Business and Finance Expert Loren Moss Discusses Commerce in Colombia

Biz Latin Hub’s Chelsea Heywood was privileged to connect with Loren Moss, Executive Editor and Publisher of Finance Colombia. Loren also juggles publishing, editorial, and business intelligence and analysis operations for FinanceAmericas, Cognitive Business and Unido Digital.

Loren discusses his pathway to developing quality English-language news publications for finance and commerce in Colombia, and provides insights on opportunities, challenges and the evolution of commerce in Colombia and the wider region.

What motivated you to produce leading English-language publications Finance Colombia and FinanceAmericas?

I was working as an analyst for a research firm in the US, covering Latin America. I was living in Miami, and I got tired of Miami after having lived there for about 5 years. I already knew Colombia very well, and had been impressed by the economy’s progress and the gains the country was making socially and politically.

So, I decided to spend some time down here. I had maintained apartments in Colombia, but hadn’t lived here full time. I decided to live here and make Colombia my formal address.

So, your time living here in Colombia is what drove you to create those publications in English?

I saw that there was no English language business publication focussed on commerce in Colombia. There were general lifestyle publications for tourists and expatriates – like the Bogotá Post and City Paper, and there are a couple of small ones here in Medellín – but not really anything focussed on investment and commerce in Colombia. There are publications that focus on all of Latin America, in English. And in Spanish, of course here in Colombia we have publications like Portafolio and La República.

So, there are English publications out there that are good, but they have a broad Latin American focus, and you tend to get content that is 40% Mexico and 40% Brazil, and 20% the other 19 countries. And you could have a 120-page monthly magazine where maybe 3 pages are focussed on Colombia. So, I thought there was a gap for coverage, and there would be a demand for high-quality business news.

My background has been in capital markets, as well as IT and services, so I thought that real business news directed towards the institutional investor or the multinational executive is something that would garner an audience that at the time was not being served.

And your background would have provided that base knowledge in how to set up the publications for those readers.

Yes, I think it’s one thing to be a journalist and get to know how to structure a news article. But if you don’t have in-depth knowledge of the subject that you’re covering – for example, if you don’t know about options pricing, or the difference between puts and calls, or what a Black-Scholes model is – then you’re not going to be able to write about those things at the level of the audience that you’re seeking to engage.

Based on your own experience with building these publications and interacting with others in the field, what would you say are common misconceptions about business and finance in Latin America and the Caribbean?

That’s a broad topic, and I think that everybody will have their own idea.

I think that you have one of two extremes: you can have people who are naïve and if they don’t have experience down here, they might still think the situation is like something from an old movie from 30 years ago. They might think they’ll arrive at the airport and see goats and chickens on the runway, for example. Of course, it’s nothing like that. And they might have some stereotypes when it comes to security or political stability. I’ve met people that are afraid when there’s nothing to be afraid of.

On the other hand, there are people who think that they can just show up and everything will be exactly the same as in Manhattan, or a northern European city, and that’s not the case either.

So you could be too naïve to one extreme or another, and every place is its own situation with its own history and its own particular levers that everyone needs to be aware of.

I would say that it’s important to avoid bad heuristics – you need to keep an open mind.

You’ve had extensive experience working in media and business and financial intelligence in this area. To dispel some of those misconceptions, could you share your thoughts on how ‘doing business’ has evolved over time in this region?

Well, a lot of ways. One obvious way that comes to mind is the capital markets. Things like private equity, for example: private equity investment activity really didn’t exist here 30 years go. Nor did the legal framework to allow the development of a private equity eco-system. And I would include here things like what we’d call in the US a ‘real estate investment trust’ – which is investment funds that focus on real estate.

In the past, in a lot of Latin American countries and Europe (especially in Southern Europe), you didn’t often have companies whose shares were publicly traded or even closely traded. The companies tended to be within families, and they tended to pass from generation to generation.

In the US, in a lot of places – just look at venture capital in the US – it doesn’t occur to most people in the US to say “I’m going to build a business and pass it down to my children.” Bill Gates isn’t passing Microsoft down to his children.

What we do (in the US) is we go to capital markets and we do things like initial public offerings. That is a tradition that, to varying degrees, hasn’t existed very much in Latin America. It’s more developed in places like Mexico, which has a more mature public market and public capital markets.

But you didn’t see something like that here in Colombia a few years ago. Nobody really did it, the legal framework wasn’t really amenable to it existing. So that’s one of the things that now we can see a nascent venture capital scene down here: you have Rappi which is a unicorn; a lot of companies are now being traded. Colombian companies are now active in capital markets and things like that. And they’re doing really well.

So I think that’s really the thing that changes; that shift from a dynastic scene in Latin American countries. Certain family companies are seen dismantling; the kids may inherit these things but the problem is that they could inherit a big company and they’re responsible for 5000 jobs, and their only qualification is their family ties to the company. They don’t always know how to run a business and they don’t necessarily have the talent for running a business. And they have the livelihoods of all these employees and contractors dependent on their success.

