Antonio Soler of Vistra - A global independent provider of trust, fiduciary, corporate, and fund services

Antonio Soler of Vistra - Podcast Transcript

Scott:	Hey, it’s Scott Orn at Kruze Consulting and welcome to another episode of FOUNDERS & FRIENDS. And before we start the podcast, let’s give a quick shout out to Rippling. Rippling is the new cool payroll tool that we see a lot of startups using. Rippling is great for your traditional HR and payroll. They integrate very nicely, but guess what? They did another thing, they integrated into your IT infrastructure. They make it really easy for when you hire someone to spin up all the web services in their computer, which sounds like not a huge deal, but actually we did the study at Kruze. We spent $420 on average, just getting a new employee’s computer up and running and their web servers up and running. It’s actually a really big deal. It saves a lot of money and the dogs are in the dogwood. We see a lot of startups coming in to Kruze now using Rippling. So, please check out Rippling. Great service, we love it. I think we have a podcast with Parker Conrad. You can hear it from his own words, but we’re seeing them take market share. So, shout out to Rippling. And now to another awesome podcast at Kruze Consulting, FOUNDERS & FRIENDS. Thanks.
Singer:	(singing). It’s Kruze Consulting. It’s Founders and Friends with your host, Scottie Orn.
Scott:	Welcome to FOUNDERS & FRIENDS podcast with Scott Orn at Kruze Consulting. And today my very special guest is Antonio Soler of Vistra. Welcome, Antonio.
Antonio:	Thanks, Scott. Happy to be here.
Scott:	Yeah, thank you so much. So, we actually refer a lot of business to you. And so, I wanted to have you on the podcast and to… Well first of all… We’ll get there in a second, but maybe you can retrace your career a little bit and tell everyone how you ended up at Vistra, how you developed your expertise.
Antonio:	Sure. So I don’t know how far back we want to go, but I grew up in a very international family with international background and really from a very young age, spend my life living across cultures, I should say. And it’s probably no surprise that when it came to my professional choices, I ended up working across culture. Yeah, how I came across Vistra or at least the primary concept that underlines Vistra as a company is… I think two big things happened. One was, I was a founder and entrepreneur in the first dot-com boom in 1999.
Scott:	No way.
Antonio:	Yes I was, which was quite an experience. I was very young and I made every possible mistake that you can make when you’re running a business for the first time. And somebody gives you a lot of money.
Scott:	Yep, yep.
Antonio:	But amongst the frustrations and challenges obviously was setting up our international offices. And it was-
Scott:	Yep.
Antonio:	… My job to do that. And I literally had to go, stand in line at the various authorities and regulatory agencies in different countries around the world to get the piece of paper that permitted you to do something or other.
Scott:	Were you flying across the world, from Brazil to Japan? I don’t-
Antonio:	Well, not on those days. In those days it was… We hadn’t gotten that big. It was just within Europe. I was just doing in France and Germany. But if you have to choose two countries in which to start, those are two pretty complicated places to get a business [inaudible] .
Scott:	Yeah. France is one of the hardest… Companies probably get anything started, right?
Antonio:	Absolutely. And at the time this was the early days of the internet and certainly getting this approval or documentation online was something that was far in the future. So, it meant getting in line in dusty offices, filling out paperwork and triplicate and doing it that way.
Scott:	I remember before we turned the mics on, you had a friend who was starting a business that could actually handle this capability, right?
Antonio:	That’s right. So, this is in 2010 or so. He was a good friend. He had his accounting practice in Italy and he was selling it to a group that really were looking at globally enabling international expansion. So, really they were assembling a bunch of practices at a local level in order to be able to go to clients and offer them a solution that crossed all the borders and relevant services. And I thought it was such a great idea that I went into as a consultant first, invested in the business and then took an executive role. I’m happy to say that we built that business successfully and sold it in 2017. Since then, I took on another couple of projects and really four weeks ago joined Vistra after a very in-depth discussion about what Vistra was trying to do and the model that they were pursuing. And I thought that they had a really good thing going and I was interested in helping them on the journey to really help entrepreneurs, and ecosystem around the entrepreneurs and the venture capital companies. And then as far as the private equity companies, both at the GP level, the LP level, and at the portfolio company level, with just handling-
Scott:	Yeah.
