E-commerce is growing rapidly in Latin America, driven in large part by the pandemic and the adoption of digital payment solutions. One company we believe is well positioned to take advantage of the e-commerce boom is Mexico-based logistics company 99minutos. To date, it has delivered more than 16 million packages.
99minutos recently announced that it raised $82 million in series C funding to further help e-commerce companies fulfill customer orders across several countries in Latin America, including Mexico, Colombia, Chile and Peru.
It’s a long way from the company’s humble beginnings in 2014 as an on-demand hookah seller. Co-founder and CEO Alexis Patjane joins us on our Rise of the Next podcast to discuss those early days, when 99minutos pivoted from an e-commerce company to a last mile delivery service during 500 Global’s Latin America accelerator program in Mexico City, and what’s next for the company.
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TRANSCRIPT
99MINUTOS’ RECENT FUNDRAISE
Shereen Abdulla
So, Alexis, congratulations on your funding. How does it feel?
Alexis Patjane
Thank you. We’ve raised 115 to 120, overall. It’s thrilling and exciting also, but then it’s a lot of money and now you have to put a lot of things to work at the same time. So it’s more stress on the table, but we’re pretty excited.
Shereen Abdulla
In fact, it seems like investors have turned bullish on Latin America, especially in the last year, where you guys are based. Now, what do you think is driving that?
Alexis Patjane
Well, I think the market in Mexico and Latin America — it’s a new, upcoming market. It’s what you would have seen in the US maybe 15 years ago or in China maybe 20 years ago. And it’s such powerful countries, economically speaking — there’s a huge opportunity, so now everybody’s trying to invest in this new, upcoming market.
Shereen Abdulla
So, 500 has been investing in LATAM since 2011 and we’re actually believers in 99minutos, having invested back in 2014. You were, I believe, in the third batch of 500’s LATAM accelerator program in Mexico City — do you mind telling us a little bit about those early days?
HOW ALEXIS CAME UP WITH THE IDEA FOR 99MINUTOS
Alexis Patjane
Yeah, of course, yeah. 500 was, for us, a game changer, to be honest. I had already been an entrepreneur three times before I did 99minutos and I never quite understood before 2014 that there were acceleration programs. I didn’t quite understand that they could give you money for equity. For me, it was something out of this world, it was like, “You’re going to give me money for a company that is a month old? That’s amazing!” So, for me, it was a game changer and that part that 500 introduced me to all these VCs, to all this circle of entrepreneurs, because I wanted to be an entrepreneur all my life but I was always focusing on the traditional. I never thought that this could be possible. But yeah, 500 was amazing. We were in an office here in Roma, a small office with eight tables, maybe eight to ten companies on the batch. But yeah, I love that time. I love 500, they’ve been amazing to us.
Shereen Abdulla
You mentioned that you were an entrepreneur before you started 99minutos but that 500 introduced you to entrepreneurship in a different light. I’m curious, in what way did it differ?
Alexis Patjane
Well, before 99minutos, I had a company that — we did food trucks. We built food trucks, we imported these three-wheelers from India and China. They were amazing products because you pressed the button and then they converted into a small restaurant. So we were pretty excited about that project. It was super profitable, but it was really complicated to make it bigger. We opened, maybe, two stores and spent a lot of money opening a store, and then waited a couple of years for the money to get in. And then we saved enough money to create two tech companies — one was called Go To Cash, which was an information market [where] you could buy homework and stuff around the internet and hire professors. I think there are a couple of billion-dollar companies now doing the same thing in the US, but we were, I think, too early, again. We launched it, and we spent all of our money launching it, and then we thought the revenue was going to come pretty fast, but it didn’t. So [with] the small part of the money that remained we opened up 99minutos.
We always look for profitability at first. If we want to make money then we have to invest money, but if we have to invest money then we have to make money. Then 500 came in and was like, “I’m going to invest the money you need instead of just working two or three years to make that money, so you can jumpstart a company.” And for me that was like, how? I mean, not even the bank gave me a credit card.
Shereen Abdulla
Otherwise, you’re bootstrapping it.
Alexis Patjane
Yeah, it was amazing them telling — and I think, back then, it was 37 or 35 thousand dollars, at maybe at half the price that it is today, dollar versus peso. It was half a million pesos back then, so it was not a lot of money but for us it was 500,000 pesos — like we’re going to do that in about two years. We have now a partner that owns 10% of the company with that, and they don’t even know us. That’s like putting a trust thing between us and 500, and that built an amazing trust between us and now we’re an ambassador of 500. I always try to say that if you’re starting a company, then you should definitely join 500.
