Subscribe now

Q&A

Tell us about your journey and how you started iTexico.

I started my first company in 1998, and then another company, another company, always in the services side. My focus originally was servicing clients in Mexico, which gave me very good experience knowing the market—not only Guadalajara but Northern Mexico, Sinaloa, Tamaulipas, Nuevo León. That gave me this sensitivity about how to do business in Mexico.

Later on, I started a joint venture with an automotive technology company building hardware and software for laboratory environments—hydraulic systems for testing, electronic systems. I’m a double E, I studied electrical engineering. But then 2008 came and I decided to go back to software development services and started looking in the US.

I met my partner Anurag in Austin—that’s why I’m in Austin right now and why we started in Austin and Guadalajara. He’s a very experienced Indian engineer who worked for TCS, Bell, IBM—all these big companies. In 2009, he was curious: Mexico? Software development services? I thought it was India. Even TCS had like 4,000 people in Guadalajara back then.

I told him, you don’t have to believe me, we just met, come over and I will show you. The merit is that he took a plane, landed in Guadalajara, met the team, had conversations with the people, and he was amazed. That was when we decided to start something together. At the beginning, it didn’t have the form or shape of a new company, but later on we started iTexico.

What were the key differences you noticed between engineers serving regional markets versus export markets?

We realized that our people in my previous company, DW Software, and the people in iTexico couldn’t mix because they were totally different. An engineer working in a company that exports services versus an engineer working in a company that services the regional market—they’re completely different profiles.

When you’re servicing US clients, you need different capabilities—better English, different communication styles, understanding of business context, ability to work across time zones and cultures. It’s not just about technical skills—it’s about being a true business partner to your clients.

How did you scale iTexico and what was the partnership dynamic with Anurag?

I think the key to iTexico’s success was the partnership structure. I remember Anurag telling me at the very beginning, “I’m worried about you being able to deliver this project,” and I told him, “I’m worried about you being able to scale the sales in the US.”

So we agreed: you worry about your stuff, I’ll worry about mine. You do your job, I’m going to do my job. And we both delivered. He tended to be more client-facing with the sales and marketing team in the States, and I focused on the operation side of things in Mexico. It was a very good setup for keeping an eye on both sides of the business.

What’s been your most rewarding moment in building nearshore teams?

The most rewarding moment is when you have a client telling you, “Oh my God, I can build my team here. I can scale here with great people, with great talent.” It’s like a moment of epiphany for them, you know?

Once again, we did it. We convinced another US company that Mexican talent is world-class. That’s very rewarding to me and to my team—proving that we can deliver at the highest level.

What’s your vision for Mexico’s role in global software development over the next decade?

Fifteen years ago when we started iTexico, we had to have more conversations about informing or educating people about Mexico and the benefits. Now you don’t have to have all these conversations. Mexico has gained mindshare, and it will keep increasing through the years.

Mexico is probably the most pure nearshore concept as a business partner for the US. We’re trying to be business partners of our clients, not just service providers. It’s something we’re doing to change the perception of the IT professional or tech professional in Mexico.

I don’t see anything but improvement coming—improvement in mindshare, in reputation. We’re full of success stories and referrals from clients. It’s like a snowball going downhill. It’s not going to be stopped by anything. The transformational force of business and conscious capitalism—the more human capitalism that is possible by working with your partner in Mexico—will keep the ball rolling.

Yes, 2023 and 2024 had some slowdown with the cost of money, but it wasn’t Mexico specifically—it was the world economy. We became a little more expensive because the dollar hit record lows around 16.40, but now it’s at a more reasonable level. The general trend is up, and we’re still competitive in the marketplace. I see a very positive landscape for the next five, ten years and more.

For founders looking to scale internationally, what’s the one piece of advice you wish someone had given you?

Partner with a local. Do not be naive thinking that the United States is a different country but somehow operates the same as Mexico. Can you imagine an American trying to come to Mexico and do the same things he’s doing in the US to sell to government or companies here? He will fail, even if he’s traveling to Mexico every other week. He will fail.

It’s the same from Mexico to the US—you need a local guy, a local partnership. For the US entrepreneur, find your Guillermo. For the Mexican entrepreneur, find your Anurag. These business partnerships are super important. In my opinion, that was the reason why iTexico was so successful, and why Improving has been successful—because we had that balanced partnership where each person focused on their strengths.

What advice would you give to service companies about growth?

This business is about growing. If you’re not growing, you’re shrinking. That’s a key piece of advice. I’ve talked with people who say they don’t want more people because managing people is difficult, all the labor liabilities and everything.

Well, man, if you’re in the services business, you need to grow. You need to scale. If you’re not scaling, if you’re not growing, you are shrinking. Don’t be afraid of growth. Build your company, grow your team. There’s space for more companies like iTexico in the world. We need more Mexico represented globally.

Any book recommendations that have helped you in your career?

The “Scaling Up” methodology from Verne Harnish—I think it’s a good methodology. “Exponential Organizations” is another one. But there’s one that has a funny title: “The Strategy and the Fat Smoker.”

Connect33 is a full-service consulting firm specializing in market entry, expansion, and software engineering team building in Latin America. With extensive experience in the region, we help companies scale efficiently by providing experience-based insights and services with on-the-ground experts.

Our list of companies we’ve scaled with includes mid-to-large enterprises such as Apexon, Atrium, Bain, Braze, C3 AI, EPAM, phdata, Terminal, and more.

Subscribe now

Q&A

Tell us about your journey with Spark Digital and how you built the business.

I started my career in software engineering, working at Sony Music and then Maven Networks, which Yahoo acquired. After that experience, I started my first business, Panvidea, an early Amazon-based SaaS company doing video transcoding and distribution for large media companies. We sold that in four years - not a huge success, but a ton of learning.

Importantly, that was the first time I had built an engineering team in Argentina. I’m a dual citizen - my mom was born and raised there - so it was the first place I looked, and it turned out to be a really great source of talent.

After we integrated Panvidea into the acquirer, the 10 developers in Argentina and I started looking for consulting work and very quickly landed a gig with Verizon, who was launching their first media services division. We became their core development team, and we thought, “We have something here, why don’t we try to find the next client?”

