20VC From Struggling to Raise Funding to IPOing at Close to $9BN Just Five Years Later; The $8BN Company You Might Not Know How To Build Large Companies with Small Teams The Biggest Hiring Lessons and Mistakes with Seba Kanovich, CEO @ dlocal

Summary Notes


In an insightful interview with Seba Kanovich, CEO of the under-the-radar $8 billion public company DLocal, the discussion delves into the company's journey from bootstrapping in Uruguay to a successful Nasdaq IPO, raising $617 million and valuing DLocal at nearly $9 billion. Kanovich, praised for his humility and leadership, shares his experiences in scaling a global team, maintaining a company culture amidst growth, and the strategic decision to tackle complex markets like Latin America, India, and Africa. He emphasizes learning from customer feedback, the importance of a low-ego culture, and the balance between ambition and humility. Kanovich also reflects on personal growth, the role of luck and skill in his career, and the continuous pursuit of improvement both for DLocal and himself.

Summary Notes

Introduction to D Local's Story

  • D Local is a largely under-the-radar $8 billion public company.
  • Specializes in payment solutions focused on Latin America and emerging markets.
  • Raised $617 million in their Nasdaq IPO in June 2021, valuing close to $9 billion.
  • Received funding from General Atlantic, Bond, and Orange Eve among others.
  • CEO Seba Kanovich is described as kind, humble, and wise beyond his years.

"But today we bring you the incredible story of an $8 billion public company that you've likely never heard of. The story of D local and joining me in the hot seat to share this incredible story is their CEO, Seba Kanovich."

This quote introduces D Local and its CEO, Seba Kanovich, highlighting the company's success and the CEO's personal qualities.

Seba Kanovich's Path to CEO

  • Became CEO of D Local by chance, meeting a partner at a family gathering.
  • Background in trading stocks and bonds, with no initial expertise in payments.
  • Describes the payments industry as complex and layered, akin to an onion.

"It was absolutely by chance. So I was in Monterey Deo, where I was born, and at my mother's in law birthday party, and I met one of my partner, and he tells me, we're starting a company."

Seba explains his unexpected journey to becoming CEO, which began at a casual social event, signifying the role of chance in career paths.

Luck and Skill in Career Progression

  • Acknowledges the role of luck but emphasizes the importance of hard work.
  • Driven by a dislike for losing, which motivates to work hard and seize opportunities.

"No one would disregard luck. It's impossible to disregard. Obviously, you need to work extremely hard and you do everything you can to go after it."

This quote reflects on the balance of luck and skill in Seba's career, recognizing that while luck plays a role, hard work is critical to success.

High Performance Leadership

  • Defines high performance by energy contribution, solution focus, and delivery on commitments.
  • Believes high performance is evident in a team where each member carries their weight.
  • Encourages a culture of learning from mistakes and taking ownership.

"It's very hard to define it, Harry, but you feel it when you see it. It's typically people that bring energy."

Seba discusses his definition of high performance, focusing on energy, problem-solving, and accountability.

Handling Team Failures

  • Values transparency and feedback in managing team performance.
  • Tolerates mistakes from action but not from inaction or paralysis.
  • Emphasizes the importance of owning decisions and learning from them.

"I think feedback is important, and I try to be extremely transparent."

This quote underlines the significance of transparency and feedback in managing teams and learning from mistakes.

Importance of Speed in Execution

  • Speed is crucial, especially for startups, to learn and adapt quickly.
  • Balances the need for speed with the ability to correct mistakes and understand regulatory frameworks.
  • Advocates for fast decision-making and iterative learning.

"Harry, I think when you're starting, speed is everything. There's nothing but speed."

Seba highlights the importance of speed in execution for learning and growth, especially in the early stages of a company.

Learning from Mistakes

  • Owns up to mistakes, especially in hiring, and avoids doubling down on wrong decisions.
  • Emphasizes the importance of recognizing and correcting mistakes rather than becoming attached to them.

"Yes, many times. Absolutely. I think the key there is to own it and the issue."

Seba shares his perspective on learning from mistakes, stressing the need to take responsibility and not persist with wrong decisions.

Hiring Mistakes and Lessons

  • Admits to being influenced by impressive resumes and past company affiliations.
  • Has learned to focus on the fit between the person and the situation, rather than just the CV.
  • Understands that solutions often come from within the team rather than external hires.

