| BUSINESSWEEK ONLINE : OCTOBER 25, 1999 ISSUE | ||||||||
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| INTERNATIONAL -- LATIN AMERICAN COVER STORY
United States: La Vida Loca of a Latin Web Star (int'l edition) If ever there were a poster boy for the bilingual, bicultural executive of the Internet age, it's Fernando J. Espuelas, the 33-year-old chairman and chief executive of New York-based StarMedia Networks Inc. The Spanish- and Portuguese-language portal offers everything from chat rooms to shopping. Born in Uruguay, Espuelas moved to the U.S. at age 10. He has worked much of his adult life in Latin America, but when wooing investors, he's all Wall Street. ''I'm Latin, but I can play an American at meetings,'' he says. Espuelas can also play the megamillionaire, thanks to an initial public offering on Nasdaq in May. As owner of 10.5% of StarMedia (www.starmedia.com), whose market value is $2.1 billion, Espuelas' stake is worth some $235 million. That's half of what he had to his name in July, when StarMedia's stock hit a high of $70 per share before dropping to its current price of $37. Such is life in the dizzying world of the Latin Net. In September alone, Espuelas pulled off a slew of deals. At Sao Paulo's Museum of Modern Art, he unveiled StarMedia Acesso, an Internet access provider. He launched Periscopio.com, a Web-search engine. He pulled off a stock purchase of San Francisco-based Webcast, an interactive media company that delivers audio and video via the Net. And he agreed to buy the assets of Miami-based mobile technology provider Page Cell International Holdings Inc. CREDIT-CARD DEBT. That's a huge change from a few years ago. In 1996, Espuelas was developing an early online service for AT&T in Latin America. Then he and a longtime friend, Jack Chen, 33, decided to start their own business. They took $100,000 in savings, piled up debt on 20 credit cards, and hired four employees. For eight months, Espuelas and Chen, now No. 2 at StarMedia, collected no salaries. Then in July, 1997, Chase Capital Partners, along with venture capitalists Flatiron Partners, invested $3.5 million. ''The deal closed a week after we ran out of money,'' Espuelas recalls. Investors began lining up. In October, 1998, StarMedia received $80 million, then the largest private equity investment ever for a Net business, from investors including Intel Corp. and GE Capital Services Inc. Later, StarMedia received $41 million more from eBay Inc. and NBC, among others. The IPO topped it all off--valuing the company at more than $4 billion, one-quarter the GDP of Espuelas' native country, before the stock began to sag. An upcoming offering of additional shares could raise $200 million more. Now, StarMedia is spending a lot of its cash on advertising--$30 million this year alone. Name recognition is key, says Espuelas, in the region's ''hypercompetitive'' market. He plans to keep spending, even though StarMedia lost $40 million in 1998 and is likely to stay in the red a few more years. For now, investors don't seem to mind, as long as Espuelas builds market share. By Ian Katz in Sao Paulo _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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 RELATED ITEMS Battle for the Net (int'l edition) LATIN AMERICAN COVER IMAGE: Latin America Logs On CHART: Spotlight on the Latin Internet CHART: Where the Cybernauts Are United States: La Vida Loca of a Latin Web Star (int'l edition) Brazil: UOL: The AOL of Latin America? (int'l edition) Argentina: The Rise and Rise of Patagon.com (int'l edition) Mexico: Discovering the Web's Flower Power (int'l edition) Peru: Putting the Net in the Corner Store (int'l edition) INTERACT E-Mail to Business Week Online | |||