So we started Spark Digital and really leaned into the vertical expertise, doing custom product development for media companies. Over 10 years we built that to about 400 people - 350 of them were in Latin America and about 320 were in Argentina. We had customers like NBCUniversal, Major League Baseball, Dow Jones, and WWE.

What were the critical elements to scaling from 10 to 350 people, and what were the biggest challenges?

People businesses are hard, no matter where they’re located. Externally, client-facing, you need to understand the client’s business, deliver high-quality services with people the clients want to work with, and do the right thing whenever mistakes are made - because they’re going to be made. The bar was shockingly low in all these areas in the market.

Internally, there are some specifics to Latin America. There’s inflation, and engineers are getting offers in dollars on a daily basis from companies that aren’t exactly playing by the rules all the time. You have to do the right thing when it comes to money - cost of living increases might be quarterly or monthly.

But outside of that, you have to build and foster an environment where high quality is rewarded. As a former developer, I know how developers want to be treated - you have to listen, let them bring ideas forth, provide a clear career path and growth plans. Treating them like they’re worthwhile is half the battle. So many companies look at their nearshore location as “less than” versus a core part of their business.

How was your team distributed between the US and Argentina operations?

We were both involved in all sides of the business as founders, especially in the earlier days. But to keep it easy, I tended to be a little bit more client-facing with the sales and marketing team here in the States. We did have project management and some key architects here as well. But my partner Francisco was from Argentina, lived in Argentina, and focused a lot on the operation side of things. It was a very good setup for keeping an eye on both sides of the business.

How did you attract and retain talent as the market became more competitive?

I think the quality of client matters a lot. Smart developers want to work on great projects. We really focused on product development for our clients - we didn’t want to be the outsourced team working on periphery, non-mission-critical stuff. We said no to a lot of that type of work, and that served the purpose of attracting developers who wanted to be a crucial part of the business.

We also tended to skew pretty senior level, even when we sold the business. We weren’t that perfect pyramid where you have a few seniors at the top and lots of juniors at the bottom. We never hired anyone we would have considered junior right out of school. It was great for clients, and the people in town that other people wanted to work with were working with us.

Having the thought that anything you do as a leader is going to get down to people who are trying to join your company matters. By treating your developers well, doing the right thing with cost of living increases, and providing clear career paths, word gets out that you’re not “the other guy.”

What would you do differently now, having gone through the transaction process?

We never thought about the business as something we were building to transact. We wanted to build a profitable business that we didn’t have to raise money for, because raising VC money for our previous company was not a great experience.

We had a maniacal focus on profitability, but also the balance of profitability to reinvesting in your company. Because we were building with the idea that we’re going to do this forever, it made the investing easier. We were long-term thinkers about it.

When you have to sacrifice utilization for new training or do a cost of living increase before the exchange rate catches up, you do the right thing knowing that in the future it’s going to be okay. Turns out, you actually build a really healthy business by doing that. When it came to transaction time, we were in a good spot.

The transaction itself was a huge learning experience. Working with a bank and learning how to talk about your business in ways you’ve never thought about before was super interesting. It’s a lot of the same conversation over and over with different buyers, so it can get tedious, but if you’re proud of what you built and have a great business, you’ll find the right buyer.

We were very much convinced that we were willing to not take the highest price for our people to have a really good place to land. In fact, we didn’t take the highest offer because of that reason. As a founder-owned business, you kind of have that luxury.

Now that you’re on the investment side with Newfound Equity, what do you look for in companies?

If you’re a founder looking to run a process and go out for sale, you really have to start thinking about that a year or two in advance. That’s from a preparation perspective, making sure you have the right team in place to tell the right story for the ongoing success of the business.

We’re really looking for founders that want to continue on, that want to build a big business. Our case is unique in that we are independent sponsors - we don’t have a committed pool of capital, we’re raising money deal-by-deal. We’re much more open to situations where the founder wants to continue and doesn’t want to move fast with a traditional private equity firm that’s going to put a lot of debt on the business and do aggressive M&A that might break culture.

They might have 10 more years to give and want to continue sharing in profit dividends. We have the ability to find the right investors for the right situation, and we’re very open to that.

Are there any technology trends that have caught your eye, particularly around AI?

Every conversation we’re having has some AI component these days. How it impacts development services firms depends on their level of specialization, their business model, and their ability to use it.

If you’re specialized with intimate knowledge of a certain vertical or the nuances of a particular solution, you’re going to have defensible pricing and can use AI tools to your advantage. But it’s going to be harder to be just a staff aug, price-forward arbitrage company going forward.

To capture the efficiency benefits, it might make more sense to fixed-price a project. You’re going to have to quote projects with value pricing because you’re going to finish much faster or with less manpower. If you just charge hourly rates for bodies in seats, you’re going to have a challenge justifying that.

On the investor side, they’re going to have to be willing to accept and value recurring revenue, but if things are more fixed price and value based, you’re going to have to look at whether they did this project for this large company, then the next one, and they’ve been a client for five years - that’s just as good as a recurring revenue model.

You have to make the decision to invest in AI, and that’s harder than it sounds. You’re going to have to maybe reduce some utilization for trial and error and training time. Those who make that investment are going to benefit in the long term.

What other trends are you seeing around partnerships and alliances?

Something I learned from one of the investment firms that looked at Spark heavily is around alliances and partnerships. That’s an area we never looked at - we always wanted to be the objective third party. We thought that if we were getting some sort of referral fee from a partner, it was unethical, but it’s just not true. I’ve completely turned the corner on that.

I’m seeing so many companies balancing partnerships well these days, especially around data and AI. Microsoft, Databricks - these companies are really leaning into their ecosystem and investing in AI themselves. You want to benefit from their investment versus thinking you can develop it on your own.

If you have a strong partnership with one of these companies, you get early access to their new AI tools and have the necessary time to work that into your process. There are tons of benefits from partnering.

How are you sourcing deals at Newfound Equity?

We took a thematic approach from day one. We laid out three themes of areas we wanted to source businesses in. First is e-commerce services firms, specifically around the Shopify ecosystem - that’s a wave going up and to the right. Second is managed service providers and cybersecurity firms, which becomes even bigger with AI coming. Third is what I call “AI readiness” - companies that used to be called big data. Big enterprises know they have to use AI but still don’t know where their data is. These are your Databricks partners, your Snowflake partners.

