Shownotes
Luis Derechin
Bio
Luis Derechin is a serial entrepreneur, global talent strategist, and author of "The Nearshore Edge: How Smart Companies Scale With Latin American Talent." As the founder and CEO of Nir-Yu, Luis created the REMOTE Intelligence framework, helping ambitious startups and mid-market enterprises access top talent while cutting costs by up to 70%.
Intro
The salient point of today's discussion is that a staggering 73% of offshore or nearshore projects culminate in failure, a statistic that underscores the critical need for a paradigm shift in hiring practices for startups. I, Jothy Rosenberg, am joined by the esteemed Luis Derechin, a repeat entrepreneur who has navigated the complexities of building successful teams across borders. Luis shares his transformative revelation that extending a startup's runway is not solely reliant on securing additional funding, but rather hinges on rethinking talent acquisition strategies. By leveraging the vast pool of world-class talent available in Latin America, companies can dramatically reduce operational costs while fostering real-time collaboration. This episode, marking our centenary, is a profound exploration of effective hiring practices that can significantly enhance a startup's prospects for success.
Conversation
The conversation with Luis Derechin, a seasoned entrepreneur and founder of Nir-yu, delves into the pressing issue of talent acquisition in the startup ecosystem. With a staggering 73% of offshore projects failing, Derechin posits that the solution to extending a startup's runway may not lie solely in securing additional funding but rather in strategically rethinking hiring practices. He shares his personal journey from selling candy as a child to successfully raising venture capital for his tech startup in Mexico. Derechin advocates for hiring Latin American talent, which not only reduces costs significantly but also facilitates real-time collaboration across time zones, thereby enhancing the effectiveness of agile methodologies. The episode culminates in a discussion about the critical importance of intentionality in hiring, integration, and communication, emphasizing that remote workers must feel connected to the company's culture to thrive and contribute effectively. This episode serves as a valuable resource for entrepreneurs grappling with the complexities of building and sustaining their teams in an increasingly competitive landscape.
Takeaways
- The podcast reveals that a staggering 73% of offshore or nearshore projects ultimately fail, underscoring the critical importance of effective management and strategy in such ventures.
- Luis Derechin emphasizes that extending a startup's runway may be more about rethinking hiring strategies, particularly by sourcing talent from Latin America at more sustainable costs.
- Effective communication and cultural understanding are essential for the success of remote teams, especially when integrating talent from diverse geographical locations.
- The discussion elaborates on the significance of real-time collaboration, highlighting how working within similar time zones can enhance team dynamics and productivity.
- The concept of 'grit' is explored, suggesting that resilience and a deep-seated determination to succeed are key traits among successful entrepreneurs in the startup ecosystem.
- Luis shares insights on a framework for remote team success, which includes rigorous talent selection and optimized team performance as pivotal components.
- Nir-Yu | Your nearshore staffing solution
- Who Says You Can't Startup online program for startup founders
- Jothy's TEDx talk - On why those with disabilities tend to overachieve
- Our YouTube channel
- Designing Successful Startups — Jothy Rosenberg | Author | Speaker | Podcaster - Site with all podcasts
- Tech Startup Toolkit book
- Please leave us a review
Transcripts
Please meet today's guest, Louis Diretz.
Speaker B:Of all the offshore or nearshore projects, 73% are failures.
Speaker B:Let that sink in.
Speaker B:And 73% are failures.
Speaker B:Why?
Speaker A:What if the secret to extending your startup's Runway isn't raising more money, it's rethinking where you hire.
Speaker A:Welcome to the Designing Successful Startups podcast.
Speaker A:Hi, I'm your host, Jothi Rosenberg.
Speaker A:Today's guest is Louis Diretzin, a repeat entrepreneur whose first venture got shut down by the principal's office.
Speaker A:He was 11 years old, selling Mexican candy to classmates, and every kid spent their lunch money on his inventory instead of the cafeteria.
Speaker A:That early brush with authority didn't slow him down.
Speaker A:Lewis went on to build Jack B, the first Mexican tech startup to raise US Venture capital.
Speaker A:And when he realized US Salaries were burning through his Runway, he discovered something that changed everything.
Speaker A:Hiring world class talent from Latin America at a fraction of the cost.
Speaker A:Now he runs near you, helping us startups do exactly what saved his company.
Speaker A:Extend their Runway by 60 to 70% while winning the war for talent.
Speaker A:This is episode number 100, and Louis brought the heat.
Speaker A:Let's get into it.
Speaker A:Okay.
Speaker A:Well, hello, Louis, and thank you for joining me on the podcast.
Speaker B:It's a pleasure to be here, Josie.
Speaker B:I appreciate the fact that you're giving me some time out of your busy schedule.
Speaker A:Oh, well, I love.
Speaker A:I love doing this podcast.
Speaker A:And, and I have to tell you something very important.
Speaker A:You are number 100 guest.
Speaker A:You scored.
Speaker B:I did, I did.
Speaker B:Wow.
Speaker B:So see, even an even bigger pleasure now.
Speaker B:At least I'd be a member.
Speaker B:I'll be.
Speaker A:Yeah.
Speaker A:So, you know, context, setting for the.
Speaker A:For the people listening.
Speaker A:Where are you originally from and where do you live now?
Speaker B:You know, a bunch of circles.
Speaker B:And I was born in Mexico City, but I was raised in San Diego, California.
Speaker B:I then moved back to Mexico, then moved to Washington D.C. then moved to San Diego.
Speaker B:My family now lives in Mexico City, and I spend time in Mexico City, obviously, because my family's here, but I travel throughout the region, in Colombia, in Argentina, in.
Speaker B:In different.
Speaker B:Different places, and then headquarters for the companies in Miami.
