Speaker 1:
From the Library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're Inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership, and vision in global business. The dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years.
Speaker 1:
Each week, we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism, right here, right now at the NYSE, and at ICE's exchanges and clearing houses around the world. And now welcome inside the Ice House. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
"If you build it, they will come." That is the quote from the 1989 film Field of Dreams. One of the most iconic lines in movie history. And it actually happened here at the New York Stock Exchange last week.
Josh King:
Instead of inspiring Kevin Costner to carve a baseball diamond from a field of corn, we here at the NYSE were all inspired to transform the Exchange's boardroom into a regulation pickleball court, allowing Major League Pickleball to hold a professional exhibition match before the players and owners of the nascent league rang our opening bell. Such is the stuff that dreams are made of.
Josh King:
The genesis of that event came out of the visit from Milwaukee Bucks owner Marc Lasry to our trading floor, and his subsequent podcast recording with us back in April. A chance conversation between two avid players, one of them a major investor in the league, and the other yours truly, set into motion the unexpected and unprecedented hosting of a sporting event in the room typically home to major IPO celebrations and other events.
Josh King:
And you can now go and watch the construction of the court as well as the full play-by-play commentary during the game itself on the New York Stock Exchange's YouTube channel and other social media platforms.
Josh King:
Now, social media and digital technology have fundamentally changed the professional sports model. It's what allowed Major League Pickleball and the Premier Lacrosse League, whose founder, Paul Rabil, talked to us about this topic back in episode 90, to get a foothold in the media landscape in ways that were impossible just a decade ago.
Josh King:
Media and sports are not outliers. Digital transformations are sweeping every single industry. This means companies must invest in cutting-edge infrastructure if they want to survive and thrive through this period of disruption.
Josh King:
Our guest today, CI&T co-founder and CEO César Gon, is helping companies build the digital products and solutions they need to stay competitive. He's also focused on teaching business leaders that, if you build it is only half the solution. Because you need to make sure your company is prepared to come along for the transformation.
Josh King:
Our conversation with César Gon on how CI&T is driving digital transformation, the growth of his company, and the future of his business. It's all coming up right after this.
Speaker 3:
And now a word from On Holding, NYSE ticker ONON.
Speaker 4:
Pause is essential. It's part of the process.
Speaker 5:
Training doesn't end when my body stops moving.
Speaker 6:
Recovery looks different for every athlete. We have different needs, different goals, different abilities.
Speaker 5:
One thing we share, our bodies need time. Time to heal.
Speaker 6:
The moment I stop training for the day, what people maybe don't realize is that the training is still going on.
Speaker 4:
In a way, the training never ends. The journey just starts again.
Speaker 5:
Pause is sanctuary, familiar spaces, and comforting routines. It clears your mind and rebuilds your body.
Speaker 6:
Let the healing begin. Time to reset. There's power in pause.
Josh King:
Our guest today, César Gon, is the CEO and co-founder of CI&T. That's NYSE ticker symbol CINT. He earned a master's degree in computer science from the State University in Campinas in Brazil, and has been a leading digital entrepreneur for four decades. Welcome César, inside the ICE House.
César Gon:
It's a pleasure to be here, Josh. Thank you for having me.
Josh King:
It's great to welcome you back, albeit virtually, to the Exchange, six months now after your IPO. How has it been being a public company? How's it affected you and your fellow colleagues and employees?
César Gon:
I would say it's incredible six months. In a very broad sense, I think being a public company has basically three concrete benefits. One, of course, is access to capital to fulfill our plans, our growth plans.
César Gon:
But also I think it is important to highlight, it is an amazing instrument to attract and align talent. That is the name of the game in this tech industry.
César Gon:
And finally, I think it is a very amazing way to establish a reputation in front of our clients, showing we are a trustworthy company designed for the long run. So I think it's being, I would say, a very good start for us.
