About the Host

Ryan is an entrepreneur, podcast host of the show Life After Business and the co-owner of Solidity Financial. Having personally experienced the hazards of selling a business, he joined up with his friend Brandon Wood to educate others on the process. Through their business (Solidity Financial), they provide a platform for entrepreneurs called Growth and Exit Planning that helps in exit planning, value building and financial management.

About the Guest

Marcelo De Fuentes has been an entrepreneur since the age of 23. He became the founder and owner of MERC-GfK, a market research company, in 1991. In 2011, he became the president and co-founder of Ziklum, today’s biggest TetraPak recycling company in Mexico. In 2016, Marcelo co-founded Fundary, one of the first companies in LATAM within the Fintech sector that uses blockchain, smart contracts, and cryptocurrencies for peer-to-peer lending. In 2017, he co-founded Muvu, a mobility solution company based on a proprietary algorithm that solves the financial problem of the car tax deduction.

Marcelo’s personal interests include ecology, graphene, alternative energies, reading, motocross, wine, friends, and, most importantly, his family.

If you listen, you will learn:

  • When and why Marcelo decided to be an entrepreneur, as well as how he jumped in with both feet.
  • The benchmarks Marcelo met while growing his business.
  • Some of the goals Marcelo wanted to reach as he continued to invest in his company.
  • What it meant to Marcelo to create a valuable company, as well as how he invested in his employees to build human capital.
  • What influenced Marcelo’s views on what defines a valuable company.
  • Why Marcelo went down the route of partnering with someone else, as well as how the partnership transpired.
  • Details of the negotiation process and how the deal progressed with an agreed-upon formula.
  • What Marcelo learned from two other companies who wanted to buy the company.
  • What it was like going from being a solo entrepreneur to becoming a partner, as well as how the rest of the process leading to a sale unfolded.
  • Some of the mixed emotions that Marcelo went through as he sold his business.
  • How Marcelo created a personal safety net after he sold his company by continuing to create value and grow.
  • Some of Marcelo’s current goals and projects.

Full Transcript

Announcer: 00:07 Welcome to Life After Business, the podcast for your host Ryan Tansom brings you all the information you need to exit your company and explore what life can be like on the other side.

Ryan Tansom: 00:16 Welcome back to the Life After Business Podcast, this is Episode 78. Do you know what role your business plays in your life? On today's episode we're talking about how building a business is like building a safety net and not only for your financial freedom but more importantly for your ability to change the world and the people around you while you have fun and the freedom to fully realize who you are as an entrepreneur. Today's guest's name is Marcelo De Fuentes and after getting laid off in the 1990s, he started his own market research company which he grew up to 700 employees with offices around the world and Marcelo shares with us some great stories and how he built the company and the process he went through in order to sell it. There was a couple of buyers at the table, he had a couple of different experiences with how they valued it and he explains why he chose the German company GFK which was the fourth largest market research company in the world at the time and towards the end of the interview Marcelo and I switched gears and we start talking about what it was like post sale. He sold the company in chunks so he had a couple of different experiences, emotionally and financially about how we ended up divesting from his company and what it was like afterwards and how he is now back at it rebuilding the safety net which is his community, his ability to be an entrepreneur and to create through the multiple different ventures he's involved in today. I had a blast talking to Marcelo, and I really hope you enjoy the episode.

Announcer: 01:42 This episode of Life After Business is brought to you by Solidity Financial's growth and exit planning. Their proven process gives you clarity on all of your exit options and how those options impact your financial success, timing and future happiness. Sell your company on your timeframe to the right buyers at the price you want.

Ryan Tansom: 01:42 Marcelo, how are you doing today?

Marcelo De Fuentes: 01:42 Good morning, Ryan.

Ryan Tansom: 02:09 God bless technology because we are across the world from each other but we came across through some mutual connections. And your story of what you did of what you've done as an entrepreneur, a serial entrepreneur, is pretty amazing and I'm looking forward to hearing it. For our listeners, maybe can kind of go back and share with us the moment that you decided to be an entrepreneur and how you jumped in with both feet?

