Posted: August 27th, 2013 | Author: Ted Rogers | Filed under: Entrepreneurship | 6 Comments »
In this era of the lean startup, deep planning and rigid processes seem out of style. I agree that startups should prioritize testing and iteration but my experience has been that successful organizations also plan well and have strict processes.
For example, I was fortunate to be a rookie reserve on the 1991-92 Washington Redskins, a team that went 17-2 and won the Super Bowl. It was Coach Joe Gibbs’s fourth Super Bowl and his third Super Bowl victory. Suffice it to say, he and his coaching staff had their processes down pretty well…
Here are a few things I remember about their methods, in no particular order:
1. They implemented KPIs clearly.
Of course, winning was the ultimate KPI, but that was simply the tip of the pyramid, underneath there were dozens of KPIs for individuals and units. Special teams had average yards allowed on kickoff, average yards gained on kickoff return, punt return yards, hang-time of punts, etc., etc.
Some KPIs were derived from “big data”, e.g., historic data showed that if our defense kept an opponent below 16 points, we would usually win, if not we would usually lose. (Our offense had 21 points as their KPI.)
There were serious consequences, consistently implemented, for players or units who failed to meet their KPIs. There were also rewards for meeting KPIs.
2. They held people accountable.
In order to do so, they recorded and measured everything. For example, the AV staff videotaped every second of every practice. Then, each morning in the team meeting, Coach Gibbs would fast forward to random plays from practice: if he caught someone not hustling, he called them out and chastised them in front of the team. Even if you were not on the field during the play, if he saw you on sidelines not paying attention, talking to a teammate, laughing, etc., he castigated you publicly, big-time, in front of everyone.
On the other hand, good effort and results were publicly praised.
The result? Everyone had a very good work ethic…
3. They controlled time completely.
Every practice, every meeting, was scheduled down to the second. There was no unstructured time where you could slack off, develop bad habits, etc. When you were in the office, you were on the clock. It seems bad but in many ways it was a relief: you knew the exact length of practice, workouts, meetings, etc., so you could manage your expectations and your output. You ran at 100MPH when you needed to, knowing that you could rest and recover later.
This is totally different from most startups, I know but maybe there is a way to blend structured time with a successful startup culture…
Anyway, it was good to know that your free time was your own, your work time was the team’s.
4. Intense market/competitive research.
The number of man-hours that went into watching film and studying tendencies of opposing teams can’t be calculated. It was a year-round process that, eventually, got distilled down to a specific plan (the “gameplan”) on the week of a given game. The gameplan was essentially a chess match written in advance by the grandmasters (the coaches) and disseminated to the chess pieces (the players).
5. In-game Adjustments
Once the game started, the coaching staff would iterate from the gameplan according events on the field. In fact, for all the rigid processes that the Redskins had, Joe Gibbs was famous above all other coaches for making successful game-time adjustments.
Here is the big disconnect with startups: many entrepreneurs think planning is a waste of time because, once you hit the market, the plans will be wrong and you will need to change anyway. This is incomplete. You will have to iterate, of course, but planning precedes successful iteration – processes facilitate efficient iteration.
It was precisely Gibbs’s meticulous preparation, planning and practice that allowed for successful iteration during the game. (“Plans are useless, planning is indispensible.”)
Posted: August 13th, 2013 | Author: Ted Rogers | Filed under: Entrepreneurship | 2 Comments »
When I think of the hours that entrepreneurs put into presenting the perfect pitch, the perfect powerpoint, to VCs, I’m reminded of this passage by Robert McKee in his famous book, Story.
In his job as a Hollywood script reviewer, McKee needed to find great stories, not perfect presentations. In this sarcastic passage, he mocks the obsession with perfect formatting:
“Great story! Grabbed me on page one and held me in its embrace. The first act builds to a sudden climax that spins off into a superb weave of plot and subplot. Sublime revelations of deep character. Amazing insight into this society. Made me laugh, made me cry. Drove to an Act Two climax so moving that I thought the story was over.
