How Cesar DOnofrio Scaled Making Sense: Nearshoring, Talent, and Resilience in Argentina | Nearshore Cafe

Brian: Welcome to the Nearshore Cafe podcast, home to the most interesting stories and people doing business in Latin America. Welcome everyone to another episode of the Nearshore Cafe podcast. I’m Brian Samson, your host, an entrepreneur who’s been doing business with Latin America for the last eight years. I’m very excited about our guest today. If you’re interested in scaling teams, scaling engineering in Latin America, this episode is for you.

Before I introduce our guest, I want to thank our sponsor, a company called Nearshore Direct. Go to NearshoreDirect.com. They provide all sorts of non-IT labor all across Latin America. Let me introduce our guest: Cesar Donofrio, the CEO and co-founder of Making Sense. Cesar, so great to have you.

Cesar: Yeah, thanks, Brian, and thank you for inviting me. It’s a pleasure to be here.

Brian: Absolutely, Cesar. I know you’re in the States; you’ve lived in the States for a while, but you grew up in Argentina. For someone who’s worked a lot, you’ve been to school at Stanford. When you meet someone and you tell them you’re from Argentina, how do you describe it? What do you think is important for people who’ve never been there to know about the country?

Cesar: You know, some people, you need to kind of describe a little bit, you know, “Where is Argentina?” because maybe they are confused about what part of Latin America it’s in. So maybe that is the first thing. And then, I feel Argentina has an interesting mix of cultures, many coming from Europe, between, I don’t know, 1850s to 1950s. A lot of people, especially from Italy, Spain, or a little bit less from Germany, moved to Argentina. So, with the natives, people in Argentina at that time, they created this special mix that is bringing maybe like good and bad things, but at the end of the day, it was special.

I remember my grandfather, he moved from Italy to Argentina in 1945. My father was five years old at that time. And I remember that my grandfather told my dad, and even myself when he was alive, that you know, you had two options if you were in Europe, mostly in Italy or Spain, at that time. You could go to “the land of the `salte`” (which is `salte`, you know, money in Italian), so that was us, people from Italy going to New York or Chicago, or to “the land of the `patata`” (the potato, you know, agriculture), with a great country like Argentina was. I think at that time it was like part of the top 10 countries in the world.

So I remember that as an option. So it created, maybe 20, 30 years or even right now, 70, 80 years later, a very interesting mix: culture, education, hard work. And that is Argentina today. It is very interesting. It has that combination that not all countries have, I think.

Brian: Yeah, absolutely. Just hitting on what you said, it’s something that I remember I was very impressed with at the beginning, when I first started to study Argentina, was how wealthy it was a long time ago. And then, through government policies, crises, things definitely took a turn. My take on all that is there’s some good to come out of it: it’s created maybe the most resilient people I’ve ever worked with. I’d love to get your thoughts on that.

Cesar: Yeah, exactly. I think that the whole situation, I think in the last, let’s say, since 1960, so in the last 50, 60 years, Argentina had been, and I saw many of those ups and downs. Argentina had issues with the military in the ’70s, but after ’82, when democracy, when we had new elections and we had Raúl Alfonsín as the new president, things started changing a little bit, at least from the political point of view.

But the economy was really bad. After that government, Argentina went to hyperinflation in ’86 and ’87. So it was like an “up” from the political point of view, but then it became a “down” from the economic. So it happened some ups and downs. And you know, I think that resilience that you are mentioning is part of believing in Argentina, including today. Argentina has like 150% inflation per year, so I think it’s in the top 10 of the bottom of the list today. So it makes the talent in Argentina, the people in Argentina, to be resilient because of that ecosystem.

Brian: Yeah, yeah. It makes me, when you say 150% inflation, I had to be there to believe it. But I look at the States, right? Inflation is something on everyone’s mind in the US. And it’s very high relatively speaking to past years, but everyone is freaking out over 10, 15% inflation. And then I’m sure Argentines are kind of laughing, like, “If you think that’s bad…” right?

Cesar: Yeah, yeah, yeah. But it also creates, I think, this calmness, you know, like, “We can get through anything.”

Brian: Yeah, exactly.

Cesar: Exactly. And also, some very good ideas that are coming from those situations. So, yeah, I think that is very interesting.

Brian: Well, I want to dive into Making Sense. I think this is really one of the model organizations over the last few decades that has been wildly successful in growing and scaling engineering. I believe you started this in 2006. But before we dive deep, deep, deep, could you just give our audience a general sense of Making Sense? What is it? What do you guys focus on? How big is it? Where are you?

