Scaling large nearshore teams

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 Sampson, your host, an entrepreneur who's been doing business with Latin America for the last eight 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 nearshore direct.com they provide all sorts of non IT labor all across Latin America. Let me introduce our guest, Cesar Donofrio, the CEO and co founder of Making Sense. Cesar, so great to have you.

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

Absolutely. Cesar, 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 describe it? What do you think is important for people who've never been to know about the country?

Well, first of all, some people you need to kind of describe a little bit where is Argentina? Because maybe they are confused what part of Latin America. So maybe that is the first thing. And then I feel Argentina have an interesting mix of cultures, many coming from Europe in the, I don't know, between 1850s to 1950s, a lot of people reading from Italy, Spain or a little bit less from Germany moving to Argentina. So with the natives 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, you know, to Argentina in 1945. My father was five years old at that time, so and I remember that my grandfather told my dad and even myself when he was alive that you know, they have like a two options. If you are in Europe, mostly in Italy or Spain at that time, you can go to the, the land of Salty, that is salty's money in Italian. So that it was us people from Italy going to New York or Chicago or to the land of the patata, that this the potato or the agriculture. And with a great country like Argentina was, I think at that time it was like part of the top 10 countries in the whole world. So I remember that as an option. So it create after maybe 20, 30 years or even right now, 70, 80 years later, a Very interesting mix. Culture, education, hard work, and that is Argentina today. It's very interesting how that combination that not all the country have that. I think.

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

Yeah, yeah. It makes me. When you say 150% inflation, 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, right? 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 calmness, you know, like we can, we can get through anything.

Yeah, exactly, exactly. And, and also some, you know, very good ideas that they are coming from, from those situations. So, so yeah, I think 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. 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 U.S. as you mentioned, we have been around since 2006. I think that part of our engineering and UX expertise had been around since then. But to be honest, we had to fine tune our service and evolve our service for many years until I think that we found a sweet spot like, I don't know, maybe like seven or eight or ten years later. So we have been trying to find our identity for eight years 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 market fit. When you have a product, really if you are doing like one or two sales, doesn't mean anything but you really find your market fit when you can sell over and over hundreds or a thousand times.

Yeah, yeah. There are a lot of software and service entrepreneurs in Latin America and I think they could get some inspiration from what you just said. Could you share some of the experiences of the very early, 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, I started as a software engineer, as a consultant, working for a company in San Antonio, Texas. The name of that company is Y and L Consulting. And but back at that time that consulting company was not able to find enough engineers to work on, on a, on a healthcare project. So I approach the management of that company and I say, well, I think that, you know, I can help you to hiding, you know, people in that, I know in Argentina. So that was our first project. So that deal or transaction lasts for, I don't know, more like eight years or nine years. We grew from two, three developers to 20 or 30 with that company, with that deal and that 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, 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 a year who say well, what is our direction really? And you 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 a hundred people, you need to be thinking on, okay, how, how we put this culture as a company or the drivers for the team that you're putting together. What is the north? So how you are thinking, what are the values you as a team. We started that exercise in 2013 or 14, around that time and we did an evolution at least three times. You know, visual mission and core values and culture.

Yeah. At what size do you think you started to think about structure? Like managers, dev managers, architects, project managers. Do you remember that?

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

Yeah. And I wanted to ask you Cesar, with the early days because near shoring back then was not what it is today. And you know, I know Argentina is well known for exporting a lot of services and 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?

Interesting. So working on service software development, service exporting service at that time, it was not something that you will see like today. I think that around 2012 or 2011, so the government in Argentina realized how important is to export those kind of services from Argentina. That is when in Argentina there is the Chamber of Commerce. The name is ceci. The Chamber of Commerce push the government in Argentina to have benefits, tax benefit, an incentive for companies working on what they call the knowledge industry. So I think in around 2012 things start to, you know, 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, the first option for outsourcing software development. And Argentina was, you know, not even in the radar. Yeah, until I think until like few years ago. Maybe like five or six years ago.

So yeah. How did you find your first five to ten engineers? 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. It's funny because he went to a local university in Mar del Plata and put a piece of paper in the board of the university recruiting for Microsoft Net developers. There are like four 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 say, yeah, we are the only four that respond to that advertising. So that's when we hire those four engineers that today they're partners in the company. And, 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 will recommend or what I would like for other companies if they decide to go to Argentina or any other countries that do an effort also to help new developers, junior developers or people that they are in universities to become software engineers. So invest some money on helping other people to learn the industry, not just go and 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, the competitive landscape looked. You know, today there's so many companies recruiting in Argentina. It's become quite competitive. You even have Latin companies like Mercado Libre Globent that you also have to compete with. What did that competitive landscape look like? Was it domestic companies like 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 it earlier about, you know, the ups and down of Argentina in general and that combine, combining that with what's going on in the industry lately, you know, with some technologies, you know, lie off in the last few, few 12 months. So. Ups and downs, Brian. So I think it was super, super hot in 2021 for, for local companies in Latin America like Telefonica Banco Alicia. 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 work for a Silicon Valley company receiving X amount of dollars 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, 2020 21, just as an example for the last two years. So it slowed down a little bit. But I think that ups and downs. But yeah, I think that local companies have a challenge to kind of hire and retaining or attract employees. Software developers.

Some of the companies you mentioned are long standing. Telefonica Banco Galicia. Have you seen more competition amongst maybe VC funded domestic companies in Latin America and especially Argentina?

