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José Cláudio Terra: Riding the Digital Innovation Wave All the Way to Acquisition

José Cláudio Terra: Riding the Digital Innovation Wave All the Way to Acquisition

José Cláudio Terra is the founder of Terra Forum, a mid-size IT and digital solutions company based in São Paulo, Brazil.  The company is in the process of being acquired by Globant, an Argentinean rival that – similiar to Terra Forum -  has innovation in its DNA. Terra is in the process of proving that locally-developed and sophisticated digital solutions and processes can succeed in the international market.

It was in the early 90s, when the Internet was far from being a common word, Cláudio began building a strong foundation in the mechanics of web services, and used that knowledge to apply to the fast changing media and marketing arena. He was then in charge of marketing strategies and media management for Editora Abril and Editora Globo, two of the biggest publishing houses in Brazil.

A few years later in 1999, when Web startups were flourishing worldwide, he moved to Toronto, Canada, to further refine his web technology expertise. “I started to see it all happening in front of me. I bet high, but didn’t lose anything nor got rich after the bubble went bust,” he told Nearshore Americas in a phone interview.

The experience was quite rich – good enough to result in two books, one of them published while in the United States and focused on building corporate web pages. That was the beginning of Terra Forum itself. When he returned to Brazil in 2002, he used his knowledge and a network of friends to launch his own consulting company. “Based on my personal knowledge and human capital, I started doing consulting to different kinds of businesses.”

The idea was quite simple: develop innovative models for specific segment of clients making use of different IT solutions and software. He became an expert in developing corporate websites and portals and, later on, in social media management for corporate clients.

Until 2008 Terra Forum had seen constant growth and a wide range of big size clients. “But it was time to seek help to keep growing,” said Terra. He said that it was at that moment he decided to look for investment partners to gain scale and and improve quality.

“One of the biggest challenges for entrepreneurs and innovators in Brazil is getting funding. The cost of capital in the country is absurd. If you do not have a mid or long term strategy, you have to work with the brakes on,” he said.

Looking for bank loans was not an option – considering the interest rates in the country were around 13% a year by then – and partnering with venture capitalists was quite hard, since the company was neither a startup nor a giant name in the local IT industry.  “That is when you notice that getting access to funding is much easier in the United States and Canada.”

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Lack of Funds

Brazil started seeing a wave of growth not recognized in years and so did Terra Forum’s clients. Though borrowing funds remained a challenge, the company went on expanding its clientele, and among its clients were big Brazilian and foreign players in the domestic economy such as Allianz, Arcor, Avon, the Brazilian Central Bank, Carrefour, Citibank, Coca-Cola, Embraer, Rede Globo and Unilever. As more clients came on board the company expanded its operations into nearby towns and cities like Rio de Janeiro, Curitiba and Belo Horizonte. Now it has around 75 staffers across the country.

Terra met Globant’s top leaders earlier this year. Globant, with offices in Argentina, the U.S. and Colombia, is a IT services provider focused on engineering, innovation and design – basically the same segments covered by Terra Forum locally. The conversations eventually evolved into acquisition talks.

The deal to purchase Terra Forum was announced only a few weeks ago. The purchase price was not disclosed.

“Now we are living in the ‘honey-moon’ moment of our partnership. It is all about innovation, and both companies are committed to that,” he said.

In Terra’s e-mail his digital signature says he is the executive-director of TerraForum Globant. “We might merge completely in the future, but for a while, we will keep the local brand, which is strong here.” A brand he is proud of to have built.

About Filipe Pacheco

Pacheco has been NSAM Brazil reporter for more than two years. He reports from Sao Paulo, Brazil’s financial capital.

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