Dear Shareholders –
The Scottish Poet Robert Burns immortalized the phrase, “The best laid plans of mice and men, oft go awry.” Of course John Steinbeck probably had a good deal to do with bolstering the immortalization of the phrase with his book, Of Mice and Men thematically based on Burns’ poem. Burns’ message echoed by Steinbeck could not be more true when it comes to startups and small businesses. The SBA reports more than half of all business startups do not make it past 5 years. Another half of those that survive beyond 5 years don’t make it to their 10th anniversary. So goes the best laid plans of entrepreneurial mice and men.
The dreams and plans of Ciao’s previous management team have gone awry, and we – new management and existing shareholders – in other words, you and me – find ourselves with the task of picking up after the broken dreams and pursuing new horizons.
Change of Command; Assets and Resources
A cornerstone of Ciao’s business plan was founded on an acquisition of a Brazilian software development firm purchased in 2013. On behalf of the sellers, I managed the Brazilian firm prior to the sale. I consulted to Ciao for a time after the sale. The sellers received stock in exchange for the asset and after three years, decided to press Ciao management on the apparent inability to gain traction. The upshot of the exchange saw the exit of former management and my entry as the CEO and majority shareholder.
I’ve been working with technology firms in emerging markets, particularly in South America, for longer than I’d like to admit at risk of you thinking I’m too old for the job. I’d rather you value my experience and wisdom. I’ve watched and participated in the proliferation of information and telecommunication technology in ‘frontier’ markets that grew into ‘emerging’ markets and ‘emerging’ markets that are by all rights today ‘developed’ markets.
The New Horizon; Resident Emerging and Frontier Market Technology
Even though technology outside the developed markets has grown leaps and bounds over the past decade, leaps and bounds of opportunity for further growth remains. Far more technology growth opportunity resides within the frontier and emerging markets of the world than in the developed markets. I think we all intuitively recognize the tremendous technology growth opportunity within the frontier and emerging markets and don’t really need too much economic analysis to explain it.
Even with all the opportunity for the internet to reach farther into the hard to reach corners of the word and to provide yet even more consumers with access smart phones, technology growth in emerging and frontier markets has slowed. Some analysis here might be helpful. Gartner explains that the rising expense of technology from the U.S. and other developed countries being sold into frontier and emerging markets is so high, that frontier and emerging markets are slowing down their purchases and exploring new options. I’m all for giving the frontier and emerging markets some new options.
We’ve initiated a corporate name change that should be effective within the next 30 days. The new name is NuMelo Technology. With the new name comes a new business plan, but a business plan that leverages what’s left of the assets and resources that the old management team left behind. The new plan is focused on providing frontier and emerging markets with an alternative to the Western, developed economy technology solutions that might seem to be the only available option at the moment. More options do exist much closer to home.
The U.S. university student population includes almost one million students from foreign countries making up about 4% of the entire student body nationwide. A substantial number of those students are from emerging and frontier economy countries. Nearly 300,000 students are in the U.S. from China and another 150,000 or so are in the U.S. from India. Europe also has its fair share of foreign students from emerging and frontier economies.
Many of these students will intern at Western based, multinational corporations. Some of those corporations include the Western technology firms attempting to sell overpriced internet and telecommunication solutions to emerging and frontier markets. A fair number of the foreign students in the U.S. and Europe will manage to remain after graduation to gain even more work experience at Western based, multinational corporations. Inevitably, many of the students will return to their emerging and frontier market economy homes.
It should come as no surprise that the economic growth of an emerging or frontier market country parallels the growth in the number of students that country sends to the U.S. and Europe. That emerging and frontier market growth is in large part coming from those returning students starting new businesses in their home country.
NuMelo’s New Plan; Local Technology Innovation
NuMelo Technology’s new business plan will be to find emerging and frontier market founded technology firms with viable solutions to satisfy the local opportunity to expand the the reach of the internet and mobile phone network within their resident region. Plenty of opportunity exists for information and telecommunication technology expansion within the worlds emerging and frontier markets. Western solutions have become price prohibitive. NuMelo will invest time, material and talent into the untapped technology solutions resident within emerging and frontier markets in order to offer an alternative to the overpriced Western solutions.
The assets and resources left behind by the last management team are well suited for supporting a rapid launch of the NuMelo business plan – particularly within Brazil where the core of the last operation resided. I’ve spent as many years myself managing operations in Brazil over the last decade as I’ve spent in the U.S (I’ve also have extensive experience in Chile, Colombia Venezuela, Honduras and Panama).
NuMelo’s new business plan is beyond the concept phase. Two letters of intent for acquisitions of technology firms in Brazil have already been signed (look for more information on the two LOIs to be posted here on the NuMelo website next week).
Right Place; Right Time; Right Strategy
NuMelo is at the right place at the right time with the right strategy. Frontier and emerging markets are rich with untapped talent. Frontier and emerging markets are looking to replace the expensive technology resources coming from Western, multinational firms. At the same time, global investment funds are exploring frontier and emerging market diversification to offset the lackluster performance of more traditional investments.
As I said at the onset of this letter, the dreams and plans of Ciao’s previous management team have gone awry, and you and I find ourselves with the task of picking up after the broken dreams and pursuing new horizons. I believe the NuMelo plan is sound and I have a great deal of enthusiasm for executing on the plan. I hope you might share my enthusiasm and I welcome your feedback.