Charles Fry, Code Éxitos: LATAM nearshore software development and entrepreneurial journey

[Music] everyone welcome to another edition of founder wisdom podcast today we have charles frye aka carlos crye uh he is the ceo of code exitos uh charles carlos can you introduce yourself yeah well i think you've done a great job charles carlos um yeah and the ceo founder of codex bills and i'm excited to be here and and go through the format with you so i'm ready

when you're ready first i need to ask like your background it's it's pretty damn cool like what what is that painting yes yeah oh i'm glad you asked uh this this painting is by a honduran artist and uh you know since we're all techies uh we didn't order this painting by the way uh julio he's on our website uh he conceived of this so on this side over here uh is his vision of the primordial world it's just so much cool detail in this thing but there is a long story on our website about it this is the primordial world and then in this age here you can see the mayan hieroglyph this is the mayan number system and part of the mayan calendar here so the mayans in central america are really starting to

evolve the concept of the number zero it's kind of hard but weird to think about somebody inventing zero uh but we had to have that concept so then if we progress further over here then over here what you see are actually he's embedded integrated circuits and some memory chips and that kind of stuff so this is our current technological age and it's just a it's just a

badass painting and as soon as i saw it i'm like i'm buying it i'm buying it how much can i buy it from you like i want that that's not it it's not for sale but i tell you what you can do is uh go out find a link on our website for what we call the creative fellows and you can learn more about julio there he has some other artwork it's pretty cool so nice thanks for noticing though yeah it's pretty cool it's like directly in my colors you know like space technology and then mayan uh history that's civilization it's pretty fascinating um i want to talk with your background because i mean you've got like a whole lot of experience seems like you were part of the the dot-com boom and maybe the

bus tell us a bit more about submit order dot com yeah wow yeah you have done some research submit order dot com was definitely in the first com boom you know i'm kind of an old guy so i'm 58 years old and um thanks we uh so submit order dot com was back when people were trying to figure out e-commerce and um a funny thing is the industry was so new that i remember sitting in meetings carlos where the marketing people would say how do we spell e-commerce is it like a biggie and a dash the word commerce or is it all one word like we had big debates about that because nobody knew um and so submit order was the first time i you know was out in silicon valley my my partners and

i that started that company we landed a lot of venture capital back in time and uh yeah we were part of the bust as well uh we were we were we were a fulfillment company that helped large retailers ship pick pack and ship the items in their e-commerce site um we were getting ready to file for our public offering when the market collapsed and so you know

we we we went the way up a lot of the dot-com bubble we actually broke up most of the company we broke it up and sold it off um but didn't think that we were ever going to get the money out of it that we had invested so it's time to move on you had showers oh yeah oh yeah i had i have a long quick counting the shares and the sheer value that i watched go up and incinerate and go away but yeah i had i had shares it was a little it was a little painful at the time but you you know you get past it yeah so what was the feeling because like there was very few that made it past the dot com uh bubble bust uh you know amazon being

one of them what was the feeling at the time you know because to me it seems like that from one day to the next the excitement all got down you know after people realized that pet.com didn't have any uh future and companies like that so what was the specific feeling at the time yeah so there were kind of two things you have to remember about that period

in venture capital funding in that period um so venture capital follows uh and being a beast investor and being a dc back company follow patterns almost like fashion styles over time and in the late 1990s the pattern was the venture capitalists would build a company up very rapidly they'd infuse a lot of capital you build it up very rapidly and then you took it public so that

was the way they exited and pets.com was built literally was built from the beginning to do an ipo that was their whole goal so um the but the feeling for us at submit order was particularly painful because we had a real company we had a real positive uh gross margin like we were making money um and actually amazon's fulfillment business is essentially what we were building amazon

was still just selling books now i never met bezos and he had a lot more success than i did financially maybe they were thinking about the same thing but we are essentially built the same sort of back-end infrastructure uh that that amazon eventually evolved so for us it was frustrating to watch the market collapse we understood why the economic value was no longer there to be in