And yet, out of the ashes of the second act, this writer created a third act of such power, such beauty, such magnificence I’m writing this report from the floor.
However, this script is a 270-page grammatical nightmare with every fifth word misspelled. Dialogue’s so tangled Olivier couldn’t get his tongue around it. Descriptions are stuffed with camera directions, subtextural explanations, and philosophical commentary. It’s not even typed in the proper format. Obviously not a professional writer. PASS ON IT.
If I’d written this report, I’d have lost my job.”
Similarly, if I or someone that works with me passes on a great business because the powerpoint isn’t good, we should lose our job.
The best PowerPoint is a live product but, short of that, entrepreneurs must communicate two simple pieces of information: why this product and why you?
Product: why does the market NEED this product?
You: why are you/your co-founders the right team?
Deeper and longer analysis follows but everything begins, and ends, with those two questions.
In terms of formatting, refer to Guy Kawasaki’s 10/20/30 Rule of Powerpoint.
Posted: August 9th, 2013 | Author: Ted Rogers | Filed under: Brazilian Venture Capital, Entrepreneurship | 3 Comments »
The Next Web recently published an important article by angel investor Juan Pablo Cappello.
Juan convincingly states what many have learned the hard way: Brazil is not Silicon Valley, its startups should not emulate Silicon Valley and we should not look to foreign investors for validation of businesses. Instead, focus on real problems in Brazil and building solutions to those problems.
(Daniel Isenberg, a professor at Babson College, made similar comments in the most recent Exame.)
My own two cents:
- Cloning businesses from foreign markets can work if those businesses address a real pain point in Brazil BUT…
- There are so many unique obstacles in executing a business in Brazil that it changes the entire analysis of whether a cloned idea is a good one. Most people only see the good idea and not the true obstacles to execution in the Brazilian market.
- Good ideas are always cloned by more than one company and therefore have multiple competitors from day one. There is no lead time for a cloned business. This reduces the chances of success.
- At some point, the goal of many startups (in the US and Brazil) switched from building a successful business to successfully raising capital.
- This is backwards: raising capital is a means to an end (building a great business), not an end in itself.
- Accelerators are hugely important and hugely helpful to the startup ecosystem but they are partially to blame for this switch: an incredible amount of time in acceleration programs is spent on how to pitch VCs; in some programs, the pitch, not the business itself, is THE focus.
- Pitching is important but it is a “sugar high”. Even with the best pitches, the sugar high – the excitement – wears off quickly and the reality of the business becomes obvious. If the business is weak you have wasted your (and the VC’s) time.
- As ever, focus on solving a painful problem for which people will pay for a solution. The bigger the problem and the more money people will pay for the solution, the better the business.
Posted: April 18th, 2012 | Author: Ted Rogers | Filed under: Entrepreneurship, Random Posts | 1 Comment »
I have long felt skeptical about business books, especially quasi-self-help books that state common sense with an air of discovery.
Typically, even in the best business books, the 80/20 rule applies: 80% is either recycled truisms or common sense, 20% (or less) is new or interesting.
Soft science, e.g., lack of quantitative analysis often damns these books to mediocrity.
In my opinion, one notable exception is Jim Collins. Someone recently gave me a copy of his most recent book, Great by Choice, and it is valuable. Collins and co-author Morten Hanson base all of their writings on rigorous quantitative analysis. Not all of their writings apply to startups but all of their findings are valuable.
Below is an outline of the book that I made for an internal presentation.
