EP056 - Scaling a distributed company from 1 to 150 people with David Hemmat of Blue Coding
About the episode
This episode is a classic leadership story with David Hemmat, the founder and CEO of Blue Coding. He scaled his company from 1 to 150 people in a couple of years and now manages a fully distributed team working with clients in the US. He also gives spectacular, humble, and honest insights on learnings, ups and downs, and how he works with his team.
About the guest
David is the founder and CEO of Blue Coding, a software development firm focused on nearshore development in Latin America. He started his career as a telecom engineer, transitioned to software development, and later became an entrepreneur.
Aside from running Blue Coding, David teaches Innovation for Entrepreneurship at Barna Management School, where he got his MBA. In his free time, he enjoys riding motorcycles and Brazilian jiujitsu.
Connect with David on LinkedIn.
About the host
My name is Peter Benei, founder of Anywhere Consulting. My mission is to help and inspire a community of remote leaders who can bring more autonomy, transparency, and leverage to their businesses, ultimately empowering their colleagues to be happier, more independent, and more self-conscious.
Connect with me on LinkedIn.
Want to become a guest on the show? Contact me here.
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Welcome everyone. Today is a very special episode because we will be talking about how to manage more than 100 people inshore, nearshore, offshore in a development company. We will share some tips and tricks and I have David Hemmat, who is the CEO of Blue Coding, a development company based in, I don't know where, but around, around the U S or in Latin America, because he's all over the place and also his team, welcome David.
Thank you, Peter. I appreciate it. I actually have a story about where I am and where I will be in the next year. And so I think it's very appropriate to talk about.
Yeah, I didn't want to offend anything. But it's like super interesting that we had a prequel talk and you mentioned almost like three different countries, or even four different countries where you were or you will be or you are at the moment. So yeah, no, it's beauty of the remote work.
The what I didn't mention is I have a very long motorcycle trip planned. I bought a motorcycle in the U. S. and I'm going to ride it down all the way to Argentina. So that's going to be my remote work challenge. I bought it in Colorado so I'm flying there next week. It's at my friend's house. I'm gonna prepare it and hopefully beginning of next year, so somewhere between January, February I'm just gonna ride it down and I'll figure out how to work remotely properly during that trip.
That's insane. That's all. That's a cross continental trip.
Yeah.
Congrats on that. It will be an experience, I'm sure.
Thank you. Thank you. It's going to be a lot of fun, but one of the big challenges I have in mind is how do I make sure that I can properly work because I'm not going to disappear from the company.
Yes. Tell me your background and the journey. How did you end up working remotely and and how did you end up funding Blue Coding?
Sure. So I was born in Venezuela. I grew up there until I was 17. I moved with my family to the Dominican Republic around 2007. I went to school there and then I started working as a software engineer. I actually studied telecommunications engineering, which is a related field. But the city that I lived in was small and, software was just an easier job to get. And so I learned a lot of software on the job. I went through a couple of onsite software jobs. But they didn't pay very much because Latin America. And so at that time, I think developer salaries were much lower than now, and I had recently gotten married. And so I needed more money because I needed to support myself. And so I took a, I found a part time remote job. And so I had two software engineering jobs at that time. I would work 8 a. m. until, 5. at one. I'd take a two hour break and then I'd work 8 to 12 for another company. And this, wait.
Both were in office or one were, no.
So the 8 to 12 was the remote one. Yeah. And eight to 12 was a remote one. I did that for six months. It was very tiring as you can imagine. But the team I was working for remotely was very interesting. They had three teams. They had a team in the Americas that was working, us business hours. Then I would step in at this weird 8 to 12 and then we had a team in India that would kick in right around 12th. So I was just working at a weird time. But what would happen was I would, go in code something and then next day, everything would be different because somebody in India had changed it overnight. So I ended up writing comments in my code. Do not touch David wrote this and so on. Then from there I did that for about six months and I was offered a more full time contract at the same company. And at that point I, I made the choice to do that. It was, I would lose the job security, so to speak. But it was going to be making three times more money and that's what I needed at the time. And so I figured, I'll take this remote job. It is a contract. It doesn't really have a defined period, but I can save up a few months of salary. And if anything goes wrong, I'll live off that. sO I did and that contract actually lasted a year. And during that time. I realized that I was making, two to three times what my friends who were working locally were making. And I wasn't making a lot of money compared to a us salary, but in the DR, that was a lot of money. And so I figured, I know a lot of good software engineers that know English that are already working for clients in the U S through the local company, and I'm sure I can find them a client, right? And so I went on Reddit and I wrote a post and I said. I'm starting a company and I'll find you a software engineer in Latin America or something of the sort. And somebody wrote to me and said, Hey, I'm looking for somebody part time. And so I called up my friend and I said, Alex do you want a part time job in the evenings? And he said, yes, let's do it. And so that was our first hire at Blue Coding, right? That's, I sat down. I was like, okay, I need to make a logo. The logo we have today is the logo I made 10 years ago. And so it seems like I did a good job. People like it. And from there, the company has grown quite a bit. Would you like me to get a little bit into the story of, what happened after?
