1 00:00:01,050 --> 00:00:02,850 - When you were building out e-commerce, 2 00:00:02,850 --> 00:00:04,350 especially in emerging markets, 3 00:00:04,350 --> 00:00:06,330 there was absolutely no playbook. 4 00:00:06,330 --> 00:00:08,730 And that meant that everything was very adaptable 5 00:00:08,730 --> 00:00:12,600 to our reality, our customer set, our stakeholders 6 00:00:12,600 --> 00:00:16,593 reinvention was the constant throughout. 7 00:00:18,150 --> 00:00:21,360 - Startups fight to survive, scale ups are different. 8 00:00:21,360 --> 00:00:23,460 These are the very few startups 9 00:00:23,460 --> 00:00:25,590 that take off like rocket ships. 10 00:00:25,590 --> 00:00:28,980 And of these only a handful grow without 11 00:00:28,980 --> 00:00:31,200 becoming sole destroying bureaucracies. 12 00:00:31,200 --> 00:00:34,590 And because there's so few of them, it's really rare 13 00:00:34,590 --> 00:00:37,530 we get to study their successes and their failures. 14 00:00:37,530 --> 00:00:40,350 So how does a hyperscaler pull this off? 15 00:00:40,350 --> 00:00:43,290 How do you sustain the energy to stay relevant 16 00:00:43,290 --> 00:00:46,860 year after year after year when it's so easy 17 00:00:46,860 --> 00:00:49,320 to coast and celebrate your success? 18 00:00:49,320 --> 00:00:51,810 Well, maybe the answer can be found 19 00:00:51,810 --> 00:00:56,100 I don't know in antibodies in EEQI jail 20 00:00:56,100 --> 00:00:58,600 or the CEO crossroads. 21 00:00:58,600 --> 00:01:01,710 (bright music) 22 00:01:01,710 --> 00:01:04,170 I'm Jimmy Allen and this is "Founder's Mentality, 23 00:01:04,170 --> 00:01:05,850 The CEO sessions." 24 00:01:05,850 --> 00:01:09,600 My guest today is Petro Arnt, he's CEO of dLocal, 25 00:01:09,600 --> 00:01:11,760 and NASDAQ listed payments company 26 00:01:11,760 --> 00:01:13,530 built for emerging markets. 27 00:01:13,530 --> 00:01:17,040 Think about it this way, it helps global giants like Amazon, 28 00:01:17,040 --> 00:01:20,220 Spotify, and Nike move money seamlessly 29 00:01:20,220 --> 00:01:24,180 in places where the payments are well, anything but simple. 30 00:01:24,180 --> 00:01:27,180 Before that, Petro spent 20 years at Mercado Libre, 31 00:01:27,180 --> 00:01:28,890 also known as MeLI. 32 00:01:28,890 --> 00:01:31,230 Latin America's e-commerce giant. 33 00:01:31,230 --> 00:01:33,720 Co-founded and led by Marcus Galperin. 34 00:01:33,720 --> 00:01:36,120 You'll hear the name Marcos a lot today. 35 00:01:36,120 --> 00:01:39,420 MELI grew from a scrappy online marketplace 36 00:01:39,420 --> 00:01:41,610 to a 100 billion dollar powerhouse. 37 00:01:41,610 --> 00:01:45,240 Now it spans 18 countries in e-commerce and FinTech. 38 00:01:45,240 --> 00:01:48,510 And as Chief Financial Officer Pedro is in the cockpit 39 00:01:48,510 --> 00:01:50,913 of that rocket ship for that entire ride. 40 00:01:52,470 --> 00:01:54,540 Pedro, I think you've probably had more experience 41 00:01:54,540 --> 00:01:58,650 than any executive I'm aware of in a hyperscaling 42 00:01:58,650 --> 00:02:00,120 period of a company. 43 00:02:00,120 --> 00:02:01,950 And I'd love just to understand from you 44 00:02:01,950 --> 00:02:04,320 what were the biggest scaling challenges 45 00:02:04,320 --> 00:02:05,673 you guys faced at MELI? 46 00:02:06,990 --> 00:02:07,823 - So there were hundreds I'm sure, 47 00:02:07,823 --> 00:02:09,600 but there's three that I think are the ones 48 00:02:09,600 --> 00:02:12,030 that we probably spent the most time on 49 00:02:12,030 --> 00:02:13,440 and were the most challenging ones. 50 00:02:13,440 --> 00:02:17,970 So the first one is so massive, massive consumer platform 51 00:02:17,970 --> 00:02:19,890 across an entire region. 52 00:02:19,890 --> 00:02:24,780 And so what were normally edge cases 53 00:02:24,780 --> 00:02:28,170 of consumer experiences gone afoul, 54 00:02:28,170 --> 00:02:31,830 when you actually looked at in terms of absolute numbers, 55 00:02:31,830 --> 00:02:33,030 they were massive. 56 00:02:33,030 --> 00:02:36,090 So the sheer scale of the business 57 00:02:36,090 --> 00:02:39,360 meant that it was extremely challenging 58 00:02:39,360 --> 00:02:43,020 and you had to deal even with edge cases 59 00:02:43,020 --> 00:02:45,510 of consumer experience going afoul. 60 00:02:45,510 --> 00:02:49,260 Second thing, the beauty of a platform business 61 00:02:49,260 --> 00:02:52,200 is how powerful the go-to market strategy 62 00:02:52,200 --> 00:02:55,590 becomes of being able to move into adjacencies. 63 00:02:55,590 --> 00:02:58,500 So MELI was a retail platform that was able to build 64 00:02:58,500 --> 00:03:01,440 on top of that, one of the most successful neobanks 65 00:03:01,440 --> 00:03:02,580 in the region. 66 00:03:02,580 --> 00:03:04,830 The most successful logistics network 67 00:03:04,830 --> 00:03:08,070 is now moving into entertainment, so on and so forth. 68 00:03:08,070 --> 00:03:11,700 So from a business potential perspective, fascinating. 69 00:03:11,700 --> 00:03:16,700 Now the complexity creep of scaling up not one business 70 00:03:16,830 --> 00:03:21,830 but scaling up multiple business units is massive, right? 71 00:03:22,197 --> 00:03:25,890 And then the third one is the age old adage 72 00:03:25,890 --> 00:03:29,400 of the people who got you here are not the people 73 00:03:29,400 --> 00:03:31,260 that are gonna get you there 74 00:03:31,260 --> 00:03:34,560 and you have to make these difficult decisions. 75 00:03:34,560 --> 00:03:38,910 Despite that meaning that a lot of loyal and contributors 76 00:03:38,910 --> 00:03:41,340 that were very instrumental for the phase 77 00:03:41,340 --> 00:03:45,030 you've just exited somehow probably had to be left 78 00:03:45,030 --> 00:03:46,260 by the wayside. 79 00:03:46,260 --> 00:03:49,290 - So how do you deal with that 80 00:03:49,290 --> 00:03:51,810 given that it's an ongoing issue? 81 00:03:51,810 --> 00:03:54,900 And do you want to both thank the pioneers 82 00:03:54,900 --> 00:03:57,480 but also make sure that they don't get in the way 83 00:03:57,480 --> 00:03:58,320 of the next stage? 84 00:03:58,320 --> 00:03:59,153 How do you do that? 85 00:03:59,153 --> 00:04:01,470 - If you're going to be a successful scale up 86 00:04:01,470 --> 00:04:03,720 I would say that almost for sure 87 00:04:03,720 --> 00:04:07,410 you have a very clearly defined culture 88 00:04:07,410 --> 00:04:10,530 and that culture is not static. 89 00:04:10,530 --> 00:04:15,270 Even as the requirements of your human capital 90 00:04:15,270 --> 00:04:19,800 and the type of personality you need to be successful 91 00:04:19,800 --> 00:04:24,750 changes the culture immediately adapts 92 00:04:24,750 --> 00:04:28,560 and therefore singles out those that aren't fitting it. 93 00:04:28,560 --> 00:04:30,780 The system generates an antibody 94 00:04:30,780 --> 00:04:33,060 and it becomes very easy for leadership 95 00:04:33,060 --> 00:04:34,890 for the people organization 96 00:04:34,890 --> 00:04:37,860 to realize because everyone's speaking up and saying, 97 00:04:37,860 --> 00:04:40,650 I don't think he's holding up his end of the bargain. 98 00:04:40,650 --> 00:04:43,500 - And in my guess I'm curious about this, 99 00:04:43,500 --> 00:04:45,810 is that that probably wasn't a surprise to them 100 00:04:45,810 --> 00:04:47,460 'cause you probably also had people 101 00:04:47,460 --> 00:04:51,390 that were often very self-aware and recognize 102 00:04:51,390 --> 00:04:53,670 they weren't ready for the next phase. 103 00:04:53,670 --> 00:04:55,440 - By and large absolutely. 