📈 How to Scale Large Nearshore Teams 💥 | Best Practices 🎙 The Nearshore Cafe Podcast

Welcome to the Nearshore Cafe Podcast, home to the most interesting stories and people doing business in Latin America. Welcome everyone to another episode of the Nearshore Cafe Podcast. I'm Brian Samson, your host, an entrepreneur who's been doing business with Latin America for the last 8 years, and I'm very excited about our guest today. If you're interested in scaling teams, scaling engineering in Latin America, this episode is for you. Before I introduce our guest, I want to thank our sponsor, a company called Nearshore Direct. Go nearshoredirect.com. They provide all sorts of non-IT labor all across Latin America. Let me introduce our guest, César Donofrio. The CEO and co-founder of Making Sense. César, so great to have you.

Yeah, thanks, Brian. And thank you for inviting me. It's a pleasure to be here.

Absolutely. César, I know you're in the States, you lived in the States for a while, but you grew up in Argentina. And for someone who's worked a lot, you've been in school at Stanford. When someone— you meet someone and you tell them you're from Argentina, how do you, how do you describe it? You know, what do you, what do you think is important for people who've never been to know about the country?

You know, some people, they— you need to kind of describe a little bit, you know, where is Argentina, because Maybe they are confused, you know, what part of Latin America. So maybe that is the first thing. And then I feel Argentina have an interesting mix of cultures, you know, many coming from Europe in the, I don't know, between 1850s to 1950s, a lot of people from Italy, Spain, or a little bit less from Germany moving to Argentina. So with the native people in Argentina at that time, they create this special mix that is bringing maybe like good and bad things, but at the end of the day, it was special. I remember my grandfather, he moved from Italy to Argentina in 1945. My father was 5 years old at that time. And I remember that my grandfather told my dad and even myself when he was alive that, you know, you have like 2 options if you are in Europe, mostly in Italy or Spain at that time. You can go to the, the land of salty, and that is salty, uh, you know, money in Italian. So that it was US people, you know, from Italy going to New York or Chicago, or to the land of the patata, that is, uh, you know, the potato, or, you know, the, the agriculture. And with a great, you know, country like Argentina was, you know, I think at that time it was like part of the top 10 countries in the So I remember that as an option. So it creates like a, after, you know, maybe 20, 30 years or even right now, 70, 80 years later, a very interesting mix. Culture, education, hard work. So, and that is Argentina today. It's very interesting, you know, how that combination that Not all the countries have that, I think.

Yeah, absolutely. Just hitting on what you said, it's something that I remember I was very impressed with at the beginning when I first started to study Argentina was how wealthy it was a long time ago. And then through government policies, crises, things, things definitely took a turn. And my, my take on all that is there's some, some good to come out of it, is it's created maybe the most resilient people I have ever, I've ever worked with. And I'd love to get your, your thoughts on that.

Yeah, yeah, exactly. I think that the whole situation, I think in the last let's say that since, you know, this 1960, so in the last 50 years, 60 years. So Argentina has been— and I, I saw many of those ups and downs. Um, you know, Argentina had like, um, uh, issues with the, the army, the military between in the '70s. Um, but after in the '82 when the democracy You know, when we have a new, you know, elections and we have Raúl Alfonsín as the new president, like things start changing a little bit, at least for the political point of view. But the economic, it was really bad. You know, after that government, Argentina went to hyperinflation in the '86. '87. So it's had like an ups, you know, from the political point of view, but then become like a down from the economy. So it happened some ups and downs. Um, and, you know, I, I think that that resilient that, that you are mentioning is part of believing in Argentina, including today. Uh, you know, Argentina is like 150% inflation per year. Uh, so it's— I think it's in the top 10 of the bottom of the list today. Yeah. So, um, it's— it make, uh, it make the, the talent in Argentina, the people in Argentina, to be resilient, uh, because of that, you know, uh, ecosystem.