Great by Choice
Collins and Hanson studied a group of companies that provided shareholder returns at least 10X greater than their industry peers over a long period
Leader of 10X companies (“10Xers”) share a set of behavioral traits—fanatic discipline, empirical creativity, and productive paranoia—all held together by a central motivating force, Level 5 Ambition
10Xers start with Values, Purpose, Long-term goals and Severe Performance Standards and apply Fanatic Discipline to adhere to them. All of their actions are consistent with those Values, Long-term goals, Performance standards. 10Xers are relentless, monomaniacal
In confused environments, 10Xers do not look to other people but to empirical evidence to drive their decisions
They use empirical evidence to create boundaries, within which they take bold risk
Empiricism as the foundation for decisive action
10Xers practice hyper-vigilance even in good conditions
They believe that events/markets will inevitably turn against them and they prepare for that time
Level 5 Ambition
10Xers channel their ego into something larger and more enduring than themselves
Their ambition is for the cause, not for themselves
The 20-mile March is a set of concrete, clear, intelligent and rigorously pursued performance mechanisms that keep the company on track
One set of metrics creates a floor, a lower bound of performance not to go below and another set of metrics create a ceiling, an upper bound not to go above
If they miss the 20-Mile March metrics, 10Xers are obsessed with getting on track, no excuses
Consistently achieving the goals of the 20-Mile March builds confidence in the organization
External environment is impossible to predict and out of their control; the 20-Mile March gives the company an internal locus of control
Fire Bullets, then Cannonballs:
It is not necessary to be more innovative than your peers
Only 9% of pioneers end as final winners in their market
You must be innovative above a certain threshold but beyond that it doesn’t necessarily help
Fire bullets, then cannonballs
Fire bullets to figure out what will work
Once you have empirical evidence based on the bullets, you concentrate your resources and fire a cannonball
[Note: the Lean Startup method follows this system]
Example: The iPod was a bullet, derived from some empirical evidence, that led to more empirical evidence; then they fired a cannonball: iTunes and iPod for non-Mac computers
What makes a Bullet:
Low risk – minimal consequences if the bullet goes awry or hits nothing
Low distraction for the overall enterprise (okay to be a high distraction for an individual)
10xers have a much higher rate of calibration before firing Cannonballs (69% vs. 22% for peer group) – example of using empirical evidence to drive decisions and contain risk
Calibrated cannonballs have a 4x higher success rate than uncalibrated (88% to 23%)
There is a danger to achieving a hit with an uncalibrated cannonball: good outcomes from bad process reinforce bad process
10xers make mistakes but learn and return to empiricism; only fire another cannonball with empirical validation
“In the face of instability, uncertainty and rapid change, relying upon pure analysis will likely not work, and just might get you killed. Analytical skills matter, but empirical validation matters much more.”
“That is the underlying principal: empirical validation.”
(Note: Lean Startup Method again…)
You don’t need to be the one to fire all the bullets, you can learn from the empirical evidence of others.
“More important than being first or most creative is figuring out what works in practice, doing it better than anyone else, and then making the most of it with a 20-Mile March.”
Questions to ask before firing a cannonball:
How can we bullet our way to understanding
How can we fire a bullet on this matter
What bullets have others fired
What does this bullet teach us
Do we need to fire another bullet
Do we have enough empirical evidence to fire a cannonball
10xers fire a significant number of bullets that don’t hit anything; they didn’t know ahead of time which bullets would be successful
Failure to fire cannonballs, once calibrated, leads to mediocre results. The idea is not to choose between bullets or cannonballs but to fire bullets first, then fire cannonballs.
Leading above the Death Line:
Productive paranoia 1: 10Xers build cash reserves and buffers before disasters happen
Productive paranoia 2: contain risk; 10Xers took less of these three risks:
- Death Line risk – failure would result in the death of the enterprise
- Asymmetric risk – the downside of failure is greater than the upside if successful
- Uncontrollable risk – risk completely out of the company’s control
10Xers also manage time-based risk – if risk is growing with time they act
“Sometimes acting too slow increases risk.”
if the risk profile is changing rapidly, then the speed of decision-making must increase.
