Buenos Aires — Sebastián Barrios, senior vice president of technology at MercadoLibre (MELI), told Bloomberg Line that the boom in the implementation of artificial intelligence solutions at the multi-Latin American market e-commerce and fintech giant will not imply a reduced need for hiring, but rather, at least for the moment, will boost it.
“At MercadoLibre we are hiring, and we continue to accelerate in hiring because we see that as an accelerator of what we can do,” he said in the only interview he granted after his participation as a panelist at the annual BRAVO event organized by the Americas Society/Council of the Americas (AS/COA) in Miami.
Barrios, who came to the company after selling his startup, Yaxi, to Cabify, highlighted MercadoLibre’s early interest in artificial intelligence and automation, a global trend that was quickly driven by its founder and CEO, Marcos Galperin.
Barrios highlighted that the company has been investing in a series of AI initiatives to achieve significant improvements in the user experience, from personalization in the purchasing process to the automation of internal processes.
With more than 15,000 developers in the company, every improvement in this area has a significant impact on efficiency, Barrios added, while noting that investment in technology by companies in the region could suffer in 2024 in the face of a more adverse macroeconomic outlook.
The following conversation has been edited for length and clarity.
Bloomberg Línea: The company’s founder, Marcos Galperin, was one of the first major business leaders in the region to express his amazement at new artificial intelligence tools such as ChatGPT. How are you absorbing this revolutionary new trend and what measurable impact have you had in implementing such solutions?
Sebastián Barrios: I think we were just pushed by the culture that Marcos has generated, among the first companies to, for example, make a direct alliance with OpenAI. We realized very quickly the potential it had. Like everybody else, I wouldn’t say that you had to be blind, I think, not to see at that moment that something very big was coming. But well, combined with all the investments we’ve been making over the last few years, we were able to adopt very quickly, forge this alliance with them, start developing products.
We did a fun initiative where we stopped not all the operations of the company, but a big part of the company dedicated to doing an artificial intelligence experimentation hackathon. We put up a little bit of all the guardrails, all the protections in terms of data and so on, and then we set the teams free to develop new ideas, to solve problems, to understand what processes made sense to automate and from that we came up with about 200 initiatives that we are actively running from some that we have released, like when you see a product page that has a lot of reviews, many user reviews, and we do a summary and we say, ‘ok, our artificial intelligence from MercadoLibre thinks this is the positive and this is the negative of this product as reported by the users’.
So, small improvements in the experience all over the site, all over the application, that improve your experience, on the one hand. And that’s very good, because of all the personalization of the experience for the users, right? For example, if you’re looking at a product that you find interesting, you put it in your cart and left it there. When we have a reminder message, which helps a lot of users because they literally forget they had it there, they needed it for the next day. Now we send it to you with a personalized message based on your previous shopping experiences and the description of that product, which is something that would be impossible to do for our millions of products and millions of users if it wasn’t through artificial intelligence automations.
And, behind closed doors, any concrete examples of how the operation became more efficient?
One always thinks of logistical processes, and it has happened. But the surprising thing was in code generation and wizards. We have more than 15,000 developers. Any improvement we are going to have there is multiplied for the whole organization. It multiplies for all our users. We can generate more features and have that flywheel that keeps turning. So I think internally we have a lot of optimism in what it’s already generating. And also this is version one. Versions two, three, five are coming. In five years the code development is going to look extremely different than it does today.
After the adjustment made by technology companies such as Amazon and Meta, which cut back their workforces, we did not see the same in MercadoLibre. What is your view on the tension between the advance of automation and technologies that make the operation more efficient, with the employment needs?
It was not so correlated. This is quite a personal opinion, but I think that the over-contracting in the boom during the pandemic, basically where you were locked in your house, you consumed more Netflix, you had to order everything online, fortunately many of the technology companies, including us, had invested a long time ago to have the capacity to be able to provide all those services. Something that was different in MercadoLibre and in the companies in the region is that this growth and this trend was maintained, unlike in the United States or the UK, where there were many articles I read about “back to the trend line”.