Antonio:	… This administrative stuff that just needs to get done when you-
Scott:	Yeah.
Antonio:	… Operate internationally.
Scott:	Yeah. Yeah, you’re speaking my language because that’s the role we play too. And for those mono, we work with tons of VC-backed startups, but you guys are experts in international-
Antonio:	That’s right.
Scott:	… Items. And we’ll talk about this, but starting up a company internationally, international payroll and then international taxes. It’s a really nice marriage for us to be able to refer clients over to you. But I think it’s super cool that you lived this problem, then get a company in the space. And now you found Vistra, it’s like-
Antonio:	Right.
Scott:	… Your third act and this one’s going to be a blowout because you’ve probably seen every trap in the space, right?
Antonio:	I don’t know. I mean, I certainly seen a lot. I think perhaps more interestingly I’ve heard from the client side, so many horror stories and often expensive horror stories because of just how complicated it is.
Scott:	Yeah.
Antonio:	If you break it down at the individual task level, it’s actually quite simple. But when you have multiple countries, multiple services, multiple tasks, it becomes an exercise in project management. Then having a provider that can project manage that for you, it becomes very valid.
Scott:	Yeah, I hear you. Also, the steps are not too bad but so many of the steps are dependent on a previous step.
Antonio:	That’s right.
Scott:	I know for us, when we do US-based compliance, a state agency doesn’t send you something and you’re just dead in the water until you actually get that piece of paper. So, I really value what you do. So, I’m really glad you came on. So let’s talk about… We’re talking to an entrepreneur, maybe they’re a five person company, a 20 person company, a 50 person company, and they need to set up a presence internationally. What’s-
Antonio:	Right.
Scott:	… The first thing they do? How should they be thinking about this and how do they work with you to do it?
Antonio:	I think the first question that somebody on my team would probably ask is, what are you trying to do out there? Is this a market that you’re really testing the water, and you want to know if it’s a potential long-term market for you, or frankly, is a place where you’re sourcing whatever it might be? And then based on that answer, potentially offer you a number of solutions. So, let’s give a silly example for the sake of our listeners. Let’s say that you are operating in the US and you’re really interested in… I don’t know, let’s take Mexico as an example, or as a neighboring market where you want to test out the market for your product. You can go the traditional route, which is set up an entity, put in place the infrastructure in Mexico, hire locally and go that way. And that is certainly is a service that we offer. And one that is the traditional model and probably the most prevalent service that we-
Scott:	Yep.
Antonio:	… Provide. Now, there is an intermediate step for those that really don’t necessarily want to take that big step right away, which is the employer of record or the PEO approach. In other words, we could work with you whereby we would employing people on your behalf, in the market of your choice. Let them do the groundwork that you need to do to really assess that the market has the long-term potential that you want it to have. And then, and only then, transition that individual and whomever else you may want into a structure when the time is right for you. And that’s [crosstalk] the key thing.
Scott:	And I’m sorry, I didn’t mean to speak over you. That’s what I recommend to a lot of our startups. It’s a really nice innovation. And like you said, you can test out the market a little bit and you’re not creating this entity that has to be unwound or has to [crosstalk] tax return. It’s really cool-
Antonio:	Right.
Scott:	… That you… And I think one of the cool things about Vistra is you guys will actually handle that whole process, soup to nuts for the entrepreneur, make it easy for them, right?
Antonio:	That’s right. We handle it soup to nuts, but we also make sure that we give you your account manager here in the US. So if you are dealing in 10 countries, the object is not for you to have 10 different relationships. It’s for you to have one, and we take care of the rest of it.
Scott:	That’s really nice, that’s really nice.
Antonio:	Yeah.
Scott:	What do you see as the crossover point for… Say someone did a global PO first. What’s the moment where they should start thinking about, okay, maybe I do need to have a legal entity here? What’s the tipping point?
