Grace Brennan

Mobile penetration is predicted to top 73% in Latin America (LATAM) by 2025, and in turn, app downloads in the region have been steadily growing over recent years. The rise in mobile use has created a vacuum for new app offerings looking to harness a large, diverse, and tech-savvy market. The problem, however, is that LATAM can be harsh, with as many as 52% of early-stage startups failing there.

Many companies make the mistake of overlooking the diversity of local regulations, tax requirements, and legal variances across individual countries in LATAM. Nations are even more nuanced when it comes to specific mobile user behaviors, expectations, and tech literacy. Walmart's attempt to launch in Brazil is a prime example. The retail giant lost $4.5 billion after realizing too late that shoppers in the country didn't want everyday low prices from a one-stop-shop business model. Instead, Brazilians prefer to browse in various stores to find timely valuable deals.

When it comes to apps, various brands have failed to conquer LATAM. Still, their stories provide useful insights to help others be better prepared moving forward. Here are four lessons learned from failed apps in Latin America:

1. Prioritize micro growth first

Launched in 2013, Mi Media Manzana was the biggest online dating app in LATAM for Android phones. In its early years, the app saw good user traction, and was able to expand from its home country of Peru into Colombia, Chile, and Mexico. Conversion and retention rates were high and the company believed they could sustain scaling up. Unfortunately, these were vanity metrics and by moving into new markets too quickly, Mi Media Manzana overspent its budget significantly.

Reflecting on the experience, Co-founder and Product Manager, Cesar Hoshi, noted how they should have focused on cities rather than countries for the app. Considering that LATAM's geography is so vast, users of the dating app needed to be in nearby locations to meet up — something that wasn't possible across borders. Hoshi also pointed out that Mi Media Manzana focused too heavily on one single metric that couldn't be controlled (retention) rather than data that was based on user input and could be impacted by product revisions.

2. Research the regulations

It's not only startups that have struggled to make headway in LATAM. Despite being one of the most downloaded apps in the world, Whatsapp's in-chat payment feature recently stalled in Brazil. One week after rolling out, Whatsapp Pay was suspended in the country by the central bank, which took the decision in order to "preserve an adequate competitive environment" in the mobile payments space.

Whatsapp's biggest error was that it failed to present the deal to Brazilian regulators before going live, which meant that it wasn't properly vetted nor approved. The decision was a gamble, and although Brazil has since said that it will authorize Whatsapp Pay once the rules are respected, Whatsapp has endured a costly and embarrassing setback.

3. Timing is everything

Square Enix, a Japanese video game company, sought to introduce an app in LATAM back in 2013. Pairing with local studios and developers in Argentina, Brazil, and Colombia, the project seemed promising. Issues began to arise though, when cultural differences and the lack of widely-available connectivity (at the time), caused roadblocks.

The gaming app had to be developed in a non-heavy way to accommodate LATAM's limited connectivity, but stakeholders in Japan took this to be a reflection of poor-quality building. There was also friction in the sense that developers in Japan had a greater level of expertise than those in LATAM. Eventually, the disconnect resulted in Square Enix closing down the projects. One game was released for a limited time on the iOS App Store, but it was removed after the deal was terminated.

Martina Santoro, the CEO of OKAM Studio — one of the LATAM partners — reflected that "[Square Enix] came in too early. Latin America now is a whole new region [...] They just missed the right time." Had the project been better aligned with the landscape of the time, the development and release may have been far more lucrative.

4. Build an in-house team

Outsourcing is a common solution for startups that want to save costs and shorten the time to market phase., a platform to find and book event spaces for special occasions, chose that route to facilitate its quick tech growth. In 2018, the company had 400 rooms and creative spaces in 16 cities and four countries throughout LATAM (Colombia, Peru, Panama, and Mexico). A year later, it was experiencing a 32% average monthly growth.

Obstacles arrived when discovered that its outsourced team did not have the passion and dedication needed to enable efficient scaling. The team also opted to wait until the platform was 100% ready to release to expanding markets - which meant delayed deliverables and the inability to make iterations based on user interactions. Having an uncommitted product team, plus a need to be completely polished was Nasuu's eventual downfall.

The landscape for apps in LATAM has come a long way in a short space of time. Apps like Rappi, Mercado Libre, Mobile, iFood, and Nubank all provide fierce competition for newcomers in the region, and have set high standards that other companies must meet as a minimum to be successful.

That said, LATAM is a hub of innovation and apps that promote opportunities for societal development, social mobility, financial control, and access to overseas markets will have the biggest potential. Likewise, the rapid acceleration of mobile usage actually opens up the market as an ideal test space and launch pad for new apps. So long as companies are responsible, well-researched, and don't underestimate LATAM's unique conditions, there's a good chance of thriving in the region.