The Exchanges

Q How do you think about reserves management? I don't, if you actually run the numbers, I believe strongly that actually it's better to have more lines of diversification and not reserves management than, you know, heavily reserve. How do you approach reserves management and concentration of capital?

A Yeah, every, every fund has its strategy, so the, the answer, there's no right answer for any one given fund. I think with us at Atlantico, we, we've defined very clearly what our goal is, and our, and our goal is to be the number one venture capital fund in Latin America, and we've, and we've defined that by saying we're going to be the fund that's going to return the highest multiple on capital for our limited partners, and for you to be able to return the highest multiple on capital, something very similar, I think, to what, what Benchmark aims for, You need to concentrate a lot more capital on that first check, and you need to operate with thinner reserves than what is typical. So to give you an example, an early-stage fund today probably reserves about half the fund, right, for follow-ons. It's probably a typical number you hear.

AI assessment note: “operate with thinner reserves than what is typical”

Q retrench to core markets. And when we look at LATAM today, you have amazing early stage funds, whether it's Atlantico, Canary, Monashies, Kazakh, but there's not Billions and billions of dollars set aside for growth, like the US has, or like some parts of Asia and India have. Am I right to be as worried as I am, and do you share my concern on the reduction of growth capital?

A I don't share your concern. And let me tell you why. I think that where you've seen a lot of the retrenching of, of growth capital has been, uh, with the crossover funds, right? A lot of crossover funds were investing very actively in Latin America over these last couple of years. Uh, and they've retrenched and they started to put more, more and more on their focus on their public positions, but that's not a Latin America specific, um, factor that that's something that we see around the world, but you, you still have here the dedicated growth capital of, you know, great Global funds that have local offices, local teams have been here for the long term, are not leaving. And those are names like, you know, you know, General Atlantic, uh, Riverwood, you have some of the, the sovereigns like GIC and Temasek that have been here for a long time and they're not leaving. And, and, and honestly, the kinds of capital that those great blue chip investors bring is plenty for the size of the market we have today. Sure. That might be different once the market is much bigger in 10 years, but It definitely allows the great companies and the breakout companies to be funded all the way through to the public markets.

AI assessment note: “I don't share your concern. And let me tell you why.”

Q Final one. What's the most recent publicly announced investment, and why did you say yes and get so excited?

A So the, the last investment we, we announced was an investment in a company called, uh, Fudo, which is a, is a leading restaurant management software and, you know, point of sale solution in Latin America. It's kind of a, a square meets toast for, for Latin America. They, you know, they have over, you know, 10,000 clients, uh, restaurants across the region. Uh, they've been, you know, they've been profitable and bootstrapped, uh, since the beginning, uh, Uh, and our friends at, uh, Andreessen Horowitz, uh, were investing in them and kind of brought us into the round along, along with Maya Capital to, to all lead this new round of the company. Uh, and it was an amazing, you know, leadership team that had deep experience in software, specifically software in the restaurant industry, and had just brought in an amazing CEO from Mercado Pago that obviously understood, you know, POS, uh, and FinTech, uh, and was really a, it really is a very inspirational leader. It's a, it's a curious thing because, A lot of these verticals, when you look at them in Latin America, they may, they may seem small at first because Latin America is simply just a smaller market, but what's different and what I think a lot of investors underestimate is just how big some of the adjacent opportunities can be in a, in a competitive market like the U S all the adjacencies are always very occupied and there's a…

AI assessment note: “the last investment we, we announced was an investment in a company called, uh, Fudo”

Q going to stick to structure because it's actually, I think, going to be the best way to do it. So if we unpack first, running Facebook LATAM, this is a pretty cool thing to do. As we said, Facebook LATAM, you were really the start and the first person running it. How did that experience impact your mindset, and that one or two big takeaways for you from that experience?

A Yeah, so I, I joined Facebook at, ah, the end of 2009, actually early 2010, that's when they, they shipped me down to Brazil, ah, to really focus on, ah, driving growth in Brazil. And, and, and as a reminder, you know, Facebook had something around a million users at that time in Brazil, ah, and our biggest competitor, which was Google's social network, Orkut, had over thirty five million users. So I was shipped down by, by the growth team and said, look, go and figure this out and sort of kill Orkut and make, and make things happen. So, I was everyone from, you know, the, the intern to the CEO, to the secretary, to the janitor, uh, of Facebook Latin America. So it sounds like a grandiose title, but when the company is that small and there's sort of hundreds of employees, you gotta do a little bit of everything. And I think that, uh, when I think about the, the main learnings I had of working at Facebook, I would say that the first one is about just the power of product market fit. I think when, when you're on a rocket ship like Facebook and everything you do can kind of only go right, um, it's really a testament to how product market fit really solves all problems. And if you, and if you don't have it, to take the flip side of it, it doesn't really matter what you're going to do because you're never going to be able to achieve greatness. So I think that's probably point number…

