Luis Derechin Podcast Transcript
Luis Derechin joins host Brian Thomas on The Digital Executive Podcast.
Brian Thomas: Welcome to The Digital Executive. Today’s guest is Luis Derechin. Luis Derechin is a serial entrepreneur, global talent strategist, and the founder and CEO of Nir-Yu, a nearshore staffing company that helps US and Canadian companies hire full-time talent across 12 Latin American countries. He is the author of Amazon’s number one bestseller, The Offshore Team Death Trap, and the creator of the Remote Intelligence Framework.
He started his first company at the age of 18. In the early 2000s, he founded JackBe, the first Mexican technology startup to land US venture capital funding, enterprise mashup software that let businesses build dashboard applications out of scattered data sources. JackBe made the Deloitte Technology Fast 50 and was acquired by Software AG, one of Germany’s leading software companies, in 2013 Well, good afternoon, Luis. Welcome to the show.
Luis Derechin: Hey. How are you, Brian? Thank you for having me. It’s a pleasure.
Brian Thomas: Absolutely, my friend. I appreciate it. Love traversing the globe. 90% of my podcasts, well, probably about in the high 80s now, are in the US or North America, but North America, you’re in Mexico City today. That’s awesome.
I’m in Kansas City, so just a few hours apart essentially as far as travel goes, but we are on the same time zone, so I appreciate that. Luis, let’s jump into your first question. I wanna get this thing kicked off. You started your first company at 18, and in the early 2000s co-founded Jackbe, the first Mexican tech startup to land US venture capital enterprise mashup software that made the Deloitte Technology Fast 50 and was eventually acquired by Software AG.
But you’ve said the part you didn’t plan was the team. How did building an integrated US Latin America team out of necessity at Jackbe become the foundation for everything you do now?
Luis Derechin: Wow, you just made 25 years of my life Flashbe in front of my eyes. That was amazing. So look, the story is, is pretty simple, right?
Entrepreneur trying to do entrepreneurial things in order to survive. When we first raised our venture capital round, I thought that I was king of the world and we moved… the company was founded in Mexico, as you said, moved to the US, and then when I got to the US, realized that US wages were very expensive, and if I wanted to beef up or hire the entire team, I would go through, through the capital that I raised very quickly.
So like any entrepreneur, you start thinking, “What can I do differently?” And in my case, the goal was, let’s prolong the runway because the longer you can last as a new venture, theoretically you’ll have more an… of an opportunity to find product market fit. So my job was, “Let’s hire everyone that we need, but I would like to spend less money.”
So I resorted to that which I knew, and it was, I’m gonna hire some positions in the US, the key positions no doubt because people need to understand US market, US culture, I mean all, all those things if you’re going to sell into the US. But a lot of the other work could be done remotely. And that’s what we did, and we saved seventy, eighty percent of what the cost of the same positions or the s- people filling the same positions from the US would cost.
And that way we were able to prolong our runway, which i- which is what I said. And ultimately, we got to a point where we raised more venture capital, right? We were able to prove out the concept enough to raise more venture capital,
and the company stayed around for fourteen years until its acquisition. But throughout the fourteen years, what we did is we had a blended team. We had positions in the US, people that understood the market, people that knew what they had to do. We then had some engineering and some other back office positions in Latin America, not only Mexico, but Mexico, Colombia, Brazil.
And then we had an engineering office in India. So this blended team gave us, gave us great coverage. And if I could, I’ll, I’ll just go to the last part of your question, and it’s ever since then. So when my company was acquired, on my way to, quote-unquote, “retirement,” I started getting requests from other CEOs in the region.
This is Washington DC, where I lived, and other CEOs in the region asking if I could help them do the same thing that we had done. “Can you help me hire teams out of Latin America?” And I realized that there was a much bigger need for having nearshore, a nearshore team that could help in the same time zone or similar time zone, that could help companies lower their cost of personnel by sixty, seventy percent, people who were English speakers that could be vetted and that could be aware of US culture and if needed, be able to travel.
So that’s, that’s a kinda long-winded answer to a very simple question.
Brian Thomas: Appreciate that. There’s a lot to that backstory, and again, congrats on your success there with the company. But you as an entrepreneur, you talked about that, like most entrepreneurs jumping out of a plane without a parachute, you gotta build one on the way down, and you figured out, gosh, how do I reduce spend but build that full vetted team that can, can handle the sc- the scaling of the company?
And I just love it, and y- again, y- now you’re sharing that with the world because you’ve done it and you’ve done it well. So thank you. Let’s move on to the next question Luis. After the exit, executives kept calling for help. You spent years consulting on offshore initiatives that had gone sideways across different industries, countries, budgets, and kept seeing the same seven failure patterns.