Speaker B:So I end up spending a fair amount of time.
Speaker A:We're going to talk about your.
Speaker A:Your company a whole bunch in a minute.
Speaker A:Before the company that you're currently.
Speaker A:That you're the founder of.
Speaker A:What other small startups were you involved with on the way?
Speaker B:So my, My first startup, I got in trouble and then sent to the principal's office.
Speaker B:Jody, when, when I was 11 years old, maybe 10, because we.
Speaker B:I grew up on, on the border.
Speaker B:So San Diego county, the second city.
Speaker B:So after the Mexican border, first city, San Ysidro, second cities called Chula Vista.
Speaker B:I grew up in Chula Vista and my parents being Mexican and wanting to immerse us in Mexican culture as well as the American culture where we live, they would take us to Tijuana all the time.
Speaker B:So I figured, I like the Mexican candy.
Speaker B:I'll buy a bunch of candy, take it back and then sell it at school.
Speaker B:I didn't know that I wasn't allowed to sell candy in school.
Speaker B:So the principal found out when all of the kids spent their lunch money on my candy and not on lunch.
Speaker B:So I was sent to the principal's office and I guess the authorities shut down my first entrepreneurial venture.
Speaker B:Ever since then, I'm what some people call a serial entrepreneur.
Speaker B:I like repeat entrepreneur because serial is more, you know, serial murderer than serial entrepreneur.
Speaker B:But I think the biggest claim to fame before near you was a company called jackbee.
Speaker B:And jackbee was the first tech startup in Mexico to raise US venture capital funding.
Speaker B:That's, that's what I did previous to the current one.
Speaker A:And you've stayed out of the principal's office and within the law and all your startups, right?
Speaker B:Well, look, we, we had some intelligence agencies that were customers back in Jackie.
Speaker B:So I spent a fair amount of time, you know, in that I can't tell you about, let's just put it that way.
Speaker A:So the current company is called what near you?
Speaker B:Nir-y u phonetically for us folks, maybe it's, it's, it's not second nature, but phonetically it'd be near you.
Speaker A:And what does it do and tell us about?
Speaker B:You know, sure, what we do is we help US companies, startups and mid market.
Speaker B:Companies hire remote talent out of Latin America to work for them again remotely.
Speaker B:This, all, this all came about as a result of my previous company.
Speaker B:So one of the things that happened Jothi at Jack V at my previous company is when we raised the venture funding, which I thought I was a rock star.
Speaker B:All of a sudden I find myself in the US having to pay US wages and sticker shock hit, right?
Speaker B:Because as you know, cost of living in the US is far more expensive than it is in most other places.
Speaker B:Therefore people have to make more money.
Speaker B:That's just a reality, an economic reality of life.
Speaker B:When I started building out the team in order to attempt to penetrate the US market, I realized that if, if I built out the entire team that I needed and paid us wages that the Runway for my company would be very short.
Speaker B:So as a way to elongate the Runway, I started hiring back in Latin America, back home, Mexico, Colombia, whatnot, in order to pay lower wages.
Speaker B: This is the early: Speaker B:So no zoom, no slack, none of those things, right.
Speaker B:We were flying by the seat of our pants.
Speaker B:And to make a very long story short, you know, we were successful.
Speaker B:The company got acquired 13, 14 years later.
Speaker B:And then ever since then, I've been helping companies do the same thing that I did for my company, which is hire really good talent, saving them 60 to 70%.
Speaker B:And in doing that, either elongating the Runway for companies to stay alive longer than they would, or be successful in the war for talent, because finding hiring talent, paying talent in the US is difficult.
Speaker B:It's expensive.
Speaker B:So if we can help them by adding another 550 million people that can work remotely for them, then, then God bless.
Speaker A:So one of the big advantages of, of, of using Central and South America compared to all the offshoring that I've ever seen people do is time zone.
Speaker A:Talk about that, will you?
Speaker B:Yeah, sure, absolutely.
Speaker B:Let me just add North America if I could, because Mexico is geographically in North America, so we don't want to exclude.
Speaker A:Guilty as charged.
Speaker A:My mistake.
Speaker B:No, no, no, I hear you.
Speaker B:I make the same, you know, mistake a lot.
Speaker B:No worries.
Speaker B:So that's why we referred to Latin America.
Speaker B:Right?
Speaker B:Latin America being all of the countries that have Latin America heritage, which is almost all of America.
Speaker B:I think there are a couple of colonies that were Dutch, one, one that was English.
Speaker B:Right.
Speaker B:Belize and whatnot.
Speaker B:So, so those would be excluded from Latin America.
Speaker B:But I'm getting into too much geographic detail.
Speaker B:So to, to answer your question, when, when offshoring started back in the day, India was the biggest recipient.
Speaker B:I believe it still is.
Speaker B:They're the biggest provider of offshore services.
Speaker B:And basically companies in initially in Europe would hire Indian engineers or Indian staff to provide services for them.
Speaker B:Then American companies started doing that.
Speaker B:But as communications became more real time, what started happening is the waterfall methodology that use, that was used for software planning and you know, just throwing a bunch of documents over and having people work on them for days, weeks, months, and then send, send back.
Speaker B:A project started turning into what's called Agile methodology.
Speaker B:And Agile methodology is more constant communication, review, more interaction, shall I say, interacting between individuals that are anywhere from 11 to 16 hours difference is difficult.
Speaker B:That's just the reality of life.
Speaker B:So one of two things would happen either.
Speaker B:Well, one of three things you would either force the service provider to work strange hours in order to acquiesce to the time zone of the company that was paying the bills, which is typically what happened.
Speaker B:You know, the circadian rhythm and other things aren't, that's not sustainable for the long term.