Marcelo De Fuentes: 02:37 Sure, Ryan. If you don't mind let me start saying that. Yeah I as you said God bless technology. Nevertheless I am not that techie guy. I'm 52 which is... I don't feel old, but in technology, 52 years old may mean a lot. So let me bring you back. Couple of decades maybe three decades. I started my business when I was 24. And as a matter of fact this happened... It was not planned. I used to work for a market research company and honestly one day I got fired. Things were not running very well in the company as a company and on one Friday, I got to the into my job and in the afternoon suddenly I was called into the owner's office and he said that the business was not doing that well and that it was going to be my last day working for him. And you know that that was a very difficult decision to you know to digest not only because it's always difficult to get fired but also because at that time we were running through difficult times family times economically. So I was part of the financial support of the family and nevertheless I was not married. I was living with my parents. So that happened Friday and on Monday I was supposed to find a job... which I did; I didn't find it, but I started the you know the process and I spent like one month looking for a job in several companies and a friend of mine called me that he needed a market research for a very specialized segment and he offered that to me due to the fact that I was unemployed with nothing else to do, with you know with a lot of bills to pay. I said well yes, of course!

Marcelo De Fuentes: 05:02 Maybe this is this is this is a God's call and I'll take it. And then a longish story. Long story short this is the way I started. As I said this is it was random. It was something that happened and since that first research. That happened in nineteen ninety, I decided that that might be my way to go professionally. I spent one entire year working in my house. I at that time I didn't have the money enough not even to pay rent. So I spent that year working and on the other hand saving money to start the business. So this is the way I started. [Ryan interjects: that's awesome.] In 1990 with zero employees my mother doing some coding and my sister bringing the copies.

Ryan Tansom: 06:05 So how did you go from working in your house. Obviously you drank the entrepreneurship koolaid and you decided it was your calling. What were some of the major milestones because you grew to a very significant size so what were some of the major milestones as you decided to grow from, whether it was acquiring from certain clients or you know employee size you know what were some give us some kind of benchmarks and where you took the company.

Marcelo De Fuentes: 06:31 Well I think this is a great question and I love to talk about it because you know this was not easy for me because bottom line I was more like an academic guy. I was not a business man. No one in my family was a business person. I was more like academic. I studied economics with mathematics and at the beginning, I didn't realize that it was important to understand the business side or the financial and business issues in a business. I know this sounds crazy but you know I was very focused on doing things right. Using the best statistics I'm trying to give to the market the best in Mexico and this way the business grew and you know growing a business brings some of the problems that you might not be aware of when you don't have them. And those problems are related with the business with an ongoing business. So as you asked what were the milestones? I spent like 10 years building up a financial, solid firm without debt and then running the business not very professionally but ten years after I started the business was growing in the two digits every year. I thought that it was. It was like a break even point either. I could have stayed as a small business. We made very very good profit margin. Or maybe to decrease somewhat the profit margin and start hiring on one hand professional guides on the second hand sharing more of the profits of the company with which the first level employees and giving them a reason to stay. Not only a reason to stay in the company but also a feeling that they belong. And another very important milestone happened when a important crisis in Mexico, an economical crisis came, and way we overcome that crisis is that I increased salaries, I increased some things that I was given- were given to the employees like cars and insurances and so on.

Ryan Tansom: 09:21 Well, you had a lot of employees to at this point right? So I mean those are not small things that you're giving away.

Marcelo De Fuentes: 09:27 No no at that time we were around 100 employees. It's not like 90 employees only in Mexico. And the other very important decision was to to bring the company into a multi-national level. And let me quote, please, "multi-national" because multinational was just another country [unclear crosstalk]. Yeah that was like... More like something for myself.

Marcelo De Fuentes: 09:58 So I decided that all profits from the previous couple of years were invested in what I've said and opening operations in Colombia. Something that that was not only important but it was you know like a huge goal to pursue because of investments because of controlling when you have tried to put your mine in 20 years now. Communicators were not as are today so controlling a small company which is 2,000 miles away from your home or where you work means a lot.

Ryan Tansom: 10:40 Well yeah I mean you don't have Skype like we're talking on right now.

Marcelo De Fuentes: 10:47 We didn't have Skype and you know all the communications in and in the digital world were really something new and please also put your mind in Latin. So yeah it was it was something it was a breaking point set and you know my mind at that time was if I get multinational, I may overcome future crisis that was like that the main...

Ryan Tansom: 11:18 The mindset behind it? You know well what else Marcelo when you were like as you're starting to grow and you're you know you're at this after 10 years and you kind of shift in by investing some of the profits into the future vision. I mean what were some of the things that you what were some of the goals you were trying to reach? Was it revenue size, employee size, was it like disrupting an industry like what was driving you everyday?

Marcelo De Fuentes: 11:39 Oh perfect, Yeah. You know what was driving me was not the PNL, was the balance sheet. Let me try to explain a little bit. Most of the businesses mainly small businesses work thinking under profit and losses of the company. Know the PNL are much lower. What's my revenue my direct costs my expenses and how much it can put in my pockets? Bottom line it's okay. I think that the real change comes when you think more in the balance sheet. I mean in the value of the company, valuation of the company, because at that time you have a mindset change in which you believe more in the long-term future rather in the short-term.

