Interview with Andre Averbug, Planning Director, PV Inova
Overview
PV Inova has defined as its mission to improve the quality of people’s lives through the innovative use of technology within public transportation settings. PV Inova’s main objective is to make the time passengers spend on public transportation productive and enjoyable by developing and commercializing new products and services that are specially adapted for these means of transportation. Its first product, TÉLO, was patented as the very first public telephone developed especially for use in public transportation vehicles. The company is now developing its second product, the TVPV, the first vehicular public digital television.
When did PV Inova begin operations and how did you develop the idea with your colleagues?
PV Inova was founded in August 2004, during the second year of my MBA. The idea for TÉLO, our first product, emerged during conversations with my partner, Paulo Lerner, who at the time was attending grad school in engineering, in Rio de Janeiro, Brazil. He came up with the idea of a public phone especially adapted for public transportation vehicles and we began to develop this idea into an actual business.
Is this the first company that you have started, and what drove you towards it?
Yes, this is my first company. Probably what drove me so passionately into this business was the fact that it was completely in tandem with my career in Development and what I had assimilated at business school. Starting a BoP (base of the pyramid) company in my native country was the most challenging and impacting thing I could do after spending years in development banks and earning a business degree.
Why did you decide to pursue a business model that is based on the Base of the Pyramid strategy?
Over the years, I realized that one of the best channels to promote economic development and prosperity is through entrepreneurship and innovation. A BoP business was a natural path for me because I was always attracted by the “do-good-and-do-well” concept. The opportunity to start a business with a strong potential for digital inclusion, positive social-economic impact and profit was all I needed to launch myself into this BoP endeavor.
You have patented your product line, is this a niche market you are entering or do you feel that you are faced with much (direct or indirect) competition?
This is definitely a niche market that we have created – exploring idle time on public transportation in a systematic manner. However, we are aware that competition will come sooner or later and we have two strategies to deal with that: being quick and efficient in occupying the best spots in the market and protecting our intellectual property.
How did you finance your start-up operations and how long did it take for the company to become self-sustainable?
Our first round of financing was by an angel-investor, who provided capital and know-how to the business. We later structured two more equity and two debt rounds and recently earned a grant from the Brazilian government. Because full commercialization will only start in January 2008, we are still on our way to becoming self-sustainable.
Does the Brazilian government financially support your work given its broader social mission?
We have earned a grant from FINEP, a government agency that supports R&D and entrepreneurship, and got financing from FINAME, one of the lending arms of BNDES, the Brazilian Development Bank. In Chile, we earned a grant from CORFO, another government agency, to start exploring the Chilean market along with local entrepreneurs.
What was the biggest challenge in starting an innovative business in Brazil and how did you overcome that?
Overall, our biggest challenge was dealing with the lack of entrepreneurial culture that is still present in Brazil, as in many other developing countries. Being approached by two young entrepreneurs with an innovative business idea was such a novelty for most companies and investors that in most cases the reaction was something like, “Great idea! But come back to me in a couple of years, once the concept has been proven; I’m not willing to take that kind of risk.” This risk-averseness was particularly acute a couple of years ago, when the combination of high interest rates and a booming stock market naturally increased the opportunity cost of venture capital.
How do you plan to further internationalize your product to other regions worldwide? To what extent will the challenges be different among the different regions?
To internationalize our business, we intend to leverage, on the one hand, on the support of multilateral institutions and, on the other, on partnerships with multinational companies. With regards to the former, we have been in touch with institutions such as the IFC and the Inter-American Development Bank (IDB) and, as far as the latter, we are developing business partnerships with players with regional and sometimes global reach. In the particular case of Chile, we were contacted by a group of local entrepreneurs through a business incubator and we are in the process of constituting PV Inova Chile.
The future of the product is not limited to making telephone calls alone – what else can you spin off from this technology?
TÉLO is much more than simply a telephone. First, as an added feature, it has a GPS module (Global Positioning System) which can be used to track the vehicles. Such a monitoring and tracking system benefits (i) bus companies, by providing more control over their fleets; (ii) passengers, who will have information on where their desired vehicle can be found, minimizing waiting times at bus stops; and (iii) public authorities, by gaining more control over public transportation quality in their cities. Other additional services such as electronic ticketing and internal security cameras may also benefit from the TÉLO system for data and image transmission to their respective information management centers. Finally, the incorporation of new technologies, such as 3G, VoIP and Bluetooth are also in the pipeline for TÉLO.
You have been a JPA at the World Bank, to what extent did that program influence the social mission of PV Inova and were you able to draw some experiences and lessons from the program to help you succeed in your business?
As a JPA, I worked on a Country Assistance Evaluation and a Country Assistance Strategy, which gave me the opportunity to interact at the strategic level with professionals from different areas and backgrounds. This experience gave me a broad, cross-sectoral perspective on Development and naturally stressed the role of the private sector and entrepreneurship in creating and spreading wealth. It consolidated my commitment to Development and my belief in the role of the private sector in it – values that are at the core of our social mission.
What is the background of your colleagues in the company?
We are three executive partners. Paulo Lerner, the Director of Technology, is an Engineer and has a background in innovation, having started other companies before. Leonardo Sampaio, the Director of Marketing, joined us after his MSc in Media and Communications at the London School of Economics. He also holds an MBA and had worked at big media and telecommunication firms in Brazil and abroad. I am responsible for Planning and Finance and my background is in Economics (BA and MSc) and Business (MBA).
Who are the other shareholders in your company, in addition to your executive partners?
We have as minority shareholders one angel investor, seven members of an investment club, and a small investment firm.
How much cheaper is it to use your phone versus a cellphone?
TÉLO is cheaper than pre-paid (pay-as-you-go) cellphones, which are dominant in developing countries (in some countries up to 94% of total phones), and its rates are equivalent to those of street public phones.
How did you first launch the product?
TÉLO was soft-launched in February 2007 in the city of Porto Alegre, Brazil, in association with Brasil Telecom and bus company Carris. It was later launched in Rio de Janeiro, in association with Metrô Rio, during the Pan-American Games (Rio 2007).
With hindsight, are there any particular lessons or messages that you wish you would have known when you started up your company?
Ironically, not knowing the real complexities and difficulties of this business from scratch was crucial to the evolution of our company. Had I known that it would have taken three years before we actually put our product on the street, maybe I would not have had the perseverance needed to keep on rolling…
Do you feel that you had the necessary advisory and support network when you started your company?
We had a good network of strategic supporters and advisors, from our angel investor, to former business-school teachers, to friends in the market and other entrepreneurs. We were never scared to knock on people’s doors for advice and never turned down an offer to discuss our business with anyone.
For more information about PV Inova
www.pvinova.com.br
andre@pvinova.com.br