We’re generally looking in the 2 to 10 million EBITDA zone. My partners Mike and James are experienced private equity investors with a lot of banker relationships. I think we stand out because I built a real business, and a lot of independent sponsors don’t have that track record.

Mike jokes that there was a business we really wanted to meet in New York - the hottest thing in AI services - and when I reached out cold with a little blurb about my story, I was having drinks with the guy the next day. If he as a PE guy had reached out, there’s no chance the founder would have returned his call.

We’re leaning into the fact that I can relate to founders better. I’m honestly happy to help them even if we’re not the right buyer - let’s just stay in touch, I’ll make connections, and think long-term about the situation. It’s clear when we talk to founders that we really want to roll up our sleeves. I’m not just an operating partner brought in for one deal - I’m an owner in the firm.

I can lean into areas I was successful at prior, like establishing nearshore operations, helping them build a verticalized go-to-market strategy, investing in thought leadership marketing, and protecting culture at all costs. We’re more flexible on hold times, don’t want to kill the business with debt, and don’t want to do M&A that doesn’t make sense.

Are you open to mentorship and helping other founders?

I’m always very willing to meet new people, and I learn from them as much as I hope they can potentially learn from me. I’m always happy to be helpful to anybody in this space, and who knows, maybe there’s something we can do together in the future.

You can reach me at ccali@newfoundequity.com or on LinkedIn.

Any book recommendations that helped you in your career?

100% - “Managing the Professional Services Firm” by David Meister. It’s like the Bible in this space. I read it very early on in starting Spark and referenced it almost like a dictionary. I’d remember, “Oh, now we’re at this point where we should be investing in middle management - how do we do that?” I found myself continuously going back to that book.

Connect33 is a full-service consulting firm specializing in market entry, expansion, and software engineering team building in Latin America. With extensive experience in the region, we help companies scale efficiently by providing experience-based insights and services with on-the-ground experts.

Our list of companies we’ve scaled with includes mid-to-large enterprises such as Apexon, Atrium, Bain, Braze, C3 AI, EPAM, phdata, Terminal, and more.

Share

Subscribe now

Q&A

Tell us about your background and how you ended up in the founder's seat to begin with.

I was born in Argentina, but I spent many years living in various different countries. I lived in the US for a while and graduated from school there. Then I decided to pack my suitcases and move to China for a while - I spent over four years living there. That's where I took my first steps as an entrepreneur after dropping out of the academic world. I was thinking about pursuing a PhD at one point in the US, but decided not to. I packed my suitcases, dreamed big, and moved to China. This was about 20 years ago.

I spent about four years there, had the time of my life, built a company, lost it all. That was my first taste of entrepreneurship. I tried to build a digital company for the local market in Chinese and Mandarin Chinese. Just a wonderful story that has a very entrepreneurship flavor - foreign country, language barriers, cultural barriers, as a LatAm founder in China doing digital work 20 years ago.

I gained a lot of experience from those four or five years, then spent a few years in Mexico, built one company there, sold it. That was my first taste of a small scale exit. I wasn't really sure what an exit was until that point. Then in about 2015, I started United Virtualities with my brother.

About United Virtualities

How did United Virtualities evolve from its initial concept?

We started off basically as a team extension service because we were coming from the digital advertising world. That was my background - what I did in China was trying to build the first foreign-owned digital agency in China. We had a ton of contacts and decided to break out from that original thesis and build a technology company servicing digital agencies in the US.

We contracted with some major digital agencies and started selling Latin American resources when that was a new thing 10 years ago. Globant was doing that with a different target, and there were a few others, but not much other than that.

We did that for a few years, but we realized there were challenges to the model. Digital agencies were constantly evolving, building their own teams, acquiring tech shops that had in-house development. It wasn't really scaling at the speed we wanted. It was profitable - even more profitable than it is now because there was the ability to acquire talent for a more efficient cost than today in the market. The spreads were larger, but the scale was smaller.

Near-shoring wasn't really a term then. We were always struggling with introducing near-shoring as a benefit and explaining why it was an additional positive way of enhancing delivery teams in the US.

How did you pivot the business model?

We started shifting away from that particular angle and began trying to get direct clients. We kept basically the same stack for a while and then shifted again to a more corporate tech or what we call enterprise tech stacks, especially around the Salesforce industry. By that time, we were about 160-170 people. Then the pandemic came. We were growing rapidly with no plan to exit at the moment, and then we met some guys who said they were interested. We said, "Let's hear what you're interested about." That's how things turned out. It was about a six to seven year ride total from beginning to end.

Scaling Challenges

What were some of the biggest challenges you faced as you were growing and scaling the company?

You face challenges every day as an entrepreneur - it's never ending. If you're not being challenged, then you're doing something wrong. If things seem easy, something's got to be wrong because by design, you have to be challenged continually.

Some of those challenges included that we weren't growing initially the way we wanted to grow at the speed we thought we should grow. It was a go-to-market decision - we had to shift our go-to-market strategy.

We also had geographical challenges because we had most of our team originally in Argentina, and Argentina was a fluctuating market due to FX situations. We were facing continuous instability. Now things are much better - whether they're more expensive or not is another matter, but it's more stable. We ended up with offices in Brazil, Argentina, and Mexico, all over Latin America. Although we speak the same languages, each comes with its own set of challenges - financial, cultural, and legal.

Also, we were one of the early entrants who entered first to the market, and near-shoring wasn't as popular as it is now. We faced an uphill battle just trying to sell the positive aspects of working with Latin America at that point in time.

Lessons from M&A

What have you learned from the M&A process, both sitting as a seller and sitting as a buyer?

First is you're not worth what you think you're worth. You're worth what somebody's willing to pay for your company. I've had conversations with entrepreneurs where most P&Ls in startups are off - they don't use the right methodology to build P&L. There's a big deficiency in the startup world with the financials of business and the correct methodology of how to assess the value of your company.

People think they're worth whatever they think they're worth by some kind of formula that doesn't necessarily apply in the real world. Once you hit the real world and go to market, you realize there are variances to your assumptions, and those variances are meaningful. You're going to be faced with a dilemma that not everybody's prepared for - you're not worth maybe what you think you're worth.