Zoom out, then Zoom in:
10Xers remain obsessively focused on their objectives and hypervigilant about changes in their environment; they push for perfect execution and adjust to changing conditions
Sense a change in conditions
Assess time frame: how much time before risk profile changes
Assess with rigor: do the new conditions call for disrupting plans? If so, how?
Zoom back In:
Focus on Execution of plans and objectives
Not all time in Life is Equal
Some moments matter more than others
SMaC – Specific, Methodical and Consistent metrics
“We’ve found in all of our research studies that the signature of mediocrity is not an unwillingness to change; the signature of mediocrity is chronic inconsistency.”
Return on Luck:
“Resilience, not luck, is the signature of greatness.”
Who Luck – one of the most important types of luck is finding the right people then building a mutual risk your life relationship with them
10Xer behaviors - fanatic discipline, empirical creativity and productive paranoia; Level 5 ambition, never relax when blessed with good luck
20 Mile March
Fire Bullets, then Cannonballs
Return on Luck – 10Xers don’t cause their luck, they increase the chance of stumbling on something that works by firing lots of bullets, then using empirical validation before firing cannonballs
Leading Above the Death Line - They manage three types of risk to shrink the odds of catastrophe
Zoom Out, then Zoom In
Posted: March 10th, 2012 | Author: Ted Rogers | Filed under: Brazilian Venture Capital, Entrepreneurship | No Comments »
I just got back from a couple of weeks in NY and Silicon Valley. The NY startup ecosystem is booming and Silicon Valley is, well, Silicon Valley – cutting edge, best of class and incessantly innovative.
Several Brazilian entrepreneurs were visiting at the same time and we had some conversations about whether Brazilian startups need to connect with SV or NY.
My thinking has evolved on this issue: several years ago I watched two executive teams from promising Brazilian startups take weeks away from their companies to hang out in Silicon Valley. It had no impact other than to hurt their companies. Maybe they met some people and increased their network but, so what? Their companies lost ground in Brazil and missed a window of opportunity.
Running a startup takes obsessive focus and jaunts to SV or NY can be a distraction. On the other hand, an understanding of trends in the Valley and NY can serve as a competitive advantage for startups in Brazil.
Here are some rough guidelines:
1. For a startup whose partners and customers are in Brazil: monitor developments in SV/NY online and by, maybe, going to one conference a year. But focus, focus, focus on your core market in Brazil. That will determine your future.
2. For a startup that has important partners, e.g., technology providers, in the US but whose customers are in Brazil: take more frequent visits, perhaps quarterly, network with companies/people in the industry and perhaps attend an extra conference. The primary focus, of course, should remain on your customers in Brazil.
3. For startups dependent on customers in the US: you probably need a physical presence in the US, either a satellite office or even your headquarters. I don’t mean a situation where your core customers are in Brazil and you hope to, someday, penetrate the US market. There are many companies like this and my advice is to stay in Brazil and focus. If your future depends primarily on US customers, however, then your company should probably be there. This is especially true for B2B companies as opposed to B2C.
This last point (#3) is tricky: in the first place, why are you building a business in Brazil that serves the US market? Brazil is a large and growing market, one that you know better than the US, so why are you building a business that serves US customers? What is your advantage in the US? You should have good answers to these questions before attacking the US market, much less moving there.
In reality, however, there are no clear rules on this subject. It depends on the specific situation of a given company (and, of course, Visa issues). For example, one of our portfolio companies is a games company that generates over 90% of its revenue from American users, yet they have no need to locate there. Another of our portfolio companies serves game studios all over the world; sooner or later, this company probably needs a presence in San Francisco in order to fulfill their potential.
If you have questions about your specific situation, contact me and I will try to offer feedback.
Posted: January 25th, 2012 | Author: Ted Rogers | Filed under: Entrepreneurship | 1 Comment »
Back in the early ‘90s, I had a brief and inglorious career with the Washington Redskins of the National Football League. It officially lasted only two and half years but it was a formative experience and I learned a lot in a short time.