I think yes, but quickly responding to everything you said and not devaluating the journey, because it's amazing, but it's almost the very same journey that other people took. And but still making the leap was a really brave thing. So congratulations.
Yeah. I have all sorts of thoughts around the challenges of hiring remotely, the challenges that small companies in say Latin America are facing with hiring developers and so on and I can, we can get into a little bit later, but there's some very interesting challenges around that and why people would pick a remote job or not.
Sure, and I think, first, I think we should go to the journey of how did you grew so big like you are now because there was a turning point when you ended up working remotely moved to an office and then again started to work remotely again. So that was really interesting.
So let's talk about that. So I had started a company between quotes, I, it was me and just me for a little while. Second year, I think I hired one part time person. And then I went to a coworking space. We had a very small coworking space in my city. I rented a desk there and that's what I where I would work from. The coworking space closed down and so at that point, I, there was another gentleman in the coworking space who was also starting his little company and we decided to rent some office space together. And so we rented a very small office and. That was a very interesting situation for me because it was my first time setting up a physical space and so on. And I started hiring some software developers here and there. And so we hired, one person locally, I think a team, we were a team of five final, at that point we had one, one person working remotely from the same city, a couple of remote developers in other cities. And then one other person in office with me, that team started growing. I guess we did a good job and we ended up renting out an office for ourselves, that office became then two office spaces and then it became three. And then we decided this is silly that we have three different office spaces in the same building. And so we went and we found a large house, it was a three story house and we rented it and we converted that to an office. And this is, I want to say 2000, maybe 18, 19, something like that. And at that point we had always hired developers remotely because I lived in a small city and so we were hiring some software engineers, but we already started hiring in the Capitol and then in other countries, at this point we probably had people in five other countries, I want to say. But all of our admin staff, all of our in house team was in Santiago in the office. And this was the accountant a small recruiting team that we had somebody that did, general operations management and so on. And when we had this house, we had about 20 people in house and we had about 20 people in other places aNd that was a very important moment career wise for me because I felt like we had achieved having a real company and when we're in LA, this was a real thing.
You mentioned four years, sorry. You mentioned Preco that you had to rent an office because, come on, I have a company, every company has an office. So it's it's always my motivation.
It didn't feel real without it. Yeah. I guess that you are, as you grow up, you're always taught that real companies have big office buildings and, nice signs outside and that's what you learn. And I remember I would talk to people and I'd explain what they do. And so they'd say, Oh, so you're like a freelancer. And I was like no, I'm not. But I know why it looks that way from the outside. I sit at home and work. And so I wanted an office and I also felt like the office was important to give the team a sense of this is a real company that we work for. And, the, there's a team culture and all of these things. I Think the third element was we were hiring people that were relatively junior at that time, and I had the feeling that unless they were in the same office space, we wouldn't be able to manage them so there were a few elements. AnD I remember I told you, I hired my first, I found my first client on Reddit and I remember years later I talked to him and I said, Oh, I just feel like we've been getting lucky all these years. We keep finding a, a better client and then losing another one. But, and at one point he told me, I said, look, you've been doing this for, I don't know how many years it was at that point, four or five years. YoU're not getting lucky, you're doing the right things, and at some point it's not that you just keep by chance finding a new client and by chance doing a good job.
Sure.
So at that point, 2019, we have this office with 40 people, sorry, with 20 people in house and 20 people remote. And I remember I sat down one day and I was like, okay, we made it, this is a real thing. And at that point, the office stopped mattering for me. Once I realized that this was a real company, I was like, okay, I don't care anymore. This is so interesting. I don't have to prove yourself. It was just a mental switch in me, yes.
Yeah, and you proved yourself to the world that yes, it's a company. We have people we have office So we don't give a flying f about the office anymore because it's just it's an office it's just an office. It's just a space.
Yeah And I think that's a very important concept, you know I've seen it in a lot of people where there's something that they really care about until they achieve it and then they're like Okay, cool. I did that it doesn't matter anymore You know, because I proved to myself and to the world that I, that I could then the pandemic came 2020...
and the world just told you that you were right on.