What are the death traps, and where do you see claim the most teams?
Luis Derechin: My father used to say, “If it was easy, anyone would do it,” right? And that, that’s why people who like challenges ultimately are the bravest ones and they have to go for it. And the reason why I say that is because international hiring is one of those.
Everyone thinks it’s easy. Everyone thinks it’s as easy as going on a job board or going on LinkedIn, finding someone, offering them a job and, and you’re good to go. But the reality, Brian, is that as per our research and o- other data that we found on the web, is only 27% of offshore hiring actually succeeds.
So why is it that only one out of every four- Times that people try hiring remotely, they’re successful. And this is part of what I started to see when I was doing these first consulting gigs, right? I’d be get called in, not because I’m a genius or anything, but it’s because I was being called in by these three out of four CEOs that hadn’t succeeded.
They would say, “Well, we need someone to help.” So I went into this, half looking to, to make some money, half looking, to do some research, but to find out what was going on. And what w- what I discovered back then is what I call the offshore team death trap. And these are seven components or seven situations that tend to repeat themselves over and over in offshore hiring, and these are the things that make projects or offshore hiring not successful or, or unsuccessful.
The seven death traps, I’ll go through them really quickly ’cause I think it’s important. Number one, talent mirage, and these are skills that look solid on paper, but ultimately crumble under real project pressure, right? We all claim we’ve done A, B, C, but wh- when, when we’re really tested about them, then may- maybe the ABC wasn’t exactly, what, what we were really good at.
The second one is cultural chasm, integration failures that turn every interaction into a complex translation project, right? We think that because one speaks English and the other understands English, that the culture is therefore transferable or transmittable, and it is not. Understanding a market, understanding the nuances are very important.
The third one, the hidden cost spike. These are unexpected expenses that ultimately end up eliminating the savings that you thought you were going to get, right? Whether it’s management overhead, whether it’s time sucks, whether it’s all these things end up doing away with the savings. The fourth one, management quicksand.
Time sinks that turn whoever the project manager is into a full-time babysitter instead of a strategic leader. This is one of the worst ones. People hire and they assume, right, things are going to go their way. They don’t understand that there’s a lot, a lot of work they actually have to do in order to ensure that the project is successful.
Fifth one, retention revolving door. Constant turnover from consultants, right, that prevent you from ever building the institutional knowledge that companies should have. Sixth one, communication fog. Time zones and language barriers that create delays and misunderstandings. And then the last one is quality erosion.
When the previous six happen in, in different combinations, you end up getting quality erosion, which is, your project sort of goes the way of the dodo, right? Little by little, it starts going extinct, and then before you know it, the project’s unsuccessful. Only one in four succeeds. And you know what, Brian, if I could?
Failure sucks. It does. So everyone wants to understand, how is it that they can fail, and is there an antidote in order to be successful?
Brian Thomas: Wow. Thank you. And I think you’ve kinda coined that term, failure sucks, which is great. It’s kind of a something that kinda gives you that little shock factor initially when you s- when you hear it or see it.
Appreciate that. You’re absolutely right, and just to highlight for my audience, you talked about those death traps, the seven. Talent mirage, culture chasm, hidden costs spire, management quicksand, retention revolving door, communication fog, and quality erosion. I think those are amazing, and we get to share this amazing…
really these tips and tricks from your experience running these companies. So I appreciate that. Louis, let’s go to the next question. You said that in your first startup you measured everything except what mattered most, whether your team felt, seen and valued, and that Slack threads and well-documented SOPs aren’t enough.
How much of your 95% success rate and your three, two-year average retention comes down to emotional and leadership side rather than the emotional systems? And what do most companies get wrong there?
Luis Derechin: Oof. The answer is the emotional intelligence that one needs in order to have a remote team and, and have it be successful i- is, is an important part, but it’s only one part of it.
So, if I could, once we discovered the seven death traps, what we ended up coining is a term called remote intelligence, and remote is an acronym, R-E-M-O-T-E, and the acronym is the antidote to the seven death traps that ultimately allow someone to achieve that 95% percent su- success rates. The R, Brian, stands for rigorous talent selection.
So, you know, it’s, it’s, it’s not only about emotional intelligence, but it’s about having the intelligence, including emotional, to know what you’re recruiting for, have a, a, a good job description, have a, a good experience list, what is it that you’re looking for, and then be able to, to be really rigorous about who, who you’re going to hire.