It came back, yes, growth, etc., but back to where it was before, while in Latin America it boomed. So I think it is not necessarily related, but I understand where the question comes from. Now, having said that, over-contracting had to be adjusted, even in some cases due to pressure from Wall Street, but fortunately not in MercadoLibre. We were very responsible. We did not have to take any measures, and, rather, we continued to grow the team. Now there are automations, process development efficiencies, and there is always the question of, ‘okay, so you are going to have fewer people, the teams are going to be smaller’, and for me it is more like ‘what is the minimum you expect from a team, from a company, where we are now going to be able to produce more?’ I don’t think we’re going towards a world where if my team, I’m going to throw out a random number, is not 30% more effective, more efficient, then I’m going to shrink the team by 30%. Rather, my team is now going to produce 30% more and even more opportunities are going to be generated. At MercadoLibre, we are hiring and we continue to accelerate in hiring because we see that as an accelerator of what we can do. Fortunately, what we need is more capable people to develop more value for users.
The world doesn’t end with artificial intelligence and automation. What other big technology trends are you watching closely for possible developments and implementations in 2024?
It doesn’t end, but it is clearly what is generating more attention and more investment, more boom. And also talking about the most productive and happiest teams, even. There is a trend called platform engineering. We have been investing for a long time in our internal platform, which is what has allowed us to adopt all these new technologies at a good speed. So I see this trend now, and it is also driven by a market that demands efficiency, and perhaps more profit than growth. Having internal tools that allow you to control costs, but also help your teams to be more effective, I think that is another very clear trend for next year.
What lessons are you seeing from the pandemic and the developments made in MercadoLibre and in Latin America for markets such as the United States, for example?
It’s quite surprising for Latinos who come to the US from time to time, or people who live here, who say, “Hey, but I could do instant transfers, for free, between accounts or between friends, and here I have to rely on Cash App or Zelle,” or that there is no universal technology that is clearly pushing there. It comes for two reasons, one, the history of more development historically. But in all the countries that we are developing, we had leapfrogging. India obviously is the clearest example, which jumped all the intermediate stages and went straight to ‘you can make payments to anyone, virtually free, virtually instantaneous, any time of the day, and you don’t have to wait for the bank to be open or closed, or an ACH that can take three days’. I think that, little by little, now the countries that historically had more development are incorporating it.
FedNow is available in the United States, although not all banks have adopted it. But it is quite unique in Latin America, and that is MercadoLibre’s mission, to democratize access to commerce and finance through electronic transactions. So how are credits calculated, for example, for a person who has just their first card, their first bank account. These are things that can be increasingly adopted from Latin America.
Osvaldo Jiménez [president of MercadoPago] talks about everything they learned at the time from the alliance with eBay. Which company do you follow closely in the United States today?
I think I would go back to AI. Clearly, we see that as the main pole where the breakthroughs are happening. OpenAI, the Transformers paper coming out of Google, right? You’ve got Meta releasing a lot of open source with a different strategy, but clearly helping to advance the technology. And well, you know who one of our main competitors is and there are also things that they do very well, there are things that we do better, but there are things that they do very well. And it’s an excellent competitor to raise the bar between the two of us.
Will the high rate environment limit technology investment by companies in the region during 2024?
I think it’s possible, there were predictions a few months ago, a headline that said 100% probability of recession in 2023, and well, it turns out it didn’t happen. I think it’s hard to predict, but clearly there are forecasts where things don’t point so well. I would love it if the savings were not in technology, because it has a very strong compounding effect where perhaps the investment you make today is not immediately profitable, but in one, two or five years, precisely when these cycles that go up and down recover, it would be ideal for the region to be more prepared to take advantage of this positive cycle.
MercadoPago has launched crypto services in several countries. What is your vision for this market, after the scandals, the crash since the pandemic? How do you see the adoption of this technology in the region, going forward?
I think at MercadoLibre we are used to seeing cycles, both economic and political, in different countries and we always invest in the long term. In crypto we never entered into any of these get-rich-quick schemes, nor did we ever offer anything like that to our users. We like some of the technological fundamentals and we believe that in the long term they are going to have a positive impact in the region, and especially if we were talking about differences between, maybe, the United States or countries that have more stable currencies with Latin America.
It has changed, though, hasn’t it? Now we see the [Mexican] ¡super peso’ and even that is difficult to predict. But clearly there are more international transactions in countries that are smaller. One advantage the US has is that maybe transactions take time, but it’s one currency used by millions and millions of people. If I want to send money to someone in another country in Latin America, it is a bit more complex, because you have to go through different currencies, different countries, different borders. So, we look at a future regardless of where it is in its up and down cycle. Our investment is long-term.