Rappi: the Latin American Unicorn | Sidebean

0:00The delivery apps have grown in popularity in recent years and Latin America is no exception But this is Rappi's territory. This Colombian startup isn't just one of the most prominent startups to come out of the region It's also the country's first unicorn. Rappi's rise to start-up has been fast and relentless But the startup is far from perfect. On one side it's earned praise from the business world But it faces harsh criticism and even legal issues. Plus the discussion goes further So let's take a look at Rappi in this episode of forensics and its success and To think it all started with donuts. This video was brought to you by Chartmogl Their tool automatically generates all the SaaS subscription analytics you need to run your business like a pro You can use it to measure understand and grow your recurring revenue. Go to turnmogl.com slash slight pain to learn more The origins It's 2015 in Colombia. Cmumbu, Rero, Céo Stanmejia and Felipe Viyamarin wanted to create an easy-buyed experience So they created grabbility. The initial idea was to make food and grocery shopping easier But then an interesting phenomenon happened. Grabbility had a feedback section and users began asking for favors

1:03Such as going to the ATM or delivering cat food. The founders noticed that the grabbility was more than adepas and Burgers they have said that the customers are in part responsible for creating Rappi. It was time then for a rebrand and Change in course. That's how Rappi was born with 10 employees and a basic app that helped with shopping all Rappi needed was users and that's where donuts come in the founders set up two tents around Bogota and offered three donuts to anybody who Downloaded the app. Well, people don't usually reject donuts So thousands signed up and granted you wouldn't get massive numbers just giving away donuts But it was a successful strategy it seems and that's all that Rappi needed a Rappi rice and popularity The only platform to exist long before Rappi But this startup offered something different by having not only groceries but other services So from the start Rappi said itself apart and the perks didn't stop there besides ordering almost anything Rappi promised that deliveries would arrive in 30 minutes and cost around a dollar as for the startup It makes money by charging around 17% of each retail transaction and then there was the region

2:08Rappi was unlike anything the Latin American countries had seen so for businesses This was the chance to reach new customers as for users and customers not leaving your house is almost all He's a guarantee of success. So deliveries were a hit and then there was the delivery personnel It was an opportunity for many people to get a job But hold on to this idea for later for the moment. Let's say that Rappi had all the checkmarks for a promising startup Just one year after its foundation Rappi had already been through why combinator plus it had expanded beyond Colombia to other Countries in the region from 2015 onward Rappi saw massive Investment and rapid expansion there was a lot of hype around it and the founders claimed the company was growing really fast Year-in-year so investors were willing to drop big bucks two hundred million dollars to be precise That's how much Rappi raised in 2018 alone and this marked a critical moment in the company's history It's a joy ride to the top 200 million dollar an investment is no small feat But with this investment round Rappi had now become the first Colombian startup to become a unicorn

3:10That's a company with a valuation of one billion dollars or more and there was no slowing down this stardew That's a year Rappi already operated in five countries plus it was expanding to other services the founders were ambitious and now aimed at Fintech into a 19 Rappi partnered with wvn that one of combies largest banks and created the digital wallet Rappi pay by 2021 It had over 600,000 users with 20 million transactions per year and then they got into credit cards with cashback Preferred interests and other benefits heck Rappi even got into the business of selling air tickets Rappi was so big Even beauty brands like avant offered products exclusively through the platform in 2019 Colombian president Ivan Duque gave him one more arrow the entrepreneur of the year award in the president's own words Rappi had transformed society That's how big it was by 2020 the company had expanded to nine countries including Peru and yours truly Costa Rica and 250 cities so all of this growth came before the pin of course the lockdown increased the demand exponentially in 2021 Rappi had raised a serious F funding round and the numbers are impressive

4:12$500 million and 5.25 billion dollar valuation those are big lead numbers It's even more so when we see that it's coming out of Latin America a region that's really at the beginning of a startup revolution So really hats off to them, but Rappi isn't perfect Rappi's wrong side No company this big is going to be perfect anything but there are plenty of downsides to Rappi and some entail a bigger discussion But let's not get ahead of ourselves Rappi is pretty huge in Latin America and most likely you've seen similar platforms in your countries Which I'm very curious about by the way So if you want to drop a comment that'd be really useful those are potentially new companies to cover So country that you're from and what you want to wrap the equivalent there anyway, let's get back to the topic All of these platforms are super cheap for the user the business is also benefit But they have to dish out a little commission But Rappi depends really on an army of personnel delivering on the ground So many people deliver to make an extra buck. There's even a term for them Rappi tenderos or Rappi tenders many Rappi tenders are migrants

5:13You see the app isn't really rigorous on requirements So undocumented immigrants turn to it even if it means small wages and that's where Rappi's reputation takes a hit an investigation report By the BBC showed that in some countries Rappi claimed that Rappi tenders earned about 1.5 dollars per delivery So with two or three deliveries per hour that's three or four dollars an hour So from that perspective the company is paying minimum wage But then there's the issue of calling delivery personnel independent entrepreneurs Rappi like many other platforms will be included doesn't pay insurance or social costs to their drivers So some countries have pressure giants like Uber to take action and pay some of these benefits Rappi operates in Latin America and there's still much to improve in these topics besides There's bureaucracy and things run a lot slower So Rappi claims that they provide a minimum wage but Rappi tenders say that that's not the case That's not what they see for example They have to buy the company bag and not doing so could mean less work also in theory Rappi tenders can choose to reject the livery's but many say that in reality They just can't otherwise the system will gradually offer them fewer opportunities

6:15And then there's the cost of the bikes the fuel and all the work related expenses that Rappi doesn't really cover At all of these factors together and you have Rappi tenders working countless hours to make a barely decent living And don't think that there aren't any complaints on the other side Rappi reviews are low in almost every country the main reason is poor customer service When customers call to complain about an order they've rarely gotten any satisfactory response It's gotten so bad that Colombian authorities started an investigation on Rappi The company had failed to comply with regulatory orders to improve customer service And that's where the discussion gets more interesting Should that be a surprise? Well, no these massive companies rarely have excellent customer service And there's the debate about the gig economy as customers we are getting more used to these services So are we willing to accept these conditions as employees? Many of us won't and don't have to But on the other hand these platforms are more and more common This might be the future of work for thousands maybe more people Even Rappi isn't alone Competition is tough but one thing is very clear

7:16Rappi managed to be different from the start From their approach to customer feedback to giving away donuts they haven't stopped Now comes the fight to stay on top And to stay on top you need great tools And that's where Tertmogule comes in Tertmogule provides you with incredibly valuable insights about your business So that you can learn more and take action We've been using Tertmogule honestly since the start of five, six years ago to track The performance of our SaaS business And if you haven't already I really recommend you to watch this video that we produced With them first on SaaS metrics and second on customer churn How ourselves how we solve our own churn problem With our widths but also using churn mongule a little bit The video that I was into what churn is And you know how could it be deadly for a SaaS business Thankfully Tertmogule can save your business by providing you with these incredible insights about customer churn So that you can quickly reduce it and find the root of the problem on your numbers It's free Tertmogule is free for any company that has under $10,000 in MRR And if you have over $10,000 in MRR you can get a $50 a month credit for 12 months If you go to our special landing page at www.mongule.com slash at slightb

8:17A big thanks for them for sponsoring today's video And then once again what is the wrap of your location? Of course beyond the state we'll rate no it's where it eats But what is the wrap of your location? Let us know in the comments, let us know where you're from And we're always curious to see all the different countries that end up watching our videos Thanks for watching and we'll see you next week