Shereen Abdulla
Got that. And how did you come up with the idea for 99minutos?
Alexis Patjane
So we were in a hookah bar, the one with the pipes, the tobacco pipes, I don’t know if you know them?
Shereen Abdulla
Yeah, oh, they’re very popular in the Middle East, where I’m based, actually.
Alexis Patjane
Yeah, they’re pretty popular there and in Mexico, also. So we were there, and we had a couple of friends, and I was there — before this, those friends were my partners on the other business — and we said, “What should we invest in?” And we were talking about where was our money going to be spent. And when we got there, they told us that they had just run out of, I think, charcoal. So we said, “What? We just came here for that, so what are we going to do?” And then I said, “Let’s try to buy something online, and let’s see if somebody can bring it right now.” And I remember we still had the BlackBerry pedal, or the pearl — it was a pretty big change from the smartphones — and we realized that concept didn’t exist. Not only in Mexico, it didn’t exist around the globe. So there was no e-commerce out there that you can buy now and receive it now.
Shereen Abdulla
On-demand, effectively.
Alexis Patjane
On-demand. So the next day, we had a couple of motorcycles on our food truck company, so we put some boxes on the back, we made the calculus of how much time would it need for the motorcycle to cross all [of] Mexico City, and it said, 88 minutes or 89 minutes, something like that. So we said maybe 99 minutes sounds better and it gives you 10 minutes for you to fulfill the order. And we created an e-commerce called 99minutos.com. So we were actually an e-commerce at first. We added 600 products in our inventory. We gave it time, depending on the phone you buy. And we launched the e-commerce.
At first, the customers starting to buy were customers that were buying recurrently because of the speed, not because of the product or the price that we were selling. And I remember that 500 was one of those companies that — those customers that bought from 99minutos. And that day, there was a storm in Mexico and we were able to deliver in 25 minutes with even the storm and everything. So they were like, “Oh, this sounds cool.” And in 500, that’s when we decided to pivot and only to the last mile for e-commerce. So we’ve gotten rid of the e-commerce then.
Shereen Abdulla
But why did you get rid of e-commerce given that customers were buying off of your online store?
Alexis Patjane
Because they were buying because of the speed, not because of the product. So when we started to — we were trying to grow the inventory. A lot of our customers said, “Oh, I cannot give you my packages for your fulfillment. But what if we activate the delivery service, and you come and pick it up here?” So we said, “Okay, that sounds good, we can do that, also.” And then Amazon, I think, was announcing their arrival to Mexico by the end of 2014, or something like that. We said it’s going to be really complicated to compete against Amazon MercadoLibre, but I think it could be easier to change the traditional logistics industry that in the world works the exact same way. So DHL, FedEx, UPS, all those companies work at the exact, same pace, and at the exact same time around the globe and in Mexico. So what we needed to fix was the delivery experience, not the e-commerce experience. So that’s why we decided to drop the e-commerce.
Shereen Abdulla
Got that. And did this pivot happen during your time at the 500 accelerator program?
Alexis Patjane
Yeah, just by the end.
Shereen Abdulla
Interesting. And so, Alexis, you said that you started off in Mexico City — where do you operate today?
Alexis Patjane
Mexico, Colombia, Chile, and Peru.
Shereen Abdulla
And have people been more comfortable ordering online in all these locations that you operate in?
THE RISE OF E-COMMERCE AND PAYMENTS IN LATAM
Alexis Patjane
Yeah, I think part of the-commerce — well, part of the people growing, I think there are two factors. People are buying more online, in Latin America. Mexico, I think, was maybe a couple of years [more] advanced than Chile, Colombia, and Peru, but because we have the US as a neighbor, and we’re pretty accustomed [to] what they’re doing, we have to replicate. But then Covid, obviously, helped, because nobody could leave home, so you were obligated that if you wanted something you had to order online. And the other thing is that in Mexico and in Latin America, there are a lot of new bank[s] or FinTech companies giving credit cards to people that were impossible to get before this FinTech game. So, like I said, we as a company, were never — even five years after we created 99minutos, we weren’t able to get a corporate credit card.
It was impossible to get a corporate credit card, not even American Express or the bank gave you that card. So it wasn’t impossible for you as a company to buy online unless you bought with your personal card and then asked for the reimbursement. So, all these new FinTechs gave a lot of capability to the people to buy online. So, the growth in Colombia, Chile, and Peru has been — also, I think, Peru, 8x on e-commerce last year and growth. I mean, they’re a small country, but they’re growing massively.
Shereen Abdulla
Interesting. And why is Business Banking so limited in LatAm?
