IT Traveler with Pedro Gutierrez, Bananacode (Avify)

Here’s another series of our tech talks with entrepreneurs and C-level executives from all over the world. In this interview we’ll talk about Bananacode, a digital firm based in San Jose that specializes in SaaS B2B platforms.

The Bananacode team is experienced in building web apps, mobile apps, MVPs, and all kinds of software integrations. Who can give you a better insight into how the company operates than the CEO himself? Let’s start!

Meet Pedro!

In this interview, Pedro Gutierrez, CEO and Co-Founder of Bananacode, together with Redwerk’s founder Konstantin Klyagin, talked about Pedro’s professional experience, beginning of his IT career, work specifics in Costa Rica, Social Security rate, payment model, and more. Continue reading to discover it all!

I’m here in San Jose, the capital of Costa Rica together with Pedro Gutierrez, CEO and Co-Founder at Bananacode a startup studio.

So, Pedro, why “banana”?

That’s a good story. In 2015, I was working as a university teacher in Limon. And Limon has specific characteristics about how people get jobs. When I was working there, I was 24 years old – pretty young at that moment. I was connecting a lot with the students. They were talking about the opportunities they had: start studying and move to San Jose to get opportunities for jobs; go to the banana fields and work there; go to the narcotraffic system, which is probably the easiest option.

In Limon, the banana fields produce the majority of bananas that we export from Costa Rica. Being a teacher, I made a simulation of an agency. I was working with the guys after five or six o’clock. I was like “Hey guys, it will teach you things that don’t exist in the university program right now like bootstrap, CSS, and HTML”. Because what students learn at the university is the basics of engineering, right? 

I worked two years in a private company and after that I started Bananacode. I said that the mission and social responsibility I would love to take is to generate employment in Limon. I thought that it would be awesome if we could export banana code, no bananas, and create a new experience of jobs. The first batch of guys that we hired as interns were from Limon – the same people that I started teaching.

The connection was the fruit name, right? Why is it not Limoncode then?

It’s so different. The banana fields were the main source of income. You can find a lot of young people still working there in restaurants at night or something like that. We export a lot of bananas to Europe, USA, and a lot of other places. And I said “Let’s export banana code”.

So if it was Italy, you would export spaghetti code.

Haha, that’s good!

All right. So just like me, your background is software development, right? Tell me more about it. What were the main technologies you worked with before you decided to be an entrepreneur? How much do you code nowadays?

I started working with HTML, CSS, and basic JavaScript. When I was at the university I started my first job working in an open source language that is not pretty popular called Tcl. It’s not a good language, more like an experiment from a university in Spain. We were not working with a commercial language.

What could you do with the language? Was it server-side?

Yeah. But HTML and CSS were always a part of it. I started getting in love with the front end part. I was developing skills in design. I wanted to design something, present it to my boss and then program it. And I was lucky at that. 

I’m not a big programmer. I started working with JavaScript, but it wasn’t full programming. It was more about giving maintenance to a specific platform – checking the JavaScript code inside some components. I was not developing at all. I was getting more involved with the product design and management. I was spending a lot of time with UX designers and all those guys. 

As soon as I got the first job for software development at my own agency, I did all the design and programming part myself. Probably after ten or eight websites, I decided that I would like to design and outsource this to India (at that moment it was WordPress). I wanted to find a team. In November 2018, I started focusing more on product development.

You’re an investor in at least one company Avenida. How much did you invest?

This is more like time than money. The investment part is after 5 o’clock. We try to develop as much as possible, and interview people. Last year we invested a small amount of money – five grand. But we are spending all the time on the product right now. We made a payment last week, so we are moving from a commission-based model to a monthly fee model.

Why do you want to spend time exactly on this project?

The idea arose in 2018. I was like “Hey guys, probably in the future a lot of people will try to start selling only on the Internet and the malls are going to be virtual and things like that”. So we started thinking about the marketplace. We were working on that because of the timing. 

The pandemic started and that was the kickoff of the product. There were a lot of people trying to hire us as an agency to develop e-commerce, but they could not afford it. So we decided to make a super simple and basic solution without monthly payment. Only if they sell we charge 15% commission. We got 85 stores in three or four months. After all the interviews we made with all those people, we found a different model.

Is it a successful project?

It’s working right now. The first three or four months, all those people were not using the platform because of the specific situations. For example, someone texts you on Instagram and tells you “I want to buy this and I can make a bank transfer right now”. And they stopped moving their traffic to Avenida. We were wondering “Why is this happening?”. The statistics showed that 10 stores were top – all of them were selling, and the rest of the stores did not. 