Speaker B:Second, the second option, you would have the person, the project manager or product manager that you know would be working off hours in order to accommodate to the it, the services vendor hours or what started happening is they all of a sudden realized, hey, there's another geography.
Speaker B:We don't have to send it to Eastern Europe or India or Pakistan or Philippines.
Speaker B:We could actually leverage the fact that there is a very large population in Latin America and we can have real time communication.
Speaker B:Mexico is Central Standard Time, right?
Speaker B:With the west coast of Mexico being Pacific Standard Time.
Speaker B:And you even have some Eastern Standard Time, Cancun and all that.
Speaker B:And then, you know, as you go down in Latin America, it tends to be maybe two hours difference if you go to the easternmost part of Uruguay or Argentina versus Eastern.
Speaker B:So the, the fact that the time zones are very, very similar allows people to have, have conversations like you and I are having now.
Speaker B:You're in Boston, I'm in Mexico City, but we can have these things and you're not, you know, late at night or early in the morning and neither am I.
Speaker A:There's, there's a, there's an approach that a lot of people that, that I, that I knew, yes, they were doing agile development and, and yes, they were using staff in India and, and I think they were trying to convince me that this was a great idea.
Speaker A:But in reality, and I'll tell you what the idea is in, but in reality, I think they were just desperately trying to make it work.
Speaker A:And so what a lot of people did was they would have the team in India work their normal hours and do a hump, a bunch of development and as they wrap up for the day and they are checking things into the source code repository, they would send a message each day, probably the project manager there would, and say, here's what we did or here's how much we accomplished of the tasks that we're assigned.
Speaker A:And the people are getting up somewhere in the US and they, and they read what happened and they look over the code and then they, it's a very challenging set of balls to juggle because then they're trying to do their part adding onto the stuff that was written while they were asleep.
Speaker A:And then the opposite happens as the, as they go to bed and the Indian people are Starting to wake up, sustaining that is just, I mean, it's exhausting for me to describe it.
Speaker B:You know, Jyoti.
Speaker B:So, so, so the answer is yes.
Speaker B:But there are companies that got the hang of it perfectly right.
Speaker B:And, and there are companies that love the 247 cycle of constant development.
Speaker B:In my experience, those tend to be larger companies with, you know, a lot more structure, a lot more predefined roles, a lot more staff.
Speaker B:So that's why when you ask what we do, we tend to focus on startups, right?
Speaker B:Ambitious startups and in mid market companies.
Speaker B:Because what ends up happening, and you know, this a, from, from, from your journey, your professional journey, as well as a lot of people.
Speaker B:99 other guests that, that you have interviewed.
Speaker B:Smaller companies look to larger companies and try to initially mimic what they're doing and then sort of fix it.
Speaker B:A lot of companies try doing what you just described.
Speaker B:Jophi.
Speaker B:Right.
Speaker B:So if, you know, if these large companies are doing the 247 development, then I can do it.
Speaker B:And it's far more sustainable for them than it is for you because you don't have the stat, you don't have the wherewithal.
Speaker B:So what I would point to, it's not that those types of engagements can't be successful, they certainly can.
Speaker B:But for startups and mid market companies, we have found that those tend to be failures far more often than successes.
Speaker B:And one of the bigger challenges is the offset in, in time zones.
Speaker B:Yes.
Speaker A:Hi.
Speaker A:The podcast you are listening to is a companion to my recent book, Tech Startup Toolkit, how to Launch Strong and Exit Big.
Speaker A:This is the book I wish I'd had as I was founding and running eight startups over 35 years.
Speaker A:I tell the unvarnished truth about what went right and especially about what went wrong.
Speaker A:You could get it from all the usual booksellers.
Speaker A:I hope you like it.
Speaker A:It's a true labor of love.
Speaker A:Now back to the show.
Speaker A:All right, so time zone is one thing, but another thing is that I find that the big companies have plenty of tasks that, that are maybe not the core really innovative part of the product that they're, and they're, and they're farming those out to someone offshore.
Speaker A:But a startup, there's probably no code that they're writing that is simple, trivial, unimportant maybe.
Speaker A:And so you need really good people and you need them to be well integrated because all the parts matter.
Speaker A:And so, you know, I know of ton of a ton of people that tried offshoring to India or China or, or even Eastern Europe and ended up pulling back, or they figured out that, okay, there are some things that are not sort of core, hard, innovative technology, the things that you might end up filing patents on.
Speaker A:So maybe give me your reactions to some of that.
Speaker B:No, look, I think what, what you're saying, what you're saying has a lot of truth behind it.
Speaker B:Now, I'm sure if we were to talk to someone that, that provides services from those offshore locations, they would say that either either the person doing the work or the product manager, product owner, sort of shift their, their time zones and depending on where you are, they can make it work.
Speaker B:And again, I don't want to knock them because a lot of time they can.
Speaker B:But what we have found, Jyoti, is that the more real time collaboration that is needed, the less time zone shift that can exist, a, B, the more cultural adherment or cultural similarity that is required.
Speaker B:And again, it's no knock on anyone, but, you know, Mexico and the US have been interchanging cultures for hundreds of years.
Speaker B:So the fact that we're so close, we sort of understand each other a bit more naturally than someone from, you know, the Far east, the Indian subcontinent, or even Eastern Europe.
Speaker B:So I would say that what we have found is, and this is not only our research, but there's plenty of research about the number that I'm about to provide to you is.
Speaker B:Of all the offshore or nearshore projects, 73% are failures.
Speaker B:Right?
Speaker B:Let that sink in.
Speaker B:And 73% are failures.
Speaker B:Why?
Speaker B:There are, There are a bunch of reasons.
