A todos los VC le gusta Starmedia
Why is everyone rushing to give Starmedia money? In June 1999, after several overwhelming rounds of private financing, the Spanish-language Internet portal launched an IPO that raised $105 million. It seems that the public agrees with 32-year old CEO Fernando Espeulas on the potential of the Latin American market. With a population of 557 million Spanish- and Portuguese speakers and an estimated 66.6 million internet users by 2005, StarMedia sits at the forefront of an exploding market. To make sure those new Internet users go to Starmedia, the company has created a free ISP, Gratis1.com, while keeping a wary eye on the advances of Yahoo!, AOL and Microsoft into its markets.
El CEO de Starmedia y su inspiracion
Starmedia was founded by Fernando Espuelas and his childhood friend, Jack Chen. Espuelas emigrated to the United States from Uruguay and learned English in his new home, Greenwich, Connecticut. (He bonded with Chen because neither were native speakers). In 1995 Espuelas, then a managing director at AT&T, was struck with the inspiration for a "Latin American Yahoo" that could unite the diverse countries and cultures of the region through Spanish-language chat rooms, free e-mail, and classified ads. Chen, a former business consultant and investment banker, joined in his effort.
El jefe
Starmedia has established a strong presence in Latin America, where Espuelas is considered quite a celebrity. The company had 2.1 billion page views in the the first quarter of 2000, runs web sites for 10 markets, and plans a Peruvian site in 2001. In its efforts to build the Starmedia brand, it has established offices in all its member countries (unlike its competitors), sponsors concerts and other events, and sells T-shirts, CDs, and books. To make sure new Internet users go to Starmedia, the company spent $20 million in marketing in 1999.
Pero hay problemas en paradiso
But not all is bright on the horizon for Starmedia. Yahoo!, Espuelas's inspiration, has started a quickly growing Yahoo! en Espanol service. And AOL, with Time Warner's enormous properties in tow, has entered the Latin American market with marketing blitzes in Brazil, after successful entries in Australia and Japan. (Starmedia says AOL's entrance will only help it, since about nine of every 10 of Starmedia users come from other ISPs.) Additionally, advertising revenues have been hampered by poor economic conditions in key Starmedia countries such as Brazil. But Starmedia executives point out that many Latin Americans consider Internet connections more of a utility than a luxury - especially teenagers who are now growing up more net-savvy then ever. A new advertising campaign is targeting users 15-24, considered StarMedia's top demographic.
Hay mucho competicion
Even after raising $500 million in venture capital, StarMedia has seen it share of fluctuations in investor support. It could be because the company now feels giants breathing down its neck, just waiting to access StarMedia's millions of young, deep-pocketed users. The company, though, prefers to remain independent. "We have 200 strategic relationships with content providers across the globe, which we think adds infinitely more value than having one big-name relationship," said Espuelas. In addition, other Hispanic-themed portals have been unveiled, crowding StarMedia's once-exclusive market. StarMedia is pairing up with teen favorites like Pepsi in an effort to expand its user base. The company is also planning a $1 billion project to wire every school in Latin America to the Internet with the obvious hope that these young students will grow up loyal to the StarMedia name.
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