Josh King:
So capital, talent, reputation, those top three. Back in November 2021, when you were here at the New York Stock Exchange, you said in your listing day speech, and I'm going to quote you here, César. "Today and only today, on this very special day, and maybe for the first time in my life, I will not talk about the future."
Josh King:
But I'm going to ask you to talk about the past for a second time. What led you, Bruno Guicardi, and Fernando Matt to start the company? And where did this name come from?
César Gon:
I need to start very early in my career. Really, I taught myself computer programming at the age of 11. And at 13, I made my first sale. I sold a code of a chess game to Attack Magazine. For a child, that was incredible.
César Gon:
That was around 1982. We are talking about first generation of personal computers, 8-bit home computers, like Commodore 64, Apple II. Incredible years of the beginning of personal computing.
César Gon:
If we fast forward, I went to the universe, I became a computer engineer with a master degree in computer science, as you mentioned. And I was really preparing myself for a PhD program in the USA when everything really changed.
César Gon:
It was 1995, the early days of the internet availability beyond the academic walls. Meaning available to companies and to the society. And for the tech industry, was an extraordinary moment. Nobody could say how, but we knew, we all knew, the changes would be rapid and profound.
César Gon:
So those, I would say, exponential technology possibilities seduced me, and I completely changed my mind. Instead of a PhD, I decided to found a tech service company. So at the age of 23, I co-found the CI&T with Bruno and Fernando, my partners. And the idea was, let's create a pioneering digital service company. Let's help large companies to explore a completely new set of possibilities related to the internet.
Josh King:
What drew you to computers and coding in the first place?
César Gon:
Really, I think it was the curiosity. Feeling that, if you write a good number of line of code, you can solve basically any human problem. That was, I would say, the idea behind that young kid.
Josh King:
Chess is a classically human problem, César. Were you a big chess fan when you decided to go out and do that coding?
César Gon:
Yes, I was kind of frustrated, because in that kind of computers, there is a lack of memory. So my algorithm was kind of... Really, I could foresee only two levels of the future of the game, and that means a very dummy player. But that was fun to work on that.
Josh King:
So one of the great Brazilian grandmasters is Henrique Costa Mecking. He's known as Mequinho, I think. He reached his zenith in the 1970s, and is still one of the strongest players in Brazil. Could your code have beat Mequinho?
César Gon:
I'm sure it's going to fail.
Josh King:
Going back to that time. I mean, what were the opportunities for you to study technology in São Paulo? And how did your parents, one of them I think is a dentist, and the other, an educator. How did they shape your interest, and say, "César, here's opportunities for you."
César Gon:
I'm from a more countryside small city named Amparo. Basically my mother was a geography teacher, and my father was a dental technician. I had a pretty standard childhood, going to school and playing soccer. We call it football here, as you know.
César Gon:
But luckily, I bump into a personal computer back in the early '80s, and that changed my life. I was really seduced by that. I started to programming magazines, and then I started to make some money and invest on new computers.
César Gon:
And I think it was kind of pure magic for a young kid. If you think about it, it's a magic that could be capable of taking a small, tall kid from a modest public school in Brazil to become a CEO of a company listed in the New York Stock Exchange. So it's kind of magic.
Josh King:
CI&T has always had this global footprint. And its first clients, I think, you got some in France and the United States. But you started very small. And it was just you, Bruno, and Fernando working out of part of an office that you shared with one of your teachers. When did you realize that the company was tapping into something big and you needed to grow?
César Gon:
In the early beginning, we could feel the demand for, in that moment, for technology. In the sense of, companies realized they needed to explore the possibilities of the internet, of digital. I think since the early days of CI&T, we were kind of confident that we could expand our business to become a real global company.
César Gon:
And of course, there is a lot of challenge in this pathway. If you think about 27 years ago, a lot of scarce information. Internet was not available as a source of learning. Scarcity of capital. And also we have to face the scarcity of reputation of what a Brazilian company is doing in the United States, selling technology for large, big companies.