as a you know 200 million dollar investor uh so in that regard it was it was pretty painful because there was nothing intrinsically wrong with our business right our idea but the market just sort of evaporated on us right right and when that market failure happened uh we waited for a while a year or so and there was just no clarity on when ipos would start up

again and so the only legitimate financial decision was to you know to break this up and sell it off to people who incorporated it into more traditional businesses so bottom line did you have a loss over that one because i i kind of uh you know like my last supplement startup we we literally we didn't even sell it you know me and my partner we didn't have

time for that so we're just like free free off you know and uh we're gonna take a 40 to 100k loss and that's it you know uh did did you like make any uh profits out of that did you guys break even or was it like a clear loss were you like literally in the red yeah we didn't we didn't make any um didn't make any money on it i don't think that we really lost a whole lot um but we didn't we we what we lost that was particularly painful was the paper value that we thought we had accumulated and we but yeah a little bit and it was it was really frustrating as an entrepreneur you know i've been a builder my whole life um the most frustrating part was to know that

we were right fundamentally it was a business the world needed and other people came along after kind of the tsunami of that financial crisis did the same business and they were successful with it so time the frustrating part was just that we didn't get the time the timing but i mean amazon had a crappy timing too what did they have different you know like did they have

more capital to survive on this low oxygen environment for a while and then potentially thrive later on well i think i've been a while since i've looked at the timeline on that but when we started submit order you could only buy a book on amazon i mean they were they were the world's largest bookseller now history has been written that bezos had plans to sell more than

books and of course you know now they are and do um but i don't i don't know that they had branched out much beyond books and like cd-roms and you know media uh until after the dot-com crash and and then sort of when the when the dust settled they said oh wait you know we have a fairly robust fulfillment system and uh you know they got into the distribution business and then later into the cloud computing business i don't know how much of that was strategy in advance and i don't think they were doing it when we were building submit order uh ups offered to buy us um but we turned them down that idea to me like books were like a worse business than like 3pl at the time but still you know i

think i think it's mostly capital and good old you know hard grit i think bezos was working with his wife at the time and you're not as a co-founder and yeah they were just hustling out you know and well i mean i can't speak but for for what i've i've read um about it also they were very scrappy you know working from cheap offices and and he also had like capital injection from his parents i think they dropped like pretty much all their savings in this business so he's been through some very tough times you know like i guess he's rich as hell but like i mean if we look at his at his telomeres today i think we they would tell a lot you know about the stress he suffered and so forth but

um i want to move forward to your next experience after that which you know you started your your consulting firm um i mean that's that's pretty much safe you know like a consulting firm like slash an agency you're always kind of guaranteed to make money especially if you stay small uh you did that for 15 years that's a that's a lot of thanks tell me a bit

more about that one yeah i mean consultancy is just a nice way to you know be self-employed uh i i wasn't you know i wasn't uh i wasn't mad about anything there was no reason not to do it i i i packed a lot of small adventures into that longer 15-year span you know i helped some people do some uh tech company purchases we did some acquisitions we did some divestitures um but it was i was more like a high iron gun you know as a freelance guy i helped some i helped some venture capitalists they would want um i would submit order i was the chief technology officer so i was able to learn what equity investors are looking for as well as how the technology has to line up to execute the business

plan and meet the financial needs so i had some bc funds that would hire me to do like technical due diligence they'd be looking at a company and i said get a phone call and they're like we don't understand what the hell this company does for a technology standpoint you go would you go look at it and uh you know tell us if it's as cool as we think it is and uh so i would do that um but you know always on the lookout i hope helped a few other people start some businesses uh yeah it's it's uh there's a lot of accumulated time of odd jobs i guess and then what brought you to accept a job like in 2011 was it the financial aspect of it was it that they gave you

some stock um because i mean to to go from entrepreneur i mean my dad did it plenty of time he was a consultant and he then he went at the cmo at another job you know and he's still um entrepreneur to this day and i i've always been curious as per how why did he made the move you know was it financial on your side to come back to the employment market no not really um so i think the job you're talking about is pillar technology yeah and uh it was some good it was some guy that i knew and they were doing some really good work and i was kind of tired of being a solo kind of freelance hired gun guy and i thought yeah you know i like i like being on

