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Bootstrapping a Marketplace from Brazil: Diego Gomes, CEO of Rock Content (Part 6)

Posted on Saturday, Sep 5th 2020

Sramana Mitra: How big were they?

Diego Gomes: They were around $10 million a year.

Sramana Mitra: What level were you at last year?

Diego Gomes: Around $12 million. 

Sramana Mitra: So it’s two companies with more or less the same size?

Diego Gomes: Yes. We knew this company for a longer time. We have been tracking them. We knew that they raised more capital than would be necessary or ideal for our company at that stage.

We saw that they had to make adjustments and make a lot of cuts and essentially be bought out of the venture capital trajectory. We thought that we had that opportunity to leverage this moment in the company with our strong position to build a global business. 

Sramana Mitra: You have not raised capital, right? You are a bootstrapped company, right?

Diego Gomes: In 2017, we raised around $1.2 million from eBricks. That was what enabled me to be able to recruit our CRO Matt. For this transaction to happen, we raised around $11 million. 

Sramana Mitra: You bought the other company in cash?

Diego Gomes: Yes, the majority was cash and a little bit of stock. 

Sramana Mitra: That brings us to 2019. 

Diego Gomes: This is mid-2019 when we closed this transaction. Since then, we have been executing the same playbook that we always did – Globalizing our CS support. We are happy to be successful in that integration merger.

From a culture standpoint, the integration process was very smooth. We are now fully integrated and operational. We have one global sales team, one global CS team, and one global service team. We were able to consolidate technology development in Latin America.

We still have developers in North America, but it’s more capital efficient for us to keep the back office and the physical store back here and serve customers worldwide. 

Sramana Mitra: Did the American customer and the Canadian customer base translate well after the acquisition?

Diego Gomes: Yes, I’m very happy with that because the company was great. It had stellar revenue retention. Since we took over, we started integrating the teams and made substantial improvements in revenue rotation. The vast majority of the customers have remained and continue to buy more from us because we have a broader suite of products. 

Sramana Mitra: Did you close 2019 at about $20 million or more?

Diego Gomez: I think that the total combined revenue would be slightly more than that. Being exposed to currency rates, we are projecting revenues of $30 million in the best case and $25 million in the worst case. 

Sramana Mitra: Are you experiencing any impact of COVID?

Diego Gomes: Yes. I would say that our business was more affected by COVID in the small business segment in Brazil. The first two months were tough. We had to reduce costs. We let go of a few people to get back to profitability again.

Right now, we have pre-COVID standard performance. I’m very confident that the worse has passed.

Sramana Mitra: I love your story. Is there anything that I should ask you in capturing your story?

Diego Gomes: No. I think it was a good interview. I love your insightful questions. It was a pleasure to be here. I’ll let you know the next time I’m around. I’m moving to the US, and I’m going to reach out. 

Sramana Mitra: Be careful, the next 18 months is going to be complicated. Don’t rush to move to the US in the next 18 months. 

Diego Gomes: I have a funny story, if you don’t mind. I was already living alone in the US. I think that helped. Since I saw the COVID situation first in the US, I had more room to forecast the impact in the Brazilian operation.

Being in the US alone in February and March was a tough time. In the end, I decided to come back to stay with my family. I rented a car and drove for four hours to fly out of the country, but it all worked out well.

Sramana Mitra: We’re concerned to see what is happening in Brazil. It’s upsetting to see how it is being run. 

Diego Gomes: It’s an unprecedented situation. In Brazil, specifically, the government is not making the right decisions. 

Sramana Mitra: Thank you for your time.

This segment is part 6 in the series : Bootstrapping a Marketplace from Brazil: Diego Gomes, CEO of Rock Content
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