104 00:04:55,440 --> 00:04:57,390 And again it goes to the antibodies. 105 00:04:57,390 --> 00:05:00,570 They had began to feel that in their interactions 106 00:05:00,570 --> 00:05:02,700 with peers and whatnot. 107 00:05:02,700 --> 00:05:04,740 Those exits, I think by and large, 108 00:05:04,740 --> 00:05:07,680 especially with the really important people, 109 00:05:07,680 --> 00:05:10,470 were never traumatic to be quite honest. 110 00:05:10,470 --> 00:05:13,380 There were times where you could find roles for them 111 00:05:13,380 --> 00:05:16,800 within the organization where you could still leverage 112 00:05:16,800 --> 00:05:21,360 some of that DNA and those skills that they did have. 113 00:05:21,360 --> 00:05:22,740 Now that's not always the case. 114 00:05:22,740 --> 00:05:25,230 Like if you just keep trying to find pockets 115 00:05:25,230 --> 00:05:28,290 to store away the old timers and you're getting it wrong. 116 00:05:28,290 --> 00:05:32,850 The other thing that we did at MELI during a period 117 00:05:32,850 --> 00:05:36,570 and that it's not easy, but I beyond recommend it, 118 00:05:36,570 --> 00:05:39,660 I would say if you're not doing this then you're gonna have 119 00:05:39,660 --> 00:05:41,790 a hard time scaling up. 120 00:05:41,790 --> 00:05:46,500 Is there should be a point in your company growth 121 00:05:46,500 --> 00:05:50,670 where you institute some form of stack ranking 122 00:05:50,670 --> 00:05:54,660 or forced curve and you force your leaders 123 00:05:54,660 --> 00:05:57,660 to cull the lowest performers. 124 00:05:57,660 --> 00:06:00,270 It's only when you force them to stack rank 125 00:06:00,270 --> 00:06:04,740 and you force them to start on a scale, 126 00:06:04,740 --> 00:06:08,760 compare them amongst each other that you begin to realize 127 00:06:08,760 --> 00:06:11,580 that a lot of those old timers consistently 128 00:06:11,580 --> 00:06:12,870 are falling to the bottom. 129 00:06:12,870 --> 00:06:14,400 At MELI I think there was a period 130 00:06:14,400 --> 00:06:16,770 of maybe six or seven years 131 00:06:16,770 --> 00:06:20,790 where the decision was the lowest performers is out. 132 00:06:20,790 --> 00:06:24,540 - As you were scaling and bringing in all these people, 133 00:06:24,540 --> 00:06:26,940 many of whom were better than the existing people, 134 00:06:26,940 --> 00:06:28,710 your culling people that have been there, 135 00:06:28,710 --> 00:06:33,710 how did you keep the culture strong and the same? 136 00:06:33,780 --> 00:06:36,720 How did you keep the founder's mentality, 137 00:06:36,720 --> 00:06:39,630 the sense of insurgency as you keep bringing in 138 00:06:39,630 --> 00:06:40,590 these new people? 139 00:06:40,590 --> 00:06:43,470 - There was a moment where we were very deliberate about it. 140 00:06:43,470 --> 00:06:47,250 I remember a conversation we had where I was really worried 141 00:06:47,250 --> 00:06:49,290 'cause I said, we're growing too much, 142 00:06:49,290 --> 00:06:50,913 we're beginning to lose culture. 143 00:06:52,652 --> 00:06:54,630 And it was Marcos actually. 144 00:06:54,630 --> 00:06:56,550 He said, look, two things, first of all, 145 00:06:56,550 --> 00:06:58,950 we're gonna have to deliberately work on culture. 146 00:06:58,950 --> 00:07:01,830 We also need to realize that when you're growing 147 00:07:01,830 --> 00:07:03,360 to the size we're growing, 148 00:07:03,360 --> 00:07:06,030 law of large numbers starts creeping in. 149 00:07:06,030 --> 00:07:11,030 And so what we need to hold steadfast to is leadership. 150 00:07:11,580 --> 00:07:16,580 If we get leadership to really, really reflect 151 00:07:16,890 --> 00:07:20,100 the core cultural aspects of who we want to be, 152 00:07:20,100 --> 00:07:21,780 then that trickles down. 153 00:07:21,780 --> 00:07:25,470 So we may not be able to ensure in our maximum 154 00:07:25,470 --> 00:07:28,440 of hire for culture and fire for culture 155 00:07:28,440 --> 00:07:29,640 across the organization 156 00:07:29,640 --> 00:07:31,680 where it has more than 10,000 people. 157 00:07:31,680 --> 00:07:35,280 But at the leadership level this is non-negotiable. 158 00:07:35,280 --> 00:07:37,050 And so when we got deliberate, 159 00:07:37,050 --> 00:07:39,960 the first one was hire for culture and fire for culture. 160 00:07:39,960 --> 00:07:43,240 So you actually built into your hiring process 161 00:07:45,360 --> 00:07:49,230 a final interview which was mainly focused on cultural fit. 162 00:07:49,230 --> 00:07:52,230 And then the fire for culture is I think my years 163 00:07:52,230 --> 00:07:56,490 have taught me that the famous case of the effective asshole 164 00:07:56,490 --> 00:07:59,370 who delivers the results but everyone kind of knows 165 00:07:59,370 --> 00:08:01,350 is culturally misaligned. 166 00:08:01,350 --> 00:08:04,770 It inevitably over the long run doesn't work. 167 00:08:04,770 --> 00:08:07,350 I think we learn that when just from scars. 168 00:08:07,350 --> 00:08:12,300 The second piece is we were very, very consistent 169 00:08:12,300 --> 00:08:16,020 about baking in culture assessment 170 00:08:16,020 --> 00:08:19,860 into the quote unquote "HR platforms." 171 00:08:19,860 --> 00:08:21,660 There was always a matching 172 00:08:21,660 --> 00:08:24,720 for do they embody our leadership principles, 173 00:08:24,720 --> 00:08:29,100 do they embody our culture, who we want our people to be? 174 00:08:29,100 --> 00:08:32,280 And then the third piece is you need to evangelize, right? 175 00:08:32,280 --> 00:08:34,920 The narrative around what MELI's culture is 176 00:08:34,920 --> 00:08:37,500 and what's important is really a key piece 177 00:08:37,500 --> 00:08:38,550 of the communication. 178 00:08:38,550 --> 00:08:41,430 And Marcos that's so much of what he did 179 00:08:41,430 --> 00:08:44,010 is just remind people all the time 180 00:08:44,010 --> 00:08:46,953 of what those key cultural attributes are. 181 00:08:48,060 --> 00:08:50,190 - You know, scaling is tough. 182 00:08:50,190 --> 00:08:52,350 Culture slips, performance drifts. 183 00:08:52,350 --> 00:08:56,070 Every new recruit has dozens of new clever ideas 184 00:08:56,070 --> 00:08:58,680 that lead to a rainstorm of KPIs. 185 00:08:58,680 --> 00:09:01,710 To fight this drift demands clarity on what matters 186 00:09:01,710 --> 00:09:04,740 and a maniacal focus on those one or two things. 187 00:09:04,740 --> 00:09:06,360 And it starts with the leaders 188 00:09:06,360 --> 00:09:08,310 and their set of non-negotiables. 189 00:09:08,310 --> 00:09:10,740 So Pedro put in place stack ranking, 190 00:09:10,740 --> 00:09:12,900 brutal but effective. 191 00:09:12,900 --> 00:09:16,440 Cold hard numbers that forced leaders to face reality 192 00:09:16,440 --> 00:09:19,470 even when it meant parting ways with people they liked. 193 00:09:19,470 --> 00:09:21,390 During its hypergrowth phase, 194 00:09:21,390 --> 00:09:23,070 the leaders of Enterprise Rent-A-Car 195 00:09:23,070 --> 00:09:25,740 were also brutally clear on what mattered. 196 00:09:25,740 --> 00:09:29,460 For their former CEO Andy Taylor, this was customer loyalty. 197 00:09:29,460 --> 00:09:32,490 Every branch was measured on one score, 198 00:09:32,490 --> 00:09:36,720 the enterprise service quality index, also known as ESQI, 199 00:09:36,720 --> 00:09:38,700 which is the percentage of customers 200 00:09:38,700 --> 00:09:40,500 who said they were completely satisfied. 