Yeah, yeah. It makes me— when you say 150% inflation, um, I had to be there to believe it. But I look at the States, right? Inflation is something on everyone's mind in the US. And it's very high, relatively speaking, to past years. But everyone is freaking out over 10%, 15% inflation. And then I'm sure Argentines are kind of laughing like, if you think that's bad, Right.

Yeah, yeah, yeah.

But it, it also creates, I think, this, um, calmness, you know, like we can, we can get through anything.

Yeah, exactly, exactly. And, and also some, you know, very good ideas, uh, that they are coming from, from those situations. Uh, so, um, so yeah, I think, um, yeah, that is very interesting.

Yeah. Well, I want to dive into Making Sense. I think this is really one of the model organizations over the last few decades that has been wildly successful in growing and scaling engineering. I believe you started this in 2006. But before we dive deep, deep, deep, could you just give our audience a general sense of Making Sense. What is it? What do you guys focus on? How big is it? Where are you?

Yeah, sure, sure. Well, Making Sense, we're a software service company. Um, we have a special focus in user experience, so user experience is in the core of our DNA as a company. We have a full service for software development. You know, don't mean— it's not that we are a UX agency. We are a software company, service company with a strong user experience arm. So today we are working a lot on digital transformation projects. We have all our clients in the US. As you mentioned, we have been around since 2006. I think that part of our engineering and UX expertise has been around since then. But to be honest, we have to fine-tune our service for and evolve our service for many years until I think that we found a sweet spot, like, I don't know, maybe like 7 or 8 or 10 years later. So we have been, you know, trying to find our identity for 8 years. So, and then after that, I think that we really scale the business because we found what I call and here in the Bay Area what they call like market fit. When you have a product, really, if you're doing like 1 or 2 sales, uh, doesn't mean anything. But, you know, you really find your market fit when you can sell over and over, you know, hundreds or a thousand times.

So, yeah, yeah, there are a lot of, um, software and service entrepreneurs in Latin America, um, and, and I think they could get some inspiration from what you just said. Um, could you share some of the experiences of the very early days, like how you landed your first couple clients and how you found your first couple of team members?

Yeah, sure, sure. Well, you know, I started as a software engineer, as a consultant, working for a company in San Antonio, Texas. The name of that company is YNL Consulting. And about But at that time, that consulting company was not able to find enough engineers to work on a healthcare project. So I approached the management of that company and I say, well, I think that I can help you to hire people that I know in Argentina. So that was our first project. So that deal or transaction last for, I don't know, more like 8 years or 9 years. You know, we grew, you know, from 2, 3 developers to 20 or 30 with that company, with that deal. So, and how we, that's what, how we started. So, and after that, I don't know, If you are doing a good job in one project, you know, eventually the manager will move to another company and they will call you. And so word of mouth, I think it was the kind of how we were able at that time to, you know, get into other companies, other projects. So, and, you know, and again, in the first year, it was you know, something more like opportunistic until we, after like 8 years, we say, well, what is our direction really? And we have a lot of thought that we put into those exercises. You know, when you start a company, we don't, so you basically, you don't need to have what is your mission, your vision, or your core value because it's you and your co-founders and a couple of engineers. So And everybody, you know, they share breakfast in the morning in the same office. So, but as you grow, you know, I think that when you pass like 100 people, you need to be thinking on, okay, how we put this culture as a company or the drivers for the team that you're putting together, what is the north? So, you know, how you are thinking as a— what are the values you as a team. So we started that exercise in 2013 or '14, around that time. And we did an evolution like at least like 3 times of that, you know, vision, mission, and core values and culture.

So yeah, at what size do you think you started to think about structure like managers, dev managers, architects, project managers? Do you remember that?

Well, let me put it this way. So if you are only providing staffing, like for example, if you have one project and, you know, your client is requesting you know, I just need 2 PHP developers or 2 Java developers. So you don't need to have a project manager, right? But as you provide more like value and as you provide more like managed services, yes, you need to add different roles and project manager is one. So I think in our case, I think it was pretty soon adding project managers, maybe in 1 or 2 years. We kind of found that putting together teams is better than just isolated developers. So, and then you evolve from that. I think that today we have more than, I don't know, 20 roles in the company. So Um, so, so yeah, yeah. And, and it's, it's a normal evolution, right?

