The J Curve Insider: Cracking Network Effects in a $100B Legacy Freight Market

The story we're bringing you today is wild.

Federico Vega, founder of Frete.com, quit a cushy job at JP Morgan in London and moved to Brazil—with no money, no team, no tech, and not a word of Portuguese. His idea was to bring the country's outdated, pen-and-paper freight industry online.

What followed was a six-year grind on the edge of bankruptcy.

No capital, no playbook—just a relentless belief that Brazil's trucking market, fragmented and analog but worth hundreds of billions, was a monster opportunity hiding in plain sight.

Today, Frete.com is the largest logistics platform in Latin America:

• 900,000+ active truckers (80% market share)

• $20B+ in annual transaction volume

• A full-stack fintech and freight operating system for Brazil's logistics sector

In this Insider, Federico shares the systematic playbook for marketplace domination in traditional industries—from breaking chicken-and-egg problems to defending against well-funded competition through network effects and vertical integration.

"We beat our competitor that raised $30 million with a Facebook group with no tech at the beginning."

Let's get into it.

A FREIGHT MARKETPLACE THAT DIDN’T WORK

Olga Maslikhova: Your first idea wasn’t Frete.com. What did you learn about marketplaces that don’t work?
Federico Vega: At first, we built a platform to move houses. Big mistake. There was no repeat usage, no fragmentation, and terrible CAC-to-LTV. Then we thought: let’s do B2B—help companies like Unilever move freight. Still didn’t work. We tried copying U.S. brokers, and realized it was a local execution game. That’s when I knew I had to move to Brazil.

DO THINGS THAT DON’T SCALE

OM: Most marketplace founders struggle with initial user acquisition. Frete was no exception—you had to solve the classic cold start problem with truckers and shippers who had never transacted online. How did you do it?
FV: The breakthrough was understanding real user behavior versus assumed behavior. Our competitor raised $30M and ran radio ads telling truckers to download an app on an iPad. This was 2013—drivers didn’t even have smartphones.

We discovered their families were searching for freight on Facebook. So we launched Facebook groups and manually posted every opportunity. No app, no email signups—just meeting users where they were.

When WhatsApp took off in 2016-2017, truckers started buying smartphones. Only then did we build an app—and traffic shifted from web to mobile.

OM: That seems obvious in retrospect, but required rejecting the standard playbook.
FV: Exactly. When our competitor asked for emails, truckers didn’t even know what that was. Then they switched to phone numbers—but truckers changed SIM cards every two weeks for cheaper top-ups. So we used national IDs.

The framework is Paul Graham 101: do things that don’t scale. Go where users are, serve them manually, then automate what works.

WE ARE CROCODILES IN THE RIVER

OM: You chose Brazil over easier markets. Why?
FV: You want three things: massive domestic market, high fragmentation, and enough complexity to create moats.

Brazil checks all boxes. It's the world's third-largest road freight market—90% of commercial cargo moves by truck because railroad infrastructure is limited. Brazil alone represents 70% of Latin America's trucking market.

The fragmentation was perfect—millions of independent truckers, thousands of small shippers, all operating offline. Ideal conditions for a marketplace to digitize the value chain.

OM: So complexity becomes your defense?
FV: Absolutely. Jack Ma said it perfectly when eBay entered China: "eBay is a shark in the ocean, we are crocodiles in the river. If we fight in the river, we win."

Brazil's complexity frustrated international competitors—including experienced players from China—just like it frustrates any foreign entrant. What looks like a disadvantage becomes your competitive moat if you learn to navigate it.

