s impeachment but saved her, at least temporarily, from the loss of the right to hold political office in spite what the Constitution mandates. This bit of political chicanery orchestrated by Renan Calheiros, the Workers Party (PT) and Supreme Court Justice Lewandowski, and likely sanctioned by President Temer, amply illustrates the permanence of Brazil’s political culture of accommodation and innovation through the use of the “jeitinho”.  The move further weakens respect for the Constitution, the Supreme Court and the overall political process.  In the end, it means institutional degradation and for anyone looking from the outside in, they can only scratch their head and wonder if Brazil will ever have rules that apply in a universal fashion.  If you are a foreign investor thinking about playing in this trillion-dollar market, what is your impression?

The impeachment (with attenuation) raises basic questions that demand answers: Is Brazil’s culture perverted in such a way that institutions cannot solidify and function? For how long will the Brazilian political body be subject to the whims and wiles of manipulative and astute members of the political elite?  Why do the major economic players condone and acquiesce in such ad-hoc maneuvering?  What is necessary for institutional stability and growth?

The short answer goes back to Brazil’s historical heritage, the weight of slavery and patrimonialism. Brazilians are aware of and frustrated by contemporary anecdotes about the difficulty of encountering the promised future.  Some say that Brazil needs another 500 years to shake off the elitist centralization inherited from the Portuguese crown plus another plus another 500 years to remediate the sins of the world’s most intense slave trade.  In 1800, slaves made up more than half of Brazil’s population and Brazil still has the largest share of African blood in the Western world.  Paradoxically, miscegenation, partially driven by demographics, led both to the myth of racial democracy but also reaffirmed Brazil’s unequal distribution of power and property based on racism.  “White” society prevailed over the many gradations of darker and poorer.  Brazil took its time in abolishing slavery (1888) and even by the end of the Empire (1889), suffrage in the newly proclaimed Republic favored the rural based patrimonial elites who could control “their” people and guide the limited suffrage that would come into place.  Illiterates were barred from voting and education was restricted, thus favoring the status quo.

From the abolition of slavery and the Republic to the present day, the vestiges of the system remain in place.  Even the shift of population from 90% rural in the 19th century to 90% urban in the 21st has only slowly, extremely slowly, begun to reverse this inheritance.  Brazil remains stubbornly unequal in education, income and the distribution of power and participation. This unevenness can be seen along the racial spectrum from white to black, rich to poor, the privileged to the destitute, from those who live in hillside favelas to those with beach-front homes.

Even as Brazil industrialized, urbanized and made great strides in wealth generation and economic opportunity, social advancement remained highly dependent knowing the right people.  Brazilians always have had to value what is called a high IQ or in Portuguese, Quem Indica – Who do you know?  Years ago, young women aspired to marrying a functionary of the Bank of Brazil and today young people are still avid seekers of employment in the public sector and preferentially to a post based on personal referral.

Since the 1930’s and even before, economic development has been state led.  Those with political power and those able to create economic surplus looked to the government for investments, loans, incentives, protection, and the benefits to be derived from positions and sinecures in state run enterprises.

With power and resources, those in government treated society and the population in a paternal and/or populist manner. Look at how members of Congress members of the president’s administration behave. Their policies and favors are for friends and family.  Although society and the economy have grown in sophistication and complexity, the political system remains largely traditional.  It is and always has been the duty of the governing to anticipate, control and genuflect toward popular demands.  In Brazil, the government has a long history of signaling and promoting social and economic benefits.  Thus today’s labor code (CLT) with its roots in the Estado Novo dictatorship provides Brazilian workers with the benefits of European social democracies before these were actually demanded and negotiated in a political struggle.  Cooptation and control prevailed over political mobilization and the winning of rights through active political participation.

While Brazil is a capitalist economy, nothing gets done without the government.  Statist ideology, state capitalism, state control and intervention are all too present.  Brazil needs to decide the role of the state in the 21st century economy.  Dilma was ejected because the state fell down on its ability to perform and coopt.  The new President promises changes and is trying to promote a more traditional style of capitalism with competition, rules, private property and the right to profit.  However, the current system is stacked against this.  And while, the Worker’s Party has expanded the state as an employer since 2003, this tradition started much earlier with entrenched interests in the state with its tentacles in all sectors is difficult to budge.  Politicians don’t want to change as they can allocate resources in the form of jobs and benefits.  Those on the receiving end or even potentially on the verge of power also lack incentive to change.