Yeah. And I wanted to ask you, Cesar, um, with the early days, um, because nearshoring back then was not what it is today, and, um, you know, I know Argentina is well known for exporting a lot of services, um, uh, and that's, that's kind of a way to level up and English is valuable and working with the US is past experience is valuable. But what did that look like in the country back in 2006? Was English as abundant? Were there as many developers who had worked with the States? How did you think about that?

Hmm, interesting. So working, working on service, software development service Exporting service at that time, it was not, uh, you know, something that you will see like today. Yeah, I think that, uh, with around 2012 or 2011, there is a— so the government in Argentina realized, uh, you know, how important is to export, uh, you know, those kind of services, you know, from Argentina. That is when in Argentina there is the Chamber of Commerce, the name is CECI. The Chamber of Commerce pushed the government in Argentina to have benefits, tax benefits and incentives for companies working on what they call the knowledge industry. So I think around 2012, things start to change a little bit. But yeah, in 2006, it was not even possible. I think that, you know, India, mostly India, it was kind of the first and the first option for outsourcing software development. And Argentina was, you know, not even on the radar.

Yeah.

Until, I don't think until like a few years ago, maybe like 5 or 6 years ago.

Yeah. How did you find your first 5 to 10 engineers? You know, because you didn't come from a recruiting background. You're an engineer yourself. Was it all your friends? How did you think about that?

Well, we have a funny story. My brother is my partner. He was the first one to be able to hire our first engineers and today are also partners in the company. So it's funny because he went to a local university in Mar del Plata. And put like a piece of paper in the board of the university recruiting for Microsoft.NET developers.

Yeah.

And there are like 4 guys working on the IT department. They took that piece of paper and put that piece of paper in their pockets and called my brother and said, Yeah, we are the only 4 that respond to that, you know, advertising. So that's when we hired those, you know, 4 engineers that today they are, you know, partners in the company. And that's how we started. And I think it was a lot of relationships with universities. And I think that that is what I would recommend or what I would like for other companies if they decide to go to Argentina or any other countries that do like an effort also to help new developers, junior developers, or people that are in universities to become software engineers. So invest some of the, some money on helping other people to learn, you know, the industry. So yeah, not just go and, you know, hire people left and right. So do some investment on, you know, helping people, teach people to, you know, how to develop to be a good software developer.

Yeah, well, I'm sure those guys are very happy they found that flyer. It changed their life, right? Changed their life.

Yeah.

I also wanted to ask you just how the competitive landscape looked. You know, today there's so many companies recruiting in Argentina. It's become quite competitive. You even have, you know, Latin companies like MercadoLibre, Globant that you also have to compete with. What did that competitive landscape look like? Was it, um, domestic companies like, uh, Galicia that maybe you were trying to steal talent from, or other consulting firms? What did that look like at the— in the beginning?

Well, I think that, you know, the story that I described earlier about, you know, the ups and downs of Argentina in general, and that combined— combining that with the what's going on in the industry lately, you know, with some technologies, you know, layoff in the last few, few 12 months. So ups and downs, Brian. So I think it was super, super hot In 2021, for local companies in Latin America like Telefónica, Banco Galicia, all the local companies, they had to compete to hire software engineers and pay US dollars rates, international rates. Because the same developer that can be, you know, work for a Silicon Valley company receiving, you know, X amount of dollars, you know, per month can be the same developer that could be building software for Banco Galicia.

So, right.

So it was tough, I think, in 2020, 2021, you know, just, you know, as an example for the last 2 years. So it slowed down a little bit, but I think that ups and downs. So, but yeah, I think that local companies have a challenge, you know, to kind of hire and retaining or attract employees.

So for example, some of the companies you mentioned are long-standing Telefónica, Banco Galicia. Um, have you seen more competition amongst maybe VC-funded domestic companies in Latin America and especially Argentina?