So, as the investment ecosystem down here becomes more modernized and sophisticated, the entire economy – everybody from the employees and their families up to the institutional investors – all benefit.

So, for those people that are moving into the Colombian market, what would you say are some of the key challenges your clients face with developing and growing their business in this changing and modernizing environment?

I think you still have to realize that when you’re in a modern city like Bogotá, Medellín, Cali, or Barranquilla for example, you really have everything that you want to get your hands on as you do in a city in the US or Canada or Australia, or somewhere like that.

And when you’re in those Colombian cities, you’re not wanting for anything. But you still have vast parts of the country that are rural; areas that don’t have infrastructure like you do in those big cities. There, electricity stays on all the time, fiber optic internet to the house.

You can get out into rural areas where these things haven’t yet arrived. You have towns here that you can only get to by river or helicopter, for example. Some have no road access.

People doing things like mining are used to working in those environments. But in general, if I’m going to make an investment of some kind in a physical asset or base an asset in these areas, if I’m going to buy mortgage-backed securities in the US, I’m probably never going to send somebody to go look at the underlying assets. I used to deal with mortgage-backed securities in the early 2000s, and for the record, I had nothing to do with and was not involved with the financial crisis. But I worked in portfolio management and I had clients that had mortgage-backed securities.

It would never occur to us to go and verify that the assets underlying those securities were therefor example. In the US during the financial crisis, they had other problems.

But when you’re working in a place like a developing economy, or places that have big differences between rural and urban environments, you probably want to do an extra level of due diligence to go and physically verify the assets that are backing your securities. If you’re investing in a mine, 1) They can sometimes be in dicey areas, and 2) do you know what the real situation is on the ground?

What are the relations like between the local populations and the operators? Because if people in the local town are fed up with them, they can run them out of town.

That’s exactly what happened with a major global miner here: they had bad local relations with the townspeople, and the town wanted them gone. They thought they could just go into the capital and with lobbyists, and get the right politicians to support them, but they didn’t take the local situation into account and so things are more complex than in fully developed places.

Or, in frontier markets: Colombia is a middle-income country and it’s not like some places where you have low levels of development and government, so you do need to obviously interact with people on every level. And not just one or the other.

So, you’re saying there’s a strong focus on that relationship building as well as getting the picture of where you might be investing or doing business. You also need to build relationships not just with your partners or the government, but also with the community you might be moving into.

Yes. If I want to build a resort in Florida or Nevada, I don’t have to put as much thought into things. If I buy the land and the land is zoned properly, and I go and get all the permits and I can just get to work. I don’t need to negotiate with anybody.

And even though in theory you can do that here, it might not be the wisest approach. You really need to understand who you’re going to interact with – who might oppose you and why. And even though the legal system says “yes, you can do that,” if you’re tone-deaf and don’t take the real situation on the ground into account, you can run into some unexpected roadblocks.

I think that’s exactly the right phrase – ‘tone-deaf’ – we can’t afford to be tone-deaf during impactful business activities, because of the risk of having the community turn around and say “we don’t want you here.”

Right, and it’s not so much that people are business-unfriendly, but you can go into things the wrong way.

It’s a matter of really knowing your work upfront. You can do business down here – there’s gold mines, copper mines, petroleum drilling, they’re about to start fracking, there are factories that do everything from process chicken to making motorcycles. General Motors has some factories down here, Whirlpool has some plants and factories down here. You can do any kind of business down here. But you have to do your homework.

To contrast, what opportunities do you see for prospective investors and entrepreneurs looking to do business in Colombia – provided that they do their homework?

There are so many. It’s a business-friendly country. I’m from the US, and one of the things I like is that Colombia has a close cultural, social and political affinity with the US. I think that translates to other countries that are, let’s say, anglophone, like New Zealand, Australia, Canada and the UK.

At the last Superbowl, you had Shakira, who’s Colombian, and you had 25 dancers out of Cali with Jennifer Lopez. You have a large number of Colombians in the US.

They’re on track to remove visa requirements, which the previous administrations in the US and Colombia set in motion. And the process takes about 5 years, but they’re already working on that.

I think that aside from being pro-business and pro-development, you also have a very eager workforce that’s willing to learn, wants to work and looks for opportunities. And as long as you treat your employees decently, you’re going to have people working hard for you in return.

It also has a good talent pool. When I look at things like English as a second language and IT skills, Colombia is able to compete with places like Mexico and Costa Rica, and some of the Asian countries.

I also think the proximity to the US helps. You could get there on a plane in 3 hours, and you can send employees for meetings and training. It’s really simple, I’ve never had any trouble. It’s very easy to do business here, relatively speaking.

The regulations are generally reasonable, so I would say that the country wants to diversify and move up the value chain, so you’ll get a certain degree of cooperation from officials and nationals. They’re not going to do everything for you, but they’re not going to block you either. There’s not a lot of red tape.

