Fernando Espuelas

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Fernando Espuelas (b. August 6, 1966 in Montevideo, Uruguay) is an American entrepreneur, author and philanthropist.

Espuelas, considered one of the pioneers of the consumer Internet, is the founder of Starmedia, the first pan-Latin Internet portal, launched in 1996. Starmedia was the first venture-capital backed Latin Internet company and also the first IPO in the Latin Internet industry. By the time Espuelas left Starmedia in 2001, the portal served over 25 million Spanish and Portuguese speakers per month across the Latin world.

According to the Harvard Business School case StarMedia: Launching a Latin American Revolution , "by the fall of 1999,StarMedia had sprinted to a sizable lead in the race to acquire Latin American Internet users. Its pan-regional, horizontal portal was the first to target Spanish- and Portuguese-language speakers on the Internet, registering 1.2 billion page views in the third quarter of 1999. Thirty-three-year-old StarMedia co-founder Fernando Espuelas was the toast of "Silicon Alley" and a recognized hero throughout Latin America. A picture of him on the cover of Internet World magazine--ripping his shirt open to show the StarMedia logo, like Superman, summed up the spirit of the company."

In 2003, Espuelas created VOY, a digital media company focused on "Latinos and those discovering Latin culture". VOY's portal was launched in 2005. Forrester Research's study "Hispanic Social Computing Takes Off ", published in June of 2007, ranked VOY's portals as the leading Latin pure-play social network in the United States.

Time and CNN named Espuelas as one of the “Leaders of the Millennium”, and he was recognized as a “2000 All-Star” business leader by Crain's New York Business magazine. The World Economic Forum includes him among its "Global Leaders of Tomorrow," and he was also a recipient of Latin Trade Magazine's Bravo Award, being named "CEO of the Year" by the magazine. Hispanic Business Magazine gave Espuelas its Hispanic Entrepreneur Award in 2000. He received a New York Award in 1999. Espuelas has been named to the "power-list" of such diverse media as The Hollywood Reporter, The Industry Standard, Latino Leaders Magazine, Red Herring Magazine, Silicon Alley Reporter, Hispanic Business Magazine, CNN and Hispanic Magazine. In 2007, Espuelas was named a Henry Crown Fellow at the Aspen Institute.

Espuelas was the co-founder and Chairman of the StarMedia Foundation which, in partnership with the Inter-American Development Bank, built technology training schools in poor neighborhoods in Brazil, Colombia and Uruguay. Espuelas served on the Board of Directors of the Educational Broadcasting Corporation, operators of PBS' New York flagship television station THIRTEEN (WNET), as well as on the Board of Trustees of Connecticut College.

In 2004, Espuelas wrote Life in Action (published by Penguin USA), an auto-biographical book telling his story from childhood in Uruguay, through the early years in the United States, to the founding of Starmedia and VOY, through his personal philosophy of self-actualization.

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[edit] Childhood

In Life in Action, Espuelas writes about studing at the Elbio Fernández school, a prestigious private school in downtown Montevideo. Espuelas' family in Uruguay was financially secure until his father, a real estate entrepreneur, abandoned them when he was 8 years old.

Seeking survival at a time when Uruguay experienced acute political and economic crisis, Espuelas and his mother immigrated to the United States in 1976, with only $100. After a series of factory jobs making everything from dresses to ice cream sandwiches, his mother found work as a housekeeper in Greenwich, Connecticut. As he recounted on PBS' Tavis Smiley show, Espuelas started his first business in Greenwich, in 5th grade, when he convinced his friends to invest in a kid's bank and insurance company. The next year, he founded the first student government in North Street School and was elected President of his class. He later began the school's newspaper, serving as editor-in-chief.

Espuelas attended Greenwich High School and graduated in 1984. While in high school, Espuelas was the President of the Debate Team and the Connecticut State Champion debater in 1982. Espuelas worked in a series of jobs while going to school: gardener; gas station attendant; Woolworth's clerk; restaurant worker; movie usher; newspaper delivery boy; messenger; Chinese food delivery person; pet shop cleaner; baby sitter; electronics board assembler in an electronic church organ manufacturing company; and as an intern at Philip Morris' headquarters in New York.

In 1988, Espuelas graduated from Connecticut College with a degree in history. While at Connecticut College, Espuelas was first the Managing Editor, then Editor-in-Chief and eventually Publisher of the college's newspaper, The College Voice and its associated publications.

[edit] Career

In 1988, Espuelas was hired out of college as an assistant account executive by Wunderman Worldwide, the direct marketing division of the Young & Rubicam advertising agency. While at Wunderman, Espuelas worked on the American Express, General Food's Gevalia and Weight Watchers accounts.

After a year at Wunderman, he was offered the position of account executive at Lowe & Partners, the American operation of the British advertising agency later to be called Lowe Lintas, to work on the Citibank Visa account.

