YC Palla's growth leads to Series A

Jake Aaron Villarreal: All right, Enrique, great to have you back here. Just a quick update. I've got Enrique Perezalonso with us who is the founder and CEO of Palla, a startup that has recently raised their series A. They went through Y Combinator. They've got some great investors and the last time we spoke there was a lot of growing and building going on. So before we jump in, Enrique, how you doing?

Enrique Perezalonso: Doing pretty good. I can't complain. We just completed our series A, which as you know, it's a full-time job in and of itself. So, we're really glad to be able to get heads down and start working on the, re on the business again. So, everything's good.

Jake Aaron Villarreal: When I started this podcast, I had this vision to go behind the scenes to share what it's like to be a startup founder in Silicon Valley, where I'm born and raised. And weekly, we dive deep in the trenches to find the wins, the losses, and the lessons learned with the hopes that it helps you run a better startup. But here's the thing. If you've gotten any value out of these conversations or been inspired at all, hit the subscribe button. And I get it. Your podcast feed's probably overflowing. But to stay up to date what's going on in Silicon Valley, stick with us because at the end of the day, we're all just trying to build something that matters. And we're better when we do it together. So, hit that subscribe button and follow us wherever you find your podcasts. Now, let's get back to the show.

All right. Well, where we left off last time, you raised a seed round and had an extension round and I think you had nine employees at the time. You had 10 companies that were like established clients and you had, you know, a lot of growth ahead of you. You were looking to continue to build your company. But for the listeners, just to give them a recap, you are a platform infrastructure that helps financial institutions or fintech companies do remittance or transfer funds from the US to South America or globally. And from our last conversation, it's a large significant growth market that's continuing to increase. Give us a little snapshot of where the company is today in terms of growth, in terms of employees, in terms of just the industry, you know.

Enrique Perezalonso: So, so happy I mean happy to start with the company and to report that yes, last year was like a breakthrough year for us and I think that's what allowed us to, you know, be able to go out to marketing and do the series A. We grew 13 times last year in terms of volume sent and revenue and you know, so, so very exciting. We, you mentioned we had 10, you know, partners, our customers. Right now we have over 30, mostly financial institutions in LATAM and in the US that are integrated, that we are an embedded platform so we live within their digital ecosystems.

So in terms of the team, we were nine, right now we're 16 and growing. So it's very exciting. We are currently planning on, on you know, expanding. As you remember, we were only doing the US to LATAM corridor because it's one of the largest corridors in the world, right? It's 66 billion, uh, just to Mexico alone. You're talking about around 160, almost 170 billion sent from the US to the whole LATAM. And that's going to be our focus. But there's also a lot of money coming from Europe to Latin America. So we're focusing on expanding our operation, being able to originate transactions from Europe to LATAM as well.

And, and you know, we are looking at other corridors, but for the time being that's our focus. Expanding also the type of rails that we use so we can continue to deliver funds real time and doing things better. That, that's what's really exciting, that there's so many opportunities even within what we are already doing because as you know when you're a startup you have to be efficient, you have to be, you have to take care that you don't go overboard with the costs, and you know, a lot of the, a lot of what you're doing still operates on the MVP level. So it's great to be able to bring on more people who are probably going to start looking at things with a microscope and improving them. So that's really exciting.

Jake Aaron Villarreal: Yeah. Well, you know, I love your story. There's, you know, companies that were born during the pandemic. You were one of them. And you have a certain set of rules which are, "I can't hire anyone that's local, that's in an office because there basically there is no offices." So, you can go remote. You talked about, you know, hiring people that you knew so that you understood what they could deliver when you hired them. As you continue to grow, you have to start taking chances of people you don't know, but maybe people that are working for you do know. What's your sort of strategy around continuing to grow and scale and bringing the right people in, but making sure you're mindful of who you're going to get when you make that decision?

Enrique Perezalonso: Sure. So, so you know, we're big believers in, you know, taking it slow when we're hiring and making sure we're not just filling bodies, you know. I think that's when you have the pressure to grow and to fill, you know, you need a function that needs to get filled immediately, there's a big pressure to just grab the first person who kind of meets a requirement and that can be a big mistake we think. So of course we still give preference to people we've worked with in the past. We still give preference to people we know of, like can get, that people can recommend like, you know, in our immediate circle, but we also know that's not always the case.