201 00:09:40,500 --> 00:09:41,520 But here's the kicker, 202 00:09:41,520 --> 00:09:44,640 if your branch was below the company average, 203 00:09:44,640 --> 00:09:48,960 you and the whole branch were stuck in ESQI jail, 204 00:09:48,960 --> 00:09:51,660 nobody got promoted, no exceptions. 205 00:09:51,660 --> 00:09:53,640 You could be the hardest worker in the room 206 00:09:53,640 --> 00:09:55,890 but if your customers weren't satisfied, 207 00:09:55,890 --> 00:09:57,840 you are not gonna be happy. 208 00:09:57,840 --> 00:09:58,890 That's focus. 209 00:09:58,890 --> 00:10:02,490 You say what you want, you measure it, you reward it. 210 00:10:02,490 --> 00:10:04,140 But there's a warning here. 211 00:10:04,140 --> 00:10:07,890 Focus is great when it's pointed in the right direction, 212 00:10:07,890 --> 00:10:10,590 but you also have to be open to new things to be willing 213 00:10:10,590 --> 00:10:12,090 to change direction. 214 00:10:12,090 --> 00:10:15,180 If focus was Pedro's first leadership lesson, 215 00:10:15,180 --> 00:10:16,983 flexibility was his second. 216 00:10:18,570 --> 00:10:23,570 - I'd like to think that it's exactly the willingness 217 00:10:27,090 --> 00:10:31,410 and the self-consciousness and the commitment 218 00:10:31,410 --> 00:10:34,710 to changing that was the biggest change 219 00:10:34,710 --> 00:10:36,810 that I went through as a leader. 220 00:10:36,810 --> 00:10:39,570 I used to be damn stubborn 221 00:10:39,570 --> 00:10:42,420 and I used to be the smartest guy in the room. 222 00:10:42,420 --> 00:10:44,820 And I think what I learned along the MELI journey 223 00:10:44,820 --> 00:10:48,420 is that you need to constantly reinvent yourself. 224 00:10:48,420 --> 00:10:51,690 And that means you need to be very open to learn. 225 00:10:51,690 --> 00:10:53,640 You need to be extremely willing 226 00:10:53,640 --> 00:10:57,900 to say what's working may not continue to work. 227 00:10:57,900 --> 00:11:02,130 And so I think it's the whole growth mentality mindset. 228 00:11:02,130 --> 00:11:07,130 Not only push yourself to that but have the constant process 229 00:11:07,440 --> 00:11:11,730 of self-assessment and really questioning yourself 230 00:11:11,730 --> 00:11:15,783 to see am I changing, am I learning, am I adapting? 231 00:11:16,860 --> 00:11:19,560 That was instrumental for us in that journey. 232 00:11:19,560 --> 00:11:21,180 We always say right? 233 00:11:21,180 --> 00:11:23,010 When you were building out e-commerce, 234 00:11:23,010 --> 00:11:24,510 especially in emerging markets, 235 00:11:24,510 --> 00:11:26,580 there was absolutely no playbook. 236 00:11:26,580 --> 00:11:29,490 And I think that serves us brilliantly 237 00:11:29,490 --> 00:11:33,240 because it kept us away from standard solutions 238 00:11:33,240 --> 00:11:35,640 and that meant that everything was very adaptable 239 00:11:35,640 --> 00:11:39,570 to our reality, our customer set, our stakeholders. 240 00:11:39,570 --> 00:11:43,890 Reinvention was the constant throughout. 241 00:11:43,890 --> 00:11:47,670 - For your own journey, is there a single leadership moment 242 00:11:47,670 --> 00:11:49,470 or moment of truth for you 243 00:11:49,470 --> 00:11:51,960 when you went from I've got the answer, 244 00:11:51,960 --> 00:11:54,840 I'm the smartest guy in the to I'm vulnerable, 245 00:11:54,840 --> 00:11:56,610 I have questions, I'm curious. 246 00:11:56,610 --> 00:11:58,530 - I have an early anecdote 247 00:11:58,530 --> 00:12:01,260 but it really ingrained something in me. 248 00:12:01,260 --> 00:12:03,870 My first job at MELI was business development 249 00:12:03,870 --> 00:12:07,710 and this was in the heydays of the first internet bubble. 250 00:12:07,710 --> 00:12:10,530 And so we didn't have any revenue, we were pre-revenue. 251 00:12:10,530 --> 00:12:12,960 It was all about confirmed registered users 252 00:12:12,960 --> 00:12:14,580 and you could IPO a company 253 00:12:14,580 --> 00:12:17,550 'cause you had a lot of confirmed registered users. 254 00:12:17,550 --> 00:12:21,420 And so I started and Marcos sent me off to sign a deal 255 00:12:21,420 --> 00:12:24,270 with who was back then one of the largest portals, 256 00:12:24,270 --> 00:12:25,290 which was Lycos. 257 00:12:25,290 --> 00:12:29,280 You would pay Lycos, you know this massive amount of money, 258 00:12:29,280 --> 00:12:30,960 they would put you on their homepage 259 00:12:30,960 --> 00:12:33,750 and then you'd get all these confirmed registered users. 260 00:12:33,750 --> 00:12:36,570 And so I signed this contract was this massive 261 00:12:36,570 --> 00:12:38,880 multimillion dollar contract 262 00:12:38,880 --> 00:12:42,150 to have some sort of static link on the Lycos homepage. 263 00:12:42,150 --> 00:12:46,560 It would've been a massive misallocation of capital, 264 00:12:46,560 --> 00:12:49,620 Massive, I was 27 years old. 265 00:12:49,620 --> 00:12:53,490 And about three weeks after I signed the deal 266 00:12:53,490 --> 00:12:57,240 and I had started to realize what, ugh, they call me 267 00:12:57,240 --> 00:12:59,940 and they say, look, we have some uncomfortable news 268 00:12:59,940 --> 00:13:02,490 we need to relay to you but we've just been bought 269 00:13:02,490 --> 00:13:04,200 by Telefonica. 270 00:13:04,200 --> 00:13:06,840 And the first thing the Spaniards are doing are reviewing 271 00:13:06,840 --> 00:13:08,640 all recent contracts. 272 00:13:08,640 --> 00:13:10,980 And so we may have to negotiate 273 00:13:10,980 --> 00:13:13,710 some way of way out clause on this. 274 00:13:13,710 --> 00:13:15,900 And I thought this is my opportunity, right? 275 00:13:15,900 --> 00:13:18,330 And we got outta that contract. 276 00:13:18,330 --> 00:13:21,360 Sheer luck, it would've been millions of dollars 277 00:13:21,360 --> 00:13:22,380 thrown down the drain. 278 00:13:22,380 --> 00:13:24,810 And so little things like that, 279 00:13:24,810 --> 00:13:28,350 especially when you're dealing with excessive resources, 280 00:13:28,350 --> 00:13:32,043 I think start to make you realize, you know what, 281 00:13:33,990 --> 00:13:37,840 be humble, learn, realize you're gonna get it wrong 282 00:13:38,880 --> 00:13:39,960 and be open about that. 283 00:13:39,960 --> 00:13:43,140 'Cause it's such a central part of the learning process. 284 00:13:43,140 --> 00:13:45,270 - Did you have a moment, 285 00:13:45,270 --> 00:13:48,930 a decade or two later where there was a young Pedro 286 00:13:48,930 --> 00:13:50,880 who made the exact same mistake 287 00:13:50,880 --> 00:13:53,520 and that you were able to say, great, 288 00:13:53,520 --> 00:13:56,040 now you've got a lesson for life. 289 00:13:56,040 --> 00:13:58,320 - So as a leader, I think this is interesting, 290 00:13:58,320 --> 00:13:59,940 but maybe this is where it comes from. 291 00:13:59,940 --> 00:14:03,180 There's this phrase, A poor plan well executed 292 00:14:03,180 --> 00:14:07,380 will almost always be a good plan, poorly executed. 293 00:14:07,380 --> 00:14:12,210 I always tell the people I work with that working with me 294 00:14:12,210 --> 00:14:15,180 is probably going to look a little bit like this. 295 00:14:15,180 --> 00:14:18,120 If there are 10 times that we disagree 296 00:14:18,120 --> 00:14:21,960 on the course forward, you're almost guaranteed 297 00:14:21,960 --> 00:14:25,590 to be told that nine of them do it your way 298 00:14:25,590 --> 00:14:28,200 and I'm gonna hold you accountable for the results. 299 00:14:28,200 --> 00:14:31,020 I believe that there's not one way to do things. 300 00:14:31,020 --> 00:14:33,840 There's probably multiple ways to get the result. 301 00:14:33,840 --> 00:14:37,410 And what's more important is the buy-in and the conviction 302 00:14:37,410 --> 00:14:39,210 when execution happens. 