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Who?

Antonio Pelaez is the CEO and Co-Founder of Dapp, a platform that integrates players in the digital payments ecosystem—banks, wallets, and merchants—into a single wallet. They focus on creating payment infrastructure for the unbanked population in Mexico.

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Defining failure

FuN: What's your personal definition of failure?

Antonio: Failure happens when you give up. If you give up, a project dies, and you might gain some lessons. But when you give up, the opportunity to keep going and try a bit more also dies.

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FuN: What was everything like before the failure?

Antonio: After a failed app, my partners and I attended the Web Summit in Dublin (2015) and noticed the huge potential of digital payments. Shortly after, a bad experience buying tickets over the phone led me to tell them, "You have to do something to pay remotely without compromising your card information." That's how Dapp was born.
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Fast forward, we were selected among the 10 best fintechs in the region at the LATAM Startup Bootcamp, where we closed an investment round of 400 thousand USD. This opened doors for us with the media, banks, VISA, Mastercard, and marked the beginning of our golden age.
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In 2020 we raised an investment round of about 1 million USD and by 2021 we managed to close an investment of about 12.4 million USD from a very large financial company at México. When just a few months before 1 million seemed very complicated to us.
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Suddenly, you become a rockstar. People start talking about your project on podcasts and other media:

• "Dapp raises almost $13 million."
• "They're going to revolutionize payments in the country."
• "They're expanding across LATAM."

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Newspapers, conferences, Forbes, and other magazines began contacting me.

We invite the other wallets to join our infrastructure and give the technology to the banks. Just as VISA interoperates cards, we would interoperate QRs.
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At the time, each competitor had its own QR code. What we did was unify them into one so people could pay seamlessly. It was a very sexy idea.

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The Real F*up 💩

Antonio: Although we generated some transactions, we focused more on integrating new wallets and chains. There was no revenue because we weren't pursuing it. We were biased, believing that forming alliances and building more connections held all the value.

For example. We connected with a very important brand of stores at México, which cost 35 thousand dollars to build the infrastructure to connect with Dapp. We offered to pay them as long as they would do it.
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That business gives us 30 transactions a month. I think we'll recover that money in about 25 years.

We were so happy "growing" that we started hiring more and more people to cover those new connections.
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We were 100% burning through money. In six months, we went from 8 employees to 54.

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FuN: How did you realize the mistake?

Antonio: Out of nowhere, someone from one of our most important investment funds called me to "understand the company's finances." Since I was on vacation, I directed them to my finance team.

After a while my team calls me and says: "Wey, I think you have to be here. This person comes to ask everything, almost to run people off."
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I had no idea what was happening, so I had to return to the city.

This person was from the financial division of the investor group—a representative sent to evaluate the status of companies and decide whether they were salvageable.

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I remember him telling me:

"We've lost track of Dapp. The person who handled this relationship at the bank left a year ago."

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They began to question why we had so many people hired and why this was the vision of the business. This person wanted to understand what we did, who our clients were and how we charged.
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From that first conversation in November 2022 to June 2023, it was an incredibly tough time. Constantly fearing the company would shut down, rumors spreading among staff, uncertainty, and heated discussions between partners.

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Now, back to Antonio…

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FuN: Were there any red flags you overlooked?

Antonio:

1. ‍There weremany times when we didn't have money to pay salaries. Sometimes, just days before payday, I had nothing to cover the payroll. For some reason, an "angel" would always appear and say, "I'm interested, here's $20K or $30K," and boom—problem solved.
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2. I thought we would become a unicorn in our next funding round. We raised that money during the golden era when unicorns appeared everywhere. There was a mentality: "Just grow and make connections; eventually, someone will figure out how to make money from it." I truly bought into that idea.‍
3. Falling into the ego trap of wanting to brag about how many employees your team has. In my mind, it became important to show off: "We're 35 now," "Welcome so-and-so," or "We're at xy employees now." The more people you had, the sexier and bigger your company seemed.
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4. Viewing investors as "enemies" or "bosses". I'd never had a boss before, so the relationship became complicated. I didn't see them as allies but as people trying to control me. This led to a lack of communication. It's completely different today—he is the first one I turn to when there's a problem.

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FuN: How did you get out of that situation?

Antonio: One day, the person sent to review our finances told me:

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‍"Toño, I like Dapp, What you're doing is incredible.  How can we make money? You have great technology, 20,000 businesses connected, and valuable partnerships.

‍In México, QR payments will take another 5 years to take off as they should. What other products can we offer besides that?"

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That's when we developed a new product: enabling points for cash deposits and withdrawals.  And that sparked a new boom for Dapp.‍

‍Luckilythe finance person arrived at the perfect time. If it had happened 5 months later, the story would have been different. The time to react and be able to cut expenses would no longer have been effective.
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‍It is because of what happened to us and what we did that we got to where we are today. It's not that we did things wrong, thanks to those decisions, today we are the fastest growing cash-in network in México because we went through a stage of attracting customers.
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Sharing the Failure

FuN: What was it like to share this situation with other people?
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Antonio: It was hard to have to talk to the partners and tell them "The income you have, you won't have it anymore" because even though they are people who have other projects, it is always delicate to take money away from someone. We even went so far as to terminate the working relationship with the wife of one of our investors.
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It was also hard to understand that we had to make a major cut. Running 12 people who dreamed with you, who you promised them we were going to take this to the next level, friends, wives of investors, who you promised them to grow together and telling them "I'm sorry, you're gone."
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I was firing people—friends—with a monster behind me telling me what to do and what not to do.

I never thought we would shut down, but deep inside, I kept telling myself, "Toño, you better pull this off because many people depend on this."

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In conclusion...
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1. Everyone genuinely wants to help: I reached out to several people for advice during difficult times, and they always gave me their time to talk, move forward, and follow up. There are so many people who want to help, but when ego takes over, asking for help feels terrible for a "rockstar."
   
   
2. Don't jump the gum: We like to scale too early. You should scale when you can actually scale. When issues start arising because you're missing a particular position, that's when you should hire. By anticipating too much, we wasted a lot of money unnecessarily.
   
3. Focus on generating revenue: When starting a business, the immediate goal often becomes raising a funding round. The metric I use now is how to do more with less. Ideally, you should have as few employees as possible, automating processes while generating maximum value. Always focus on profitability.
   
4. Entrepreneurship is a marathon, not a sprint: Sometimes, you hear about a new competitor, and your first instinct is to react. Often, those competitors are ahead for a while, but for some reason, they fizzle out. It's better to go slow and steady.
   
5. Great companies thrive on smart people, not famous people.

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Connect with Antonio!

Learn more about Dapp here.

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Remember, our channels are open to any questions, complaints, feedback or collaborations: rich@fuckupnights.com.

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