Josh King:
Looking back at that time, the late 1990s, early 2000s, thousands of technology companies trying to get off the ground. What was the sector like in Brazil? And how did being all of 10,000 kilometers from Silicon Valley either help or inhibit your success?
César Gon:
We used the local market to learn. Learn how to be entrepreneurs. Learn how to be really professionals, because we start a company as our first job. And learn how to be leaders. Really, CI&T started to grow, and we needed to define a leadership model that could really help us to scale the business.
César Gon:
But since day one, we were looking at CI&T as a global business. So when we opened our first service area outside Brazil, that was our launching in the United States. That was the moment, the decisive moment of, "Well, I think now we are playing with the right offering in the right market with the right position, and we are going to scale fast."
César Gon:
And our first big customer in the US was Yahoo in California. So we learned a lot with them. Yahoo was an iconic company in that moment.
Josh King:
I mean, talking about scaling fast, César. Today, I think around 6,000 employees fill your offices in nine countries. When you first broke into the United States, you described the company as a waterfall CMMI company.
Josh King:
What was the value proposition at that time? And how did the rise of machine learning and other digital disruptors over the past decade change the space?
César Gon:
Josh, the early chapter of CI&T was about a very engineering company, focused on really designing big monolithic systems for large corporations. And our value prop was around a very, I would say, robust, but just low methodology and previsibility.
César Gon:
We defined the system, and we delivered it in the right budget, with the right quality, in the right time. But when we started operating in the USA, then was 2006, a completely new set of technology possibilities were arriving. We're talking about cloud computing, big data, smart mobility, smart forms, and so on.
César Gon:
We could easily see that the old value prop about monolithic, I would say, previsibility, and just quality, we're going to fail. So we decided that, well, we need to really change the way we see the industry. And the industry were changing a lot.
César Gon:
So then we combined, I would say, engineering with design. And that was, I would say, an eureka moment that, well, let's create a company that will be much more aggressive on combining data, design, I would say, tech in the sense of really explore new technologies, and so on.
César Gon:
I think that new position resonate a lot with the USA market. And we start to really grow faster. To give you some data, from 2006 to 2016, we grew 30% a year in revenue.
Josh King:
One of the insights that you had was, if you present your services as digital rather than tech, it was really going to help you pitch directly to, say, a CEO rather than the CIO or the CTO when you were going out to look for new business. Was that a key discovery of yours?
César Gon:
Yes. I think the next step in our evolution was, we added strategy, digital strategy and with customer-centric design. And then, of course, top-of-the-line software engineer. So we started positioning CI&T as the strategy, plus design, plus engineering.
César Gon:
This value proposition resonate a lot with business leaders. Because this is really a way to position that we need to address the opportunities end to end. From the business opportunity, from the consumer data, to the building of the whole technology that is necessary to put something meaningful in the hands of the consumer.
César Gon:
So really, we do this in a very, I would say, comprehensive and disciplined way. We call it lean digital, this combination of the disruption of digital, in terms of aggressively using tech data and design. But with the discipline and the leadership frame from lean.
Josh King:
We don't have to go back that far, César, maybe just to 2018. I think you said, the company started out as a software development company, but you didn't know what it was now. That was what you were saying in 2018. Now we're four years later in 2022. How have you and the team started to define the company in a new way for where we are right now?
César Gon:
We introduced three new growth forces. The first one is this idea of, let's add domain-driven digital strategy as a core component of our offering.
César Gon:
The second one was, we did a new business architecture. We changed the way CI&T's organized. Now we use a very, I would say, entrepreneur organization model based on growth units. I think this is a very scalable organizational model. And by now we approach the mark using 26 different growth units around the world.
César Gon:
And finally, we start to design a programmatic approach for M&A, so M&A would be a part of. Because our history was about organic growth. And to go beyond the 30% curve, we say internally, 30% curve, we really need to add new enduring capability. Focus on really selective, very strategic acquisition.
