This post is a translation of an interview that ran in Uruguayan newspaper El Pais, conducted by Stella Maris Pusino. In it, Endeavor Entrepreneur Federico Cella discusses his career as a serial entrepreneur, as well as his latest venture: Lynkos.
Federico, a 33 year old from Montevideo received a degree in Business Administration from ORT, studied at Exeter, and was Six Sigma Certified in Aveta Business Institute and in Managerial Development in IEEM. He began his career at Aiva, which his mother, Maria Noel Ache, founded. They were selected by Endeavor Uruguay as Endeavor Entrepreneurs in 2007. He started Lynkos with Endeavor Entrepreneur Gabriel Colla after leaving Aiva in 2008. Through Lynkos, Federico and Gabriel hope to revolutionize asset management and financial intermediation. Federico is married and enjoys playing soccer.
El Pais: You started your career at Aiva…
Federico: Yes. In 1994, I returned from the United States at the age of 19. I didn’t know what I would do, but I wanted to build something of my own. At that time, my mother, Maria Noel Ache, started Aiva with her partner, Carlos Parra, while they were also working full time at Blue Cross & Blue Shield (BCBS). So, I joined the new company, which started as an insurance broker, selling in Uruguay and Argentina.
El Pais: A more modest beginning than what it is now…
Federico: It was just a secretary and me, in Montevideo, and Sebastian, Parra’s son, in Buenos Aires. Over the years, as the company grew, I took on several roles, from operations in the beginning to Managing Director at the end. At age 22 I was traveling six or seven months a year, recruiting people or agents so that they would sell the products we represented. Our effort to develop the company commercially, and its ability to help stakeholders quickly reach those markets, produced a synergy, which simultaneously attracted more retailers and new markets. My mother and her partner, after selling BCBS Uruguay, began to participate actively in the company in 2009. As such, Aiva developed into what it is today, a large wholesaler of financial services that distributes not only personal insurance, but retirement and investment funds throughout Latin America — 400 different ones — from six worldwide companies: Skandia, Allianz, Old Mutual, American Fidelity, BUPA and Swiss Life, through about 200 insurance brokers, stock brokers, banks and financial planners. It grew from those initial three employees to more than 200 today.
El Pais: What are your average sales?
Federico: On average, about US$40 million per year. It’s been stable for the last three or four years. I cannot give more details because in the financial business confidentiality is very important. For Lynkos this is not an issue, so we can speak openly.
El Pais: So, what circumstances led to the creation of the new company?
Federico: It was a market opportunity, having an idea to address that opportunity, knowing people that supported that idea, and it was also a personal decision. I worked for over fourteen years in the family business. Even as a teenager I helped my mother at the office with my siblings during the summer. The family business has great dynamics in many ways, but it is also taxing in other ways and I wanted to get out of those dynamics. Today Aiva and Lynkos are two separate projects. I left the Board of Aiva in 2008 but I am still a partner, along with Carlos Parra, my mother, and others. I founded Lynkos at the beginning of 2009.
El Pais: And the initial goal was?
Federico: Lynkos is a technology company and unlike most technology companies in Uruguay, it focuses on products; it is not a company that develops customized software or sells technology consultancy services. Lynkos develops its products and sells them. During the first year and a half, between June 2009 and December 2010, we concentrated on developing the first version, with an internal team of ten people, and another forty outside of the office, twenty in Argentina and another twenty in Uruguay.
El Pais: But Lynkos is Aiva’s “child”, an evolution…
Federico: Only in part. My work at Aiva contributed to the idea of starting up Lynkos and its implementation. The work to develop Aiva commercially constituted its first strength, but its second strength was technology. It was not easy to manage the usage of so many products and to consolidate everything with distributors. The technology we developed at Aiva made our commercial development possible. Our success when compared to our competitors was mainly due to our technology development. Then the question came up: If this is so good for Aiva, why not offer it to others in the same business?
El Pais: It seems very simple….
Federico: There were also other promising factors. For instance, a group from Hong Kong approached us because they wanted to use it for their business in that region, but our platform was not ready for this. For starters, it was in Spanish. The market opportunity for Lynkos to flourish was the demand for tools that facilitate the development of distribution channels of companies in the financial sector, and, at the distribution level, the need for tools that allow for better service to the end customer, in an efficient way. Because, believe it or not, in the financial services industry there is a lot of paperwork trailing the processes from one place to another, generating duplication of work and unnecessary delays and mistakes, which end up increasing costs for the companies and slowing down the service. These were the premises we adopted for Lynkos, and there, we developed everything from scratch, targeting these technological shortcomings. We finished the first version of our platform in December and are selling it in many countries in Latin America and South East Asia.
El Pais: Who uses the new platform and how do they benefit from it?
Federico: Today our platform supports the products of Skandia, Allianz, Old Mutual, American Fidelity, BUPA and Swiss Life, and at the broker level, all those included in Aiva and others. Almost 300 organizations already use the product throughout Latin America. It allows insurance companies, retirement funds, and companies with investment funds to develop alternate sales channels and improve the profits in the existing ones; it allows transactions to be processed electronically therefore generating efficiency. It improves the operating processes of the sales processes, shortening lead times and resources, reducing or minimizing duplication of processes, and therefore, costs. It all adds up to better customer service.
El Pais: Does anything like Lynkos exist in the world?
Federico: Only in the United States and England. Nowhere else. And they are specifically focused on those markets. In the markets we operate in there is no competition, nothing similar. There are commercial challenges. Many insurance companies, for example, have their own technology departments that handle their own needs. Even though we do not compete with them, we often have to show them how Lynkos complements what they already do, without replacing their own platforms. In addition, a company can be connected to Lynkos very quickly, without lengthy implementation. In a month and a half they can be effectively using Lynkos. It’s a finished product that they can try before buying without a large investment, because the business model takes into account the cost of the individual user or transaction. If they want to discontinue using it tomorrow, they can do so without great financial loss.
El Pais: What’s the cost for the client?
Federico: Depends on the customer, on their size…a broker that has between 1,500 to 6,000 clients can have a cost of about US $1,500 a month; a carrier with 200,000 accounts is paying between US $15,000 and 20,000 a month, as long as they use it.
El Pais: How do you sell your platform?
Federico: We have a sales team in Uruguay; local technical and commercial partners in Chile and Hong Kong, and a third channel, the self-subscription, the small or medium broker that starts to use the system on their own by recommendation or through Internet search.
El Pais: How much do you expect to bill this first year?
Federico: Close to one million dollars.
El Pais: Based on your experience, what skills should an entrepreneur have?
Federico: First, an idea that motivates him, because to follow through with it means a lot of effort and experiencing many difficulties, uncertainties, fatigue and tension over time. Anybody can have a motivating idea. Second is not to be afraid of those challenges, and this has to do with personality. The ability to resist comfort and certainty and not fear failure.
El Pais: Do you have any critiques of the government in Uruguay?
Federico: One very strong one: the lack of communication and encouragement for young people to study and pursue careers in technology. Hundreds of accountants, lawyers and medical doctors graduate every year, while in the technology area there is zero unemployment. While pursuing their studies, students can find jobs in technology that in turn help them to continue studying. It is a virtuous cycle. They earn good money in an industry with a lot of upward mobility and flexibility, because they can work here or for foreign customers. They can even enroll and study for free- there is nothing stopping them. But young people are not aware of this.