So we started interviewing all of them to see how we can make them use Avenida. We made this pivot based on the interviews and hours of talking with the founders of different stores. I think it is getting better right now.

Now you can tell me why you founded Bananacode and why you decided to become an interpreter.

Well, I have 13 or 14 years of experience as an entrepreneur in different fields. I’ve had a band for nine years. Two years ago, I noticed that it was kind of an entrepreneur situation. We were a group of ten people, and we were spending money on flights and tours. I learned a lot about how to manage people.

Then, I started another company producing concerts – managing artists and things like that. In the last job that I had in the private sector, I learned a lot from the guys from Toronto, Canada. I visited Toronto a couple of times, and I was impressed how hard the founders were working. I saw what they built, it was really cool and so similar to the simulation I made when I was in Limon. I thought “What if I just try to sell something by myself as a service?”.

I started selling marketing in November 2017. I didn’t know anything about marketing, but my co-founder knew a lot. I said “I know about numbers, management, and design. Teach me what you know and let’s start selling that”. We spent probably eight months selling only marketing, and one day I received a call “Hey, do you develop websites?”. At that time, the name of the marketing company was different. I started selling banana code.

Was it difficult to start?

Yeah, it was difficult. In Costa Rica, you need to have a kind of reputation. If you are going to sell something, you need a portfolio of products to show the customers. I started selling cheap because that’s the thing, right? I was selling myself the first year. I sold eight or ten websites for less than two grand, and that made my portfolio.

I have a great story about this. A few years ago, I met Brad Parscale President Trump’s campaign manager at the conference in Lisbon. His story is pretty much the same. He built about 1000 websites to create a website for one of Trump’s construction projects. He was making those websites one by one. Brad could compete with the New York agencies because they were way more expensive. And then he became Trump’s campaign manager. He made $98 million.

Wow!

You start small and you never know where it takes you.

I was totally alone with the banana code until December 2018. One of the startups I was working with raised 15 grand. And they said “Let’s hire someone that can help us with the React Native development”. 

I started recruiting someone. Alexis – the CTO, applied for the recruitment process and I interviewed him. He showed me a lot of things that he had built. I said to the guys like “Hey, I have the developer who is going to check the code and everything”. 

I remember that he stayed in his house for three days. I couldn’t contact him, and after the third day he said “I have already finished everything”. He showed me the application and everything was working pretty good. And I said “What are you trying to do? Who are you? What are your goals?”.  He told me “Well, I have been trying to find someone to build something, but here in Costa Rica I cannot find anyone. Everyone is pretty good with their jobs and they don’t want to start building anything.”

It looks like a very comfortable place. Warmth, tasty fruits.

Yeah. So I said to Alexis “Let’s do something. I’m trying to find a partner. I can give you 50% of my company if you want to jump into this adventure. Let’s check how it goes”. Probably two weeks later we got two projects with full engineering where we had to develop a lot of things. And yeah, this is our third year already.

Was it for the investment of 15 grand?

The 15 grand was for developing the first MVP of this company. He resolved everything about the consumer SDK. I knew how to do that but not at his level. So the 15 grand was for developing the MVP for at least two or three months more.

We hired two interns from Limon for that project, and we got hired for another project, which is the biggest newspaper here in Costa Rica. We employed two more guys and started on January 7, 2019. We were six guys at that moment, and we started with three projects. That was probably the best decision. Alexis is an incredible CTO. He knows a lot, and is a super geek guy. Right now we are 13 people and we develop more robust projects, polishing all the processes. But it has been hard. It is still hard.

Is it difficult to do business in Costa Rica?

Kind of. I don’t know if that happens in Europe, probably no, but here it takes two or three months for Costa Ricans to make a decision for every client they take. It’s so hard because I have been prospecting them, I have been showing them a lot of things, and I have been creating some wireframes to demonstrate what they were trying to build. And after two or three months they haven’t made a decision. So sometimes I need to get at least ten prospects, and after two or three months – only one or two close.

B2B sales are always slow no matter where. But speaking of Costa Rica, is there bureaucracy in doing business?

Yeah, that part is hard because if you want to start something, you need to pay from the day zero. So if you hire someone for a professional service, and you have been working with that person for six months, regularly paying a specific fee – it automatically turns into an employment relationship. 

If Social Security finds out that you have been working with this person for six months, they will ask you to pay the full amount of money for this period. If you have 13 people like me and they find out that you have been working with them for two years, they will charge you all the money for Social Security. It’s hard because you need to pay 26%. If you pay someone $1,000, you need to pay $260 for Social Security, and the employee will get 10% of $1,000. The specialty of the government is to close entrepreneurs, and make them broke.