AI assessment note: “the main learnings I had of working at Facebook, I would say that the first”

Q Pesci Urbano. Which I, I hope I said very elegantly and correctly. Um, it's a work in progress. Um, but I want to start there. So a question from a mutual friend, Hugo Barra, he said, what was it like being a part of, at the start, what was the kind of Groupon clone gold rush? And, and what was that like? And what's your favorite memory from that time?

A Yeah. Just to give you a sense of the, the breakneck speed that, that we were going, uh, with, with Pace Urbano, you know, I, I probably worked, I don't know, a hundred hour weeks for two years straight. So it was, you know, both, uh, exhilarating to have that, that kind of growth and that kind of traction, but also, you know, exhausting, right? You're just, you're just sprinting a marathon and, and, and it's, and it tires you out. Uh, you have a lot of adrenaline to keep you going, but it definitely tires you out. And, and, and to give you a sense, we started, You know, myself and my co-founder Alex, uh, working out of his living room, uh, in his apartment in Rio de Janeiro in Brazil. And, you know, fast forward two years later, we were over 1200 employees present in six different countries across Latin America. The company was doing over a hundred million dollars a year in, you know, net revenues. So sort of a, sort of a, a very large, uh, company in every sense of the word, word in a very short amount of time. And I think one of the things that probably is, is most Um, memorable for me. It was probably one of the first offers that we put live on the site. This is probably in the first or second month of the, of the website, but we just started selling so many, uh, coupons of that particular offer. I remember we would press, you know, refresh on our keyboards on the browser a…

AI assessment note: “one of the things that probably is, is most Um, memorable for me”

Q Julio, what was your biggest hit from an investing standpoint? Could be with Atlantico or as an angel and how did it impact your mindset?

A I think my biggest hit was either an angel investment in Ipsy, uh, up in the US, uh, or in Quinto Andar, uh, in Brazil. You know, and both of those were probably around, you know, a hundred X returns, maybe even more than a hundred X returns, but it was, they're massive returns. Uh, and I think that what, when, when you make those investments and eventually sort of that money hits your bank account, I think it really solidifies the importance of the power law in venture, right? And sort of these asymmetric returns that exist only in venture capital and only in the early stage. And what, what, what it's done to me as an investor is to think about How do I get into these massive, massive kind of category defining companies that are probably coming around in Latin America once every, you know, couple of years. I need to be able to get into those because that one hit, that one return is probably going to be more valuable than the sum of all the other, uh, investments that I'm going to make in that fund. And that's all that matters really to be successful in the early stage.

AI assessment note: “my biggest hit was either an angel investment in Ipsy, uh, up in the US”

Q Yeah, I totally get you. In terms of the COVID boom, how's it different?

A So what's happened in the COVID boom when you look at the U.S. is that you had this, you know, massive acceleration of digital adoption for everything from e-commerce, grocery delivery, your usage of your Peloton, what have you. And now that we're in a post-pandemic world, we're seeing a lot of these numbers just revert back to the long-term historical trends. Uh, it, it's very clear when you look at it in the data in the US. What, what's happened in Latin America is that you had a similar boom during, during the COVID period, but you didn't have the reversion to the long-term average. So if you look at, just give you one example here, if you look at e-commerce penetration in, in Brazil to take one specific case, we're right now about almost three years ahead of where we would have been in that historic growth curve. And I think a lot of it is again, because a lot of Brazilians were trying things out like e-commerce Or digital banking or telemedicine for the first time. And they saw how much better it was than, you know, waiting in line at their bank branch or waiting in line at their doctor's office, that they weren't going to go back to the old world. And that was a little bit different than I think what happened in more developed countries like the US. So really the pandemic, you know, pushed us ahead three years into the future. And we didn't, and we didn't fall back down a…

AI assessment note: “you didn't have the reversion to the long-term average”

Q going to stick to structure because it's actually, I think, going to be the best way to do it. So if we unpack first, running Facebook LATAM, this is a pretty cool thing to do. As we said, Facebook LATAM, you were really the start and the first person running it. How did that experience impact your mindset, and that one or two big takeaways for you from that experience?