Being on the buying side for a few years and having experience in integration, I think the second moment of truth for entrepreneurs is how challenging and difficult integration is as a whole process. I call it similar to marriage. You're going to be day in, day out with the person you're married to, so you have to make a smart choice about who you're marrying.

Due diligence is not just a one-way street - it's a two-way street. You're doing it to them as well. Do your due diligence. You're getting married, you're cashing in, but there's a cost and you're getting married. Integration is hard culturally. It can be hard for you and your employees, and your employees are your friends. They built a company with you for the last 10 years, worked weekends and nights, and suddenly you throw them into this different culture. You have to be smart about it.

For companies evaluating buy versus build expansion strategies in Latin America, what's your advice?

It's hard to buy scale in Latin America. There just simply aren't that many large companies in Latin America. I always say it's not buy versus build - it's more of buy and build. Are you going to find a company that has 400 people already working with the revenues? It's hard. There are not that many and most of them have been acquired.

If you find a smaller partner and they're really good and they can help you, buy them and build through them. That's what I always advise. Which is what they did with us - we were the first company in our group that had footprint in Latin America. Now we're up to about 600 employees in Latin America through subsequent acquisitions.

I recommend laying the foundations first with a really solid partner, buy through that, and build. You could do it organically, but I would fast track it if you can.

Building Enterprise Relationships

What's your approach to building long-term relationships with large enterprises?

It's a great and complicated question. It's very personal. I don't know if there's a formula that works for everybody that you can just rinse and repeat.

For myself, being Latin American was challenging to build those relationships in the beginning - having to travel to the US continually to build the relationship. The perception of a Latin American provider back in the day was challenging.

How did we overcome that? Just through hard work, honestly. Reliability, showing that we were there whenever it was needed, that the quality of work was really good. I'm a big sponsor overall of Latin America. I think the quality - now everybody knows it's not a surprise. Everybody knows how great Latin America is.

I believe in work. I don't think there's any shortcuts. You have to build a quality team. There's no shortcuts to that. Don't cut corners ever, because I've seen unfortunately some entrepreneurs cut corners in service to build scale, and I think it impacts the image of what we're trying to build as a whole. Don't cut corners. Don't sacrifice quality ever, reliability ever, and make sure that you deliver what you promise. If not, just be transparent about it.

We made so many mistakes in so many projects, but so does everybody else. Don't hide them. Just be transparent. That's how you build reliability and relationships.

When I moved to a US-based corporate role after the acquisition, I wouldn't say it's easier, but there's a level of relationship that gets built and leverage that I just didn't have on my own. Finding the right partner to fast track your own growth and your ability to get through to some clients that before seemed impossible - it's a real thing. We grew a lot after the acquisition.

Current Market Observations

What differences do you see from when you were building to today's entrepreneurial ecosystem?

The young entrepreneurs I'm meeting now are miles ahead of where I was when I started. They have exponentially more tools, resources, and technical understanding at their disposal. When I moved to China, I did it purely on gut feeling without any business plan or analysis - I was jumping in completely blind.

Today's founders are incredibly well-prepared and have access to AI, mentorship, and information that gets synthesized instantly. But there's a trade-off: they may be missing that emotional, gut-feeling component that's critical for entrepreneurship. They need to balance all their tools and knowledge with that instinct about seizing opportunities urgently. The technical abilities come naturally to them, which I had to build from scratch, but they need to develop their emotional resilience more.

Revenue Focus

Was your client split between the US and Latin America when you sold your company?

I would say 100% to zero. We had no Latin American clients. That was a decision from day one. In my previous digital agency business, my clients were multinational companies, but it was always the Latin American office of multinational companies that we were serving - whether Argentina, Mexico, mostly.

When we built United Virtualities, decision one was US market. That was the first decision. We didn't even know what to sell from a tech perspective yet, but we knew we wanted to focus on the US market. That was the right decision for us all the way through because it's hard to grow with Latin American clients for many different reasons, and it's risky. My experience is to focus on the US market.

Parting Advice

Any parting thoughts or words of encouragement for LATAM entrepreneurs?

Entrepreneurship is the best thing in the world. I wouldn't trade my history for anything. The success wasn't even the best part of the journey - I still miss my early days in China and those first 10 years of building.

For anyone going through challenges in scaling their company, know that there's a way to overcome it. I failed countless times - 10 years ago I didn't know how I was going to survive the next month. It's a wonderful journey where you never know what's going to happen.

Trust your gut. Gut feeling is critical for entrepreneurs. And if anyone ever needs advice or wants to talk, I'm always available to help other entrepreneurs in our network.

Share Connect33 Newsletter

Connect33 is a full-service consulting firm specializing in market entry, expansion, and software engineering team building in Latin America. With extensive experience in the region, we help companies scale efficiently by providing experience-based insights and services with on-the-ground experts.

Our list of companies we’ve scaled with includes mid-to-large enterprises such as Apexon, Atrium, Bain, Braze, C3 AI, EPAM, phdata, Terminal, and more.

Subscribe now

Q&A

Tell us about your background and how you ended up in the tech world.

I'm originally from Spain, born in Madrid, but I grew up between Spain and the US since my mom was American. I'm actually a lawyer by trade - I went to law school first in Spain with an exchange program in France, then worked at a big Spanish law firm with alliances in Latin America. I even spent seven months in Buenos Aires, which was my first introduction to the region.

After that, I went to law school in the US and started working at a big law firm in New York doing corporate work, privacy work, and international work for almost six years. Then I moved in-house and found myself at Namely, which was a fast-growing HR, payroll, and benefits software company in New York. We went from $20 million to $60 million ARR in two years, and I started the legal team there.

From Namely, I joined BetterCloud in October 2018 to start their legal team as well. That's how I eventually ended up leading an office full of engineers in Mexico - quite a journey from law!

About BetterCloud

Can you give us a quick background on BetterCloud and your current focus?

BetterCloud was founded at the end of 2010 out of Atlanta. We basically help IT manage their SaaS applications in several ways. One is spend management - helping companies understand what applications their employees are using, how much they're paying for them, when contracts renew, and whether they're overpaying for unused licenses.

Our bread and butter since the beginning has been user management, onboarding, and offboarding. We help IT onboard users into all the different applications they need through automated workflows, and we do the same for offboarding when employees leave. We also help secure those applications through data loss prevention and ensuring proper document sharing permissions.