So, you know, we've been, we've gotten lucky. I think we started hiring a few new positions which we didn't know. And you know, what we did is just be very rigorous around the hiring process and trying to get references and talking to people who know them and talking to them, not just one interview and saying, "Okay, you're hired." But many interviews and trying to know that person. Because ultimately, it's about a couple things. And for me the two most important ones that come to mind are, number one, the cultural fit, right, that's going to be key. And you know, will this person be, even though they might be an excellent technical resource, will their personality clash with the rest of the team? Just uh, and that's very important, that can cause a lot of disruption especially in a small company like us. So we put a lot of attention to that.

And then there's like, "hey, can they do the job" part, which is, you know, there's a, the hey they do they have the knowledge component, but they also, you also need hey do they want to learn, do they are they adaptable, are they you know willing to grow? And that's really what you're looking for, people who have that go-getter attitude that have that you know that want to grow professionally, personally and and they're willing to take a risk because ultimately going to work for a startup is a big risk for, you know, for anyone. So you have to believe in what the company is doing and you have to believe that team can take it to the next level and that you can be successful in that environment.

Jake Aaron Villarreal: Yeah, I love that. I love those words you used, adaptability. I think it's so important for any employee, any leader really. As the markets change, as you know the economy changes, as the president changes, there's all sorts of variables you got to work through and figure out. How do you adapt and succeed in the market you're in? I think is incredible because you're talking about, you know, one out of five people and I think this is specific to LATAM, that yeah, you know, money is sent from here to somebody outside the borders.

If that those numbers continuing to grow, it's a very scalable market and if you're a player in that space, you know, it's easy, you would think, to get investors excited about what you're building and the problem you're solving. When we talked last time, you said, you know, it's hard to teach an old dog new tricks. You've been in the business a long time, 20 years, and this is, you know, a startup that you're, you know, getting off the ground. Now it's way off the ground. 4.5 million in a series A funding. And, you know, looking at going through Y Combinator, you were saying that that experience was incredible. It was like the Harvard education for a founder because you not just understand how to build a business, but the network you can create, the badge of honor you wear, and opening doors really helps, too. So, a lot of things kind of come out of that. But I think the thing that you left me with, which was the maybe hit me the most was, you know, God gives you the strength, and I'm going to make probably not say this accurately, but God gives you the strength to have the patience to go through the things that you cannot change. Or in other words, you're not always going to get what you want when you want it. So, give me the strength to figure out how to get through this and overcome it.

I think that's so important to realize and keep in mind as a startup founder that you're trying to build a business. You've got pressure. You want to scale. You have investors that are looking at what you're doing and you know you have to navigate that process. I recently heard that you know if you don't have problems you don't have a business. Hopefully you have the right kind of problems, but you know you don't want too many of the others. But, you know, from your perspective, you've really navigated this from the pandemic into where you're at today. Talk a little bit about the fundraising because the market is in some ways good and for other companies not so good. So, what did you learn when you started the process and it became really your full focus to getting the funding and now where you're at today?

Enrique Perezalonso: Sure. So, so first thing I think the first thing that comes to mind is that the environment has changed significantly since we did our seed round. We did our seed round in 2021. All the markets were frothy. Investors were really, you know, backing. You know, you could come up with many ideas and you would find an investor that would back you. That's a reality. And as you know, markets have now tightened. That's a reality. They I think at least for last year they just became much more difficult. And the other key thing is that when you're talking about a seed round, the stakes are not as high, you're not raising as much money so there's a bunch of investors who are willing to get in on the ground floor, but maybe you have more, you know, you have more leeway, let's call it, more more leeway in terms of what you can do, the time you have to get your product to market. The expectations on the series A, that like the expectation is you have a company that's already working and that can be that can be expanded significantly.

So, so that's really what you're trying to convey to the investors. And you know, it's, it is a harder process because of that, because of those expectations, because you know a lot of investors they have different thesis in terms of what you know what they want to invest in, the size of the company, the industry. So, so it was I'd say that it was a harder process from what we had gone through in the past, but in the other in in other ways it was you know very enriching too, learned a lot. You know, we can each I feel like it's another one of those big mile markers in the role that you can say, "Hey I was able to achieve this," and and it's really a it's a a badge of honor not just for me but for the whole team because we really have been able to create a business that is you know it's growing significantly, it's creating value for partners, customers, our team, our investors, and and that's really ultimately what it's about, right? But yeah, I'd say that it is a it was a long process, but you know, I'm glad we're glad to be done, but we're very happy with the end result. We have a great group of investors, very involved, and we think they're going to be, you know, very, you know, a great team. We're going to make a great team with them to take this company to the next level.