A Yeah, so I, I joined Facebook at, ah, the end of 2009, actually early 2010, that's when they, they shipped me down to Brazil, ah, to really focus on, ah, driving growth in Brazil. And, and, and as a reminder, you know, Facebook had something around a million users at that time in Brazil, ah, and our biggest competitor, which was Google's social network, Orkut, had over thirty five million users. So I was shipped down by, by the growth team and said, look, go and figure this out and sort of kill Orkut and make, and make things happen. So, I was everyone from, you know, the, the intern to the CEO, to the secretary, to the janitor, uh, of Facebook Latin America. So it sounds like a grandiose title, but when the company is that small and there's sort of hundreds of employees, you gotta do a little bit of everything. And I think that, uh, when I think about the, the main learnings I had of working at Facebook, I would say that the first one is about just the power of product market fit. I think when, when you're on a rocket ship like Facebook and everything you do can kind of only go right, um, it's really a testament to how product market fit really solves all problems. And if you, and if you don't have it, to take the flip side of it, it doesn't really matter what you're going to do because you're never going to be able to achieve greatness. So I think that's probably point number…

AI assessment note: “when I think about the, the main learnings I had of working at Facebook”

Q On the flip side, what's the biggest miss and what did you take away from that?

A I'd say the biggest miss I had was not investing at the, the seed round of Snapchat. Uh, so just to give you some context at the time, I used to invest with a, a bunch of friends from, you know, both Stanford and Facebook. Uh, and, and one of my, my friends, uh, had, uh, Evan as a student in his class and has sort of gotten a, an early glimpse of Snapchat. And because some of our, some of our crew, uh, still worked at Facebook at the time, we had to run it by a Facebook conflicts committee. Uh, and I remember Facebook conflicts committee said, oh, and you guys can't invest this because it could potentially be competitive. Uh, and, and, and all there, and there were a couple of ways we could have done this kind of, uh, you know, sort of outside that, or some of us could have done it, you know, individually, but we kind of just backed off from it. We said, oh, this whole like disappearing messages thing doesn't make any sense. Sure. Like the numbers are kind of just off the charts, but let's forget about it. It's probably, you know, it's probably just a fad. And I think we didn't, we didn't insist on it. And we didn't insist on going in the deal. Once we had the sort of that, that, that no from the, uh, Uh, from the conflicts committee, and obviously that probably would have been the best investment I would have ever made.

AI assessment note: “biggest miss I had was not investing at the, the seed round of Snapchat.”

Q importance of processes there and not having them being a challenge. Can I ask, you know, you also expanded into multiple different products. We mentioned kind of the Groupon clone, which is very unfair labeling in the early days, but it expanded well beyond that. How do you think about and advise founders on when's the right time to expand product lines and add second and third and fourth products?

A So when we launched Pace Urbano, back to the question of the topic of vision, right? Our vision was to build the ultimate local services company in, in Latin America. And we started with the Groupon model for, for daily deals. And then subsequently we, we launched a food delivery business, a restaurant reservation business, a local content business, kind of really executing on that overall vision of what we, what we wanted to build. I think that what we got wrong is that we probably did that too early. And what I would tell founders is that you have to pick one market, right? And probably one market and one customer, and you really have to nail it and you really have to win that market before you move on to the next one. I think trying to fight a multi front war and trying to win multiple markets at once, especially in a hyper competitive market, like the one we had is a recipe for, for disaster. Uh, so what we always tell our founders is look, focus on one geography, one product, one customer win that. And then go on and move on to the next one. Don't try to do everything in parallel. I think focus is probably one of the most important and often underrated skills in a founder and importance in a, in a, in a startup.

AI assessment note: “you really have to win that market before you move on to the next one”

Q Can I ask, how did they help out when times were bad?

A It was, it was a variety of things. I mean, just to give you like one example, you know, we, we had, uh, several fundraising and, and M&A conversations that were happening, you know, throughout our history. Uh, and at times we were just short staff to be able to handle all these requests and all these things that we needed. And I remember, you know, very clearly, um, that, that GA, um, sent in a couple of analysts that they basically kind of lent us to come work with us for a couple of months. And help us organize sort of our finance team and a lot of our reporting. I think I remember also with, um, you know, T. Rowe Price at the time, it was Henry Ellenbogen that was running the, the private investment team there. Um, and he, he helped, you know, get us in front of some pretty critical, uh, partners globally, uh, both from a M&A standpoint, from a fundraising standpoint, I think really kind of opened up his Rolodex and, and helped us open some of these doors when we, when we most needed them. When, when the, when the investment wasn't an important investment for them anymore, it was, you know, a fairly small one when you consider the size of their fund. And it was one that was on the rocks. And even then he was using his reputation. And I think, uh, really going to bat for us as far as being supportive of the company.