Ryan Tansom: 12:37 What were some things that you saw yourself do differently once you had that shift in mindset like what were in your mind what what did it mean to create a valuable company and what were some of the long-term things that you trying to do to hit those goals?

Marcelo De Fuentes: 12:52 Due to the fact that we were a service company, the main issue was to create human capital. That was the most important thing by far.

Ryan Tansom: 13:05 So in what ways did you do that? Because I know service companies you know there's a huge challenge because now that you're in the tech space and we can talk about that a little bit later. But you know the difference between a service based business like you're in or you is your services are people it's a lot more difficult to increase the value and scale it as fast as it is in the software world. So what were some of the things that you were doing to keep your employees to build that human capital?

Marcelo De Fuentes: 13:32 Yes. What you said is completely right. I mean it's by far easier when you have a production plan for example when you want to increase your revenue well you have to invest in the cities. It might not be Lenio but that's the way it happens when it's a service is quite different. So what I did at the time is to share part of the company with employees. It was not a it was what we shared at that time was all profits of the company. So we created or I created a compensation structure for my first liner's in which they were part of the company as owners. Maybe they didn't have shares of the company but they shared profits of the company, all profits not just in the company they were working because I started the business in Mexico and Colombia and then we moved- we opened operations in Venezuela Ecuador Panama and a couple of more countries. So we have a very interesting like basket in which all first liners participated.

Ryan Tansom: 14:51 How many first liner... What did that look like because I know that you know you know you're talking about the executive team right? The bench- that a lot of people call the bench you know, having that that you know really really powerful next-level management you know what was the makeup? Did you have a handful of those people like how did you find them and how did you trust them to the point where you were able to do all this. You know all my first liners were people that worked for me for several years so I didn't hire- no, I'm lying.Only one managing director, the country manager which were doing Venezuela, I hired him directly to to take that position as managing director of the country. All the other cases were people that worked for me at least five years before they became first liners.

Ryan Tansom: 15:47 So you know as you're sharing the profits with these people did you see their reaction- see their actions change or their work or vision or culture... How did things kind of shift as you started doing that?

Marcelo De Fuentes: 16:00 Well the first- to share profits is just one part of the equation because you may share profits but the other and your question is very, very, very good because I know some companies that are very aggressive in terms of the compensation packages they bring to their employees but they are not that successful. And I think that the other part of that part of the equation is that I really spend a lot of time training the first liners to change the way they thought at that time- I mean the mindset to become businessmen and business women because I used to have a lot of first women in that first line. Something that I feel proud of. So I- with all of them I spent a very important part of my time teaching or... I don't like that word. Maybe showing?

Ryan Tansom: 16:00 Mentoring, or you know leading?

Marcelo De Fuentes: 17:06 What I learned, not in school, but the hard way [Ryan interjects: the School of Hard Knocks, right?] Like School, no?

Ryan Tansom: 17:16 So I mean I love it because I think that's you know one of the key ingredients that you will see in successful companies. I'm just curious Marcelo you know when you said that you were an economics guy and you were not a business guy but you started making these very intelligent business decisions along the way. You know what... Where did you find the influence or where did it spark that you should be looking at future value and you should be doing things like this? Was it just through trial and error or did you have resources or people that were kind of guiding you along the way?

Marcelo De Fuentes: 17:49 No no honestly no. I never hired any external advisor. No honestly this was something that I I have to say that I don't know from where it come from. I have to say that maybe something very important: I am not that greedy. I mean I think that money is a consequence and when money is a consequence, really enjoy the journey. But when you think that money is the goal, I think that that you tried to pursue very short-term goals and I really believe from the bottom of my heart what I've said.

Ryan Tansom: 18:44 It's a lot more fun too when everybody is there right. I mean when everybody is in the trenches all working together it's a heck of a lot more fun.

Marcelo De Fuentes: 18:48 Yeah sure. And you know I want to say something that might sound weird, but you feel right when your personal compensation at the end of the year is very close to one of your first liner's when that when the year is not the best of all. I don't know if I said it clear.

Ryan Tansom: 19:09 No I think you're right. I mean because you know you you know if if if you've had a hard year things are going... I mean everybody looks to you. I mean you're the one that everybody's looking at. And I think you know. Yes you still own the company of the future value that whole entity's yours. But you know if you're taking down you know huge salaries and a lot of perks while everybody else is suffering I think it says a lot about character.

