Bernardo Garcia (Félix) on doing things that don’t scale, the power of your first 20 customers and getting the flywheel going
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On this episode Pat sits down with Bernardo Garcia, Co-Founder of ripping remittances startup Félix Pago to dive into the early days of the business, finding product-market-fit and doing things that don't scale. In particular we chat about how they realised that existing solutions were not really solving the problem for hispanics in the US sending money to their home countries and how they put the flywheel together relying on WoM and influencers, but primarily by going through the grind of hands-on, in-person customer acquisition.
You will learn about
Finding product-market-fit and launching on the back of your customer needs
Be where your customers are and acquiring customers manually
Scaling beyond the early days, geo expansion vs. product expansion, what route will Felix take and why
Dive into the full episode on
👉 Spotify
TL;DR
A remittance is not a transaction it is a means to an end to either subsidise the living expenses of relatives in their home country, fund a business, finance medial expenses or building a home
Comparing remittances to FDI in Latin America, FDI by global companies trail remittances flows in countries such as Mexico, Guatemala and Honduras by a wide margin presenting a huge market opportunity of $160Bn annually
The opportunity is massive, Latin Americans in the US represent $4.1Tr in GDP, larger than the economies of India, the UK and France, just behind Germany, Japan, China and the US
The first 20 customers matter, be manual and non-tech in the early days meeting your customers where they are and then build the tech around it with a product ready for scale
Quick Fire with Bernardo
Who is an entrepreneur you admire and why: David Velez (Founder and CEO of Nubank), incredible story of how a Colombian saw such an opportunity with an industry in Brazil that no one dared to challenge, he was relentless in that.
What is the best piece of advice you have ever received and would like to pass on to others: Just fu**ing do it, test it, worst case there is nothing there and you move on
Three keywords that describe a successful business: Be. Customer. Obsessed.
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Every good idea starts at a bar
Bernardo and Manuel met during their MBA program at Wharton becoming friends and used the time to brainstorm ideas. Both being Latinos they had left their home countries for better opportunities in the US. In Bernardo's case Mexico and Manuel coming from Venezuela, they had a strong urge to build an impactful business connecting Latin America and the US. Most of their classmates were thinking around what their next job will be after graduation - Manuel and Bernardo were heads-down working on their own business.
What we invested in the MBA is already a sunk cost, let's use these two years to spend as much time as possible to brainstorm and launch something
They came across the Latin American / Hispanics opportunity in the US not only because of romanticism, but due to their immense scale. Latinos in the US represent 20% of US population, 60M people with a GDP of $4Trl. and growing. If hispanics in the US were a country it would be the 5th largest economy just behind Germany and Japan. However they are still underserved by traditional banking players and have different needs.
Who is a standard Félix customer:
The primary target from day one were construction, agriculture and service employees, the backbone of the US economy. Additionally it turns out they are also an attractive solution for hispanics that came to study in the US, work in high-paying jobs and want to send back money to their country. To add some numbers to this, 2019 a total of $90Bn in remittances was sent from the US to LatAm, today the number sits at at a $160Bn, but only 15% of remittances are digital.
Multiple players have been around for decades including Xoom, (acquired by Paypal), Remitly (the leader in digital which has been around for 13-15 years) and the legacy players with their app such as Western Union and the likes.
Bernardo and Manuel came to a simple assumption:
If these players have been in the market for many years and only have 15% of the digital remittances markets and 85% are not engaging, customers are not loving the existing product.
To validate their hypothesis they decided to talk to the customers. So they went outside all the Western Unions in big metropolitan areas in the US with big hispanics communities, from the Bronx, South Philly, Houston to LA to understand why do people prefer to come to stores physically instead of sending remittances digitally with established players.
What were the reasons legacy, in-person solution was still the preferred option for many?
The most popular answer was: It's easy, because you just have to stand in line, tell the agent what to do and if something goes wrong they fix it for you.
Interestingly every time, when they walked outside the store, they took a photo of the receipt to send it to their relatives via Whatsapp, because they needed the code to receive the remittance.
What if we merge the human experience of going to a physical store and rebuild it on whatsapp? - This is how Felix was born.
Manuel and Bernardo were confirmed in their assumption. They had come across a huge market with low digitisation, that is very fragmented, and where customers didn't love the existing products. Clearly an opportunity to build something unique.
So they went to work. The first chatbots were the founders themselves to verify that there is demand for this before building the actual chatbot on whatsapp and they went about finding their first 20 customers.
Your first 20 customers matter
For their early customers they went really hands on. Félix took on the risk at first, sending the money at personal expense and customers paid them after to establish trust. Then customers came back in regular intervals, be it in weeks or months based on their own needs.
For Bernardo the purest sign of product market fit is when customers are coming back and paying you and then the second things is that they want to refer your product.
And this started to happen, besides using the product customers asked if they could refer their friends and work colleagues and they asked for new countries, i.e. could you open Guatemala?
How did you get the customer's trust?
The first customers were incredibly hard to acquire but as Felix delivered the service, word of mouth would build. Every new customer would be cheaper to acquire than the previous one.
It is exactly what happened, it just took much longer than they had initially thought. And it was hard. For the first 1,000 customers they went to flea markets all over the US setting up tents to promote their service in person, handing out flyers onboarding customers on the spot. They would try the product directly and:
If it doesn't work you can either punch me in the face or take my money - this is how they build trust one by one
It took a year, but then the flywheel came together.
Felix hit an Inflection point in Dec. 2022 when working with a few influencers. With one of them they blew up. The company started seeing a ton of customers coming in. That was the moment they thought, now it is game on. This was a solid year after building the product and another year of iteration, in total 2 years since inception.
Good things take time to compound, but when they take off they truly do.
The Tech behind: USD Stablecoins to power the transaction
Customers really value immediacy. Félix wanted to deliver the fastest possible services for them. They had heard some terrible stories of someone needing a remittance, taking a 2-hour bus ride to get to the store to pick it up and not getting the money that day. They couldn't make it back home, so they had to sleep at the bus station.
Delivering the remittance at the time you promise is crucial.
When they started experimenting with traditional rails, just doing international transfers between banks and the range they gave them was between 1 and 5 days and Bernardo felt this was not acceptable. You cannot give customers such a broad range, so they took to crypto for remittances and gave it a shot.
They did an experiment, Manuel had a Coinbase account in the US and Bernardo a Bitso account in Mexico. So Manuel sent Bernardo the crypto, and he sold it for pesos in Mexico. Back then there were not real time transaction on the blockchain, so it took them 15-20min to complete the transaction. Still significantly better than the alternatives.
Eventually they learned that some tokens were not ideal due to the volatility, so they opted for USD stablecoins to power their transfers.
To listen to the full story dive into the episode wherever you are getting your podcasts
👉 Spotify
Other episodes you might enjoy
[Operator Stories] Pedro Conrade (Neon) dreaming up the future of financial services in Brazil, when is it the right time to introduce new products and lessons learned from 5 acquisitions
[Operator Stories] Gerry Giacomán (Clara) on always be changing, building compounding value and how to balance profitability and growth
[Operator Stories] Lucas Vargas (Nomad) on diversifying your assets, investing like the 1% and scaling to 100M+ in ARR
[Investor Journey] Arjuna Costa (Flourish) challenges in achieving true financial inclusion, waves of fintech adoption and embedded finance
If you haven’t yet subscribed, join the +3,000 Enthusiasts via Substack, Medium, or LinkedIn and follow the show wherever you are getting your podcasts. If you enjoy the work we are doing, drop us a review or rating on your preferred podcast app.