Juan Pablo Chapa (00:00):
How did you guys arrive at a decision to go all in and open an entity and hire employees?
Manuel Martinez Herrera (00:00:08):
Yeah, we debated that a lot internally and that was at a board meeting that we decided with the entity because we were looking at the two models, right? Do we just like hire them through like a third party — like a Deel or a Remote or whatever one of those? Or do we go full-fledged and open our own entity and all that?
And because we knew we were going to hire, we were going to grow very quickly. We wanted to have like 40 people within six months. Talking to the board, one of the board members was very adamant. She said: “If you're hiring five people, whatever, then yeah, you can do either and it's going to be fine. But if you're going to have so many people and you want to have your culture and you want them to feel like they're part of the company, you're better off doing your subsidiary and they're not employed through someone else. You can kind of give them the same packages that you give in the US, just makes them feel better.”
And then the other thing is, if you do the contractor model, if after a while you want to turn into your own entity, you're going to have to pay the fees of the breakup fees. So knowing, like, you know, that's a long-term thing for you guys and you want to grow quickly, it makes more sense to do it that way.
And it took us like four months to be ready to hire someone with the entity and the social security number and the tax number and the whatever. But because we started in December of ‘22 and we wanted to be able to hire by May, June of ‘23, it was all within the timelines we had. So that worked out very well for us. Great.
My advice would be, I think it's similar to that. If you're just testing the waters and for now you're just going to hire one engineering team and you're going to have seven to eight people, then I think doing the third party thing is fine. If you are all in and you know it's gonna be important for you, then I think the sooner you have your own entity, the better it's gonna be for you.
Juan Pablo Chapa (00:01:59):
Sure. Yeah, I agree with that 100%. I think we, at Connect 33, we see a lot of companies that go into it with the contractor model and say like: “Well, if it grows to a certain number…” But I don't necessarily... I think you're working at a disadvantage by going. I think if you just commit to the entity up front, you're likely to hit that 10 much faster than if you don't.
Manuel Martinez Herrera (00:02:26):
And you put the pain up front and then it's smooth sailing versus in the middle of like having to switch everybody from one thing to the other and explain what's going on. And it just becomes more burdensome, I think, in the long term.