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

That's right. That's right.

So they run out of money, so they have to close operations. And the software developers that they hire, you know, two years ago now, they have no job. So coming back to, in, 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 got been ups and downs. So. But I think that eventually as soon as the, the economy, the economy and in General companies start, you know, investing again in technology or in, in software development. The market will be pretty warm eventually.

Yeah, yeah, you mentioned the 2020, 2021. A very crazy time for everybody. How did making sense think about offices? Work from home.

Oh wow.

Coming back to the office.

Wow, wow. Huge topic. Well, let's see what is working and what maybe is not need room to improve. So being able to work inside the same office have a big benefit as far as creativity 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 Mar del Plata, 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 developer. I think the senior developer, you have no question about that. But if you have like a junior developer, someone that is just started, you know, that is difficult because you need, 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. That it's not the same level of communication if okay, let us have lunch and let us talk about this workflow or these other new tools that we can use. So 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, you know, with some level of frequency. It could be like you know, 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, this software application soon they are requesting their employees to, to be back to the office. So. So I don't know, I think it would be a mix, but I, I think it would be a hybrid like some frequency when you can get people back to the office. Back to the office or getting togethers.

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. And 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, yeah, 100%. And culture is a big thing too when you are working with people that they are miles way. So yeah, being able to build those teams, that it will have a mix of experience in different levels or skills so that it will make 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?

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 150, 100, 150, 75. Between that number, between let's say between 75 to 150, you need to have start having like those rules and you know, protocols and yeah, I think that is the number having more like a managers, people like being leaders for each, you know, department or area. 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, 10,000, you know, you will have another level of management and issue.

Yeah.

So.

So, so would you say about a 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, 20, 21, you need to have like a whole team of recruiting. Because recruiting, it was very hard. Yeah. So yeah, I think you play a little bit. But those numbers, it will start to make sense between 100, 150.

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

Well, I think that culture is, is a big factor today. Even one of our core value is one thing, one mission. If we feel that we have, you know, right engineers, but we feel that it will is a wrong candidate for the one thing, one mission core value. We just hired another one. Even when we know that hub is like have less experience.

Yeah.

Something that we don't have is. So I think that you can have two attributes in one team and we have a lot of people that do a 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 a hard work that really smart people. We have smart people in the company. But if we need to qualify, we have more people doing hard work in general.

Yeah, yeah, no, I can certainly see that. Can you talk a little bit about leadership for you today? How are you spending your time? And you're obviously in the States as well. And really this is 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 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 we have, you have people, companies with headquarters in the US and start hiding people in in Latin America. So for, for both cases I think that the, the, 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 of the owners, they feel that is right is like start having people here in the US as part of, you know, that connection with the clients, with the opportunities. And I in the last, I don't know, few years, I saw more and more companies doing that, you know, kind of. 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 the co founders to the US and they will have a. No more like. Mostly like strategic. More connection with potential opportunities that you know, dealing with the day by day issues or operation of the business.

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

I don't know, TV shows.

Yeah.

LA movies, Hollywood brands, the high level, you know, design. So that, that is, you know, again, it's coming again. Kind of, kind of going back to our first question about, you know, what is the mix of Argentina that is making Argentina and the US close? So that is 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 coal. Argentina is closer to more like Italy and Spain. That. Okay, let's put a family together. In general, you don't move. So if you was born and raised in Marvel Plata, you will stay there. But if here in the States you move a lot and you have Thanksgiving when you are getting back to your family in Argentina, if 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 I don't know. So that's what I feel are the two main, you know, the two main reasons and you know, what is close, far away.

Yeah. I have a few fun questions for you. Says. So as you've, you've lived in the States for, for a while now, what's your favorite meal to have in. In the States?

Favorite meal in the state? Oh, burgers.

Burgers?

Yeah, burgers. I think that for some reason burgers 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 at any place in the US In Latin America it's not that possible.

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. Good. Yeah, yeah.

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

Okay. Okay, good to know.

But to you the same question when you return, when you turn back to Argentina, what's the one meal that you can't wait to eat?

Oh, I think I like as far as, you know, meal is pizza and for some reason the cheese is a little different. What you can eat outside of at least Argentina. What else? Ice cream, but it's more like gelato, like Italian. So that is, you know, different. Empanadas. I don't know. There is a, a bunch of. Right so milanesas, you know, asados. Asados. You can, you can eat this in 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 from the cows and agriculture in the country.

Yeah, the milk. Yeah, milk is a little different.

So.

Yeah, very interesting.

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

Well, I think it would be. 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. Yeah. So that is an excellent souvenir. And if, if you can use it, even better. You know, I think that Chevron Matt is getting very popular. Popular in the U.S. too.

Yeah.

Not as crazy as in Argentina, but getting popular.

Yeah.

So. So maybe like a leather jacket. 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 U.S. what else? Well, if you are able to buy and bring some dulce leche also, even you can find in many places here. But there is another option.

Yeah, no, that's wine. So of course, those are. Those are. 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, 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, maybe it's fun when they say forget about it.

Okay, good, good. Forget about it. Forget about it. Yeah, I like it.

Yeah. Other 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. Well, Cesar, this has been an absolute blast. 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, what's the best way for them to find Making sense online?

Making sense.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 help, you know, as much as I can.

Perfect. Well, Cedar, thank you again. Let me thank our audience and our sponsor, nearshore direct. Go nearshore direct.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.

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