In some countries, it’s still very difficult to lay people off, for example. In Colombia, it’s relatively reasonable. It’s not as easy as it is in the US but it’s a lot easier than in many European countries. And so that reduces the risk for the employer to hire people and to set things up.

The theme of technology and development is a hot topic, and is perceived to be growing at a rapid pace in Colombia. Medellín has established itself as a tech hub and is world-renowned for doing so. How would you characterize the nature of technological development and innovation in Colombia?

If you look at the Swiss company LafargeHolcim, they already had tiered services operations here in Medellin. Just recently, they announced they were going to be hiring at least 600 more employees – doing knowledge work, doing technology and financial back-office services for that Swiss global raw materials company.

And so, their center here supports operations in all of the Americas including the US and Canada, so I think that that says a lot, and is a good example.

Accenture, who has a similar business model, just announced a new Nanolab – I think they have 3 or 4 of them throughout the world. And the first one is here in Medellín.

And I’m impressed by the former employees of mine that I’ve had who have recently graduated in things like 3D animation and programming. One former client, UruIT came from Uruguay. They have had tremendous success here, and they just opened up an office in Bogotá for staff augmentation. They are hiring developers and work with various coding languages.

Another company, Gorilla Logic in the US had operations in Costa Rica and they have expanded here into Colombia, again doing software programming. They’re hiring coders who can program in different languages.

I had a team once that was working on a project for a company out of California, using Alteryx’s data analytics, and it was not difficult to find people to get visas for and send them to the US for advanced training on Alteryx. It was so easy – we applied for the US visa and off they go to California.

It really is not difficult to do business here for people across the world – not just in North America.  I’ve had clients from Ukraine and Russia open up operations here, who were readers of the publication.

They called me up and wanted to open up in the Americas and chose Colombia as the first base of operations for the work they were doing. They already had operations in Central Europe and Africa and wanted to expand across the Atlantic and set up operations here.

So, there’s so much opportunity here and I think where Colombia is, it’s developed enough to the point where the necessities and the stability and the security are here, but it’s not so mature that there are no longer any opportunities.

So it’s emerging as a frontrunner in the region for innovation, but what you’re saying is the market is not yet so saturated that there is still a lot of international interest and prospects for success are high.

There’s still fruit on the tree to be picked.

So we’ve talked about some of the challenges and the evolution of doing business. What further advice would you give to businesses expanding into the region, based on your own experience in doing so?

I would tell people to set any preconceptions and stereotypes aside and approach things with an open mind. At the same time, don’t be naïve and make sure you’ve done thorough due diligence. Do your homework on things. It is an attractive place to do business, but you want to properly educate yourself before jumping in.

I think it’s a land of opportunities and it’s inhabited by welcoming people, but you need to prepare yourself before you come. And as you come and as you establish things here, there’s a lot to learn, it’s not enough to learn from a brochure that somebody gives you.

It’s not all over at the final stage of forming a company; you’ll always have to keep up with the times and maintain that taste for adaptation and change while the economy itself is still modernizing, is that fair to say?

Yes. I think if somebody said they were just going to find a lawyer, set up a business and get a visa – if they’re going to live here – and think it’s going to be that easy, well, yes you could do that, but it may not be the best approach.

The things you’re going to learn in business culture and day-to-day things and employee relations – those things are not negative here in Colombia. But they still are different; there’s going to be a lot to learn when it comes to ways of doing business and dealing with contracts.

Little things can end up being a big deal. For example, in the US, it’s very common to have hourly workers and part-time workers. That’s very uncommon here. It’s complicated to do. You can do it, but most people don’t because it’s not worth the added complexity. It’s not how you typically do business here.

In the US, we tend to pay people usually one pay cycle in arrears, because if you’re an hourly worker then it takes a few days to add everything up.

Here, you’re paying your employees on the last day of the month, for the work they did that day. This is almost never done in the US, except for perhaps a day laborer, or a farm. But those kinds of things come out of Colombia’s agricultural past.

When you lay somebody off in the US, unemployment insurance pays their employment. Down here, you as an employer are liable for that lump sum. It’s all these different things. So just because you have a lawyer, there are plenty of other different things you have to deal with.

And there are unwritten rules, too: it’s custom here to buy everybody a gift basket at Christmas. And you don’t have to do that – nobody tells you that you have to do that, and there’s no law that says that you have to do that – but your employees are going to expect that.

Take advantage of opportunities for commerce in Colombia

Expanding to Colombia? Get support for your company setup and ongoing corporate compliance from an experienced team that supports international commerce in Colombia.

Biz Latin Hub is a multinational law and accountancy firm enabling companies to do business in Latin America and the South Pacific. Our headquarters is based in Bogotá, Colombia. Our teams of multilingual legal and accounting professionals offer a full suite of market entry and back-office services to give companies the best possible start in a new commercial environment, in full compliance with local corporate regulations.

Given the favorable conditions in the country and the region as well as the economic growth, Biz Latin Hub through its company Colombian Business Services offers the experience and support necessary for investors to have a successful market entry in Colombia. Feel free to contact us now.