Jake Aaron Villarreal: Yeah. You know, you oftentimes get investors that bring different value to the table. Could be opening doors in a specific market or maybe strategy or maybe they might be a company that would acquire a company that they invest in at some point. What's been a surprising partner investor that's part of your team now that you that you're excited about? Not to put one over the other, but like what's one that you're really excited they were part of the process?

Enrique Perezalonso: I'd say the leader in in in our round was Revolution Ventures. And you know they're very detail-oriented. They get very much in the weeds and I just love the new board dynamic that we're creating. We have David Golden who's one of the partners in Revolution Ventures and also Heidi Miller who's, she used to lead JP Morgan International. She used to be the head of JP Morgan International for a while. So, you know, you don't get that caliber of people in your board. So you can bounce ideas and kind of you know add value on a day-to-day basis that often it, it's we're excited because people with real world experience and contacts and who can you know lift up the phone, make intros, make connections. So that's really great to have. It's I'd say that's something that makes us really excited and you know I think that going forward it's really going to help us you know achieve our goals.

Jake Aaron Villarreal: Yeah. Exciting. Yeah. That's a great company. In terms of the investment, you have it now. Usually it's, you know, you put the funds into, you know, systems or strategy or people or, you know, acquisitions. When you look at this new round of funding, where were you looking to make your first big hit with it?

Enrique Perezalonso: Oh, great question. So, so number one, like I said, there's a couple processes and there's a, you know, in in functions within the company that we had at the let's call it at an MVP level. So, like basic a very basic level and we need to make sure we're doing that really well. Just to give you an example, just on the just the finance let's let's say the finance function, right? I've been managing that since we were, you know, since day one. But we've gotten to a point where we need, you know, if not a CFO, but a finance manager or someone who can really dive into the numbers and do that day in day out. And as as a you know, what I've you know, your role changes every day, right? As a in a startup and as a CEO, I've realized, hey, my role needs to be not so much about being in the weeds and the numbers, but really being in front of customers, being in front of the partnerships, which is something that is, you know, being more and more demanding of me. So, so that's kind of where what drives a lot of the change in the organization and the hires is, "Hey, where can I add more value and where what are things that I can delegate now, especially now that we have the resources and we're growing very fast?" And that drives a lot of it you know, so so that would be one thing in terms of the investments.

The other big investments of course is what are the big you know big opportunities that we can capture and certainly one of them is to open up new corridors and that requires investing in teams, investing in licensing, investing in infrastructure in other countries so that we can start serving, you know, the markets where we're at from other geographies. And that's really what we're looking into right now. And hopefully, you know, pretty soon we'll be able to give you good news about new, you know, new markets that we're serving and new corridors.

Jake Aaron Villarreal: Yeah, really exciting. You know, you talked a little bit about an idea. Yeah, I don't know if you went down this path, but it was also about not just aligning with banks and financial institutions and fintech companies, but potentially also aligning with companies that could do the payments to their international contractors or right, you know, people and where has that continued or is that where is that part of the business?

Enrique Perezalonso: That part hasn't you know that part is still going on. So, so it hasn't grown as fast. I think what's happened is that the kind of like the payments the embedded person-to-person payments has grown so fast that we really kept this you know still in the in the incubation you know period, incubation stage. Now that we have the resources I think that's something we're starting to pay a little bit more attention. There's a big demand for it, so so we want to make sure we have the right product and the right go to market strategy though, so that's why we you before before the round, we were so focused on just the day-to-day growth that we were seeing on the on our traditional product. That's something that it was just growing organically without a lot of help from us and it was doing okay but not at the same level as the other one. And now that we've you know finalized the round this is something precisely that we're trying to you know look at more carefully. How can we improve that? How can we make it easier for companies for example maybe like someone like yourself that might have a sound engineer or a producer or a you know someone who's doing post-production in Colombia or Mexico or wherever, how can you pay those teams without having to you know go to the bank and make a wire transfer to just make it really easy and that's what we're working on as well.

Jake Aaron Villarreal: Yeah. Well, there's a ton of opportunities there and like the content creator communities where there's a huge growth there and yeah, everyone's looking for systems and everyone's looking to keep their cost down as they go and grow and build. So, if you've got something that works well, good to know when it's available and happy to share it.