Yes so the world told me that the government told me that we had to go home and work from home and I was fine with that. I was fine with that, of course. But so what we did was we told everybody in the office, Hey, take your laptops and go work from home. And we'll see in a few months what happens. So we have this big empty office space and many of the people that worked with us. Weren't from our city. They had come from another city, for work, for school, for something. And they had gone back to their towns. And we started getting calls and from one of the developers. And he said, Hey, I'm moving back to my hometown because I'm alone in Santiago. I have, I live here alone and I'm locked up all day and I'm just going to go hang out with my family buT I'm going to give up my apartment. Can I stay remote? And so we said, sure, you're doing a good job. Why not? And so that happened a few times. And at that point, we made the decision. We said, All right clearly seems like people want to work remotely and they're doing a good job, right? And so we were thrown into the fire with that thought that maybe these junior people wouldn't be able to perform. They were doing a good job. And, that's why I said, all right, let's give back this big office. Fortunately, we had a comfortable lease agreement, and let's sell most of the stuff there and let's rent a smaller office. And that way, if anybody wants to go there because they don't have the right space at home, they can go to the smaller office in the work.
Sure.
And so we did that. We rented a smaller office space. We sold a lot of the things that we had to the employees. And so we just said here, take it and, pay us whenever you want or. Oh we'll subtract it from your salary or whatever desks and chairs and monitors and so on. Happy Christmas. Yeah. And then we had this office that sat empty for another year thE new one, because actually nobody wanted to go there. And so I remember my father was visiting me one day and he asked me about the office and I said it's there, we're using it as storage. And he said, Why are you paying for an office that nobody goes to? And I said we have files and we have equipment. And he said, just put it all out in the street. It'll be cheaper. Give it all away. It'll be cheaper. And I was like, that's actually true. So in my mind, I had some resistance. I didn't want my house to be the office again, if that makes sense.
Yeah, totally.
But I said, you know what? I guess it's okay. The accounting folks can come by every two every month and file some papers and look for something. They never did. So I took the, the two file cabinets home. We sold everything else and we've been remote, completely remote since. And our team has grown quite a bit after that. The last time I checked on Slack, we had 140 people. I don't have, accurate numbers. We added, I think, eight or nine new team members this past month. And so it's hard for me to say how many people we are, but it's kept growing remote was fine after all.
This is this amazing journey. How but you were not ready to give up all the time, right? So you, first you went with the small office, then file cabinet and stuff like that. And now it's everything is remote. I think the main question is, it was all mental, it was a real challenge. Yes. I guess the question is that you mentioned that you've started with 20 people in office, 20 people remote, and obviously the team grew, people were more remote and now they are fully remote. Is there a, maybe a tip or a learning that you can share? How did you manage to integrate those people who were remote to the in office and now how can you build any kind of better collaboration between those people who are fully remote now.
Yeah. So in the office we had, especially that last office that we had, it was a very nice place and we had, a dining room and we would all hang out together for lunch. And so we had built a very nice team culture and that was one of my fears losing that. And I think that when we started to work fully remote we went through a process of trying to figure out how we could keep that team culture before that, before we went remote, we, the remote people were not as integrated. That's the truth is that people who are working from their homes they generally just show up during the day. They were on slack. They would occasionally join a nice, fun team activity of some sort that we did online, but for the most part they were doing their own thing, and we had a couple of occasions where we had a, a management meeting on site. And so some of the people that were remote, we would invite, but this was, two, three people, not very many. But within the team that was in office, we had a lot of fun. We would went out paintballing together. We would go out, Friday night and have dinner and it wasn't a formal thing, but it just naturally happened when you were in the same space with the same people. Now, when we were at remote especially during the pandemic, I think that was a shift for many people, in my case I was in the middle of a divorce and so I was also going to live alone, right? And not have the face to face interaction. A lot of the people we worked with were also working from their homes and they didn't have their family close by. And so suddenly you're going from seeing 20, 30 people a day to nobody.
Did you have like really strict lockdown regulations in the Dominican Republic?
For a little bit maybe for a month or two, and then they started decreasing but we had curfews. And so you didn't go out at night and hang out and bars and restaurants were closed and so on. And so that was a big shift. And I think that our HR team said, Alright, what do we do here? And it was important for me to as the CEO, what do we do here so that we can keep that team integration. And we tried things out. And we had a Friday Netflix party, there was an extension that you could install and watch a movie together. But what we realized was a lot of people during this shift their social life just shifted away from work, right? And so they do their social life with their family. They do their social life with their friends nearby and one of the things we learned was that's okay. You can still work with people that you don't go out to restaurants with. it's a challenge because a lot of trust is built by seeing people face to face. When you're having a tense situation, but you can joke about it at the water cooler. And people smile and you realize that there's no malice behind what's going on. It's just, we have disagreements at work. That helps the situation a lot. And so we've had to learn how to implement some strategies that help us overcome some of those challenges, right? And so the question is not so much whether or not we can be friends and whether or not we need to hang out after work is how do we maintain the trust and the understanding between each other, even if remote?
Yes. And by the way, sorry, but I think it's important to mention here for the audience, but you are a development company serving clients and as someone like I do myself I do understand that when you are working for others, or like when you're providing a service for clients, it's always a little bit more tension in there then just simply, I don't know, developing your own product and selling it to customers and so on, because, clients have problems, clients have issues, clients have requests. Sometimes, there is a fire, you have to put out the fire immediately Cause that's in the contract and so on and so on. So that is a little bit faster type of work required. And obviously your team needs to be adaptable to that. So there are, the tensions should be like flat, even with some strategies and just wanted to highlight, yeah, that's a little different scenario.
