February 10, 2026 • 38 mins
How can a hyperscaler grow at lightning speed without losing its soul?
In this episode, Jimmy Allen sits down with Pedro Arnt, CEO of dLocal and former CFO of Mercado Libre, to explore how to scale at pace while keeping culture, relevance, and energy intact. From building one of Latin America’s most successful e-commerce and fintech giants to steering a new generation of high-growth businesses, Pedro shares what it means to stay adaptable, focus on impact, and reinvent yourself as a leader.
We’re also joined by Ann Wright, founder of The Wright Approach and a long-time coach to global CEOs, who helps leaders navigate their career crossroads. Ann reveals why self-awareness is a strategic skill, how to protect your time and energy, and what it really means to do only what only you can do. Together, these conversations uncover how the best leaders balance humility with conviction and build organizations that stay curious, grounded, and relentlessly relevant.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
- When you were building out e-commerce,
especially in emerging markets,
there was absolutely no playbook.
And that meant thateverything was very adaptable
to our reality, our customerset, our stakeholders
reinvention was the constant throughout.
- Startups fight to survive,scale ups are different.
(00:21):
These are the very few startups
that take off like rocket ships.
And of these only a handful grow without
becoming sole destroying bureaucracies.
And because there's so fewof them, it's really rare
we get to study theirsuccesses and their failures.
So how does a hyperscaler pull this off?
How do you sustain theenergy to stay relevant
(00:43):
year after year afteryear when it's so easy
to coast and celebrate your success?
Well, maybe the answer can be found
I don't know in antibodies in EEQI jail
or the CEO crossroads.
(bright music)
I'm Jimmy Allen and thisis "Founder's Mentality,
(01:04):
The CEO sessions."
My guest today is PetroArnt, he's CEO of dLocal,
and NASDAQ listed payments company
built for emerging markets.
Think about it this way, ithelps global giants like Amazon,
Spotify, and Nike move money seamlessly
in places where the paymentsare well, anything but simple.
(01:24):
Before that, Petro spent20 years at Mercado Libre,
also known as MeLI.
Latin America's e-commerce giant.
Co-founded and led by Marcus Galperin.
You'll hear the name Marcos a lot today.
MELI grew from a scrappyonline marketplace
to a 100 billion dollar powerhouse.
Now it spans 18 countriesin e-commerce and FinTech.
(01:45):
And as Chief Financial OfficerPedro is in the cockpit
of that rocket ship for that entire ride.
Pedro, I think you'veprobably had more experience
than any executive I'maware of in a hyperscaling
period of a company.
And I'd love just to understand from you
what were the biggest scaling challenges
you guys faced at MELI?
(02:06):
- So there were hundreds I'm sure,
but there's three thatI think are the ones
that we probably spent the most time on
and were the most challenging ones.
So the first one is so massive,massive consumer platform
across an entire region.
And so what were normally edge cases
of consumer experiences gone afoul,
(02:28):
when you actually looked atin terms of absolute numbers,
they were massive.
So the sheer scale of the business
meant that it was extremely challenging
and you had to deal even with edge cases
of consumer experience going afoul.
Second thing, the beautyof a platform business
(02:49):
is how powerful the go-to market strategy
becomes of being able tomove into adjacencies.
So MELI was a retail platformthat was able to build
on top of that, one of themost successful neobanks
in the region.
The most successful logistics network
is now moving into entertainment,so on and so forth.
So from a business potentialperspective, fascinating.
(03:11):
Now the complexity creep ofscaling up not one business
but scaling up multiple businessunits is massive, right?
And then the third oneis the age old adage
of the people who got youhere are not the people
that are gonna get you there
and you have to makethese difficult decisions.
(03:34):
Despite that meaning that alot of loyal and contributors
that were very instrumental for the phase
you've just exited somehowprobably had to be left
by the wayside.
- So how do you deal with that
given that it's an ongoing issue?
And do you want to both thank the pioneers
(03:54):
but also make sure thatthey don't get in the way
of the next stage?
How do you do that?
- If you're going to bea successful scale up
I would say that almost for sure
you have a very clearly defined culture
and that culture is not static.
Even as the requirementsof your human capital
(04:15):
and the type of personalityyou need to be successful
changes the culture immediately adapts
and therefore singles outthose that aren't fitting it.
The system generates an antibody
and it becomes very easy for leadership
for the people organization
to realize because everyone'sspeaking up and saying,
(04:37):
I don't think he's holdingup his end of the bargain.
- And in my guess I'm curious about this,
is that that probablywasn't a surprise to them
'cause you probably also had people
that were often veryself-aware and recognize
they weren't ready for the next phase.
- By and large absolutely.
And again it goes to the antibodies.
They had began to feelthat in their interactions
(05:00):
with peers and whatnot.
Those exits, I think by and large,
especially with thereally important people,
were never traumatic to be quite honest.
There were times where youcould find roles for them
within the organization whereyou could still leverage
some of that DNA and thoseskills that they did have.
(05:21):
Now that's not always the case.
Like if you just keeptrying to find pockets
to store away the old timersand you're getting it wrong.
The other thing that wedid at MELI during a period
and that it's not easy,but I beyond recommend it,
I would say if you're not doingthis then you're gonna have
a hard time scaling up.
(05:41):
Is there should be a pointin your company growth
where you institute someform of stack ranking
or forced curve and you force your leaders
to cull the lowest performers.
It's only when youforce them to stack rank
and you force them to start on a scale,
(06:04):
compare them amongst eachother that you begin to realize
that a lot of thoseold timers consistently
are falling to the bottom.
At MELI I think there was a period
of maybe six or seven years
where the decision was thelowest performers is out.
- As you were scaling andbringing in all these people,
many of whom were betterthan the existing people,
(06:26):
your culling people that have been there,
how did you keep theculture strong and the same?
How did you keep the founder's mentality,
the sense of insurgencyas you keep bringing in
these new people?
- There was a moment where wewere very deliberate about it.
I remember a conversation wehad where I was really worried
(06:47):
'cause I said, we're growing too much,
we're beginning to lose culture.
And it was Marcos actually.
He said, look, two things, first of all,
we're gonna have todeliberately work on culture.
We also need to realizethat when you're growing
to the size we're growing,
law of large numbers starts creeping in.
And so what we need to holdsteadfast to is leadership.
(07:11):
If we get leadership toreally, really reflect
the core cultural aspectsof who we want to be,
then that trickles down.
So we may not be ableto ensure in our maximum
of hire for culture and fire for culture
across the organization
where it has more than 10,000 people.
(07:31):
But at the leadership levelthis is non-negotiable.
And so when we got deliberate,
the first one was hire forculture and fire for culture.
So you actually builtinto your hiring process
a final interview which wasmainly focused on cultural fit.
And then the fire forculture is I think my years
(07:52):
have taught me that the famouscase of the effective asshole
who delivers the resultsbut everyone kind of knows
is culturally misaligned.
It inevitably over thelong run doesn't work.
I think we learn thatwhen just from scars.
The second piece is wewere very, very consistent
(08:12):
about baking in culture assessment
into the quote unquote "HR platforms."
There was always a matching
for do they embody ourleadership principles,
do they embody our culture,who we want our people to be?
And then the third piece isyou need to evangelize, right?
The narrative aroundwhat MELI's culture is
(08:34):
and what's important is really a key piece
of the communication.
And Marcos that's so much of what he did
is just remind people all the time
of what those key cultural attributes are.
