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Also leaned to not fuck with the cartels. Oh come on, you can’t leave us hanging like that! This is the beginning of the best story in the thread. How did the

by shawn 8y ago

Also leaned to not fuck with the cartels. Oh come on, you can’t leave us hanging like that! This is the beginning of the best story in the thread. How did the cartel connection form? Was your contact named Estefan? Did he have a mild accent and project an aura of power? “Bad decisions make good stories!”

thanatos_dem 8y ago
Luckily, nothing too exciting happened. We were operating in the financial tech space in Mexico, trying to make lending less comically predatory (a standard small business loan in Mexico can have close to the same interest rate as a payday loan in the US). With that goal in mind, we were targeting areas in Mexico that needed the most help. Cities with a decent small business sector, looking to grow, and having difficulty doing so. Juarez was a perfect fit, especially given that a lot of citizens have been across the border and can see how much better things can be. My parents were not amused. Then the movie Sicario came out soon after, and they were somehow less amused. But I got to ride around in armored vehicles with a security detail, so that was fun. Really my "learned not to fuck with the cartels" lesson came from our market research. This may surprise you, but the banks in Mexico are... sketchy. Well, not all of them, but definitely a few. In particular, we were in a competing market as Banco Azteca. It appears to have since been removed, but at the time, the Banco Azteca wikipedia page described it as having "a uniquely effective debt collection system" or something like that. Yeah, what they actually have is a motorcycle gang. They give you a loan with massive, often times impossible to pay off interest rates, and if you don't pay them back, motorcycle dudes with bats show up to collect, or take enough of your property to make up the difference.
- dragandj 8y ago
  Shouldn't that be a common knowledge in the area and work out as their competitive disadvantage? Provided that there are at least some competitors that are better for the customer?
  - justaguyhere 8y ago
    This is Juarez we are talking about. Maybe this motorcycle gang was scary enough for the competitors, maybe they have cops/politicians in their pockets... There could be any number of reasons for the gang to flourish, starting with violence
  - thanatos_dem 8y ago
    The bigger issue with lending in Mexico is a bit deeper than the sketchiness of some of the big banks. In particular, there is no reliable credit score system, so determining credit worthiness is a crap shoot. There is actually a credit reporting agency, but nobody reports to it, so nobody is really sure why they're there. A lot of citizens also (understandably) don't trust the banks and keep most of their money at home. As a result, there's very little data available to make credit determinations on, since you can't even use most people's record of good standing with their bank accounts, so the process for getting a loan is generally sit in a room with a group of bankers and try to convince them you're a swell guy/gal and won't lose their money. This results in extremely high default rates, because people are good at misrepresenting themselves and lying about their intentions [citation needed]. With such high default rates you only really have two options; improve your credit worthiness determination process somehow, or increase interest rates and have an effective (if unethical) collections process. With some data protection laws making the creditworthiness determination route a legal minefield, most banks in Mexico opted for the latter. Our entire business strategy was to take the other route.
    - dragandj 8y ago
      I myself live in a country with a not so effective rule of law and whatnot. That's why I find it odd that banks are so concerned with possibly doing an illegal data collection, while employing unquestionably criminal techniques of extortion...
  - manigandham 8y ago
    It's not a simple disadvantage when the act of choosing another option invites the same violence against a customer.

by shawn 8y ago

thanatos_dem 8y ago

Luckily, nothing too exciting happened. We were operating in the financial tech space in Mexico, trying to make lending less comically predatory (a standard small business loan in Mexico can have close to the same interest rate as a payday loan in the US). With that goal in mind, we were targeting areas in Mexico that needed the most help. Cities with a decent small business sector, looking to grow, and having difficulty doing so. Juarez was a perfect fit, especially given that a lot of citizens have been across the border and can see how much better things can be. My parents were not amused. Then the movie Sicario came out soon after, and they were somehow less amused. But I got to ride around in armored vehicles with a security detail, so that was fun. Really my "learned not to fuck with the cartels" lesson came from our market research. This may surprise you, but the banks in Mexico are... sketchy. Well, not all of them, but definitely a few. In particular, we were in a competing market as Banco Azteca. It appears to have since been removed, but at the time, the Banco Azteca wikipedia page described it as having "a uniquely effective debt collection system" or something like that. Yeah, what they actually have is a motorcycle gang. They give you a loan with massive, often times impossible to pay off interest rates, and if you don't pay them back, motorcycle dudes with bats show up to collect, or take enough of your property to make up the difference.

dragandj 8y ago
Shouldn't that be a common knowledge in the area and work out as their competitive disadvantage? Provided that there are at least some competitors that are better for the customer?
- justaguyhere 8y ago
  This is Juarez we are talking about. Maybe this motorcycle gang was scary enough for the competitors, maybe they have cops/politicians in their pockets... There could be any number of reasons for the gang to flourish, starting with violence
- thanatos_dem 8y ago
  The bigger issue with lending in Mexico is a bit deeper than the sketchiness of some of the big banks. In particular, there is no reliable credit score system, so determining credit worthiness is a crap shoot. There is actually a credit reporting agency, but nobody reports to it, so nobody is really sure why they're there. A lot of citizens also (understandably) don't trust the banks and keep most of their money at home. As a result, there's very little data available to make credit determinations on, since you can't even use most people's record of good standing with their bank accounts, so the process for getting a loan is generally sit in a room with a group of bankers and try to convince them you're a swell guy/gal and won't lose their money. This results in extremely high default rates, because people are good at misrepresenting themselves and lying about their intentions [citation needed]. With such high default rates you only really have two options; improve your credit worthiness determination process somehow, or increase interest rates and have an effective (if unethical) collections process. With some data protection laws making the creditworthiness determination route a legal minefield, most banks in Mexico opted for the latter. Our entire business strategy was to take the other route.
  - dragandj 8y ago
    I myself live in a country with a not so effective rule of law and whatnot. That's why I find it odd that banks are so concerned with possibly doing an illegal data collection, while employing unquestionably criminal techniques of extortion...
- manigandham 8y ago
  It's not a simple disadvantage when the act of choosing another option invites the same violence against a customer.