Economic complexity, a population of 210 million, a GDP that has shrunk to less than 2 trillion, societal diversity and increasing yet still poor levels of education are all factors demanding a new model.  Not much will happen with President Temer.  He has only one bullet and that is to somehow revive the economy and this will be a challenge.  Moreover, his term is too short and if he tries to run for reelection in 2018, that act will trigger another crisis.  Brazil needs to find leadership but the population also needs to decide on a future where the state has a greatly reduced role in collecting and allocating resources.  Because this will involve pension reform, tax reform, privatization, de-bureaucratization, losses of access to easy jobs and privileges, the process can only take place over a long time frame.

It remains to be seen if the old can survive until the future arrives.

Falta de Liderança

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Com a aproximação das eleições municipais no Brasil e as eleições presidenciais nos EUA, vale olhar a questão de liderança.  A percepção geral e’ que existe uma crise.   Não há mais lideres.  Nos EUA, tanto Donald Trompa quanto Hilary Clinton demonstram índices inéditos de rejeição pela população.  No Brasil há um grande cansaço com relação a classe politica e não estão aparecendo faces novas que animam o eleitorado.  Dilma esta’ fora e o Temer assume para logo sumir para China.  (Muitos gostariam que não voltasse).

 

As pessoas, principalmente a classe media, culpam a corrupção e a cultura politica pela ausência da renovação.  Certamente, no Brasil, a Senadora Gleisi expressou algo que políticos não gostam de admitir: ou seja não tem moral para liderar e nem condenar nada.  Tanto a Dilma quanto o Temer, como os candidatos americanos, primam pelo desgosto que provocam.

Falta carisma `a safra atual de lideres tanto no Brasil quanto nos EUA.  Mas o que e’ isso?   Embora um pouco difícil de definir, quando falta o povo nota e ressente.   A origem vem da palavra grega, kharisma, e significa tocado pela mão ou a graça de Deus.  Quer dizer que o líder que possui carisma apresenta características diferenciadas, fáceis de reconhecer.  Nos Estados Unidos, Presidente Obama e’ considerado carismático por suas características de personalidade que ganham expressão através das instituições que as ampliam.  Também e certo que ele tem a capacidade de atrair pessoas e quando presente as pessoas sentem sua postura e seu dom de liderança legitimada pela posição que ocupa.

A liderança politica e os dons carismáticos nos países que praticam a democracia são legitimados pelos votos.  No Brasil, entretanto, apesar da tradição continua de eleições e de um sufrágio amplo, ainda não se construiu, ou talvez melhor, perdeu-se a ideia de como liderar.   Mas, nos EUA, também a desconfiança cresce vertiginosamente.  Hoje em dia o comum e escutar “Fora” quando tratando da classe politica.  Enfim, questiona-se bastante se os políticos e o sistema merecem credito e confiança.  Faltam confiança e credibilidade.

Desde a redemocratização em 1985, foram 5 presidentes eleitos pelo voto direto.  Dois deles sofreram impeachment e Lula que foi o mais carismático de todos acaba de ser indiciado e corre risco de prisão.

Será que Deus esta decepcionado e não oferece mais sua graça ou será que é’ falta mesmo de quem candidata.  Da ótica individual, quando se busca uma liderança há também a expectativa de alguns requisitos ou atributos básicos como: vontade, idoneidade, autenticidade, visão e persuasão.  Essas características sustentam e dão base para a projeção do carisma.

Sintetizando:

Vontade: quando se fala da esfera publica, o líder deve ter vocação no sentido de fazer politica visando o bem publico e não beneficio próprio.  A ideia e’ que tem que querer por uma forca interior, um moral e não um ganho puramente material.

Idoneidade: Algo que as pessoas devem reconhecer no individuo que inspira confiança no trato do bem publico.