Yeah, yes, yes. Again, it was, um, I think 2021, it was the highest point for VC deployment and money in the IT ecosystem. Yeah. So it was very tough. So slow, slow down a lot. And I think that many of those engineers, they have a tough time coming back to because I don't know, maybe, you know, if you're working for a startup here in the Bay Area, You know, yeah, they have ups and downs, but right now, many of them, they were not able to raise another round of money.

That's right.

So they run out of money, so they have to close operations, and the software developers that they hired, you know, 2 years ago, now they have no jobs. So coming back to, in this timing, coming back to the job market, trying to find a job, there are no more startups, you know, building new software. So it's kind of been ups and downs. So, but I think that eventually, as soon as the economy and in general companies start investing again in technology or in software development, the market will be pretty warm eventually.

Yeah. You mentioned the 2020, 2021, a very crazy time for everybody. How did Making Sense think about offices, work from home, coming back to the office?

Wow, wow, huge topic. Well, let's see what is working and what maybe is not and need room to improve. So being able to work inside the same office, have a big benefit, you know, as far as creativity, you know, working things a lot faster. But also, I understand that for, again, for software developers or UX designers, if they know what they have to do, they can do it from, you know, Mar del Plata, you know, Italy, Barcelona. So they just need to communicate, understand having been on Scrum meetings, on meetings during the day, and then they know that they have to produce code or produce some kind of deliverables. So that is one thing. But also, that is more for senior developers or mid-level developers. I think the senior developers, you have no question about that. If you have like a junior developer, someone that has just started, you know, that is difficult because you need to be in the office. You need to— it's not the same thing that if, hey, let us share your screen and let us code together. It's not the same level of communication if, okay, let us have lunch and let us talk about, you know, this workflow or these other new tools that we can use. I think we have good and bad things. What I know is that eventually we will have a hybrid. We will have getting together, being able to, with some level of frequency, it could be like weekly or once a month or once a quarter that you put people together in some location. It's funny because today I was talking with a friend of mine and he told me that Zoom, the company that, you know, the software application Zoom, they are requesting their employees to be back to the office. So I don't know. I think it will be a mix, but I think it will be a hybrid. Some frequency when you can get people back to the office, back to the office or getting together.

Yeah. Yeah, I think what you said earlier too, you know, because when you look at software, successful software consultancies, you need some sort of a pyramid structure. You can't have 100% senior guys, you know, in your earlier comment about investing relationships with the universities, you can find talent easier, you can grow talent. So when you have, just like the military, you have more privates than generals, you have more junior developers, some semi-senior, a couple seniors. I'm sure that really matters as you think about office culture.

Yeah, 100%. And culture is a big thing too when you are working with people that they are you know, miles away. Um, so, so yeah, being able to, uh, to build those teams, uh, that it will have a mix of, uh, experience, uh, in different levels, you know, uh, or skills, uh, so that it will make, you know, a good solution and something that is scalable at the end of the day.

Yeah. Scalable is the word that I wanted to, to dive into now because you built a very successful company, 300, 400 team members. Tell us, when, when did you feel like you needed to switch gears and really thinking about scaling and systems and operations? And what sort of people did you need to start hiring then?

Um, I think after like a hundred— I don't know exactly the number, I will be like, would be like off, but I think I will get it quite right. So yeah, between like, uh, 150, 100, 150, 75, between that number, uh, between, let's say between 75 to 150, um, you, you need to have start having like those rules and, uh, you know, protocols. And, uh, yeah, I think that is the number, uh, having more like managers, uh, people, uh, like being leaders for each, uh, you know, department or area. Um, so, and it's all an evolution, you know. It will— I think that it will never end when you are, you know, passing those, those numbers, you know, when you are like, I don't know, 5,000, 10,000, you know, you will have another level of management and all of these issues.

Yeah. So, so would you say about 150 is where maybe you, you needed a level above like a lead developer that's coding within, you needed like a some real dev managers that were focused more on managing than coding?