Cesar: Yeah, sure, sure. Well, Making Sense is a software service company. We have a special focus on user experience. So user experience is at the core of our DNA as a company. We have a service for software development. I mean, it’s not that we are a UX agency, we are a software service company with a strong user experience arm.

So today, we are working a lot on digital transformation projects. We have all our clients in the US. As you mentioned, we have been around since 2006. I think that part of our engineering and UX expertise has been around since then. But to be honest, we had to fine-tune our service and evolve our service for many years until I think that we found a sweet spot, like, I don’t know, maybe seven or eight or 10 years later. So we had been trying to find our identity for eight years. And then after that, I think that we really scaled the business because we found what I call, and here in the Bay Area what they call, like “market fit.” When you have a product, really, if you’re not doing like one or two sales, it doesn’t mean anything. But you really find your market fit when you can sell over and over, hundreds or a thousand times.

Brian: Yeah. There are a lot of software and service entrepreneurs in Latin America, and I think they could get some inspiration from what you just said. Could you share some of the experiences of the very early days, like how you landed your first couple clients and how you found your first couple of team members?

Cesar: Yeah, sure, sure. Well, I started as a software engineer, as a consultant, working for a company in San Antonio, Texas. The name of that company is YNLC Consulting. Back at that time, that consulting company was not able to find enough engineers to work on a healthcare project. So I approached the management of that company and I said, “Well, I think that I can help you to hire people that I know in Argentina.” So that was our first project. That deal or transaction lasted for, I don’t know, more like eight or nine years, and we grew from two, three developers to 20 or 30 with that company, with that deal.

That’s how we started. And after that, I don’t know, if you are doing a good job in one project, eventually the manager will move to another company and they will call you. So word-of-mouth, I think, was the kind of how we were able at that time to get into other companies, other projects. And again, in the first year, it was something more like opportunistic until, after like eight years, we said, “Well, what is our direction really?” And we put a lot of thought into those exercises. You know, when you start a company, you basically don’t need to have what is your mission, your vision, and your core values because it’s you and your co-founders and a couple of engineers, and everybody shares breakfast in the morning in the same office.

But as you grow, I think that when you pass like 100 people, you need to be thinking on, “Okay, how do we instill this culture as a company or the drivers for the team that you’re putting together? What is the North Star? How are you thinking as a team, what are the values?” So we started that exercise in 2013 or ’14, around that time, and we did an evolution like at least three times: vision, mission, and core values and culture.

Brian: At what size do you think you started to think about structure like managers, Dev managers, architects, project managers? Do you remember that?

Cesar: Well, let me put it this way: if you are only providing staffing, like, for example, if you have one project and your client is requesting you, “I just need two PHP developers or two Java developers,” you don’t need to have project managers, right? But as you provide more value and as you provide more managed services, yes, you need to add different roles, and project manager is one. So I think in our case, I think I was pretty soon adding project managers. Maybe in one or two years, we kind of found that putting together a team is better than just isolated developers. And then you evolve from that. I think that today we have more than, I don’t know, 20 roles in the company. So, yeah, and it’s a normal evolution, right?

Brian: Yeah. And I wanted to ask you, Cesar, with the early days, because nearshoring back then was not what it is today. You know, I know Argentina is well-known for exporting a lot of services, and that’s kind of a way to level up. And English is valuable, and working with the US, previous experience, is valuable. But what did that look like in the country back in 2006? Was English as abundant? Were there as many developers who had worked with the States? How did you think about that?

Cesar: Hmm, interesting.

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Cesar: So, working on service, software development service, exporting service at that time, it was not something that you would see like today. I think that around 2011 or 2012, the government in Argentina realized how important it is to export those kinds of services from Argentina. That is when, in Argentina, there is the Chamber of Commerce, the name is CESSI. The Chamber of Commerce pushed the government in Argentina to have benefits, tax benefits, and incentives for companies working on what they call the “knowledge industry.”

So I think around 2012, things started to change a little bit. But yeah, in 2006, it was not even possible. I think that it comes, you know, India, mostly India, it was kind of the first, and the first option for outsourcing software development. And Argentina was not even in the radar until, I didn’t think, until like a few years ago, maybe like five or six years ago.

Brian: How did you find your first five to 10 engineers? You know, because you didn’t come from a recruiting background, you’re an engineer yourself. Was it your friends? How did you think about that?