Marcelo De Fuentes: 19:33 Yes. Now exactly what you said is driving the company with a balance sheet. I'm not big with PNL.

Ryan Tansom: 19:40 So you know as you're doing this and you're looking to the future. I mean what were like... What was the end goal? I mean because you you've been growing the company and you grew it significantly. There's a couple other milestones for when you decided to partner up and do some other various things with the business or how did you get to that point- where were you going and then how did those things change as you were... because I think it was 2002 right? So made me explain what was the triggering event that that opened up your eyes to partnering up with someone and why did you go down that route?

Marcelo De Fuentes: 20:14 Because I'm Mexican and I went through maybe six very big and important economic crisis. You know when I used to study economics in the 80s and we received at that time in the universities people coming from the U.S. obviously to discuss economics in rough times for most of the people from other countries was something a little bit like theoretical. But when you when you go through that through those crisis. When I say crisis just take into consideration that in 2009 for example sample the GDP in Mexico decrease in real terms 7 percent. [Ryan interjects: Wow.] I mean it's a rollercoaster. So when I decided that it was important to partner with a bigger company a multinational company nevertheless we were multinational.

Ryan Tansom: 21:20 They had three- they were in three countries, right?

Marcelo De Fuentes: 21:26 At that time, I was in four countries but my partner not my partner was in around 10. Well, a big difference, no?

Ryan Tansom: 21:34 Yeah. Right. So how did they did they knock on your door or how did like how did the whole thing kind of transpire?

Marcelo De Fuentes: 21:42 It was it was also that was something I would say at a lucky- it's your lucky day because they were... so a German based company that they named the company GFK at that time, it was the fourth largest company around the world - research company market research company and they came down to Mexico looking or opening operations in LatAm until Mexico was one of the countries. Was the second most important one in the region. And they were looking for a Mexican company to partner with. And as a matter of fact I was not in their radar. I was not in their loop and I this is something that they said to me. I came to their to their attention because a couple of previous meetings with another two Mexican research companies did it didn't go that well. So they came to my office and I think that well you know I really believe and when you have a good feeling with people they were really lovely lovely people very academic and that I think that was like the first first impression very good. Second very important thing is that with one key at that time they were able to open four countries and business wise, I think it was a very smart decision on their site because at that time I was running Mexico, Colombia, Venezuela and Equador.

Ryan Tansom: 23:23 So and how many employees do you have at that point?

Marcelo De Fuentes: 23:31 We were around 500 around 500. Yes. Yeah.

Ryan Tansom: 23:32 So you know when they're you know so obvious I agree to two and you can see when you get internal feelings. It's like a first date right. I mean you'd you kind of feel the synergies with those people so then after that you know there's a lot of more the technical stuff that has to happen which is valuing the company, understanding how the deal is structured and stuff. How did they how did you guys start going into those conversations and what were the back and forths of the outcomes that you guys were each trying to hit?

Marcelo De Fuentes: 24:01 Well it was very straight and forward. We signed an NDA and they did a... I'm sorry, I forgot the word [Ryan interjects: that a the due diligence are kind of like an audit?] Yes, sorry yes. They did due diligence for six months. [Ryan interjects: Oh my gosh!] Yeah for six months with them.

Ryan Tansom: 24:27 What did they do? Just like send a team of people over to your office and just camp out for half a year or what?

Marcelo De Fuentes: 24:32 No they hired at that time, I think that it was Ernst and Young. So I have them in the company for six months in all of the countries that I've said, four countries [Ryan interjects: Oh my gosh.] Yeah. So so you know they went first through all financials. They went through operations because the business that I used to have operations you know were a nightmare. Operations was difficult when all companies. But in a market research it was a nightmare. It was really really something important to look up.

Ryan Tansom: 25:17 Well, you've got 500 employees in four countries and it's all people. Oh my gosh.

Marcelo De Fuentes: 25:18 Yeah. You know it was everything was very it was not technological. Obviously we used to have technology but market researcher, the research the way we used to do it. Remember we used to do all Face-To-Face interviews. You know when you asked at that time for market research, you'd have to wait a couple of months maybe three months to get results and now you can have results maybe in five minutes.

Ryan Tansom: 25:57 Right. [lots of overlap] During those six months was there anything that like got you to the point where you were annoyed or regretting going down that route or surprises that came up?

Marcelo De Fuentes: 26:06 No. You know something that they did really well is when we signed the NDA and you know the first agreement we signed a formula. And the formula was very easy. It was an average of the EBITDA of the previous two years multiplied by a factor plus 20 percent of the average of the previous revenue of the previous couple of years also. So we had a problem.