Yeah, yeah, I think so. Yeah. And in other areas too, because I don't know, when you are like 10, 20, 50 people in the company, if you have like one person doing recruiting and someone that is, you know, keeping taking care of the payroll, for example, that it will be more than enough. But when you have more volume, you need to have like a head of HR. And that it will be reporting, you know, to those two people and maybe, you know, 2021, you need to have like a whole team of recruiting because recruiting, it was very hard. So, so yeah, I think that you play a little bit, but those numbers, it will start to make sense between 100 and 150.

Yeah. And speaking about recruiting, there's obviously technical talent. What are, what are things that your recruiting team is consistently looking for, for, for Making Sense, new Making Sense team members, like cultural attributes, personalities? What are, what are some things that are maybe consistent at Making Sense?

Well, I think that culture is a big factor today. Even one of our core values is one team, one mission. If we feel that we have, you know, right engineers, but we feel that it is the wrong candidate for the one team, one mission core value, we just hire another one, even when we know that have less experience.

Yeah.

Something that we don't have is, so I think that you can have like two attributes in one team. And we have a lot of people that do hard work than people that they are very smart. So even if you can combine two, it would be great. But we have a lot more people that do hard work than really smart, smart people. We have smart people in the company, but we, if we need to qualify, you know, we have more people doing hard work in general.

Yeah, yeah, no, I can, I can certainly see that. Um, can you talk a little bit about, um, uh, leadership for you today? Like, how are you spending your time? And you're obviously in the States as well, and, you know, uh, um, really this is, uh, helpful for For aspiring service entrepreneurs that want to scale and they get to a certain point, how should they spend their time? What advice do you have about leadership, inspiring, setting guidelines?

Yeah, so we have different stories. We have companies that providing services from Latin America to the US. That they have headquarters in Latin America, like, you know, with office in Mexico, Colombia, Brazil, or in any of the other countries. And then you have, in the other way, you have people, companies with headquarters in the US and start hiring people in Latin America. So for both cases, I think that the benefit of having a closer relationship with clients and opportunities and strategy and see what's going on on the field is a huge benefit. So what I saw and what I would highly recommend is that when you reach that 100, 150, or 50, or whatever is the number that, you know, the co-founders or the owners, they feel that is right, it's like start having people here in the US as part of, you know, that connection with the clients, with the opportunities. And in the last, I don't know, few years, I saw more and more companies doing that, you know, kind of the— and I saw a lot of maybe people from Argentina moving to the States because, you know, the economic, you know, political reasons, the bad situation in Argentina. But I saw more and more people, you know, transition, you know, more of the co-founders to the US. And they will have no more like mostly like strategic connection with potential opportunities that, you know, dealing with the day-by-day, you know, issues or operation of the business.

Yeah. Yeah. Cesar, I also wanted to ask you, because, you know, you moved to the States a while ago, starting in Texas and then California. Tell us about your own cultural assimilation. You know, what was— what did you find similar between the States and Argentina, and what was maybe the bigger culture shocks for you?

You know, LA movies, Hollywood, um, brands, um, the high-level, you know, design Uh, so that, that is, you know, again, it's coming again, kind of going back to our first question about, you know, what is the mix of Argentina, uh, that is making, making Argentina and the US close. Um, so, so that, that is in one, in one area. And maybe what is The opposite is the emotions, the feelings. I think that in the US, people— and you have different flavors, right? But it's more like cold. Argentina is closer to more like Italy and Spain that, okay, let's put a family together. Uh, in general, you don't move. So if you was born and raised in Mar del Plata, you will, uh, you will stay there. But if, um, here in the States, you move a lot, and yes, you have Thanksgiving when you are getting back to your family, but in, in Argentina, it's— you will stay the whole life. Pretty much 90% of the time, you will stay in the same city when you were Raised, born and raised. So, um, I don't know. So that, that's what I feel are the two main, um, you know, uh, the two main reasons and, you know, what is close, far away.

Yeah. I have a few, uh, fun questions for you, Cesar. Um, so, uh, as you've, you've lived in the States for, for a while now, um, what's your favorite meal to have in, uh, in the States?

Um, favorite meal in the state? Oh, burgers.

