#015: What is the Big Mac(book) Index?
Spotify loves LatAm, Kushki expands, and logistics stay red-hot
Hola technopolist@s,
Latin culture steps into the fore by propelling Spotify to new heights — and with it, I finally have a legitimate reason to mention Barack Obama and Bad Bunny in the same newsletter. What’s Not shows us how PR spin is no match financial results, from El Salvador to Brazil.
With all of the doomsday reports about surging inflation, we take a look at inflation’s cousin, purchasing power, and create a new metric tailored specifically to tech: The Big Mac(book) Index.
What’s hot
🎵 Streaming gets spicy. Spotify Q2 results surpassed company guidance, driven by 14% annual subscriber growth that’s caused CEO Daniel Ek to directly shout out the region as a standout on Spotify’s earning calls. For the second quarter in a row, audience growth in the region — particularly in Brazil and Mexico — has been the primary driver of the streaming platform’s growth. We’ve had a few clues leading up to the strong earnings report: Bad Bunny has been the platform’s most streamed artist in 2020 and 2021, and the Puerto Rican sensation has been the highest-grossing musical artist on tour in 2022. Plus, Obama just added him and Spanish superstar Rosalia to his much-anticipated summer playlist. (Bloomberg Linea)
💰 Money moves. Kushki, the Ecuadorian fintech unicorn, received regulatory approval to become Ecuador’s first payment aggregator. The fintech, which provides one-click payment processing that allows businesses like Rappi to have a single payments processor across all of LatAm, reached unicorn status in June with a $100mn fundraise. Now, the new approval allows them to move beyond payments alone to become a direct intermediary between banks and businesses so that business owners don’t even need to speak to their banks anymore. (Latam List)
🚚 Latin logistics. Frete, the Brazilian trucking marketplace, has acquired logistics software provider InterSite in a cash and stock deal to beef up their user experience. The São Paulo-based logistics scaleup became a unicorn last November with a $200mn fundraise led by SoftBank and Tencent. Frete is a key player in an exploding logistics landscape that has minted heavyweights like Nowports and enticed Texas-based import/export provider Cargo Produce to expand into Mexico. Frete has also announced that it’s looking to take advantage of the market correction by making more acquisitions in the coming months — a trend we’ve noticed in other hot sectors like fintech and mobility. (Latam List)
What’s not
🇸🇻 Bukele, bitcoin, and bonds. Salvadoran President Nayib Bukele has announced plans to buy back up to $1.6bn of government bonds in a two-pronged attempt to avert junk bond status while plugging his $1bn plans to sell new bitcoin-backed Volcano Bonds. Bond prices — which have slid to rock-bottom levels in the past year — boosted 20% on the announcement, while Bukele and Finance Minister Alejandro Zelaya have doggedly defended the bitcoin initiative, claiming it has boosted financial inclusion and foreign investment. But Bukele and Zelaya are opposed by… pretty much everyone else. Local business owners report extremely low usage of bitcoin and the government’s digital wallet; the IMF has decried legalising bitcoin; analysts estimate that Salvadoran public investments in bitcoin have shed at least 50% of their value; and commentators think that the buybacks are overblown and less likely. (Bloomberg Linea)
🏦 David and Goliath Nubank. There’s good news and bad news for Nubank CEO David Velez. The good news: Nubank has surpassed 1mn users for its crypto offering since launch one month ago, and its investor platform (Easynvest) has grown its user base 2.5x in one year. The bad news: new user growth hasn’t been enough to stop the bleeding of Nu’s share price and Velez’s personal fortune. The 1mn crypto users represent less than 2% of Nubank’s customer base — still just a drop in the bucket towards higher monetisation. Nubank is trading at half of its YTD peak (one-third of its IPO price), and Velez was recently demoted off of Bloomberg’s list of the 500 richest people. (Bloomberg Linea)
Stat of the week
With inflation in the news, we’re taking a look at purchasing power this week. The Economist invented the Big Mac Index in 1986 as an intuitive way to compare the purchasing power of different currencies without complex consumer price indices. Just ask: what does a Big Mac cost in that country, in dollars?
In that same spirit, I’ve created The Big Mac(book) Index as a 21st-century update for the tech world — with a small twist. Rather than just showing the dollar cost of a computer in each country, this chart converts that cost into the number of days work required to buy the machine.
In real terms: as an average citizen in Chile (the “cheapest” place for a Macbook in LatAm) a Macbook costs you over one months worth of work – nearly 5x as much labor than it would in the US.
The Index looks at 2 variables: average income (GDP per capita) and the local cost of a Macbook Pro. Here’s how each country in LatAm stacks up:
Compare the two richest countries in LatAm: Chile and Uruguay. The Uruguayans — though wealthier on average — face nearly double the price of a Macbook. Roiled by hyperinflation, Argentina suffers from the same problem as Uruguay.
Smart links
Meet Riivi, the streaming platform based solely on LatAm content
How Argentine unicorns and startups are dodging layoffs
Entrepreneurs in Mexico like the metaverse, but few know what it’s about
Mexican women — though underrepresented — are outperforming men in the stock market
Mexico’s “super peso” smashes expectations as nearshore manufacturing surges
IDB chief’s open letter warns Argentina to honour IMF commitments (or else)
Argentina appoints veteran politician to lead new economy ‘super ministry’
Argentines turn to black market dollars as crisis worsens
Brazilian unemployment hits a seven-year low in a lift for Bolsonaro
London's High Court rules against Venezuela's Maduro in $1 billion gold battle
Why Latin America Lost at Globalization—and How It Can Win Now
Americans are flooding Mexico City. Some locals want them to go home