AI assessment note: “GA, um, sent in a couple of analysts that they basically kind of lent us”

Q That's amazing to hear. Sorry. I like to drill down when it's like, you know, how people move the needle, especially in tough times. You mentioned Benchmark there though, such an iconic and institutional firm. And obviously you became an EIR there, um, which is where you met Scott. But how did that experience with Benchmark impact how you think as an investor? Yeah.

A So as, as you said, after we sold Pace Urbana to Baidu, I, I moved back to the Bay area and I took a role as a, as an EIR at Benchmark. You know, the, the, the partner who had invested in Pace Urbana, Matt Kohler said, look, you know, this, you know, this didn't go exactly the way that we expected, but we, we really liked the experience of working with you. Why don't you come hang out here and let's try to figure out what we can do together. Uh, and, and, and that period that I spent at Benchmark and interacting with all the partners and getting to see how they, how they operate in the day to day, you know, was definitely a huge learning experience. I, I, I'd say that there were probably two things that I took away from, you know, watching the best of the best, kind of doing their thing at Benchmark. And I think the first one that was really striking to me was just the incredible level of focus they had. Right. They really stick to their knitting. They know that they're the best at, you know, the craft of early stage venture and investing in these great breakout companies and being sort of the supportive partner that these, that these founders want. Uh, and I think that, that, that focus and the, and the ability to say no to many other things that might come up, you know, they don't raise the opportunity funds and the growth funds. They don't do SPACs. They're kind of just focu…

AI assessment note: “we at least At Atlantico have tried to steal a little bit of that, that playbook”

Q How do you think about reserves management? I don't, if you actually run the numbers, I believe strongly that actually it's better to have more lines of diversification and not reserves management than, you know, heavily reserve. How do you approach reserves management and concentration of capital?

A Yeah, every, every fund has its strategy, so the, the answer, there's no right answer for any one given fund. I think with us at Atlantico, we, we've defined very clearly what our goal is, and our, and our goal is to be the number one venture capital fund in Latin America, and we've, and we've defined that by saying we're going to be the fund that's going to return the highest multiple on capital for our limited partners, and for you to be able to return the highest multiple on capital, something very similar, I think, to what, what Benchmark aims for, You need to concentrate a lot more capital on that first check, and you need to operate with thinner reserves than what is typical. So to give you an example, an early-stage fund today probably reserves about half the fund, right, for follow-ons. It's probably a typical number you hear.

AI assessment note: “You need to concentrate a lot more capital on that first check, and you need to operate with thinner reserves”

Q Yeah, I totally get you. In terms of the COVID boom, how's it different?

A So what's happened in the COVID boom when you look at the U.S. is that you had this, you know, massive acceleration of digital adoption for everything from e-commerce, grocery delivery, your usage of your Peloton, what have you. And now that we're in a post-pandemic world, we're seeing a lot of these numbers just revert back to the long-term historical trends. Uh, it, it's very clear when you look at it in the data in the US. What, what's happened in Latin America is that you had a similar boom during, during the COVID period, but you didn't have the reversion to the long-term average. So if you look at, just give you one example here, if you look at e-commerce penetration in, in Brazil to take one specific case, we're right now about almost three years ahead of where we would have been in that historic growth curve. And I think a lot of it is again, because a lot of Brazilians were trying things out like e-commerce Or digital banking or telemedicine for the first time. And they saw how much better it was than, you know, waiting in line at their bank branch or waiting in line at their doctor's office, that they weren't going to go back to the old world. And that was a little bit different than I think what happened in more developed countries like the US. So really the pandemic, you know, pushed us ahead three years into the future. And we didn't, and we didn't fall back down a…

AI assessment note: “What's happened in Latin America is that you had a similar boom... but you didn't have the reversion”

Q Oh, it's going to be great. We have so many great topics. The schedule is quite long, so I'm excited for the discussion. Tell me, how did you make your way into the world of venture, and how did you come to Found Atlantico most recently?

