1. GUEST SPEAKER
Thursday, April 19
Dede Willis
Vice President Operations
Proligo LLC
TOPIC
“The Genomics Revolution”

2. TODAY
Azul Casares
Patagon.com
5:00 - 6:00 Presentation Room 218
6:00 - 7:00 Reception Room 248

3. Internet Market Potential
(Est).
E-commerce market(1) $537 million $8.3 billion
Online users (1) million million
% that are online shoppers (1) % %
Online advertising (2) $51 million $1.6 billion
Internet services (3) $1.4 billion $8.1 billion
… but:
% of citizens on the Net (1) % 12%
Sources:
(1) Jupiter Communications, (2) Forrester Research, (3) International Data Corporation

4. Contrasting Environments
ASSUMPTIONS in most REALITIES in most
existing E-models developing countries
Complexity
rate of change
Accessibility to Resources
Environment Stability
LOW
HIGH

5. Economic Situation in Argentina
Date Context Factors
Hyperinflation (4,923% / year)
Peso to U.S. dollar convertibility
Foreign direct investment legal framework
1994 Mexican devaluation
1997 Asian market slump
1998 Russian default & Brazilian economic crisis
Country risk Foreign investment interest rate
Economic crisis and many banks went bankrupt
Volume of stock trading: $13 M trades/day ($100 M in 1993)
Brokerage firms: 50 active (180 in 1993)

6. Argentina: Country Risk 1993-1999

7. Internet Adoption in Argentina
Date Factors
Telecom system privatized: Telecom and Telefónica
(monopolies to end on Nov. 1999)
Low PC penetration (average wage $500/month)
High access cost (5 ISPs: 60% market, other 200: 40%)
Internet users: 400,000 (1.5% of the population)
Actual buyers: 5%
South American online buying: 26% own country
Not enough locally relevant content or services
Low credit card usage
Inadequate fulfillment systems

9. Patagon.com Financial Destination Site
and Its U.S. Models

10. AméricaEconomía (AE)/ Dow Jones Partnership
Customer
Individuals interested
in Latin American
financial markets:
Investors,
researchers,
analysts,
journalists,
finance professionals
Information (Content Providers)
AméricaEconomía (AE)/
Dow Jones Partnership
Patagon.com provided 10% equity, support in establishing AE’s Internet strategy, and advertising
AE provided links to Dow Jones, its own financial information, access to its sales force, and advertising
Advertising Fees
Transaction Fee
Hybrid Services
Fee for service agreement to
receive financial information.
Joint marketing and preferred
pricing programs, and primary
ISP through Latin America
Multimedios América
Internet Service Provider
Reciprocal links to direct traffic, and advertising exchange relationships
Data Processing and Networking
Patagon.com was offering its information content, and signing Microsoft as its exclusive supplier. Microsoft provided support, and a preferred customer status
Other Ad hoc Partnerships
Preferred computer hardware supplier

11. Organizational Capabilities Development at Patagon.com
Phase Phase Phase Phase 4
Business idea Starting firm Launching site Growing Business
Resources &
Competencies
Leverage
Diversification
Strengthening

12. Phase 1. Developing Business Idea
Leverage
Diversification
Strengthening
Casares’ technology and business skills
Adrian’s formal training at Harvard
Visits to Internet companies (E*Trade, Yahoo!)
Receive feedback from U.S. investors
Skills and knowledge transformed into
first business plan (became the firm’s map)
Resources & Competencies

13. Phase 2. Starting the Company
Leverage
Diversification
Strengthening
Casares’ personal savings
Financial information from public sources
Web site modeled after a group of
U.S. single purpose sites
5 people are hired
IT: 1 computer, 2 programmers
Resources & Competencies

14. Phase 3. Launching the Web Site
Leverage
Diversification
Strengthening
Funding from angel investor
Advertising by StarMedia
Alliances with info providers
Consultants from InvestCapital
Focus groups with InvestCapital’s clients
Software development advice from Hong Kong
Visits to Brazil and Mexico
Hired 8 more employees
IT: 3 computers, 4 programmer, 1 server
Resources & Competencies

15. Phase 4. Growing the Business
Leverage
Diversification
Strengthening
Funds from U.S. investors
Partnerships with AmericaEconomia (+sales force)
Reciprocal links program to direct traffic
Agreement with Microsoft, IMPSAT, Compaq
Media child of EC in Argentina
U.S. become advising partners
Endeavor provided contacts
Microsoft placed tow consultants full-time
Informal advisory network of business leaders
Hired 11 more employees (CFO and CSO)
HQ in Miami. Offices in Brazil, Chile, and Mexico
IT: 11 computers, 9 programmers, 5 servers.
Resources & Competencies

16. THE PRIMARY OBJECTIVES OF “Patagon.com” Case Study were
Explore how the Internet can simultaneously be a local,
regional, transcontinental and multilingual medium for
content and commerce.
Review fundamental organizational, managerial and
technological issues associated with doing business in
marketplace & space.
Understand the need to consider the macro-level strategy
and the micro-level implementation.
…And to do so in the context of one of the most dynamic
online markets in the world.

17. Reference Montealegre, R. “Extending Chakravarthy’s Strategy Framework
to Cope with Constrained and Unstable Environments: Imitative
Catching-up E-Commerce at Patagon.com,” IEEE Transaction on
Systems, Man, and Cybernetics, Vol. 3, No. 4, July 2000, pp