Building a Global Hardcore Financial Technology Company from Brazil: Ricardo Josua, CEO of Pismo (Part 6)

Sramana Mitra: What is your engineering team in Brazil like? How big is it? Is it all in one place?

Ricardo Josua: It’s spread around the world. We have 280 engineers at this point.

Sramana Mitra: In Sao Paulo?

Ricardo Josua: No, they’re remote. Maybe 120 are in Sao Paulo. We have become remote-first. People have an office if they want to go to an office. If the team wants to have a meeting and three of them are in India, everyone has to connect on their own device. It has to be the same experience for everyone. We have now engineers in India and Singapore. We have a growing team of engineers in the US and UK.

Sramana Mitra: Judging by how much money you’ve raised, I take it you have hit the unicorn valuation number?

Ricardo Josua: No. This might sound self-serving. With the downturn, people are realizing this. The valuation you get on a round is not that relevant.

Sramana Mitra: For me, it’s not relevant at all. Then you pile up liquidation preferences. It destroys your cap table and your ability to raise money. There are lots of bad things with being a unicorn.

Ricardo Josua: Exactly. It’s becoming more obvious now. It’s hard to fit the shoes of a multi-billion dollar company. It’s not an easy task. Liquidation preferences places founders, especially, in very awkward situations where they are priced out of their own company. I’m very glad that we didn’t concern ourselves with valuations too much. Of course, there’s dilution. In the end, dilution will be given by exit time. For me and my partners, this is our swan song. We are building something to last.

Sramana Mitra: There is a big difference between real unicorns and fake unicorns. Real unicorn has real significant revenue where you can justify a public market valuation. Fake unicorns are term sheets laden with liquidation preferences.

Ricardo Josua: I wonder what the situation for the first investors and founders is. What about your stock options? What do you tell your executives that had been betting on the company? Your strike price is now above the short price. What you thought of as a bonus is non-existent.

Sramana Mitra: I have absolutely no fascination for fake unicorns. In fact, I hate fake unicorns. They become unicorpses.

Ricardo Josua: I hate ARR multiples which are meaningless really. The second thing that is very telling of our previous situation in the market was that people were using the runway as the base KPI for their business. I just have this many months before I need capital again. The internal metric is time-to-breakeven.

Sramana Mitra: That’s the fundamentals-oriented business-building process that has gotten upended. Some of your investors are the culprits – Softbank and Tiger. This is a problem.

Ricardo Josua: To a certain extent, that was a rational decision. In a zero-interest-rate scenario with no horizon for growth in interest rates, that was not an absurd take. Growth and revenues in 10 years equal revenues next year. As long as you can grow and find ways to monetize, it may make sense. The world tends to work in cycles.

Sramana Mitra: It is never good for founders to go that route. Fascinating conversation. I’m glad to see a hardcore technology company coming out of Latin America. It will be very interesting to see how you play in the Indian market. It’s a playground of technology companies. Thank you for your time.

This segment is part 6 in the series : Building a Global Hardcore Financial Technology Company from Brazil: Ricardo Josua, CEO of Pismo
1 2 3 4 5 6