a team uh super charismatic ceo and bob myers ball of energy and you know it was hard to say no because he had a great vision for the company and he had great talent assembled and uh you know he was just growing the company and he asked me to come along and help grow it and uh i did and i had a lot of fun and uh made a lot of you know uh good friend and it was it wasn't really about money uh it was more about getting back and doing something with a group of people that i had a lot of respect for and still talk to a lot of them today and they're all great uh that company ended up getting bought by accenture um and so then it sort of became

what it wasn't when i was there but uh that's okay accenture's confirmed too but not my cup of tea when you have your agency it's always you know a top challenge to recruit eight players mostly because you don't have the budget uh to convince them to come and work for you while these companies i mean they some of them are funded and yeah they have huge funds

they can allow to pay people you know six figures a year and you just wanted to be part of you know that dream team and maybe even make it stand there and bring these lessons back to your your own businesses at that time did you wanted to go afterwards in entrepreneurship again or were you like okay i might just stay in the corporate world as per say

yeah now the corporate world isn't for me uh they probably don't want me and i probably don't want to spend much time there it's it's just a different um it's just different it's not bad um you know i would meet i would meet cios fortune 500 buddies and they'd be like oh wow you know young you're such an awesome job i i wish i could do what you do and i i think damn i just think same thing about that guy i mean that's a cool job you paid a million dollars a year department that must be easy uh so you know i i don't think the corporate world ever had a lot of appeal to me um i i left tiller to do another start with some guys that i really believed in they

had a really big vision it was in transportation logistics supply chain and um i here again it was a lot of fun i mean we somewhere i have on my uh stored files you know pictures of two or three of us sitting around in the basement office it's like a dungeon in uh in sunnyvale uh we were in sunnyvale california no we were in palo alto we were palo alto when we started and uh you know boom we got it to work and it got up and running and got under sale uh i've often said that my attention span is like in the zero to 100 million revenue range and the reason is i like that i like that zero i like that zero zone because well you don't have much but you have all

the freedom to innovate and create and it's kind of all on you by the time most companies most tech companies by the time they hit somewhere around let's just call it 100 million dollars in revenue and hit that number a couple times and i know it's a long way from being a billion and i'm not talking about valuation talking about money coming in the door money going

after 100 million bucks um a lot of the a lot of the work has to do around improving processes and improving just improving everything and it's interesting work but it's not like it's not like going into the dungeon basement office in palo alto going man this is going to be huge here's what we have to do today at 100 million bucks you need people with longer attention

spans than i have uh and so that's kind of always been my range so how how different was it because yeah it's like i mean 100 million annual rent rates on that that's yeah like in people paying you for logistic and transportation who were your clients and also like tell us a bit more about if there's some phases in the game let's say from zero to one

million from one to ten ten to fifty and fifty to a hundred is is that how a company change and how much employees and what changes exactly through these uh growth phases yeah it's a great question uh and when i think about i i think i'd probably have some notes written somewhere i don't think money is the right proxy uh i don't think it's the right kpi

for thinking about these phases but you're exactly right about the phases of growth from a startup so uh and i find that it usually equates to the number of people in the company so uh i i've used this question when i lecture to mba classes people can get an mba in entrepreneurship now which is kind of mind-blowing to me uh i asked you know you're doing a

startup you and your partner you've got a startup uh who is the first per and you need the highest you need to hire an employee you're gonna hire your first employee um the question is simply who you hire as your first employee and i'll speed things along for your podcast and people are like well maybe a lawyer an accountant account is a popular pick that's good good

idea a software developer and i'm like no the answer is in my experience you will the first person you hire is whoever will take the job right because you know somebody wants a job and they come in and they see you and you're sitting there in a folding chair and they're like um how am i going to tell my wife that i just took a job and it's you there's no company here it's just so they have to be pretty big risk takers when you and that sort of continues for the first i used to i usually use 25 people so the first 25 people you know them you get a chance to meet them you probably interview them yourself you sit around and over the conference table about all kinds of media life direction

