How do you grow your ecommerce business when a full 50% of your market is unbanked? You give them a bank. When the supply chain isn’t working as well as you need it to, maybe you get into shipping. Mercado Libre, Latin America’s e-commerce behemoth, saw friction and tackled it head-on, moving into these adjacent businesses to keep the growth going. 

In his Signal 2021 session, Sean Summers shared the company’s strategy for moving into the fintech market as a way to grow the business.



John Battelle  

We return to another of our Signal pillars: commerce. To learn more about commerce trends, this time in Latin America and around the world. I’d like to introduce you to Sean Summers, the CMO of Mercado Libre. Before joining Mercado Libre, Sean worked in the UK as marketing director for Twinings, the traditional English tea brand. I hope I got that right, I probably did not, and held various positions at PepsiCo, including marketing for Quaker and Tropicana.

Welcome to Signal, Sean.

Sean Summers

Thank you very much for the invitation. It’s a pleasure to be here with you at Signal. It’s an honor. Well, Latin America.I’m sure you have heard a lot of things about Latin America. Today, I want to share a little bit of the journey that we’ve been in Mercado Libre over the last 22 years, and some of the operational principles that we follow. Then I want to share some thoughts about some macro trends that are impacting our business and potentially yours. And some thoughts I’m going to end with some thoughts about what this could mean for P&G. So as I mentioned, Latin America, it’s, uh, if I asked most of the audience about Latin America, I think a couple of things come to mind. A lot of instability, and a lot of things changing. Everything is very fluid be it social, economic, political. But also it’s a region with a lot of natural resources. And the one thing about living and operating in a fluid environment, is that the resilience that you build, and the agility that you build is fantastic. So for us in Mercado Libre, Latin America continues to be a region full of potential. 

What’s our mission? Very simple: to democratize commerce and money in Latin America for the 660 million people who live in Latin America. How have we operated over the last few years? Very simple principles. They’re simple. But in the end, I think that the combination of all of them is what makes Mercado Libre the success that it is. First, just like you guys in P&G, we start always from analyzing unmet consumer needs, and we try to apply a first perspective. We don’t come so easily, because we don’t know a lot about that, because everything is sort of new. We try to come without any biases, any pre concepts. We try to analyze that opportunity with the angle of how could technology help us develop a new product, something that is simpler, more intuitive, cheaper to use, even if possible, a free to use product? Okay, for instance, that’s it, that is exactly what we did when building our FinTech business. What was the insight? 50% of people in Latin America don’t have access to  basic financial services. For many of you, that might be a surprise, but it’s a reality of the region. No matter how well the banks have operated over the last 50 years, 50% of the people don’t have access to those services. And the one thing many of those consumers, many of those merchants were users of Mercado Libre and asking them, we realized that this was a pain point that someone needs to solve, and nobody was solving it. So we started developing our own financial services, but for the 21st century, using this very simple methodology. This methodology of applying our technological view to these consumer problems, needs to be combined with a risk taking mentality. We are obsessed with being fast to market, we are obsessed with iterating, doing fast iterations test and learn mentality. We don’t try to do long development cycles, we don’t try to de-risk every single innovation by doing all the research, before committees, PowerPoints. We try to take our minimum viable product quickly to market and start learning from real feedback in the real world, and definitely start iterating from day one. 

Obviously, this approach has risks. And inherently behind this approach, you have to accept failure. That’s the reality of our business and the way that we operate. But I wouldn’t go as far as saying that we celebrate failure, nobody celebrates failure. The reality is that we embrace failure, we see it as an opportunity to learn, as an opportunity to improve our products. And we accept that, and failure, in a sense,it’s embraced, but not any type of failure, if it’s failure, because of sloppy execution, if it’s repetition of mistakes, that’s not something that we tolerate. But all other sorts of mistakes and failures are part of the learning process. And the last factor that guides our operating model is that we always think long term. That’s something that, obviously, same as you guys, we try to deliver on the short term quarterly results, we are a public company, and also build the most sustainable business, or more most successful business possible in the long term. 