César Gon:
And by the way, because of this M&A strategy, it was easy to see that the best pathway for us would be, go for an IPO and become a public company. Just to give you some data points. We grew 41% in 2020, 51% in 2021. And we are driving towards at least 59% in this year, 2022.
César Gon:
Of course, to operating this new base, we are increasing our investment in hiring, training, leadership development, and of course keeping a very solid level of margins and cash conversion rate.
Josh King:
That performance over the last few years is just remarkable, César. And as we head toward our mid-show break, as you reflect on your own development, how is your leadership style and the management structure that you've used evolved over the past 15 years based on what you learned from the launch of CI&T's production system?
César Gon:
Yeah. Let me describe something I think is very unique to CI&T. We have what we call an entrepreneur organization model, in the sense we are designed for growth. We approach the market through autonomous units we call growth units.
César Gon:
As of today, we are organized as a set of 26 growth units around the world. And when a growth unit reaches a ceiling size of around 400 people, we split it into smaller units. It's a kind of divide and conquer model. So we can continue to grow aggressively while keeping CI&T very flat, nimble, and agile.
César Gon:
And our best senior people really connect to our clients, instead of being dragged by the bureaucracy. And by the way, each one of these growth units count on what we call the CI&T global platform. For positioning, for value prop, for branding investment, for human capital strategy.
César Gon:
So I think this is an amazing way to really scale CI&T, but keeping the energy and the leadership, the autonomy, and the entrepreneurial roots that is, I think, part of our DNA
Josh King:
After the break, César Gon, CEO of CI&T, and I will discuss his outlook for digital transformation in 2022 and beyond. That's coming up right after this.
Speaker 8:
India has one of the strongest and fastest growing economies in the world. With a population of 1.4 billion, making energy secure, affordable, and sustainable is essential in supporting its growth.
Speaker 8:
In response, the Indian government aims to diversify its energy mix, increasing its natural gas consumption to 15% by 2030. Efficient to transport, liquified natural gas is critical in supporting countries with developing infrastructure.
Speaker 8:
ICE's West India Marker LNG futures contract complements our global natural gas complex. Providing essential risk management as demand for liquified natural gas in India and the Middle East grows.
Josh King:
Welcome back. Before the break, I was talking to César Gon, CEO of CI&T, about his career and the early growth of the company. So César, earlier we talked about CI&T's value proposition as a CMMI, or capability maturity model integration. But for our audience, can you explain the company's offerings today, and your projections for the potential growth of the business?
César Gon:
Sure. I think the best way to see CI&T is global digital specialists, combined with strategy, design, and engineering capabilities to generate concrete results in very short time, typically a quarter. That's the value prop.
César Gon:
We're going to combine practice and methodology to understand the business opportunity, to understand consumer behaviors, and turn it in concrete technology platforms, journeys building, that will show results in a very short time. So basically it's the way we are operating with our customers.
César Gon:
I would highlight that, in terms of verticals, I think the most significant opportunities are in the verticals where we have a presence of two interlinked trends. Radical changing consumer behavior is happening everywhere, combined with the advent of new exponential technology possibilities. If we go for verticals like financial services, retail, or consumer goods, we can make it very concrete.
Josh King:
What do financial services, retail, and consumer goods and other verticals, why are they more ripe for your services than other industries?
César Gon:
I think it is where we clearly see this combination of interlinking trend, is where the consumers are changing the way they behavior. And also we see an amazing new set of technology, exponential technology possibilities. For example, in financial services, we have this competition among traditional financial institutions, large banks and insurance company with the fin tax.
César Gon:
And this battle continue to create a lot of demand for us, as we are playing both side. If you think about crypto, blockchain, use cases around trading custody of digital asset, international payments, peer-to-peer transactions, NFTs, and a lot of innovative ideas around decentralized and secure information exchange.
César Gon:
Open banking is another big trend. So not only regulatory demand, but specifically if you think you can build new platforms to take advantage of a whole new batch of information available. New services in markets like personal finance payments, insurance, and so on. It's just financial service is being rebuilt completely by digital.