That doesn’t sound like a very favorable climate for information technology services.

There are specific methods that you can use. We incorporated Bananacode in Delaware.

We are charging everything from the United States and Canada to Delaware. We are only moving the salaries to Costa Rica. Thus, we are not making profit in Costa Rica. I would love to be different, but that’s the only way.

I must say it is the same in many Eastern European countries. Where do you get your leads from?

I need to be completely transparent. We haven’t spent a penny on marketing. The leads come from word-of-mouth. At least in Costa Rica, a lot of people are like “Hey, someone recommended you and I found your name on the website. I really want to have a quote from you”. But when it comes to big leads that we really want to connect with, like from the United States, Canada, and Europe, it’s more about how I can get connected with them, via LinkedIn or through different virtual events.

Even Clubhouse is getting some power now. But how can I visit all those places? We have been visiting Austin for two years. Last year we couldn’t because of the pandemic situation. But the idea is to go to as many events as possible and present our value proposition. 

When I worked in Toronto, I found some friends who were working for a specific startup and they hired us for that. Right now we are using software called CyberLeads, which gives you 500 contacts of the decision makers of specific agencies for startups that got funded in the last three months. I’m connecting with them to see if we can give them some value. I already sent them a proposition. We will see how it goes.

What’s the outcome of that?

Sometimes it’s a good conversation with the CEO or decision maker. But sometimes it’s like “We don’t need to outsource. It’s something that we are not thinking about right now”. So what I try to do is just be connected with them, see if they have any overflow and can talk to us. 

What I have learned is that if I get some good relations, it gets into an email like “Hey, Pedro, I found something that’s probably going to help you. Perhaps they need your services”. I receive that kind of email every week or every month. Sometimes what I try to do is give value. It’s great if I can send whatever can help that founder or owner. In the future they come back and say “Guys, probably we have something for you”. It’s all about networking and how we can give them value. 

What you are doing is super cool because I really love and want to travel. If I could talk to someone for 30 minutes and give him something that could help him at that moment, then in the future he would say “Hey, you helped me. I can give you a connection”. 

Yeah, networking is very important. That’s why I travel to the locations where our customers are and I try to visit them regularly. I go twice a year to New York, and I’m in touch with my connections in Berlin. Also, professional events help.

Last year I traveled to Austin for the South by Southwest conference and it got canceled the week before.

I wanted to go there.

When I visited SXSW for the first time I was like “Oh my God, I will go to all those workshops among the founders that I can prospect”. And it didn’t happen.

Hopefully next year.

Definitely. Next year is going to be a different one.

How do your prices work? How do you calculate them?

Well, every time I send a proposal like “This is the team you are hiring. This is the amount of weeks you are going to be hiring these specific resources”. We try to calculate the salary, the Social Security things and our profit. I try to give the client the exact number of weeks, the exact amount of resources, and the total.

Sometimes they want a discount or something like that. So I need to start working with our profit. What we are trying to do is to charge $35-40 an hour. We have been working for $25-28, so the idea for 2021 is to raise it to $35-40. We have closed two projects with that rate in the last two months, but we want to close at least ten this year. 

We are trying to find 4-6 month projects to build a pretty solid product that we can move along the usability testing and beta testing. So we could say this is really for high profit. I know that it is still cheap.

It is pretty cheap even compared to Eastern Europe because other people I spoke with in Costa Rica charge $50-60. But you need a portfolio first.

This is exactly the same situation as two years ago, but with a different amount. I have the confidence that we can start charging $50-60 in one and a half years.

Speaking of profit, what do you consider a good margin?

What I recommend to small entrepreneurs is that the 20% profit is good. But in software you can work for more than 100% profit. I have been talking to some friends and they were like “I charge 400% profit sometimes”. It is not possible for me in my situation. 

But right now, the real number that we have been getting in the last year is 50% profit. But the idea is to start increasing that. Sometimes we are just checking with the client, right? I try to put the price not to our work but to the client. Since what we are going to build is different to McDonald’s and a small owner.

This is good. This is called value-based price. One more recommendation that I heard is that you ask the customer “What does it cost not to have this done?”. So if you are not getting this done for the next half a year, how much money do you lose?

In November of last year, I had a discussion with our client. We have already developed some kind of automatic form for an insurance company for them. They said “Hey, guys, how much is the same project but eight times? We need to do this for eight countries”. If it costs 12 grand, then just do the math, right? But they said it was a lot of money, so on and so forth. 

