Entrepreneurship in Brazil is bad, but it's good

There is a phrase that circulates among Brazilians who moved to Miami: living in the United States is good, but it is bad; Living in Brazil is bad, but it's good. The comfort there coexists with the longing for the human warmth here. After more than 40 years of managing companies, I realized that the paradox also applies to business.

Undertaking in Brazil is bad. High interest rates, expensive credit, legal uncertainty, violence and a tax system that looks like a madhouse. There are also rules that change depending on the address. We have 5,569 municipalities, with powers to issue local regulations. Those who operate across the country know: opening a store in another city can mean facing completely different rules.

Add to this the judicialization of labor relations. Millions of cases reach the Labor Court every year. Many actions seek legitimate rights, but the volume reveals the extent of conflicts, risks and costs that need to be managed.

It's not enough to sell well, take care of the customer and control cash. The entrepreneur needs to master licenses, inspection and obligations that consume resources even before the first sale. Energy that could finance innovation ends up dedicated to overcoming obstacles.

So far, only the bad side. The upside is less obvious: These obstacles also keep competitors away. A foreign company considering entering Brazil compares risks and markets and may decide that the effort is not worth it. Those already here have learned how to navigate the maze. What remains a problem can also become a competitive advantage.

I experienced this paradox. When I founded Petz, in the early 2000s, the American giants in the pet sector did not have the presence here that they had in the United States. From the first store onwards, we had space to learn, form teams and develop skills. Today, Petz and Cobasi are part of a group on a Latin American scale, with a sophisticated omnichannel operation. It was the merit of those who built the business, but less pressure from international competitors also opened up space for growth.

In the United States, the paradox is reversed: entrepreneurship is good, but it is bad. The environment is more predictable, access to capital is broader and new competitors enter more easily. Winning customers and preserving margins requires continually reinventing yourself.

Here, the challenge is often to get into the game. There, it's about continuing to win when so many others can play.

It would be a mistake to celebrate our barriers. They can protect established companies, but they deter investment, make products more expensive and make life difficult for those starting out. They do not alone explain inequality, but they help to perpetuate a Brazil with a broad base of low income and a narrow top of wealth, so different from the broader American middle class.

What may have helped my company grow is not necessarily what is best for the country. I prefer a Brazil where it is easier to do business, even if that means more competitors competing for my customers.

After all, starting a business in Brazil is bad, but it can be good for those who have already overcome the obstacles. What we cannot accept is that the success of those who arrived first depends on the difficulties of those who are still trying to get started.