Purpose is what drives the best companies.
It’s a human thing. We devote ourselves in a deeper way to things we believe are important, valuable, or transformational for ourselves and the communities we care about.
Some of these desires to make change come to us when we are very little, or are just developed with our constant interaction with the environment. We might notice when they appear or may realize they have been there the whole time.
Human motivation is a rare thing, but a powerful one.
So, what does it have to do with Company Building?
At Polymath we believe our purpose and commitment to impact accounts for a large part of our success.
It has given us the tenacity to do things at a time and place that seemed just crazy, and it keeps pushing us to find new and better ways to create businesses with the potential of changing millions of lives for the middle class of Latin America.
That sense of purpose has connected us with amazing people along the way, and most recently with Peter Ostroske.
Peter joined Polymath as a Venture Partner this year to help us take the next step of this journey of impacting the middle class.
We talked to him recently, to better understand his view on purpose and impact, and how they connect to Polymaths’.
Keep reading if you want to know:
- Peter’s personal success story.
- How to build impactful ventures.
- How to measure impact.
- Why are impact and purpose important when fundraising
Let’s dive right in.
This story begins in New Orleans, Louisiana, United States, where Peter grew up.
In Louisiana, we always say: Thank god for Mississippi because Louisiana is always the second worst state in everything, from education to health to economy. Peter Ostroske
He was raised in New Orleans by two parents that were always involved in community activities and projects, which made him get close to social causes early on.
When he finished high school he went to the University of Chicago as an undergraduate, although he was always sure he was going to be an entrepreneur.
From an early age, I was sure that I´d be an entrepreneur. To be honest, I didn't give other professional paths much consideration. Once I realized I didn’t want to be in the U.S, I started analyzing other cultures and communities around the world, said Peter Ostroske.
So he did become an entrepreneur. After graduating college Peter founded his first business, a sportswear brand specializing in fisherman clothes. He built and scaled the business, getting its clothes placed in major multi-brand stores across the U.S.
Finally, the business was acquired which gave Peter the opportunity to move on with some great experience, to his next adventure, building a business outside the States.
But first, Peter started an MBA at Wharton, and during his first year, he decided to go and start planting the first seeds for his dream… where?
Back then a lot of people were talking about BRICs (Brazil, Russia, India and China), as the next frontier for the world’s economic growth. Brazil and Latin America seemed like an obvious choice: Culture, climate, proximity to the U.S. are reasons why people are attracted to LatAm today, and those were some of the same reasons I had 15 years ago. Peter Ostroske
And where better to start out than monashees, one of the oldest and biggest VCs working in Brazil and Latin America?
Peter was an Entrepreneur-in-Residence (EIR) there. He started a business in the country, but it didn’t scale as expected.
💡 Failure: A feeling every entrepreneur has to get used to.
But that was just the beginning. He didn’t want to go back to finish the MBA (another dropout my friends), so he decided to come to Bogota, in 2013: That’s right, almost 10 years ago. Around the same time, Polymath was born in Medellin.
Brazil was interesting, but it wasn’t Latin America. At least in the way I always understood Latin America in terms of Spanish-speaking LatAm. Brazil does feel very much like its own continent, that's a lot of times how people describe it. Peter Ostroske
Casualty or causality? We will never know.
The point is that once in Bogota, Peter started Ofi, an IT consultancy focused on helping businesses get the best out of technology for their operations.
There was really just one VC and it was Velum Ventures. They invested in Ofi and, after I arrived, it took 6 or 7 years for things for the startup and VC ecosystems to show meaningful growth by global standards.
The company is still running and is now operating in Colombia, Mexico, Chile and Ecuador.
Not bad for the third try, right?
I would say that I got the timing wrong but the place right. Peter Ostroske
Where impacts comes in…
There’s yet another thing that Peter shares with Polymath (and that’s why we are such a good match), and it’s the understanding of what impact means in Company Building.
There are many ways to change the lives of people. Some come from non-profit organizations, others from governments, but yet another portion can come from private and profitable businesses.
One way of bridging that gap is creating businesses that can both serve the mass market, help them access new opportunities and use technology to support exponential growth.
That’s basically what Peter has been doing with Ofi, and what all our Ventures are focused on.
We believe creating new income sources and augmenting productivity is more efficient than waiting for governments to change the reality of the millions of people that belong to the middle and lower middle class in LatAm.
That’s what we call being hands-on.
According to Mckinsey’s “LatAm’s missing middle report”, a conservative growth in productivity for the labor in the region can help us achieve a growth cycle that could lift the GDP to at least 50% higher than the expected baseline.
That’s a lot of growth…
Building productive companies can help move people from where they are today toward and eventually beyond a minimum living wage. Peter Ostroske
But, what does productivity mean?
It means the workforce can access better technologies, knowledge, and expertise that help them not only be better at their jobs but also achieve higher income by helping companies increase cost efficiency, innovation, or entry to new markets.
It’s a win-win-win situation as you can see.
The problem is that LatAms hasn’t been growing that productivity in the last few years as much as other emerging economies.
Compound annual growth rate LatAm vs other economies. (2000 - 2016) a report by Mckinsey
As you can see in the figure, most of the GDP growth of the region has come from increasing the number of productive people in the labor market, rather than increasing the productivity of those people.
China is a great example of productivity growth that can account for a large part of the success of the country in the last decade. They went from 3% of the population being middle-class in early 2000 to at least 60% in 2019.
That’s the kind of impact that you can’t just ignore.
And of course, technology has a big part in it. Not because of technology itself, but for the scalability and exponential growth it brings.
It’s not going to be technology for technology's sake, usually, technology is a means to an end. Peter Ostroske
Let’s listen what Peter has to say about it.
Profitability guarantees sustainability. Peter Ostroske
As we have said many other times, the journey is just beginning.
Latin America’s tech ecosystem is living its early days, and there’s much to be done in order for the real change to compound. This is just starting.
But what we see in the future is much more opportunities for businesses that focus on the possibility to serve the mass market in the region. Not only because it’s needed, but also because it can be very profitable.
The tricky thing is that the business models that are required to reach that profitability cannot be imported from other regions, but have to be created around the real and specific needs of Latin America.
The idea of focusing on a demographic is very interesting because the businesses that are most successful are the ones that are built around a well understood need. Peter Ostroske.
It will also become more and more important to show this intentionality and deep understanding of the market when fundraising, especially as the global economy continues to deteriorate and imminent recession has started to affect valuations, deal flow, etc..
The opportunity is there, and it needs to be capitalized.
In 2013, you could find some people in Bogota with a smartphone, but now you everyone has one, or even two.
The device count goes up and so does access, so people can access important services that they couldn’t before, or that they didn’t even know existed. Peter Ostroske.
In the end, the next 12 to 18 months will be pivotal to the consolidation of the tech ecosystem in Latin America. Alongside Peter and the rest of our team, we will continue to build and support companies committed to the purpose of impacting the middle class.
It’s a hard path, but we are starting to see how the ecosystem matures with more talent, more sophisticated investors, and a handful of companies/founders with a vision to scale tailored business models for the region.
Those are the ones we are looking for.
Lastly, here’s a final piece of wisdom from Peter:
When you don't have enough money to meet your basic needs, your choice spectrum is pretty limited. You are not really thinking about how to support your neighbors or how to better educate your kids. Hopefully, through business, we can expand the set of possibilities people have to select from and in doing so, create real impact in Latin America.