- You know, scaling is tough.
Culture slips, performance drifts.
Every new recruit hasdozens of new clever ideas
(08:56):
that lead to a rainstorm of KPIs.
To fight this drift demandsclarity on what matters
and a maniacal focus onthose one or two things.
And it starts with the leaders
and their set of non-negotiables.
So Pedro put in place stack ranking,
brutal but effective.
Cold hard numbers that forcedleaders to face reality
(09:16):
even when it meant partingways with people they liked.
During its hypergrowth phase,
the leaders of Enterprise Rent-A-Car
were also brutally clear on what mattered.
For their former CEO Andy Taylor,this was customer loyalty.
Every branch was measured on one score,
the enterprise service qualityindex, also known as ESQI,
(09:36):
which is the percentage of customers
who said they were completely satisfied.
But here's the kicker,
if your branch was belowthe company average,
you and the whole branchwere stuck in ESQI jail,
nobody got promoted, no exceptions.
You could be the hardestworker in the room
but if your customers weren't satisfied,
you are not gonna be happy.
(09:57):
That's focus.
You say what you want, youmeasure it, you reward it.
But there's a warning here.
Focus is great when it'spointed in the right direction,
but you also have to be opento new things to be willing
to change direction.
If focus was Pedro'sfirst leadership lesson,
flexibility was his second.
(10:18):
- I'd like to think thatit's exactly the willingness
and the self-consciousnessand the commitment
to changing that was the biggest change
that I went through as a leader.
I used to be damn stubborn
(10:39):
and I used to be thesmartest guy in the room.
And I think what I learnedalong the MELI journey
is that you need toconstantly reinvent yourself.
And that means you needto be very open to learn.
You need to be extremely willing
to say what's workingmay not continue to work.
And so I think it's the wholegrowth mentality mindset.
(11:02):
Not only push yourself to thatbut have the constant process
of self-assessment andreally questioning yourself
to see am I changing, amI learning, am I adapting?
That was instrumentalfor us in that journey.
We always say right?
When you were building out e-commerce,
(11:23):
especially in emerging markets,
there was absolutely no playbook.
And I think that serves us brilliantly
because it kept us awayfrom standard solutions
and that meant thateverything was very adaptable
to our reality, our customerset, our stakeholders.
Reinvention was the constant throughout.
(11:43):
- For your own journey, isthere a single leadership moment
or moment of truth for you
when you went from I've got the answer,
I'm the smartest guy inthe to I'm vulnerable,
I have questions, I'm curious.
- I have an early anecdote
but it really ingrained something in me.
My first job at MELIwas business development
and this was in the heydaysof the first internet bubble.
(12:07):
And so we didn't have anyrevenue, we were pre-revenue.
It was all aboutconfirmed registered users
and you could IPO a company
'cause you had a lot ofconfirmed registered users.
And so I started and Marcossent me off to sign a deal
with who was back then oneof the largest portals,
which was Lycos.
You would pay Lycos, you knowthis massive amount of money,
(12:29):
they would put you on their homepage
and then you'd get all theseconfirmed registered users.
And so I signed thiscontract was this massive
multimillion dollar contract
to have some sort of staticlink on the Lycos homepage.
It would've been a massivemisallocation of capital,
Massive, I was 27 years old.
(12:49):
And about three weeksafter I signed the deal
and I had started to realizewhat, ugh, they call me
and they say, look, we havesome uncomfortable news
we need to relay to youbut we've just been bought
by Telefonica.
And the first thing theSpaniards are doing are reviewing
all recent contracts.
And so we may have to negotiate
(13:10):
some way of way out clause on this.
And I thought this ismy opportunity, right?
And we got outta that contract.
Sheer luck, it would'vebeen millions of dollars
thrown down the drain.
And so little things like that,
especially when you're dealingwith excessive resources,
I think start to make yourealize, you know what,
(13:33):
be humble, learn, realizeyou're gonna get it wrong
and be open about that.
'Cause it's such a centralpart of the learning process.
- Did you have a moment,
a decade or two later wherethere was a young Pedro
who made the exact same mistake
and that you were able to say, great,
now you've got a lesson for life.
(13:56):
- So as a leader, I thinkthis is interesting,
but maybe this is where it comes from.
There's this phrase, Apoor plan well executed
will almost always be agood plan, poorly executed.
I always tell the people Iwork with that working with me
is probably going to looka little bit like this.
If there are 10 times that we disagree
(14:18):
on the course forward,you're almost guaranteed
to be told that nineof them do it your way
and I'm gonna hold youaccountable for the results.
I believe that there'snot one way to do things.
There's probably multipleways to get the result.
And what's more important isthe buy-in and the conviction
when execution happens.
(14:39):
So if people are executingmy plan all the time,
it doesn't work.
There will be one out of 10times where I will tell you,
look, I'm really sorry onthis one I will not seed
and you just need to disagreeand go commit to my plan.
- I love that one of the world'stop executives talks about
almost losing millions on his first deal.
(15:00):
That's vulnerability.
But second, I become quite obsessed
with the fact that most CEOs
discover their step back moment.
It's this crossroads,if they continue as is,
they become the micromanager
and start wearing the capesof the energy vampire.
If they shift, if they step back,
if they learn to trust each others,
(15:20):
they redefine their role
such that they're giving others wings.
If anyone knows thosecrossroads, it's Ann Wright,
Founder of the Right Approach.
She spent 20 years coaching leaders.
Think of her as a kind of CEO whisperer.
Ann gets past the armor and she finds out
what's really keeping leaders up at night
and then helps them facethose fears head on.
(15:43):
And her first question toCEOs, well it's old but gold.
But she asked, what isit that only you can do?
- [Anne] It's an age old question
but the what can only youdo is increasingly important
because people can get seduced
about now I'm CEO, I need to.
(16:06):
And a lot of what theythink they need to do
isn't exactly what they need to do.
Getting their teams in place is essential.
If they came up within the organization,
the most important role is theperson who's replacing them.
So they're not trying to do both jobs.
And I have people do the exercise of okay
(16:27):
if these are the threemost important things
you said you wanted to do,
where is the time in yourcalendar for doing that?
- [Jimmy] You're saying it'salmost increasingly important
that they ask the question,what can only you uniquely do?
Why is it increasinglyimportant? I'm just curious.
- [Anne] Because everybodywill want them, right?
(16:48):
When you've come up through the ranks,
all the people who thinkthey're your friend
or had a previousrelationship with you just,
you know, want a cup ofcoffee or want to drop in
and before you know it,
you could spend your whole day doing that.
So you have to change.
And this thing about notbeing friends anymore
or not being of the troopsis quite hard because again,
(17:11):
it's something thatgets said all the time,
it's lonely at the top right?
And people say it veryglibly. It's really true.
Once you are in that role,
there isn't a singleperson in your organization
you can tell everything to.
I think there's something else around
if people are feeling a bit overwhelmed,
they want to go to the thing
they really know how to do, right?
(17:32):
You know, I used to be the sales director
and I'm really good at that soI'll just go there and help.
And so I feel good, right?
Which is a short term gratification
and in the long run
stop them from reallythinking about the fact
that their financedepartment needs attention
and that may not be their strength.
- [Jimmy] What I talk abouta lot in the CEO forum
(17:53):
is the problem of our timeis that CEOs are exhausted
and if you're exhausted you'd complicate.
Is that what you're seeing when you're?
- [Anne] Absolutely
Apparently there was a piece in the FT
or something recentlyabout how tenure for CEOs
is getting shorter and shorter.