Speaker B:We've done work on this for many, many years, and we've, we've identified seven components of the death trap.
Speaker B:Right?
Speaker B:So when a project is stuck, we call it the offshore team death trap.
Speaker B:Because you have a team that's offshore, you think things are going to go swimmingly and.
Speaker B:And then you end up being in this debt trap where it slows, you know, withers away and dies sometimes, not, not so slowly.
Speaker B:So things like cultural chasm, where the person you hire isn't, you know, as culturally adept as your team needs him or her to be.
Speaker B:There is communication fog, whether it's because of time zone or because of accent or language barriers.
Speaker B:There's the hidden cost spiral, right?
Speaker B:Because when you hire someone, you don't know exactly how much they're going to cost or what the total cost is going to be.
Speaker B:I can go through the seven of them.
Speaker B:But long, long story short is what you're saying is correct.
Speaker B:The, the fact that you're sort of trusting and hoping that things go well, it's almost a recipe for failure.
Speaker B:What you need is a framework for success.
Speaker B:And the book that I just published, the Offshore Teen Death Trap, the seven components of the Death trap, and then provides a framework called the Remote Intelligence Framework, remote being an acronym.
Speaker B:I'll go through the acronym in a little bit.
Speaker B:But it's a framework that companies can follow in order to go from only 27% success rates to about 95% success rates.
Speaker B:So by reading a book, you can fix the possibilities of success.
Speaker B:You know, that's great news.
Speaker A:That is great news.
Speaker A:So one other thing that I always worry about when I'm using someone who's, who's, well, yeah, not local and not, you know, they might be considered contractors depending on how you hire, hire this remote team.
Speaker A:So.
Speaker A:And the thing I worry about is you don't want to lose really core knowledge that, you know, you're, you're, you know, like one of the reasons that we have, you know, vesting on stock options is because you don't want people who are core to your team and their, and their brain is getting full of, you know, really valuable knowledge about the problem you're solving and, and how your technology works, et cetera, et cetera.
Speaker A:And you don't want them walking out the door with all that knowledge.
Speaker A:And so you, you come up with ways to retain them.
Speaker A:So, you know, the whole vesting where there's a one year cliff, you certainly don't want anybody to leave in the first year because they haven't contributed anything yet and walk away with, with a bunch of options.
Speaker A:I feel like you have a solution for this because I, I worry about it.
Speaker A:So you, you've probably worried about it and you've got a book and you've got a company that helps solve it.
Speaker A:So I'd love to hear your thoughts on that one.
Speaker B:So if it.
Speaker B:Most companies that hire don't hire thinking, unless these are temporary hires, which I'll put in a separate bucket.
Speaker B:But most companies that hire don't go in thinking, gee, I'm going to hire for the short term, give this person a lot of knowledge, you know, and then, and then have the person walking out the door.
Speaker B:But it's, it's not the way you hire.
Speaker B:And when I say the way is, you know, employees, contractors, brand them however you want.
Speaker B:It's the intention with which you hire.
Speaker B:It's how you treat the individuals.
Speaker B:It's the type of respect, communication, integration that you give to the individuals.
Speaker B:So what we have found, Josie, is that in the remote intelligence framework, there's a First, the R stands for rigorous talent selection.
Speaker B:So when you hire someone that is going to be working outside of your company's geographic confines, you have to be even more rigorous than if you were hiring them to work shoulder to shoulder with you.
Speaker B:Because you're going to have to trust that this person does work a thousand miles away, right.
Speaker B:Or 2,000 miles away, and that the person is going to be able to contribute.
Speaker B:You have to.
Speaker B:The E stands for expert onboarding integration.
Speaker B:You have to dedicate the time to integrate the person into your culture, making sure that they feel like they're part of the company.
Speaker B:And then the M stands for manage support and services.
Speaker B:You have to provide the right level of support and service that you would.
Speaker B:So without going into the other three letters, which we'll cover in a second, just those three, three hint at the, what I will call the intentionality with which individual workers have to be hired, and especially more if they're going to be hired remotely.
Speaker B:If you hire someone shoulder to shoulder, people sort of live the culture, you know, live and breathe it every day.
Speaker B:Your shoulder to shoulder.
Speaker B:If you do something that you shouldn't be doing, you're, you know, the person has the desk next door or the office next door is going to knock on your door and say, hey, Jothi, you know, we don't do things like that here.
Speaker B:Whereas if a person is going to work remotely, you need to have the communication loop to be able to provide feedback.
Speaker B:You need to explain expectations a lot more.
Speaker B:You need to make sure that the person feels a lot more entrenched and identifies with the company.
Speaker B:And all those things require intentionality.
Speaker B:From the moment you interview, the moment you hire, the moment you onboard, and then the moment you communicate.
Speaker B:Does that make sense?
Speaker A:Absolutely.
Speaker A:And I'm glad you mentioned communication because if, if they're not part of the weekly all hands, if they're not getting a lot of communication, not just from the direct manager, but, but, you know, from the CEO because, you know, think I like to think about it this way.
Speaker A:A startup that doesn't have to pivot is a, is a.
Speaker A:Well, they're, they're either very lucky or, or just, you know, incredibly smart.
Speaker A:But I've almost always had to pivot and, and sometimes it's not like a big pivot.
Speaker A:We're changing our business model.
Speaker A:Sometimes it's.
Speaker A:We learned something about, you know, the product and we have to, we have to adapt to that.
Speaker A:And it's hard work making sure you've explained that to everybody and you have to explain it over and over because you know, they kind of got used to the way things were and you're changing it.
Speaker A:And anything you change, no matter how little you, you at a startup, these are little, this is a small number of people, you know.
