Bootstrapping A Latin American Social Networking Powerhouse With 50 Million Users: Sonico CEO Rodrigo Teijeiro (Part 7)

Sramana: When you realized you were losing $270,000 a month, what actions did you take?

Rodrigo Teijeiro: I fired 25 people of the 90 that worked for me and hit the brakes on expenditures. After a couple of months, I came to the conclusion that we could do two specific businesses to monetize the traffic that we had. We launched Recarga.com as a mobile recharge site because 500 million people in South America have cell phones, 85% of which are prepaid cell phones. There were no competitors to that type of site online and the service has taken off like crazy. It is growing at a rate of 30% monthly. I think by the end of this year that the site will let us make a million dollars a month in revenue.

We built out another business, Datam.com, which essentially uses all the data we have from the social network and the e-commerce sites to segment it and give offers to our users. That site has taken off very well.

Sramana: What types of offers are you delivering to Sonico members?

Rodrigo Teijeiro: Right now I just bought a Groupon copy because it makes sense for us to do it ourselves. We have 52 million registered users. We have 500,000 users who are paying customers. We are very good at buying cheap traffic and segmenting. I see the coupon business as a great thing for our network.

Sramana: Where did things end up in 2010?

Rodrigo Teijeiro: I had losses of $270,000 in January 2010. We turned that into a profit of $600,000 by Q4.

Sramana: What happened in Q1 of 2011?

Rodrigo Teijeiro: In 2011, the business model is to consolidate. We are pushing the Groupon clone that we will launch in a couple of weeks. The revenues seem to be pushing toward $20 million in revenue for this year.

Sramana: I like stories like yours a lot. I like the nonventure business where the emphasis has to be on sustainability and monetization. There is not a grow-at-all-costs luxury. Very few entrepreneurs have that luxury.

Rodrigo Teijeiro: It is almost impossible to raise capital outside of the U.S. Nobody will loan you money. You have problems with bureaucracy. During the first three years that I started the calling card business, I was working 24/7. I was doing consulting for other companies to sustain myself. The U.S. is centered on the idea that you have to focus on one thing and nothing else. Outside of the U.S., we don’t have the luxury of only doing one thing. You need one cash cow which will give you the revenue to try out new stuff.

Sramana: 1M/1M caters to an international audience, and we have a module dealing with consulting through services while bootstrapping. There are lots of companies that are built with that model. If you can’t access capital, you need to figure out ways to generate it.

Rodrigo Teijeiro: Exactly. That is spot on with what I have experienced and how I believe it should be done. One note to end the story; the girlfriend that I spent 30 minutes talking to on the phone is now my wife.

Sramana: Congratulations on your success, and that is a great way to end the story!

This segment is part 7 in the series : Bootstrapping A Latin American Social Networking Powerhouse With 50 Million Users: Sonico CEO Rodrigo Teijeiro
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