WATCH OR LISTEN TO THE J CURVE EPISODE WITH FEDERICO ON SPOTIFY:

MARKET STRUCTURE DETERMINES STRATEGY

OM: What’s different about Brazil’s freight market versus the U.S.?
FV: Brazil is much closer to China than to the U.S. The U.S. evolved with more capital and a stronger entrepreneurial culture. Back in the 1980s, you had companies like Dial Truck—basically trading floors for freight. Rather than going to truck stops, shippers would call a guy who’d manually find a trucker. That model evolved into massive freight brokers like CH Robinson, which scaled into $10–15 billion companies. By the time the internet arrived, the U.S. already had digital infrastructure and consolidation. Dial Truck became DAT.com and integrated with the brokers already in place.

China followed a different path. For decades, the market was completely offline—fragmented, paper-based, and opaque. Then came the VC revolution, which enabled companies to build digital infrastructure from scratch—even if they had no revenue for years. That’s exactly what happened in Brazil.

OM: So what's the strategic lesson for marketplace founders?
FV: Market history shapes market structure. In the U.S., you’re competing with consolidated players at every layer. In emerging markets like Brazil and China, fragmentation creates opportunity—marketplaces can capture entire value chains.

But to win,  you need hardcore venture capitalists who understand this dynamic. You can’t bootstrap your way to network effect dominance in emerging markets. You need patient capital that accepts zero revenue for years.

HOW NETWORK EFFECTS ACTUALLY WORK

OM: One of the seven powers is network effects (as defined by Hamilton Helmer). What gives Frete its defensibility?
FV: Three components: fragmentation is the fuel, data is the engine, and vertical integration is the moat.

Fragmentation fuels the network—millions of independent truckers and thousands of small shippers create the perfect conditions.

Data powers everything. We know which truckers show up, which shippers pay on time, and which routes are risky. That history becomes a credit score, an insurance premium, and a routing algorithm. The more data flows through the network, the smarter it gets.

The real defensibility though comes from vertical integration. We’re not just matching freight—we’re the bank, the insurer, the fraud prevention layer. Each product makes the platform stickier and more valuable.

Today, we move over $20 billion in freight annually and have opened bank accounts for more than 500,000 truckers. We’re not just matching freight—we’re the OS for the entire ecosystem.

TEAM, CULTURE, AND CRAZY PEOPLE

OM: You still interview everyone at your 750-person company. What’s the cultural filter you use when building the team?
FV: I prefer a crazy guy I have to stop over a lazy one I have to push. That’s the culture.

OM: How do you test for that kind of intensity and cultural fit?
FV: I have specific questions I ask everyone: What are three things you like most about this company? What are three things you dislike? If I asked your friends what they don’t like about you, what would they say?

I cross-reference the answers to see if they align. I also look at their CV—if someone has never stayed more than two years at a job, I don’t interview them.

OM: What else do you look for?
FV: I ask what they do outside of work. If someone wakes up at 5 AM to work out, it shows they understand that success comes from consistent effort. Nobody likes doing intense cardio at 5 AM, but those people know that discipline over time drives results.

Most of my C-levels didn’t start out in senior roles. They joined in junior positions and grew from within. We’re back in the office five days a week—that’s already a great filter. People who commit to being physically present show they’re serious about the work and the culture we’re building.

FRAUD IS THE NEXT BIG AI FRONTIER

OM: You say AI is transforming freight. How?
FV: The biggest disruption is in fraud and anti-fraud. The people committing fraud are often more technologically advanced than the people trying to stop them.

Traditional anti-fraud in trucking was calling someone to ask if they’d used a trucker before. But now, with AI, you can replicate videos and voices perfectly. The tools we used even a few years ago are obsolete—the tech gap is widening fast.

When I hire for anti-fraud, I want someone technology-forward. I’m not looking for ex-army or ex-police officers—they think in terms of how the world used to work. I want someone who sees where it’s going.

OM: How sophisticated is your current anti-fraud technology?
FV: We use the same tools digital banks use. If a phone number was linked to fraud in the past, we flag it. If a trucker uses a number previously tied to fraud at a bank, we know.

We also use data to predict theft. If a trucker usually hauls coffee from São Paulo to Porto Seguro but suddenly wants to take drinks to Rio during Carnival, that’s a red flag. Someone’s likely offering to buy the freight for cash. AI helps us catch that.