Speaker B:Yes, small number of people, large number tasks and like you said, most are going to have to pivot and these aren't, sometimes they're not, you know, company making pivots, sometimes it's, it's a series of smaller pivots, right.
Speaker B:In your positioning, it's the use of a word, it's the way that you sell, it's the way that you present.
Speaker B:Right.
Speaker B:It's the sales engineer that instead of starting out with this part of the demo, should start with this part of the demo, et cetera, et cetera, et cetera.
Speaker B:So the need for constant communication to me is absolutely a must have in startups and in mid market companies.
Speaker B:And the fact that you, that more communication is needed in real time and having the exchange of opinions, it's not top down, right?
Speaker B:You, you, you've been in these situations, worked for startups and advised many companies.
Speaker B:You know that sometimes it's bottom up, sometimes it's top down, sometimes it's side to side.
Speaker B:But the only way that you make this flourish is by having constant communication from every person that is involved in the product.
Speaker B:And we've, we've spoken a lot about technology, but it doesn't have to be technology.
Speaker B:It can be in the product, it can be in customer support, it can be marketing, can be in the legal team, it can be in all these teams.
Speaker B:Because today remote work is done not only for tech jobs but for numerous, numerous jobs.
Speaker B:But the one constant is the intentionality with which you hire people, right.
Speaker B:Interview you, onboard them and then the constancy with, with which you're always communicating.
Speaker B:Because that's the only way that startups or mid market companies are going to be successful.
Speaker A:And by the way, we just did a full circle because how do you do an all hands if you're not in a very close time zone?
Speaker B:I've seen them done.
Speaker B:You know, people at 1am are sitting there with, you know.
Speaker B:With their coffee, waiting for the 9:00am call, right.
Speaker B:That starts elsewhere.
Speaker B:Can it be done?
Speaker B:Yes, but for smaller companies that don't have the infrastructure, don't have the multiple levels of management and whatnot.
Speaker B:Very difficult to do.
Speaker B:Yes.
Speaker B:And frankly, yeah, I mean, you know, this a startup or mid market company, it's difficult enough as it is why, you know, add that layer of difficulty.
Speaker B:Right.
Speaker B:Just if you want to hire less expensive, then try nearshore instead of offshore.
Speaker A:Listen, when I, when I, I hold weekly all hands at all my companies up until we get to like.
Speaker A:45, 50 people, we usually have a, A, a single room we could, we could do it in.
Speaker A:This is all pre Covid and even so to entice people to come to the meeting and be on time, I bake muffins for, for everybody and food is an amazing motivator for people.
Speaker A:And then I, I had remote people and I, and I felt bad and I, I would say listen, I can't really ship you muffins cause you know they won't be, they won't be yummy by then.
Speaker A:So I'm sorry, you can either enjoy watching us eat our muffins or I'll send you recipes if you want.
Speaker A:But anyway, so that's, tell us the, the other three letters.
Speaker B:So the O stands for optimized team performance and this goes again to the communication.
Speaker B:So once you communicate you onboard someone with intentionality, you make them part of the team by making sure that they understand what they have to achieve and then having a feedback loop where you're actually tracking performance and making sure that that performance is achieved.
Speaker B:The T is transparent.
Speaker B:Cost plus pricing.
Speaker B:And that one I think is equally important.
Speaker B:The person that is doing the work.
Speaker B:You want the management of the company for whom they're working to understand whether that person is making a fair wage typically as a way to sort of shortcut hiring.
Speaker B:In another country a lot of companies rely on third party service providers and there are two types, at least in my experience of third party service provider.
Speaker B:There is the, that are those that are going to offer a black box pricing service where they're going to say we're going to charge you $23 per hour for a Java developer with, you know, three, three years of experience and that's great.
Speaker B:Oh, the company that's doing the hiring understands the budget and understands sort of the boundaries.
Speaker B:But the problem is you don't ask how much the person doing the work is going to make.
Speaker B:And out of those $23 a person may be making 8, 10, 11 and he or she feels exploited.
Speaker B:And then over time the, the relationship isn't going to be perfectly aligned because if you're paying your staff in the US bonuses, you know, or there's, you know, there's a reward for something that the whole company achieved and the person that is doing the work nearshore or offshore Isn't participating in those rewards, in the bonuses and everything.
Speaker B:Then the person starts saying, hmm, well am I part of this team or aren't I part of the team?
Speaker B:So for me, the T and transparency isn't, you know, it's one more layer of that communication and the ability for the manager to talk to the person doing the work about how much the person is getting paid, the person that's doing the work if, if they want a raise, if they need a raise, being able to talk to the company to whom they're providing services instead of having a third person that is always trying to build more for the work and pay less for the person that's doing the work.
Speaker B:And lastly, the E is for enhanced scalability and growth.
Speaker B:And that's sort of a result of the other five.
Speaker B:If you're rigorous about selecting talent, if you, you're intentional about the way that you onboard people expertly, if you provide the right level of support, support and services, if you optimize the performance of your team and if you're able to have this transparency with the wages, what, what results is enhanced scalability and growth.
Speaker A:How do you deal with the fact that as much as we would would like people not to share what their salary is with other with their colleagues, how do you deal with the fact that, cause you just talked about, are the people that are remote and the people that are local getting the same fairness is the bonus structure, rewards, whatever is it fair?
Speaker A:And yeah, obviously that's, that, that, that's important.
Speaker A:But, but, but one of your starting statements at the beginning of this, this, this podcast was, well, one of the big benefits of doing this is your Runway is going to be longer because your costs are lower.
Speaker A:But you know, so how do you deal with the fact that this person sitting in Mexico is salary information with the person sitting in, in San Diego, right?
Speaker A:And, and then they're going to say, well wait, you're making almost twice what I make.