That's a very important point. I see our work is consulting and when I think of, and this is something we can talk about the consulting mindset is come in, identify the problems and fix them. That's what you're hired to do.
Yeah you're hired to solve problems.
And that's fast paced. That's right. There's no, we don't get a three month learning curve. We don't get to say, Oh, you didn't train us. And and that is true.
That's why you get more money than sitting in a full time employee because you are wrapping up fast for solving the problem really fast and it has a fixed timeframe. So yeah. Yeah. I get it obviously, but yeah.
Yeah. Yeah. That's important. So I just want to fast forward a little bit and into what we learned. But we've learned a few things. The first thing is each team within our company has its own little culture the biggest team is obviously our development team and development we split into two. We have one team that's our internal development team for the projects that we are responsible for. And then we have another team that works directly with our clients. And those are the two largest that followed by that is our recruitment team. It has about 10 people right now. And they each have their own little subcultures of how they work. They have their own understanding of how to do organization and so on. And there's some things that as a company, we want to have shared like there's certain values like honesty, for example, is very important for us. A flexibility is another one, but we also just accepted that we don't need the recruitment team to be into the same social activities and and participate in slack in the same way as say. The finance team, right? They each have their own rhythm, their own type of work and their own requirements and their own people that behave in different ways. And so we've allowed each manager to within certain boundaries, create the team culture that they think is a good fit for what they're doing.
This is so freaking important that you just said, by the way and this is why it's so great that during this show I get to talk not just to those who are selling services to remote teams, but are actually managing remote teams. Because most of the time, just FYI, most of the time you hear that you need to build one big Culture within the team, but some of my clients are also in the development space and even like sometimes open source, for example, which is like a whole other situation on level, by the way, in terms of culture and how they work and It's super hard to integrate the engineers to anything else or the marketing team be the finance team, for example. So not just pick up engineers, that's also like engineer heavy related work and because they are fundamentally a little bit different people anyway. So it's super important that you said that yes, you have shared values as a company, but you are allowing and also fostering to build separate cultures within each team.
Yeah, and it's something that we encourage through the managers. And so I think the managers are key here. And I'd like to dive into that a little bit, if you'd like.
Sure. Please.
So one of the things that shifted when we decided we are actually a fully remote company Was We started hiring more people remotely and that included managers, right? And so that opened up a much wider talent pool to us and we have a wide variety of people on the team. I'll just give you some examples. We have, one of our managers is, has been working with us for four years. And every time I call her, she is essentially going to a new country. And so she'll stay a few months in one country and then go to another. And so I'm never clear on what her home base is. And she she had at one point an ambulance that they had converted into a camper with her partner and they would travel the world around it. Jesus. We have another manager who was in the Navy in the U S and he was on a submarine for five years. This was before working with us, of course.
That's what I wanted to ask.
And then he was training the submariners. And so he has a very different background, we have one manager who was the, our engineering manager is has a background similar to mine, software engineering. And we have, so now we have very different people, right?
Yeah, these are fundamentally different people, yes.
Yeah our CFO comes from big finance and it's a mix of cultures. And so one of the things that we learned to do was get together every once in a while, at least the management team, we have a meeting in Mexico city this coming week and we're going to be spending three, four days together, talking some work and then just spending some time together because. There is a lot of tension that's created when you bring people together that don't necessarily have the same background. We had a joke last time we met. One person told another, Oh, you're so much nicer in person. And this was HR telling the finance guy this. And it was funny because it was through, behind the computer screen, the finance guy is the person who tells you, you can't do this. Yes, you can't have that. No, in person. He's completely different. He's a nice guy. You want to hang out with him. And so we do need to create that trust between the managers. And that shared understanding of what's important as a company, those core values that we're sharing. But beyond that, we're giving each team, each manager the flexibility to do the same with their teams, right? And our recruitment team is very particular in that many of the recruiters that we have are people that we hired and trained, right? And so they're at a An earlier stage in their career and they need a different type of incentives. They need more followup oftentimes they needed closer management, right? Whereas our sales team is very much one where sales and marketing is very much one where we're working with capable people that are specialized. And so the management is a lot less close and the incentives are a lot less close. And then beyond that, each person has their own style. And we have one, one manager who likes to put trivia questions and the Slack channel and say, he's giving out a 25 gift card for anybody who can figure out what it is. And so you just let that stuff foster as long as it fits in with the core values of your team and and it makes your clients happy. Then just let it happen. Let the culture create itself, I think is the answer.
