Former CEO & Co-Founder, dLocal
The New World of Work and Global Payments | Nasdaq Uncovered: dLocal and Deel
dlocal CEO Sebastián Kanovich and Deel COO Dan Westgarth sat down with Nasdaq to discuss their partnership and how dLocal ...
About Sebastian Kanovich
Sebastián Kanovich, CEO and co-founder of dLocal, has described the company as an infrastructure provider that helps global merchants such as Amazon, Netflix, and Spotify collect payments and make payouts in emerging markets. He has stated that dLocal processes payments locally in each market, offering access to over 900 payment methods, and that the company focuses on solving the complexity of fragmented payment systems, regulation, and currency conversion. Kanovich has said that dLocal's growth strategy involves expanding into new geographies and adding products such as fraud prevention and issuing services, while maintaining profitability with an adjusted EBITDA margin of 40%. Kanovich has discussed the company's origins in Uruguay and its decision to bootstrap before taking outside investment from General Atlantic. He has said that the company's IPO on the Nasdaq was driven by a desire for credibility and compliance rather than a need for capital. In interviews, he has emphasized the importance of speed of execution, building international teams by combining core company culture with local hires, and the need for global merchants to adapt to local payment preferences. He has also described the new world of work as being split between remote workers seeking flexibility and businesses needing data on talent availability and compensation.
Transcript (8 segments)
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Dan Westgarth0:00
My name is Dan Westgarth and I'm the CEO at Deel. Deel is the platform for the future of work. We help companies hire anyone, no matter where they may be.
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Sebastian Kanovich0:11
I'm Sebastian Kanovich, CEO of dLocal. At dLocal, we're building financial infrastructure for emerging markets, essentially connecting global companies with users across Latin America, Africa, and APAC through payments, payouts, issuing, and fraud solutions.
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Dan Westgarth0:27
I think the new world of work is split into two sides. One side is for the remote worker, and the other side is for the business that is hiring a remote worker. I'll start with the remote worker. I think it really is grounded or rounded with flexibility: flexibility over where you work, when you work, how you work. Previously, in order to get a job, you would have to be within say a 50-mile radius of your employer's office. Today, talent is everywhere, and the work can coexist with that. I think from a business perspective, the new world of work is founded on data. Talent availability and those two things really sit side by side. So while you can hire anyone anywhere, they can be across the country, across state, across country. If you don't have a good set of data engaging them, knowing how much to pay them, the currency to pay them, the benefits to give them, it's really, really tough. And I think when we ended the pandemic, that data was really, really missing, but now it's there if you look in the right places, and if businesses utilize the right tools, they can use data to really, really empower this next phase of remote work.
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Sebastian Kanovich1:34
When you look at the history of work, historically people used to work for the company that was next door. Now you see people from India, from Nigeria, from Brazil, from Mexico working for companies that might be Chinese, European, or even American. And that means that there's a lot of friction and a lot of complexity in terms of payments. Why? Because people want to get paid on time in a local currency, but those rails were historically not there. Companies like Deel have solved many parts of that issue from a hiring perspective, but then the payment space continues to be extremely critical, and that has driven a lot of demand for us. We've seen a huge increase in demand for payments. I think a payment has two sides: as a payroll platform, I have clients that need to fund us or pay us money, and then we have remote workers that we need to pay. The key thing here is that it's on a global level. Typically, payments exist domestically: an employer might fund the payroll platform in their country and then pay their employees in their country. At Deel, we have clients funding it internationally, so it might be that we have a business through Singapore that's funding Deel in Singaporean dollars or US dollars or Australian dollars. Once these funds are received by Deel, they're converted into the required currencies and then paid to the remote contractors and employees. Previously, this wasn't done before. Both legs have become international, and that's producing the increased demand.
The first and very most important thing is the idea that every payment is done locally. So we won't be sending wires overseas. If it's a transaction that's going to end in Indonesia, we make sure that it's done through an Indonesian banking channel or a wallet. If it's in Nigeria, we make sure that it's paid out. The same happens with any of the 37 markets where we operate. When you avoid cross-border funds, you make sure that there's less friction, you have more visibility in terms of the payments, and therefore you manage to get much faster payments, which in this particular case we are discussing is extremely important. These are people waiting for their salaries or the result of their work, so delays are not acceptable.
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Dan Westgarth3:42
Deel and dLocal, we share a very common DNA in the sense that we are extremely international companies and we understand the complexities of this market. We come from a very complementary system, but we look at this problem and we believe it's going to continue. It has a lot of potential, but it's also full of friction, and we're both trying to solve the problem. So this has been a partnership that has allowed us to work from one market to 18 markets today. There's so much more we can do on the issue, adding new geographies, continuing to make sure that payments hit the employees or coworkers on time. So many very exciting things to do ahead. Going international is easier than ever before. Previously, going international typically meant hiring a general manager or a CEO, investing a lot of money into a market entry, and that market entry taking a long time, therefore the return on investment was relatively difficult to measure, the key component being time. Now, international expansion can happen much easier, and proof of concept and ROI can be measured on a much shorter time frame. My advice to younger ambitious businesses: go global quickly, but only if you feel you have reached domestic market saturation. Otherwise, going global, even though it is easier, can still be a distraction.
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Sebastian Kanovich4:57
We're working on many new currencies and payment routes with dLocal. We're starting to offer more complex services in more exotic markets. One of the things that we love about dLocal as a founder of ours is the approach to exotic and complex markets. dLocal is able to support those markets and able to support a lot of functionality within them.
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Dan Westgarth5:24
In terms of what's next, our two companies are highly complementary. Both Deel and dLocal view the future of work as something where we're going to continue to see more and more people working remotely. There's so much we can do. We started from one country to 17 countries today, adding new geographies, offering local credit cards, making sure money continues to hit the bank accounts on time. Very exciting future ahead for this partnership.