"Yes. Someone is a VP at a big corporation and you say, okay, that's going to fix all of my problems."

This quote reflects on past hiring mistakes, emphasizing the lesson that a prestigious background does not guarantee success in a new role.

Focus and Prioritization

  • Seba Kanovich emphasizes the importance of focus and prioritization in a company operating in multiple countries.
  • Listening to customers is a key strategy for determining what to focus on.
  • Customer feedback guides the company's product roadmap and expansion strategy.

"We probably have a cheat sheet for this, which is we listen to our customers."

This quote highlights the company's reliance on customer feedback as a guiding principle for prioritization and focus.

"And everything else which is not going to impact your customers, you try to not focus on that has always been the hack."

This quote reinforces the strategy of prioritizing customer impact over other distractions.

Customer-Driven Strategy

  • Customers' needs and opinions are central to Seba's decision-making process.
  • The company's product strategy, including offerings like payouts, is directly influenced by customer requests.
  • Seba values consistent signals from customers as indicators of where to focus next.

"We ask our customers, what should we do next?"

This quote demonstrates the company's proactive approach to customer engagement in shaping its product strategy.

"If I spend too much time on something that it's not going to have an impact on customers, then I'm probably doing suffering work."

Seba highlights the importance of customer impact as a measure of work value.

Customer Feedback and Business Direction

  • Seba trusts the collective feedback from smart customers to guide the company's direction.
  • He believes that customers facing similar challenges will point the company towards common goals and opportunities.
  • The decision to go public was influenced by the desire to enhance customer perception and trust.

"Typically when you have smart customers the way we do, they give the signals in the same direction."

This quote explains that smart customers often have aligned interests, which can guide company strategy.

"We went public because we felt that we wanted to be better perceived by our customers."

Seba links the decision to go public with the objective of increasing customer confidence.

Learning from Mistakes

  • Seba reflects on past mistakes, particularly the process of seeking the company's first investor.
  • He acknowledges that not dreaming big enough was a painful but valuable lesson.
  • The partnership with General Atlantic was a turning point, shifting the company's focus to long-term building.

"But the real lesson behind that is that we weren't dreaming big enough."

Seba admits that limited ambition was a mistake that held the company back.

"We are building this thing to own for 100 years."

This quote signifies a major mindset shift towards long-term ownership and building.

Fundraising and Investment Partners

  • Seba discusses the drawbacks of running a formal fundraising process and the importance of choosing the right investment partner.
  • He values investors who trust the company and provide validation and support.
  • The transition from bootstrapping to having investors created a new dynamic and required a balance between frugality and growth.

"I think you end up attracting the wrong type of investors."

Seba criticizes the traditional fundraising process for not necessarily attracting investors aligned with the company's values.

"We wanted to optimize for the right partner."

This quote shows the company's focus on finding an investor that adds value beyond just capital.

Geographic Expansion Strategy

  • Seba explains the strategic choice of going deep into challenging markets rather than spreading too thin over many countries.
  • The company prioritizes markets with higher friction and the potential for significant impact.
  • The breadth of the company's geographic footprint is designed to provide simplicity and value to its merchants.

"We've always looked for the places which had the higher friction, and there's always a trend between going a little bit wider."

Seba outlines the company's approach to choosing markets based on the level of challenge and opportunity.

"So we've gone generally deep."

This quote clarifies that the company's expansion into 35 countries is considered deep due to the complexity of the markets they operate in.

Tackling Difficult Markets

  • Seba is drawn to challenging markets because they resonate with the company's origins and present opportunities where others see barriers.
  • The company's leadership feels a sense of fit with tackling problems in hard markets.
  • Seba finds the prospect of building a business in places perceived as impossible to be tempting.

"That's where we come from, Harry."

This quote ties the company's approach to tackling difficult markets to its roots and identity.

"We find it tempting."

Seba expresses an attraction to the challenge of operating in markets that are full of friction and often overlooked by others.

Barrier to Entry and Value Generation

  • Recognizing the difficulty of a task as a barrier to entry that competitors would also find challenging.
  • Resolving to solve difficult problems to create value for customers.

"We need to make it because it's very hard. If it was so hard on us, it would be hard on everyone. That's a huge barrier to entry. Let's solve this thing and we'll be generating value for our customers."

This quote highlights the strategic mindset of viewing challenges as opportunities to differentiate and add value, recognizing that if something is hard for them, it will be hard for others as well, which can serve as a competitive advantage.

