Last month, Nine Four MBA Intern JP Villafuerte tagged along with portfolio company Latii on a trip to one of their initial US markets, Texas. In a previous post, Nine Four General Partner Kurt Ramirez talked about his experience visiting the Mexican manufacturers who supply Latii´s marketplace, and the processes in place to assure American standards and quality. This post looks at the other side of that equation, exploring Latii´s distribution channels, sales processes, and client dynamics in the US.
As a quick recap, Latii is a managed marketplace of windows and doors, focused on helping US construction material buyers access Latin American-made products. On one side, it clusters and standardizes Latin American manufacturers, which traditionally lacked the scale or know-how to sell into the US market. On the other, it offers high-quality products at best-in-market prices and lower lead times to American dealers. Finally, Latii brings it all together through a digital platform, allowing both sides to work in tandem, thereby making the request-quote-approval-and-delivery cycle shorter and less prone to error.
From Austin to Houston and everything in between.
If there is one thing to know about the architectural window and door market in the US, it is that it’s local. Different climates require different solutions: the same vinyl window that will weather the salinity and humidity of Houston might perform poorly under the Belton sun. It is trend-based, and while thin minimalist profiles are preferred in Austin, thicker, more traditional ones are the norm in Temple. It is regulated at the county level, requiring brands to comply with distinctive specifications and energy efficiencies. Dealer-builder relationships are long-term, dealers depend on builders for continuous business and builders are looking for reliable dealers that will install, service, and replace products when needed.
As part of its go-to-market strategy, Latii is putting boots on the ground and developing, one shop at a time, a network of local dealers in Texas. This tactic serves three purposes – it builds momentum on the demand side of the marketplace, provides valuable insight into digital product design, and allows Latii to scale operations gradually with short feedback cycles.
During the 3-day trip, we visited over 15 dealers across six cities. Every dealer was at a different point in its relationship with Latii: some were in the process of sending their first quote, and some heard the word Latii for the first time. If I could paint what I experienced into a continuous scene it would look something like this:
Santi (Latii CEO and founder) or Luca (Chief of Staff) would drive to the next window dealer on their list. They would knock on the door and introduce Latii as a new brand of high-end aluminum and steel thermally broken windows at affordable prices. The owners would invariably proceed to quiz them on specs, certifications, and existing dealers. Once Santi or Luca had proven their credentials, the conversation would move on to the origin of the product and how their windows stacked against incumbents in quality and price. In most cases, this would be enough to hook them for a quick product demo. We would go back to the truck, get a few samples and a window, and bring them back into the shop. The owners would suspend conversation and spend 2-3 full minutes playing with the samples, they would feel the weight, test the nooks and crannies, and look at them from different angles primarily focusing on the thermal isolation of the pieces. The conversation would resume with some variation of “This is good stuff, what did you say your price (per square foot) was?”, or “I think I have a couple of jobs that would be perfect for this.”
I am not sure I have experienced such a frontal example of product market fit. To the dealers, the price-to-value equation was a no-brainer, and the product deserving of trying.
Once the dealers expressed interest, Santi or Luca would offer to quote existing or past projects to put Latii’s prices to the test. If everything worked out, the dealers would go ahead and start quoting projects and order samples for their showroom.
A managed marketplace, not a window brand.
Knocking on doors and building relationships solves the zero-to-one problem. However, as the business scales, new categories are added, and more quoting cycles are received and distributed among parallel manufacturers in LATAM, the complexity of the logistical problem will require real-time supply allocation and robust workflow management between dealers, Latii, manufacturers, and their suppliers.
Santi makes it clear that for Latii’s technology to truly succeed, it’s crucial that US dealers feel the same trust in Latii’s products as they do when getting into an Uber. Essentially, just as one ride is as dependable as the next, every item made under the Latii brand needs to be seen as just as good as any other, regardless of its manufacturing source. If successful, this would result in network effects and brand moats.
To deliver this experience, Latii is building a suite of solutions aiming to bring all parties closer together. One such tool is its quoting engine. In the US, the burden of quoting lies on the dealer, who, in many cases, spends hundreds of thousands of dollars every year quoting projects. Most of the cost of quoting can be traced to the human labor required to process technical drawings, written documents, and annotated images into the right instructions for the manufacturer. Using machine vision and LLMs, Latii is streamlining this process, reducing quoting times from as much as 8 hours per project to a few minutes. The resulting workflow allows dealers to save money and guarantees all manufacturers are working under the same game plan.
Next challenges.
As the first orders and deliveries continue to make their way into the US, Latii’s next challenge is twofold. On the operational side, guaranteeing execution will be imperative to building the long-term trust that is key in this industry. On the product side, Latii’s technology will need to significantly improve the current request-quote-approval-and-delivery workflow to justify user adoption.
Takeaways
- The quality of Latii’s products manufactured in LATAM met or exceeded the expectations of American window and door dealers across the board.
- Dealers are in the business of optimizing for price at different levels of quality, if the product complies with their standards, origin is secondary.
- Onboarding a new brand requires an investment of time (installation) and money on the dealer’s side, and they want to make sure they are developing long-lasting relationships.
- While current lead times might not be as critical for new projects, Latii will need to step up its operations to participate in the remodeling business.
- Latii’s technology, using machine vision and LLMs, will reduce quoting time and cost for dealers, and promote uniform quality across manufacturers.
The information provided in this blog is not intended to be financial advice or solicitation for any purchase or sale of securities and is the opinion of the author at the time of publication. Investing in securities entails risk, including the risk of principal. Some of the information presented has been provided by third parties, has not been independently verified, and is subject to change without notice. The opinions stated are the opinions of Nine Four Ventures at the time of publication. Past performance is not a guarantee of future returns.