the company and in about 25 you start having jobs you need fields so you're like oh we need an it manager let's hire an it manager so somebody writes up a job description that's usually pretty bad if i'm writing it but it's kind of like we need somebody that fits this and that starts to happen between 25 and 50 25 and 100 people now you're you're hiring

people for a job uh after a hundred sometimes sooner but definitely after a hundred um you now look around your business you have an organization so you have a vp of hr you have you know you have functional managers and your cto wants to hire staff and he's hiring people that you've never even met so you're you know you're walking around the office you're looking at the

company slack channel and phone who the hell is this person i don't even know who this person is they work for us so those those phases all have distinct differences in the company culture and how you have to manage and how you have to lead like that so uh your stages of growth are very real and to me it's always been about uh head yeah it counts definitely important well in my opinion especially when you're in the agency game which will get to the moment like it's it's a game of eight players how many players can you get and in my opinion you get one out of ten that you recruit and yeah that means that nine others need to be let go of normally or eight or seven if you have a good nurturing

program uh but yeah this is this is kind of uh interesting just to close down on zen justice um you exited that one uh is the company still existing or uh the yeah the company actually the company was acquired so it was acquired by a company out of canada uh i left before that acquisition uh happened and my role there i was i was kind of back to being a hired gun i was brought in specifically to get that business opening the initial goal was to get to 100 million dollars in revenue um i knew the business and we got in and we persecuted the business really hard it was a venture back deal pushed it really hard uh it was almost five years of you know typical startup brutality uh but it wasn't my

thing you know i was i was there but it wasn't mine and so we hit our goals and we got to a good stopping point i said you know i'm out we've got a good leadership team somebody else can take from here uh and by that time i had i had become very passionate about the idea of codexydose so it was it was time for me to go i had found a new path yeah it seems it was a smooth transition because you found it um codexytos in 2018 and you heard fully out of zenjustic so i guess you why why did this project became so interesting to you because it's an agency it's a software agency you outsource a work in platinum which is a very good idea in my opinion being in latin

myself why did you became so passionate about that one um so i had some personal connections into central america i spent a lot of time here and you know but let's face it there's some there's some economic uh hurdles across here and i was i'd reached a stage in my life where i wanted to i'm not going to retire i mean that's not in my dna um so i wanted to find something that was more fulfilling from uh for other reasons and i was familiar with latin america and central america in particular buddhist where i'm sitting now and you know i got spirit all the details i went through a whole bunch of what-if scenarios about different businesses some of them pretty obvious and some not uh and then i actually had the need for

some software developers and i'm like well i'm going to spend money on outsourced software development i'll just do it in honduras and i really couldn't find an agency to use your model uh term i couldn't really find an agency that i had much confidence in and what i noticed was there were really smart men and women here but i had this long-standing belief carlos that for a

technologist to be what separates the good ones from the great ones is you need there are two things that critical first thing is uh you have to be on a good team uh and this is very true in athletics right if if you're two times better than the next best person on your football team you're not going to play your best game every day you need to be on a team where you're pushed the second thing you need is you need quality work so if the only job opportunity you use as a spirit of owner is to write some shitty back office insurance software for a big bank that you know an insurance company doesn't care anything about software technology or entrepreneurship how can you possibly get any better so quite simply it was like

wait the skill's there and the desire is there we just don't have the opportunity uh to exercise that of course i'm living in the united states the lifelong tech entrepreneur and you know we're scraping people up anywhere we can for developers i source work all over the world uh russia india eastern europe uh i mean you can't beat the time zone and so i'm like wait a

minute why are we why are we killing ourselves flying halfway around the world working 12 hours out of sync when there are you know 250 million people just south of north america duh let's take advantage of that so that's what we're doing down here all our our clients are in in only the united states and canada some in europe uh we stay really close to time zone

synchronicity um and yeah we we design build and launch digital products for people it's a ton of fun okay i don't know if i answered your question directly yes yes kind of well i mean but i'm still curious why honduras and like have you spent some time vacationing there is that what inspired you um well no i was inspired by my wife who's you know my step-daughter