And some of that is energy.
(18:14):
Interestingly, I justhad this conversation
with a client yesterday
and she said, I really thought I knew
what I was getting into'cause she'd been so close
to it for so long.
And she said I had no idea.
- [Jimmy] What unlockedmy energy in my day job
had nothing to do with my day job.
- [Anne] Exactly right.
- And it was a specificmoment when I was going down,
(18:36):
I think a very typical pattern
and telling you that I'm inthe wealth accumulation stage
of my career and then I'll be at the point
that I can do things I love.
And then you kind ofask what's stopping you
from doing both?
And I then you know, went down to 80%
and started my music businesses.
Is that typical?
(18:56):
- [Anne] And sometimes I'll meet somebody
and they've already got lots of interests
and one of my favorite stories
is of a very senior lawyerwho was also a concert pianist
and a dressage competitorand a photographer
and an artist and hadtwo lots of children.
(19:17):
You know, an older lot and a younger lot.
Astonishing, right?
But he made it work becausehe got so much energy
from those activitiesthat he was even better
in his in quotes day job.
And he was inspiring to another generation
that you could do both.
(19:38):
- There are two things to unpack here.
First, it is so criticalthat CEOs pick the right path
at the crossroads.
Do what only you the CEO can do
and then empower othersto get on with their job.
That's exactly the shiftPedro was describing.
Second, take care ofyourself. The job is lonely.
The job demands more energythan you actually have.
(20:01):
Now most CEOs will tellyou the biggest battle
they fight every dayis with their calendar.
So the last thing theywant to hear is some idiot
saying sign up for improvor take up sailing.
But passions matter.
Every leader we've heard on the podcast
has said the same thing.
An outlet outside of workdoesn't drain your energy.
(20:22):
It multiplies it. DonKatz plays ice hockey.
Christina Jou reads poetry.David Haynes rides motorcycles.
Leaders need energy becauseexhausted leaders complicate.
Because exhausted leadersallow their organizations
to drift into irrelevance.
- You know, if you talk toMarcos, you talk to all of us
(20:44):
who have been there since the beginning.
It's not true that we were acustomer-centric organization
from the get go, right?
This was B2C, it was veryhard to get that one voice
of the consumer, butthere was something else,
which turns out is a phenomenal proxy
(21:05):
for customer centricity,and that's product.
So the one thing thatwas always core at MELI
and that was Marcos.
So at one point movingto sit with the engineers
to send a message toall of his leadership,
product technology matters
and I want you involved in the details.
Like you couldn't say itMELI oh I've RFD'd this off
(21:26):
to the product organization.
Ask them for the delivery date.
If you were a leaderand you weren't on top
of what was working with the product,
what wasn't working with the product,
what the product roadmap was,
you were not gonna last there.
- You know, one of thethings I talk a lot about
is first fall in love with your product.
The customer follows,
this idea of customer first doesn't work.
(21:47):
'Cause if you don't have a greatproduct that delights them,
there's no point indoing customer research.
But then let's justuse product as a proxy.
How did you keep thatrelentless focus on being great,
being relevant to everybodyin the marketplace?
- Yeah, so the centerof gravity within MELI
(22:10):
was always around product and technology.
The decisions were notmade around the P&L,
I always say I had the least relevant
of all the C-level positions'cause I was the CFO.
And then you had the businessguys who were very important.
But the real place wheredecisions were made
were in product and technology.
(22:30):
The second piece is therewas always a strong element
of long-term thinking,which I think also helps you
to focus on the productand the experience.
Then at one point, I'd sayfairly early on in the journey,
late 2000s beginning of the teens,
something else did begin to get introduced
in a more mechanized and methodical way,
(22:52):
which was the voice of the customer
through very detailedlistening and NPS, right?
So because it's a large B2C platform,
you could ask consumers,
what do you like about the platform?
What do you dislike about platform?
The customer service metricwas actually instrumental
(23:14):
because we startedmeasuring per each journey
within the customer experiencewhere the NPS is higher
and where the NPS is lower.
And that feedback loop back into product
I think became incredibly,incredibly powerful
because you were looking ata data-driven enunciation
(23:35):
of where consumers arecomplaining the most.
Oh it's the billing, oh it's the returns,
oh it's the search, right?
And then that was feeding backinto product and tech teams,
and business teams andthat was the first metric
to try to move.
- And just on that, you know,
when you have this maniacalfocus on the technology
and product, this maniacalfocus then on NPS.
(23:59):
You end up with a culturewhere you have to love the idea
that red is good.
Meaning that these problems are something
we're gonna embrace and celebrate.
But every time I listen to you,
every time I listen to Marcos,
it is hard not to get exhaustedwith this relentlessness.
How did you guys keep the energy levels
(24:22):
going that the organizationdidn't just exhaust itself
and fall over and collapse?
What did you do about energy specifically?
- We were working withthese coaches I remember.
And actually people I respect a lot
and I still use till this day,
but at one point they startedveering some of the stuff
they were trying to get us to do
(24:43):
away from sort of these moreengineer like approaches
to sort of consciousbusiness and you know,
esoteric is an unfair word,but softer areas of this stuff.
And I remember getting offand calling the partner in
and saying, you know, what are you doing?
This is not what we want.
We're an engineering type organization.
(25:04):
And his concern was he said,
"Look, I worry you guys aregoing to burn out the motor.
I'm looking your organization,I'm working with you.
And it's just too intense."
And I think that was just notunderstanding what drove us.
If you were to ask me whatdrives you in your business life?
I think the answer would be seeing impact.
(25:25):
Seeing something that'sbroken, trying to fix it,
designing something to fix it
and then actually seeing it get fixed.
That's what keeps mewalking into work every day
so motivated.
So I think when you have thatkind of a group of people
where impact and fixing andseeing things get better,
(25:46):
that kind of intensity doesn't drain you,
quite the opposite it energizes you.
And then there's a secondpiece which is related,
which is we at MELi were veryfortunate to see the results.
We saw the results in thegrowth of the business,
we saw the results in performance
in terms of capital marketsrecognition by peers.
(26:07):
We'd always used to sayat first we had to explain
to everyone what our company did.
And then at one pointeveryone used our company.
So I think when you havethat combination of people
that are driven by wanting to fix things
and wanting to have impact
and then you see theconcrete results of that,
that is not draining, that'sincredibly energizing.
(26:28):
- Guys, this is a mic drop moment.
We are hearing a formerCFO say that his job
was the least important.
What mattered was the folksin product and technology
because with them thecustomers would follow.
Second, we are hearing aCFO say that the one number
that really mattered wasNPS, net promoter score,
a system for feedback, recovery action,
(26:51):
not a financial number.
Pedro's beginning to give usthe shape of the new rules
of scaling, product andcustomer at the center.
Execution matters more than management.
A founder once told meafter he had a meeting
with a very polished HR recruit,
he said the following,"Everything about the professional
management system tells you that execution
(27:13):
and keeping customerpromises is a job to escape.
Do it well and we willpromote you out of it."
Well I believe the opposite.
I want executors free from admin
and quote unquote management.
I want them to get rich bybeing great at execution.
You know we're so conditionedwe don't even realize
(27:33):
how much our language and rewards say
your job only matters if youleave it to become a manager.
No wonder bureaucracies are soul crushed.
As CEOs, the one thing youcan't delegate is the job
of putting the executor at the center.