Sure. I really love it. And can you, by the way, it's super important to state that you are really open. You are the CEO. That's again, worth to mention. So everything comes down from you. And it's really great to see that you are super open to have pretty much anything that, not against the main borderlines that you have and that's it. Otherwise it's pretty laid back. So it's really great. But as a CEO, I'm a hundred percent sure that you measure and track things anyway. So if you can share, we don't do exact numbers or details, obviously. That this type of culture a little bit more laid back management style, did it translate into any kind of results in house and also maybe financially. So maybe for example, in house, less churn less fluctuation within the team. And in terms of financially, financially, I think we know it because your team is growing. So obviously clients are growing too. So that's like a given, but tell me a little bit more about that.
Of course. So a couple of things. See, I had maybe one or two entrepreneurial experiences previously, but it's not like I'm a seasoned industry expert, right? And so many of the things that we do today, we figured out along the way, or somebody, there was a point in my career where I said, I need to go do an MBA because we're making all of this up. And I'm sure big companies know how to do it already. And so I went and I did an MBA to learn something.
They don't know. By the way, not that much.
I realize that later. One of the things that we looked at was I looked at the team and I said, okay, you know how sometimes you hire somebody to come fix something at your house and you have to tell them how to do the job? That's not the tip of type of people that we need to hire. I need to hire people that can do the job way better than me, right? And a few years ago, we started that shift and we said, all right, we're not going to hire a junior or mid level person that we can train, at least for the management roles. We're going to hire somebody who brings the experience. And we had a few issues with that because we would bring somebody who had the experience, but in a very different setting or different culture. And so it didn't translate well, but little by little, we figured out what culture things were important and what type of experience things were important. And now we have people on the management team that are just way better than me at their jobs. And so I'm not going to go tell the sales team how to generate sales. Like I just, I don't have the knowledge to, they're doing a very good job.
And you see the results. So why should you do that anyway?
Yeah, that's the second thing, right? At one point we brought in the CFO and the team, the finance team shifted from one where I needed to say, I want a report that says this and this. To one where we sit down every week and the CFO tells me, David, look at these numbers. This is what you need to be looking at. And so it shifted the direction of the interaction. And the way I see it is this: first. As long as the results are good, there is no need for micromanagement. Micromanagement is something that happens when the person in charge is not able to get the job done. And so somebody comes in and says, here, let's work closely together so that we can help you get move forward. The second thing is, I don't know how to do the job any better than they do. And so oftentimes what happens is if it's not working out, it's okay, let's sit down together and try to figure this out. Recently, we've resorted to saying, let's bring in external consultants to look at the issue, because I certainly can't tell you how to fix the problem. sO I think the laid back culture has allowed us to grow. Not because it's any better, but because if I were trying to tell people how to do their jobs, then we would get nowhere. So part of my job is giving people a budget and an objective and saying, you do your best, you go figure this out for us and I'll give you whatever support you need. You just come back and tell me what you want and I'll try to make it happen. And trusting that they have the experience to do it better than I can anyways. Maybe it's something nobody has ever done, but you're probably better fit for this than I am. I think that, we have good years. We have years where we grow very fast years that we grow a little bit less fast. anD then, the pandemic was a crappy year and these things happened and I'm not a believer in tracking performance super closely because I don't think it's linear. And so I'm looking at the numbers, right? But for me, and this is somebody, something I always tell my team is as long as we can pay our bills, as long as the numbers are black, I don't care. That means we have time. I don't need 20 percent more this month or this year. What I need is the numbers to be in the black, right? So that we can pay bills and I need you to be trying to figure out how to do things. And that's really worked really well for us. I know as a company, we make decisions based on how much cash we actually have available. We don't typically take credit for anything. And that's put us in a position where even in bad markets, we're doing fine because We're not growing necessarily. We're not growing fast, but we can pay our bills. We have all the time in the world to weather the storm, right? Whereas other companies that have taken on funding externally or have, put themselves in a situation where they have to produce results or having a very bad time. So that's performance wise. And then in terms of culture, I think that the key thing is that we have people that we shouldn't be able to hire because they should be making a lot more money somewhere else, but they really like working for us. And I'll say that, about the managers, right? A lot of the people we work with, I feel like they're really top people and they could probably get a job making twice as much as we can pay them somewhere else. But they love this job and they say, I hated my previous job. This one's great. I have an objective, I know where I'm going and I own this too. And so it's great for retention.
Perfect. You mentioned one thing which is critical and I would love to get a little bit more information there, before we actually talk about where the team is coming from and why. That's also an important question to discuss, I think. So you mentioned that That yes, you hire a players for the managers. That's important, of course, because they need to do their own job and, they have to have the experience in the background, but you had some bad hires which I mean, everyone has not because of the missing skill set, but because of the missing match in terms of the culture. Is there any way A practical tip or something that you can share. Because I also agree with you that hiring the manager is amazingly hard because checking skills and background is super easy. it's a piece of cake for a good recruiter, but checking culture fit, that's hard and that's hard. And you can hit and miss on that. And if you hit and miss on the manager that can send back to you really good on the journey. So is there any tip that you can share on how to check this culture fit? Because it's super important.