303 00:14:39,210 --> 00:14:42,450 So if people are executing my plan all the time, 304 00:14:42,450 --> 00:14:43,770 it doesn't work. 305 00:14:43,770 --> 00:14:47,220 There will be one out of 10 times where I will tell you, 306 00:14:47,220 --> 00:14:50,790 look, I'm really sorry on this one I will not seed 307 00:14:50,790 --> 00:14:53,883 and you just need to disagree and go commit to my plan. 308 00:14:54,750 --> 00:14:57,420 - I love that one of the world's top executives talks about 309 00:14:57,420 --> 00:15:00,630 almost losing millions on his first deal. 310 00:15:00,630 --> 00:15:01,950 That's vulnerability. 311 00:15:01,950 --> 00:15:04,020 But second, I become quite obsessed 312 00:15:04,020 --> 00:15:06,120 with the fact that most CEOs 313 00:15:06,120 --> 00:15:08,610 discover their step back moment. 314 00:15:08,610 --> 00:15:11,910 It's this crossroads, if they continue as is, 315 00:15:11,910 --> 00:15:13,590 they become the micromanager 316 00:15:13,590 --> 00:15:16,680 and start wearing the capes of the energy vampire. 317 00:15:16,680 --> 00:15:18,795 If they shift, if they step back, 318 00:15:18,795 --> 00:15:20,970 if they learn to trust each others, 319 00:15:20,970 --> 00:15:23,010 they redefine their role 320 00:15:23,010 --> 00:15:25,380 such that they're giving others wings. 321 00:15:25,380 --> 00:15:28,680 If anyone knows those crossroads, it's Ann Wright, 322 00:15:28,680 --> 00:15:30,360 Founder of the Right Approach. 323 00:15:30,360 --> 00:15:33,030 She spent 20 years coaching leaders. 324 00:15:33,030 --> 00:15:35,850 Think of her as a kind of CEO whisperer. 325 00:15:35,850 --> 00:15:38,160 Ann gets past the armor and she finds out 326 00:15:38,160 --> 00:15:40,500 what's really keeping leaders up at night 327 00:15:40,500 --> 00:15:43,140 and then helps them face those fears head on. 328 00:15:43,140 --> 00:15:47,010 And her first question to CEOs, well it's old but gold. 329 00:15:47,010 --> 00:15:51,003 But she asked, what is it that only you can do? 330 00:15:52,927 --> 00:15:53,760 - [Anne] It's an age old question 331 00:15:53,760 --> 00:15:58,363 but the what can only you do is increasingly important 332 00:15:59,610 --> 00:16:02,430 because people can get seduced 333 00:16:02,430 --> 00:16:06,660 about now I'm CEO, I need to. 334 00:16:06,660 --> 00:16:08,970 And a lot of what they think they need to do 335 00:16:08,970 --> 00:16:10,773 isn't exactly what they need to do. 336 00:16:11,610 --> 00:16:15,900 Getting their teams in place is essential. 337 00:16:15,900 --> 00:16:18,600 If they came up within the organization, 338 00:16:18,600 --> 00:16:22,290 the most important role is the person who's replacing them. 339 00:16:22,290 --> 00:16:25,020 So they're not trying to do both jobs. 340 00:16:25,020 --> 00:16:27,210 And I have people do the exercise of okay 341 00:16:27,210 --> 00:16:29,610 if these are the three most important things 342 00:16:29,610 --> 00:16:31,770 you said you wanted to do, 343 00:16:31,770 --> 00:16:34,740 where is the time in your calendar for doing that? 344 00:16:34,740 --> 00:16:38,580 - [Jimmy] You're saying it's almost increasingly important 345 00:16:38,580 --> 00:16:43,173 that they ask the question, what can only you uniquely do? 346 00:16:44,220 --> 00:16:46,830 Why is it increasingly important? I'm just curious. 347 00:16:46,830 --> 00:16:48,960 - [Anne] Because everybody will want them, right? 348 00:16:48,960 --> 00:16:50,490 When you've come up through the ranks, 349 00:16:50,490 --> 00:16:52,890 all the people who think they're your friend 350 00:16:52,890 --> 00:16:55,380 or had a previous relationship with you just, 351 00:16:55,380 --> 00:16:58,590 you know, want a cup of coffee or want to drop in 352 00:16:58,590 --> 00:16:59,430 and before you know it, 353 00:16:59,430 --> 00:17:01,320 you could spend your whole day doing that. 354 00:17:01,320 --> 00:17:03,150 So you have to change. 355 00:17:03,150 --> 00:17:05,730 And this thing about not being friends anymore 356 00:17:05,730 --> 00:17:10,730 or not being of the troops is quite hard because again, 357 00:17:11,130 --> 00:17:12,900 it's something that gets said all the time, 358 00:17:12,900 --> 00:17:14,280 it's lonely at the top right? 359 00:17:14,280 --> 00:17:18,120 And people say it very glibly. It's really true. 360 00:17:18,120 --> 00:17:19,890 Once you are in that role, 361 00:17:19,890 --> 00:17:22,290 there isn't a single person in your organization 362 00:17:22,290 --> 00:17:23,880 you can tell everything to. 363 00:17:23,880 --> 00:17:26,190 I think there's something else around 364 00:17:26,190 --> 00:17:28,860 if people are feeling a bit overwhelmed, 365 00:17:28,860 --> 00:17:29,970 they want to go to the thing 366 00:17:29,970 --> 00:17:32,340 they really know how to do, right? 367 00:17:32,340 --> 00:17:33,960 You know, I used to be the sales director 368 00:17:33,960 --> 00:17:37,894 and I'm really good at that so I'll just go there and help. 369 00:17:37,894 --> 00:17:40,440 And so I feel good, right? 370 00:17:40,440 --> 00:17:43,260 Which is a short term gratification 371 00:17:43,260 --> 00:17:45,390 and in the long run 372 00:17:45,390 --> 00:17:47,520 stop them from really thinking about the fact 373 00:17:47,520 --> 00:17:50,100 that their finance department needs attention 374 00:17:50,100 --> 00:17:51,960 and that may not be their strength. 375 00:17:51,960 --> 00:17:53,790 - [Jimmy] What I talk about a lot in the CEO forum 376 00:17:53,790 --> 00:17:58,680 is the problem of our time is that CEOs are exhausted 377 00:17:58,680 --> 00:18:01,380 and if you're exhausted you'd complicate. 378 00:18:01,380 --> 00:18:03,090 Is that what you're seeing when you're? 379 00:18:03,090 --> 00:18:04,890 - [Anne] Absolutely 380 00:18:04,890 --> 00:18:06,390 Apparently there was a piece in the FT 381 00:18:06,390 --> 00:18:09,840 or something recently about how tenure for CEOs 382 00:18:09,840 --> 00:18:12,120 is getting shorter and shorter. 383 00:18:12,120 --> 00:18:14,070 And some of that is energy. 384 00:18:14,070 --> 00:18:15,810 Interestingly, I just had this conversation 385 00:18:15,810 --> 00:18:17,970 with a client yesterday 386 00:18:17,970 --> 00:18:20,970 and she said, I really thought I knew 387 00:18:20,970 --> 00:18:23,070 what I was getting into 'cause she'd been so close 388 00:18:23,070 --> 00:18:24,510 to it for so long. 389 00:18:24,510 --> 00:18:26,220 And she said I had no idea. 390 00:18:26,220 --> 00:18:29,520 - [Jimmy] What unlocked my energy in my day job 391 00:18:29,520 --> 00:18:31,350 had nothing to do with my day job. 392 00:18:31,350 --> 00:18:32,183 - [Anne] Exactly right. 393 00:18:32,183 --> 00:18:36,150 - And it was a specific moment when I was going down, 394 00:18:36,150 --> 00:18:37,770 I think a very typical pattern 395 00:18:37,770 --> 00:18:40,800 and telling you that I'm in the wealth accumulation stage 396 00:18:40,800 --> 00:18:42,720 of my career and then I'll be at the point 397 00:18:42,720 --> 00:18:45,360 that I can do things I love. 398 00:18:45,360 --> 00:18:47,790 And then you kind of ask what's stopping you 399 00:18:47,790 --> 00:18:48,993 from doing both? 400 00:18:49,920 --> 00:18:53,070 And I then you know, went down to 80% 401 00:18:53,070 --> 00:18:55,110 and started my music businesses. 402 00:18:55,110 --> 00:18:56,730 Is that typical? 