You have to celebrate themand then you gotta rewire
the company around them.
Because here's the twist,
(27:54):
in bureaucracies processes suffocate
and good leaders have to work around them.
Paradoxically in scaleinsurgents, they love process
because it liberatesthe people who matter.
- I think what attractedme to the current challenge
of grabbing an earlierstage publicly traded,
(28:16):
very large organization butmuch earlier stage than MELI,
was that the scale up phaseis really what makes me tick.
If someone were to give mea blank canvas of a company
that was in that scale up phase again
that actually needed theintroduction of some elements
of mechanization, that's exactly my pond.
(28:38):
That's where I want it to be.
So that's what I hope to be bringing
to dLocal at this point,which is we need to scale up,
we need to become more mature,
but we're gonna do it in a way that works
and that means theright amount of process,
which is probably littleand indispensable,
but it also means beingacutely aware of honoring
(29:00):
how it became the globalsouth juggernaut that it is,
to try to not break any of that.
And by the way, Jimmy, it'sa lot easier to narrate,
a lot easier in theorythan it is in practice.
In practice it is extremely difficult.
- What's interestinglistening to you today is,
you're describing bad processes
as if it begins to erode thebuy-in and the conviction
(29:24):
of the person that's supposedto be benefiting from it.
It's a bad process.
If it's disempoweringin the name of scale,
it's a bad processthat's 23 years at MELI.
That's not taught in anybusiness book anywhere.
- And it's just one small thought on that,
which is this, processhas a very scary tendency
(29:49):
to become an end in itself.
When that's the exact opposite reason
why you institute process.
Where I learned that as a CFOis planning and budgeting.
It's amazing how you lookat most organizations
and you'd think that the actual business
moves in line with thebudget and the processing
(30:09):
because companies spend months
trying to do fortune telling, months.
And you have business unit leaders
who instead of being running a business,
are stressing and sweatingthe whole gaming around
what my annual targetsand my three year targets
are gonna be.
So that to me was incredibly instrumental
(30:32):
about how processbecomes an end in itself,
which is the last reasonwhy you instituted process.
- My example of that is HR,where you put in systems
for your people so thatthey support your people.
So the promotion processesare not capricious, et cetera.
But then you go into a review meeting
(30:52):
and someone says, "Yes,Jack is a superstar
but we can't double promote him
because it will erode theintegrity of our system."
And you're like, why does this system
suddenly become more important than Jack?
And yet you hear it in everyperformance review meeting
in every room around the world.
- And that's the other thing,
I observe my leaders and myteam a lot to see how they deal
(31:17):
with mechanization and process.
And I think there's two extremes.
There are those that very quickly
devolve into the processis what I am here for.
And I think the HR is a great example.
The second thing is in a lot of startups
at the scale up phase,
(31:38):
you also have those early stage people
that worked entirely inthe absence of process
and say, process iscrap, I want none of it.
And both extremes, youhave to identify quickly
and probably get rid of.
What you need is to find the people
that really understand howmechanization of an organization
(32:00):
has to serve the ultimate purpose,
which is the end user, themerchant, the consumer.
And I'm very deliberate about observing
how my people deal withprocess when it's introduced.
'Cause you need to startfiguring out as a big part
of who is equipped for a scale up phase,
(32:21):
how they are able to work with process.
- Listen, before I go to our final,
'cause, we're out of time.
To the final list of fun questions.
Is there anything youwished I had asked you
or that you wanted to say?
- We had a conversation the other day
that made me reflect on something.
And it's this of the moments of truth
(32:42):
or the big moments around mycareer where big decisions
were made and they were a turning point.
I thought long and hard about this.
I was trying to comeup with a list of these
and I kept resistingit and then I realized
why I resisted it Jimmy.
'Cause I think that whathappens in that moment of truth
(33:06):
is not that relevant.
It's everything youwere doing the previous
10 or 15 years, the little things,
the things that you wouldbore the crap out of people
if I had to narrate them on the podcast.
Which actually made itwork at that moment.
And the reason I say this is,
and I remember I was atMELI when this happened.
(33:27):
So when COVID hit, wewent into this immediate
sort of cost cutting,what would get rid of.
And we started looking at thedata and obviously e-commerce,
the business was just taking off
like it had never taken off, right?
And so we talked a lot aboutwhat made that possible.
How smart were we aroundthe COVID decisions
(33:48):
and this and that.
And the conclusion was the reason MELI
hit escape velocity is becauseof what it had been building
the prior 10 years.
Those moments of truth are a consequence
of everything you did before.
We shouldn't be highlightingthe moment of truth.
We should be highlighting all that work
(34:09):
that went in to when thatbig, big moment happens.
The company being able totake advantage of that.
- Two quick points, firsthyperscalers love processes.
They just rejected the processes
of the professional management system.
Second, I think it's worthpausing on Pedro's insight
on moments of truth.
(34:29):
He notes that greatness isn'tone breakthrough, one moment,
it's actually the resultof thousands of decisions
that create the foundationfor that moment.
And on the Founder's Mentality site,
we've tried to collect lotsof stories of other CEOs
talking about that journey,
the journey where you restore primacy
to the people who keep customer promises
(34:49):
and then the magic starts,so hit the show loads.
Now let's get back to Pedro
and a round of rapid fire questions.
What brings you energy?
- Learning more than anything else.
- What drains you of energy?
- Self-interested peopleand what kills me the most,
(35:11):
false agenda-driven conversations.
So conversations about A, whenreally what's going on is C.
- This really brings the next one.
Do you have energy vampires
that you have to encounter in your work?
And if so, how do you deal with them.
- It's the non-straightshooters and the people
who are not really sayingit as it should be.
(35:37):
Eventually those people are very, very bad
for any organization andthey shouldn't be around.
Fortunately I've worked at organizations
again where the cultures were right,
and so the entire organization
had antibodies for those people.
And so the cultureitself takes care of it.
What's the best advice you ever received?
(36:00):
- Look at the movie and not the picture.
Direction of travel matters more
than where you are at aspecific point in time.
And that has been incredibly useful for me
when it comes to sort oflooking at where we are
(36:20):
and maintaining the rudder steady.
Is are we at least movingin the right direction?
- Alright, let's recap the key takeaways
from our conversation with Pedro.
We're gonna have todeliberately work on culture.
We also need to realizethat when you're growing
to the size we're growing,law of large numbers
starts creeping in.
(36:42):
And so what we need to holdsteadfast too is leadership.
- The risk that comes withscaling is the culture fades.
We've got to be intentional.
Culture isn't something you do
to the rest of the organization.
It actually starts with how leaders act.
- It's not true that we were acustomer-centric organization
(37:06):
from the get go.
But there was something else,
which turns out is a phenomenal proxy
for customer centricityand that's product.
- No matter how big our companiesget, it's always possible
to find a way back to thevoice of the customer.
And for MELI, that journeybegins with the product
and the teams that make it.
(37:27):
- When you have that combinationof people that are driven
by wanting to fix thingsand wanting to have impact,
and then you see theconcrete results of that,
that is not draining, that'sincredibly energizing.
- The right culture andmission always energizes.
It attracts energy giversand creates antibodies
(37:47):
against energy vampires.
That's how companies stay relevant.
How about leaders, focusyour personal journey
on these two questions.
What can I uniquely do?
And what passions mustI pursue to reenergize?
Because sometimes playingice hockey or reading poetry,
that's the secret to leadership.
Scale insurgents are rare.