Alexis Patjane
I don’t know, to be honest, it’s like they don’t trust nobody, so they try to do — they want to have the loan with zero risk or the credit card with zero risk. I’m going to give you an example, American Express gave us, maybe, $20,000 in credit after five years of creating the company, but if you tried to spend 5,000, then they block the card because then you had to pay the 5,000 for you to be able to pay their remaining 15k. So it was like you’re giving me 5k on credit, not 20k, and you’re trying to manipulate the way you use it. And there’s no way of speaking to them, and asking them, or to be flexible. It’s impossible, you need your bank account statements — if you’re not profitable, then we will not lend you money. So they’re pushing you to be a traditional company, but if you’re receiving investments, and you’re trying to invest, you’re obviously losing money because you’re trying to grow as fast as you can. But they will not lend you money if you lose money. So it’s a pretty complicated circle. And this is only corporate speaking — then, with the personal, that’s exactly the same thing. But, imagine, there are a million companies in Mexico, but there are 122 million people without credit cards. So that obviously helped a lot, and now everybody’s able to buy online because they have a valid credit card or debit card that can actually be for online purpose[s].
THE CURRENT OPPORTUNITY FOR 99MINUTOS
Shereen Abdulla
And, Alexis, where do you see the opportunity for growth, considering that e-commerce in LatAm is relatively smaller than in other emerging markets?
Alexis Patjane
Well, I think, compared to the US — I mean, China, I think, in 2020, had 83 billion parcels delivered, and in Mexico were less than a billion. I think, in the US we’re something between 20 and 25 billion parcels a year. A lot of people living in LATAM, there’s strong economy in some of the countries. There are a lot of big e-commerce stores starting to work in this part of America and it’s inevitable for the people to start buying more online. So, we’re growing in Mexico and Latin America — I mean, Peru 8x year-after-year, Chile is 3x year-after-year, Mexico 3x year-after-year. It’s inevitable that in less than, maybe, two years, we will already be above a billion parcels a year.
We’re already fast-tracking to all of the other countries in the globe that use e-commerce. I think, it’s one of those things that [is] unavoidably going to happen. I think it’s something that everybody knows [is] going to continue growing, and that needs a lot of logistics infrastructure, that needs a lot of banking infrastructure, a lot of e-commerce infrastructure. And all of the e-commerce[s] are already investing in LATAM. All of the banks or FinTechs are already investing in LatAm. So that leaves the hard part, which is logistics, that the traditional carriers are not investing in LatAm. They’re investing — they have markets, bigger markets around the globe. Speaking with DHL and all of those big guys that you know, they try and invest in all countries that are gaining more volume. So, LatAm is quite alone. Mexico has those traditional companies. But Chile, there’s nobody there. Peru, there’s nobody there. Colombia, maybe FedEx is there. Ecuador, there’s nobody there. Panama there’s — we’re completely abandoned, logistically speaking. So now, it’s up to us to give that e-commerce experience here.
99MINUTOS’ FOCUS ON CO2-FREE DELIVERIES
Shereen Abdulla
That’s so interesting. By the way, speaking of the logistics infrastructure, I love the fact that you’re using Co2-free trucks, especially given 500’s emphasis on ESG. Are they electric vehicles?
Alexis Patjane
Yeah, we have, I think, 70 electric vehicles right now operating in Mexico, and we have 30% of our capacity in Chile are already electric vehicles. Colombia still has more —
Shereen Abdulla
Oh, that’s actually quite high.
Alexis Patjane
Yeah. Chile’s company started exclusively with bikes, e-bikes, and electric fleet. It was to be the company that was going to be emission-free, and then we had to move that a bit because the trucks that we needed were not available [in] electric, so we had to buy some diesel trucks. But the essence is that we do 100% electric.
Shereen Abdulla
Oh, wow! And when did you make the decision to start moving towards having more and more electric vehicles in your fleet?
Alexis Patjane
2018. We had a partner back then called NG. NG is the biggest energy company in the world, and they had an amazing strategy of making Chile an amazing infrastructure with charging electric cars and electric vans. So we were excited that they were doing this infrastructure and if they had the infrastructure for us to charge the vehicle then we should only buy the vehicles and start working. It worked out as we expected, but Mexico, which is the biggest market right now, hasn’t been as tough as Chile in placing the benefits for electric fleet, electric chargers, stations. There’s still no infrastructure here and the brands of trucks that they sell here are still not the ones that you see in parts of China, or even parts of the US. There’s still maybe two or three brands of trucks here and they’re twice as expensive as the normal truck, and if you try to buy one it’s six months delivery time.
Shereen Abdulla
Oh, interesting.