So I have a couple of ideas. The first thing is there is a team culture and then there is your work culture, right? So for example, I recently hired an executive assistant. And one of the things that I had identified was that I can't be giving people task lists. That's just not my style. The way I like to work is I like to sit down. I want to talk about what we want to do. I want to talk about what I think is important. And then I want to say, Peter, good luck. Come back to me with, if you have any questions, and so there are people that just aren't a good fit for that because there's people that want much more explicit instructions and much more validation after each task. And so the first thing is know yourself, right? And know what's going to work out for you, especially if you're hiring a direct report regarding team culture, I think that the way people behave is very much driven by how the rest of the company behaves. And so we have people from many different backgrounds, and we do things a little bit differently in some respects. And for example we're a company that I want to say is generous in the way it treats its employees. And I'm not saying generous from a financial perspective. It's not that we give people a lot of money, right? It's more that we try to be considerate with them, understand when they have a health situation or a family situation and figure out how we can help. And I don't think that's the rule in every company. But one of the things I was talking to our HR manager recently, and I said, Rebecca, I think you should actually look at this because you have a much more critical eye than I do around figuring out if somebody is trying to cause us trouble, right? I'm always very trusting. And so and she comes from a background, a larger company where they had a lot of issues because of the type of employees. And when she came in a very clear vision of this is dangerous. Watch out for this. I've seen this before. And she said something interesting. She said, yeah, I used to have that, but I've lost it during my time here. And so I think the point was that her vision of how she looked at the team became much kinder and more generous over time because that's how the company behaved. And so I think that You come in and you start absorbing what's around you. But you want to hire people that have at least some of the core values, right? And I'll tell you some of the ones that are important for me. Honesty is one of the first, right? I don't care if you do a bad job, but I want you to be honest about how you feel about things and what you did, right? And that ties in with integrity. We never want to bill a client for an hour that we didn't work. We never want to try to cheat somebody out of even a dollar, right? A second one is a desire to improve. That's also super important for me. Look. Come in here. This company is at a place where there's a lot of things we can improve. I don't care. All I need is for you to look at it and say, all right, here's where we're going to start getting better. anD then the third one, for example, that I think is very important is being kind to others. And so just understanding that, being kind goes a long way. Looking out for people's feelings goes a long way. So we have a number of other values that we look at, but I'm looking at some of those, right? And some people will express some of them more than others. Okay. But as long as they're not opposite to one of, that's a good start. Now in hiring and just going to your point, what I've figured out is that it's incredibly useful to hire people as consultants, have them work for you on a project basis or a part time basis for a while, and then you'll really know if they work well with you. And so that's our sales director was a sales consultant initially, right? Our CFO did some small projects for us. And so when there is the possibility, especially for a larger role, Hey, come in, advise us on this for a while. Let's figure out if we can work well together. And then if it looks good, I'm just going to say, look, I want to hire you full time. What can we do here?
This is music to my ears. Thank you for saying, assuring the audience that we didn't talk about that before, by the way. Because it is exactly what I tell to others when they need to hire a manager is the beauty of being modular. It's a beauty of being scalable. You hire them for a contract. Part time, fractional, sorry or as a consultant, that's it. Keep them on a roll for a half a year or so, or like a couple of months, see if they can work together with your team. And then if a, the need is still there for a full time person, that's also an issue by the way. And they are a good fit. You can move them in house. This is amazing.
And it's not intentional, right? It's just that when you go out to hire somebody up front, it's very hard, especially when it's a role where I'm going to assign you a department. And so What happens is you need to build up that comfort and oftentimes that comfort is built up through work, right? And so you might have an idea what often what happens in our company is we say, all We're gonna need a I'll give you an example we're gonna need a legal counsel in a couple years time, right? We're not gonna go out with a job description and hire them or we're gonna say is okay sure But how can we handle it right now? Is there a lawyer that we can have a retainer with for a while that we can, he can help us figure out what we need from a legal counsel, right? And then that relationship just develops, right? Or it doesn't. And if it develops, then it might turn into us down the road saying, Hey, would you like to join our team full time?
Totally. These are all great. You mentioned that you're originally from Venezuela and you're living in the Dominican Republic. Now, by the way, you are now in, I think, Miami.
Yeah, that's right.
