Brian Meissner set up a successful hostel in Uruguay straight out of College. How did he do it? And what other opportunities are currently available to Western entrepreneurs? This interview will reveal the answers…
International Man: Brian, you’re originally from Wisconsin. So how did you end up in Uruguay?
Brian Meissner: This may be a bit cliché but my interest in living and working overseas started the way a lot of peoples does; by taking a pretty big trip when I was in college. Broke up with a girl and needed some air, planned on traveling for a couple of months and wound up spending over a year in South America.
IM: Straight out of college?
BM: Actually, it would have been between my sophomore and junior years.
IM: OK, right in the middle there. So did you end up going back to college? Did you finish your degree?
BM: Yeah. Actually, during the time I was away, I started working in order to maintain my travels — odd jobs, tourism industry stuff — eventually working with the Brazilian public agency SEBRAE and having some eye opening experiences independently assisting local producers compete and survive by becoming export qualified co-ops. With this experience I wound up starting a little business which consisted of some contract consulting, market analysis and political research.
That experience was definitely life changing. It was a big jump from life in Wisconsin. I learned valuable skills and worked in a way I hadn’t before.
So, it was kind of tough going back to college after professionally doing what you went back to study. I loved college and I have a lot of appreciation for what I learned there. But, it’s one thing to go back to grad school and have a very particular focus, and it’s another to sink your teeth and work on policy analysis, for example, and then go back to basic college-level courses.
In some ways it felt like a step back, hard to take seriously. I knew I wanted to get back out on my own again quickly, always having been fairly entrepreneurial in spirit. Even more so than in the past, I put more emphasis on my full time jobs working in and managing restaurants and bars and focused on the broader theory I was learning in school.
My last year at college was spent every single day in one way or another formulating and finalizing a plan to open up a boutique hostel and bar. And that’s kind of how I wound up in Punta del Diablo.
IM: How did you ultimately decide on placing it so far up the coast?
BM: It mostly came down to large-scale economic factors that few people probably would apply to this context.
We have a kind of a boutique upscale hostel, which means you have the accommodations, amenities and quality of a hotel or B&B setting with social services that are really more traditionally hostel — bringing everybody together in a group setting
That idea came about in response to a shift in tourism, which has been so gradual I don’t think it’s gotten the notice that it should. It’s been a response to people holding so many more jobs in life – now certainly than they did several generations ago – it’s really provided people with a lot more opportunities for extended travel
The changes we have seen over the last 30 years are pretty significant. People are taking fewer trips for longer periods. They’re still taking the same amount of travel days, but how they spend that and what kind of trips people go on is fundamentally very different.
That meant that there were a lot of opportunities to fill in these pretty substantial gaps between the established destinations in a place like South America. A large part of the travel market is traversing between these large destinations, and the experience between the bookends is as much a part of their trip as the big name sites and cities. I think the room for growth is to place yourself for that market within the space between the more established destinations and really work at making yourself visible and accessible.
So corridor that I chose was, for example, from Buenos Aires to Rio de Janeiro.
I discovered that more than three quarters of people that spend a trip for at least 30 days in South America at some point touch Buenos Aires and about 60% touch Rio de Janeiro. So obviously that corridor is very significant.
IM: So after school, did you just head straight down then or did you stick around in the US before heading back to Uruguay?
BM: No, I went straight down. I had already been working full-time since I was 15 years old. While going through school I was actually managing at a local restaurant and working the bar. I was very involved and had a lot of experience in the service industry by the time I started El Diablo Tranquillo at the age of 23.
As mentioned, it wasn’t the first business that I had started. The others previously were obviously much smaller scale, but also had been good practice for, you know, the basics — all those kind of entrepreneurial life lessons that can be very important like research, paying attention to the bottom line, watching your cash flow, being objective, but most of all being prepared, diligent, and just working long, hard, and smart.
I also traveled extensively which I thought gave me a lot of empathy for my market – another factor I thought important.
It’s the same three factors I recommend all entrepreneurs be aware of – especially when going overseas: understand the market, understand what it means to do something on your own and understand both the operations and expectations of your industry.
IM: So you officially started the business when you were 23… and how long has it been going on for now?
BM: Four and a half years.
IM: So you’re about 28?
IM: Did you head out with anybody, or was it just yourself as an independent entrepreneur / adventurer kind of guy setting everything up?
BM: No, it was me there alone for 6-7 months. My girlfriend came down after that. It was a personal endeavor.
IM: What about some of the lessons here… Obviously I imagine there’s going to be a fair bit of difference between getting started and running a business in the U.S. versus in Uruguay? Can you tell us a little bit about what it takes to start a business in that country, and then what it actually takes to run it?
BM: In Uruguay specifically, I think it’s a relatively easy country to establish a business in that the laws of incorporation are fairly easy to maneuver. But that’s about where anything easy stops [laughs].
