Brazil entrepreneurs thrive on the web

The internet is transforming people’s lives in many different ways around the world – but is it making us individually richer and, if so, how?

Brazil is a country with a foot in two camps – part rich, mainly poor, so it’s a good place to take the financial pulse of a global phenomenon like the internet.

Brazilians love the web. Not everyone has access, but those who do spend an average of 70 hours a month online, which is more than anywhere else in the world.

Less than a third of Brazilians have a connected computer at home, so most people go online at internet cafes, known locally as Lan Houses.

There are more than 100,000 Lan Houses dotted around the country.

Winning combination

The country’s online revolution has created opportunities to establish small businesses that simply didn’t exist before.

Fabio Seixas is a 35-year-old “serial entrepreneur” whose three previous businesses went bust.

But he appears to have struck gold with an innovative way of selling designer T-shirts online, by getting his customers to do much of the work.

His website runs online competitions asking people to submit designs for T-shirts, which are then displayed on the site and people vote for the ones they like best.

He then manufactures the winning entries.

It means he only produces goods he is sure customers will like, and in internet-crazy Brazil his online design competitions have become very popular.

“With a local shop, you don’t have access to many people, but with the internet I can have customers all over this big country,” he says.

He created his company with $7,000 five years ago, and now his turnover is $1m a year.

He says that it is hard for entrepreneurs to raise money in Brazil.

“We don’t have access to venture capital and the banks are not lending money, but the internet allows us to start a business with low costs,” he says.

“You have to be innovative to attract attention. We’re doing well because people are talking about us.”

Massive growth

Fabio’s business is by no means an isolated case.

The popularity of the internet has created a platform for lots of internet businesses, many of them for online shopping.

“The growth of commerce in Brazil is not coming from the top 50 retailers, it comes from the other 10,000 retailers,” says Romero Rodrigues, founder of BuscaPe, Brazil’s first price comparison website.

He maintains that there is an ever-growing number of internet retailers, whose sales increase every year.

“Many of these companies began working from home, sometimes mom and pop businesses, and now they have 40 or 50 people working for them,” he says.

He dropped out of college to found BuscaPe 12 years ago at the age of just 21.

His site helps people find cheap deals on goods ranging from Television sets to perfume.

He started in Brazil, but now BuscaPe has expanded across Latin America and Mr Rodrigues recently sold a 90% stake in the company to a South African electronic media company for more than $300m.

But he denies that the deal made him a multi-millionaire, as the proceeds were shared with other investors who had put money into BuscaPe to finance its rapid expansion.

Social advantages

The internet is also helping people who don’t aspire to be entrepreneurs, in ways that open up income generating opportunities.

Paulo Ivan is unemployed and lives in a shelter in the country’s commercial capital Sao Paulo.

He uses the internet to find work by emailing his CV in response to online job advertisements.

He logs on at a city council-run internet cafe known as a Telecentro, where internet access is available free of charge.

“This is a huge city so it is easier to look on the web than go walking from one employment agency to another,” he explains.

“It saves a lot of time and I don’t always have enough money for the bus or the subway, sometimes not even enough to eat,” he adds.

The internet has given him hope and opened up new opportunities, even though it has not secured him a job recently.

“Unemployment is a serious problem here, people spend more time out of jobs than in them,” he explains.

Changing habits

The growth of the web has also transformed the way services are delivered in Brazil.

Millions of Brazilians do their banking online, buy tickets for the theatre and, most importantly perhaps, interact with government via the web.

Administrative tasks that used to take hours of queuing and hassle at government offices can now be done in minutes online.

The internet helps people get personally richer in myriad small ways that add up to something big, according to economist Diane Coyle, author of a book The Weightless Economy.

“The internet gives people access to much more information, which they can use to find a job or get better qualified,” she says.

“It also opens up new market opportunities” by making it easier, cheaper and quicker to buy and sell things.

The internet reduces what economists call “the transaction costs” of doing business.

It is in small ways like this, multiplied many times over, that the internet helps some people become a bit richer – and a few of them very wealthy indeed.