I have found that much of what I learned in sports applies to business. For example, what I learned about the characteristics of successful athletes also applies to entrepreneurs.
Innate talent matters in both cases but less than you think — the most physically gifted athletes are often not the best players. I believe talent comprises about 1/3 of what it takes to succeed in sports or entrepreneurship. Talent derives from genetics and no player or entrepreneur has control over it.
Another 1/3 of success comes rigorous training – physical conditioning, skill development, study of the game and other things that the individual can control. The player or entrepreneur must maximize his potential in this 1/3 in order to have a chance of success.
The last 1/3 of a successful athlete or entrepreneur comes from… I don’t know. No one does. It has to do with energy, belief, destiny, love for their profession… (That last one really matters – how many people don’t love their job but still make it to the top 1%? Not many.)
I can't define this final 1/3 but it often manifests itself in two traits: inner focus and urgency.
By inner focus, I mean that all of the person’s being is directed toward the goal. Even when he is not visibly working toward it, his being is pointed toward the goal. He does nothing contrary to it. All the elements of his life fit into the pursuit the goal (not the other way around).
In that sense, pursuit of athletic or entrepreneurial success may seem to be a selfish endeavor. It doesn’t have to be, but one must surround themselves with people that support the goal and understand the sacrifice needed to achieve it.
Less obvious than inner focus, great athletes and entrepreneurs posses urgency. I don’t mean hurry or imbalance, just urgency. They live a half-step ahead of the world. They anticipate what must be done and do it. Proactively. They don’t wait, they don’t procrastinate.
Sports has a tempo, a momentum. So does entrepreneurship. An entrepreneur’s urgency pushes the tempo and maintains forward momentum in his business.
One can sense whether an entrepreneur has urgency. For example, they ask for help but don’t wait for it. They move forward irresistibly, believing the world with eventually follow. (It often does, proving the old saying, "Move and the world moves with you.")
Of course, inner focus and urgency are necessary but not sufficient traits: you also need the first 2/3 of the equation — talent and training — but inner focus and urgency are unique traits exhibited by almost all high-achieving athletes and entrepreneurs.
Posted: October 31st, 2011 | Author: Ted Rogers | Filed under: Entrepreneurship | No Comments »
I have often counseled entrepreneurs to focus more. I have never counseled them to focus less.
Like so many things in venture capital, however, “focus” is easy to see but difficult to define. How does one distinguish between an entrepreneur that is expanding intelligently and an entrepreneur that is losing focus?
Mostly, I think it is a function of timing and relevance.
Regarding timing: at the beginning, keep your goals simple and singular. Prove and stabilize one business model in one vertical before expanding into another vertical.
Then, consider relevance. Is the new vertical truly relevant to the core business? Ask yourself, how well do you know the new vertical? Are you a member of the ecosystem? Do you personally experience a pain point in that vertical that you can address? If yes, it’s relevant. If not, you are losing focus.
As an example, take one of our portfolio companies in the games space. They started as a developer of mobile games; for a year or two, they focused on churning out games. Over time, their games became more sophisticated and more successful and, eventually, they produced several massive hits on iOS and Android.
The company needed to use mobile ads to fully monetize their user base and they soon became experts in the mobile ad space, which led to a realization that a huge opportunity existed in mobile ads, especially connected to mobile games. They decided to dedicate resources to developing a mobile games ad platform.
So, a young company with limited resources pursued two lines of business simultaneously. Is there a focus problem? No.
There was/is no focus problem for two reasons: first, because the company won the market as a games developer first, before expanding into developing an ad platform. Second, the ad platform addressed need in a relevant market that the company understood extremely well.
Had the company STARTED by pursuing on two lines of business, there would have been a focus problem. They would have chased two rabbits at once and lost both of them. Instead, they caught the first rabbit (successful games development) then turned to the second (mobile ad platform).
In sum, stay extremely focused in the beginning, then expand into new verticals only if they are highly relevant to your core business.