403 00:18:56,730 --> 00:18:59,310 - [Anne] And sometimes I'll meet somebody 404 00:18:59,310 --> 00:19:01,590 and they've already got lots of interests 405 00:19:01,590 --> 00:19:05,250 and one of my favorite stories 406 00:19:05,250 --> 00:19:10,140 is of a very senior lawyer who was also a concert pianist 407 00:19:10,140 --> 00:19:14,310 and a dressage competitor and a photographer 408 00:19:14,310 --> 00:19:17,310 and an artist and had two lots of children. 409 00:19:17,310 --> 00:19:19,620 You know, an older lot and a younger lot. 410 00:19:19,620 --> 00:19:22,050 Astonishing, right? 411 00:19:22,050 --> 00:19:25,740 But he made it work because he got so much energy 412 00:19:25,740 --> 00:19:30,630 from those activities that he was even better 413 00:19:30,630 --> 00:19:33,240 in his in quotes day job. 414 00:19:33,240 --> 00:19:35,790 And he was inspiring to another generation 415 00:19:35,790 --> 00:19:36,963 that you could do both. 416 00:19:38,340 --> 00:19:40,140 - There are two things to unpack here. 417 00:19:40,140 --> 00:19:43,890 First, it is so critical that CEOs pick the right path 418 00:19:43,890 --> 00:19:45,180 at the crossroads. 419 00:19:45,180 --> 00:19:48,120 Do what only you the CEO can do 420 00:19:48,120 --> 00:19:50,880 and then empower others to get on with their job. 421 00:19:50,880 --> 00:19:53,700 That's exactly the shift Pedro was describing. 422 00:19:53,700 --> 00:19:58,080 Second, take care of yourself. The job is lonely. 423 00:19:58,080 --> 00:20:01,260 The job demands more energy than you actually have. 424 00:20:01,260 --> 00:20:03,360 Now most CEOs will tell you the biggest battle 425 00:20:03,360 --> 00:20:06,300 they fight every day is with their calendar. 426 00:20:06,300 --> 00:20:08,730 So the last thing they want to hear is some idiot 427 00:20:08,730 --> 00:20:12,300 saying sign up for improv or take up sailing. 428 00:20:12,300 --> 00:20:14,640 But passions matter. 429 00:20:14,640 --> 00:20:17,040 Every leader we've heard on the podcast 430 00:20:17,040 --> 00:20:18,690 has said the same thing. 431 00:20:18,690 --> 00:20:22,320 An outlet outside of work doesn't drain your energy. 432 00:20:22,320 --> 00:20:25,740 It multiplies it. Don Katz plays ice hockey. 433 00:20:25,740 --> 00:20:30,300 Christina Jou reads poetry. David Haynes rides motorcycles. 434 00:20:30,300 --> 00:20:34,620 Leaders need energy because exhausted leaders complicate. 435 00:20:34,620 --> 00:20:37,590 Because exhausted leaders allow their organizations 436 00:20:37,590 --> 00:20:39,963 to drift into irrelevance. 437 00:20:41,820 --> 00:20:44,730 - You know, if you talk to Marcos, you talk to all of us 438 00:20:44,730 --> 00:20:46,380 who have been there since the beginning. 439 00:20:46,380 --> 00:20:51,380 It's not true that we were a customer-centric organization 440 00:20:52,560 --> 00:20:54,570 from the get go, right? 441 00:20:54,570 --> 00:20:58,740 This was B2C, it was very hard to get that one voice 442 00:20:58,740 --> 00:21:02,220 of the consumer, but there was something else, 443 00:21:02,220 --> 00:21:05,640 which turns out is a phenomenal proxy 444 00:21:05,640 --> 00:21:08,580 for customer centricity, and that's product. 445 00:21:08,580 --> 00:21:12,210 So the one thing that was always core at MELI 446 00:21:12,210 --> 00:21:13,410 and that was Marcos. 447 00:21:13,410 --> 00:21:16,710 So at one point moving to sit with the engineers 448 00:21:16,710 --> 00:21:19,620 to send a message to all of his leadership, 449 00:21:19,620 --> 00:21:21,180 product technology matters 450 00:21:21,180 --> 00:21:23,670 and I want you involved in the details. 451 00:21:23,670 --> 00:21:26,520 Like you couldn't say it MELI oh I've RFD'd this off 452 00:21:26,520 --> 00:21:28,110 to the product organization. 453 00:21:28,110 --> 00:21:29,700 Ask them for the delivery date. 454 00:21:29,700 --> 00:21:32,250 If you were a leader and you weren't on top 455 00:21:32,250 --> 00:21:33,750 of what was working with the product, 456 00:21:33,750 --> 00:21:35,280 what wasn't working with the product, 457 00:21:35,280 --> 00:21:37,020 what the product roadmap was, 458 00:21:37,020 --> 00:21:38,700 you were not gonna last there. 459 00:21:38,700 --> 00:21:40,770 - You know, one of the things I talk a lot about 460 00:21:40,770 --> 00:21:43,500 is first fall in love with your product. 461 00:21:43,500 --> 00:21:44,790 The customer follows, 462 00:21:44,790 --> 00:21:47,550 this idea of customer first doesn't work. 463 00:21:47,550 --> 00:21:49,650 'Cause if you don't have a great product that delights them, 464 00:21:49,650 --> 00:21:52,830 there's no point in doing customer research. 465 00:21:52,830 --> 00:21:55,200 But then let's just use product as a proxy. 466 00:21:55,200 --> 00:22:00,200 How did you keep that relentless focus on being great, 467 00:22:03,330 --> 00:22:06,900 being relevant to everybody in the marketplace? 468 00:22:06,900 --> 00:22:10,500 - Yeah, so the center of gravity within MELI 469 00:22:10,500 --> 00:22:13,110 was always around product and technology. 470 00:22:13,110 --> 00:22:16,320 The decisions were not made around the P&L, 471 00:22:16,320 --> 00:22:19,380 I always say I had the least relevant 472 00:22:19,380 --> 00:22:22,590 of all the C-level positions 'cause I was the CFO. 473 00:22:22,590 --> 00:22:25,320 And then you had the business guys who were very important. 474 00:22:25,320 --> 00:22:28,440 But the real place where decisions were made 475 00:22:28,440 --> 00:22:30,780 were in product and technology. 476 00:22:30,780 --> 00:22:33,330 The second piece is there was always a strong element 477 00:22:33,330 --> 00:22:36,750 of long-term thinking, which I think also helps you 478 00:22:36,750 --> 00:22:39,450 to focus on the product and the experience. 479 00:22:39,450 --> 00:22:43,530 Then at one point, I'd say fairly early on in the journey, 480 00:22:43,530 --> 00:22:47,970 late 2000s beginning of the teens, 481 00:22:47,970 --> 00:22:50,490 something else did begin to get introduced 482 00:22:50,490 --> 00:22:52,920 in a more mechanized and methodical way, 483 00:22:52,920 --> 00:22:56,100 which was the voice of the customer 484 00:22:56,100 --> 00:23:01,100 through very detailed listening and NPS, right? 485 00:23:01,320 --> 00:23:06,150 So because it's a large B2C platform, 486 00:23:06,150 --> 00:23:07,890 you could ask consumers, 487 00:23:07,890 --> 00:23:09,270 what do you like about the platform? 488 00:23:09,270 --> 00:23:11,250 What do you dislike about platform? 489 00:23:11,250 --> 00:23:14,700 The customer service metric was actually instrumental 490 00:23:14,700 --> 00:23:17,790 because we started measuring per each journey 491 00:23:17,790 --> 00:23:20,910 within the customer experience where the NPS is higher 492 00:23:20,910 --> 00:23:22,380 and where the NPS is lower. 493 00:23:22,380 --> 00:23:25,620 And that feedback loop back into product 494 00:23:25,620 --> 00:23:29,190 I think became incredibly, incredibly powerful 495 00:23:29,190 --> 00:23:33,920 because you were looking at a data-driven enunciation 496 00:23:35,010 --> 00:23:37,200 of where consumers are complaining the most. 497 00:23:37,200 --> 00:23:40,110 Oh it's the billing, oh it's the returns, 498 00:23:40,110 --> 00:23:42,030 oh it's the search, right? 499 00:23:42,030 --> 00:23:45,120 And then that was feeding back into product and tech teams, 500 00:23:45,120 --> 00:23:47,700 and business teams and that was the first metric 501 00:23:47,700 --> 00:23:48,720 to try to move. 502 00:23:48,720 --> 00:23:50,640 - And just on that, you know, 503 00:23:50,640 --> 00:23:53,730 when you have this maniacal focus on the technology 504 00:23:53,730 --> 00:23:58,263 and product, this maniacal focus then on NPS. 505 00:23:59,100 --> 00:24:02,940 You end up with a culture where you have to love the idea 506 00:24:02,940 --> 00:24:04,260 that red is good. 507 00:24:04,260 --> 00:24:07,530 Meaning that these problems are something 508 00:24:07,530 --> 00:24:09,570 we're gonna embrace and celebrate. 