I cannot follow that, by the way. And you mentioned that the majority of the team is from South America, but the majority of the clients are from the U S. And I said pre call that for many U S companies so for example, if you are talking about the Valley obviously, salaries are insanely inflated there. And also by the way, in Miami too. Usually these companies look for service providers in mid U S or Midwest or somewhere a little bit more affordable, shall we say? That's why we have I don't know, tulsa growing up and stuff like that. But they rarely, or I'm not all the time hearing that as a solution, they rarely think outside of the U S and usually when they do it's because one of the founders or the service provider, someone is from South or middle America and they have the knowledge that, Hey, come on there are people there, they have the same skill set that you do. I don't know they, you pay 70% of a valley salary or something and you have the same results with those people. So why not do that? And, also, these people, usually South American people or Central American people they are very much closer to the U. S. culture in general, I think. So it's easier to work with these people in a practical sense, shall we say, so it's not like Asia or something where you have like totally different cultural aspects of working together. How did you, obviously it was also, it's not an intentional choice that you described to moving with the staff, mainly from South America, but how did it work out for you?
So first was it was very intentional, and I'll get into that immediately. The first company I worked for my fourth full time job that they actually paid me a salary for was with a company in the Dominican Republic that had a team of, I think at that point it was like 40 later grew to about 200 or 300 developers and they had the same model, right? But they had an in office model where they'd hire developers, train them and work for U. S. clients. Now, how that had developed was the founder of that company had worked in the U S for many years and he had contacts and he said, Hey you know what? I'm going to go set up a shop in the Dominican Republic and I'll offer you developers and it's going to cost you a little bit less and I'm going to manage a team. And so it's exactly what you mentioned, somebody had that knowledge.
That is the bridge. Yeah.
During my career, I worked with teams in Asia too. And I think I mentioned this pre call, but there were challenges with having a 12 hour time difference. I'd go to bed. And I'd wake up in the morning and my code would be completely different. And so somebody had to stay up at night and overlap, right? There's also certain communication challenges, right? And I'm not talking about language. I'm talking about cultural communication, right? There's certain cultures where it's perfectly fine to say, no, this is a stupid idea and there's certain cultures where you can't say that. And you need to say yes, sir. And we'll find a very roundabout way of showing this. And look, neither of them is better or worse, but sometimes there's challenges when trying to bridge that gap. Now, my experience was that developers in Latin America. Their jobs were generally with companies that were already working for U s clients. And so I, even though I developed my software engineering career in Latin America, I developed it working for U. S. based clients in a U. S. based context, right? The office I went to was somewhere else, but the requirements, the technologies the schedules, everything was around our U. S. based clients. And I think that is the case for many people in Latin America especially now. And of course, offshoring has existed for a very long time. I want to say since the 80s or 90s, large corporations are setting up offshore centers, especially in Asia. Latin America wasn't so much of a destination because even though it's cheaper than the US, it's not as cheap as say India and what we've seen. So what I saw was this we started working out with very small companies, like our audience initially was solo founders or companies of two, three, four people that were looking to hire their first developer, and they didn't have 10, 12, 000 to pay somebody in LA, and so they'd come to us and I'd say, Hey, I can find you somebody really good. It's going to cost you six, seven. Something like that. And they'd be great. Okay, cool. Let's hire this person. He's in my time zone, right? I already work remotely because I'm a small entrepreneur. I've been working from my home office for a few years already. And so it was going to be remote anyways. noW as we've grown, our market has shifted. We no longer serve so many of those small companies. We're going to mid and large now. And for the mid and large, it's a little bit different. They'll often come to us and say, Hey, we want a team of 20 right? We have a budget. The budget is this many dollars. How can you make that work? And we'll say, All right, here's what we can do. You can get 18 developers within this budget for a year, right? And what we have is the knowledge of what countries to hire and what the local laws and regulations look like, right? How do you deal with taxes? How do you deal with labor law in that country? Where do you find the people? And so those are the things that we're helping our clients with now. And I think that's one of the challenges, Peter it's, if you're a Company here out of Miami and you have, a few hundred employees and somebody comes and said, Hey, please hire 20 developers in Brazil. Okay, I don't even know where to start.
Yes, totally.
So we're helping bridge that gap. And yeah, the reason we picked Latin America was, it was a choice and it wasn't, it was a choice that I was exposed to when I said, this is a very good idea, let's do it. So first was time zone. And so a lot of the complaints we heard, or I heard in my career was, I don't want to be hanging out at night taking calls or, at 4 AM, a second one was work culture. And so again, that was bridged by the fact that most of the developers we work with are already working with us companies anyways, and a third one was the English level, right? And so of course, Latin America is huge. Brazil, I want to say has a population of 140 million, something like that. Mexico, a little bit less. Put all together, I'm saying, I'm thinking five, 600 million people Central and South America. And some of those people speak English very well and some don't. And so we hired the ones that do. That's essentially it.
And by the way, those who are working in a knowledge work in development, they usually speak English, by the way.