Posted: April 16th, 2011 | Author: Ted Rogers | Filed under: Entrepreneurship, posts | No Comments »
The average VC firm probably makes an investment in 1 out of 400 deals they see, maybe less. That means 399 entrepreneurs get turned away for every one that receives a wire into their account. Many of those 399 entrepreneurs bring deals that fit exactly into the parameters listed by VCs on their websites and blogs – so why are they turned away?
In reality, a good VC deal is difficult if not impossible to pre-define. I can give all the fancy descriptions I want: “an effective entrepreneur addressing a real pain point in a huge potential market with a capital efficient business model” blah, blah, blah.
The truth is, I define a good VC investment like Justice Stewart defined obscenity: I know it when I see it. I also know when I don’t see it.
So, rather than trying to define a good VC investment, I will describe what I see, and what I don’t see, when presented with a good investment. Today I’ll address the entrepreneur/team, in the next post I'll address the business itself.
Characteristics of an Investible Team
In a good VC deal, I sense “inevitability” in the entrepreneur. Whether or not I invest, whether or not anyone invests, this guy will find a way to succeed. He is moving and the world will move with him.
This inevitability manifests itself in energy and confidence. The energy derives from the huge opportunity he has discovered, the confidence from the planning he has done.
Inevitability shares many of the same molecules as arrogance but is a completely different compound.
An “inevitable” entrepreneur believes in his vision but will do whatever it takes to win, even if it means admitting wrongs and changing course. He prioritizes success over being right.
On the other hand, an arrogant person doesn’t learn well – the person is afraid to be wrong and takes criticism as personal. He will ignore good advice and make the wrong decisions at critical times.
As an aside, it’s ok to be a jerk – not preferable, not necessary, but ok – a lot of successful businesspeople are jerks. But arrogance means being a jerk without a corresponding level of competence. That’s unacceptable.
The team has synergy, of course, but not necessarily “resume synergy”: this guy has a programming background, that guy has business development, etc.. It has chemistry: a healthy, competent group dynamic. Each person is an expert in their role; each has respect for the others; none has the desire to encroach on the others’ roles.
This doesn’t mean they like each other, it means they believe in each other.
On the other hand, it’s important that they not dislike each other.
Dislike among founders, at the early stage, bodes ill. It’s ok that Lennon and McCartney hated each other after the White Album but, if they had felt that way in 1963, there never would have been a White Album, probably not even A Hard’s Day Night.
If, when one guy is talking, the others are sighing, shifting in their seats and looking away, if one is subtly apologizing for another’s comments when it’s their turn to talk, I get very worried.
I heard about a study that attempted to define what characteristics make up successful sports stars.
The study came to the conclusion that the most successful athletes share three traits: first, athletic genes, second, effective training and third… no one knows. The third trait of the athletic star – character, will, personality, whatever – is indefinable. But it is what separates Ronaldo from a talented soccer player that can run the 100 meters in 9.8 seconds, gets the best training and still falls short.
Having had a brief and inglorious career in professional football, with a team that won the Super Bowl, I promise you that the difference between those who make the team and those who don’t is not athletic ability and it's not training: everyone has that. The people on the team have that third, indefinable trait and so does the team as a whole.
The same applies to great entrepreneurs and their teams.
Posted: January 5th, 2011 | Author: Ted Rogers | Filed under: Brazilian Venture Capital, Entrepreneurship, posts, US Venture Capital | 4 Comments »
Interesting item from Venture Beat (I was on vacation and would have missed it had Michael Nicklas
not tweeted it):
Emerging markets drive tech adoption — The days are long gone when users in emerging countries embraced older technology. With growing middle classes in Brazil, Russia, India, and China — and plenty of wealth in other regions has well — the demand for tech goods will continue to expand. That trend has been driving sales in tech for some time — 80 percent of Intel’s sales are overseas now. But it will also happen with web services such as social network games. [emphasis added] Accel and Tiger Management’s recent $30 million investment in Vostu shows that the Brazilian social game market has a lot of potential. Success in an emerging market can generate the growth that a startup needs to get to critical mass.[emphasis added]
Two points jump out at me. First, just as the microprocessor business bloomed in the US then matured into a truly global market, so will many web services businesses (see, e.g., Facebook). It’s not an overly complex point but it’s an important one and Intel provides a nice analogy.