509 00:24:09,570 --> 00:24:11,100 But every time I listen to you, 510 00:24:11,100 --> 00:24:12,690 every time I listen to Marcos, 511 00:24:12,690 --> 00:24:17,370 it is hard not to get exhausted with this relentlessness. 512 00:24:17,370 --> 00:24:22,110 How did you guys keep the energy levels 513 00:24:22,110 --> 00:24:25,740 going that the organization didn't just exhaust itself 514 00:24:25,740 --> 00:24:27,810 and fall over and collapse? 515 00:24:27,810 --> 00:24:30,540 What did you do about energy specifically? 516 00:24:30,540 --> 00:24:33,660 - We were working with these coaches I remember. 517 00:24:33,660 --> 00:24:35,670 And actually people I respect a lot 518 00:24:35,670 --> 00:24:37,770 and I still use till this day, 519 00:24:37,770 --> 00:24:41,280 but at one point they started veering some of the stuff 520 00:24:41,280 --> 00:24:43,260 they were trying to get us to do 521 00:24:43,260 --> 00:24:47,460 away from sort of these more engineer like approaches 522 00:24:47,460 --> 00:24:51,810 to sort of conscious business and you know, 523 00:24:51,810 --> 00:24:56,070 esoteric is an unfair word, but softer areas of this stuff. 524 00:24:56,070 --> 00:24:58,620 And I remember getting off and calling the partner in 525 00:24:58,620 --> 00:25:00,450 and saying, you know, what are you doing? 526 00:25:00,450 --> 00:25:01,620 This is not what we want. 527 00:25:01,620 --> 00:25:04,140 We're an engineering type organization. 528 00:25:04,140 --> 00:25:06,127 And his concern was he said, 529 00:25:06,127 --> 00:25:11,127 "Look, I worry you guys are going to burn out the motor. 530 00:25:12,360 --> 00:25:14,970 I'm looking your organization, I'm working with you. 531 00:25:14,970 --> 00:25:16,530 And it's just too intense." 532 00:25:16,530 --> 00:25:19,290 And I think that was just not understanding what drove us. 533 00:25:19,290 --> 00:25:23,070 If you were to ask me what drives you in your business life? 534 00:25:23,070 --> 00:25:25,830 I think the answer would be seeing impact. 535 00:25:25,830 --> 00:25:28,950 Seeing something that's broken, trying to fix it, 536 00:25:28,950 --> 00:25:30,870 designing something to fix it 537 00:25:30,870 --> 00:25:33,690 and then actually seeing it get fixed. 538 00:25:33,690 --> 00:25:37,620 That's what keeps me walking into work every day 539 00:25:37,620 --> 00:25:38,910 so motivated. 540 00:25:38,910 --> 00:25:42,030 So I think when you have that kind of a group of people 541 00:25:42,030 --> 00:25:46,950 where impact and fixing and seeing things get better, 542 00:25:46,950 --> 00:25:49,380 that kind of intensity doesn't drain you, 543 00:25:49,380 --> 00:25:51,360 quite the opposite it energizes you. 544 00:25:51,360 --> 00:25:53,910 And then there's a second piece which is related, 545 00:25:53,910 --> 00:25:58,350 which is we at MELi were very fortunate to see the results. 546 00:25:58,350 --> 00:26:00,990 We saw the results in the growth of the business, 547 00:26:00,990 --> 00:26:04,140 we saw the results in performance 548 00:26:04,140 --> 00:26:07,383 in terms of capital markets recognition by peers. 549 00:26:07,383 --> 00:26:09,900 We'd always used to say at first we had to explain 550 00:26:09,900 --> 00:26:11,760 to everyone what our company did. 551 00:26:11,760 --> 00:26:14,610 And then at one point everyone used our company. 552 00:26:14,610 --> 00:26:16,860 So I think when you have that combination of people 553 00:26:16,860 --> 00:26:19,860 that are driven by wanting to fix things 554 00:26:19,860 --> 00:26:21,390 and wanting to have impact 555 00:26:21,390 --> 00:26:24,150 and then you see the concrete results of that, 556 00:26:24,150 --> 00:26:27,273 that is not draining, that's incredibly energizing. 557 00:26:28,530 --> 00:26:30,120 - Guys, this is a mic drop moment. 558 00:26:30,120 --> 00:26:33,330 We are hearing a former CFO say that his job 559 00:26:33,330 --> 00:26:35,040 was the least important. 560 00:26:35,040 --> 00:26:38,190 What mattered was the folks in product and technology 561 00:26:38,190 --> 00:26:40,740 because with them the customers would follow. 562 00:26:40,740 --> 00:26:44,070 Second, we are hearing a CFO say that the one number 563 00:26:44,070 --> 00:26:48,390 that really mattered was NPS, net promoter score, 564 00:26:48,390 --> 00:26:51,270 a system for feedback, recovery action, 565 00:26:51,270 --> 00:26:52,770 not a financial number. 566 00:26:52,770 --> 00:26:55,860 Pedro's beginning to give us the shape of the new rules 567 00:26:55,860 --> 00:26:59,190 of scaling, product and customer at the center. 568 00:26:59,190 --> 00:27:01,890 Execution matters more than management. 569 00:27:01,890 --> 00:27:04,200 A founder once told me after he had a meeting 570 00:27:04,200 --> 00:27:06,660 with a very polished HR recruit, 571 00:27:06,660 --> 00:27:09,720 he said the following, "Everything about the professional 572 00:27:09,720 --> 00:27:13,230 management system tells you that execution 573 00:27:13,230 --> 00:27:17,160 and keeping customer promises is a job to escape. 574 00:27:17,160 --> 00:27:20,610 Do it well and we will promote you out of it." 575 00:27:20,610 --> 00:27:21,930 Well I believe the opposite. 576 00:27:21,930 --> 00:27:24,510 I want executors free from admin 577 00:27:24,510 --> 00:27:26,520 and quote unquote management. 578 00:27:26,520 --> 00:27:30,660 I want them to get rich by being great at execution. 579 00:27:30,660 --> 00:27:33,660 You know we're so conditioned we don't even realize 580 00:27:33,660 --> 00:27:36,540 how much our language and rewards say 581 00:27:36,540 --> 00:27:40,290 your job only matters if you leave it to become a manager. 582 00:27:40,290 --> 00:27:43,260 No wonder bureaucracies are soul crushed. 583 00:27:43,260 --> 00:27:46,440 As CEOs, the one thing you can't delegate is the job 584 00:27:46,440 --> 00:27:48,540 of putting the executor at the center. 585 00:27:48,540 --> 00:27:51,030 You have to celebrate them and then you gotta rewire 586 00:27:51,030 --> 00:27:52,530 the company around them. 587 00:27:52,530 --> 00:27:54,450 Because here's the twist, 588 00:27:54,450 --> 00:27:57,810 in bureaucracies processes suffocate 589 00:27:57,810 --> 00:28:00,270 and good leaders have to work around them. 590 00:28:00,270 --> 00:28:04,680 Paradoxically in scale insurgents, they love process 591 00:28:04,680 --> 00:28:06,963 because it liberates the people who matter. 592 00:28:08,250 --> 00:28:12,840 - I think what attracted me to the current challenge 593 00:28:12,840 --> 00:28:16,710 of grabbing an earlier stage publicly traded, 594 00:28:16,710 --> 00:28:20,550 very large organization but much earlier stage than MELI, 595 00:28:20,550 --> 00:28:25,530 was that the scale up phase is really what makes me tick. 596 00:28:25,530 --> 00:28:29,580 If someone were to give me a blank canvas of a company 597 00:28:29,580 --> 00:28:31,425 that was in that scale up phase again 598 00:28:31,425 --> 00:28:35,040 that actually needed the introduction of some elements 599 00:28:35,040 --> 00:28:38,700 of mechanization, that's exactly my pond. 600 00:28:38,700 --> 00:28:40,200 That's where I want it to be. 601 00:28:40,200 --> 00:28:42,660 So that's what I hope to be bringing 602 00:28:42,660 --> 00:28:45,990 to dLocal at this point, which is we need to scale up, 603 00:28:45,990 --> 00:28:47,910 we need to become more mature, 604 00:28:47,910 --> 00:28:50,910 but we're gonna do it in a way that works 605 00:28:50,910 --> 00:28:53,370 and that means the right amount of process, 606 00:28:53,370 --> 00:28:56,130 which is probably little and indispensable, 607 00:28:56,130 --> 00:29:00,660 but it also means being acutely aware of honoring 608 00:29:00,660 --> 00:29:04,890 how it became the global south juggernaut that it is, 609 00:29:04,890 --> 00:29:06,810 to try to not break any of that. 610 00:29:06,810 --> 00:29:09,630 And by the way, Jimmy, it's a lot easier to narrate, 611 00:29:09,630 --> 00:29:11,880 a lot easier in theory than it is in practice. 