The E is once you’ve hired them, you have to do an expert job in onboarding and integrating, because people are just thrown to the wolves. “Right, you work here now, go do this.” Well, no, you didn’t onboard me. I don’t understand who does what, right? Who, what’s expected of me. How do I integrate with other people?
How do I communicate? So onboarding and integration, incredibly important. M, providing the managed support and services. Whenever you have an HR team and, and a team that is in office, if anything happens, everyone finds out and they can rally around the person providing all the support and service that the person may need.
Whether it’s a laptop or whether it’s there’s a death in the family or, a sickness and the person just needs different types of support, that’s what we call managed support and services. So you have to be intentional, way more intentional about communication and providing that level of support and services.
The next one is optimized team performance. You mentioned standard operating procedures and other types of measuring. That, that’s also part of it, but it’s not the only part. So you need to have the way to task people, ensure that they understand what is expected of them, and then measure their performance, which is why the O, again, optimized team performance.
The T stands for transparent cost plus pricing. One of the things that I’ve run into over the years is the pricing or whatever, you’re going to hire someone remotely, and you go through an agency, and the agency charges, I don’t know, three thousand bucks, but the person doing the work is making nine hundred bucks, and the agency’s keeping twenty-one hundred of them.
So whenever the company that did the hiring or the person doing the work, either party finds out, that relationship breaks. So everything needs to be transparent about the wages that are being paid, about what are the costs that, that, that are part of the project in order for a project to be successful.
And then if you’re successful in all those five, REMOT, what you’ll have is enhanced scalability and growth, the last E in the Remote Intelligence Framework.
Brian Thomas: That’s amazing, and I love how you break that out. We talked about the Remote Intelligence Framework early in the beginning of the podcast before we actually hit record, but what’s great is the audience is gonna hear about this.
The Remote Intelligence Framework is the anecdote to the seven death traps, and those anecdotes, again, there are seven of those, of course. You talked about rigorous talent selection, expert job onboarding, integration, managed support services, optimized team performance, et cetera, et cetera. I just love it, and that’s why your book was number one on Amazon.
So I appreciate that. To wrap up here, Luis, let’s jump into your last question, and we’ll have you out of here. You’re fully binational, moving between Mexico, the US, and Latin America, living the borderless model you advocate. As remote work matures and AI reshapes what teams need to do, where do you see cross-border talent and distributed teams heading, let’s say, over the next five, ten years?
And what will separate the companies that build genuinely integrated global teams from those that keep falling into these death traps?
Luis Derechin: Everyone thinks that because AI is here, that remote work is going to go away, and Brian, it- I, I’m seeing the exact opposite. And it’s the exact opposite because there’s enough talent in the US, but even if you’re looking for excellent or incredible or great talent, it’s still a portion of the talent.
And ultimately, you want to be able to hire excellent talent wherever they are. So what we’re seeing is whereas before it was more of a company hiring back office support in order to provide the necessary support for their staff in the US to do the work, now you have early stage companies that are hiring remotely because they found a great LLM engineer in Argentina, and they found a great AI developer in Uganda, right?
And then you have an Israeli developer who is great in cybersecurity and whatnot. And now you have these small, very cohesive teams, but no one is in the same office and everyone is remote. So the fact that AI is here, and we’re all being enhanced, right, or multiplied by the capabilities that AI has, just means that the talent that you need to find has to be better.
And the way to find the best talent isn’t to sort of fish in the same pond where everyone’s fishing, but you need to actually go outside of the border boundaries and be able and willing to, to hire everywhere. So what I’m seeing is growth for remote work, remote intelligence, offshore, nearshore, caused by artificial intelligence.
Brian Thomas: Thank you. I appreciate that, and that’s a different perspective, and I wouldn’t have thought of that, but I’m glad you talked about that here on the podcast. But AI is doing some great things, and we also know that it’s screwing up a lot of things and, and you talked about that. There’s great talent all over the world, and finding the great talent is one challenge in itself, but really pulling everything together is so important, and you really highlighted that.
And I love having experts like you on the show because you can tell our audience your experience through the years and, and what you’ve done and what’s made you successful. So thank you. Louis, it was such a pleasure having you on today, and I look forward to speaking with you real soon.
Luis Derechin: Brian, it was my pleasure.
I am honored to have been part of this and anything that you or your audience may need through LinkedIn, my first name, L-U-I-S, last name Deretchin, D-E-R-E-T-C-H-I-N. Give me a holler, and I’d be happy to help in any way I can.
Brian Thomas: Awesome. Appreciate it. Bye for now.
Luis Derechin Podcast Transcript. Listen to the audio on the guest’s Podcast Page.