(38:08):
They keep their founder mentality
while also giving customersthe benefits of their size.
They win in a turbulent world
because they're usingnew rules for scaling.
And that's why we'resticking with Mercado Libre
It's a rare scale insurgent.
And in our next episode,we're going right to the top.
We'll be talking directlyto Marcus Galperin,
Co-founder and ExecutiveChairman of Mercado Libre.
(38:30):
So we'll be back in two weeks.Until then, stay curious.
(bright music)
- When you were building out e-commerce,
especially in emerging markets,
there was absolutely no playbook.
And that meant thateverything was very adaptable
to our reality, our customerset, our stakeholders
reinvention was the constant throughout.
- Startups fight to survive,scale ups are different.
(00:21):
These are the very few startups
that take off like rocket ships.
And of these only a handful grow without
becoming sole destroying bureaucracies.
And because there's so fewof them, it's really rare
we get to study theirsuccesses and their failures.
So how does a hyperscaler pull this off?
How do you sustain theenergy to stay relevant
(00:43):
year after year afteryear when it's so easy
to coast and celebrate your success?
Well, maybe the answer can be found
I don't know in antibodies in EEQI jail
or the CEO crossroads.
(bright music)
I'm Jimmy Allen and thisis "Founder's Mentality,
(01:04):
The CEO sessions."
My guest today is PetroArnt, he's CEO of dLocal,
and NASDAQ listed payments company
built for emerging markets.
Think about it this way, ithelps global giants like Amazon,
Spotify, and Nike move money seamlessly
in places where the paymentsare well, anything but simple.
(01:24):
Before that, Petro spent20 years at Mercado Libre,
also known as MeLI.
Latin America's e-commerce giant.
Co-founded and led by Marcus Galperin.
You'll hear the name Marcos a lot today.
MELI grew from a scrappyonline marketplace
to a 100 billion dollar powerhouse.
Now it spans 18 countriesin e-commerce and FinTech.
(01:45):
And as Chief Financial OfficerPedro is in the cockpit
of that rocket ship for that entire ride.
Pedro, I think you'veprobably had more experience
than any executive I'maware of in a hyperscaling
period of a company.
And I'd love just to understand from you
what were the biggest scaling challenges
you guys faced at MELI?
(02:06):
- So there were hundreds I'm sure,
but there's three thatI think are the ones
that we probably spent the most time on
and were the most challenging ones.
So the first one is so massive,massive consumer platform
across an entire region.
And so what were normally edge cases
of consumer experiences gone afoul,
(02:28):
when you actually looked atin terms of absolute numbers,
they were massive.
So the sheer scale of the business
meant that it was extremely challenging
and you had to deal even with edge cases
of consumer experience going afoul.
Second thing, the beautyof a platform business
(02:49):
is how powerful the go-to market strategy
becomes of being able tomove into adjacencies.
So MELI was a retail platformthat was able to build
on top of that, one of themost successful neobanks
in the region.
The most successful logistics network
is now moving into entertainment,so on and so forth.
So from a business potentialperspective, fascinating.
(03:11):
Now the complexity creep ofscaling up not one business
but scaling up multiple businessunits is massive, right?
And then the third oneis the age old adage
of the people who got youhere are not the people
that are gonna get you there
and you have to makethese difficult decisions.
(03:34):
Despite that meaning that alot of loyal and contributors
that were very instrumental for the phase
you've just exited somehowprobably had to be left
by the wayside.
- So how do you deal with that
given that it's an ongoing issue?
And do you want to both thank the pioneers
(03:54):
but also make sure thatthey don't get in the way
of the next stage?
How do you do that?
- If you're going to bea successful scale up
I would say that almost for sure
you have a very clearly defined culture
and that culture is not static.
Even as the requirementsof your human capital
(04:15):
and the type of personalityyou need to be successful
changes the culture immediately adapts
and therefore singles outthose that aren't fitting it.
The system generates an antibody
and it becomes very easy for leadership
for the people organization
to realize because everyone'sspeaking up and saying,
(04:37):
I don't think he's holdingup his end of the bargain.
- And in my guess I'm curious about this,
is that that probablywasn't a surprise to them
'cause you probably also had people
that were often veryself-aware and recognize
they weren't ready for the next phase.
- By and large absolutely.
And again it goes to the antibodies.
They had began to feelthat in their interactions
(05:00):
with peers and whatnot.
Those exits, I think by and large,
especially with thereally important people,
were never traumatic to be quite honest.
There were times where youcould find roles for them
within the organization whereyou could still leverage
some of that DNA and thoseskills that they did have.
(05:21):
Now that's not always the case.
Like if you just keeptrying to find pockets
to store away the old timersand you're getting it wrong.
The other thing that wedid at MELI during a period
and that it's not easy,but I beyond recommend it,
I would say if you're not doingthis then you're gonna have
a hard time scaling up.
(05:41):
Is there should be a pointin your company growth
where you institute someform of stack ranking
or forced curve and you force your leaders
to cull the lowest performers.
It's only when youforce them to stack rank
and you force them to start on a scale,
(06:04):
compare them amongst eachother that you begin to realize
that a lot of thoseold timers consistently
are falling to the bottom.
At MELI I think there was a period
of maybe six or seven years
where the decision was thelowest performers is out.
- As you were scaling andbringing in all these people,
many of whom were betterthan the existing people,
(06:26):
your culling people that have been there,
how did you keep theculture strong and the same?
How did you keep the founder's mentality,
the sense of insurgencyas you keep bringing in
these new people?
- There was a moment where wewere very deliberate about it.
I remember a conversation wehad where I was really worried
(06:47):
'cause I said, we're growing too much,
we're beginning to lose culture.
And it was Marcos actually.
He said, look, two things, first of all,
we're gonna have todeliberately work on culture.
We also need to realizethat when you're growing
to the size we're growing,
law of large numbers starts creeping in.
And so what we need to holdsteadfast to is leadership.
(07:11):
If we get leadership toreally, really reflect
the core cultural aspectsof who we want to be,
then that trickles down.
So we may not be ableto ensure in our maximum
of hire for culture and fire for culture
across the organization
where it has more than 10,000 people.
(07:31):
But at the leadership levelthis is non-negotiable.
And so when we got deliberate,
the first one was hire forculture and fire for culture.
So you actually builtinto your hiring process
a final interview which wasmainly focused on cultural fit.
And then the fire forculture is I think my years
(07:52):
have taught me that the famouscase of the effective asshole
who delivers the resultsbut everyone kind of knows
is culturally misaligned.
It inevitably over thelong run doesn't work.
I think we learn thatwhen just from scars.
The second piece is wewere very, very consistent
(08:12):
about baking in culture assessment
into the quote unquote "HR platforms."
There was always a matching
for do they embody ourleadership principles,
do they embody our culture,who we want our people to be?
And then the third piece isyou need to evangelize, right?
The narrative aroundwhat MELI's culture is
(08:34):
and what's important is really a key piece
of the communication.
And Marcos that's so much of what he did
is just remind people all the time
of what those key cultural attributes are.
- You know, scaling is tough.
Culture slips, performance drifts.
Every new recruit hasdozens of new clever ideas
(08:56):
that lead to a rainstorm of KPIs.
To fight this drift demandsclarity on what matters
and a maniacal focus onthose one or two things.
And it starts with the leaders
and their set of non-negotiables.
So Pedro put in place stack ranking,
brutal but effective.
Cold hard numbers that forcedleaders to face reality
(09:16):
even when it meant partingways with people they liked.