OM: What about AI’s impact on operations?
FV: We found 80% of broker-trucker conversations are repetitive: “Is the freight still available?” “Do you have freight to another location?” “Can I use this type of truck instead?”

AI now handles those interactions. Automation gives us cleaner data, and that data powers predictions—like pricing, contract risk, or fraud.

We’re building a Bloomberg terminal for freight. Pricing updates in real time based on rain, accidents, and demand. That’s only possible because of AI.

SURVIVING SIX YEARS ON THE EDGE

OM: You survived six or seven years of “always going bankrupt”—even at a $400M valuation. How did you manage the psychology and cash flow?
FV: Marketplaces require massive user acquisition before monetization. Brazilian investors didn't understand that profit today is secondary to market domination tomorrow. You're always 18 months from running out of money.

The psychological burden was brutal. But I'd have rather gone bankrupt than gone back to JP Morgan and spent 30 years doing the same thing. That fear became rocket fuel.

In the end, we got lucky to raise from Valor Capital—Scott Sobel and Michael Nicklas. Surprisingly, they liked our scrappiness, creativity, and efficiency. Everything you build when you survive near-death experiences on repeat. But they were more than money—they really added value beyond capital. Through them, I met one of Uber's founders, then Goldman Sachs, then Blackstone. They opened doors that would have been impossible otherwise.

OM: What did you learn about managing investor relationships through that journey?
FV: Warren Buffett's partner says the most important contract you're gonna sign in your life is marriage. Keep your eyes wide open before you sign the contract and close them after you get married. Same with investors.

Investors aren't perfect, but they have the capital when you need it most. They're smart people who will have opinions about your business—even when they've never operated in your industry or run a company themselves.

Negotiate what you can before you sign. After you sign, focus on making the relationship work. You don't have to agree on everything, but avoid burning bridges. Sometimes you'll need to stand firm on your vision while keeping things collaborative. As Gympass (now Wellhub) founder César Carvalho says, "Sometimes you have to eat the frog"—it's not pleasant, but you push through and keep building.

RAPID FIRE

OM: What's the most underrated tech company in Latin America?
FV: MercadoLibre. Even though it's a $100 billion business, it's still underrated. I'm convinced that if e-commerce became illegal tomorrow, within a few years these guys would be at $100 billion again selling something else. The execution capability is ridiculous.

OM: What question do you wish people asked you more often?
FV: I wish employees understood that success comes from consistent efforts. Success doesn't come overnight, and when it does, it's the exception, not the rule. You're gonna have to work consistently for years, and it's gonna be suffering.

OM: If you had to build another startup, what industry would you pick?
FV: Medicine or biology. It's gonna be one of the most disruptive industries because of AI. Everything related to biology is gonna suffer massive disruption, and it's gonna impact millions of people.

OM: What's more important—passion or perseverance?
FV: Perseverance. Hundreds of thousands of times more important. You need passion to persevere, but if you don't persevere, luck is never gonna show up to your doorstep.

OM: One counterintuitive lesson about marketplaces?
FV: Everyone underestimates network effects. You can see companies trying to compete with established network effect businesses—you can put $200 billion and it's not gonna happen. The wall becomes so thick that competitors can't make a dent.

TAKEAWAYS

✓ Building in LatAm means embracing complexity. Bureaucracy and fragmentation are a moat—if you can navigate them.

✓ The “do things that don’t scale” mantra is still en vogue—early traction often comes from manual, unscalable effort.

✓ Market structure determines strategy. Don’t copy Silicon Valley playbooks in Brazil—history, infrastructure, and behavior shape entirely different outcomes.

✓ Well-built network effects are the strongest defense against better-funded competitors.

 P.S. If this issue was valuable to you please share it with a founder who needs to hear it. Let’s build LATAM’s next tech leaders—together.

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