Antonio:	Sure. I mean, there’s a lot of ways of answering that question. So from a purely financial perspective, the PEO model is a great model, but you ended up… What you’re basically doing is paying a percentage on top of the salary of the individual.
Scott:	Yep.
Antonio:	Right? So as you hire more individuals, the absolute number that you’re paying goes up pretty-
Scott:	Yep, yep.
Antonio:	… Substantially, and there comes a point financially speaking, where you may want to look at alternative models. That’s the financial side. On the more legal side, depending on the size of your business in that country, you may fall a foul of permanent establishment rules and regulations that you can’t be so big and be operating under the guise of something else. At a certain point it is in your interest to set up and have things done properly in that location. Especially if, as it tends to be the case, you’re going to talk about signing local contracts, having local relationships there, that’s something that you need to do through your own entity versus a third party, or even going back to the head office.
Scott:	That makes a lot… I hadn’t thought of the local contract aspect. Is it a headcount issue too? Like, you can only have 10 people or 20… Is there a bright-
Antonio:	Yeah.
Scott:	… Line or is it sort of a threshold that you advise your clients on? And saying, hey, we got to flip you over now into an entity.
Antonio:	Yeah. I wouldn’t say there’s a hard and fast rule because it depends on the level of the person, what they’re doing, et cetera. But at a certain point, if you’re serious about a market, you probably want to have your own presence.
Scott:	Yep, yep.
Antonio:	And it’s for the company to decide when that is.
Scott:	Hey, it’s Scott Orn at Kruze Consulting. And before we get back to the podcast, quick shout out to ChartHop. ChartHop is one of my favorite new SAS tools on the market. And basically what ChartHop does, is it puts your org chart in the cloud. And I always like to say, it brings transparency to your organization. And so, everyone in your organization can see who they report to. They can see the full org chart of the company and how their group relates to other groups. It also has a lot of information on the individuals in the company. And so, you can click on the ChartHop profile and just get where people live, their experience, slack handles, all those stuff. And it’s just a really great tool. The other thing is ChartHop has started doing some cool stuff around compensation and budgeting planning. And so, you can actually start seeing what the cost structure of the company look like during certain scenarios. So, I’m loving ChartHop. Check it out, charthop.com. We use it at Kruze, we really like it. And I can’t recommend it enough. All right, back to the podcast. Now, going back to the full on entity, what are the steps in the process that you handle for the clients? What do you knock it out for them?
Antonio:	So, the bundle. Let’s talk about-
Scott:	Yeah.
Antonio:	… The bundle. The bundle which is sort of the turnkey solution, is the setting up an ongoing maintenance of your legal entity, whichever one you choose or whichever one we choose together. And you have annual obligations. You have aspects that need to be handled at the entity level. It may be shareholder meetings, it may be all kinds of annual obligations.
Scott:	Board of director elections, that stuff. All the stuff-
Antonio:	[Correct].
Scott:	… That makes you retain your corporate liability shield stuff.
Antonio:	Exactly.
Scott:	Yeah.
Antonio:	So that would be, I would say one service line within the bundle. The second service line would be the statutory accounting and tax compliance at the local level, right? In some countries you need to have local books, you certainly need to file local taxes and ensuring that you have someone on the ground that knows how to do that. And frankly, does it on your behalf, whilst giving the ability to get that information back to your head office so that it can be consolidated as needed. Again, is part of the bundle, the second leg. And the third leg would be, your employees. Your HR and payroll services. So, advising you on what employment contracts should look like, what benefits packages should look like. And then once you choose them, implementing them, paying the payroll, ensuring that these people get paid according to whatever the local custom may be.
Scott:	Yep.
Antonio:	And doing so again, in a compliant manner. So you put those three together and you effectively get an outsource back office service, which permits you to just send your front office people to do the work that you need them-
Scott:	Yeah.
Antonio:	… To do. And the rest is taken care of for you.
Scott:	Yeah. I think the beautiful part of that, especially on the HR compliance and in payroll is you have an expert who actually really understands that country specific stuff. I think people underestimate the complexity, country to country. And again, that’s why we like referring Vistra in because we know we’re not capable of doing that. And we don’t even try because we don’t want to mess it up and put the company in jeopardy. And so it’s nice that you have all these… An account manager who can liaise with the country experts.