612 00:29:11,880 --> 00:29:15,000 In practice it is extremely difficult. 613 00:29:15,000 --> 00:29:17,820 - What's interesting listening to you today is, 614 00:29:17,820 --> 00:29:19,680 you're describing bad processes 615 00:29:19,680 --> 00:29:24,630 as if it begins to erode the buy-in and the conviction 616 00:29:24,630 --> 00:29:27,870 of the person that's supposed to be benefiting from it. 617 00:29:27,870 --> 00:29:29,760 It's a bad process. 618 00:29:29,760 --> 00:29:34,760 If it's disempowering in the name of scale, 619 00:29:34,830 --> 00:29:38,370 it's a bad process that's 23 years at MELI. 620 00:29:38,370 --> 00:29:41,970 That's not taught in any business book anywhere. 621 00:29:41,970 --> 00:29:44,010 - And it's just one small thought on that, 622 00:29:44,010 --> 00:29:49,010 which is this, process has a very scary tendency 623 00:29:49,290 --> 00:29:52,080 to become an end in itself. 624 00:29:52,080 --> 00:29:55,260 When that's the exact opposite reason 625 00:29:55,260 --> 00:29:56,940 why you institute process. 626 00:29:56,940 --> 00:30:00,720 Where I learned that as a CFO is planning and budgeting. 627 00:30:00,720 --> 00:30:04,710 It's amazing how you look at most organizations 628 00:30:04,710 --> 00:30:07,020 and you'd think that the actual business 629 00:30:07,020 --> 00:30:09,990 moves in line with the budget and the processing 630 00:30:09,990 --> 00:30:12,790 because companies spend months 631 00:30:13,740 --> 00:30:17,010 trying to do fortune telling, months. 632 00:30:17,010 --> 00:30:19,830 And you have business unit leaders 633 00:30:19,830 --> 00:30:22,410 who instead of being running a business, 634 00:30:22,410 --> 00:30:26,370 are stressing and sweating the whole gaming around 635 00:30:26,370 --> 00:30:29,040 what my annual targets and my three year targets 636 00:30:29,040 --> 00:30:29,873 are gonna be. 637 00:30:29,873 --> 00:30:32,220 So that to me was incredibly instrumental 638 00:30:32,220 --> 00:30:35,700 about how process becomes an end in itself, 639 00:30:35,700 --> 00:30:39,480 which is the last reason why you instituted process. 640 00:30:39,480 --> 00:30:44,010 - My example of that is HR, where you put in systems 641 00:30:44,010 --> 00:30:46,500 for your people so that they support your people. 642 00:30:46,500 --> 00:30:50,460 So the promotion processes are not capricious, et cetera. 643 00:30:50,460 --> 00:30:52,950 But then you go into a review meeting 644 00:30:52,950 --> 00:30:55,800 and someone says, "Yes, Jack is a superstar 645 00:30:55,800 --> 00:30:58,080 but we can't double promote him 646 00:30:58,080 --> 00:31:01,230 because it will erode the integrity of our system." 647 00:31:01,230 --> 00:31:03,840 And you're like, why does this system 648 00:31:03,840 --> 00:31:05,790 suddenly become more important than Jack? 649 00:31:05,790 --> 00:31:09,450 And yet you hear it in every performance review meeting 650 00:31:09,450 --> 00:31:11,070 in every room around the world. 651 00:31:11,070 --> 00:31:12,360 - And that's the other thing, 652 00:31:12,360 --> 00:31:17,360 I observe my leaders and my team a lot to see how they deal 653 00:31:17,820 --> 00:31:20,520 with mechanization and process. 654 00:31:20,520 --> 00:31:22,950 And I think there's two extremes. 655 00:31:22,950 --> 00:31:25,630 There are those that very quickly 656 00:31:26,640 --> 00:31:31,350 devolve into the process is what I am here for. 657 00:31:31,350 --> 00:31:34,050 And I think the HR is a great example. 658 00:31:34,050 --> 00:31:36,630 The second thing is in a lot of startups 659 00:31:36,630 --> 00:31:38,040 at the scale up phase, 660 00:31:38,040 --> 00:31:41,550 you also have those early stage people 661 00:31:41,550 --> 00:31:44,430 that worked entirely in the absence of process 662 00:31:44,430 --> 00:31:47,490 and say, process is crap, I want none of it. 663 00:31:47,490 --> 00:31:51,000 And both extremes, you have to identify quickly 664 00:31:51,000 --> 00:31:52,890 and probably get rid of. 665 00:31:52,890 --> 00:31:55,200 What you need is to find the people 666 00:31:55,200 --> 00:32:00,200 that really understand how mechanization of an organization 667 00:32:00,600 --> 00:32:03,600 has to serve the ultimate purpose, 668 00:32:03,600 --> 00:32:06,660 which is the end user, the merchant, the consumer. 669 00:32:06,660 --> 00:32:10,350 And I'm very deliberate about observing 670 00:32:10,350 --> 00:32:13,860 how my people deal with process when it's introduced. 671 00:32:13,860 --> 00:32:17,070 'Cause you need to start figuring out as a big part 672 00:32:17,070 --> 00:32:21,270 of who is equipped for a scale up phase, 673 00:32:21,270 --> 00:32:24,510 how they are able to work with process. 674 00:32:24,510 --> 00:32:26,520 - Listen, before I go to our final, 675 00:32:26,520 --> 00:32:27,450 'cause, we're out of time. 676 00:32:27,450 --> 00:32:29,550 To the final list of fun questions. 677 00:32:29,550 --> 00:32:31,890 Is there anything you wished I had asked you 678 00:32:31,890 --> 00:32:34,110 or that you wanted to say? 679 00:32:34,110 --> 00:32:36,240 - We had a conversation the other day 680 00:32:36,240 --> 00:32:38,220 that made me reflect on something. 681 00:32:38,220 --> 00:32:42,060 And it's this of the moments of truth 682 00:32:42,060 --> 00:32:47,060 or the big moments around my career where big decisions 683 00:32:47,490 --> 00:32:50,850 were made and they were a turning point. 684 00:32:50,850 --> 00:32:52,363 I thought long and hard about this. 685 00:32:52,363 --> 00:32:54,390 I was trying to come up with a list of these 686 00:32:54,390 --> 00:32:57,270 and I kept resisting it and then I realized 687 00:32:57,270 --> 00:32:58,650 why I resisted it Jimmy. 688 00:32:58,650 --> 00:33:03,650 'Cause I think that what happens in that moment of truth 689 00:33:06,150 --> 00:33:07,950 is not that relevant. 690 00:33:07,950 --> 00:33:11,250 It's everything you were doing the previous 691 00:33:11,250 --> 00:33:14,790 10 or 15 years, the little things, 692 00:33:14,790 --> 00:33:17,730 the things that you would bore the crap out of people 693 00:33:17,730 --> 00:33:20,760 if I had to narrate them on the podcast. 694 00:33:20,760 --> 00:33:23,520 Which actually made it work at that moment. 695 00:33:23,520 --> 00:33:25,200 And the reason I say this is, 696 00:33:25,200 --> 00:33:27,060 and I remember I was at MELI when this happened. 697 00:33:27,060 --> 00:33:31,230 So when COVID hit, we went into this immediate 698 00:33:31,230 --> 00:33:33,480 sort of cost cutting, what would get rid of. 699 00:33:33,480 --> 00:33:36,930 And we started looking at the data and obviously e-commerce, 700 00:33:36,930 --> 00:33:38,670 the business was just taking off 701 00:33:38,670 --> 00:33:41,400 like it had never taken off, right? 702 00:33:41,400 --> 00:33:45,120 And so we talked a lot about what made that possible. 