Speaker A:And yeah, you go, well, wait a minute, how much does your rent?
Speaker A:How much is your mortgage?
Speaker A:And, and maybe that works, but they're still probably going to whine about it.
Speaker B:You know, I, I find that first of all, when, when I say transparency, I, I, I don't mean commonality in the fact that everyone's talking wages, right?
Speaker B:I mean, you, you, you, you still want to compartmentalize.
Speaker B:So the person that is doing the work is go, is going to share wages, you know, with the person that's doing the hiring with, you know, with managers, not necessarily with the, with, with Their peers.
Speaker B:So.
Speaker B:So first of all, right, we hope.
Speaker A:You hope they aren't well, Correct, Correct.
Speaker B:But then I'll also say that most people that are doing work remotely understand that part of why they have the work, that the remote work, is because they're going to be making less than their peers in the US and they're conscious and they don't whine so much about it.
Speaker B:Because the cost of living in Latin America is much lower.
Speaker B:Right.
Speaker B:You know, a mortgage in the US is going to run you a thousand, couple thousand, three, four, five thousand, depending on where you live.
Speaker B:Right.
Speaker B:Is it, you know, Mississippi, or is it Palo Alto?
Speaker B:So the fact that a person makes more in the US doesn't necessarily mean that they have a better quality of life.
Speaker B:Sometimes in Latin America, making 30% because you don't have a mortgage, right.
Speaker B:Because you have your own home that you were able to buy for tens of thousands of dollars.
Speaker B:Tens of thousands of dollars.
Speaker B:You know, you could buy an entire home here.
Speaker B:Not all homes that there are also homes that are hundreds of thousands, but still, you know, a medium class dwelling is 50 to $120,000.
Speaker B:Mortgages tend to be a lot smaller.
Speaker B:Health insurance, I'll give you an example.
Speaker B:So health insurance for an entire family in Latin America will probably run you, depending on the health plan, will probably run you two to $400 per month.
Speaker B:Compare that with health insurance in the US right?
Speaker B:The deductibles are going to be tiny compared to us.
Speaker B:So the cost of living in the US is so expensive that people in the US need to make that much money in order to live the same type of quality life that people in Latin America making 30 to 40% of what US individuals make.
Speaker B:Therefore, I would almost say that the workers doing the work down here feel blessed and privileged because they'll be making more than if they worked for a local company.
Speaker B:I think they compared themselves more to their next door neighbor.
Speaker B:Right.
Speaker B:And how much their next door neighbor is making than comparing themselves to their peer who lives in Palo Alto.
Speaker B:Because it's incomparable, it's mentally infeasible for that comparison to occur.
Speaker A:I hope you're enjoying the show.
Speaker A:In addition to the podcast, you might also be interested in the online program I have created for startup founders called who says you can't startup in it, I've tried to capture everything I've learned in the course of founding and running nine startups over 37 years with no constraints like there were with my book.
Speaker A:The program is four courses, each one about 15 video lessons plus over 30 high value downloadable resources.
Speaker A:The QR code will take you where you can learn more.
Speaker A:Tell us what parts of this whole picture your company does.
Speaker A:Are you helping them find the people?
Speaker A:Are you helping them stay within the local laws which are hard to keep track of because they're different everywhere.
Speaker A:And what are all the things that you guys do?
Speaker B:So the answer is yes to all of those.
Speaker B:We, my, my company specializes in helping U.S. companies find the talent.
Speaker B:Right?
Speaker B:So we, we help them go through a rigorous talent selection.
Speaker B:We immerse ourselves and in our talent acquisition professionals in not only the job descriptions but the company's culture, communication patterns, type of accent that you need.
Speaker B:It's very different if a person is going to be, you know, chat Spanish than conversational English.
Speaker B:So and we, we find the talent.
Speaker B:We then help a company onboard and integrate the talent.
Speaker B:We then provide the right level of support and services in country whether it's in Mexico, Colombia, Argentina, wherever they may be, they may be hiring.
Speaker B:And as you indicated, we make sure that they steer right of all the other laws that have to be obeyed.
Speaker B:Right?
Speaker B:Regulations, rules, laws for tax purposes, for reliability purposes, intellectual property ownership purposes.
Speaker B:And then we help them optimize team performance.
Speaker B:Even though we're not responsible for deliveries.
Speaker B:Right.
Speaker B:Or the constant performance, we do participate in creating feedback loops making sure that as you said, either the all hands happen or there are constant communication that is happening with them.
Speaker B:And we do all this with the transparent cost plus pricing structure.
Speaker B:So you know, as you look at the, the acronym that we created, we sort of eat our own home cooking by obeying the REMOT as part of our business model.
Speaker A:So you know, a normal person recruiter in the US is going to get maybe 30% of the person's first year salary.
Speaker A:That's their business model.
Speaker B:Correct.
Speaker A:What parts do you, I assume you get that, but we don't.
Speaker B:So our business model is when we work with a US company in order to find them talent, first of all, we don't get paid anything until a person is actually hired starts working.
Speaker B:So it's, you know, zero risk for, for, for our U.S. client.
Speaker B:And then when we find a person, we don't charge anything upfront, 10, 20, 30% of wages.
Speaker B:We, we don't believe in that.
Speaker B:We believe that we're partners in, in the business model.
Speaker B:And because of that we will say this is Jose and Jose fits the job description and we think it's talented enough.
Speaker B:And then we let the company know what are the wage expectations that Jose or obviously Whoever.
Speaker B:So each resume goes along with the expected wages or the wage expectations that each person has.
Speaker B:It's part of the transparency.
Speaker B:And then we will agree that if and when the person's hired, our US Company bills our US Customer in order to make sure that the terms and conditions and liabilities are between a U.S. company and another U.S. company.