Whenever we face a situation where in order to hit the short term results, we need to compromise that sustainability of that growth potential, we never take that road. We take the hard road of investing in the long term. That’s how we have operated in the past. And that’s how we are thinking of operating in the future. Talking about the future. Three trends that I am seeing: first one, a golden age of entrepreneurship. The reality not just in Latin America, in the world, not just in our industry, almost in every single industry. The new entrepreneurs, they have access to capital, to technological resources, even to talent as never before. And what that means is that our competitive sets are changing dramatically, both for P&G, and for Mercado Libre. It’s not just incumbent players that we are competing with, and we know very well how they operate. But they come with a new dynamism, a new way of working, new playbooks. And that requires us to think differently on how to compete. 

The second element that I’m seeing, the second trend that I’m seeing, it’s the boundaries between category segments are blurring very, very, very fast. From a consumer point of view, they’re willing to try new experiences and new products from sources or from companies that you would never expect. And from a company point of view, I think, answering the question of where to play and how to win, it’s becoming more difficult to answer. You can look at Mercado Libre, recently as an e-commerce company, and we never thought that we will become a FinTech company, and a big player in the world of logistics and advertising and now entertainment. That was never part of the plan. But the opportunities are showing up. You can have the biggest competitive worldwide started as an e-commerce company, they moved into telco services, and entertainment. At first glance, that combination doesn’t make a lot of sense. But in the end, from a consumer point of view, it makes sense. You can sell easily to Asia, to China, look at how gaming companies are moving into commerce, or moving into FinTech offering new experiences. I see that this mashup is going to change the rules of the game for many industries, definitely for ours, but I also think it’s going to have an impact on CPG. And last, and this is not new, but the war for talent is as important as ever before. The reality is that the new talent are asking for a different way of working.

The incumbent players, which used to be the place where talent would go, they’re not necessarily the place to go. I think that the pace of change is accelerating, that requires new abilities, the ability to learn and learn, and you need to make sure that you are tracking that talent. Even for us it’s a challenge, even though we’re only 22 years old. And in the words of Steve Jobs, why join the Navy, when you can join the pirates. And I think that the talent today is thinking in that way. So how do you make yourself relevant in this environment? 

So what are the things I know that I’m sharing with you? First, I think that there’s an opportunity for P&G to rethink the role in this world of entrepreneurship. Entrepreneurship probably today, you’re not playing a significant role. You might be supporting entrepreneurs, you might eventually buy a company. But I think, what if you thought about P&G as an enabler of this entrepreneurial ecosystem? What do you have? You have core capabilities, internal capabilities that are fantastic. R&D, marketing, retail, go to market logistics? What if you thought about those core capabilities or platforms? What if you productize those services in a way that and you make them open and available to the world? Where would that approach put P&G? I think at the center of a new entrepreneurial ecosystem. When it comes to competing in this world of mash up between different segments and categories, I think there is an opportunity for you to refresh that approach to innovation. What do I mean? I think you’re fantastic. I look at your core, your 10 core categories, you know exactly how to innovate, there are new SKUs, new formats, new fragrances, new ingredients.

You are world class in doing that, and probably that’s going to help you hit your targets of five to 7% organic growth. But what if for a moment you thought about: we want P&G to be again, a growth company? What if you wanted to go for a 15% growth annual rate? I think that the current approach  wouldn’t necessarily help you to get there. What have you thought more openly about innovation, not just products, not products and services. Let’s say, for example, a new mom. You know everything about how to serve a new mom with personal care products and with nappies. What if you thought about that experience, end to end, from the moment that I get pregnant to the moment that my child, my child leaves the nappies, and I tried to offer not only physical products, but maybe other experiences, support them through that very difficult journey? Support them maybe through an app that offers counseling that  offers help, offers other things other than physical products? What if you put all these together into some kind of, of a bundle, that you could offer a subscription direct to consumer, or going through the traditional challenge channels? And moreover, what if, for all those moms that cannot afford that bundle that you would offer, what if you also finance that through micro lending? Yes, in the new world of open banking, P&G tomorrow might be a FinTech company. That’s the kind of opportunities that are going to open in the future. And then, when it comes to talent. I remember when I graduated from university 25 years ago, P&G was the place to go. For me, for a lot of my classmates. The question for you is, is that still the case? Are you as successful as you are today because of all that talent that you’ve been able to recruit, and develop and retain? When you look at the next 10, 20 years, and you look at all the options that this new talent has available, do you think that they’re going to choose what they’re choosing today P&G? I have the problem in Mercado Libre, many times we are seen as a Navy and not as the innovator. I think that remaining true to who you are, you really have to go deep and understand what things you need to change to make sure that that talent, not only the new talent, but the talent that you have today, is fulfilling their full potential by being in P&G. And that means changing ways of working, giving ownership, giving empowerment, reducing meetings, reducing PowerPoints, taking risks, I think you need to do that you owe that to the P&G of the next 20 years. 