Cesar: Well, we have a funny story. My brother is my partner. So he was the first one to be able to hire our first engineers, and today they are also partners in the company. So it’s funny because he went to a local university in Mar del Plata and put like a piece of paper on the board of the university, recruiting for Microsoft .NET developers. And there are like four guys working on the IT department, they took that piece of paper and put that piece of paper in their pockets, and called my brother and said, “Yeah, we are the only four that responded to that advertisement.” So that’s when we hired those four engineers that today are partners in the company.

And that’s how we started. And I think it was a lot of relationships with universities. And I think that that is what I would recommend, or what I would like for other companies if they decide to go to Argentina or any other countries, that they make an effort also to help new developers, junior developers, or people that are in universities to become software engineers. So invest some money on helping other people to learn the industry, and not just go and hire people left and right. So do some investment on helping people, teach people how to develop, to be a good software developer.

Brian: Well, I’m sure those guys are very happy they found that flyer. It changed their life, right?

Cesar: Changed life. Yeah.

Brian: I also wanted to ask you, just how the competitive landscape looked. You know, today there are so many companies recruiting in Argentina. It’s become quite competitive. You even have Latin companies like Mercado Libre, Globant, that you also have to compete with. What did that competitive landscape look like at the beginning? Was it domestic companies like Banco Galicia that maybe you were trying to steal talent from, or other consulting firms? What did that look like at the beginning?

Cesar: Well, I think that, you know, the story that I described earlier about the ups and downs of Argentina in general, and combining that with what’s going on in the industry lately, you know, with some technology layoffs in the last 12 months. So, ups and downs, Brian. I think it was super, super hot in 2021. For local companies in Latin America like Telefónica, Banco Galicia, all the local companies, they had to compete to hire software engineers and pay US dollars, international rates. Because the same developer that can be working for a Silicon Valley company receiving X amount of dollars per month can be the same developer that could be building software for Banco Galicia. Right? So it was tough, I think, in 2020, 2021, just as an example for the last two years. So it slowed down a little bit, but I think that ups and downs. So but yeah, I think that local companies have a challenge to hire and retaining, or attract employees, software talent.

Brian: Some of the companies you mentioned are long-standing: Telefónica, Banco Galicia. Have you seen more competition amongst maybe VC-funded domestic companies in Latin America and especially Argentina?

Cesar: Yeah, yes, yes. Again, it was, I think 2021, it was the highest point for VC deployment and money in the IT ecosystem. Yeah, so it was very tough. It slowed down a lot, and I think that many of those engineers, they have a tough time coming back. Because, I don’t know, maybe if you’re working for a startup here in the Bay Area, yeah, they have ups and downs, but right now many of them, they were not able to raise another round of money. That’s right. They ran out of money, so they had to close operations, and the software developers that they hired two years ago, now they have no jobs. So coming back, in this timing, coming back to the job market trying to find a job, there are no more startups building new software. So it’s having an ups and down. But I think eventually, as soon as the economy and in general, companies start investing again in technology or in software development, the market will be pretty warm eventually.

Brian: Yeah, yeah. You mentioned 2020, 2021, a very crazy time for everybody. How did Making Sense think about offices, work from home, coming back to the office? Oh, wow, huge topic.

Cesar: Well, let’s see what is working and what maybe needs room to improve. So, being able to work inside the same office has a big benefit as far as creativity, working things a lot faster. But also, I understand that for, again, for software developers or UX designers, if they know what they have to do, they can do it from Mar del Plata, from Italy, from Barcelona. So they just need to communicate, understand, having been on Scrum meetings, on meetings during the day, and then they know that they have to produce code or produce some kind of deliverables.

So that is one thing, but also that is more for senior developers or mid-level developers. I think that for senior developers, you have no question about that. But if you have like a junior developer, someone that is just starting, that is difficult because you need to be in the office. It’s not the same thing that if, “Hey, let us share your screen and let us go together.” It’s not the same level of communication as, “Okay, let us have lunch and let us talk about this workflow or this other new tools that we can use.”

So I think we have good and bad things. What I know is that eventually we will have a hybrid. We will have getting togethers, being able to, you know, with some level of frequency, it could be like weekly or once a month or once a quarter, that you put people together in some location. It’s funny because today I was talking with a friend of mine, and he told me that Zoom, the company, the software application Zoom, they are requesting their employees to be back to the office. So I don’t know, I think it will be a mix, but I think it would be a hybrid, like some frequency when you can get people back to the office or getting togethers.