Geographic Expansion and Team Composition

  • The balance between bringing core team culture and hiring local people who understand the local context.
  • The importance of mixing cultures to build bridges and understand both sides of the market.

"The Reality is somewhere in the middle, you need to bring your culture to the new place, because if not, you don't have a way of cooperating with the rest of the company, but you need local people. Otherwise, it's absolutely impossible."

This quote emphasizes the hybrid approach to geographic expansion, suggesting that a combination of internal culture and local insights is necessary for successful international growth.

Learning from China's Market

  • The high level of innovation, hard work, and ambition in China.
  • The value of firsthand experience in understanding the ambition of Chinese companies in emerging markets.

"The level of ambition that chinese companies have in emerging markets, it's undeniable for us."

Speaker B reflects on the eye-opening experience in China, acknowledging the significant ambition and drive of Chinese companies, which has implications for how to compete and operate in emerging markets.

Benefits of a Small and Lean Team

  • Small teams drive ownership and impact, encouraging a sense of personal investment in the company's success.
  • Smaller teams are easier to keep coherent and aligned with the company's culture, especially in a remote organization.

"I think small teams can achieve huge things. I believe small teams drive ownership, and ownership, it's extremely important because you have the feeling that you are doing something that has an impact."

This quote supports the philosophy that smaller teams can be more effective and motivated due to a stronger sense of ownership and impact on the company's results.

Leadership Insecurities and Humility

  • Continuous adaptation and learning as a leader, especially in a company that keeps evolving.
  • The importance of maintaining a level of humility and hunger for improvement.

"I always feel that I need to be better. When I speak to other ceos, I say, wow, they do know what they're doing and I'm trying to learn as I go."

Speaker B expresses the ongoing insecurity and drive to improve as a leader, emphasizing the value of humility and the desire to continuously learn from others.

Personal Insecurities and Public Profile

  • Discomfort with being in the spotlight and a preference for simplicity and focusing on the job.
  • Acknowledging that a higher public profile might benefit the company despite personal insecurities.

"I don't feel comfortable on the spotlight. I like to live a life that is very simple, and I think a lot of that is insecurity."

Speaker B shares a personal reflection on the discomfort with public attention, suggesting that while it may be beneficial for the company, it conflicts with personal preferences for a simpler life.

Secrets to a Happy Marriage

  • Long-term partnership, mutual admiration, and support as key elements of a happy marriage.

"I admire her. I love her. We get along extremely well, and she's a partner. That's all I can ask for."

Speaker B provides insight into his personal life, emphasizing admiration, love, and partnership as foundational to his long-standing marriage.

Mindset When Facing Doubts

  • Avoiding overthinking and preferring action and natural movement.
  • Seeking new perspectives by engaging in different activities and environments.

"If I'm spending too much time in my own mind, there's something wrong. I'll rather execute in some sort of direction or do something else in my life."

This quote reveals Speaker B's approach to doubts and challenges, highlighting the preference for action and change of focus rather than dwelling on uncertainties.

Decision to Go Public and IPO Process

  • Timing and market conditions as factors in deciding to go public.
  • The role of banks and advisors in navigating the IPO process.
  • The pride in executing a well-planned IPO within a tight timeline.

"Public companies are the big leagues, and you want to be playing in the bigger leagues."

Speaker B discusses the decision to go public as a strategic move to increase visibility, build trust, and play in the "big leagues," indicating a desire for the company to achieve greatness.

Challenges of Public Speaking and the IPO

  • Distinguishing between the enjoyment of speaking about the company versus personal discomfort with public attention.
  • The exhaustive but fulfilling process of explaining the business to investors and bankers.

"I could speak about the local for 100 hours. What I don't enjoy speaking about myself."

Speaker B clarifies that while he is passionate about discussing the company, he does not enjoy the personal aspect of public speaking, which aligns with his earlier statements about preferring to avoid the spotlight.

Surprises in the IPO Process

  • The unexpected role and importance of banks in the IPO.
  • The complexity and coordination required with various advisors.

"Everything was surprising, but I didn't understand before the role that banks play."

Speaker B shares his initial lack of understanding of the role of banks in an IPO and the complexity of coordinating with multiple advisory teams, highlighting the learning curve involved in taking a company public.

Differences Between Private and Public Company Leadership

  • Adjusting to the focus on quarterly performance in a public company.
  • The need to explain the company to a new set of stakeholders.
  • Surprised by the emphasis on tone over numbers in public company discourse.