Now, to leave you on a positive note, I think you are the owners of the future. We’re talking about one of the most successful companies in the history of America, probably in the history of the world. You have had to reinvent yourself many times. You have the capabilities, you have the financial resources, you have the talent. I don’t even think that you need more inspiration. I think you know exactly what you need to be doing to reinvent P&G and make it fit for accelerated growth for the future. It’s all about moving into action. 

And I’ll leave you with one final thought. I always say that your biggest risk when I look at big organizations and successful organizations like yourself, it’s legacy that is the biggest challenge. The way I say this is, what brought you here won’t get you there. You really have to take a deep view and look at your core capabilities, and understand which of those are still relevant for the future. Which of those core capabilities that may have made you successful until now could be relevant in the future if you refresh them. And most importantly, which core capabilities that made you successful up to this point, you need to let go in order to be successful for the future. I wish you all the best in this journey.

Thank you, Sean. I appreciate your thoughts. You’re honing in on one of the hardest things in a successful business, which is how do we do things differently when we’ve been trained to keep doing things the way we’ve always been doing them? Because it’s making a lot of money and it’s making us quite successful. That last point you made, about what brought you here may not be what keeps you here. You mentioned earlier in your talk, something that struck me as possibly a little crazy, the idea of a large CPG company becoming a fintech pioneer. But your own company was a large e-commerce company that became a FinTech pioneer. Can you tell us a little bit about that?

When we started, we said that we would do e-commerce and, and then what happened is that we were waiting for the incumbent players to develop the right financial products. And in the beginning, it was a basic online payments, nobody did it. At some point, we said, well, we need to do it. So we started building an online payments business. And we just learned that we had to iterate a lot. We made tons of mistakes, but we keep learning. And eventually, fast forward a few years, we always said that we would never get involved in shipping products. But at some point, there was friction. Consumers were telling us that’s a friction. Nobody solved it, we had to go in and solve it. We knew very little about logistics running a logistics network. Nowadays, we manage a million square meters of surfaces in warehouses, and they really have seen in the region, we have 10s of 1000s of bands delivering every everyday. Two years ago, we knew nothing about that. So I think it’s all about coming with this fresh perspective and having the guts to go for it.

Sometimes in a large organization, if you have the guts to go for it, that means you’re gone. Do you have any tips for how to innovate in a constructive way that ensures that if you fail, it’s not the end of your career?

I think it has to start from the top. And we have to be realistic. When you go back here tomorrow, or Friday, to the office or Monday to the office, it is sort of a challenge, there has to be a belief at the top that this needs to change. And they have to create the conditions and many times we talked about the conditions being about celebrating failure. As I said before, nobody celebrates failure. People at the top have to create the conditions, they have to change the ways of operating. And that’s difficult. But again, the conditions are created from the top to the bottom. But I also think that from the bottom, there has to be more of a rebel revolution. There are enough talented people that know what they need to do. What are the things that need to change? I think it’s a combination, with the energy from the top, but also from the bottom, in saying, we need to change. And this is the way forward. 

I started with small things, our changes in our evolutions. They are small changes, most of the things that you need to change. Not that big. We make 5000 releases of new things every day. That’s the kind of innovation. There are very few things that are decisions that are very difficult to turn back. Those are the ones that we leave for the top. But everything else we try to push down and allow people to learn and test and feel and correct.

Right. Good point. Well, Sean, thank you so much for being part of Signal and giving us your insights on Latin America and well beyond. We hope to see you back here soon.

Thank you very much. It’s a pleasure.