Ryan Tansom: 26:51 Did you know Marcelo when you were going into that you know, there's a lot of entrepreneurs that are not overly aware of what EBITDA is or how to get to it or what it means or what those multipliers are. So did you know before going into that kind of what the formula should be and how you get to it? Or was that an education process for you?

Marcelo De Fuentes: 27:08 Yes I I I knew it and I knew it because I sold my company to GFK, but something that I I haven't said to you is that I was in a selling process falmost two years with another two companies. And you know those years where those were really difficult times.

Ryan Tansom: 27:34 So that was different companies that you owned or was it four different processes for the same company that you were trying to bid against?

Marcelo De Fuentes: 27:40 No no no no. There were two other companies. As a matter of fact, one of the companies was a U.S.-based company. So there were another two multinational market research companies. So they were looking for us. And so when I when I got into the negotiation process with GFK, I had a Ph.D.

Ryan Tansom: 28:07 Trust me I've been through some of those scenarios too so these other companies that you own, I mean what were some of the what were the major milestones of that Ph.D. that you learned that you might not have done correctly through the other ones that you brought to the table with the current company?

Marcelo De Fuentes: 28:23 I love that question because you know the real issue and why I didn't say yes to the other companies is that the formula that they were proposing for the deal was a discounted cash flow with a present balance. So what I think about that is that it may work for companies for some companies in some segments, but in my case it was I thought that at that time and I'm not at that time I really believe even nowadays that it is quite not only difficult it's quite unfair to get a valuation on what's going to happen. Because it's not only that the small letters in the contract is what if you don't get to the point that we all agree on. So if you don't then comes tons of [Ryan interjects: stipulations and ways that they don't have to pay it right?] Yes, penalties. So if you don't get to that point by 10 percent you will be penalized with blah blah blah. What I answered what I said to those companies is can- are you really aware that you are dealing with a LatAm company? I don't know what's going to happen for example in Venezuela with all my respect Venezuela of all countries. But you know that I leave every day with the Jesus on my mouth in Mexico trying not to go through a huge economic crisis like the one that I talked to you two minutes ago in Mexico or in Ecuador or in Colombia. So the big difference and the reason that I said yes to GFK is the future is it's something that we will as partners is something that we have to build together. We are willing to pay you for what you've done the condition before that work is that you have to sell the company in trenches.

Ryan Tansom: 30:56 So I'm curious Marcelo are the other two companies were they like financial buyers which is why they were doing the discounted cash flow versus like a you know a strategic partner like GFK?

Marcelo De Fuentes: 31:08 No no no. Did you mean that they were like venture capitalists or something like that?

Ryan Tansom: 31:13 Yeah or like private equity or something like that or were they actually other market research firms?

Marcelo De Fuentes: 31:18 As a matter of fact, those were market research companies. Yeah yeah but do you know that the huge difference is that those companies were managed by people more financial oriented. And GFK used to be a company very technical very ... focused mportantly in the technical side. So the management board of GFK at that time all of them were part of the of Academi part of them were researchers for their entire life. So they care [Ryan interjects: They got it.] more about the people rather than financials. And I love that.

Ryan Tansom: 32:09 So yeah I. Yeah that's it's amazing especially if you cared about your employees like you showed with the profit sharing and the training and mentoring and all that stuff. So now that you've seen you go down to the process and you've got Ernst and Young there for six months and maybe you know you sign the deal. Now you've got 50 percent partners. What was it like going from a solo entrepreneur being able to call all the shots to having a bunch of partners?

Marcelo De Fuentes: 32:38 For the first years and when I say the first years I- let me say something. I used I had a two year contract at the beginning that so I was supposed to sell the second part of the company. No I'm sorry three year contract at the end of that third year. [Ryan interjects: Oh really?] Yes. But we didn't end up doing it. And we added a couple of years more because we were in a honeymoon. We were very happy. I was very happy with them. I suppose that they were happy with me. Otherwise they wouldn't sign them. So answering you at the beginning it was the honeymoon at the end. I have to say that it was not that fun.

Ryan Tansom: 33:29 So when you say the end how many years... What changed? I guess maybe before it... like so how many years did it start- the relationship and dynamics start to change and what changed about it?

Marcelo De Fuentes: 33:43 It changed for the last two years and what drove the change at that time it was the whole management board changed with Egypt gate and what happened at that time is that what I said to you that it used to be a management board, very people oriented and very technical and methodological. And like yeah those kind of more academic. The management board changed for people more on the financials. And at that time we were struggling as partners because I was defending my beliefs.