The second idea, that success in an emerging market can get a startup to critical mass, is more complex. Of course, growth in an emerging market can help a startup get to critical mass, but at what cost? Specifically, should a startup really think “globally” or focus on winning local markets?
Generally, I believe that a startup should focus on local markets, then expand internationally only if strategically compelled and only after reaching critical mass. Going beyond local markets requires resources that most startups don’t have – as a young company, “if you chase two rabbits, you will lose both”.
On the other hand, that applies less to web services companies and, as the Brazil and the US converge, even less to web services companies that want to address those two markets. In fact, for reasons that I’ll address in later posts, I believe that bridging the Brazilian and US markets provides huge opportunities for entrepreneurs and investors, as long as they have sufficient agility and deep knowledge of both markets.
Final caveat: some non-web services startups can/should break the “local markets first” rule but they are rare and require an inordinate amount of investment capital. I see them mostly in the cleantech area – Amyris
is an example.
Posted: February 26th, 2010 | Author: Ted Rogers | Filed under: Brazilian Venture Capital, Entrepreneurship, posts | 1 Comment »
My friend Tiago Sommacal
wrote a great comment on my last post
, in which he asserted that Brazil may not have the technological innovation to support a wave of startup success similar to that in the US from 1994-1999. As I sat down to write a reply, I decided the importance of the issues merited a full blog post.
It's probably a topic many people have opinions on, so feel free to weigh in.
….I would add that you did not directly address Brazil's technological position. Your expectation that huge wins will take place isn't explicitly related to any specific vertical/industry. However, the dot-com bubble was strongly related to a new industry (Internet) formed by ventures bringing technologically groundbreaking products which basically shaped a whole new market [think about AOL's or Amazon's services]. These products' newness largely justify why their usage quickly took off. One can argue that Brazilian startups or entrepreneurs (including geeks) are far behind their American counterparts when it comes to the technological edge of their solutions, especially when we consider that Brazilian online ventures already compete with many US-based players [e.g., Google, myspace or PayPal] – that is, from a certain standpoint, the Internet, here, is a world-class industry.
I would definitely like to know your thoughts on Brazilian startups' technological edge in 2010 against their American counterparts in 1994 when you get a chance.
The premise of your question is that, in order to have the huge wins that I predict, Brazil must have a technological edge or at least technological innovation. I don't think this is correct. It's true that the American boom that happened in 1994 was enabled by a technological innovation (Arpanet, which became the Internet) but the innovations that occurred with, e.g., AOL and Amazon, were business innovations, not technology ones. In fact, only one of the companies you listed, Google, succeeded because of technology innovation (search algorithms): AOL, Amazon, MySpace and PayPal (and EBay, YouTube, etc.) did not.
There were certainly many technology-based companies that did succeed back then but there were even more companies that were nothing more than imitators or aggregators (auction sites, email services, shopping aggregators, etc.). Many of these grew and were acquired at huge returns for entrepreneurs and investors.
In sum, the technology that is required for a boom is present in Brazil: broadband and great software development. What will spark the boom going forward is the confluence of other factors, including but not limited to demographics (emerging middle class, consumers), the economic environment (lower interest rates, fiscal stability) and culture (entrepreneurship, high wireless and internet usage).
Regarding US-based competitors, in the broad universe of web-based businesses only a small percentage of US companies have penetrated the Brazilian market in a meaningful way – plenty of space remains open, for now, for Brazilian companies.