Founders Interviews: Eduardo Pinto Basto and Rodrigo Moretti of Modatta

This month, we bring you an interview with the co-founders of Modatta, Eduardo Pinto Basto and Rodrigo Moretti.

Modatta helps users control and monetize their personal data by interacting with brands privately, ensuring that every time value is generated to the brand, users receive a part of that value.

*This interview has been slightly edited and adapted for reading ease.

First, I’d like to know a bit about your professional background and the path that led you to Modatta.

E: Rodrigo and I met at university — studying Computer Science & Engineering at NOVA — and have been close friends since then. But after university, we took different paths. I took more of a management path and got hired at EDP in the Marketing Intelligence department. I was in charge of creating new products, testing EDP’s own products, and also working very closely with the data side of things — using data to understand what clients will do, in order to help the business. Afterward, I thought I needed a better Management foundation, so I got an MBA at Hult International Business School, very focused on innovation and organization management. I was invited by EDP to go to Brazil to found their innovation department. I was there for about three or four years and laid the first bricks of a corporate venture investment fund for EDP. After that, I came back to Portugal and worked in B2C channel management. And that was when I decided I had enough of working for others; I’ve always wanted to make something for myself and wanted to spend the rest of my life working for myself. In conversation with Rodrigo, we decided to take that step, and one of the things that prompted us was realizing that, in the companies we worked for, the GDPR didn’t consider at its forefront the creator of the data. So, we started by trying to figure out what would be the best solution for that and ended up down the Blockchain road, which eventually lead to Modatta. Now here we are!

R: I took the technology path. I studied Computer Science & Engineering and started working at Sonae, a consulting firm that implemented technological projects. I had that typical consultant career where you start as a consultant, then go into project management, then team management, then product management. At some point, I was even doing contract managing. It was a typical engineering-to-engineering-management path. I went back to university to get my Masters and afterward started working at NOS. In 2018 I was one of the people in charge of implementing GDPR at NOS. As Eduardo said, we realized that companies were investing a lot in risk mitigation and not in solving the problem, because no one had the courage to bring the owner of the data to the table. So, we thought there was a fantastic opportunity there to be game changers. I mean, the data is ours, no matter what kind of consent — more or less explicit — we give in order to use our email or whatever, the data is still ours like an arm or a leg. So, if the data is ours we should 1. keep it with us and 2. decide how it’s used and if possible benefit from it. There is incredible value in our data well beyond its financial value. There’s a lot of knowledge, a lot of things your data says about you which you have no access to and no way to extract it. We wanted to tackle that. Because we were leaning towards Blockchain and the tendency to decentralize, we put 2 and 2 together and started Modatta.

In line with that, I wanted to ask what was Modatta’s origin story, from the moment you sat down and had that idea together, until now.

E: It was a phone call I got from Rodrigo, which is kind of funny. Someone I worked with at the time told me about cryptocurrency and I realized there was great potential for that market to grow. I mentioned it by chance to Rodrigo at lunch and he also started investing in crypto. So, we agreed then that we had to develop something based on it, and went home to do some thinking. Rodrigo called me one day and said, ‘I have an amazing idea — we should start to look into personal data management in Blockchain, how can we figure that out?’. And I told him that must already exist because it was so obvious. That’s when we went to a hackathon in London organized by a Blockchain called EOS and one of the topics they wanted to tackle in that hackathon was personal data inside Blockchain. And that’s when we started taking the first steps that eventually lead us here. Rodrigo quit his job first because he was already leaving, I was on the fence.

R: I was leaving to start my own company anyway.

E: I stayed another 3 or 4 months. Rodrigo was so excited that he abandoned his other project. I told him ‘calm down, do your own thing, and afterward we can do this.’ But then it all started developing in such a way that I also had to leave. Trying to build a company while working for another — some people do it, but I think you need to be 100% focused on what you want to do otherwise it won’t be solid.

R: As Eduardo said, I was going to quit my job anyway because I wanted to start my own business even before this whole personal data thing. I was going to start a consulting firm — I spent a whole year doing that! But then we started having these conversations about data and it was like my ‘eureka’ moment. We just had to find a way to sell personal data, which was kind of perverse; selling personal data sounds horrible, it’s always the bad guys. We set out to find a legal, honest way to monetize data. The first thing we did was interviews to study the market on the user side, but then we talked to companies we had professional relationships with in order to understand what they use personal data for and what had GDPR changed. We did that market research and decided it was time to launch a pilot. Because we’re 2 computer science engineers, we built our MVP and launched in [app] stores with no investment, no marketing, and no promotion budget. We launched the website and the app and let it roll. Then, one day we’re having lunch at a small, unknown restaurant near our first office in Alcabideche, and the waitress tells us “I’ve seen you on the internet.” We thought…what the hell? We thought maybe it was some news regarding Web Summit we weren’t aware of. But she said, “No, it was an influencer on Instagram.” We had started a member-get-member programme, so if I invited someone to join Modatta and they did, I would make money. Influencers found us somehow and shared the invite to join Modatta. At the time, we were communicating a lot via our old website where we had sort of a blog, so we said there that when we reached 30 thousand users we’d transfer the money into people’s accounts. We launched in September and by the end of the year we had, let’s say 1500 users, but I think it was less. In March we reached 30 thousand people — which we didn’t expect at all.

