SaaS Interviews with CEOs, Startups, Founders
He Exited for $600m, Started with 40%, Now Building YC and AngelList for Latin America
12 Feb 2021
Chapter 1: What challenges did the guest face while building a business in Latin America?
Yeah, I think it's the first account of like an intimate reflection of the challenges of building a business in Latin America. And hopefully it inspires a lot more founders to build great companies. You are listening to Conversations with Nathan Latka. Now, if you're hearing this, it means you're not currently on our subscriber feed. To subscribe, go to getlatka.com.
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Or bootstrap founders like Vivek of QuestionPro. When I started the company, it was not cool to raise. Or Looker CEO Frank Behan before Google acquired his company for $2.6 billion. We want to see a real pervasive data culture, and then the rest flows behind that. If you'd like to subscribe, go to getlatka.com.
There, you'll find a private RSS feed that you can add to your favorite podcast listening tool, along with other subscriber-only content. Now look, I never want money to be the reason you can't listen to episodes. On the checkout page, you'll see an option to request free access. I grant 100% of those requests, no questions asked. Hello, everyone. My guest today is Brian Reckworth.
If you haven't heard him, you should know he's bootstrapped an online real estate startup in Latin America, eventually raised 74 million bucks and then merged with a competitor, sold the company for about 600 million bucks.
He's a top angel investor in Latin America with over 55 investments and focused on helping building the next great generation of iconic companies in the region with his business, Latitude.com. Brian, you ready to take us to the top? Hey, love to. Thank you. Thanks for having me. I want people to listen. So let's sort of build up your credibility here for a second.
You bootstrapped an online real estate startup in Latin America. What was that company name? Viva Real. Viva Royale. Was it a marketplace model? Yeah, it's similar to Zillow. Zillow for Brazil, if you will. Zillow Trulia. And yeah, no MLS in the US, no multiple listing service, so no central database. And so we consolidated and built the largest online real estate marketplace in Latin America.
And so how did the marketplace work? Did you just take a cut of this GMB going to the platform or what? We ended up, initially it was just a classifieds model. So we had advertisers, we had 7 million properties across Brazil and about 35,000 real estate companies that advertised. And then we also we ended up building a bunch of other businesses, software as a service business.
We acquired a few of those. So we became kind of a holding of a handful of different assets. But the primary business was the kind of classified marketplace business. And why couldn't you keep bootstrapping that? Why did you need to go on to raise capital or drive growth?
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Chapter 2: How did the guest bootstrap their online real estate startup?
That's not like... And I think that exact equal equity isn't always the best approach. It turned out that I actually put more money into the business. So I ended up with a little bit more equity. So I helped fund the initial... You know, early days, like my college roommate, I got him to write a check. We were college roommates. He started a business. I was going to join him.
And then I chased the girl in Columbia, you know, living in San Diego, met there. She likes to say she imported me to Columbia. That's where we started.
Chapter 3: What was the business model of Viva Real and how did it evolve?
And, you know, he ended up selling his business at 27. And so he was sitting around his pajamas at 10 in the morning trying to figure out what to do with his life. So he was our first check-in. I brought him in along with my uncle, my brother, and my dad. We all kind of financed the business in the early days. So I ended up with a little bit more equity.
So that kind of took care of, that's how it handled. Well, and it made it clear sort of how decisions were going to get made quickly, it sounds like. Yeah, yeah. I mean, in general, I don't think we really had any incidences where it was a big debate about what to do. We were always just kind of put a lot of trust in each other in terms of where the business needed to go.
But yeah, it worked out well. We have a great relationship. Yeah. No, I mean, if you took the risk early and you reaped the rewards, right? You had caught 30%, 40% of the business, maybe more, and you sold for $600 million cash. Why the hell are you on a podcast right now? Why aren't you on a jet somewhere?
First of all, I know you're trying to get the, get the exact amount of what, what the net proceeds were. I didn't own 30, 40% of the business. I wish I did. Um, but, uh, I forgot you guys raised a bunch, right? Yeah. We raised a lot of, we raised a lot of money and still though, even if you get, you know, 10%, 5%. Yeah. Yeah. Yeah. We'll let you use your imagination, but, um,
But yeah, it was a good transaction. I'm happy about it. Early investors made a lot of money. Why am I on a podcast? I'm out hustling a book, man. I got a book that's coming out, Viva the Entrepreneur. It's all about starting, scaling, and raising venture capital in Latin America, which is something that... I got my ass kicked early on and eventually kind of figured it out.
And so now I'm kind of passing on those lessons. I think that there's an incredible opportunity with over 700 million people in Latin America. Today, there was one of my good friends, David Velez, just announced that they raised $400 million at a $25 billion valuation for the world's... world's largest neobank, Nubank. That's fresh hot off the press this morning. Yep.
So there's a lot of activity in the region. I'm launching this book and then we have a little rolling fund that we're going to launch at Latitude to reinvest in those early stage entrepreneurs and help founders navigate the challenges of building a venture-backed business in the region. Okay, so there's a lot to unpack there. There's the book, The Rolling Fund, Latitude.
Why don't you first explain in more detail what Latitude is doing? You explained it to me as sort of like the YC, but for Latin America. I would say it's like YC and Angel List having a Latin baby. Yep. That's my quick summary. Right now, we're basically helping dozens of entrepreneurs navigate the early stages of their business.