I think one thing that’s definitely present in all of Latin America that we’re very much unaccustomed to in the U.S. is that we assume relatively easy access to credit. It’s quite an adjustment. That means you have to be a lot more creative in terms of capital generation than you would be, and certainly for a hospitality business such as I was doing.
Given the robustness of the business plan and the opportunity that was there, if I was in the States, I’d have a mortgage against my property and pretty straight forward debt structure.
But in Uruguay, for example, at one point, we already had $580,000 invested into property and construction when I attempted to get a $60,000 loan – so 10% of what I was putting up as collateral – and was denied by the 3 largest banks in Uruguay. I was shocked.
Here we had a business plan sound enough to generate over half a million dollars in private investment through the scrutiny of people who are putting a lot of faith in a 23-year-old kid and then the banks saying “oh well, now that you have a half-million dollars put against it, we still won’t consider it.”
So that was certainly a reality check in terms of the different playing fields once you leave the U.S.
IM: So you had raised over half a million from angel investors, predominantly from the States, and now you were just looking to get the $60,000 operating line of credit or loan, and they said “nope, too risky”.
BM: Yeah. It didn’t end up being a setback or anything, but it was a bit of a surprise.
Obviously I was aware that traditional forms of credit and capital weren’t going to be a major part of my plans. But to see the extent of that really makes you realize why, I think, a lot of other things play out as they do in Latin American life.
It’s shocking to think that someone with a phenomenal idea just really has no opportunity to do anything about it in so many countries.
In the U.S., we’re fortunate to have an understanding and ability to maneuver across international borders. It becomes a huge advantage actually to be able to generate capital elsewhere and bring it to Latin America because it provides a competitive advantage that maybe you have and not everyone in the market shares. In some degree that’s always true — those who are good at financing and fundraising obviously have an advantage in any business…
In western countries, you just don’t have the blockage to capital access that you do there. It impacts the economy a lot.
IM: That’s very interesting. So raising capital locally is one of the challenges in starting a business in Uruguay. What about things like paperwork, licenses, building codes, those sorts of things?
BM: In the U.S., those challenges are rigorous. They’re tedious. They can require expenditures on the legal system that you would prefer not to spend, or force you to make decisions you’d prefer not to make.
The problem in Uruguay and elsewhere in Latin America is the gap between sort of stated realities and enforcement. Enforcement can almost seem so arbitrary that it can really be a challenge just to figure out what’s going on. At home, you can just read the building codes and know how you have to build it. In Uruguay, you have to read the building codes at the municipal level, the state level, the national level and then figure out how the building codes are enforced, interpreted and what they imply.
Again, it’s a different challenge.
It’s much more ambiguous and can feel more arbitrary. It forces you to do a lot more “sifting through” on just figuring out the differences and empirical practices, whether it’s laws or permits or anything else. How are they going to affect you?
There are permits in the beach town that I operate in that after 4 years, we’re still on a waiting list to be OK’d from the fire department because they won’t do an inspection. They just lack the resources. Technically, I shouldn’t be able to operate a business because that’s a necessary component of having a commercial license. However, they’re all aware it just takes years. It takes years waiting ‘til someone gets off their butt in the fire department and gets out and does an actual physical inspection.
So you’re forced to be more flexible.
In the States, you read a checklist and say, “before I apply for a commercial operator’s license I need closure of construction, fire safety permit or whatever” and it can at times be paralyzing here. But in Uruguay, if I were to look at it that way, I’d still be waiting to open my business! [Laughs]
So you actually have to go in and have the conversation and say, “Hey man, I applied for this a couple of months ago and I don’t know what you want me to do here…” and they go “Oh yeah, it takes forever. We’ll give you the OK.”
As a business owner, it’s really quite terrifying because the arbitrariness can at times make you feel as though there are things you can’t have under your control. Most people forget that one of your main and most underrated functions as a business owner is just limiting your exposure to risk. When things feel arbitrary, it’s very unsettling. On the other hand, it opens up a lot of possibilities because again it puts the ball in your court where it otherwise wouldn’t be, you have more power to affect outcomes because the system isn’t as rigid.
I don’t mean to say it’s Wild West lack of control, I just mean there are gaps between bureaucracy and enforcement. If you’re accustomed to the West, you know it just wouldn’t happen. In the West it just doesn’t matter – you have to get your fire permit. And if you say, “I’m on the list”, they’re going to say “OK, well in 48 hours you’re going to have it, so come on back.”
IM: It seems that quite often when you’re starting a business overseas, everybody wants you because you have unique skills that aren’t available in the local economy. But obviously, from what you’re saying, it goes both ways. You need to learn to deal with their system and develop a number of new skills yourself to deal with issues like these… in addition to what you bring from the West.