"The quarterly questions are new. I never thought of our business in quarters."

Speaker B reflects on the new challenges of leading a public company, particularly the shift in thinking required to meet the expectations of public market stakeholders.

Leadership Style and Business Evolution

  • Leadership and business styles change over time, with different aspects becoming easier or harder.
  • Access to resources like people, investors, and tools generally increases with time and reputation.
  • Challenges include maintaining a desirable culture during rapid growth and public market presence.

"What gets easier over time and what gets harder over time." "And the harder part for us at least, it's to retain. I want to maintain a culture that I'm proud of and identify with in a context where we are growing extremely fast and we are doing so in the public markets, keeping that balance."

The quotes highlight the evolving challenges and benefits of leadership as the business grows. The first quote sets up the question about the dynamic nature of business management, while the second quote reflects on the specific challenge of retaining a company's culture amid rapid growth and public scrutiny.

Organizational Scaling and Team Dynamics

  • Teams within an organization tend to break and require restructuring as the company scales.
  • Different departments may experience strain at various growth stages, necessitating continuous iteration and improvement.
  • The concept of breaking and fixing is cyclical, with solutions being temporary as the company continues to expand.

"Scaling teams, they break in steps." "The question is what's currently breaking and what you should be focusing on fixing?"

These quotes underscore the iterative process of scaling an organization. The first quote describes how teams can break down in phases, while the second quote emphasizes the importance of identifying and addressing the most pressing issues in a growing company.

Talent Management and Organizational Roles

  • Experience is not the sole determinant of an individual's capacity to scale with a business.
  • Attitude and willingness are critical factors in a person's ability to adapt to business growth.
  • Promoting a low-ego culture and flexibility in roles can help manage transitions and maintain a cohesive team.
  • Leadership is conditional on performance, with the possibility of role changes if someone else can do a better job.

"I don't think people are not ready because of the experience." "You want to keep a low ego."

These quotes focus on the approach to managing talent and roles within a company. The first quote challenges the notion that experience alone prepares individuals for scaling, while the second quote advocates for a low-ego culture to facilitate role adaptability.

Personal Reflections on Success and Humility

  • Belief in one's own hype can be a pitfall, especially at a young age.
  • Cultural factors, such as humility being a valued trait in Uruguay, can influence personal attitudes towards success.
  • Winning is defined as having done everything possible, with success being transient and always followed by more work.

"Did you ever believe the hype?" "Feeling that you did everything there was to be done."

The first quote prompts a reflection on the temptation to believe in one's own success narrative, while the second quote defines winning as the fulfillment of having done everything that was possible, highlighting the speaker's philosophy on achievement and humility.

Personal Interests and Philosophies

  • Personal interests can include literature that influences one's outlook on life.
  • Strengths and weaknesses are recognized as identifying talent and taking losses personally, respectively.
  • Interview techniques focus on open-ended questions to gain insight into a candidate's fit for the company.
  • Evolving company culture while under public scrutiny is a challenging aspect of leadership.

"And wolf by Herman Hess." "I typically ask, what else should I know?"

The quotes reveal personal influences and management strategies. The first quote cites a book that impacted the speaker's view on life, while the second quote shares an interview technique that encourages candidates to reveal more about themselves.

Vision for the Future and Advice to Entrepreneurs

  • Aspiring entrepreneurs are encouraged to dream big and compete globally, regardless of their origin.
  • The future vision includes expanding the company's reach and product offerings in emerging markets.
  • Personal aspirations remain open-ended, with an acknowledgment of life's unpredictability.

"That they can dream bigger." "Delocal will be in the financial services provider for emerging markets."

The first quote conveys encouragement to entrepreneurs to have larger ambitions, while the second quote outlines the speaker's vision for the company's expansion and role in the financial services sector for emerging markets.

Personal and Professional Growth

  • Everyone is learning and making it up as they go, including business idols.
  • Understanding that no one has all the answers is a valuable insight that could have been beneficial earlier in one's career.
  • The journey of personal and professional growth is ongoing and shared by all, regardless of status.

"That everyone is trying to make it and everyone is making it as they go." "And understanding that we are all learning."

These quotes reflect on the universal nature of learning and growth in both personal and professional contexts. The first quote humanizes the experience of building a career, while the second quote emphasizes the continuous process of learning.

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