who's honduran that's pretty powerful motivator and they came way before uh so um you know there were family connections and deep personal connections and i was here more than being a tourist so i had a pretty good you know i've been in this part of the country since 2000 late 2010 so i you know it's not like a it's it's not like i got off the tour bus and said hey this is cool i should buy a house here um and honduras needs it there was talent here so why not yeah venezuela too and well it's the current situation right now the wife of my brother is from honduras my wife is is mexicans and i mean i've traveled like throughout uh platinum um with my wife in the the past couple years and yeah

lots of talent there um for example if i compare with filipinos you know like latin people they have a bit more thinking you know like more critical thinking and you know they have more i don't know personality which is um essential in work you know you need to be creative you need to have an opinion on things and you know entrepreneurship in your blood i've been to

philippines as well by the way um i've been fascinated by you know talent and where to search it in the world in the past couple of years i found a couple of hub and still not on my radar right now um i do have uh serbia and the baltics you know as probably number one when it comes to talent and also tunisia algeria and you know like north africa africa surprisingly enough also if you search there's like very good talent good critical thinkers in there and also they they don't um ask like uh for as much as you know canadians in the u.s which is always the basis the basis is price quality right india is still very good right also uh i avoid philippines i avoid a bunch of other regions in the world

but yeah especially philippines um what made you because i guess you did your own work on that level too like for example on my side you know like yes i get to talk to mexicans sometimes because the weekends i interviewed them but somehow they don't pass um the initial tests you know the communication they just don't communicate as much let's say which is a essential criteria so

what exactly other than the time zone which is surmountable in in some aspect but other than that what core skills have you found culturally speaking that these folks had yeah i think um so i always we always talk about hiring for attitude you can teach skills um you know here in central america what we see are a lot of you know really honest hard-working people that have

a good work ethic and just good integrity overall um you know it's not to say the rest of the world is full of liars and thieves but um our clients are really happy working with our team and our team is pretty open about you know understanding their deficiencies and working to improve them so my approach has been less about we're going to get the highest skill per

dollar spent and i believe that what we do we build products for for entrepreneurs so our clients are all preceded a round be round entrepreneurs and it's it's a as you know it's a deeply personal and intimate thing so we have very low turnover our team works with our clients our clients work with us for three months six months a year it's now more than a year

uh and our our team is fantastic about that so i think it's about people first and so there's nothing wrong with eastern european developers uh although it's unfortunate what you know the ukraine and the russian communities are going through um but it's there's nothing wrong with indian developers but it's hard as hell to go there and spend any meaningful amount of time it you know it takes

a long time it's expensive uh it's just it becomes a barrier uh and it's a barrier i don't want to deal with so we have you know we have a client coming here on monday they're visiting from the us uh from boston massachusetts they're coming here on monday they're flying in sunday night they're going to be here monday and tuesday with the team and then they're they're

going on i mean they can you can do a two-day trip here and i think that's true of most of latin america you get way down in argentina and it gets to be really hard so for me it's all about uh facetime you know access time so like cuber was uh was coded initially in mexico city for example um why why not mexico which is nearer and which is culturally nearer also than the states why not mexico no don't get me wrong i love mexico and our design studio we have a strategic partnership with uh a design studio called blue pixel and uh maria is awesome our team's awesome and they're you know they're out of mexico city um for me i had personal connections with us uh we're going to be opening spark center

spark spaces are we our design center our development centers we refer to as a spark space um we have two in andodas and that's probably the limit for andres and then we're looking at other countries in central and south america so it's not like we're exclusively honduras center in our footprint our u.s team and we have people in the our u.s team is made up mostly of

more senior developers 10 to 15 years of experience and they tend to be remote mostly remote so but we have a growing cohort of us-based developers so we're sort of geographic agnostic as long as we can maintain the time zone yeah what do you think about the future of latin startups such as rappy yeah it's a great question uh i've been i've been so busy for the

last three years getting coded you know up to where we are today that i haven't had a lot of time but it's funny you ask i'm starting to track the latim uh vc and startup community a little more closely i probably don't know enough right now to have an informed opinion uh other than to say that what i see in central america looks a lot like the u.s startup environment did 25 years ago and by that i mean we have um there there are three drivers in my mind you have a talent pool and you have an entrepreneurial skill set and you have an investor pool and so what i see a lot of in latin america is not very good entrepreneurship not a lot of experience in building commercial quality digital products whether it's