BM: I think that’s definitely true. Especially in the case of forming or initiating a business overseas. I think it’s a lot different for people who go and work elsewhere, or who just live elsewhere.
IM: So what is it like to run the actual business? You got all set up and you’re now bringing people in. Is it dramatically different than in the West?
BM: Very much. First there is the arbitrariness of rules I mentioned earlier. And that goes all the way down to fundamentally, I think, the issues of capital flow.
It also doesn’t help that, because it’s so hard to found and run a business due to capital issues, there’s so little competition and it seems lack of resistance to monopolies in the marketplace.
It’s not uncommon to have our suppliers not show up for a week. But you can’t change suppliers because there’s no alternative.
Can you imagine managing a business — let’s just say managing a restaurant with 70 employees in the States (which I did for a few years) — I never actually had to go “Oh man, we’re out of light bulbs, or beer, or napkins…” Here in Uruguay, I have to drive out to the store and get it. And in the rural area where my business is, it’s a 1 to 2 hour trip to buy supplies that theoretically we should be able to have delivered and ordered.
Of course, it’s been my experience that there is a lack of a serious attitude about work. Productivity is very low here.
I think we’re fortunate in the States and other western countries that many people can make the connection between actions now and opportunities later.
But here it feels like a very fatalistic society. People feel that any changes in their condition, new opportunities or exposure to new ideas, are just arbitrary and temporary. There was a study in Uruguay recently where they posed the question “Imagine two secretaries, the same age, doing the same job. One works more quickly, efficiently, and with more trustworthiness. Is it fair that she makes more money?” 85% of the people said no, and I really believe it’s because their sense of fairness makes the assumption that equality of opportunity is a given (none) so fair becomes equality of outcomes. It’s very hard to motivate in that environment.
I mean, even the janitorial staff that I hired in the States was hoping to either learn from that, use the money to educate themselves, hope for a raise or at least some OT. Everybody is aspiring to something in the States. It can be really difficult to acclimate yourself to working with people who aren’t aspiring to anything [laughs].
Previously, I wouldn’t have hired someone like this – I flat out wouldn’t employ somebody who wasn’t hoping to positively benefit from the experience and use it in some sort of a personal or professional progression. But you just can’t find those people here. It’s just not an option to look for that in an interview process.
They just see it as, “Well, I could wake up today and go to work – or not. Either way, I’m gonna live the same life and someday die.” [Laughs] You know, it’s like wow… That’s like pretty hard to motivate. [Laughs]
IM: Yeah. I was in Costa Rica for a couple weeks, just got back a little while ago and I found that exact attitude so prevalent…
BM: And once you see it, it’s just impossible to ignore it.
IM: It’s funny, I was down there with my wife and her parents and they had gone somewhere on a little bit of a hike up a local mountain. Instead of hiking down, they ended up getting a ride back to their car 6 kilometers away from the European-born owner of a restaurant they found at the end of the path.
On the way, the owner waves to another driver and explains to my parents-in-law “oh, that’s one of my workers that didn’t show up for work today. Didn’t call, just didn’t show up. You get used to it after a while.” In North America that wouldn’t work. You’d be fired and they’d find somebody else.
BM: Right, and part of the reason is because there’s a competitive nature in the job market that doesn’t exist there. There’s a hierarchy within any job in the States and you want to be seen as doing your job well because you believe that you will get future opportunities, whether that means promotion or better references when you apply for a new position at a new company in the future. And beyond that, just using that experience to learn and to grow.
Their welfare system would just absolutely blow away anything you would see in any western country. You know, they just don’t work for 3 – 4 months and they’re fine. I mean, my friends in America are worried about the effects of the crisis here. A typical Uruguayan response would be, “Oh yeah, I just won’t work for a year or two”. That just doesn’t happen in the States. It doesn’t work that way.
IM: So you’re currently in Texas. I guess right now it’s winter season in Uruguay. So do you close for the year, or do you just go on a very minimal base through the winter?
BM: It’s our slow season, but we stay open. We have two buildings and we close down one of those. We have an employee housing system but the staff moves into the main building for winters and because there are very few guests for about 3 months a year, we cut back significantly.
IM: So is this business something that you have to be there most of the time to run or have you been able to find the right people to manage it for you so you can stay relatively hands off and focus on the more proactive side of things?
BM: This is kind of the first time… We’ve been through a few managers, some better than others. I left once before and it was quite disastrous. This time things are going really well and I’m confident in the group we have there now. We’ve kind of adjusted our recruiting and HR policy to where we depend on a good mix of locals and foreigners, and bring a group with a lot of varied skills together – this helps us get through Murphy’s Law a little bit, because the unexpected tends to happen.
I could no longer entertain leaving without the presence of somebody who’s been with us a while and who has a really solid work ethic and sense of commitment. Usually, that means mostly coming from abroad.
