There tend to be two types of emerging market tech success stories that get ink, venture capital and revenues from the U.S. The first is the so-called “copycat,” most prevalent amid Chinese Internet companies. (I say “so-called” because I think it actually takes quite a bit of innovation to localize an idea successfully, plus most Valley Web sites are just rip-offs of one another.) The other type are the IT outsourcing firms that multinationals hire to handle anything from annoyingly menial to overly-complex techy projects. These companies built much of India’s tech sector.
I found an example of each last week in Argentina. Earlier this week, I wrote about MercadoLibre—one of the only Nasdaq traded companies to come out of Latin America and clearly a company that took the copycat route. Conveniently just upstairs from MercadoLibre is Globant, an Argentine company taking the outsourcing route.
Globant has cobbled together a $50 million a year (and growing) business that’s something like a mix between edgy-but-small Ideo and big-and-boring Infosys. It’s hard to get excited about an IT outsourcing firm. My question is always: If you know so much that you can advise everyone on their businesses, why don’t you actually make something yourself?
And for the local economy, tech services companies are a great way to create a lot of high-paying jobs quickly, but long term it doesn’t necessarily build a startup ecosystem that knows how to build product companies—a gripe I heard repeatedly while I was in Bangalore last month.
And, personally, when I look at the world’s fast growing economies and burgeoning populations, I get a lot more excited about entrepreneurs that are taking advantage of those untapped domestic markets in ways US companies can’t. 95% of Globant’s revenues come from the UK and the US, so their chief local advantage boils down to labor cost, which many companies doing business in India’s services sector have learned isn’t a sustainable edge.
But, despite all that, Globant is worth watching for six reasons.
1. A quick sale isn’t the goal. Co-founder Guibert Englebienne (pictured above) boldly says the plan is to go public on Nasdaq in two years. For those keeping score, that would make two for Argentina after MercardoLibre.
2. Globant is building an actual business to back that bravado up. I mentioned the $50 million in annual revenues. Globant also has 1500 employees and is the fastest growing company in Argentina. It has ten development centers throughout the country—some in the poorest areas. It also has offices in London, Boston, New York and Palo Alto. Globant has also acquired two smaller companies and aims to do more.
3. It’s an IT company people really aspire to work at in Argentina. Globant gets 1,600 resumes a month and is co-creating some local university classes to create a skilled enough workforce to support its growth. It’s invested heavily—almost obnoxiously—in creating a cool “Google-like” place to work complete with massage rooms, yoga rooms, game rooms and a hair salon. Its conference rooms are named after iconic hipster cartoons like Tom & Jerry, the Thundercats and Spanish names I didn’t recognize. Occasionally you have to hack something just to apply for a job at Globant.
A class of people who can code for multinationals may not breed a next generation of product-company entrepreneurs, but it does groom many of the would-be employees for those companies. Put another way—Silicon Valley isn’t just built on the Evan Williams and Mark Zuckerbergs of the world. It also relies on the highly skilled employees they hire.
4. Globant does work for non-tech big brands like Nike, but also big tech companies like Google and EA. Indeed 60% of its revenues come from Silicon Valley. Why do these very heavily-staffed, deep-pocketed tech companies need a (comparatively) tiny Argentine outsourcing firm? I’m not exactly sure. But for the employees of that firm, they’re building connections with some of the most powerful tech multinationals they wouldn’t be able to build otherwise.
5. Globant has raised $24 million from US investors Riverwood Capital and FT Ventures. I’m not saying you have raise US money to be a promising startup, indeed most of the ones I cover around the world haven’t. But with few VCs investing in Latin America, it’s impressive that Globant has grabbed such attention.
6. The four founders came up with the idea in a bar. At TechCrunch we are firm believers that some of the best things happen in bars.