REVOLUTION OF A DIFFERENT KIND?
Internet entrepreneurs try to do for their companies what the Zapatistas did for armed rebellion

by Hank Sims

The Internet first took notice of Mexico some six years ago, when a band of ski-masked rebels in the southern state of Chiapas who used the new, decentralized form of communication as a lifeline to supporters in the first world. The Zapatistas shocked the world with their inventive use of the medium, and inspired several foreboding tomes on "cyberwar."

These days, though, Mexican entrepreneurs are looking to wrest a corner of cyberspace from the rebels. Inspired by their colleagues in California, several Mexican companies have launched their own e-business ventures, complete with talk of IPOs, corporate-casual culture and cheeky advertising campaigns. Particularly the latter. The international, Spanish-language Ebay clone Mercadolibre.com is swamping television with spots featuring Fidel Castro logging on, discovering a mountain of bargains and issuing a new decree -- "Que viva el Mercado Libre!"

One of the new players in the Mexican e-business sector is To2 ("todos", or everyone), which is trying to position itself as the premier online news source for Mexico and Mexican expatriates. Located in a suite of offices in the smart Anzures district of Mexico City, the web site is staffed by a young, international group of reporters that are fighting for the attention of the estimated 2 million Mexicans who have an Internet connection in their home.

To2's editorial director, Hilda García Villa, is proud of the staff of over 100 that she has hired from established outlets like the Associated Press and he Mexican daily Reforma, and is optimistic about her company's prospects for the future.

"At this stage in the game, what we have to do is position ourselves well," García says. She is concerned with developing To2 as a recognized and respected brand name, on which will immediately pop into mind when Mexicans log on in search of news.

Todos specializes in breaking stories and twice-monthly special reports, which have tackled such subjects as the death penalty, press censorship and abortion. Also -- perhaps inevitably, considering the business of Internet news -- the site also encourages its readers to form "communities," or electronic bulletin boards arranged by theme, in which users discuss events in the news, lifestyle issues or technology.

The latter is a major of the company's business strategy. As with most electronic news sources, To2 gives its product away. And like other electronic news sources, its business strategy is a bit hazy. The To2 "communities" bring revenue to the community in two ways: it deepens identification with the company brand, and it segments the audience by areas of interest -- increasing the effectiveness of the advertising the site runs.

But the strategy, adopted from English language sites like Salon.com, may not be as effective in Mexico as it has in the United States. For one thing, as García points out, e-commerce is still very much a thing of the future in Mexico. Most of the country lacks the necessary financial infrastructure, and delivery services rarely make it out into the hinterlands. Perhaps more importantly, the large majority of people are uncomfortable with the idea of ordering goods over the phone, much less over the Internet.

To2 hopes not only to overcome, but to capitalize on this apparent limitation.

"If To2 can become a brand that people trust, they will order things from our partners," says García. The site has already forged partnerships with several electronic retailers, including DeCompras (a retailer of clothes and consumer goods), Flora.com (flowers) and Submarino (books, CD's and videos). García thinks that a closer relationship with these and other e-commerce companies will benefit both parties: To2 will garner income for directing users to the retailers, while the retailers will enjoy the To2 seal of approval.

To bolster its profile, To2 recently launched an English-language version of its site, based in Texas and aimed at Mexicans living in the United States, where people are more accustomed and able to purchasing over the Net.

However, in light of the recent troubles that Internet content providers have suffered at the hands of the American stock markets, this may seem like an uncertain strategy for building a profitable business. And To2 recently discovered that it will first have to face a new, formidable opponent. In March, Mexican financeer Carlos Slim announced that his Teléfonos de Mexico would be launching a joint venture with Microsoft, a Spanish-language portal aimed at the same market segment that To2 is targeting. Garcia doesn't take her company's new competition lightly.

"How could we not be concerned -- it's Bill Gates, it's Carlos Slim," she said. "But they won't be able to put together the newsroom that we have. This will be where we'll be always be able to beat them."