iot or software and then high net worth individuals typically family money they're not what we would consider to be smart money investors right they're still more um patriarchal and in the way they want to do an investment it's like hey i'll give you money but you have to do exactly what i say and uh for me as as an outside observer we've got to get over that

hump and i've i've talked to some people who you know they they want to be investors but they want to control the investment i'm like well no you've got to let the uh entrepreneur do that well wait if i do that they'll just spend the money and i'm like yeah no but if you if you make their life terrible then they're not going to fail anyhow so yeah we've got we've got to get those three things it's uh it's topic i'm spending more time so i don't have any bright answers but i i think that it's i think that it will be um it can be a good market it can be a great global market and a lot of other people have already recognized that so i think it's going to grow but it's

you know it's going to take a while yeah same here have similar opinion and where do you think um outsourcing is going in the next few years what are the trends well um it depends what we ask and it depends on model uh they're invested in so i have friends who consider themselves near shore offshore outsourcing we don't use any of those terms to describe our work

we consider ourselves remote teams right um and so our perspective is a little different than like when i'm in guadalajara with my friends i see a lot of indian uh businessmen who come over and they bring the indian outsourcing model and they've set it up in guadalajara okay cool i mean it's a business model and it works um and there's a there's a market for it it's

just not the market that we're in we're we like to be maybe it's our own you know my own uh arrogance or self-importance but we tend to be more of a um consultancy um a studio uh than an outsourcer yeah i would say the same with top leads you know um i'm not focused on one specific place in the world uh but yeah i tend to try to fetch the best uh remote talent there is out there um for the the right prices right there's always a price in the market and that's that's what i'm trying to achieve um now if we talk about code exitus and you know there's the word exodus in the the brand which is kind of yet like we or spanish it's latam um where you want to take the

business in the next five to yeah five to ten years so you know we have plans to be a 100-year company and we've we've built the organization that way so codexydose is a core product development studio uh we hope it's around for 95 more years at least um needs to and um but we'll be involved more directly in investing in entrepreneurial efforts here in latin america and

probably look a little bit more like an incubator or an accelerator or have a function that serves that way uh and i also want to spend a little my time while i still am actively working maybe helping the investor community here in latin america get a little more comfortable with early stage uh venture-like investing uh because you need all three of those things to come together you

need good entrepreneurs good technical pool and smart money and so you know we'll chip away at all of those things nice if you have one advice to give a new founder what would that be uh yeah it's a great question so uh i don't have one piece of advice i i give them maybe two or three layers of advice the the most important thing is take care of your family uh your spouse your children whatever take care of your family it sort of goes without you tell entrepreneurs to take care of themselves we're all you know pathological optimists and we're going to work too hard and do a bunch of bad things but um it's okay if you do it to yourself but but you've got a family that's involved and so pay attention to

that that that's first piece of advice um when it comes to business advice i would say that what's helped me the most is everyone's interesting if you give them a chance to be interesting and they may be valuable to you someday but not today so i'm a big believer in networking and getting to know people and you know it's not like you have to get something today

but just you know build your network it's something and and that that i think is super easy to do now with technology that we have and you can keep track of people and you know be thoughtful and listen to their stories linkedin is a great way to do it and uh so yeah that's that's usually the advice that's top of mind for me it's very good advice take care of your family and yeah show people that their work and develop your network because it keeps expanding right and also the more love you give to your family the more it goes out in the world right so i think that's super important as well thank you for for being here lots of lessons lots of insights where can people find out more about you yeah um

so my email address and you can you know post this somewhere where people can read it but it's carlos at codexydose.com our website is codexpost.com so you can go there and see the website you can learn more about this painting and our creative fellows program that we're very proud of that um and you can find me on linkedin and then there it's under my english charles frye

you can find me on linkedin and and connect there and uh i'm always happy to know new people all right i'll let you go to your meeting carlos you've gotta run i'll see you i enjoyed it thank you so much have a good one bye [Music]