A So the cliff notes on, on me is that I've spent the last 15 years or so in tech, um, mostly as a founder and operator, half that time in, you know, Silicon Valley, San Francisco Bay Area, and half the time down here, uh, in Brazil. And, you know, when I was an operator, I think similar to, to a lot of folks out there, I started investing, right? It was first as a, as an angel investing. This is over 10 years ago. Uh, and then, you know, ultimately over time just started to fall in love with, with investing. And, and ultimately when I, when I Uh, wrapped up my last company a few years ago, I decided to just dive headfirst into investing and, um, basically build that fund that I always dreamt of having when I was an operator and entrepreneur. And, and that's what Atlantico is today. Uh, I'm originally from Brazil, so, uh, it, it seemed to me to be quite obvious to go all in on Latin America. I think it's probably one of the most exciting regions in the world. I felt like, you know, I obviously had a personal edge being here and having started a company down here. And I think today, you know, with Atlantico, we've built what's one of the leading early stage funds in the region, and I think we're still in the early days of building what we think is going to be the dominant venture firm for Latin America.

AI assessment note: “build that fund that I always dreamt of having when I was an operator”

Q What do you favor in founders today in terms of their product strategy? MVP, iterate, customer feedback, test, ship, test, ship. Would you prefer The craftsmanship, the beauty of product design, really stressing the details.

A Right. So that, so, so that's a, it's a spectrum that you, depending on the, the company and depending on the product and depending on the market, you might want to be in different parts of that spectrum. So it's neither all the way to one side and not, not on the other side. I still have my own personal bias to like the scrappy founder that, you know, iterates and try things and sort of very numbers based. But I think today, especially after the experience with Prefer, I've gained a much, much higher appreciation for the craftsmanship. I think that, you know, Scott Bell's He, uh, always advocated for, And maybe I was, you know, 10% uh, craft and 90%, you know uh,, scrappiness and iteration, and now I'm probably sixty-forty, you know, much more still on the scrappy side, still on the iterative side, but I still see the value of, you know, great design, great experiences, greatly crafted products in being able to craft that early nut that is, you know, product market fit.

AI assessment note: “now I'm probably sixty-forty, you know, much more still on the scrappy side”

Q Sorry, I just don't understand one thing. I sound really stupid here. What are the barriers to adoption? Like, why is it only one and a half percent?

A The main thing is just time, right? I think Latin America and a lot of sort of company creation, Uh, started just a lot later than, than in the U S and the way that we measure, uh, this tech penetration index is just looking at the, the, the value of all the tech companies that are from the region and kind of comparing it to, to the levels of GDP as kind of a good, a good sort of baseline. Uh, and the fact that, you know, the tech ecosystem here probably took, I don't know, a good 10 years or 15 years to really get up to speed compared to more developed countries like the U S and even probably another, you know, seven years behind China and India. Just means that we need more time to develop talent, to have the, the good examples, and for companies to be able to grow. And we're, we're on that path, but we just started late.

AI assessment note: “The main thing is just time, right?”

Q importance of processes there and not having them being a challenge. Can I ask, you know, you also expanded into multiple different products. We mentioned kind of the Groupon clone, which is very unfair labeling in the early days, but it expanded well beyond that. How do you think about and advise founders on when's the right time to expand product lines and add second and third and fourth products?

A So when we launched Pace Urbano, back to the question of the topic of vision, right? Our vision was to build the ultimate local services company in, in Latin America. And we started with the Groupon model for, for daily deals. And then subsequently we, we launched a food delivery business, a restaurant reservation business, a local content business, kind of really executing on that overall vision of what we, what we wanted to build. I think that what we got wrong is that we probably did that too early. And what I would tell founders is that you have to pick one market, right? And probably one market and one customer, and you really have to nail it and you really have to win that market before you move on to the next one. I think trying to fight a multi front war and trying to win multiple markets at once, especially in a hyper competitive market, like the one we had is a recipe for, for disaster. Uh, so what we always tell our founders is look, focus on one geography, one product, one customer win that. And then go on and move on to the next one. Don't try to do everything in parallel. I think focus is probably one of the most important and often underrated skills in a founder and importance in a, in a, in a startup.

AI assessment note: “you really have to win that market before you move on to the next one.”

Q That's amazing to hear. Sorry. I like to drill down when it's like, you know, how people move the needle, especially in tough times. You mentioned Benchmark there though, such an iconic and institutional firm. And obviously you became an EIR there, um, which is where you met Scott. But how did that experience with Benchmark impact how you think as an investor? Yeah.