Of course, that's it. And so the population is there. So that's why Latin America the reason why it wasn't so popular was initially a cost thing. But I think more and more companies have seen the benefits and we had a situation during the pandemic that I'll bring up because I can think it highlights a shift. We had to essentially double what we were paying developers because companies in the U S suddenly said, Oh, look at that it turns out I don't have to hire anybody in Miami, for example, because now we're all remote. So let me go and see if I can hire somebody in Columbia. And this is very good for the developers, but it made it a very challenging market where we had companies from the U S coming and saying, you know what, we're going to pay you X thousand dollars, which was way more than we could pay. Plus a bunch of benefits, right? Because they're basing it around their us based budgets. A lot of it was VC funded money.
So Burn the cash.
Exactly. And I'm not a fan of that model because it ...
Me neither.
Yeah. But they had a lot of cash to throw around and, good guys that we were paying 20 an hour started asking us for 35 and 40. And so that shifted the market a little bit. Now that also happened in the U S with the developer salaries, they went up.
It happened everywhere, by the way, just to, just FYI. So it happened in Europe as well. It happened in Asia as well. The pandemic and the forced remote so yeah, most companies, not just development companies, but the marketing and anything they suddenly realized that, okay, now that we are working remotely why can't I just hire people from there? They are same, but cheaper. And I should do that. And by the way, once after a critical mass we had that actually frustrated the the prices everywhere. Yeah, equalize the salaries a lot. And that's something which is a good thing, by the way, I think yeah, maybe on a business level for you might be a little bit more challenging. But on a personal level, I think it's really great that it won't equalize at all. But at least it will be a closer or shorter gap between countrywide salaries.
So yeah, for example, in Latin America, we used to be able to say Brazil is more expensive than Bolivia. We can't say that anymore, at least not for developer salaries, right? Because what happens is the people that apply from the jobs from Brazil can also apply to the same jobs from Bolivia. And so they're expecting the same salary. Now I mentioned something at the beginning of the call around the challenges for local businesses, or maybe that was pre call, but local businesses in say Latin America, I'm sure in Asia too, are in trouble because they used to hire people for 000 a month, and now they're being out competed by companies offering three and four times as much money, right? And the problem is their revenue streams can't support that. Plus, I'm going to give you an example of, the Dominican Republic, which is a country I know well in terms of labor law, right? The expected overhead that we use to calculate is somewhere between 30 and 50 percent. So if I'm going to pay you, Peter, 10, right? I'm probably going to spend between 13 and 15 in benefits and severance packages and vacations and insurances and so on. And the problem that we have is we have companies that are say, based in the U S or Canada, right? Frankly, don't care much about labor law in Brazil. And they're just going to Brazilian guys and saying, Hey, you know what? Here, I'll give you this much in cash and you figure it out. And the legal system isn't strong enough to enforce, the offering of these benefits, or withholding of taxes or anything like that. And from the employee's perspective, his choice is either I can get 10 in my pocket and do whatever I want with them. Or I can say I'm being paid 10 and get seven and so that's a tough thing to overcome. And I, we'll see how it plays out over time. I think companies are adapting.
It will change. So the legal and taxation side of things, it will change. I'm a big proponent of somewhat a global that won't happen by the way, but I hope it will something like a global freelancer tax or something. That's equalizing everything because it's just super, much more easier to do or But it won't change in terms of the local companies. So yes, they will be continue being in trouble. It's happening also everywhere. It's the same thing that inflation of the prices. It's not supported by the local markets and what they are actually paying. So I wouldn't say, and again, it's a controversial statement, but local companies in these countries will get access to the leftover of the developers and the employees, I think, because most of the talents who are actually, speak English, know the market really well, they know their skills and, they're developing self improving and whatever, they will be headhunted by companies like you or from people from the U S or Western Europe, whatever.
Yeah I think a few things happen. So one thing is the local companies raise their prices. No, that's just part of it. sO services become more expensive and you're not being outcompeted by your neighbor because your neighbor also has more expensive talent. Now that's one thing. I think they also have coping strategies. For example, hey, let's hire people and train them. That's a lot cheaper than hiring senior people. So there's a few strategies there, but it is a challenging market. It is a challenging market.
Anyhow, it is an interesting journey. And I know that we talked to like too much a little bit and thank you for your generous amount of time, but it was a really great talk and a really great discussion and I'm super happy that you shared like really practical insights on how to run a team remotely. Super valuable, I think. Last question is that if someone needs some custom development, where can people find you?
Yeah. So that would be, you can find us at blue coding. com. So blue as in the color and then coding. And yeah, we do custom software engineering and we help people build teams in Latin America on a staff augmentation basis. That's a good place to find us. Or you can find me on LinkedIn as David Hemmat. That's H E M M A T.
Perfect. By the way, congratulations on securing this domain name, by the way, it's like unique.
So thank you. Thank you. But you did it like almost like 15 years or so, yeah, I bought it 10 years ago. I don't think anybody else was looking for it. And so we keep it. Thank you.
That's a good name. And the logo still works. So whatever, right?
Yeah. Yeah. Yeah.
Peter, thank you so much. It's been a pleasure talking to you. I really enjoyed it.
Thank you very much.