During its hypergrowth phase,
the leaders of Enterprise Rent-A-Car
were also brutally clear on what mattered.
For their former CEO Andy Taylor,this was customer loyalty.
Every branch was measured on one score,
the enterprise service qualityindex, also known as ESQI,
(09:36):
which is the percentage of customers
who said they were completely satisfied.
But here's the kicker,
if your branch was belowthe company average,
you and the whole branchwere stuck in ESQI jail,
nobody got promoted, no exceptions.
You could be the hardestworker in the room
but if your customers weren't satisfied,
you are not gonna be happy.
(09:57):
That's focus.
You say what you want, youmeasure it, you reward it.
But there's a warning here.
Focus is great when it'spointed in the right direction,
but you also have to be opento new things to be willing
to change direction.
If focus was Pedro'sfirst leadership lesson,
flexibility was his second.
(10:18):
- I'd like to think thatit's exactly the willingness
and the self-consciousnessand the commitment
to changing that was the biggest change
that I went through as a leader.
I used to be damn stubborn
(10:39):
and I used to be thesmartest guy in the room.
And I think what I learnedalong the MELI journey
is that you need toconstantly reinvent yourself.
And that means you needto be very open to learn.
You need to be extremely willing
to say what's workingmay not continue to work.
And so I think it's the wholegrowth mentality mindset.
(11:02):
Not only push yourself to thatbut have the constant process
of self-assessment andreally questioning yourself
to see am I changing, amI learning, am I adapting?
That was instrumentalfor us in that journey.
We always say right?
When you were building out e-commerce,
(11:23):
especially in emerging markets,
there was absolutely no playbook.
And I think that serves us brilliantly
because it kept us awayfrom standard solutions
and that meant thateverything was very adaptable
to our reality, our customerset, our stakeholders.
Reinvention was the constant throughout.
(11:43):
- For your own journey, isthere a single leadership moment
or moment of truth for you
when you went from I've got the answer,
I'm the smartest guy inthe to I'm vulnerable,
I have questions, I'm curious.
- I have an early anecdote
but it really ingrained something in me.
My first job at MELIwas business development
and this was in the heydaysof the first internet bubble.
(12:07):
And so we didn't have anyrevenue, we were pre-revenue.
It was all aboutconfirmed registered users
and you could IPO a company
'cause you had a lot ofconfirmed registered users.
And so I started and Marcossent me off to sign a deal
with who was back then oneof the largest portals,
which was Lycos.
You would pay Lycos, you knowthis massive amount of money,
(12:29):
they would put you on their homepage
and then you'd get all theseconfirmed registered users.
And so I signed thiscontract was this massive
multimillion dollar contract
to have some sort of staticlink on the Lycos homepage.
It would've been a massivemisallocation of capital,
Massive, I was 27 years old.
(12:49):
And about three weeksafter I signed the deal
and I had started to realizewhat, ugh, they call me
and they say, look, we havesome uncomfortable news
we need to relay to youbut we've just been bought
by Telefonica.
And the first thing theSpaniards are doing are reviewing
all recent contracts.
And so we may have to negotiate
(13:10):
some way of way out clause on this.
And I thought this ismy opportunity, right?
And we got outta that contract.
Sheer luck, it would'vebeen millions of dollars
thrown down the drain.
And so little things like that,
especially when you're dealingwith excessive resources,
I think start to make yourealize, you know what,
(13:33):
be humble, learn, realizeyou're gonna get it wrong
and be open about that.
'Cause it's such a centralpart of the learning process.
- Did you have a moment,
a decade or two later wherethere was a young Pedro
who made the exact same mistake
and that you were able to say, great,
now you've got a lesson for life.
(13:56):
- So as a leader, I thinkthis is interesting,
but maybe this is where it comes from.
There's this phrase, Apoor plan well executed
will almost always be agood plan, poorly executed.
I always tell the people Iwork with that working with me
is probably going to looka little bit like this.
If there are 10 times that we disagree
(14:18):
on the course forward,you're almost guaranteed
to be told that nineof them do it your way
and I'm gonna hold youaccountable for the results.
I believe that there'snot one way to do things.
There's probably multipleways to get the result.
And what's more important isthe buy-in and the conviction
when execution happens.
(14:39):
So if people are executingmy plan all the time,
it doesn't work.
There will be one out of 10times where I will tell you,
look, I'm really sorry onthis one I will not seed
and you just need to disagreeand go commit to my plan.
- I love that one of the world'stop executives talks about
almost losing millions on his first deal.
(15:00):
That's vulnerability.
But second, I become quite obsessed
with the fact that most CEOs
discover their step back moment.
It's this crossroads,if they continue as is,
they become the micromanager
and start wearing the capesof the energy vampire.
If they shift, if they step back,
if they learn to trust each others,
(15:20):
they redefine their role
such that they're giving others wings.
If anyone knows thosecrossroads, it's Ann Wright,
Founder of the Right Approach.
She spent 20 years coaching leaders.
Think of her as a kind of CEO whisperer.
Ann gets past the armor and she finds out
what's really keeping leaders up at night
and then helps them facethose fears head on.
(15:43):
And her first question toCEOs, well it's old but gold.
But she asked, what isit that only you can do?
- [Anne] It's an age old question
but the what can only youdo is increasingly important
because people can get seduced
about now I'm CEO, I need to.
(16:06):
And a lot of what theythink they need to do
isn't exactly what they need to do.
Getting their teams in place is essential.
If they came up within the organization,
the most important role is theperson who's replacing them.
So they're not trying to do both jobs.
And I have people do the exercise of okay
(16:27):
if these are the threemost important things
you said you wanted to do,
where is the time in yourcalendar for doing that?
- [Jimmy] You're saying it'salmost increasingly important
that they ask the question,what can only you uniquely do?
Why is it increasinglyimportant? I'm just curious.
- [Anne] Because everybodywill want them, right?
(16:48):
When you've come up through the ranks,
all the people who thinkthey're your friend
or had a previousrelationship with you just,
you know, want a cup ofcoffee or want to drop in
and before you know it,
you could spend your whole day doing that.
So you have to change.
And this thing about notbeing friends anymore
or not being of the troopsis quite hard because again,
(17:11):
it's something thatgets said all the time,
it's lonely at the top right?
And people say it veryglibly. It's really true.
Once you are in that role,
there isn't a singleperson in your organization
you can tell everything to.
I think there's something else around
if people are feeling a bit overwhelmed,
they want to go to the thing
they really know how to do, right?
(17:32):
You know, I used to be the sales director
and I'm really good at that soI'll just go there and help.
And so I feel good, right?
Which is a short term gratification
and in the long run
stop them from reallythinking about the fact
that their financedepartment needs attention
and that may not be their strength.
- [Jimmy] What I talk abouta lot in the CEO forum
(17:53):
is the problem of our timeis that CEOs are exhausted
and if you're exhausted you'd complicate.
Is that what you're seeing when you're?
- [Anne] Absolutely
Apparently there was a piece in the FT
or something recentlyabout how tenure for CEOs
is getting shorter and shorter.
And some of that is energy.
(18:14):
Interestingly, I justhad this conversation
with a client yesterday
and she said, I really thought I knew
what I was getting into'cause she'd been so close
to it for so long.
And she said I had no idea.
- [Jimmy] What unlockedmy energy in my day job
had nothing to do with my day job.
- [Anne] Exactly right.