It's all about helping IT manage their SaaS stack and helping finance with their SaaS spend.

Expanding to Mexico

How did you arrive at the decision to expand specifically to Mexico?

We had a successful exit in summer 2022 when Vista Equity Partners bought a majority of the company. Once we became part of their portfolio, they looked at our practices and said, "Out of the 80-90 companies in our portfolio, there's only two - you being one - that has all its R&D in the US. You should seriously consider opening an R&D center outside the US."

We went through due diligence on several countries. We quickly discarded India because of time zone and travel complications for our first international experience. Our initial three targets were Argentina, Poland, and Ireland.

Argentina was attractive with great talent and English levels, plus the time zone works well with the US, but the economic uncertainty and difficulties with moving money in and out made it too risky for a PE-backed company.

Poland also had excellent English levels and lots of software engineers, but being right next to Ukraine during the war made us hesitant about opening an office there.

Ireland we discarded because it's too expensive - with Facebook, Meta, and everyone there, you'd pay almost the same salaries as the US.

Then Mexico came as a dark horse and we quickly realized it was awesome. The time zone aligns perfectly with US time zones, you can get anywhere in the US from Mexico City within four to five hours, English levels are really good, there's lots of talent, and economically it makes sense - you can pay really good salaries that are significantly cheaper than the US.

Plus, our CEO knew I had connections in Mexico, and he wanted to send someone from the "mothership" to bring our culture and values. He came to me in early November and said, "Do you want to do this? You need to tell me within three days." After talking with my wife - and it's funny, when we got married we had this plan to live somewhere else after 10 years, and Mexico was one of our potential destinations - we decided to go for it.

Talent and Hiring

How would you describe the talent pool in Mexico for engineering roles?

It's been really great. We have 60+ people in Mexico, with 40+ in engineering and about 4-5 in product and design. The talent has been excellent.

What we found is it was easy and quick for us to find really good junior talent - what we call L1s and L2s in our leveling system (L1, L2, L3, then senior, staff, principal as L4, L5, L6). We were very successful very quickly with junior talent and managers.

Where we struggled more - and there is good talent, it's just harder to find and you have to pay more - is that mid to high-level individual contributor level: senior, staff, and principal engineers. Part of our challenge was we require being in the office three days a week, which was important for us to create culture and enable teams quickly as we were hiring many people simultaneously. Some of the more senior talent didn't want to come to an office, though I think that's changing.

The sheer number of software engineers in Mexico is huge. UNAM graduates about 5,000 engineers every year, and there are many American companies coming here. The talent exists - you just need to make sure you have an attractive proposal for them.

What specific channels worked well for recruiting engineers?

UNAM is one great example. Tec de Monterrey, which has a big campus in Mexico City, is another excellent source. The Polytechnic is really good too. There are many quality engineering schools in Mexico City, both public and private.

When we first arrived, we used external recruiters, but that wasn't very successful. They didn't understand our culture and were bringing us IT folks when we needed software engineers - there's a difference.

Where we became very successful was when we hired our own internal recruiters, taught them BetterCloud's ways, culture, and values. We had up to three at one point, now we have two - Anna and Fer - and they've been fantastic. They've recruited over 90% of the folks we have here.

They did smart things like talking to universities, going to their events, joining events that Google was throwing here, and hosting our own events. We were also very successful with referrals. We had one junior software engineer join, and within 10 days we hired his best friend, then the best friend's best friend. When people are happy, they want to bring their people. The most successful thing we've done is relying on our own internal recruiters who understand how we recruit and understand the company.

Entity vs. Contractor Model

How did you decide to set up a full entity rather than using contractors?

We debated this a lot internally and decided at a board meeting to go with our own entity. We were looking at two models: hire through a third party like Deel or Remote, or go full-fledged and open our own entity.

Because we knew we were going to grow very quickly - we wanted 40 people within six months - one board member was very adamant. She said if you're hiring five people, either model works fine. But if you're going to have so many people and you want them to feel like part of the company with your culture, you're better off having your own subsidiary rather than having them employed through someone else. You can give them the same packages as in the US, which makes them feel better.

The other consideration was that if you do the contractor model and later want to switch to your own entity, you have to pay breakup fees. Knowing it was a long-term thing and we wanted to grow quickly, it made more sense to do it from the start.

It took us about four months to be ready to hire with the entity, getting the Social Security number, tax number, and everything set up. But since we started in December 2022 and wanted to be able to hire by May-June 2023, it was all within our timelines.

My advice is similar: if you're just testing the waters and hiring one small engineering team of seven to eight people, the third-party approach is fine. But if you're all-in and know it's going to be important for you, the sooner you have your own entity, the better. You put the pain upfront and then it's smooth sailing, versus having to switch everybody in the middle and explaining what's going on.

Technical Stack and Specialization

Do you have any specialization in your tech stack?

We're mostly a Java shop using React on the frontend. In Mexico, there's a lot of Java talent, so that's been great for us.

However, we acquired a product from G2 that's built on Ruby on Rails, and that was more challenging. There aren't that many Ruby on Rails developers in Mexico, and because of that scarcity, it's more expensive. We didn't have to hire that many, so we were able to find the right people, but I'm talking to another company from Vista's portfolio who's mostly Ruby on Rails and they're struggling more because there just isn't as much talent in that technology. Java in Mexico has been super successful for us.

Advice for Companies Expanding to LATAM

What advice would you give someone considering expansion into Latin America?

I've been informally chatting with five or six companies opening offices in Mexico, and I always tell them the same thing. I sat down with one company recently - their CTO and product team came to Mexico City and asked me "What is Polanco?" I was like, "Wow, you want to open an office in Mexico and you don't know that Polanco is a neighborhood in Mexico City?"

You need someone who either understands the local market from the inside, like in my case, or from the outside, like what you guys do for your clients. You cannot just be the foreigner who doesn't speak Spanish and think you can just open an office. You need someone who understands the market so you make the right calls at the beginning.

It's not rocket science, and we don't know some secret. It's just knowing how the culture and market work because you're either from the country, you've done business there, or you've lived there. There are cultural things that can get lost in translation if you don't have someone to bridge that gap.

Make sure you either bring someone or hire a strong local lead to help lead that office and bridge the cultural differences. That's been part of my job - bridging the cultural difference between Mexico and our headquarters in the US.

