Silicon Valley’s startup scene has its wealth of office parks; New York, its converted lofts. Sao Paulo? Startups here get a mansion.
“We call it the startup mansion,” says Daniel Hatkoff, the man who gave life to the idea. The Mansão Startup–as it’s called in Portuguese–is a sprawling, 6,000-square-foot affair, housing 110 employees of nine companies a block from the busy street where Google has its local Brazil office. The building itself shows remnants of its past, both as a nightclub–high ceilings and 150 working speakers–and as a clothing store, with its dark wood finishing.
Of course, the mansion has the standard furniture of a co-working space, including open offices, crowded tables, and a barbecue. It also had the required cliche: a ping pong table in the middle. “There’s a lot of things that happen on that ping pong table,” says Hatkoff.
The converted mansion is, perhaps, a fitting metaphor for the burgeoning startup scene of Brazil. The impetus behind Hatkoff’s startup came from what he saw when he first visited as an emissary of private equity firm Warburg Pincus: a country that was geared too much to serving those in mansions.
“What happened in Brazil is you had really rich people, really poor people, and no middle class,” says Hatkoff. As the fledgling middle class has grown in recent years, he saw that businesses weren’t serving them correctly. For example, he says, instead of banks offering useful middle-class products like life insurance, they adapted wealth management products designed for the wealthy. “They started offering the same products they’d offered for rich people, and make the numbers a little bit smaller,” he says. (A similar story gave rise to Hatkoff’s own company, Pitzi, if you substitute phone insurance for life insurance.)
But creating a company in Brazil has its own peculiar challenges. Some are standard, such as high taxes, high business costs, and inefficient payment systems. Other challenges, are more uniquely Brazilian. For example, the cost for Hatkoff to ship to the city of Salvador is four times as high as to the similarly distant state of Sergipe. Why? Because trucks get stolen.
“Sometimes you have to deliver into high-risk areas, which are like slums where you’ll need a police escort,” says Hatkoff. “That can add to costs.”
Brazil’s promise may lie in its middle class, but it still has its slums and its mansions.