Justo Ferraro, Fudo | Building an Industry's Default SaaS, the Upside of Selling to SMBs, and Expanding Abroad

The audio and video are in Spanish. These notes are a translation.

Today I spoke with Justo Ferraro, CEO of Fudo, software for managing restaurants. To date, Fudo has +25,000 active customers and has raised $7.5M from investors such as Andreessen Horowitz, Atlantico, and Maya Capital.

Youtube Timestamps*

[1:27] - Personal Story and the Origin of Fudo

Before Fudo and Mercado Pago, Justo started a first startup in 2011 that did not find Product Market Fit.

What did Justo learn from this experience? What are some of the mistakes he keeps very “top of mind”?

When he told the story, Justo mentioned that he dedicated 3 to 4 years of his life to it, suggesting he could have left the business earlier.

How does Justo think about the right moment to “throw in the towel”?

In 2015, Justo joined Mercado Libre, a company that was already 16-17 years old, but still behaved like a startup. They invited him to lead Mercado Pago Point, its point-of-sale terminal, which grew to 8 million active businesses across Latin America.

What were some of the lessons Justo took away from this stage?

The way Justo became CEO of Fudo is unconventional.

Could Justo tell us how that process went?

Fudo was born in 2014 as a side project of Juan, Justo’s partner and CTO, and they bootstrapped until 2022, when they raised capital, already with a substantial business of 8 thousand restaurants.

What changed, and what was the conversation that led them to take the path of raising capital?

[15:17] - Digitization of Restaurants

Most restaurants in Latin America are not chains, but independent businesses that do not seem very modern, being family-run, very manual, and not very digital.

Is this characterization correct? How would Justo describe the level of technology adoption in these restaurants?
What are the challenges of selling technology to small businesses like restaurants in Latin America?

Fudo specializes in software for restaurants, which makes it a vertical software.

Why does it make sense to build software specialized in a vertical, both at the business level and for the customer, according to Justo?

It is impossible to avoid the comparison with Toast, the reference vertical SaaS for restaurants in the United States.

How much does Justo study a reference like Toast? Does he try to connect with its founders and investors? How much can you learn from a reference, and what is very different in Latin America?

[26:16] - Vertical SaaS Playbook

If Fudo charges between $300 and $500 per year for its software, they would need 250 thousand restaurant customers to reach $100 million in sales.

How could Fudo reach that scale and be a profitable business with all the support needed for so many customers?

Vertical software tends to launch new products that cover additional needs of their customers, becoming a key platform for their businesses.

How do Justo and his team prioritize which products to launch, and in what sequence?

A natural expansion in vertical SaaS is to add a layer of fintech services, where Justo has a lot of experience from his past at Mercado Pago.

How does Justo think about the combination of fintech and software? When does it make sense, and at what moment?

One of the advantages of vertical SaaS is that they achieve a lower CAC due to “word of mouth”, as they become the standard solution in their industry.

Are they seeing these benefits emerge at Fudo as they gain market share? Does growing become easier?
That said, what actions have they taken proactively to position Fudo as the standard solution for restaurants? Which have been the most effective?

Fudo is in Argentina, Chile, Mexico, and Brazil, which sounds like quite a few markets at once.

How has Justo thought about prioritization between countries?

[41:08] - Final Questions

What questions do people never ask him that he thinks they should ask him?
What is the most contrarian or uncommon advice he has for the founders who are listening to him?