Enrique Perezalonso: Absolutely. Absolutely. You'll be the first one. We'll let you know. In fact, if you want to try our MVP, happy to talk afterwards.

Jake Aaron Villarreal: Yeah. Very cool. That's great. Well, as you continue to evolve as a company, obviously you have to evolve as a person and as a leader. It sounds like you're pulling back and letting, you know, other people run different parts of the business from finance and maybe other areas. When you look at growing, you know, you talked a little bit about, you know, the pandemic starting and everyone's remote and distributed. Do you see that as a model that's continual, continued to work for you or you looking to bring everyone together at some point?

Enrique Perezalonso: So I I don't think we're ever going to bring everyone together just because one of the things we've done is kind of grow. Half of our team is in the US, some other like the other half is in Latin America. We just because it makes sense that a lot of our partners are in the region. So it's good to have them there. So, so right out of the gate, it's that that maybe is not going to be feasible to have them in in one central location. I do think and I am I know that eventually there there's a limit right to what you can do with remote because you know if you're hiring younger people they might not get the same kind of coaching and learning opportunities that if they were in an office. Like if you know think about it if you're like 20 and you're right out of college it's not the same thing you know you have to be with your peers with your you know have opportunities to get mentorship to learn and we do eventually want to provide those opportunities and the same thing I would say that there's a lot of benefits to being in the same place and just being able to you know just even from a personal level right.

So it's worked really well up to now because it's manageable. We're still 15 people. Every week everyone gets you know we all get together on a screen of course and we all talk about what the company is doing and what the goals are. However, I think eventually it's, and we're far from that yet, but but it will come a point where we will need to have some operational centers. That's the way that I'm envisioning it. It might change, so you don't quote me, but that, you know, that's how I see it today, where, you know, we people can come together maybe a couple times a week and for sure we're going to have one in in Mexico City or LATAM and then another one probably here in Florida. And that's where I think we are headed because you know I I I hope or you know not not hope but I wish I could tell you that remote you could grow to 100 people remote but I think at some point it there's a limit to it and I don't know exactly where it is but I'm I I think we eventually every company hits it especially every company that's born like us in the pandemic and that's 100% remote.

Jake Aaron Villarreal: Yeah. Yeah. Makes total sense. Well, you started off remote. It sounds like you got some runway to continue to do that. But I do agree that, you know, the education you can get by rubbing shoulders with your, you know, current employee employees and your friends, it does go quite a ways, especially if it's younger employees with paired with an older employee or more tenured. It's just that transfer of knowledge happens, you know, more than you know. So it's I think it's at some points important but really excited that we were able to reconnect here and have you back on. I know that there's a lot of companies that are raising capital today and you know in the AI space is a little bit different where you have different breakthroughs that are making it in some ways maybe easier to raise capital. But for an organization like yours as we end here just you know from, if you think about AI you know how does that impact your company? I'm just curious to know, is it integrated? Is there any level of technology in there or is it utilizing tools that are helping you operate your company differently?

Enrique Perezalonso: So, so I think that there's AI, I'd say that over the past two years, has really become enmeshed in the day-to-day of what we do. Not necessarily in the way that you might think. Like for example, we don't have any processes run by AI, we don't have, but we do have for example on the engineering side, there's tools that just make uh engineers' lives so much easier, much more efficient. And then I'm going to talk about myself, but I think a lot of my colleagues and co-workers kind of share this, is the AI just makes you so much more efficient. It replaces a lot of, a lot of going back and forth in terms of searching for things, reading things. It really makes you go faster.

So yeah, without saying, "Hey, you know, it's embedded in our platform," and because of course we're not, you know, an AI platform, so to speak. We're a money movement platform. But I'd say that it is embedded in our daily workflow. If you're researching something, hey, you're probably going to use AI. If you are writing something and you just want to double check it or just maybe increase the size of the text a little bit, you will use AI. And that's where I think that you we start to see it more. So, so I do think it's it's going to continue for sure. It's it's going to continue to be a part of not just professionally, but personally in our daily lives. I I think that's something that's here to stay and that's going to take a big presence in our lives.