- And it was a specificmoment when I was going down,
(18:36):
I think a very typical pattern
and telling you that I'm inthe wealth accumulation stage
of my career and then I'll be at the point
that I can do things I love.
And then you kind ofask what's stopping you
from doing both?
And I then you know, went down to 80%
and started my music businesses.
Is that typical?
(18:56):
- [Anne] And sometimes I'll meet somebody
and they've already got lots of interests
and one of my favorite stories
is of a very senior lawyerwho was also a concert pianist
and a dressage competitorand a photographer
and an artist and hadtwo lots of children.
(19:17):
You know, an older lot and a younger lot.
Astonishing, right?
But he made it work becausehe got so much energy
from those activitiesthat he was even better
in his in quotes day job.
And he was inspiring to another generation
that you could do both.
(19:38):
- There are two things to unpack here.
First, it is so criticalthat CEOs pick the right path
at the crossroads.
Do what only you the CEO can do
and then empower othersto get on with their job.
That's exactly the shiftPedro was describing.
Second, take care ofyourself. The job is lonely.
The job demands more energythan you actually have.
(20:01):
Now most CEOs will tellyou the biggest battle
they fight every dayis with their calendar.
So the last thing theywant to hear is some idiot
saying sign up for improvor take up sailing.
But passions matter.
Every leader we've heard on the podcast
has said the same thing.
An outlet outside of workdoesn't drain your energy.
(20:22):
It multiplies it. DonKatz plays ice hockey.
Christina Jou reads poetry.David Haynes rides motorcycles.
Leaders need energy becauseexhausted leaders complicate.
Because exhausted leadersallow their organizations
to drift into irrelevance.
- You know, if you talk toMarcos, you talk to all of us
(20:44):
who have been there since the beginning.
It's not true that we were acustomer-centric organization
from the get go, right?
This was B2C, it was veryhard to get that one voice
of the consumer, butthere was something else,
which turns out is a phenomenal proxy
(21:05):
for customer centricity,and that's product.
So the one thing thatwas always core at MELI
and that was Marcos.
So at one point movingto sit with the engineers
to send a message toall of his leadership,
product technology matters
and I want you involved in the details.
Like you couldn't say itMELI oh I've RFD'd this off
(21:26):
to the product organization.
Ask them for the delivery date.
If you were a leaderand you weren't on top
of what was working with the product,
what wasn't working with the product,
what the product roadmap was,
you were not gonna last there.
- You know, one of thethings I talk a lot about
is first fall in love with your product.
The customer follows,
this idea of customer first doesn't work.
(21:47):
'Cause if you don't have a greatproduct that delights them,
there's no point indoing customer research.
But then let's justuse product as a proxy.
How did you keep thatrelentless focus on being great,
being relevant to everybodyin the marketplace?
- Yeah, so the centerof gravity within MELI
(22:10):
was always around product and technology.
The decisions were notmade around the P&L,
I always say I had the least relevant
of all the C-level positions'cause I was the CFO.
And then you had the businessguys who were very important.
But the real place wheredecisions were made
were in product and technology.
(22:30):
The second piece is therewas always a strong element
of long-term thinking,which I think also helps you
to focus on the productand the experience.
Then at one point, I'd sayfairly early on in the journey,
late 2000s beginning of the teens,
something else did begin to get introduced
in a more mechanized and methodical way,
(22:52):
which was the voice of the customer
through very detailedlistening and NPS, right?
So because it's a large B2C platform,
you could ask consumers,
what do you like about the platform?
What do you dislike about platform?
The customer service metricwas actually instrumental
(23:14):
because we startedmeasuring per each journey
within the customer experiencewhere the NPS is higher
and where the NPS is lower.
And that feedback loop back into product
I think became incredibly,incredibly powerful
because you were looking ata data-driven enunciation
(23:35):
of where consumers arecomplaining the most.
Oh it's the billing, oh it's the returns,
oh it's the search, right?
And then that was feeding backinto product and tech teams,
and business teams andthat was the first metric
to try to move.
- And just on that, you know,
when you have this maniacalfocus on the technology
and product, this maniacalfocus then on NPS.
(23:59):
You end up with a culturewhere you have to love the idea
that red is good.
Meaning that these problems are something
we're gonna embrace and celebrate.
But every time I listen to you,
every time I listen to Marcos,
it is hard not to get exhaustedwith this relentlessness.
How did you guys keep the energy levels
(24:22):
going that the organizationdidn't just exhaust itself
and fall over and collapse?
What did you do about energy specifically?
- We were working withthese coaches I remember.
And actually people I respect a lot
and I still use till this day,
but at one point they startedveering some of the stuff
they were trying to get us to do
(24:43):
away from sort of these moreengineer like approaches
to sort of consciousbusiness and you know,
esoteric is an unfair word,but softer areas of this stuff.
And I remember getting offand calling the partner in
and saying, you know, what are you doing?
This is not what we want.
We're an engineering type organization.
(25:04):
And his concern was he said,
"Look, I worry you guys aregoing to burn out the motor.
I'm looking your organization,I'm working with you.
And it's just too intense."
And I think that was just notunderstanding what drove us.
If you were to ask me whatdrives you in your business life?
I think the answer would be seeing impact.
(25:25):
Seeing something that'sbroken, trying to fix it,
designing something to fix it
and then actually seeing it get fixed.
That's what keeps mewalking into work every day
so motivated.
So I think when you have thatkind of a group of people
where impact and fixing andseeing things get better,
(25:46):
that kind of intensity doesn't drain you,
quite the opposite it energizes you.
And then there's a secondpiece which is related,
which is we at MELi were veryfortunate to see the results.
We saw the results in thegrowth of the business,
we saw the results in performance
in terms of capital marketsrecognition by peers.
(26:07):
We'd always used to sayat first we had to explain
to everyone what our company did.
And then at one pointeveryone used our company.
So I think when you havethat combination of people
that are driven by wanting to fix things
and wanting to have impact
and then you see theconcrete results of that,
that is not draining, that'sincredibly energizing.
(26:28):
- Guys, this is a mic drop moment.
We are hearing a formerCFO say that his job
was the least important.
What mattered was the folksin product and technology
because with them thecustomers would follow.
Second, we are hearing aCFO say that the one number
that really mattered wasNPS, net promoter score,
a system for feedback, recovery action,
(26:51):
not a financial number.
Pedro's beginning to give usthe shape of the new rules
of scaling, product andcustomer at the center.
Execution matters more than management.
A founder once told meafter he had a meeting
with a very polished HR recruit,
he said the following,"Everything about the professional
management system tells you that execution
(27:13):
and keeping customerpromises is a job to escape.
Do it well and we willpromote you out of it."
Well I believe the opposite.
I want executors free from admin
and quote unquote management.
I want them to get rich bybeing great at execution.
You know we're so conditionedwe don't even realize
(27:33):
how much our language and rewards say
your job only matters if youleave it to become a manager.
No wonder bureaucracies are soul crushed.
As CEOs, the one thing youcan't delegate is the job
of putting the executor at the center.
You have to celebrate themand then you gotta rewire
the company around them.
Because here's the twist,
(27:54):
in bureaucracies processes suffocate
and good leaders have to work around them.
Paradoxically in scaleinsurgents, they love process
because it liberatesthe people who matter.
- I think what attractedme to the current challenge
of grabbing an earlierstage publicly traded,
(28:16):
very large organization butmuch earlier stage than MELI,
was that the scale up phaseis really what makes me tick.