A So as, as you said, after we sold Pace Urbana to Baidu, I, I moved back to the Bay area and I took a role as a, as an EIR at Benchmark. You know, the, the, the partner who had invested in Pace Urbana, Matt Kohler said, look, you know, this, you know, this didn't go exactly the way that we expected, but we, we really liked the experience of working with you. Why don't you come hang out here and let's try to figure out what we can do together. Uh, and, and, and that period that I spent at Benchmark and interacting with all the partners and getting to see how they, how they operate in the day to day, you know, was definitely a huge learning experience. I, I, I'd say that there were probably two things that I took away from, you know, watching the best of the best, kind of doing their thing at Benchmark. And I think the first one that was really striking to me was just the incredible level of focus they had. Right. They really stick to their knitting. They know that they're the best at, you know, the craft of early stage venture and investing in these great breakout companies and being sort of the supportive partner that these, that these founders want. Uh, and I think that, that, that focus and the, and the ability to say no to many other things that might come up, you know, they don't raise the opportunity funds and the growth funds. They don't do SPACs. They're kind of just focu…

AI assessment note: “two things that I took away... first one... was just the incredible level of focus”

Q What are the most common ways that you find you have to be cutthroat?

A Sometimes it's just about giving feedback that the company is going down the wrong path. I think a lot of times it's just about You know, putting up a mirror in front of that founder and making it clear that they maybe don't have product market fit, right? That maybe what they think is, is working really isn't working, uh, and kind of bringing reality down. Um, and, and I think that founders are optimistic by nature and they, and they think things are going well and they're gonna end up well. And sometimes you just have to say, look, this is, this isn't working. You have to try something else. And maybe you have to, you know, make cuts. Maybe you have to pivot. Maybe you have to fire your co-founder. And making those, making those decisions are tough, and sometimes when you're stuck in the day-to-day of running a company, you may not be able to zoom out and see, see the big picture in the same way that maybe an investor might, and it's my role as an investor to be able to help the founder see the big picture and make those tough decisions.

AI assessment note: “Maybe you have to fire your co-founder.”

Q You know, you met Scott Belsky while at Benchmark and you guys started Preferred together. I do want to touch on this experience. I, again, spoke to Hugo and he said, um, ask this one. What were your biggest lessons from the preferred journey and not getting to product market fit there? What did you take away from that two to three year journey?

A I'd say that the, the first thing is just how much I had under appreciated the fact that my two prior experiences at Facebook and then with Pace Urbano, how, how important product market fit had been there and how lucky I was to be in those places because finding, you know, true and amazing product market fit is, is so, is so hard and it's, and it's quite rare. Uh, and I think I underestimated the difficulty of doing that in such a, in such a complex market as the one that we attacked, uh, at, we attacked with Prefer. You know, just to give you some context, you know, Prefer was trying to basically reinvent the nature of the firm, right? Thinking about the firm for the 21st century. What would be this platform for the future of work? So obviously a, a, a very grand vision and a problem that's very, very hard to solve. And I, and I thought that, look, I'm gonna, you know, get together with Scott, get together with these other, uh, you know, great co-founders. And we're going to kind of iterate and try a bunch of things and eventually get there. Uh, but we never did, you know, we, we kind of hit our head against the wall for three years and tried a bunch of things until eventually, you know, so we ran out of steam. And I think one thing that, you know, Scott always pulled me to do, and I think that, you know, if I could do it over again, I probably would have listened more to him…

AI assessment note: “underappreciated the fact that my two prior experiences... finding, you know, true and amazing product market fit”

Q Oh, no way. I had Sarah, I didn't know she spun off and did her own thing. Huh. That is amazing. Yeah, I, I had her on the show and we've actually spoken a lot. Um, tell me, what have you changed your mind on recently?

A Oh man, this is gonna sound like I'm backtracking, right? But I was talking about, you know, being non-consensus and, and, and I think that In Latin America or in markets that are a little bit more risky and less familiar, sometimes you have to, in the spectrum of non-consensus to consensus, you might need to, uh, sacrifice a little bit of, of doing something that's not consensus in order to honestly just invest in founders that are backable. Thinking that means here, founders that speak good English, right? And, and a lot of times they're more polished because I think international investors, they, they overvalue those attributes. Uh, and, and being able to be fundable and be able to raise the next round is actually a pretty critical thing in, in new markets like Latin America.

AI assessment note: “this is gonna sound like I'm backtracking... I was talking about being non-consensus”

Q Can I ask, we mentioned the incredible hyper growth there, and scaling to a hundred million in revenue, 1200 people, you know, then challenging times came. Uh, Enrique actually at Brex asked this, and he asked, you know, when you look back at that journey, what are one or two elements that maybe you made mistakes on that caused that sharp decline in company performance?