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Chapter 4: Why did the guest decide to raise capital instead of continuing to bootstrap?
We host 25 sessions over a month period, bringing in amazing mentors from the Valley and other places, top entrepreneurs in Latin America that have done it before. And then, you know, we're snapping a fund on top, which is going to go live here shortly. Just getting our first LP commitments from only LPs are founders that have built big business in Latin America or GPs of top funds in the U.S.
or globally. And then, yeah, that's the book is... kind of part of the process. So those are the kind of the three, the trifecta, I guess you'd say. Why rolling fund? I mean, this is a hot thing in the press today, but you could argue there are much more effective ways to get capital into Latin American companies than having a rolling fund. So why choose a rolling fund?
I don't really want to deal with the management of all of the back office stuff. And secondly, I like the fact that I can go on and raise capital externally. If anyone's listening and they want to become an LP, happy to hear more about them. And so for me, it's an easy way to get going. And it's also... And we'll see how it evolves, right? For me, it was just a simple thing to get going.
I like also the nature of the rolling aspect of it because we're doing cohorts. So it tucks in nicely to have, when you've got a segment of entrepreneurs that are coming through, 10, 12 entrepreneurs that are building their businesses, you can get exposure to each batch. So it lines up pretty nicely with what we're building as well. So about 12 founders per cohort? Yeah. Yeah.
Right now, we actually have... Right now, it's almost like an NGO because I'm just funding this operation where there's eight of us. My co-founder, Gina Gotthil, ran Duolingo, grew it from 300 to 300 million users. My other co-founder is the CTO of a venture-backed business in Brazil. The three of us, along with a team of five other people, we're basically just helping founders for free right now.
We're selecting the cream of the crop, the best entrepreneurs that are building the biggest ideas. And we're running through this program. We don't take any equity at the moment. All virtual, I imagine? All virtual, remote first. And we're doing that. And then we're going to start investing in some of these companies.
Probably in the second half of the year, we'll start formalizing our investment for specific terms, taking around a 3% to 10% equity in these companies and investing between $50,000 to $250,000. And yeah, we'll see where it goes. I mean, we want to build a bunch of products as well. I'm an entrepreneur, so I don't want to sit back and invest. I want to build some cool shit.
Talk to me about the angel investments you've done. Pick a baby. Which one are you most excited about?
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Chapter 5: How did the merger with a competitor impact the business?
Well, I mean, there's the ones that I... have been excited about because I got cash in the bank and the ones that I'm excited about moving forward. No, moving forward. Do the moving forward ones. Okay. All right.
I think last week, a week or two ago, a company called La House in Colombia raised a $35 million Series B. I was fortunate enough to invest in the team there very, very early on, kind of pre-seed. And then I invested in the subsequent rounds. And, you know, that company is, you know, is doing extremely well. And I think they have an enormous market.
You know, we look at the comparable business to that business in China is a 70 billion dollar market cap company. Obviously, Latin America is not China. But if you take the aggregate of the region, it's an enormous, you know, it's twice as large as India when you when you look at the GDP.
And so there's an enormous opportunity, you know, and I'd like to they're going to pick up where I left off on the real estate side.
Chapter 6: What were the steps taken to achieve a $600 million valuation?
What about bootstrapped ones that haven't raised, but they're growing like crazy? I mean, it's hard to pick a, you know, pick a, pick a favorite here, right? There's a handful of companies that have done that. You know, I'd have to, I'd have to think about it, but any particular sector you you're interested in? No, I know you're, I know you're a software. This is your expertise, man.
I'm just curious in Latin America, what bootstrap founders do you really respect? Um, well, you know, there's, there's a bootstrap founder that, um, he ended up raising a little bit of money, but he was the ultimate bootstrap founder. Um, you know, he, he did go through YC and then he's, you know, built an education company. Uh, it's called, you know, they've done extremely well.
Um, there's, you know, I, it's hard to, it's hard to rattle them off right now, but, um, I'm very excited about a bunch of, a bunch of, a bunch of companies that are, you know, that are, um, you know, they're building great businesses. All right, take us home here. You wrote a book. Most books, business books, you get through the first three pages. You get about everything you need.
You put it down. You forget about it. Why are people going to read your whole book? Yeah, I think it's the first account of an intimate reflection of the challenges of building a business in Latin America, a venture-backed business. And I think when I started my business, there wasn't a lot of role models that had built businesses in our region, tech companies.
The one that stands out is Mercado Libre, which today it's a $90 billion market cap company. Marcos Galberin and Hernan Caza, along with Nicholas Nixakazi, the last two were investors in my company. I guess all of them were because they were investors in the fund. I read a case study from them at Stanford about their business when I had the idea for my business.
And so just that inspiration behind reading that and being like, oh, this is something I could do. Why don't I build the MercadoLibre of real estate? So I think that that's the thing that I hope hits home with founders is that they expand the size of their ambition.
They have someone that understands and has a little empathy with the challenges and the intricacies of building a business in the region. And hopefully it inspires a lot more founders to build great companies. Brian, where can they get it? It's going to be on Amazon. February 2nd is the date that it hits Amazon. So yeah, because this will be coming out after that. So check it out on Amazon. Yeah.
Amazon. Wonderful. Brian Reckworth. Thanks for taking us to the top. Okay. Thank you, man.
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