Marcelo De Fuentes: 34:30 Nevertheless we were giving very good profit margin. As a matter of fact the best profit margin in the region. But they wanted other time for me to change, for example, my compensation program. I can understand that it was it is quite difficult to have a Mexican employee earning more money than a German one at the same level. And I really I really can understand that but that is something that if you change it you might pull the trigger. And I was not very happy with that. I didn't feel well at that time moving, I said no. So we entered into fights and they say you have to change. And I said No I'm not changing because I own 50% of the company I'm still making decisions and in the meanwhile when if I give you back a very good profit margin I understand that I'm putting you in a very difficult political problem. But so I have to defend my business model. And you know we obviously want at the time it was the size, no? And it was logical to change the company.

Ryan Tansom: 35:53 But it's frustrating you know being in a position where you sign up for one thing and things change, regardless of whether it financially makes sense or not. And all of a sudden you just have different beliefs than the partner that you originally signed up with so it just puts you in an emotional spot that you didn't want to be in. So how did you get out of that. I mean did one side did you or the them decide it was time to then purchase the rest of the business? How did the whole rest of the transaction actually unfold?

Marcelo De Fuentes: 36:22 No honestly that decision was taken by that time. The term of the addendum expired. I received a phone call from the president of the company saying that they were not signing and not another addendum and that they wanted me to leave the company at that time. I agreed, but nevertheless it was not a question. [Ryan interjects: It was a demand, but I agreed.] I wanted to feel that it was like something negotiated.

Marcelo De Fuentes: 37:04 Yeah I was not feeling right in the company. And you know they were not feeling right with me. So they took that decision. They hired a managing director only for Mexico. So what they did is they- I used to run the company as one company in all my countries. And I was respected while I was owner. When I left the company, they divided the countries... they run the countries one-on-one. So they hired a managing director for Mexico because all the rest of the countries that I used to manage they had a managing director. So they kept each managing director and they hired one for Mexico. And I spent like honestly like when I worked with him it was like a couple of months, but bottom line giving control of the company to the managing director I spent honestly one hour and I said the only thing that you need to do to make this company successful is don't move the business model. Stick to it. Stick to the business model. Don't change the business model that I have. This company runs well the way it is and just enjoy the ride. I don't know what happened.

Ryan Tansom: 38:29 I was going to say, I know based on what you said. I can probably guess how they approached it. You know what was it like Marcelo handing off your baby like this, the company that you created. You know what was the thoughts in your head the emotions that you were feeling as you were going through this?

Marcelo De Fuentes: 38:44 I think that the best way to resume that is, I cried for one day and you know the feeling was it was bit like a mix feeling. I had a lot of mixed feelings. On one side you feel very good because you feel that the job was well done in your life. But on the other hand at that time I was I was forty-six. I meant, to be 46, you are not a teenager but you're not prepare to retire.

Ryan Tansom: 39:21 And your whole identity is wrapped up in your company, too.

Marcelo De Fuentes: 39:23 Yes sure. So it's your baby. And you know the feeling is like... Like when someone takes away from you a safety net and you are in a circus. And when you have a safety net obviously I'm not saying that you don't take risks. It is it is different than when someone says hey you have to do this without now the safety net.

Ryan Tansom: 39:47 So the safety net for you Marcelo was it a financial safety net or an emotional saftey net?

Marcelo De Fuentes: 39:51 You know very very good question it was more of an emotional one it was more the company you know because financially now now you have cash. Now you have money. You were paid, no? And this is something that I didn't like at the beginning. A lot of people came to me other times saying wow you should be very happy now you can play golf. As a matter of fact, I don't play golf. Now you can play golf and you can relax and you can enjoy. And the only thing that I was not doing it was I was not enjoying the time. I was not having fun at all. Yeah. But people tend to see things only in a straight, money-driven way. And then you come to you realize that money obviously is important but it's just not the most important thing. And mainly when you have your primary necessities covered. And when I say a primary I'm not saying I'm not talking about a feeding or I'm not talking about the house. I'm saying that I mean I'm not I don't have a private jet. I don't need it. I don't have a yacht. I don't need it. Really I don't need it.

Ryan Tansom: 41:10 Well I think you hit on a lot of extremely important things. I had a my own personal experience very similar to yours and I was actually talking to another gentleman that was on the show and we were really talking about this entire scenario. And I like how you described as a safety net and I don't think people understand what that safety net consists of until afterwards and then you realize oh shit like I had a lot of other emotional needs that were being met through my business that I wasn't aware of and I'm curious what what did you notice what what did that safety net consist of for you? You know if you were to you know because I think you've recreated that in those dynamics. What did what did you miss the most?