In 1991, Espuelas returned to South America to work in Ogilvy & Mather's Argentine operations. In Argentina, Espuelas was the founding Managing Director of Ogilvy & Mather Direct. Starting with one account, Espuelas led the company to be O&M Argentina's single largest source of profit by the second year of operations. After 2 months in Argentina, Espuelas was additionally named head of the company’s Unilever account, responsible for a portfolio of global brands such as Dove and Pond's. The Unilever business was one of the most important accounts for both O&M in Argentina and across its worldwide network. At the end of 1991, Espuelas was elected to the Board of Directors of Ogilvy & Mather Argentina, at the age of 25.

In 1994 AT&T recruited Espuelas to lead the roll-out of the AT&T brand throughout Latin America. Within a year, he was promoted to Managing Director of Marketing Communications for the Latin American and Caribbean region, becoming one of the youngest executives of that rank at the company.

While at AT&T, Espuelas conceived and launched AT&T Hola (in Spanish) and AT&T Ola (in Portuguese), the company’s first online service in Latin America. A combination of news feeds from Reuters, interactive forums, online games and the first search engine that searched in Spanish and Portuguese, AT&T Hola/Ola was positively received by both the media and consumers across Latin America.

In 1996, Espuelas envisioned the portal that would “unite” Latin America: Starmedia. After a frustrating year and a half of approaching venture capitalists to invest in his vision, only to have them refuse, many avowing that Latinos did not like technology and would not use the Internet, the company went on to raise $2.5 million dollars in 1997.

It was the first venture capital ever invested in a Latin Internet company. Over the next 4 years, the company raised over $500 million in investments. In 1999, the company went public on the Nasdaq, the first Latin Internet company to do so, eventually reaching a market valuation of $3.8 billion USD at its peak. Starmedia had over 1,200 employees in 18 offices across 12 countries in the Americas and Europe. Today, Starmedia is France Telecom's single largest Internet operation in the world.

In 2003, Espuelas founded VOY, Spanish for "I Go". Conceived as media brand for young Latinos in the United States and Latin America, VOY developed both traditional media properties, such as the highly acclaimed film Favela Rising, winner of over 25 festival awards, including at the Tribeca Film Festival, and short listed for an Academy Award, as well as new media platforms such as the music-based social network www.voyplaza.com.

Espuelas is a public speaker in the United States, Latin America and Europe on a range of topics related to the Internet and the impact of technology on people and society. Since the launch of StarMedia, Espuelas has been extensively covered by broadcast, print and online media throughout the world.

[edit] StarMedia

In a highly publicized moment of inspiration that was recounted in numerous articles and television segments, Espuelas envisioned a "virtual plaza to connect the peoples of Latin America" while hiking atop a mountain in Nepal. Soon after, Espuelas founded Starmedia with his Chinese-American childhood friend, Jack Chen.

As Starmedia's Chairman/CEO, Espuelas created the first Internet media company for Spanish- and Portuguese-speaking audiences worldwide. Using a combination of their 12 credit cards, family savings, and loans from friends, the pair managed to piece together the first $100,000 used to launch the Latin portal in September 1996. Eventually Starmedia raised over $500 million USD in equity in a series of private and public offerings. Starmedia's market capitalization reached $3.8 billion dollars. Starmedia's success served as an important catalyst in the development of the Latin Internet market by encouraging both entrepreneurs and financiers to back the development of the sector.

According to the Harvard Business School case StarMedia: Launching a Latin American Revolution , written by professors Thomas Eisenmann and John K. Rust, "by the fall of 1999, StarMedia had sprinted to a sizable lead in the race to acquire Latin American Internet users. Its pan-regional, horizontal portal was the first to target Spanish- and Portuguese-language speakers on the Internet, registering 1.2 billion page views in the third quarter of 1999. Thirty-three-year-old StarMedia co-founder Fernando Espuelas was the toast of "Silicon Alley" and a recognized hero throughout Latin America. A picture of him on the cover of Internet World magazine--ripping his shirt open to show the StarMedia logo, like Superman, summed up the spirit of the company."

The company’s high profile, as manifested in its thousands of press articles across the world, ensured that the whole Latin Internet sector benefited from a constant source of positive attention and relevance. Billions of dollars were subsequently invested in Latin America by foreign and local companies, international venture capitalists and buy-out firms seeking to capitalize in the fast growth of this new segment. Myriad companies were created and funded, telecommunications companies made significant investments in infrastructure to meet the demand, and governments and other key sectors of the society, specifically the news media, adopted Web tools to modernize.

Espuelas, a skilled marketer armed with cash from his successful IPO, was the mastermind of massive marketing campaigns promoting the StarMedia brand. In the process, Espuelas became iconic as the “poster boy” of the Latin Internet, appearing on the cover of magazines, in television shows and even in CNN’s own promotions: a brief image of Espuelas was included, amongst other renowned politicians and celebrities, within the 15 second top-of-hour CNN on-air network ID.

Additionally, CNN filmed a documentary on Espuelas’ life that was broadcasted across the world. The media referred to Espuelas as "The Hispanic Bill Gates" and "The New Simon Bolivar", terms that would be often recapitulated in thousands of articles and interviews referencing Starmedia.