703 00:33:45,120 --> 00:33:48,150 How smart were we around the COVID decisions 704 00:33:48,150 --> 00:33:49,050 and this and that. 705 00:33:49,050 --> 00:33:52,800 And the conclusion was the reason MELI 706 00:33:52,800 --> 00:33:56,940 hit escape velocity is because of what it had been building 707 00:33:56,940 --> 00:33:58,590 the prior 10 years. 708 00:33:58,590 --> 00:34:01,230 Those moments of truth are a consequence 709 00:34:01,230 --> 00:34:03,480 of everything you did before. 710 00:34:03,480 --> 00:34:06,360 We shouldn't be highlighting the moment of truth. 711 00:34:06,360 --> 00:34:09,240 We should be highlighting all that work 712 00:34:09,240 --> 00:34:14,240 that went in to when that big, big moment happens. 713 00:34:14,520 --> 00:34:17,700 The company being able to take advantage of that. 714 00:34:17,700 --> 00:34:21,540 - Two quick points, first hyperscalers love processes. 715 00:34:21,540 --> 00:34:23,310 They just rejected the processes 716 00:34:23,310 --> 00:34:25,170 of the professional management system. 717 00:34:25,170 --> 00:34:28,290 Second, I think it's worth pausing on Pedro's insight 718 00:34:28,290 --> 00:34:29,880 on moments of truth. 719 00:34:29,880 --> 00:34:33,750 He notes that greatness isn't one breakthrough, one moment, 720 00:34:33,750 --> 00:34:36,270 it's actually the result of thousands of decisions 721 00:34:36,270 --> 00:34:38,580 that create the foundation for that moment. 722 00:34:38,580 --> 00:34:40,320 And on the Founder's Mentality site, 723 00:34:40,320 --> 00:34:43,980 we've tried to collect lots of stories of other CEOs 724 00:34:43,980 --> 00:34:45,270 talking about that journey, 725 00:34:45,270 --> 00:34:47,580 the journey where you restore primacy 726 00:34:47,580 --> 00:34:49,980 to the people who keep customer promises 727 00:34:49,980 --> 00:34:53,460 and then the magic starts, so hit the show loads. 728 00:34:53,460 --> 00:34:54,960 Now let's get back to Pedro 729 00:34:54,960 --> 00:34:57,183 and a round of rapid fire questions. 730 00:34:58,290 --> 00:35:00,390 What brings you energy? 731 00:35:00,390 --> 00:35:03,600 - Learning more than anything else. 732 00:35:03,600 --> 00:35:05,760 - What drains you of energy? 733 00:35:05,760 --> 00:35:10,623 - Self-interested people and what kills me the most, 734 00:35:11,760 --> 00:35:15,210 false agenda-driven conversations. 735 00:35:15,210 --> 00:35:20,210 So conversations about A, when really what's going on is C. 736 00:35:20,280 --> 00:35:21,510 - This really brings the next one. 737 00:35:21,510 --> 00:35:23,340 Do you have energy vampires 738 00:35:23,340 --> 00:35:25,500 that you have to encounter in your work? 739 00:35:25,500 --> 00:35:28,050 And if so, how do you deal with them. 740 00:35:28,050 --> 00:35:31,440 - It's the non-straight shooters and the people 741 00:35:31,440 --> 00:35:36,440 who are not really saying it as it should be. 742 00:35:37,380 --> 00:35:41,250 Eventually those people are very, very bad 743 00:35:41,250 --> 00:35:44,820 for any organization and they shouldn't be around. 744 00:35:44,820 --> 00:35:47,100 Fortunately I've worked at organizations 745 00:35:47,100 --> 00:35:49,680 again where the cultures were right, 746 00:35:49,680 --> 00:35:51,480 and so the entire organization 747 00:35:51,480 --> 00:35:53,730 had antibodies for those people. 748 00:35:53,730 --> 00:35:56,730 And so the culture itself takes care of it. 749 00:35:56,730 --> 00:36:00,090 What's the best advice you ever received? 750 00:36:00,090 --> 00:36:04,170 - Look at the movie and not the picture. 751 00:36:04,170 --> 00:36:08,340 Direction of travel matters more 752 00:36:08,340 --> 00:36:12,090 than where you are at a specific point in time. 753 00:36:12,090 --> 00:36:16,260 And that has been incredibly useful for me 754 00:36:16,260 --> 00:36:20,640 when it comes to sort of looking at where we are 755 00:36:20,640 --> 00:36:22,710 and maintaining the rudder steady. 756 00:36:22,710 --> 00:36:26,493 Is are we at least moving in the right direction? 757 00:36:27,630 --> 00:36:29,460 - Alright, let's recap the key takeaways 758 00:36:29,460 --> 00:36:31,110 from our conversation with Pedro. 759 00:36:32,400 --> 00:36:34,800 We're gonna have to deliberately work on culture. 760 00:36:34,800 --> 00:36:37,650 We also need to realize that when you're growing 761 00:36:37,650 --> 00:36:40,590 to the size we're growing, law of large numbers 762 00:36:40,590 --> 00:36:42,000 starts creeping in. 763 00:36:42,000 --> 00:36:47,000 And so what we need to hold steadfast too is leadership. 764 00:36:47,760 --> 00:36:51,390 - The risk that comes with scaling is the culture fades. 765 00:36:51,390 --> 00:36:52,890 We've got to be intentional. 766 00:36:52,890 --> 00:36:54,675 Culture isn't something you do 767 00:36:54,675 --> 00:36:56,640 to the rest of the organization. 768 00:36:56,640 --> 00:36:58,773 It actually starts with how leaders act. 769 00:37:00,240 --> 00:37:05,240 - It's not true that we were a customer-centric organization 770 00:37:06,510 --> 00:37:07,860 from the get go. 771 00:37:07,860 --> 00:37:09,570 But there was something else, 772 00:37:09,570 --> 00:37:13,020 which turns out is a phenomenal proxy 773 00:37:13,020 --> 00:37:15,783 for customer centricity and that's product. 774 00:37:16,770 --> 00:37:19,890 - No matter how big our companies get, it's always possible 775 00:37:19,890 --> 00:37:22,110 to find a way back to the voice of the customer. 776 00:37:22,110 --> 00:37:25,110 And for MELI, that journey begins with the product 777 00:37:25,110 --> 00:37:26,493 and the teams that make it. 778 00:37:27,810 --> 00:37:30,810 - When you have that combination of people that are driven 779 00:37:30,810 --> 00:37:34,110 by wanting to fix things and wanting to have impact, 780 00:37:34,110 --> 00:37:36,870 and then you see the concrete results of that, 781 00:37:36,870 --> 00:37:40,053 that is not draining, that's incredibly energizing. 782 00:37:41,550 --> 00:37:44,490 - The right culture and mission always energizes. 783 00:37:44,490 --> 00:37:47,970 It attracts energy givers and creates antibodies 784 00:37:47,970 --> 00:37:49,770 against energy vampires. 785 00:37:49,770 --> 00:37:51,600 That's how companies stay relevant. 786 00:37:51,600 --> 00:37:54,450 How about leaders, focus your personal journey 787 00:37:54,450 --> 00:37:56,010 on these two questions. 788 00:37:56,010 --> 00:37:58,230 What can I uniquely do? 789 00:37:58,230 --> 00:38:01,950 And what passions must I pursue to reenergize? 790 00:38:01,950 --> 00:38:05,212 Because sometimes playing ice hockey or reading poetry, 791 00:38:05,212 --> 00:38:07,170 that's the secret to leadership. 792 00:38:07,170 --> 00:38:08,940 Scale insurgents are rare. 793 00:38:08,940 --> 00:38:10,620 They keep their founder mentality 794 00:38:10,620 --> 00:38:13,650 while also giving customers the benefits of their size. 795 00:38:13,650 --> 00:38:15,150 They win in a turbulent world 796 00:38:15,150 --> 00:38:18,210 because they're using new rules for scaling. 797 00:38:18,210 --> 00:38:20,280 And that's why we're sticking with Mercado Libre 798 00:38:20,280 --> 00:38:22,110 It's a rare scale insurgent. 799 00:38:22,110 --> 00:38:24,840 And in our next episode, we're going right to the top. 800 00:38:24,840 --> 00:38:27,210 We'll be talking directly to Marcus Galperin, 801 00:38:27,210 --> 00:38:30,210 Co-founder and Executive Chairman of Mercado Libre. 802 00:38:30,210 --> 00:38:34,191 So we'll be back in two weeks. Until then, stay curious. 803 00:38:34,191 --> 00:38:36,858 (bright music)