Marcelo De Fuentes: 41:57 I think I'm an entrepreneur. That's more than a businessman. I think I'm I am an entrepreneur. So my personal safety net is to feel that I'm creating things everyday, so let me tell you what happened afterwards. I opened a recycling company, a recycling company that I have today. I own today. [unclear]. I really believe in in in the green business and I really believe that this world deserve deserves something better than what we are doing with the earth. So I started this recycling company a company today is the largest private recycling company in Mexico. But it was not good enough. It is not good enough because nevertheless it is a good sized business as it has 65 employees.

Marcelo De Fuentes: 42:58 I needed something more in the intellectual side. And then somebody came to my world and they came to my world and to my life in 2016 with a very good friend of mine. We started saying that we have to take advantage about technology about what was happening in the world about our experience. And I really believe that the financial world will change a lot; is changing and will change. We will not recognize the financial world in five years now. [Ryan interjects: I would agree with that.] So I want to be part of that. And then we started working on ideas and and Fundary came to us.

Ryan Tansom: 43:49 So I love it and then that's a good segue into kind of what you're doing now because so you said I think you hit the nail on the head which is you feel like you want to you want to be creating and you want to be evolving yourself as you're moving into all these different areas. So what is it that you know so maybe explain Fundary and explain you know what is the passion and what you want to grow? Because I think you've reinvented yourself in a pretty amazing way. So you know I guess maybe two questions. One is that you know what are you what are you... What are you personally trying to accomplish through this? And how does that type of the business end and what is it that the business actually does?

Marcelo De Fuentes: 44:28 Okay let me let me say first that maybe this is a little bit. I did it because I'm selfish and why I'm selfish because I have to be able to get out of my safety net. And my safety net is I have to feel that I'm doing something financially that might have obviously results for me. But I don't want to feel right. I have three daughters and I really want them to do to be proud of me. So why Fundary and why is Fundary so important for me in this part of building on my safety net and why it's important. As I said I'm selfish but it's important because I think it's important for society. Let me give you some numbers. In Mexico financial banking penetration is below 40. Thirty seven percent. I mean thirty seven percent of the people have any kind of bank account. Just imagine or try to imagine a country with this this figure growing and trying to move from the underdeveloped world to the first world. It's impossible. [Ryan interjects: yeah that's crazy.] It's awful. I mean, we have to do something and the typical and traditional financial segment is not going to do so. And it's not going to do so because they don't care and they don't care because they don't need it. They don't need it. So with this in mind, Fundary came to life. And again I'm selfish because I want to feel good. On the other hand I really want to feel good because I know that if we succeed with Fundary, a lot of people will have a better life.

Ryan Tansom: 46:19 And I think it's an amazing thing that you're doing because the one of the gentlemen that spoke to, we were talking about had you know maybe there's like a call to action to have businesses switch and have more of an altruistic purpose instead of just managing the balance sheet. So I think you know I think it was very awesome how you called out. You said you were selfish but I would disagree with that because I think what you're doing you're accomplishing a lot of things at once so it's not like you're chasing another dollar to create you're trying to change something that is going to help everybody and everybody should win. You know so I don't think that there's anything selfish in my view.

Marcelo De Fuentes: 46:59 You know when I say selfish is maybe let me elaborate a little bit, taking some words that you said now. Altruism I think it's something that all of us have to do. But it's not the right way to move a country. So I think that we have to take advantage of technology to make a better world, to make a more democratic world. Not in political terms I mean in terms of way of life. So I decided at the time not to to work on an altruistic companies. Nevertheless I do. And I do it. So I like it. But on the other hand I believe that if you want to succeed and you want a country to grow and do what you have to have businesses. And if you have businesses you have to have profits but you have to share the profits not only with your team but also with the rest of the society. How having fair enough profit margins and thinking on how to do a business that really matters.

Ryan Tansom: 48:08 I mean well said. And that is what I mean that is some amazing stuff and I and I agree with you and I think it's very cool how self-aware you are and it and to be able to line all these things up so that way you can enjoy the ride while changing how things actually operate. And you know one piece you know to go down into that little bit of the technical stuff because I think it's pretty cool and it's it's a hot topic these days but so Fundary that you guys have the. The technology staggers block chain crypto currencies and smart contracts right. So your beach heading into this this world that everybody is talking about these days, correct?

