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eBay of Latin America: Mercado Libre CEO Marcos Galperin (Part 5)

Posted on Wednesday, Dec 12th 2007

SM: What was Internet adoption like in 2003?

MG: I do not remember year by year. I think the evolution was somewhere around 10% per year.

SM: What type of revenues were you seeing in 2003?

MG: I believe we had $4M in 2003. I would have to check that number, but 2006 was $52M, and in 2005 we had $28M.

SM: You raised $46M in financing in the middle of 2000! I find that unbelievable.

MG: Exactly. Two years later we only had $2M in revenue.

SM: How did the investors feel about that?

MG: In 2001, we barely managed to avoid one of our major investors shutting down the company. The founders still had a good number of shares, so we were able to outvote them.

SM: How did you manage to keep a good number of shares with a $46M preferred share investment?

MG: The valuation was quite high.

SM: No kidding! What was the valuation?

MG: We do not disclose that.

SM: That is an amazing deal. The investor in that round was a private equity firm, you said.

MG: The lead investor was Goldman Sachs. Others also invested, such as Chase Capital, GE Bank, Banco Santander Centro Hispano which is a large bank in Europe and throughout Latin America.

SM: In 2003 you had $4M in revenue, and $12M in 2004. Were the investors starting to warm up to the idea?

MG: Yes, they were wanting us to be profitable as soon as we could, but eBay was a shareholder by then and they believed it was more valuable for us to continue gaining market share and growing our top line rather than focusing on whether we made or lost half a million per year. We agreed with that. We could have become profitable in 2004, but we decided not to. We became profitable in 2005.

SM: How many employees did you have by 2005?

MG: I believe we had about 200 people.

SM: Is it expensive? How much does the workforce cost in South America?

MG: It varies by country, but it is typically much cheaper than what it is in the US. It depends on the type of person you are looking for.

SM: Are the technology skill sets easy to find?

MG: The technology market in Argentina, where we hire most of our people, has heated up a lot. It is getting harder to hire people.

This segment is part 5 in the series : eBay of Latin America: Mercado Libre CEO Marcos Galperin
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