I remember that I came to a kind of directors meeting and said “If you want to compete against your biggest competitors, you need to know that they are investing in technology. If you are not investing in technology, probably you are not going to be the first in the market. If you want the best – hire the best, but pay exactly how the best costs”. They didn’t accept the deal because it was a lot of money. I didn’t understand that because it was a super big company. 

One of the lessons of 2020 was how to say “no”, because we were kind of desperate sometimes. If someone said “No, guys, we cannot pay you 50 grand, we can pay you 20”, I should have not accepted that. We need to have a sustainable business and our price is 50, not 20. So that was a big lesson.

Where are most of your customers located?

I think in Central America, although I would love to say North America. We’re looking for three or four clients in Costa Rica, one in El Salvador, one in the United States, and one in Toronto right now.

Is it a startup in El Salvador?

Yeah, it’s a startup. They are starting from zero. We are developing all the products right now. It’s a dark warehouse supermarket. The idea is to sell you exactly what you want. You have to ask for that on the app or the website, but you cannot visit the place. It’s a dark warehouse. The name is “Keep”. There is no Uber in El Salvador, so they want to start working in that direction. It’s a super cool project.

Speaking of processes, do you document them somewhere?

Yes. We use “Notion” for knowledge base management. But all the time it’s like “Guys, what happened here? Did we follow the process? Let’s check the process or let’s fix the process”. 

So definitely we are small, but as soon as we can get bigger clients, the process will probably get stronger and we’ll be able to hire seniority, which is something that we are struggling with right now. Our team is amazing, but we need more seniority because they come and they put a lot of things in order. The idea is to hire people that can teach us how to do specific things, not to tell them what to do.

And what roles do you have in the company?

We can see each other once a month. But with the last events, we can go full remote and have virtual events as well. That’s great, but pretty small. I have been talking to a lot of guys who are working in big companies that are paying a lot. Even if you are a junior, there are companies that are paying you as a mid or senior. It’s a lot for a person who has only one year of experience. So we are competing against salaries, not against other things.

Speaking of juniors and mids, how much are the salaries?

I think juniors have $1000-1800, mids have $2000-2500, and seniors have  $3000-3500, something like that. But Social Security is 26% on top of that. So it’s very hard because they always ask whether it is freelance or full-time with Social Security. If it’s freelance, they are not interested. So that’s the hardest part.

Everyone wants a full-time job. Is paying cash an option?

What I try to do is like “If you’re not coming to a specific office, but you are only working for goals, we can pay you all money in cash, right? You only have to make a bill because the office is here and they will ask you for that. But we can even pay you in TransferWise or PayPal from the US company. If you want to make your movements to bring the money – that’s up to you, we can do that. We do this with some people from India and Argentina.”

But as soon as you grow, you need to have everything in order with the government and things like that. Even sometimes if you want to work with a specific client, they ask you for all the papers to see if you follow the law.

Is it easy to retain talent here?

Here, if you offer people a stock option pool, they don’t understand it. They don’t know what that is because that’s not part of the culture in Costa Rica. We’re telling them “If you can grow with us and give us value, you are going to be part of the party giving you stocks every month”. So it has been a challenge with the people that we have already.

You are talking about shares, right?

Yeah.

But you are a service company. Is there a difference? Or do you want to be like a startup?

I really want to have that culture here like “If you can help us not pay you all the money that you’re expecting, because we cannot, we can give you a stock option pool for four years”. It has worked for some time. They are staying because they have some stocks. But the idea is to start increasing the perks and start giving them the options to travel with us to Austin or to a specific country.

If you want to go to Europe and stay there for three months, you can do it. If you are here in San Jose or on the beach right now – it doesn’t matter for us. If you’re working – that’s perfect. So that’s one of the things that we have that the biggest companies don’t. They don’t allow you to go outside the country because you need to visit the office once a week, etc. We are trying to be more open to that. It’s hard, but we have the talent right now.

Do you offer any perks?

We are trying to move into the medical plan for a private service. We really want to fulfill Social Security first because we know they want it. Every month they need to make us a bill and we pay them. If they don’t do it, we cannot pay them. So the first thing we are trying to fix is Social Security. And as soon as we have that, we can start paying for other things like team buildings and so on.

We try to cover all the food, drinks and everything of every town hall at the end of the month. We also want to buy new devices and computers. We have a lot of ideas, but we don’t have money yet.

What’s the gender balance in Bananacode?

We have a lot of women right now. It’s 50/50 but we are trying to hire more women. From my point of view, they have more communication skills and keep order better. So, yeah, we have a balanced team.

What’s your favorite project?