Did your US engineering managers need calibration for hiring and managing international teams?

The first managers we had in Mexico were all local managers that we hired here to lead the teams. As we grew, we now have some managers in the US leading teams in Mexico, and that's actually been very successful, mostly because the individuals I'm thinking of are just high performers who would do great leading teams anywhere in the world.

But yes, there is some cultural proficiency needed. What's been very helpful is that these US managers come frequently to the Mexico office, spend a lot of time with their teams in person, hang out with them, and create personal bonds. They also get support from me and the people team here to understand the cultural nuances.

Share Connect33 Newsletter

Connect33 is a full-service consulting firm specializing in market entry, expansion, and software engineering team building in Latin America. With extensive experience in the region, we help companies scale efficiently by providing experience-based insights and services with on-the-ground experts.

Our list of companies we’ve scaled with includes mid-to-large enterprises such as Apexon, Atrium, Bain, Braze, C3 AI, EPAM, phdata, Terminal, and more.

Additionally, we help buyers find top software development partners that match their project needs through our Latam Partners platform.

Subscribe now

Q&A

Tell us a bit about yourself.

My name is Carlos Quirarte. I'm originally from Guadalajara, Mexico, and I have over 20 years of experience helping international companies in the technology sector grow, expand their operations, and scale their teams in Latin America, specifically in Mexico, Guadalajara, Mexico City, Monterrey, and other areas.

I'm currently living in Madrid. I'm starting an MBA in digital transformation and an Advisor at Connect33.

What sparked your journey into technology, particularly in helping companies establish a presence in Mexico and Latin America?

My journey started with a passion for building from scratch and empowering local talent. Guadalajara, emerging as the 'Silicon Valley of Mexico,' presented an ideal launchpad for many technology companies.

Early in my career, I saw the region's untapped potential not just in technical skills but also in drive and adaptability. That passion became a mission at Ooyala, EPAM, and C3AI, like turning global strategies into local success stories.

What are the critical ingredients for a successful software engineering team-building expansion?

For me, it comes down to three things: 1. cultural alignment with global leadership, 2. talent strategy, and 3. scalable operations.

For example, cultural alignment with global leadership is understanding the company's expectations and translating those locally in Mexico. How is it, culturally speaking, that we can merge and make this work because the company already has its own culture, and coming to a brand new region with a different culture, language, and ways of thinking and doing things again? That's the piece that is very important to me. And acting as a kind of mediator and as a translator in terms of how is it that things work in Mexico and how things work with the company in other regions or if it's coming from America, how is it that we can combine the strengths and the abilities from both sides and make it work.

Then, in terms of talent strategy, building strong new grad programs and partnerships with the universities, which is something that I did with these three companies, Ooyala, EPAM, and C3AI, allows the companies to work with this talent that is eager to learn and to apply everything that students learned when they were at the university. How can we help them go through the right processes, and how do companies work in real life from a professional standpoint?

In terms of scalable operations, establishing processes that can grow with you early is key. Key KPIs, delivery, governance, documentation, and strong onboarding frameworks are key. This helps us build a strong foundation, and then, from there, we can grow, which will help us scale. If you don't have these components, it would be challenging or more complex for the company to be successful in any landscape.

How can companies in the US that are looking to expand into LATAM better prepare for that transition?

The main issues are underestimating local complexity, labor laws, and cultural nuances. There's also a misconception that nearshoring is just cost-savings. When done right, it's about quality and strategic value. Preparation requires boots-on-the-ground leadership and investing in a long-term talent pipeline, not just short-term staffing. So, I think the company must be willing to learn to be open-minded and assertive in listening to this.

You've worked with some really big technology players and seen how they think about acquisitions and talent there. What kind of teams or tech are they looking for now in the age of AI?

I think that the profiles have evolved. When I joined Ooyala in 2013, and until now, when I joined C3 in 2022, I wouldn't say it was a completely different profile, but it was very much an upgraded kind of profile. So, I think that what companies value the most is not this cliche about people being passionate about software engineering–it's kind of like a must.. it has to be there already.

So it's more about being hungry and about continuous learning. Now, with AI, that was one of the main reasons why I was willing to transition my professional career and leave EPAM and join C3AI because back then, C3AI was basically the only real AI company that was starting or looking to expand its operations into Mexico. Back then, some companies already started talking about AI, but C3 was already working in AI. They had already begun developing AI applications for global clients.

This allowed an opportunity to bring this kind of company to Mexico. The profiles that they were looking for are, obviously, very strong software engineers, but from the very beginning, one of the things I told them is that we have really good software engineers and developers, but they are just starting to learn about AI. I can assure you that most of them haven’t worked with AI so you have to understand that and be open and willing to develop such talent again, train them, and guide them through whatever we are looking to accomplish together as a team. So going back to your question it’s just really strong software engineers in terms of understanding how software works, what software engineering and strong technical capabilities, very much interrelated to algorithms and data structures. So that's the foundation, because having that covered will give you the flexibility to adapt to work with almost any programming language.

Most engineers used to say “I'm a Java developer, JavaScript developer, Python developer, or whatever”. But none of them would say, “I'm really good at algorithms and data structures, and I can move and work with any programming language”. That was one of the things that differentiated EPAM and especially C3AI when I started working with them.

What did you find most effective for maintaining alignment with management, specifically in terms of skill sets and hiring bar, regarding EPAM and C3 AI?

The two main things are transparency and consistent and constant communication. So, I always aimed to maintain a rhythm of executive updates and align on measurable outcomes. For example, at C3AI, I work closely with the leadership team in Redwood City to meet product and talent goals. Also, bringing US leaders to Mexico to build empathy and a shared vision helps us.

Once the executive team is close to their teams, it's honest and transparent, and they communicate goals on this, like All Hands, coffee talks, or whatever format you want to use. How important that is, and people can feel that level of connection with the executive team when they say, "Oh, this is real, and it's not just like sugarcoating whatever that we're trying to accomplish."

Those two components are critical to ensuring the company's cultural alignment and that the strategy is present, working, and will help us scale.

As you observed, my question is about general software engineering hiring in Guadalajara. We see this Connect33 all the time when we start working with clients, and they begin interviewing in their respective LATAM market, they've expanded into. These hiring managers, engineering leaders in the US, have never hired internationally. How did you set that expectation and get past that wall of hiring that is more or less always there?