Alexis Patjane
I think, maybe, in the next couple of years, the electric companies or brand companies are going to come here to Mexico and it’s going to be easier for us to buy them and to operate them. So we’re just hoping somebody takes a leap of faith and comes to Mexico to sell these types of vehicles.
Shereen Abdulla
Did Amazon have anything to do with your decision to introduce more and more EVs, given its carbon footprint?
Alexis Patjane
No, I think we actually announced it before they did. And then, obviously, them announcing it was something that now the — most of the e-commerce are trying to get us to work with them. So some companies are trying to get the seal on the box that says how many kilograms of Co2 you saved by doing the electric delivery, and now it’s a global objective for some of the companies that we work with. But, I think, obviously, Amazon helped with all of this. We’re nobody compared to them, and when we announced it, it was like, “Okay, now, who are you?” But when Amazon announced it, it was like, “Okay, now this is happening, we should definitely try to do the same.”
ALEXIS’S ADVICE TO FOUNDERS
Shereen Abdulla
Alexis, what are some of the lessons you learned along the way?
Alexis Patjane
Well, there are a lot of lessons. I’ve been an entrepreneur almost, I think, 16 years now, and I think one of the most important lessons I learned was never, never get a cheap lawyer, once you’re closing a big round. That’s the most important one. Back in 2015, we were receiving an investment, but it was not venture capital, it was a logistics company here in Mexico. If it wasn’t for the lawyer that we had hired to do all the paperwork, we wouldn’t have a company right now. So it was a pretty hostile negotiation, they were trying to take the company away from us a year after the investment was done. And three years later, after investment, we were able to take them up the cap table before they went bankrupt, but it was a pretty stressful time for us. I always, I speak to this lawyer and I always give him thanks because it’s something that you, as an entrepreneur, actually don’t know and you don’t even have to know. So you have to hire a good legal team to do it, and right now, with all the US investors here in Mexico, it’s easier because their paperwork is not as hostile as if it was a company, but that’s one of our biggest lessons. Never, never, never hire a cheap lawyer.
Shereen Abdulla
I’ve definitely never heard that before. By the way, good one.
Alexis Patjane
Yeah, that was a hard one. And I don’t know, if I think about something, I’ll put it out there.
WHAT’S NEXT FOR 99MINUTOS
Shereen Abdulla
Okay, well, maybe looking more forward ahead — what’s next for 99minutos and what do you plan on doing with the funds that you just raised?
Alexis Patjane
When we started the company, we started first as an on-demand service. So, 99minutos — every delivery was made in less than 99 minutes. Then we realized that some of the bigger e-commerce weren’t even able to pick and pack their packages in less than 99 minutes. So we offered same-day delivery, then we offered next-day delivery, then we offered this Co2-free delivery, and then we started to go outside of the local cities, we started to connect them — Mexico to Guadalajara, Monterrey to Queretaro, so on [and] so forth. Last year, we launched puro network, which is called punto99. And we did this because we were having a lot of trouble with the returns. In the US, I think 20% of the parcels are returns — people that didn’t like the package, or the size didn’t fit, or whatever. And here, we didn’t have the infrastructure. So they were launching the returns with the physical FedEx stores or the physical DHL stores.
So we launched this puro network to help get to the final consumer faster, and then we realized that we were almost, maybe a step away [from] being the complete logistics circle for e-commerce. So now, we’re going to invest in fulfillment, a big warehouse, where we’re going to be able to tell our customers, “You just have to sell and leave the rest to us. We will do that pick, the pack, the first mile, the last mile, the return, the warehousing, the inventory — we’ll do absolutely everything, now you just have to get yourself selling.” So that’s the idea, that’s where the investment is going to go.
Also, we’re going to penetrate much more coverage within the countries that we operate [in] right now. Mexico, we have 70%, Chile, we have 40, Colombia, we have 30 — we want to get to at least 90% coverage in all the countries that we operate. And last, we’re going to offer our software, our logistics software, to the e-commerce companies or platforms that use their own infrastructure. So we’re launching it’s called Routa 99, which is a SaaS software, and it’s for all the e-commerce that have some brands working with them. Ton of e-commerce that we know has maybe 80% of their volume is with 99minutos, but then they have 20 or 30 brands working with them to do deliveries, or motorcycles, or cars. So we’re going to give that software away, so people can actually have a better routing tool, better tracking service, and everything on the same software. We have a hard road ahead, but it’s exciting, pretty exciting, all the things that we’re launching. So now we just have to fulfill them.
Shereen Abdulla
Super! And congratulations, again, on the fundraise. Alexis, thank you very much for your time. It was wonderful to have you on the show.
Alexis Patjane
Thank you. Thank you for having me.
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