A Yeah. Uh, it's great that you, you spoke to, uh, Enrique. He's a, he's a good friend. I think I met him when he was probably at 16 or 17 starting his first company, um, in, in Brazil. So, uh, it's an amazing career he's had since. And it's a great question because, you know, I think, I think the, the ups and downs of, of being a founder, and I think sort of the reality of just life in the trenches of what it is to, to run a startup is, is challenging. And I think that we, we made a lot of mistakes. I think some of the biggest mistakes we made were around focus was probably expanding into too many product lines. Was probably expanding into too many geographies, uh, too fast. And I think all those things, uh, ultimately started to consume cash and probably more importantly, started to consume, you know, management attention and management focus. Uh, and we, we eventually had to pay, had to pay that bill, right. Uh, that eventually arrived when the market as a whole, and I think sort of, this was a global phenomenon show that that daily deal model wasn't as great and wasn't as sustainable, honestly. As the entire world, uh, had thought. And when that market started to, to fall from under us, we had a lot more fronts to be able to, uh, to have to fight on. We had a lot more fires to put out. And a lot of that was just because we, we had expanded and we had so much surface area that…

AI assessment note: “biggest mistakes we made were around focus was probably expanding into too many product lines”

Q What do you favor in founders today in terms of their product strategy? MVP, iterate, customer feedback, test, ship, test, ship. Would you prefer The craftsmanship, the beauty of product design, really stressing the details.

A Right. So that, so, so that's a, it's a spectrum that you, depending on the, the company and depending on the product and depending on the market, you might want to be in different parts of that spectrum. So it's neither all the way to one side and not, not on the other side. I still have my own personal bias to like the scrappy founder that, you know, iterates and try things and sort of very numbers based. But I think today, especially after the experience with Prefer, I've gained a much, much higher appreciation for the craftsmanship. I think that, you know, Scott Bell's He, uh, always advocated for, And maybe I was, you know, 10% uh, craft and 90%, you know uh,, scrappiness and iteration, and now I'm probably sixty-forty, you know, much more still on the scrappy side, still on the iterative side, but I still see the value of, you know, great design, great experiences, greatly crafted products in being able to craft that early nut that is, you know, product market fit.

AI assessment note: “now I'm probably sixty-forty, you know, much more still on the scrappy side”

Q What do you know now that you wish you'd known when you started Atlantico?

A You know, I think, I think that it's, it's probably something around, you know, uh, LP management. I think I was definitely surprised at how much more time I spend with LPs than, than I expected. Uh, and I think a lot of those are these really amazing conversations where I can learn a lot from. And some of them are more just kind of straightforward, you know, reporting, uh, discussions. And, and, and had I known that I probably would have optimized more to have in my LP base folks that are, are there for interesting debates where I can learn from, uh, rather than more of the, the, the types of LPs that are just looking to update numbers since you're going to end up spending the same amount of time with both of them.

AI assessment note: “I was definitely surprised at how much more time I spend with LPs than, than I expected.”

Q You know, you met Scott Belsky while at Benchmark and you guys started Preferred together. I do want to touch on this experience. I, again, spoke to Hugo and he said, um, ask this one. What were your biggest lessons from the preferred journey and not getting to product market fit there? What did you take away from that two to three year journey?

A I'd say that the, the first thing is just how much I had under appreciated the fact that my two prior experiences at Facebook and then with Pace Urbano, how, how important product market fit had been there and how lucky I was to be in those places because finding, you know, true and amazing product market fit is, is so, is so hard and it's, and it's quite rare. Uh, and I think I underestimated the difficulty of doing that in such a, in such a complex market as the one that we attacked, uh, at, we attacked with Prefer. You know, just to give you some context, you know, Prefer was trying to basically reinvent the nature of the firm, right? Thinking about the firm for the 21st century. What would be this platform for the future of work? So obviously a, a, a very grand vision and a problem that's very, very hard to solve. And I, and I thought that, look, I'm gonna, you know, get together with Scott, get together with these other, uh, you know, great co-founders. And we're going to kind of iterate and try a bunch of things and eventually get there. Uh, but we never did, you know, we, we kind of hit our head against the wall for three years and tried a bunch of things until eventually, you know, so we ran out of steam. And I think one thing that, you know, Scott always pulled me to do, and I think that, you know, if I could do it over again, I probably would have listened more to him…

AI assessment note: “I'd say that the, the first thing is just how much I had under appreciated”

Q I want to ask, you know, post-prefer, you then obviously start Atlantico, and you'd been investing for the last decade or so, and during a lot of what we discussed, you've been investing as an angel as well. When you think about the transition from angel to institutional investor, how did your mindset shift when making that transition?