Yeah, so that's interesting because, on one hand, it is like in the university. Most universities do not teach you how to develop your soft skills and interview well. One of the things that you should say is how you can sell yourself without obviously telling lies or overselling yourself, but highlighting your skills, strengths, and abilities.

Most engineers struggle with this, and when they are in an interview, especially when speaking a second language, it's also hard to express themselves and let the interviewer know why they should hire them. Why are you interested in the position or in the company itself? This is also one of the things that I've been. When I was, I had a very close relationship with universities in Mexico, especially in Guadalajara.

This was one of the things that I was also asking them and pushing them to do. As part of your programs, you must give them a seminar that can provide them with tools to develop their soft skills, at least on how to behave appropriately in an interview. On the other hand, I was again talking to the company, the people from Talent Acquisition, and the hiring managers.

Ideally, I would ask them to come to Mexico and do the first in-person interviews, so that people can understand the culture and environment and interact face-to-face. They can see how people react and behave, their expressions or movements, and some reactions to questions. This will give them flexibility and allow them to be more assertive during interviews.

So it has to come back to being willing to learn and understand that, especially if you haven't had this opportunity or this is the first time a hiring manager has hired internationally. Sometimes, it's difficult, and again, it's difficult for both sides, and you have to be willing to manage that. I also think the company should provide different kinds of training to these engineering managers to better interview people internationally, if possible in person, and if not, then how to do so remotely.

Connect33 is a full-service consulting firm specializing in market entry, expansion, and software engineering team building in Latin America. We’ve scaled with mid-to-large enterprises, including Apexon, Atrium AI, Bain, Braze, EPAM, phdata, Tekton, and more.

Visit connect33.io and latampartners.io to learn more.

Tell us the story of DaCodes.

We founded the company eleven years ago as a mobile development company. We were focused only on developing mobile apps. However, as you are aware, technology is constantly evolving, so we have transitioned from mobile apps to web development, to servers, to AWS, to the cloud, to AI, and various other technologies. Currently, we offer mainly two types of services. One is staff augmentation, in which we assign people directly to the client based on a rate card and seniority. The other is custom software development, where we develop software from scratch. The UX/UI design, workflows, and everything else are currently under our management. Currently, we have around 250 people working in the company. Most of them are developers, like 200.

We have experience working with various industries, including healthcare, fintech, sports, and retail. We can do almost everything right now, but we are currently developing some new capabilities. We are currently building an integration team. We are building our AI team. We are an AWS partner, so we work a lot with them to create a lot of, cloud workflows or workloads. Currently, we are growing, I believe. I believe that AI is currently a popular topic.

As a software firm, you need to be, you know, trying to keep pace with AI because every time AI is releasing new things. However, our goal for the next five years is to have 500 developers, increase our revenue, improve our gross margins, and expand our presence in the United States. Currently, I believe that half of our revenue comes from the US, and the other half from Mexico.

As you may notice, we are expanding in the US. We have two offices here, one in Houston and one in Scottsdale. We are striving to drive growth here in the US.

Full post: https://www.connect33.io/post/scaling-engineering-teams-in-latam-carlos-vela-dacodes

Q&A

What is your background and current business venture?

My background is in computer science, and I've been building tech companies since I was in school. About 15 years ago, I founded Tecton Labs, my first consulting firm. During that journey, I realized there were opportunities beyond just consulting, which led me to create Boring Holding - a parent company designed to build different products and services.

One of the companies under Boring Holding is Equals 11, a post-implementation consulting firm focused on Salesforce. Unlike traditional implementation partners, we specialize in taking existing implementations and elevating them through optimization, automation, and fixing implementation issues.

Why did you create Equals11 specifically for Salesforce consulting?

Boring Holding was created to explore ventures beyond pure service-oriented consulting. While Tekton Labs designs products using various technologies without focusing on any specific platform, Equals 11 was established to create value on top of established platforms - currently Salesforce, but potentially SAP, Oracle, or others in the future.

The decision to focus on Salesforce was strategic. We identified a significant market gap: companies that are too small for the "big four" consulting firms but too large for smaller implementation partners. These mid-market clients have the budget but can't afford the premium rates of larger firms. We've mastered serving this sweet spot efficiently, providing high-quality services tailored to their specific needs.

Why do you continue to build software services companies in Latin America?

I focus on Latin America for several key reasons:

1. Cultural Understanding: Being from Latin America myself, I understand the regional culture, which is crucial when building effective teams.

2. Cultural Alignment with the US: Latin American business culture aligns well with the US market, which is our primary target.

3. Quality Talent: The region offers the same quality of talent as other global regions, with professionals who can deliver excellent results.

4. Time Zone Advantage: Latin American countries operate in the same time zones as the US, allowing for real-time collaboration.

5. Cost Efficiency: While not as pronounced as before, a cost advantage remains compared to US-based teams.

Most importantly, I view Latin America as a map of centers of excellence, with each country offering different educational backgrounds and professional profiles. For example, Argentina and Uruguay excel in complex technical challenges due to their university systems, while Peru is strong in product-based, web, and mobile development. This allows us to assemble teams leveraging the specific expertise of different countries.

How do you decide which Latin American countries to expand into?

It depends entirely on what we're trying to build. For Salesforce specifically, we're scaling our team in Brazil because our research showed that Brazil and Argentina have the strongest Salesforce talent pools, with Brazil taking the lead. If I were building a team focused on microprocessors or more specialized technical work, I would likely choose Argentina.

Beyond technical considerations, we also evaluate local laws and regulations. Each country has different restrictions and requirements for building teams, which must be factored into expansion decisions.

Rather than concentrating all our talent in one location, we maintain a distributed model. While having teams in a single location can facilitate culture-building and in-person gatherings, it also restricts access to talent. Our remote-first approach allows us to hire the best people regardless of location - currently, our Salesforce team includes professionals from Brazil, Argentina, Peru, Spain, and the Netherlands.

Which industry verticals are you currently serving?

We initially planned to focus on financial services and healthcare based on my prior experience. However, we quickly discovered an unexpected opportunity in the nonprofit sector. Many nonprofits receive Salesforce licenses at reduced or no cost but lack the expertise to implement and optimize the platform effectively. We help them bridge this gap - showing them not just how to use Salesforce as a database but how to leverage its full capabilities.