E: Our goal for the first year was 12 thousand — 1 thousand a month.

R: As we had promised, we transferred the money into people’s accounts. After that first transfer, a lot of the influencers that brought all those users confirmed that the app worked and from March to May we had 100 thousand people.

Wow!

E: We had 18 thousand in a day alone.

R: We were at the top of both [app] stores for a while. At some point, we were like ‘Okay, this is working, brands are making money, users are making money, everyone wants this, but we need more resources.’ So we started speaking to investors. We did some acceleration programs and met Cristina [Fonseca, Partner at Indico Capital] and she invited us to participate in the first batch of the Indico Pre-Seed Programme powered by Google for Startups. We used the money to build a team and the product. Now we have an engineering team ready, the product ready and solid, validated by the market, the users, and the companies, and we’re raising our seed round to attack the market.

I think you might’ve already answered my next question which is what was the most pivotal moment for Modatta?

E: There are a few but I think the main one was when we started paying our users. That’s when we had a huge growth spurt and it gave us the reassurance to start talking to investors. That was the big moment. Until then, it was painful. Another moment was after we built the new platform; understanding that what we had done the first time around worked, applying the same strategies, and realizing that the second we get resources we can grow.

And what would you do differently?

E: Easy — hiring faster.

R: Recruiting took way longer than we expected. So, that would be something we’d do differently.

E: And that first investment, maybe we’d use the money differently. We were too cautious, we didn’t take the risk straight away

R: We’d move faster. But it’s all a matter of learning: trying, failing, succeeding, adjusting, and moving on. Everything we’ve done so far has prepared us for what’s coming next, which is essentially repeating a lot of the steps we’ve taken before. Looking for users, looking for companies…

E: We’re going into the expansion way better prepared for what needs to be done. What we learned is invaluable.

Can you share some business growth tips?

R: What we were saying about hiring: It’s better to hire someone who’s in line with your vision for the business, your work ethic, and your culture, than worrying about skill sets and so on. Because if you can build a cohesive team — and cohesion isn’t about coding well or drawing well, it’s about people who think like you and who believe in your product — if we had had that in mind earlier, we would’ve grown much faster. Instead of focusing so much on ‘do you know how to code on this software?’ or ‘how many years of experience have you got?’

E: If you have someone who’s highly motivated, who likes their work, and who believes in what they’re doing, that’s priceless, because otherwise, people leave. Working at a startup takes a certain kind of person.

R: There’s a lot of uncertainty, a lot of change. Focus on soft skills, culture, and values.

Last question: what’s the best and the worst/hardest part of having a startup?

R: The worst part — and this is a bit cliché, lots of managers say this — is the weight of other people’s salaries. We’re a cohesive team, everyone works together, but at the end of the day it’s our project and the people who work for us have families to support. And they quit stable jobs with stable incomes to believe in our project. So that weight of getting to the end of the month and making sure they still have everything they deserve, and their families, too. When things are shaky, especially, that’s the hardest part.

E: We had two people working for us, who weren’t full-time employees but who worked for us on a weekly basis, who we really liked, and we had to stop their services because we couldn’t pay them. That’s the hardest part.

R: The best part. I speak for myself, but I keep having a lot of fun every time I come to the office. For many reasons. For one, I have the freedom to do what I like. There are still a lot of boring things we have to do on the daily, but that’s counterbalanced by the fact that I believe in what I’m building. Everything we work on goes towards something I believe in and not something someone else, who I don’t really know, believes in, which I don’t know what it is. I know what I’m working for and that’s invaluable.

It’s a privilege.

E: I’d say the same thing and I’ve actually mentioned it at the beginning. The best thing is about your time: it’s my time and I’m doing what I want, how I want to. Then, there’s the not-so-good part: the weight of the responsibility, of having people working for us and knowing that if this goes wrong, things go wrong for them as well. But knowing that I’m making the most of my time here makes up for that. It makes me happy. I say to Rodrigo all the time I don’t come to work, I come to have fun. Of course, there are bad days and good days, but 90% are good. There’s boring stuff too, accounting and so on. But it’s also good because we get to have control over everything in the company. In my [previous] job I was focused on only one thing, but now I’ve tried all departments in my own company and I get to choose what I want to do. Tomorrow I can decide that we won’t sell data anymore, we’ll sell chocolate instead — it would be hard to convince Rodrigo, about 3 months of arguing, but that’s just a part of the job.

R: We’d eat the entire stock.

E: But yeah, I think this is the best part.

R: In terms of personal growth there’s nothing better. We’ve grown more professionally in three years, than in fifteen or twenty in our previous jobs, by a wide margin.

E: Also talking to all the people we’ve talked to who we’d never meet if we were in a corporate job. The diversity of people we encounter, and amazing conversations we’ve had with people from other countries, with different life experiences. That’s so awesome that it makes up for everything else. But of course, we’re not above sleepless nights, gastrointestinal problems, acid reflux because of stress…

R: Maybe let’s leave that out of the interview.

Interview and translation by Matilde Castro.

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Leading early stage VC based in Lisbon, Portugal

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