Sebastian Kanovich - Powering Emerging Markets Payments - [Founder’s Field Guide, EP. 56]

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Founder's Field Guide. Founder's Field Guide is a series of conversations with founders, CEOs and operators building great businesses. I believe we are all builders in our own way. And this series is dedicated to stories and lessons from builders of all types. Founder's Field Guide is part of the Colossus family of podcasts and you can access all of our podcasts, including edited transcripts, show notes and resources to keep learning at joincolossus.com.

**SPEAKER_2** (1:06)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (1:31)
My guest today is Sebastian Kanovich, CEO of payments company Dlocal. Sebastian founded Dlocal in 2016 to bridge the infrastructure gap between payments in developed and emerging markets.
Since then, the initially bootstrapped startup has enabled global merchants like Uber, Spotify and Google to service billions of emerging market users. And in doing so, Dlocal has created $10 billion of equity market value, having IPO'ed last year. Our discussion covers Dlocal's playbook for facilitating payments in emerging countries, what Sebastian's learned about great API building, and how he challenges himself to improve personally. Please enjoy my conversation with Sebastian Kanovich.
Sebastian, I've been really looking forward to this conversation because I am so fascinated with the world of payments. It's this massive thing that everybody uses every day that is unspeakably complex in its guts and in a world that's increasingly global. D-Local sits in a fascinating position in this world. So I think the right place to begin would actually be with the present day and survey your take on global payments. What is interesting about that system to you today and the role that you play in it?

**Sebastian Kanovich** (2:39)
First of all, thanks very much for having me. It's great to be here.
Payments has become exciting. It wasn't this way when we started. From day one, I always felt the same. Payment is not rocket science by no means, but it works, but it's sometimes broken on the edges. And what we've seen is that things that people give for granted in places like the US, Europe, even China, that the user can go and buy from a company and that company can go and pay for that user.
It's not the case when you're sitting in Nigeria or when you're sitting in India or when you're sitting in Brazil. So if anything, we've seen that people are demanding more and more use cases that require international payments, but those payments are completely broken and they're not broken because there's something fundamentally broken about it. It's more about building the infrastructure, making sure that those pipes connect to each other. The other thing we've seen more and more is that payments are a very local trend. So if you are a user sitting in South Africa, you have a very different behavior from the user sitting in Mexico or from the user sitting in India. And if anything, we are seeing that becoming more and more localized. Well, that's great news for the user because now I can go and pay with whatever payment method I want. It's very challenging from a merchant, from a company perspective, because sadly you need to accept hundreds, if not thousands of payment methods. So what we've seen or what gets me excited and what keeps me going is there's a problem that shouldn't be broken fundamentally, but it is today. What gets me excited is whenever we fly into a new country and that has happened multiple times, we say, wow, this is really complex. There's multiple frictions here. We should be solving them.

**Patrick O'Shaughnessy** (4:01)
Talk me through an example of a country.
What happens when you show up, what you typically see, and the playbook that you've created to facilitate lower friction payments in a given country. Sounds like it's idiosyncratic. Each country is a little different, but give us a sense of what it feels like to approach somewhere that isn't yet where it could be and what you do to get it there.