Burgers. Yeah, yeah, burgers.

Yeah, burgers. I think that for some reason burgers, um, in Latin America you can get— well, I think maybe today is a little different, but I think that you can get a decent burger any place in the US. Uh, in Latin America it's not That boss.

Yeah. Although I will say my favorite burger in the world is in Argentina. There's a place called Burger Joint in Palermo, Soho.

Oh yeah, yeah, yeah, I ate that one last year. So yeah, that is good.

Yeah, yeah, yeah. Whenever I go there, that is my first stop and my last stop.

Yeah. Okay. Okay. Yeah.

Good to know. Yeah. But to you, the same question. When you return, when you turn back, uh, to Argentina, what's the one meal that, uh, you can't wait to eat?

Oh, um, I think I like, uh, as far as, um, you know, meal is pizza. And for some reason the cheese is a little different, uh, what you can eat outside of at least Argentina. Um, what else? Uh, ice cream, but it's more like gelato like Italian, so that is, uh, you know, different. Um, empanadas. I don't know, there is a bunch of— yeah, right. So milanesa, you know, asados. You can, you can eat decent meat too, but you know, it's a little different.

Yeah, yeah. The gelato, by the way, we don't talk about that a lot on the show. We have had many conversations about the pizza and the difference in the cheese, but The gelato is fantastic, and I'd imagine it's, it's from, uh, from the, the, uh, the cows and the agriculture in the country.

Yeah, yeah, yeah. Milk is a little different. So, um, yeah, yeah, very interesting.

Yeah, we have a lot of people that are, um, uh, they come to the show for travel tips as well. Okay, so for, for those, um, going to Argentina for the first time, Um, what would you recommend that they, um, that they, uh, shop for, that they, that they purchase?

Uh, uh, buying things or going to restaurants?

Yeah, so, uh, outside of, outside of food, because we know Argentina is a culinary paradise, but, um, outside of food, anything that you'd recommend that they, um, they shop for?

Well, I think it would be, um, it's an, it's an excellent souvenir even if you are not using it. It's like a mate.

Yeah, yeah. So I'll, I'll show you mine right here.

Yeah, yes, yes. So that is an excellent souvenir, and if, if you can use it, even better. You know, I think that yerba mate is getting very popular in the US too. Yeah, not, not as crazy as in Argentina, but getting popular. Yeah, so, um, so maybe like a leather jacket, uh, it could be a good option if you can find, you know, someone that you like. Knife. So they have a pretty— because of the barbecue in Argentina, you can find a good knife that is not easy to find in the US. Um, what else? Uh, well, if you are able to buy and bring some dulce de leche also, even you can find in many places here, but that is another Option.

Yeah, no, that's wine.

So of course, those are some great ones.

Those are some great ones. Yeah. Thank you. Thank you. I know our listeners will be happy. We'll put all those in the show notes for them.

Yes.

And then the last question, obviously you're fluent in English, but it's your second language. Do you have any favorite phrases you've picked up in English that you especially like?

Well, when they— I maybe— it's fun when they say, forget about it.

Okay, good, good, good.

I don't know.

Forget about it.

Forget about it.

I like it.

Yeah, all the movies, you know, sometimes I don't remember anyone right now, but in the movies, you know, they are making those really funny.

Yeah, I like it. Good, good choice. Um, well, Cesar, this has been an absolute blast. Um, really appreciate your, your openness and transparency about How to scale a successful company. Congratulations again on all the success of Making Sense. Okay, if people are interested, um, what's the best way for them to find Making Sense online?

Uh, makingsense.com, or, you know, feel free to contact via LinkedIn, and I would be more than happy to answer any other questions that you may have. So I'm happy to connect with people and and help, you know, as much as I can.

Perfect. Well, thank you again. Let me thank our audience and our sponsor, Nearshore Direct. Go nearshoredirect.com. Great way to find non-IT talent all across Latin America for growing US companies. Well, that's all the time we have. Thank you again, Cesar, and we'll see you the next time on the Nearshore Cafe podcast.