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Archive for December, 2008

jetblueJetBlue or Azul Linhas Aereas, one of the leading low-cost carriers in the world,  started its operations in Brazil this week to enter a underexplored and potential gold mine market in South America. The airline was founded by David Neeleman (right) with $150m from American and Brazilian investors  with orders of up to $1.4 bi for 36 jetliners from Embraer (Brazilian Aviation Company).

Below is an excerpt from an article published on the Wall Street Journal by Susan Carey.

David Neeleman, founder of JetBlue Airways Corp., launched his fourth low-cost airline — this time in Brazil — defying poor markets for aircraft financing. Azul Linhas Aéreas Brasileiras SA started service Monday with four jetliners and plans to acquire four more by next month. It had originally planned to start operations in January but moved up its debut to capitalize on the peak holiday season.

Mr. Neeleman said frozen credit markets make this “the worst time ever to finance a plane.” But he said Azul is leasing six aircraft, all directly or indirectly from JetBlue, another Embraer operator, and managed to get financing from the Brazilian Development Bank and a German bank for a few more aircraft. “We have five more to go,” he said in a telephone interview from Salvador de Bahia. “We’ll get it worked.”

The 49-year-old airline executive, who speaks fluent Portuguese and holds both U.S. and Brazilian citizenship, is Azul’s chairman and holds a 20% equity stake and 80% voting control in the venture. A Brazilian retailing executive was recruited as president.

One target market is Brazilians who don’t travel at all, as well as those who take about 250 million trips a year on long-distance buses. As a result, Azul’s cheapest fares, purchased 21 days in advance, are similar in price to bus tickets. Its lowest one-way fare from Campinas to Salvador de Bahia is 209 reals, or roughly $87, for a two-hour flight. The bus takes 33 hours.

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The Brazilian govervenment has celebrated today as the country’s GDP has grown to 1.8 percent in the third quarter from the second. These are further signs that the South American country is resisting the global recession.

According to the official statistics agency, IBGE, the expansion of the gross domestic product was faster than the 1.6 percent expansion in the second quarter from the first.

The announcement comes against pessimistic forecasts that saw GDP growing 1.2 percent in the third quarter. Previous estimates were between 0.4 percent to 1.4 percent growth.

According to Forbes NY: “On an annual basis, GDP expanded a robust 6.8 percent in the third quarter compared with the same period in 2007 , after posting a revised year-on-year growth of 6.2 percent in the second quarter. The result was stronger than the the 5.6 percent year-on-year GDP median growth forecast in the Reuters poll. Estimates ranged from 4.2 percent to 6.0 percent.”

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The New York Times highlighted the growth of Power.com, a start up social networking company from Brazil which aims to become the leading portal where people can access their virtual lives. Power’s investors include venture capital firm Draper Fisher Jurvetson and Esther Dyson. What the site does is to put in one place instant messages, network updates, email and contact lists – instead of spread across Facebook, Hi5, LinkedIn, MSN, MySpace and Google’s Orkut.

“To me the important issue is that users are driving Power themselves,” said Esther Dyson, one of the technology industry’s preeminent global trend spotters and a seed investor in Power.com. “And it excites me that these users are not just in the US. Nor are the software’s creators: Latin America has impressive software design and engineering talent. Silicon Valley is not the only place to find great talent to build a world-class company.”

Vachani, a self-proclaimed “global adventurer” arrived in Brazil 5 years ago to take a break from the Silicon Valley. A UC Berkeley graduate, and a serial entrepreneur, Vachani, who lives in Rio de Janeiro, said, “I came to Brazil with a smile, a backpack and a passion for Brazilian dance and music. I just wanted to get my mind off of technology, and I thought I would go back to the US and start a new project after a year or so. Little did I know…”

Vachani soon recognized Latin America’s hidden treasure: undiscovered great minds. Vachani stated, “I quickly realized that Latin America was like India 30 years ago, before Silicon Valley discovered it. Back then, most of India’s brilliant minds were trapped in academia or working as bureaucrats in the government, with no entrepreneurial opportunities. Today, thousands of brilliant minds in Latin America are likewise underutilized and undervalued, with their biggest dreams being jobs as government bureaucrats and academics. Little capital and few role models are available to young entrepreneurs.

If I could create a project that truly pushed the limits of innovation, and that had capital, I knew I would be able to attract hundreds of Brazil’s and Latin America’s brightest minds. Together we have built Latin America’s first global technology company built upon the Silicon Valley adage to first bring the brilliant minds together and then they will create a brilliant product and company.”

Vachani did just that. As founder and CEO of Power.com, he attracted the world renowned Silicon Valley venture capital firm Draper Fisher Jurvetson, famous for investing in Skype, Baidu, and Hotmail, to invest $6 million in Power and complete DFJ’s first ever investment in Latin America. A group of private investors — including Esther Dyson — added another $2 million. Power has attracted over 70 of Brazil’s brightest minds, including self-made entrepreneurs, professors, PhD’s and top graduates from Brazil’s most prestigious universities.

Igor Barenboim, Power’s Director of Business Development, PhD graduate from Harvard University and former Global Economist for Latin America’s largest hedge fund, stated, “I joined Power when it was just an idea on paper because I truly believed that Steve’s vision would help jumpstart Latin America’s transformation into an economy which truly values its intellectual capital. As a Brazilian with great dreams for the future of Latin America, I knew I needed to join this adventure”

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