Speaker B:And then we take care of payroll from the US down.
Speaker B:So we use our companies in Mexico, Argentina, Colombia, wherever we are in order to pay these individuals, making sure that we're compliant with again, local regulations, whatnot.
Speaker B:And we pre negotiate a flat fee, not a percentage, but a fee of a few hundred dollars per month per person in order to manage payroll, manage the legal, provide the type of support that you need and all the other services that we've spoken about.
Speaker B:So it's actually very costly.
Speaker A:It's okay.
Speaker A:So that's brilliant because now you've got annual recurring revenue that you can predict for us.
Speaker B:Yes, but we also have annual recurring revenue or annual recurring expenses that our customers understand they're able to budget correctly.
Speaker B:They're also able to better understand the price quality gap.
Speaker B:Right.
Speaker B:Or price quality relationship.
Speaker B:Sound good?
Speaker B:So it's the best way to align everyone.
Speaker B:Right.
Speaker B:If a person happens to leave, we're often asked, so what kind of guarantee do you give us that you're going to find someone else if a person leaves?
Speaker B:And my answer is, well, if a person leaves, I stop making money.
Speaker B:So, you know, it's, it's in my best interest to find someone that is, you know, compliant with everything you need.
Speaker B:Because I don't, I don't charge anything unless I have people working.
Speaker B:So yeah, we see, we see our relationships instead of vendor or service provider and client, we actually strive to create deep partnerships where we participate in the success and the constancy of the growth.
Speaker B:Right.
Speaker B:And they get to have people that are making them or are, want to be part of their success.
Speaker B:Does that make sense?
Speaker B:It's about aligning.
Speaker A:No, it's great.
Speaker A:It's, it's really great.
Speaker A:So I'm guessing you have to travel a lot.
Speaker B:I do, but I love it.
Speaker B:I love it.
Speaker B:It's, it's, you know, I.
Speaker B:Going back to my, the story where I sold candy.
Speaker B:My next job or the first company I created was with my father.
Speaker B:I created an import export company.
Speaker B:Finally, when the borders in Mexico were open to imports, we would buy housewares all over the world and then bring them into Mexico.
Speaker B:And my father was an incredible salesperson.
Speaker B:So he would stay in Mexico and sell These things.
Speaker B:And imagine I'm 19, 20 and I'm traveling the world buying housewares in order to send them back to Mexico so that my father would sell.
Speaker B:So I've had experiences, you know, alone in Turkey in midnight.
Speaker B:Right.
Speaker B:Or in India and in Europe going to a bunch of fairs.
Speaker B:So ever since then I've loved traveling, being part of cultures, being able to see different cultures, how they react to different things.
Speaker B:So for me it's not a burden, it really is a pleasure.
Speaker A:You must wear out the passports.
Speaker B:It's funny because when I do get to the borders, the border guards flips a page, then another, then another, another, another, another.
Speaker B:And I sit there and I chuckle, right?
Speaker B:And I usually get my passports with 10 year expirations and I haven't had one where I haven't had to go back to the passport office and get a new one because the, the, the page, all the pages were stamped on.
Speaker A:Correct.
Speaker A:I guess they don't let you put loose pieces of paper in.
Speaker B:There are countries that do that.
Speaker A:I see.
Speaker B:Like Cuba.
Speaker B:I'll give you a quick example.
Speaker B:I actually went to Cuba years ago to see if there was the potential to hire talent.
Speaker B:And they don't stamp your passport, they give you a separate page because in some countries the fact that you visited Cuba is shunned upon.
Speaker B:So you get to take that page and throw it out and no one knows that you were there.
Speaker A:Wow, that's funny.
Speaker A:This has been great.
Speaker A:I have one last question for you.
Speaker A:Okay.
Speaker A:And it's not about your company and it's this.
Speaker A:If you, if you think about the word grit, where, and I believe I've never seen a startup person who doesn't have a lot of grit.
Speaker A:And I, and I think of the word grit as, as the descriptors are resilience, stick to it.
Speaker A:I ness, focus, determination, a few other words like that.
Speaker A:What is your source of grit?
Speaker B:You know, it's.
Speaker B:On the surface, it's a very easy question, but it's, it's one of the more complex because I think it changes over time, right.
Speaker B:When, when we first start a company, you know, I know very few people that don't go into this thinking they're going to be a success, right?
Speaker B:Here's the next unicorn I'm going to generate.
Speaker B:Create the next unicorn.
Speaker B:And then you sort of realize, well, maybe unicorn was overhyping it.
Speaker B:So the motivation that was there to create a billion dollar valuation company sort of shifts, right?
Speaker B:And you, you may get smaller in your desired, in your desired growth, but Then you start realizing the impact that you can make in different markets.
Speaker B:So my source of grit, I think it goes back to the people that I work with, the objectives that I set for myself.
Speaker B:Obviously, I want to be economically successful.
Speaker B:I know of no entrepreneur that goes into it thinking I'm doing this because I want to be less well off than I am today.
Speaker B:So it's economic benefit, it's family, right?
Speaker B:It's the ability to provide a better life for my family, my children.
Speaker B:It's the ability to work, in my case, with people that are working in other countries that I can see how they improve their lifestyles and their families that stick to itness.
Speaker B:I think it's.
Speaker B:You said it, it's determination, it's stubbornness, but ultimately it's thinking that what, what you're doing really matters to you and to others.
Speaker A:But it goes back to childhood too, right?
Speaker A:I mean, you were a, a little 11 year old and you did your first, you attempted to do your first startup.
Speaker A:So there's a, there's maybe a deeper source of grit than just.
Speaker A:You know, the, the, the various companies that you've had and the people around you.