César Gon:
If you go for retail, we see massive investment. Of course, around eCommerce, omnichannel, marketplace strategy. But more than that, we see a lot of use case, very mature now, combining sales journeys in-store and online. Like same-day delivery, online purchase with pickup at store. We see in-store purchase with home deliver.
César Gon:
So very sophisticated. Also real-time stock management, searching payments. There's plenty of new things happening. And as a foundation for all this, I would say, in innovation, we see data. Data analytics and machine learning approach, really providing a huge set of valuable and actionable recommendations.
César Gon:
And finally, if we go for consumer goods, there is also mature use case around using predictive analytics and big data to understand consumer behavior and trends, and foster digital sales, and, of course, accelerate product development.
César Gon:
So many opportunities linked to mobility, connected wearables, IoT use case. So it's an infinite game of innovation. And these industries are really big source of transformation use case.
Josh King:
When you get a new client, I'm looking at your client list now on the website, a lot of great NYSE listed names, like AB InBev, BlackRock, Johnson and Johnson, Kohl's, MetLife. I mean, the list goes on and on.
Josh King:
But before the break, César, we were talking about your own use of lean principles at CI&T. How can companies, from startups all the way up to industry stalwarts, be embracing?
César Gon:
Lean digital is really a combination of the disruption of digital, in terms of grasping and using tech data and design, with the discipline and the leadership frame of lean. I think if you double-click on Lean Digital, what we have learned in the battlefield is that a sustainable transformation in a traditional organization will demand three measure redesign.
César Gon:
I think the first is the most visible one. It is a new way of designing beauty, and evolve digital products, experience and platforms. The other two redesigns are much less visible, and maybe much less glorious, but equally important.
César Gon:
The second redesign is the management system. Meaning the way the company do planning, budgeting, incentives, reporting, and reviewing of activities. It means a new management system focused on connecting strategy to the daily work of the teams.
César Gon:
And finally, the third redesign that's probably my favorite subject, Josh, and probably is the most difficult one, is to promote a new approach for leadership development to foster behavior change in the way senior management happens at the company.
César Gon:
It's about command-and-control behavior leaving the scene. And opening the stage for a collaborative leadership style, for collaborative leadership habits. I think this is probably the most difficult part of a real sustainable digital transformation.
Josh King:
Real sustainable digital transformation, in whatever economic weather you might be operating, César. I mean, nobody wants to have an economic downturn, but do you think that this might be a period of a growth opportunity for CI&T, as companies are looking to become more lean facing the reality they're facing in 2022?
César Gon:
Yes, Josh, I think there are clouds in the sky. So, the global economy is yet to recover from a devastated pandemic. And we have a new set of geopolitic threats on the table, right? But I think what is clear is, in parallel, software continues to eat the world, enabling unprecedented and radical changes in consumer behaviors in the society.
César Gon:
So digital is the answer to reconnecting companies to a new breed of consumers. And the result is this, I would say, ever-growing demand for digital services in the corporate world. And an extraordinary opportunity for companies positioned like CI&T.
César Gon:
I like to say that uncertain is our best food. CI&T is designed for adaptability, change, and innovation. Either for ourselves, or for our clients. So I think this is, at the end of the day, uncertain and scarce times, lean digital will be the answer for a lot of small and big corporations.
Josh King:
We have no shortage of uncertainty. We've got inflation, labor shortages, supply chain problems, geopolitical unrest, and so much more.
Josh King:
I guess one way to weather this uncertainty and shortages, even for yourself, is to make sure that you hold onto your workforce. CI&T has a lower attrition rate than the rest of the tech industry. What does your management team do to attract and also keep talent under your roof?
César Gon:
Our value proposition to our employees is very clear. We grow faster than the industry, so we create a lot of opportunities for people to step up and take on new challenges. And we deliberate promote from within. So we can provide our people with a much faster way to develop their careers.