Marcelo De Fuentes: 48:48 Yeah we are working on a very very updated on the technical side. Yes.

Ryan Tansom: 48:54 So you know what would be success for you if you were to look at 2020 with your team and your technology and the mission what like what would really get you going and what's the what's the milestones you're trying to hit?

Marcelo De Fuentes: 49:11 In the very short-term, the first milestone is to have a nice ICO. And when I say in the very short term we are thinking about this within the next couple maybe three months. And this is an important milestone because to do an ICO I feel it's a very healthy way to have enough economical resources to build up that business. Let me say something very quickly Fundary, the birth product infinity will be a peer-to-peer lending club a platform that is already working. We are just moving this platform to a smart complex. This is something that should be finished by the end of the month, end of January. And so this is the first milestone in a parallel we are working building up what's important for us which is our Ambasador program this is something that maybe we should in some other show if you like, I can explain it to you. But our Ambassador is... our ambassador program is something that we really believe that will help us to increase the business quickly. But on the other hand it will help us to keep the default rate very low in all the loans.

Ryan Tansom: 50:36 It's your people your people skills I mean you manage 700 people across the world I mean it's... you're combining technology and people and I think it's pretty cool.

Marcelo De Fuentes: 50:43 Yeah. And you know if we are we are focusing on having at least 20,000 ambassadors within the next couple of years. Yeah. Those people were not will not be employees. But what's important about this is these ambassadors and the people borrowing the money and the people receiving the money all of them will have a some kind of financial benefit. So yes this is something that this is why I said to you this business may have a huge very important social impact. Very important.

Ryan Tansom: 51:33 Well you're changing things and you're enjoying the ride. And I can hear the passion in your voice which is so fun because it sounds like you've rebuilt your safety net and you're going to check a lot of boxes in the in the process too which is just a lot of fun.

Marcelo De Fuentes: 51:46 Honestly I'm very grateful with you because you are with this interview. You are helping me to do keep on building up.

Ryan Tansom: 51:55 So I love it. I'm going to have to I'm definitely going to be grabbing that analogy from here on out. And so Marcelo what is the best way for our listeners to get in touch with you?

Marcelo De Fuentes: 52:11 I'm at your disposal any time you can e-mail me. The best way to to to contact me is to e-mail [Ryan interjects: and I can have that e-mail in the show notes, too.] Yeah please please do it. It will be a pleasure to to answer any anyone who has questions or whatever.

Ryan Tansom: 52:30 If there's one thing that you want to highlight from all this stuff that we talked about or one thing you want to leave our listeners with what would you think it would be?

Marcelo De Fuentes: 52:36 Yeah we should never never surrender and we should always keep our entrepreneurship ambition. I really believe that this world not only deserves this, it also needs it. So yeah I love also what you do. What I know about you and I what I wanted to say is all the new generations they have a lot of things to do. We have to use technology to have a more democratic world with less differences in terms of you know way of living. This is something that we have to work on.

Ryan Tansom: 53:17 Marcelo, I'll tell you what I want to live in the world that you envision. I can tell you that. [Marcelo interjects: Thank you]. Thank you so much for coming on the show I appreciate it.

Marcelo De Fuentes: 53:23 Thank you Ryan he was really a great pleasure to talk with you.

Takeaways

Ryan Tansom: 53:29 Thanks for sticking in there till the end. I hope you enjoyed the interview with Marcelo. I learned a ton from talking with him and the top three things that I want to highlight are one of the big takeaways was the ability to be true to yourself and who you are. Marcelo did an amazing job articulating what it was like to realize that that safety net was gone. And to realize that he likes to create and then reinventing the scenarios for him to be able to be going towards his passion changing the world and having fun again and I think it's huge and it's not an easy process. So if you've got the ability to find out what drives you and what your safety net looks like before you sell it's really really worth the time and the effort and the look in the mirror before you have to be outside of your company looking at what it used to be like. And the second thing that I think is really worth highlighting is that it's about the people and the culture and your employees. And the trend is from all these successful entrepreneurs is how they valued their people. And it wasn't about them or their egos and they place so much of the value on their people that things naturally took care of themselves like getting a lot of money for your business, having a lot of fun building the community and the culture and everybody can see the magic that's happening if you treat them right. The Third takeaway that I had is understanding your company's value and focusing on the long term sustainability will position yourself in the right place regardless. So when Marcelo switched his thought process to look at company value a lot of things started working really well for him, which is why GFK knocked on the door and was able to offer him the price that he wanted. I hope you enjoyed the episode and until next week start thinking about what your safety net looks like and what your business means to you.