MercadoLibre’s Marcos Galperín on Latin America’s ecommerce boom
Marcos Galperín is not a vindictive man. Even so, the dotcom entrepreneur is clearly tickled. MercadoLibre, Latin America’s answer to eBay, which he founded in 1999 after losing his job at Argentina’s state energy company, YPF, has overtaken his former employer to become that country’s largest company by market capitalisation
“Everything I did was useless,” he jokes of his job fresh out of university designing complex corporate finance deals for YPF, until it was taken over in 1999 by Spain’s Repsol. Its access to far cheaper credit rendered such transactions obsolete.
Thanks in part to the financial skills he honed at YPF, Mr Galperín’s Buenos Aires-based shopping site was one of the region’s few tech start-ups to survive the end of the dotcom bubble in 2000.
Now worth $11.6bn by market cap — almost double its value two years ago — MercadoLibre has become a household name across Latin America, and its undisputed ecommerce leader.
In June, the company entered Nasdaq’s top 100 companies, replacing Yahoo. “It’s symbolic,” says the 46-year-old, who this year appeared on the Forbes rich list for the first time with a fortune of $1.3bn.
When he founded the company from the garage of his family’s leather business, Yahoo was then the equivalent of today’s Google and Facebook combined, he recalls. “It’s a reminder of how important it is to keep innovating and taking risks. Nobody’s place on that list is guaranteed,” he cautions, with an air of humility.
In fairness, Mr Galperín is hardly sitting back. MercadoLibre — meaning “free market” — makes its money by listing and transaction fees, online advertising and commissions from its own payment system. This year the company expects to match around 50m different buyers and sellers of anything from computers to cars. That figure is up from 38m last year.
Mr Galperín is now moving into the banking sector — about half of the region’s 650m population do not have bank accounts. “We have democratised commerce, now we want to democratise money,” he says, humility dissipating.
Nevertheless, he balks at the suggestion that he is setting out to “disrupt” the banks. “No, no, no,” he protests. “We are not competing with the banks, but targeting the 50 per cent [of people] who have no account, or whose needs are not being met.”
Mr Galperín argues that MercadoLibre is uniquely positioned to do this, enabling its customers to borrow money with two clicks before it arrives in their digital wallet.
The company has a wealth of data about its users, from their reputation among other buyers and sellers to how long it takes them to pay, so that artificial intelligence can be used for credit analysis and preventing fraud.
Argentina itself offers a set of very particular opportunities. Mr Galperín notes, for example, that the country is tucked between Uganda and Tanzania in the global ranking of credit as a proportion of gross domestic product. So even if MercadoLibre lends $5bn over the next decade — in less than a year it has made loans worth about $100m to small businesses using its sales platform — it would continue to be “irrelevant” in the credit market in Latin America.
“What could happen, though, is that this leads banks and other financial institutions to do things that they were not doing, and to lend to people they were not lending to,” says Mr Galperín.
Even if MercadoLibre is not setting out to disrupt, it is facing competition from other disrupters. On the day in October when Amazon announced that it was expanding its presence in Brazil, MercadoLibre’s share price fell by more than 10 per cent (it has since recovered). Mr Galperín puts on a brave face: “For the last 18 years, our only constant has been competition.”
In any case, there is room for both companies, he argues, pointing to year-on-year growth of around 50 per cent: “We have never grown as fast as we are growing now.” He believes there is room for ecommerce to expand. He says that in Mexico MercadoLibre is enjoying triple-digit growth, thanks to new company incentives such as free shipping, loyalty programmes and free returns.
“The secular trends are so in favour of ecommerce and e-payments that growth depends on new initiatives,” he says. But it is his home country, Argentina, that gets him most fired up. So much so, that critics accuse him of becoming a cheerleader for President Mauricio Macri, who is deepening his pro-market economic reform agenda after a solid win in midterm elections last month.
“I am definitely a big fan of what is happening in Argentina,” says Mr Galperín, who stirred up a storm on Twitter recently after arguing that the government needed ambitious labour market reforms to compete globally. “I’m very optimistic about what this government is doing, which is everything that we expected, and more. Argentina is going through a historic moment.
“Many people in this country right now are willing to support change, and I am definitely a part of that.”
It is not just talk. Last year, Mr Galperín moved back to Argentina after 14 years living across the River Plate in Montevideo, the capital of Uruguay, which meant an international commute twice a week (by private jet). He originally moved there after Argentina’s economic collapse in 2001, but delayed his return over more recent concerns that his country was heading the same way as crisis-ridden Venezuela.
Now he is optimistic enough to say that if, as expected, a new capital markets law is passed by congress, he is considering an initial public offering on the local stock market. “We are definitely not doing it for more liquidity,” he says, pointing out that, each day in the US, MercadoLibre trades three to four times more than the entire Buenos Aires bourse.