Autenticidade: A possibilidade de transmitir sinceridade mesmo quando incorrem em equívocos, isso e’ admitir os erros.

Visão: ter um gol ou objetivo compartilhado que leva a mobilização de recursos

Persuasão: Poder de comunicação e captação das pessoas para que tornam aliados.

Essas características são individuais e podemos encontra-las em muitos âmbitos e são, felizmente, características de muitas pessoas.  Mas só com a presença de instituições e’ que se permitira a projeção mais ampla dos atributos individuais para a sociedade.

O problema aqui e’a construção de instituições que cerquem e ajudem o individuo.  Do lado negativo, as instituições impedem ou diminuem as ações maléficas já que o individuo sabe que há consequências.  Ao mesmo tempo, quando as instituições funcionam as ações positivas geram resultados.  Obras são construídas, a segurança funciona, escolas ensinam e a rede de saúde funciona sem grande favoritismo.  Quando ocorrem desvios, e’ possível fazer a denuncia e esperar a condenação e correção.  Enfim há mais confiança do que desconfiança na justiça e no sistema e instituições como um todo.

Um dos problemas do Brasil e’ que o Estado e os órgãos públicos são tomados e aparelhados. E’ fato que a diversidade da imprensa, a funcionalidade da justiça e da policia e a historia de solidez das instituições americanas, de forma geral, separa bem o Brasil e os EUA.  A confiança, o respeito e a legitimidade dão mais solidez.  Um exemplo obvio e que a Constituição americana vem de 1789 enquanto o calhamaço de defesa de interesses (A Constituição) do Brasil vem de 1988, ou seja, só aí 200 anos de diferença.   Há, sem duvida, uma historia institucional que ate agora vem favorecendo e modelando lideranças.  E’ obvio que o poder econômico e outras influencias também competem e comprometem, mas o sistema ainda funciona.

Liderança pressupõe também liderados.  E na politica, as pessoas apoiariam o líder através de participação partidária e participação eleitoral.  E o apoio vem com a expectativa de um retorno material e também moral.  O líder deve entregar beneficios reais e ideais para seus seguidores.  Dilma perdeu quando não conseguiu mais fazer a distribuição de benesses e falhou outra vez na total falta de coerência ideológica e programática.

Por mais que a Presidente Dilma proclame sua inocência, ainda há a percepção que ela pode não ter cometido o crime, mas os roubos e desvios acontecerem quando ela tinha responsabilidade e comando.  Não e’ aceitável repetir a exaustão que não sabia ou não via.  Pode se querer acreditar que as pessoas são honestas, mas quando entram na esfera publica e na politica, aí já gera no Brasil a desconfiança. E Dilma que nasceu em Minas, tinha que desconfiar.  Isso porque a historia de manipulação, roubo e atos ilícitos vem de longe.  Poucos políticos conseguiram manter a boa reputação.

Os episódios finais do processo de impeachment no Senado são tristes.  Dilma tentou se defender, mas ainda se tem a impressão de que ela não contou nem a metade do que sabe, e não teve coragem de desafiar, a não ser através da repetição patética de que foi vitimada por um golpe.  Ela não contou por que não sabia das coisas, e se ela realmente não sabia, e’ porque não quis saber, o que a deixa no papel de coitada.

Ela teve a oportunidade de ser uma grande figura, a primeira mulher eleita para a presidência com seus 54 milhões de votos.  Eh triste observar que Dilma não liderou e não comunicou uma visão coerente.  Ela tentou projetar a imagem de pessoa idônea e autentica, mas nunca assumiu nenhuma responsabilidade pelos atos nefastos ocorridos em sua administração, e assim se auto-destruiu como líder.  Em vez de ajudar na construção de instituições e processos, ela as manipulou para ganhar uma eleição, e no segundo mandato foi omissa na sua participação como chefe institucional, justamente quando a situação econômica ruiu, pelo menos em parte, por suas próprias medidas administrativas.

E hoje, ela não e’ mais presidente e perdeu o cargo da liderança para um vice, cujas ações não correspondem as suas palavras.   Assim o impeachment constitui mais um capitulo triste de um pesadelo ainda sem fim.