Antonio:	Well, there’s a reality that doing business in the US, which is the US is such an extraordinarily business friendly climate-
Scott:	Yeah.
Antonio:	… That even noncompliance in the US when you get things wrong, the penalties are reasonable.
Scott:	Yeah, yeah.
Antonio:	That’s not the case. That’s not the case in many other countries.
Scott:	Yeah.
Antonio:	In many other countries, you’re personally liable-
Scott:	Oh My God, really?
Antonio:	… If taxes don’t get filed. You are on the hook, your personal assets are on the hook. If you end up as the legal representative of an organization in Brazil, as an example, and you have an issue or something isn’t done properly, they can go after you. And there are plenty of horror stories of people going to see their subsidiary in country A or country B and not being allowed out of the country.
Scott:	Oh My God, really?
Antonio:	Of course. And again, this is not a scare mongering tactic.
Scott:	No [crosstalk].
Antonio:	That’s not what I’m trying to do here. I think the point I’m trying to make is that a lot of these extraordinary companies that have come out of the US, they’re really have busted through a lot of the regulations and compliance that existed here. There’s a reason it exists that these companies were created in the US is… That’s part of the ethos of the country. Well, when you go abroad and there’s plenty of examples of a phenomenally successful US companies that do fall afoul of local regulation-
Scott:	Yeah, yeah.
Antonio:	… Internationally. It’s important that you have a partner with you that at the very least ensures your compliance within the parameters that are acceptable.
Scott:	That’s really cool. Yeah, I’m thinking of the Uber, Airbnb regulatory arbitrage in the US.
Antonio:	Exactly.
Scott:	And I know Uber’s had trouble in other countries. Is there a point where the company gets too big for you to even service them in these countries or what’s-
Antonio:	Absolutely.
Scott:	… Of a threshold there?
Antonio:	Absolutely. No, no, no. Listen, like anything in any business, I think once you are achieved the scale that merits it, setting up your own back office operation makes sense. And again, in the same way that Vistra would accompany you from an EOR arrangement to an outsourced back office arrangement for your international expansion needs, we would also accompany you when you decided to take it in house. Because of Vistra really does spend the majority of its time working with fast growth companies in the tech and biotech space. That’s part of our DNA.
Scott:	Yeah.
Antonio:	We’re used to accompany you through the entire life cycle. And by the way, very important to know also, you may expand into 20 countries, but you only might get the scale, or it might make sense to in source in 10 of those 20.
Scott:	Yep, yep.
Antonio:	And those other 10, you still want to have a third party relationship just economically speaking.
Scott:	Yeah. And also, maybe in those other 10 countries that you didn’t hit scale, you might need to unwind it. And I’m-
Antonio:	Awesome.
Scott:	… Assuming you can do that for them too.
Antonio:	Absolutely.
Scott:	Yeah.
Antonio:	Yeah. [crosstalk] It’s the entire life cycle.
Scott:	… Low risk, especially with the PO option in some of these countries. You can get in, try it out. If it doesn’t work, you guys can unwind it for the clients and move on to greener pastures. Slap, that’s really neat.
Antonio:	Absolutely.
Scott:	You talked about the three legs of the stool earlier with payroll and HR being one of them and then tax compliance. How do you interact with the mothership, maybe a US-based corporation mothership, and then these subsidiaries. What processes and what services are you providing on the tax side?
Antonio:	Yeah, so that’s where the magic kicks in. Our client companies are really different. Some have all the power at the center, so to speak. So if it’s a US headquartered company, the decisions are taken amongst a group of people sitting in a particular office or these days with the pandemic in their homes.
Scott:	Yeah.
Antonio:	But still it’s a US centric model. As companies grow, they often choose to either stay centralized or move to a regional model, where you do have a regional decision makers that need to be involved in a project of this sort, if you’re managing a multi-country deal for a client. And the extreme of that are those that get so big that they actually have local decision makers. Every country has their head, and each of those heads needs to-
Scott:	Yeah.