I think this is the one that we are building right now in El Salvador. It’s innovation, and the new trend of dark warehouse things. It’s a zero-to-hero project. They are investing a lot of money, they are renting a new dark warehouse, and they are building that. They are only expecting our tech in order to start. So I’m pretty excited about the launch.

They’re going to do friends and family beta testing in May. And they have invited us to go to El Salvador for the launch. They give us the freedom to do what we can do and what we know. I really like that because we started this on December 1. They are super happy with all the products we have been developing so far. We are moving to the second phase right now, which is the app.

I think that if you respect the process, you can get a great solid product that you will love.

Who’s your favorite customer? It can be your ideal customer or your favorite customer from the existing ones.

I’d say “Keep” because they are the ideal profile of the customer we are trying to find. They are professionals who have been working in a specific niche for years. They make a lot of investigations about who will develop the applications. They told us that they have been interviewing a lot of agencies for two months. They really like the details and your advice based on experience. That’s so valuable, right?

Are there any new technologies or trends that you’ve been following?

I think we’re moving deeper into React Native and React.js. Probably Alexis is the best person to answer that part. What I know is that he has been working more with AWS and DigitalOcean which has been growing a lot.

Probably the next thing is about machine learning. As soon as we have more data in different projects, we will definitely start offering services about that. We know a lot of people here in Costa Rica who are good at machine learning, Python and R. So that’s something that we know we need to do but we haven’t had time yet. I know that Alexis is trying to explore some positions there. If we get a project in this field – we already have a team that can work on this with us.

You told me that you wanted to visit Ukraine. What have you heard about it?

 I haven’t heard a lot but a mentor from Austin who’s working with people from Ukraine has visited them two times. What I would like to do is to understand the culture, explore the food and the places. As you’re here I really want to say “Hey, let’s go to the beach and explore the places that I know well”. That is something that I really appreciate.

When people are hosting you, they can show you many things that they have been doing all their life. That’s great because at the end of the day, capitalism is telling you that people are numbers, and they are just making money. But I connect more with people behind all that effort. If I can share time with people from different countries and cultures who can understand how to be a worldwide citizen – that’s cool.

Feel free to visit Ukraine anytime. Be my guest.

I would love to. I haven’t gone to Europe, only to the United States and Canada.

What does your customer from Austin say about working with Ukrainian developers?

He really likes it.

By any chance, do you know the company name or the city in Ukraine?

I can check it in any chat, but I don’t remember the name exactly. What he says is that they are super smart and pretty solid engineers. I connected with this guy from Austin, because he is trying to hire from Costa Rica, not from Ukraine, due to the time zone. I think he has been working with them for four years. But he really wants to outsource new projects here as he lived in Costa Rica 15 years ago. He wants to have a team here that he can visit, go to the beach, and connect with as well.

I would call it lifestyle outsourcing.

Yeah, definitely. He says that you’re smart people and go-getters. That’s certainly something I want to explore. I’ve been trying to develop with Indian people, but they are more like YouTube learners. I really want to see if we can explore an opportunity in Ukraine.

And finally, what would you recommend from your experience to other founders?

I think it’s persistence. Just keep going, and try to improve your atomic habits. Sometimes you’re so tired of the routine. Sometimes you need to handle a lot of pressure from clients that are not paying or not closing. But in the end, if you follow a specific mission, build a team, and create something that can impact a lot of people – things will get better.

Last year, I wanted to give up maybe three or four times. I was thinking of finding a job, just relaxing for a couple of months, and then coming back. But I said to myself “No, I have worked a lot. I have spent many nights working hard”. This is the third year. And I have heard that the third year is probably getting better in the whole structure. So it’s all about pushing, and getting the things done. This is the only thing that lets you move forward.

That’s for sure. Thank you, Pedro. It was an interesting conversation. I wish you luck with all your projects and growing your team. Feel free to visit us whenever you can!

Yes, definitely. Thank you very much!

Work With Ukraine

The interview was recorded before russia’s unprovoked invasion of Ukraine on February 24, 2022. In the face of massive disruptions, the Ukrainian tech sector concentrated its efforts on maintaining organizational cohesion. 

Don’t hesitate to start or continue ordering services in Ukraine. We moved our specialists to safer regions to ensure favorable working conditions and quality results. Despite the electricity terror, our energy system is back on track, and our business spaces are now fully equipped with power generators and Starlinks.

We continue working regardless of the wartime challenges. By choosing a Ukrainian IT vendor you can help keep our country’s tech sector afloat. With a working economy, Ukraine will have necessary resources to recover faster. 

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