Brian: Yeah, yeah, I think what you said earlier too, you know, because when you look at successful software consultancies, you need some sort of a pyramid structure. You can’t have 100% senior guys. And your comment about investing in relationships with the universities, you can find talent easier, you can grow talent. So when you have, just like the military, you have more privates than generals, you have more junior developers, some semi-senior, a couple seniors, I’m sure that that really matters as you think about office culture.

Cesar: Yeah, yeah, 100%. And culture is a big thing too when you are working with people that are miles away. So, yeah, being able to build those teams that will have a mix of experience in different levels or skills, so that will make a good solution and something that is scalable at the end of the day.

Brian: Yeah, scale is the word that I wanted to dive into now, because you’ve built a very successful company, 300, 400 team members. Tell us when did you feel like you needed to switch gears and really start thinking about scaling and systems and operations, and what sort of people did you need to start hiring then?

Cesar: I think after, I don’t know exactly the number, I will be off, but I think I will get it quite right. So, yeah, between like 75 to 150, you need to start having those roles and protocols. And yeah, I think that is the number: having more managers, people being leaders for each department or area. So, and it’s all an evolution. I think that it will never end. When you are passing those numbers, when you are like, I don’t know, 5, 10,000, you will have another level of management and other issues.

Brian: So would you say about 150 is where maybe you needed a level above like a lead developer that’s coding within? You needed some real dev managers that were focused more on managing than coding?

Cesar: Yeah, yeah, I think so. Yeah, and in other areas too, because, I don’t know, when you are like 10, 20, 50 people in the company, if you have like one person doing recruiting and someone that is taking care of the payroll, for example, that will be more than enough. But when you have more volume, you need to have like a Head of HR, and that will be reporting to those two people. And maybe in 2021, you need to have a whole team of recruiting because recruiting was very hard. So, yeah, I think that you play a little bit, but those numbers will start to make sense between 100 and 150.

Brian: And speaking about recruiting, there’s obviously technical talent. What are things that your recruiting team is consistently looking for, for new Making Sense team members, like cultural attributes, personalities? What are some things that are maybe consistent at Making Sense?

Cesar: Well, I think that culture is a big factor today. Even one of our core values is “One Team, One Mission.” If we feel that we have the right engineers, but we feel that he is the wrong candidate for the “One Team, One Mission” core value, we just hire another one, even when we know that he has less experience.

Something that we don’t have is… so I think that you can have like two attributes in one team, and we have a lot of people that do hard work, more than people that are very smart. So even if you can combine two, it would be great. But we have a lot more people on the “do hard work” side than really smart people. We have smart people in the company, but if we need to qualify, we have more people doing hard work in general.

Brian: Yeah, no, I can certainly see that. Can you talk a little bit about leadership for you today, like how are you spending your time? You’re obviously in the States as well, and really this is helpful for aspiring service entrepreneurs that want to scale and they get to a certain point. How should they spend their time? What advice do you have about leadership, inspiring, setting guidelines?

Cesar: Yeah, so, yeah, you know, we have different stories. We have companies that provide services from Latin America to the US that have headquarters in Latin America, like with offices in Mexico, Colombia, Brazil, or any of the other countries. And then, on the other hand, you have companies with headquarters in the US and they start hiring people in Latin America.

So, for both cases, I think that the benefit of having a closer relationship with clients and opportunities and strategy, and seeing what’s going on on the field, is a huge benefit. So what I saw and what I would highly recommend is that when you reach that 150, or 50, or whatever is the number that the co-founders or the owners feel is right, is to start having people here in the US as part of that connection with the clients, with the opportunities. And in the last, I don’t know, few years, I saw more and more companies doing that. And I saw a lot of, maybe, people from Argentina moving to the States because of the economic or political reasons, the bad situation in Argentina. But I saw more and more people transitioning, more co-founders to the US, and they will have more like mostly strategic roles and more connection with potential opportunities than dealing with the day-to-day issues or operation of the business.

Brian: Yeah, Cesar, I also wanted to ask you, because you moved to the States a while ago, starting in Texas and then California. Tell us about your own cultural assimilation. What did you find similar between the States and Argentina, and what was maybe the bigger culture shocks for you?