If someone were to give mea blank canvas of a company
that was in that scale up phase again
that actually needed theintroduction of some elements
of mechanization, that's exactly my pond.
(28:38):
That's where I want it to be.
So that's what I hope to be bringing
to dLocal at this point,which is we need to scale up,
we need to become more mature,
but we're gonna do it in a way that works
and that means theright amount of process,
which is probably littleand indispensable,
but it also means beingacutely aware of honoring
(29:00):
how it became the globalsouth juggernaut that it is,
to try to not break any of that.
And by the way, Jimmy, it'sa lot easier to narrate,
a lot easier in theorythan it is in practice.
In practice it is extremely difficult.
- What's interestinglistening to you today is,
you're describing bad processes
as if it begins to erode thebuy-in and the conviction
(29:24):
of the person that's supposedto be benefiting from it.
It's a bad process.
If it's disempoweringin the name of scale,
it's a bad processthat's 23 years at MELI.
That's not taught in anybusiness book anywhere.
- And it's just one small thought on that,
which is this, processhas a very scary tendency
(29:49):
to become an end in itself.
When that's the exact opposite reason
why you institute process.
Where I learned that as a CFOis planning and budgeting.
It's amazing how you lookat most organizations
and you'd think that the actual business
moves in line with thebudget and the processing
(30:09):
because companies spend months
trying to do fortune telling, months.
And you have business unit leaders
who instead of being running a business,
are stressing and sweatingthe whole gaming around
what my annual targetsand my three year targets
are gonna be.
So that to me was incredibly instrumental
(30:32):
about how processbecomes an end in itself,
which is the last reasonwhy you instituted process.
- My example of that is HR,where you put in systems
for your people so thatthey support your people.
So the promotion processesare not capricious, et cetera.
But then you go into a review meeting
(30:52):
and someone says, "Yes,Jack is a superstar
but we can't double promote him
because it will erode theintegrity of our system."
And you're like, why does this system
suddenly become more important than Jack?
And yet you hear it in everyperformance review meeting
in every room around the world.
- And that's the other thing,
I observe my leaders and myteam a lot to see how they deal
(31:17):
with mechanization and process.
And I think there's two extremes.
There are those that very quickly
devolve into the processis what I am here for.
And I think the HR is a great example.
The second thing is in a lot of startups
at the scale up phase,
(31:38):
you also have those early stage people
that worked entirely inthe absence of process
and say, process iscrap, I want none of it.
And both extremes, youhave to identify quickly
and probably get rid of.
What you need is to find the people
that really understand howmechanization of an organization
(32:00):
has to serve the ultimate purpose,
which is the end user, themerchant, the consumer.
And I'm very deliberate about observing
how my people deal withprocess when it's introduced.
'Cause you need to startfiguring out as a big part
of who is equipped for a scale up phase,
(32:21):
how they are able to work with process.
- Listen, before I go to our final,
'cause, we're out of time.
To the final list of fun questions.
Is there anything youwished I had asked you
or that you wanted to say?
- We had a conversation the other day
that made me reflect on something.
And it's this of the moments of truth
(32:42):
or the big moments around mycareer where big decisions
were made and they were a turning point.
I thought long and hard about this.
I was trying to comeup with a list of these
and I kept resistingit and then I realized
why I resisted it Jimmy.
'Cause I think that whathappens in that moment of truth
(33:06):
is not that relevant.
It's everything youwere doing the previous
10 or 15 years, the little things,
the things that you wouldbore the crap out of people
if I had to narrate them on the podcast.
Which actually made itwork at that moment.
And the reason I say this is,
and I remember I was atMELI when this happened.
(33:27):
So when COVID hit, wewent into this immediate
sort of cost cutting,what would get rid of.
And we started looking at thedata and obviously e-commerce,
the business was just taking off
like it had never taken off, right?
And so we talked a lot aboutwhat made that possible.
How smart were we aroundthe COVID decisions
(33:48):
and this and that.
And the conclusion was the reason MELI
hit escape velocity is becauseof what it had been building
the prior 10 years.
Those moments of truth are a consequence
of everything you did before.
We shouldn't be highlightingthe moment of truth.
We should be highlighting all that work
(34:09):
that went in to when thatbig, big moment happens.
The company being able totake advantage of that.
- Two quick points, firsthyperscalers love processes.
They just rejected the processes
of the professional management system.
Second, I think it's worthpausing on Pedro's insight
on moments of truth.
(34:29):
He notes that greatness isn'tone breakthrough, one moment,
it's actually the resultof thousands of decisions
that create the foundationfor that moment.
And on the Founder's Mentality site,
we've tried to collect lotsof stories of other CEOs
talking about that journey,
the journey where you restore primacy
to the people who keep customer promises
(34:49):
and then the magic starts,so hit the show loads.
Now let's get back to Pedro
and a round of rapid fire questions.
What brings you energy?
- Learning more than anything else.
- What drains you of energy?
- Self-interested peopleand what kills me the most,
(35:11):
false agenda-driven conversations.
So conversations about A, whenreally what's going on is C.
- This really brings the next one.
Do you have energy vampires
that you have to encounter in your work?
And if so, how do you deal with them.
- It's the non-straightshooters and the people
who are not really sayingit as it should be.
(35:37):
Eventually those people are very, very bad
for any organization andthey shouldn't be around.
Fortunately I've worked at organizations
again where the cultures were right,
and so the entire organization
had antibodies for those people.
And so the cultureitself takes care of it.
What's the best advice you ever received?
(36:00):
- Look at the movie and not the picture.
Direction of travel matters more
than where you are at aspecific point in time.
And that has been incredibly useful for me
when it comes to sort oflooking at where we are
(36:20):
and maintaining the rudder steady.
Is are we at least movingin the right direction?
- Alright, let's recap the key takeaways
from our conversation with Pedro.
We're gonna have todeliberately work on culture.
We also need to realizethat when you're growing
to the size we're growing,law of large numbers
starts creeping in.
(36:42):
And so what we need to holdsteadfast too is leadership.
- The risk that comes withscaling is the culture fades.
We've got to be intentional.
Culture isn't something you do
to the rest of the organization.
It actually starts with how leaders act.
- It's not true that we were acustomer-centric organization
(37:06):
from the get go.
But there was something else,
which turns out is a phenomenal proxy
for customer centricityand that's product.
- No matter how big our companiesget, it's always possible
to find a way back to thevoice of the customer.
And for MELI, that journeybegins with the product
and the teams that make it.
(37:27):
- When you have that combinationof people that are driven
by wanting to fix thingsand wanting to have impact,
and then you see theconcrete results of that,
that is not draining, that'sincredibly energizing.
- The right culture andmission always energizes.
It attracts energy giversand creates antibodies
(37:47):
against energy vampires.
That's how companies stay relevant.
How about leaders, focusyour personal journey
on these two questions.
What can I uniquely do?
And what passions mustI pursue to reenergize?
Because sometimes playingice hockey or reading poetry,
that's the secret to leadership.
Scale insurgents are rare.
(38:08):
They keep their founder mentality
while also giving customersthe benefits of their size.
They win in a turbulent world
because they're usingnew rules for scaling.
And that's why we'resticking with Mercado Libre
It's a rare scale insurgent.
And in our next episode,we're going right to the top.
We'll be talking directlyto Marcus Galperin,
Co-founder and ExecutiveChairman of Mercado Libre.
(38:30):
So we'll be back in two weeks.Until then, stay curious.
(bright music)
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