On May 25, 1999, StarMedia completed the first public offering on Nasdaq for a Latin Internet company, selling 7 million shares at $15. The company went on to raise hundreds of millions more capital over the next 2 years. By 2000, at age 34, Espuelas was acknowledged as one of the main players in the Latino Internet industry. Uruguay's leading newspaper, El Pais, dubbed him “The Emperor of the Internet” on its front page.

In July 2001, the Wall Street firms that sold StarMedia's 1999 IPO, including Goldman Sachs and JP Morgan, were sued in numerous high profile class-action lawsuits alleging fraud in the share allocation process of every IPO of every company that went public over a 3 year period. Espuelas, Chen and the CEOs and CFOs of every company taken public during that period were named in the lawsuits. By 2002, and after an investigation as to how shares were allocated, the suits against all the executives named in the class-action suit were dismissed. The suits against the investment banks continue to work through the legal system.

On August 5, 2001, after a disagreement with the Board regarding the strategic direction of the company, Espuelas resigned as CEO of StarMedia but agreed to stay on as Chairman until November 15, 2001. At that time, he was replaced by Susan Segal, a venture capitalist who had given Espuelas his first round of institutional financing in 1997. Segal then led the company’s new strategy to divest itself of its portal assets, including the StarMedia brand, and focus the company on its mobile unit, StarMedia Mobile. The resulting new company, Cyclelogic, was led by Segal until it filed for bankruptcy in 2003.

On November 15, 2001, StarMedia announced that it was reviewing the accounting treatment of some transactions in its Mexican subsidiaries. An independent committee of the Board of Directors was formed and outside lawyers and accountants undertook a multi-million dollar, 6 month investigation. Days after the announcement of the creation of the Special Board Committee, the company and its Board were sued by class-action law-firms in New York Federal Court for what they alleged to be a 'catastrophic' fraud.

The lawsuits alleged that StarMedia had boosted its revenues by $10 million through overstating revenues with two Mexican subsidiary companies while Espuelas was CEO. After the independent investigation initiated by the board found no wrongdoing on the part of management, the class-action suit was settled by the Board and its insurance company, a full release was given by the shareholders to the former management and the lawsuits were dismissed by the Federal judge on the case.

As part of Segal's new strategy, in July 2002, StarMedia was sold for $8 million USD to EresMas, a Spanish ISP. EresMas was then sold to a unit of France Telecom a week later for $250 million dollars. EresMas' new leadership of the Latin Internet (through the purchase of StarMedia the previous week) was cited by France Telecom as the rational of the acquisition.

In company announcements made in 2006, StarMedia, now part of France Telecom, claimed to be the global leader in Spanish language Internet services. By 2008, the company stated, Starmedia was serving over 24 million unique users a month and continued to expand by launching new services, such as finance and entertainment channels, and opening offices across Latin America.

Espuelas writes in Life in Action: “Because I believed in our company and our mission, I had never sold a single StarMedia share or stock option. I personally lost close to $500 million.”

On March 29, 2006, the U.S. Securities and Exchange Commission (SEC) sued Espuelas and several members of the StarMedia executive team alleging in a civil lawsuit that the accounting treatment of a certain transaction relating to StarMedia's Mexican subsidiaries did not meet GAAP. The civil lawsuit relates to accounting decisions made by StarMedia in 1999 and 2000.

At the time of the filling, Espuelas, who cooperated with the SEC investigation over 5 years, told Adweek's Marketing & Medios magazine: "I know that I did nothing wrong.…It [the lawsuit] is related to accounting issues at the company. I personally was not involved in accounting at the company. I'm very confident that the company did things right. We had a rather elaborate control function, both internal and external, and to my knowledge that was undertaken correctly."

[edit] VOY

At the end of 2003, Espuelas launched VOY to great media fanfare. With widespread coverage in the United States, Latin America and Spain, covers of magazines and international TV stories, Espuelas' company said that it was “enabling a culturally relevant community that entertains and empowers today's new generation of Latinos and those discovering Latin culture. VOY interacts with people on their platform of choice: Internet, mobile, IPTV and other merging distribution channels. VOY’s consumers connect with each other and relevant content to discover, develop and share all that is Latin.”

VOY launched its online service, VOY Plaza, as the first integrated Latin music experience on the web. Through the combination of culturally relevant content with community enabling features such as video, audio and text-based creation, sharing and distribution services, the company says that it is making VOY Plaza into “the central meeting place online for Latinos and Latinophiles in this country and around the world.”

As part of its initial branding strategy, VOY released the award winning documentary, Favela Rising. The film received widespread critical acclaim. Espuelas said at the time of the release, “Favela Rising encapsulates the VOY philosophy of optimism and self-empowerment. The film’s message of hope transforms people, motivates and inspires us to action.” Telling the true story of one man's struggle against violence and racism to start a social movement for peace, Favela Rising won over 25 major international awards and was short listed for an Academy Award nomination. It premiered at the Tribeca Film Festival in 2005 and was seen around the world through the film festival circuit. In 2006 it opened in theaters across the U.S. and Brazil and later made its U.S. television debut on Cinemax.

VOY's social network can be found at VOYplaza.com

VOY has offices in Los Angeles.


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