This article is adapted from our AQ Top 5 feature on young Latin American entrepreneurs. To see the rest of our list, click here.
If you could pick a time and a place to start a business, Argentina in 2009 probably wouldn’t top your list.
The global economic crisis was raging. Argentina was still immersed in its financial “outlaw” phase, the result of the government’s 2001 default and ensuing fight with creditors. Add that up, and there was virtually no access to credit for a young entrepreneur like Maximo Cavazzani, who was just 23 and struggling to build an app-making business out of a small space in his father’s textile factory in Buenos Aires.
In retrospect, it was “the best reality possible,” Cavazzani says. The lack of financing forced discipline upon his company, Etermax, from day one. The model by which startups burn through cash in the hope of one day turning a profit was never an option. This made Etermax lean, efficient and conservative. Meanwhile, the crisis had a silver lining: Argentine software engineers cost in dollar terms only about half what they do today, he said.
“This country is a great filter for entrepreneurs,” Cavazzani told AQ in his Buenos Aires office. “In Silicon Valley, some people get an idea, on Day Two they (create) the company, and on Day Three they’ve got a million dollars to start it up. Here, we had to generate enough cash to meet payroll from the start. That teaches you very fast what’s important.
“And, well, it was the only reality I ever had, right? This was the only Argentina I knew. There was no other option.”
That initial adversity forged Etermax — the creator of apps including Trivia Crack, which for a long stretch in 2014 and 2015 was the world’s most-downloaded free app on the Apple Store, and is now available in more than 15 languages. The company has since expanded to more than 250 employees, and in 2016 Mattel Games chose Etermax to develop its new app for the classic game Pictionary. Growth has been so fast that Cavazzani’s father is now moving his business out of the old factory — so Etermax can have the premises to itself.
Cavazzani’s story is proof that crisis-ridden countries, rather than being a barrier to entrepreneurship, are often a great laboratory. In Latin America, of the six “unicorn” tech start-ups — those worth $1 billion or more — four of them were founded by Argentines.
This can also be traced to the high education levels that have long made Buenos Aires a staging ground for tech companies. What set Trivia Crack apart was not so much its design or coding, but the content — trivia questions that were equal parts funny and obscure, and hooked gamers right away. Cavazzani also understood that good content requires people to interact and exchange ideas — so instead of the classic Silicon Valley mix of long hours and working from home, he implemented a relatively tame 9 a.m. to 6:30 schedule, but requires everyone to be present in the office.
Going forward, he would like to see Argentines more fully embrace their entrepreneurial nature. Most kids grow up wanting to be Lionel Messi — but Cavazanni gently pointed out that in Argentina as elsewhere, high-end entrepreneurs make more money than high-end soccer players. There’s a good reason most Argentines aren’t aware of that, Cavazzani said. “The 10 Argentine billionaires who are on Forbes’ list, nobody knows their faces. They’re not on television. They don’t give advice. They’re extremely hidden.”
This is partly because of security risks, and partly because media scrutiny of successful business leaders in Argentina can often be destructive. Cavazzani admits that for him, too, “it’s easier to be in the shadows.” But he says he has tried to take a higher profile — by attending conferences, talking to media and participating in groups like Endeavor, an organization that gathers and mentors high-impact entrepreneurs,
An even richer ecosystem for entrepreneurship would help create more jobs and lead Argentina out of its economic woes. Maybe that way, a future Maximo Cavazzani won’t have to deal with such adversity when he or she starts his company, he said. “That’s the way out, so we don’t have crises in the future.”