Antonio:	… Approve something.
Scott:	Yep.
Antonio:	As you can imagine, each of those comes with its challenges. And our job really is to mirror the organization of the client. So, talking about our niche, as I said, and then working with the tech companies and biotech, very often, we have the luxury of being able to work with a relatively small company in its early stages. And therefore a lot of decisions are taken by a small group of people. And we give them their account manager that sits in front of them, hopefully in the same city or at the very least-
Scott:	Yeah, yeah.
Antonio:	… At the same time zone as they grow. And we accompany them on that growth. We may find ourselves starting to allocate different account managers for different services and for different geographies based on how the company is deciding to run its operation.
Scott:	That must be really difficult flexing your organization to match the growth. Because I know you’re servicing the same clients. We are just on the international aspect. And these companies grow and you’ve got a new point person every nine months or someone left.
Antonio:	Yep.
Scott:	You can handle the… It’s definitely challenging. And then it’s hard, yeah. You [crosstalk] know on the… I’d say the bookkeeping side or closing the books for the subsidiaries. That’s-
Antonio:	Yeah.
Scott:	… Something you guys do as well, right?
Antonio:	Of course, of course. Yeah, that’s all done at the local level. So, one should not confuse statutory bookkeeping in a particular country with the consolidation work-
Scott:	Yep.
Antonio:	… That happens usually again at head office.
Scott:	Yep.
Antonio:	So we handle all that for you at the local office level. And I think it should be sort of… I should mention also that the other reality of these businesses is, the MNA side. The transactional side, where very often you are either absorbing or carving out parts of your business, either selling them or bringing them in. In the event that you’re bringing in businesses, and again, these are businesses that are already operating in different parts of the world. You have to ensure that what you’re inheriting is also in good standing. That they have paid their taxes, that their employees are being paid properly. That the benefits level are in line with whatever the country’s specific guides are.
Scott:	Yep.
Antonio:	And again, the traditional model would probably be to bring in a bunch of rather expensive people who charge you on a time basis to go in and do that work. Well again, with an organization like Mystery, you have the people on the ground who can very quickly understand if they’re already servicing you and your company. Understand how you run and what the benefits are and whatever you’re giving to your employees, compare that to what the target company is offering their employees. And insure reconciliation by the book in that local contract. And again, if you’re doing that in 20 countries simultaneously, it’s a big piece of work.
Scott:	Yeah, that’s a lot of work. And the [consultant] makes a consolidation so much easier when the local countries books are closed efficiently and correctly. Antonio, this is amazing man. Thank you so much. Like I said, we’ve referred a bunch of business to you and we were talking before we turned the microphone on, but we’ve noticed that the pace of international hiring, international presences has really picked up with COVID as people got more comfortable-
Antonio:	Yeah.
Scott:	… Working first remotely, and then remotely internationally. So you have a really awesome growth opportunity ahead of you. And thank you for helping the Kruze client base. Maybe just take a second to let everyone know how they can get ahold of you or Vistra, they want to work with you.
Antonio:	So, obviously, we have our website, vistra.com. In there you’ll have all the information that you need in order to understand the services that we offer, not just again at the corporate level, but also when you start talking at the fund level, we also have something that we didn’t cover today, but an entire suite of services that ensure the fund compliance. Beyond that, if you’d like to reach out to us here in the US directly to talk about anything, my email is, antonio.solera@vistra.com. I’ll be happy to take your email and put you in touch with the right people, and at your disposal to talk about whatever it is that maybe on your mind as far as international expansion.
Scott:	That’s beautiful. Well, thank you so much for coming by. Excited for you, for the new opportunity of Vistra. And we look forward to doing a lot of work together. Appreciate it.
Antonio:	Thanks, Scott.
Scott:	Bye, man.
Antonio:	Bye, bye.
Singer:	(singing). It’s Kruze Consulting. It’s Founders and Friends with your host, Scottie Orn.

Antonio Soler of Vistra - A global independent provider of trust, fiduciary, corporate, and fund services

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