César Gon:
And by the way, if you rank CI&T with its comparables, we have the most experienced workforce in the industry, the best overall Glassdoor rating. And we are the number one on recommendations also at Glassdoor.
César Gon:
So we are very proud that the majority of our global team of around 150 executives build their careers in our ranks. And the average tenure of these executives with CI&T is 15 years. If you look at our 40 most senior directors, the average tenure with CI&T is 19 years.
César Gon:
This is very unique in the tech industry. That is, as you know, is very well known for executive rotation. So I think this guarantee and DNA of a place where careers will be, I would say, fruitful.
Josh King:
Another thing that employees of every company, ours included, are increasingly focused on, is they want to know where their companies stand on major ESG issues. And a few days ago, CI&T released its first ESG report.
Josh King:
Curious what's in the report, and what's your own vision for the role that the company should play in matters of equality and environmental stewardship.
César Gon:
Josh, I see ESG as a major part of contributing with our attractiveness for tech talent, and also to guarantee that we can really, of course, have a very aggressive set of business goals, but also show that CI&T is in the game for purpose for somehow create a better world.
César Gon:
So I think we were very happy a few weeks ago to publish our first ESG global report. I think one of the highlights, of course, we show all the initiatives and progress to date. The key principles that are guiding our effort, our goals for 2025.
César Gon:
But I think one very interesting example of concrete results. We monitor the representation of people from four underrepresented groups. Women, people with disability, black people, and people from the LGBTQY+ community.
César Gon:
And one concrete result we achieved was a 10 percentage point increase from 2019 to 2021, reaching 40% of our people from at least one of those underrepresented groups. I think it's an amazing result. And of course we will continue to foster diversity, because at the end of the day, to make us more competitive.
Josh King:
As we wrap up, César, shortly after your IPO, you announced the acquisition of Somo Global. I'm curious, how does Somo help you expand your business? And what is CI&T's M&A strategy now that you're a public company?
César Gon:
Somo is the perfect example of how we are combining our organic strategy with M&A. Somo is a UK-based digital service company with strategy design engineering, with a very mature offering for two verticals that CI&T was not playing a lot. That is auto and utilities. With very, I would say, solid, long-term clients there.
César Gon:
And Somo is a way to really add to our growth strategy, UK and Europe. Europe is the second largest market in the world for digital transformation service, just behind the USA. And now we have a very good platform, an amazing leadership there, to allow us to really foster growth, in not only UK but in Europe.
César Gon:
So this is basically what we are looking for. Founder-led companies with deep vertical expertise that can combine with CI&T global footprint to foster growth and create value for a large number of customers.
César Gon:
You should expect more moves in this space. And also I think the way we organize this growth unit model we can provide the founders of this company is a very powerful, I would say, value prop.
César Gon:
That they will continue to lead their business, serve their clients, but take advantage of a company with global exposure to different competence, expertise, and talent in different place of the world. So I think it's a very compelling value prop, and we are very confident we will continue combining our organic growth machine with M&A.
Josh King:
Combining the organic growth machine with M&A. Overseeing a quarter-century of growth in innovation of CI&T. I think all of our listeners are excited about where the company's headed next. Thank you so much, César, for joining us inside the ICE House.
César Gon:
It was great, Josh. Thank you for having me.
Josh King:
That's our conversation this week. Our guest was César Gon, CEO and co-founder of CI&T. That's NYSE ticker symbol CINT. If you like what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a comment or a question you'd like one of our experts to tackle on a future show, email us at [email protected], or tweet at us @icehousepodcast.
Josh King:
Our show is produced by Peter Ash, with production assistance from Ken Abel and Ian Wolf. I'm Josh King, your host, signing off from the Library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the information and do not sponsor, approve, or endorse any of the content herein, all of which is presented solely for informational and educational purposes.
Speaker 1:
Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security, or a recommendation of any security or trading practice. Some portions of the preceding conversation may have edited for the purpose of length or clarity.