Manufacturing has emerged as our second key vertical, particularly for companies migrating from legacy platforms to Salesforce. We're also growing our presence in healthcare, though it remains a smaller portion of our business currently.

The beauty of our approach is that we focus not just on understanding vertical-specific processes but on mastering the Salesforce ecosystem itself. This allows us to add value across different industries by identifying which tools and approaches will deliver the most impact for each client's specific needs.

How are different industries adopting AI and Agent Force capabilities?

We're seeing adoption across all verticals, though in different ways. One area with significant recent demand is digital marketing agencies. These organizations collect vast amounts of data from social media but struggle to process it effectively and integrate it with their CRM systems. They need consistency between campaign metrics from platforms like Google and their internal CRM data.

Agent Force, Salesforce's AI offering, is designed to be implemented across all verticals. While large enterprises may require highly specialized implementations, most organizations can benefit from standard implementations with customizations tailored to their specific needs.

My perspective is simple: if you're not leveraging the new capabilities in the Salesforce ecosystem, you're missing the wave. And these tools are increasingly accessible and user-friendly.

Where do you see the biggest growth opportunities in Salesforce consulting over the next five years?

I see two primary growth areas:

1. Evolving the Consulting Process: Traditional consulting often involves providing recommendations without ensuring implementation success. The complexity of today's Salesforce ecosystem requires a more integrated approach. During discovery, we gain comprehensive insights that naturally position us to help with implementation. Without this continuity, clients risk failed implementations or optimizations. The future of consulting must bridge discovery and execution.

2. Talent Acquisition and Retention: Finding the right talent for Salesforce work is challenging. Interestingly, traditional software engineers aren't always the best fit because they tend to default to coding everything from scratch rather than leveraging the platform's capabilities. This approach creates maintenance issues when Salesforce updates occur. We need people who genuinely appreciate the platform approach and want to understand how Salesforce works at a fundamental level.

Beyond acquisition, retention is critical. Having the right people in the right positions prevents high attrition rates, which directly impacts quality and operational effectiveness. In the Salesforce ecosystem, constant team changes make it impossible to deliver consistent quality.

How do you approach talent acquisition and retention at Equals11?

For recruitment, we maintain what we call a "candidate list" - we're continuously interviewing potential team members regardless of current needs. This proactive approach means that when a client needs to scale quickly, we already know qualified developers and consultants who can join immediately.

Our organizational structure is deliberately horizontal with minimal layers. This works exceptionally well with the right people, giving them opportunities, responsibilities, and the freedom to experiment and occasionally fail. We believe everyone has a creative soul, and by encouraging that creativity rather than simply dictating tasks, we create an environment where talented professionals want to stay.

The key is finding people who are genuinely passionate about the Salesforce ecosystem and then giving them purpose and autonomy. This approach has proven effective for both attracting and retaining top talent.

Can you describe a typical client engagement at Equals11?

While I can't name specific clients, I can describe our work with a nonprofit organization. Like many nonprofits, they had access to Salesforce at no cost but were only using it as a basic database, missing out on its full potential.

Our engagement followed a structured approach:

1. Health Check: We begin with a quick diagnostic process to identify potential pain points - similar to a doctor's initial assessment. This reveals obvious issues without requiring a full discovery process.

2. Discovery: This is our comprehensive assessment - equivalent to medical tests that provide detailed insights. We evaluate the organization's Salesforce instance for security, best practices, and potential red flags.

3. Solution Design: Based on our findings, we develop modular solutions addressing specific needs - security enhancements, automation improvements, data cleansing, etc. We specify which components or platforms will be used for each solution.

4. Implementation: We execute the planned improvements, focusing on the client's objectives. For nonprofits, these typically include increasing donor numbers, growing donation sizes, improving donor communication, and ultimately enhancing fundraising effectiveness.

5. Ongoing Optimization: As the organization evolves, we conduct additional discovery processes to address new challenges. This creates a continuous improvement cycle.

In some cases, we also provide staff augmentation, supplying technical talent to complement the client's existing expertise after we've diagnosed their needs.

How do you measure success with clients?

Success metrics vary by engagement type:

- For Staff Augmentation: The primary metric is attrition - we aim to provide stable teams that remain in place for at least a year, unlike the industry norm where staff often changes every few months. We're selective about clients, declining to work with those whose culture would make team stability impossible.

- For Post-Implementation and Optimization: We measure success through quality improvements and reduction in errors. Many clients initially choose the cheapest consulting firms, which often fail to follow best practices (like working directly in production environments). By implementing proper processes, we demonstrate immediate value.

- For Strategic Consulting: We align with the client's specific pain points. For a nonprofit focused on fundraising, we might target specific percentage increases in donations. For other clients, metrics might include successful integrations, automation implementation, or security improvements.

Regardless of the engagement type, we always establish clear, measurable objectives that serve as our North Star throughout the project.

Do you plan to expand beyond Salesforce consulting?

While I'd love to explore opportunities with platforms like SAP, Databricks, or others, I've learned the importance of focus. For at least the next 24 months, we'll remain exclusively focused on Salesforce. The ecosystem is so vast that it would be unwise to diversify at our current size. Once we grow to around 400 people, we might consider creating separate divisions for other platforms, but not before then.

What's your outlook for the technology sector in 2025?

I'm optimistic about 2025, and not just because of the typical "new year effect." The economy is looking stronger than in previous years, which is positive for the entire technology sector. I'm seeing budgets being released and investments being made after two years of constraint.

The outlook for Salesforce specifically and the tech sector generally is very positive. Client budgets are loosening, and sales cycles are shortening - all indicators of a healthier business environment ahead.

Connect33 is a full-service consulting firm specializing in market entry, expansion, and software engineering team building in Latin America. With extensive experience in the region, we help companies scale efficiently by providing experience-based insights and services with on-the-ground experts.

Our list of companies we’ve scaled with includes mid-to-large enterprises, including Apexon, Atrium AI, Bain, EPAM, phdata, Tekton, and more.

In addition, we help buyers get matched with top software development partners based on their project needs via our Latam Partners platform.

Visit connect33.io and latampartners.io to learn more.

Subscribe now