Jake Aaron Villarreal: Yeah, we're seeing that too. Any product names that you think of that have been most effective for you or your company? Because there's so many tools out there in AI, you know, you got for the developers, I know there's Cursor and a number of other companies, Copilots and yeah, but you know, for sales or for marketing, has there been anything that's really you've seen help accelerate your execution on anything?

Enrique Perezalonso: I'd say on the engineering team you said it, Cursor, Copilot, those are the big ones of course in that space. I would say we have a specific tool that's helped us. I think of course we have ChatGPT, you have Grok, you have Perplexity. And I know the team uses it for different things of course. But I'm just waiting, excited about it, waiting to see what else comes up and how we can really start integrating it more in the workflow and into the operational systems and making our lives more efficient. Because ultimately you know I I I, it's not like it's going to take your job away or at least that's my vision. But it's going to make you so much more efficient that you might not end up hiring. One person is probably going to be able to do the job that five people do, did in the past or three people did in the past. So it, it's I think we're in the midst of a little bit of industrial revolution. So it's going to change the way people work and the functions they do and how they do those functions.

Jake Aaron Villarreal: It's wild. Yeah. It's keeping, I mean we're seeing companies right now that are not hiring people unless they have AI tool experience. You know whether you're a developer, you know, how much coding are you doing, you know if you're doing more than a certain amount of coding yourself and you know you're probably not thinking the way that we want to be hiring people. On the marketing side, what tools are you using, go into details about how it's was a benefit for you know sales. Like it's starting to hit every single operational aspect of a company. So, it's good to see that you guys are right in the middle of it. Can't wait to catch up with you on the next one. If there's any roles or any positions that you're hiring for that you want to plug and throw out there, feel free to mention anything.

Enrique Perezalonso: So, we're looking, we are actually looking for a finance manager who can actually help us with all the models, all the analytics, of course, unit economics, kind of customer retention, all that good stuff. And who can also, you know, hold their own in terms of accounting and and bookkeeping. Not that they would do it. We're looking for a well-rounded person who can help us with that. And that's one of, that's been a challenge. I'll say that it's been a challenge. You know, a lot of good people out there, and it's it's hard to sift through all the, the applicants. I'd say that's probably one thing where AI could be interesting if we could find the right tool that helps us match kind of the right experience and the right, the right uh culture or that, that would be really interesting.

Jake Aaron Villarreal: Yeah. Yeah. Got it. Well, ironically enough, we rolled out AI agents in 2024 and really what it's done is it's helped accelerate the communication between us and our customers. So, we basically have a, an LLM that takes what you're telling us you need and then we put it in the system and then we send to you. We do a kickoff call. We understand what you're sharing with us and then we say, "Okay, here's what we think you're saying."

Enrique Perezalonso: Yeah.

Jake Aaron Villarreal: And we put it in the system and then it kind of trains itself up and then we send candidates, you review them, they come back, they're a fit, they're not a fit. Ultimately, it's getting smarter and smarter. So you no longer need to tell us more than once what you need. And as as you provide feedback and we provide feedback. Now we kind of think like you think and it's really accelerated not just how we operate but also the delivery of the candidates that our clients want without a lot of frustrations of going back and forth. "I've told you this three or four times. Do you understand what I'm..." right? It starts to take your energy and your time and you know ultimately it's not very fun. So that's how we're, we actually built that and we're using it and it's really been fascinating to see how the technology has helped us you know also evolve in the process. So but we will certainly, we'll get this posted you know in the next 30 days or sooner so you'll be able to get you know hopefully some visibility and people can connect with you directly. Enrique, where do they go again if they want to find Palla or find you?

Enrique Perezalonso: Well, you can always just go to palla.com and you can see what we do. Or if you want to get in touch with me, you can always write me directly at enrique@palla.com. That's as easy as that.

Jake Aaron Villarreal: Okay. If you get flooded, don't blame us, but we'll definitely get people to...

Enrique Perezalonso: I'm fine. I'm fine with that. I'd love to get good candidates.

Jake Aaron Villarreal: Perfect. All right. Well, thank you so much for joining. I really appreciate your time, Enrique. Excited to see where things go and for the listeners again for listening. Hopefully this was a good catch up for you as well. I'm your host Jake Aaron Villarreal signing off for now. We can't wait to catch up with you on the next episode. Until then, Enrique, the world take care. If you like what we're doing, don't forget to subscribe, leave a review on Apple Podcast or wherever you listen. Follow us on YouTube where we go behind the scenes to learn what it takes to be a startup founder.

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