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This week, I sit down with Edrizio de la Cruz the co-founder of Arcus that he sold to Mastercard, a former visiting partner at Y-Combinator and CEO of the Founder School. Tune in to learn about the highs and lows of a startup and get valuable advice.
In our conversation, he shares:
How he went from being an airplane mechanic to an investment banker
The creation of Arcus to tackle the remittance market through gift cards
Being rejected from all accelerators, except Y-Combinator
Pivoting and focusing on LATAM bills payments through API integration
How to maintain team’s motivation during challenging periods
How they got acquired by Mastercard in a prolonged negotiation process
Becoming a visiting partner at Y-Combinator and coaching founders
How he supports entrepreneurship for underrepresented tech professionals
Going to the Whitehouse to talk about venture capital and startups
Listen now on 🟢Spotify or 🟣Apple Podcast.
Some key takeaways:
Startups are hard and persistence is key
Throughout our discussion Edrizio emphasized on persistence as a key factor in entrepreneurial success. Of course, he his an underdog founder, someone that defied the odds, which probably made it even harder. But when I asked:
Hugo: “What are you the most proud of?”
Edrizio: “I feel like I could have quit a lot of times. I think a normal person would have quit and I chose to stay sometimes in my own detriment, sometimes when nobody wanted me to in the company."
Or when we talked about Y-Combinator and what makes it special he said:
Edrizio about YC: “And all you're doing is listening to these success stories that are really horror stories.”
We all hear about how hard it is. But once you’re there, it’s probably different.
Pivoting is necessary
In his own words:
Edrizio about pivoting: “It’s not about whether or not, it’s about when?”
From our discussion, I understood that being able to recognize when a pivot is needed and execute it is an important skill of a founder/CEO. Edrizio mentioned many times that he should have let go the original product earlier.
While pivoting is incredibly hard, especially if you’re short on cash, it’s not surprising that you don’t always get it right on the first shot. But getting the right timing is more an art than a science.
Focus on a niche
Focus on one market/product initially rather than spreading too thin. Edrizio told me all about how trying to tackle multiple markets simultaneously was a mistake. If you look at examples of great companies, they all leveraged the power of a niche. It's better to win in one market before expanding. It leads to much greater success. Don’t try to expand too quickly. In his own words:
“The error that I made was to keep both the U.S. and Latam on at the same time.”
"It doesn't matter if you're in a small market. I think if you can get big in that market and then expand, it's better than if you try to get of medium size in multiple markets at the same time, because it rarely translates from one to another."
From “chief doer” to “chief delegator”
As a startup scales, the CEO role shifts from "chief doer" to "chief delegator". Your role becomes more focused on bringing talented people who could potentially take your job than to execute. Scaling a company requires bringing on individuals who can take on leadership roles and delegate tasks.
“There's like two faces to a CEO. There's like chief doer and chief delegator."
"Under 50 employees, you are doing a lot. You're doing sales, product management, marketing, you're kind of leading the charge on everything."
"Once you get past 50, you have to be very cognizant of being able to bring on talents and people that are so good that they could take your job from you."
Where to find Edrizio:
🔗 LinkedIn: https://www.linkedin.com/in/edrizio-de-la-cruz/
🔗 The founder school: https://www.linkedin.com/school/thefounderschool/
Where to find me:
🔗 LinkedIn: https://www.linkedin.com/in/hugorauch/
🔗 Newsletter: https://explorepodcast.substack.com/
Timestamps:
00:00 Introduction and Guest Welcome
02:41 Edrizio’s Early Life and Journey to New York
04:38 Challenges and Determination in Education
07:20 Breaking into Investment Banking
10:53 Founding Arcus and Early Struggles
14:57 Getting into Y Combinator
24:55 Facing Leadership Challenges
25:26 Navigating Legal Troubles
28:22 Pivoting the Business Model
30:16 Scaling and Learning from Mistakes
35:52 Acquisition by Mastercard
41:20 Role at Y Combinator
46:43 Founders School Initiative
50:36 Final Thoughts and Reflections
From Unseen to Unstoppable - Edrizio De La Cruz (Arcus, Y-Combinator, Founder School)