Speaker A:I'm kind of looking for the root source of the strength and toughness.
Speaker A:Maybe the word I left out was toughness.
Speaker B:Look, I saw my father.
Speaker B:My father was a certified public accountant.
Speaker B:And that sounds incredibly boring, but what he did is he started his own firm, right, in, in order to grow.
Speaker B:And I saw the ups and downs and that's just how I lived my life.
Speaker B:So, you know, on my reliving patterns that I was taught, you know, I, I guess if, if a shrink was to listen to me, they'd probably say, you know, I was mimicking that.
Speaker B:But there, there's a cultural aspect.
Speaker B:There is a personality, right?
Speaker B:Everyone talks about the type A personality.
Speaker B:I can't remember not being competitive.
Speaker B:I hated to lose.
Speaker B:Josie hated to lose, right.
Speaker B:I remember hearing Sir Alex Ferguson, who, who was, who managed Manchester United through their heyday, right?
Speaker B:The best period that Manchester United ever had.
Speaker B:He's the one who managed to manage them.
Speaker B:And he would say that he wanted, when he went to scout young players, he loved seeing who were the players that cried if a team lost.
Speaker B:Because you knew that deep down that kid hated losing so much that he would work his tail off to never lose again.
Speaker B:So, you know, it, I think it just forms part of, of who we are as, as entrepreneurs.
Speaker B:I don't want to say that everyone cries when they lose, but I did, I buy that.
Speaker A:I buy that.
Speaker A:A hundred percent.
Speaker A:It resonates with me.
Speaker A:Yeah.
Speaker A:And, and, and I have a, I have a childhood source of grit and it's when something really terrible happens.
Speaker A:In my case, losing a leg and a lung to cancer and having to figure out how to, how to live again and how to rebuild one's self esteem.
Speaker A:And then once you do that, and I did a TED Talk on how I did that and this other book is about that, which is called who says I Can't and that it's, it's, you can see me on the COVID and there's a leg missing.
Speaker A:So it's, it's, it's about fighting back against something that's holding you down and if you succeed at that, which I did, now you're, you're set for all kinds of other challenges.
Speaker A:I mean, my startups have not been easy.
Speaker A:I was not blessed with a bunch of easy ones.
Speaker A:I had one easy one, only one.
Speaker A:All the rest were really hard, including this, this current one, which has been a disappointment.
Speaker A:And it's my ninth one and it's my last one.
Speaker A:I'm not going to do anymore.
Speaker B:You think?
Speaker A:Well, okay, but you know, I don't think of this podcast as a, as a business, but it is a thing.
Speaker A:And I'm, and I'm creating an online set of online courses for startup founders.
Speaker A:So it's, I've got a triumvirate going which is sort of turning into a thing.
Speaker A:You know, the book, the podcast and the online courses are all about startup founders and I hope to do mentoring of, of, of startup CEOs as well and kind of, that's my next thing and that'll, I can, I'll do that as long as I can.
Speaker B:Well, that's, that, that, that's a great, that's a great way to A, give back and B, create, create a lot of value.
Speaker B:So just to finish off on, on what you were saying, first of all, thank you for sharing.
Speaker B:I'll be honest, I did not know your story and that, that's very inspirational.
Speaker B:So, so thank you for sharing it.
Speaker B:Look, I, I, I think to, what you said is we're, we're all stuck or we're all going to face obstacles.
Speaker B:And whether, you know, you, you let, let the obstacle defeat you or, or not is, is up to, to each individual.
Speaker B:And, and I have found that those that are incredibly competitive tend to be entrepreneurial in spirit.
Speaker B:Right.
Speaker B:And it's, it's just, it goes with the personality.
Speaker B:We're, we're competitive, hyper competitive, you know, we're, we're hyper aware of what's going on and we feel like, like we want to make a difference.
Speaker B:That I think summarizes what you said.
Speaker B:The people that you're mentoring, you know, I'll put myself sort of in that category and many of my friends who.
Speaker A:Are also entrepreneurs, well, that's a great way to end this very entertaining and I think valuable episode for our audience, which is entrepreneurs of all sorts.
Speaker A:So thank you very much, Jothi.
Speaker B:Once again, I'm the one who's thankful that you shared the space with me.
Speaker A:And here are your toolkit takeaways.
Speaker A:Toolkit number one.
Speaker A:Your Runway is a hiring problem, not just a fundraising problem.
Speaker A:Lewis discovered that building his US Team at US Wages would have killed his company.
Speaker A:By hiring exceptional talent from Latin America, he extended his Runway dramatically without raising another dollar.
Speaker A:Before you chase more funding, ask yourself if there's a smarter way to build your team.
Speaker A:Time zones matter more than you think.
Speaker A:Offshoring to India or Eastern Europe sounds great until you're taking calls at midnight or losing days to asynchronous handoffs.
Speaker A:Latin America operates in real time with US Companies.
Speaker A:That means agile works.
Speaker A:That means agile actually works and your team feels like one.
Speaker A:Team Toolkit number three Grit comes from hating to lose.
Speaker A:Lewis talked about legendary coach Sir Alex Ferguson scouting kids who cried when their team lost because that fire meant they'd never stop fighting.
Speaker A:Ask yourself, do you hate losing enough to push through when it gets hard?
Speaker A:Now go look at your org chart and your burn rate and ask yourself, is there a smarter way to build this team?
Speaker A:And that is our show with Lewis.
Speaker A:The show notes contain useful resources and links.
Speaker A:Please follow and rate us@podchaser.com designly successful startups.
Speaker A:Also, please share and like us on your social media channels.
Speaker A:This is Joffy Rosenberg saying TTFN Tata for now.