A I think when you're investing your own money, you have the luxury of investing in things just because you like them, right? Um, maybe it's off strategy, maybe it's not your focus, but you like the founder or you like the idea. You might invest in things that are, you know, non-tech or not, not your core competency. And, and, and what changes when you're investing other people's money is that when you, when you go out there and you raise a fund, you, you promise a particular strategy and a particular area of focus. And, and, and now it's your responsibility to deliver on what you, what you sold. Right. So you can't go off and say, I'm going to raise an early stage fund and start making, you know, growth investments or, or sort of seed stage investments. Uh, you really have to be able to, you know, deliver on, on what you sold. And I think that's, that's important to LPs, the consistency in, um, in what you sell and what you deliver. So sticking to that strategy, um, that you, that you, that you outlined. I think the other thing also is that as an angel, you probably have a lot more leeway to be A friend, let's say, to the founders and to the entrepreneurs. Um, and you can be a little bit more of a cheerleader. You can have a little bit more fun with them as people. But I think that once you're investing other people's money, you're, you're really there to maximize returns. So yo…

AI assessment note: “what changes when you're investing other people's money is that when you go out there”

Q What are the most common ways that you find you have to be cutthroat?

A Sometimes it's just about giving feedback that the company is going down the wrong path. I think a lot of times it's just about You know, putting up a mirror in front of that founder and making it clear that they maybe don't have product market fit, right? That maybe what they think is, is working really isn't working, uh, and kind of bringing reality down. Um, and, and I think that founders are optimistic by nature and they, and they think things are going well and they're gonna end up well. And sometimes you just have to say, look, this is, this isn't working. You have to try something else. And maybe you have to, you know, make cuts. Maybe you have to pivot. Maybe you have to fire your co-founder. And making those, making those decisions are tough, and sometimes when you're stuck in the day-to-day of running a company, you may not be able to zoom out and see, see the big picture in the same way that maybe an investor might, and it's my role as an investor to be able to help the founder see the big picture and make those tough decisions.

AI assessment note: “Sometimes it's just about giving feedback that the company is going down the wrong path.”

Q Julia, do you think boards add much value? I've sat on boards with some of the best. Rarely have they added any value. Genuinely, do you think they're valuable?

A In, in my experience, having a moment where you bring in different investors and different advisors together, you know, to, to check in and talk about strategy and talk about direction, that conversation is valuable. Whether that has to happen at a board meeting and whether it has to happen sort of in the formal construct of a board of directors, I don't, I don't think so. I think a lot of the most valuable conversations I've had and strategy planning conversations I've had weren't in board meetings. That doesn't mean to, that doesn't mean that board meetings can't also be helpful. But I don't think that they are, they are necessary elements of having those important strategic discussions and conversations that guide a firm. Uh, and that's a little bit of also why I, I think that being, you know, formally on a board or, you know, listening only to your board members isn't necessarily, uh, as, as important as I think a lot of investors make it out to be. I think as a, as a founder, a lot of the people that helped me the most weren't on, on the board, right? I think you mentioned Mickey Malka. Mickey Malka started as an angel investor Uh, and Pace Urbano is probably one of my, my greatest mentors. He eventually joined our board, but he probably added as much value before he was a board member as after he was a board member. So I'm, I'm a believer that getting the right people to …

AI assessment note: “Whether that has to happen sort of in the formal construct of a board of directors, I don't think so.”

Q Can I ask, how was the first fundraise for Atlantico? It was, you know, early in the LATAM. It was earlier than it definitely is today from an ecosystem perspective. How was that first fundraise?

A It was, it was slower than I expected. I think that, you know, when you, when you're trying to get a first-time fund off the ground, things just move slow. I think people want to understand your strategy, want to understand what your edge is. And that, and that requires, I think, more, more conversations than you would, that you would normally need to have once you already have a fund with an established track record. You know, that said, I think we were, we were very lucky that I, you know, personally had a, a very strong track record as an investor prior to Atlantico. And I had a, a pretty extensive sort of operating background that I had met a lot of people. And I think a lot of people that were willing to make a bet on, on me as a person and me as an investor. Uh, so we were able to get the found the, the fund off the ground, you know, Fairly quickly, but it definitely took longer than than I expected when I first sought out to to go raise the money.

AI assessment note: “It was, it was slower than I expected.”