Initially, I really focused on taking almost anyone and trying to change their attitude and get them to take business and responsibility seriously. Now, I’m like, “OK, how can we create a good recruiting system to get a continual flow of talented foreigners?”
And that’s working out pretty well.
IM: Excellent. Now, let’s change gears a bit. Obviously you spend a fair amount of time in Uruguay. Have you established residence there? Are you a permanent tourist?
BM: Our business is incorporated in Uruguay and I’m the sole owner, we meet various size requirements that enable me to remain in the country permanently on that basis. I’m actually just at this point starting the residency process.
IM: By the way, did you have any trouble getting used to the Uruguayan culture as compared to, say, Wisconsin?
BM: Yeah [laughs]. And not just being in Uruguay but a small town isolated from larger centers, which I think amplifies some of the differences. It’s hard having always been not only entrepreneurial, but driven… and surrounding myself with driven people.
That’s a very hard adjustment to make. To kind of accept people who are – I have no other word for it than – hopeless, or maybe better said as resigned. You know, it’s not sort of the depressing connotation of the term “hopeless” here. They just don’t aspire to anything. It makes it really hard to connect about anything. It’s been difficult to take casual acquaintances and turn them into real friendships.
IM: Do you hang around with locals a lot, or do you hang around more with the expats, or a mix?
BM: You know, we have a unique situation where we have 40+ employees for a lot of the year – and it’s a mix of people who are both local and foreign. They’re just such a continuous presence in my life. That makes up the majority of people that I spend my time with because, first, I’m at work a lot and second, because I happen to work in the service sector, so when I’m not at work I’m hanging around at the restaurant [laughs]. I’m still around the same people.
In terms of other people I hang out with, we also have tons of really interesting guests who come through all of the time. There’s such a constant stream of that, so you don’t get too bored.
IM: Interesting. OK, let’s move onto my next topic – opportunities. So obviously you identified an opportunity where you’re set up, and you mentioned at the beginning of this interview that the amount of traffic between Buenos Aires and Rio de Janeiro in peak season makes it a very popular thoroughfare. What about any other opportunities that you can see from an outsider’s perspective… If a westerner were to go in there, what are some of the things he could look for to build a business in Uruguay?
BM: I think there’s really a tremendous amount of opportunity, again in large part based on the limitations the average local imposes on himself. When you are taught that unless you’re parents are rich, you can’t start a business, that means a lot less start-up businesses. Stifled availability of capital certainly doesn’t do anything to change that mindset.
A lot of opportunities are not tried. Even shoe-stringing it, I think there are a lot of opportunities to go down and do what I think we entrepreneurs do intrinsically: look for available markets.
Then again, I think almost any foreigner, entrepreneurial by nature or not, can immediately look at something here and go, “well, this should be this way and it’s not. Or, this could be more efficient, why isn’t it?” Nobody’s creating solutions to problems. And there’s a market for just so many things on a small level.
Pick a spot, pick wherever you want to be and within a week you’re going to identify some sort of hole in the market on a kind of obvious scale that no one is addressing.
IM: Are there any types of business that naturally are a better fit for westerners coming into a Latin American country versus others?
BM: Obviously since I’ve worked in the service/hospitality industry, I think any service industry is a good option. I think we have the opportunity to leverage our skills best when it’s not in the world of production, or the more capital-intensive operations.
IM: That’s a very interesting insight, actually. Do you have any further general advice for entrepreneurs and all those of us who were raised in the West who have the Western mindset when it comes to doing business?
BM: I think we’ve touched on a lot of the important ones. I’d also recommend that people think about how attractive the kind of stepping stone process an internship is to get some experience before building a business overseas and build a network in your desired area.
Oh, and don’t be afraid to tap into your network at home too. They can be a great help.
IM: So you don’t have to be the lone wolf going into the foreign land. You can tap into your existing network to help you establish overseas and set up a business.
BM: To help you get established – whether it’s a business endeavor, or just your living situation. Some people need more security than others or are more risk averse, but if you’re willing to take the leap, remember that the same elements that made your move attractive to you likely resonate with others – if you’re making the bold move let them feed off of that and participate in some way, they’ll thank you for the opportunity and you’ll be grateful for the assistance that you can be confident in.
If I may take a second to share the new project I am currently developing I think some of your readers, particularly those interested in foreign real estate or rural vacation homes, may be interested in?
I am currently developing a new venture which will operate in both the tourism and real estate spaces. SA-Trails is an application designed to address the two biggest obstacles facing overland travelers in South America in order to glean information useful in anticipating real estate opportunities and then pro-actively driving that growth through exposure and accessibility. If you’d like more information regarding how we combine an innovative routing service with a proprietary data collection system to become involved with and drive accessibility of emerging destinations – email me at brian (at) eldiablotranquilo.com
IM: Sounds good. Brian, I want to thank you very much for taking some time with us.
BM: My pleasure.