Cesar: You know, LA, movies, Hollywood, brands, the high-level design. So that is, you know, again, kind of going back to our first question about what is the mix of Argentina that is making Argentina and the US close. So that is in one area. And maybe what is the opposite is the emotions, the feelings. I think that in the US, people, and you have different flavors, right? But it’s more like cool. Argentina is closer to more like Italy and Spain, that, “Okay, let’s put a family together.” In general, you don’t move. So if you were born and raised in Mar del Plata, you will stay there. But here in the States, you move a lot. And yes, you have Thanksgiving when you are getting back to your family, but in Argentina, you will stay your whole life, pretty much 90% of the time, you will stay in the same city where you were raised and born. So, I don’t know, that’s what I feel are the two main reasons, and you know, what is close and far away.

Brian: I have a few fun questions for you, Cesar. As you’ve lived in the States for a while now, what’s your favorite meal to have in the States?

Cesar: Oh, burgers. Burgers, yeah, yeah. Burgers. I think that for some reason, burgers in Latin America, you can get, well, I think that maybe today is a little different, but I think that you can get a decent burger any place in the US. In Latin America, it’s not that possible.

Brian: Although I will say my favorite burger in the world is in Argentina. It’s called Burger Joint in Palermo Soho.

Cesar: Oh, yeah, yeah, yeah, yeah. I ate that one last year. So, yeah, that’s good.

Brian: Yeah, yeah, yeah. Whenever I go there, that is my first stop and my last stop.

Cesar: Okay, okay, good to know. Yeah.

Brian: But to you, the same question: when you return to Argentina, what’s the one meal that you can’t wait to eat?

Cesar: Oh, I think I like, as far as meal, is pizza. And for some reason, the cheese is a little different than what you can eat outside of, at least, Argentina. What else? Ice cream. It’s more like gelato. So that is different. Empanadas. I don’t know, there’s a bunch of things, right? So, Milanesas, Asados. You can eat decent meat too, but it’s a little different.

Brian: Yeah. The gelato, by the way, we don’t talk about that a lot on the show. We have had many conversations about the pizza and the difference in the cheese, but the gelato is fantastic, and I’d imagine it’s from the cows and the agriculture in the country.

Cesar: Yeah, yeah. Milk is a little different. So, yeah, very interesting.

Brian: Yeah, we have a lot of people that come to the show for travel tips as well. So for those going to Argentina for the first time, what would you recommend that they shop for, that they purchase?

Cesar: So, outside of food, because we know Argentina is a culinary paradise, but outside of food, anything that you’d recommend that they shop for?

Cesar: Well, I think it would be… it’s an excellent souvenir even if you’re not using it: it’s like a mate.

Brian: Yeah, I’ll show you mine right here. Yeah.

Cesar: Yes, yeah. So that is an excellent souvenir, and if you can use it, even better. You know, I think that mate is getting popular in the US too, not as crazy as in Argentina, but getting popular. So, maybe like a leather jacket could be a good option if you can find someone that you like. Knife, so they have a pretty, because of the barbecue in Argentina, you can find a good knife that is not easy to find in the US. What else? Well, if you are able to buy and bring some dulce de leche, also, you can find in many places here, but that is another option.

Brian: No, that’s… wine, of course. Those are, those are, those are some great ones. Those are some great ones. Yeah. Thank you, thank you. Yeah, I know our listeners will be happy. We’ll put all those in the show notes for them.

Cesar: Yes, yes.

Brian: And then the last question: obviously, you’re fluent in English, but it’s your second language. Do you have any favorite phrases you picked up in English that you especially like?

Cesar: Well, maybe it’s fun when they say, “Forget about it.”

Brian: Okay, good, good, good. “Forget about it.” “Forget about it.” I like it.

Cesar: Yeah, all the movies, you know, sometimes I don’t remember anyone right now, but in the movies, you know, they’re making those really funny. Yeah, I like it.

Brian: Good, good choice. Well, Cesar, this has been an absolute blast. Really appreciate your openness and transparency about how to scale a successful company. Congratulations again on all the success of Making Sense. If people are interested, what’s the best way for them to find Making Sense online?

Cesar: makingsense.com, or feel free to contact via LinkedIn, and I would be more than happy to answer any other questions that you may have. So I’m happy to connect with people and help as much as I can.

Brian: Perfect. Well, thank you again. Let me thank our audience and our sponsor, Nearshore Direct. Go to NearshoreDirect.com. Great way to find non-IT talent all across Latin America for growing US companies. Well, that’s all the time we have. Thank you again, Cesar, and we’ll see you the next time on the Nearshore Cafe podcast.

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