Diversification of investments is not a new concept. It allows companies and individuals to both minimize the risk, as well as maximize the benefits, of each investment. Carpio Solutions, headquartered in Cary, has taken the concept one step further by diversifying entire national economies with its unusual “dual shore” model of business.
“With the power of the Internet and the way people travel, if you are not going global you’re missing out,” says founder and CEO Marco Fregenal. “Nowadays I can’t see how anyone can survive without being international.”
Carpio Solutions focuses on financial software products to help CFOs both manage office operations and improve operational efficiency. Its proprietary Rules Engine allows CFOs to do critical analysis based on future assumptions, as well as past trends.
“We can cut the budget cycle and financial investment of most companies by half,” Fregenal says. “We have a customer with 16 different P&L budgets. We can cut its budget cycle by half to two-thirds. It literally took them nine months to build a budget. Now they can do it in three to 4.5 months. That is pretty powerful.
“And within that, they can also do a lot of ‘if and then’ analysis.”
The key is the dual shore model. Work done in the U.S. generally consists of knowledge-based work, such as architecture, design and specifications, as well as customer relations.
Offshore work involves things such as writing code, manufacturing and quality assurance.
“We leverage the areas that give the greatest value to our customers by doing IT in the U.S. and lower-end work offshore,” he says. “By combining them we give our customers the greatest value, as well as a reduction in cost that is pretty powerful.”
None of the work is delegated to third-party companies, so quality assurance remains in the hands of local Carpio offices in the U.S., Mexico, Panama and Brazil.
“We hire local people,” Fregenal says. “You can’t do anything international without a local presence. In Mexico we hire Mexicans; Panama, Panamanians; Brazil, Brazilians. You cannot maintain the quality and services without being local. You have to understand the culture, language, approaches, likes and dislikes.
“If you can provide that, you can build very strong relationships and give the best possible value.”
Fregenal plans to have established 10 Carpio Solutions offices by the end of the year, expanding into Argentina, Spain and Portugal.
“Spain and Portugal have strong ties to Latin America,” he says. “Lots of companies that have offices in those countries also have offices in Latin America.”

Why Latin America?
Fregenal says if people compare the increasing salaries, communication costs, differing time zones and overtime – working in Latin America is much less expensive than India.
“Latin America is very hot right now,” he says. “Latin America is what the U.S. was 20 years ago. Both are well-traveled cultures that are familiar with each other, and there is no significant resentment to the U.S.
“The question to ask is, would you have invested in India 15 years ago? If the answer is yes, invest in Brazil. Latin America is the next India but even greater in size in terms of GDP.”
Other benefits to Latin America include closer proximity to the U.S., smaller time zone difference, and similarity in culture, professional ethics and holiday schedules.
The advantages are particularly pronounced in Brazil.
“Brazil is on fire,” Fregenal says. “A lot of companies are investing in Brazil.”
Brazil is also self-sufficient in terms of energy and has a strong commodities market for goods such as coffee, soybeans and
ethanol.
“The U.S. economy is getting weak, Latin America is doing extremely well, so the dual shore approach diversifies the risk,” Fregenal says.
But the real key to the success of such a dual shore model is having teams that understand each other’s culture. That is perhaps Carpio’s biggest advantage.
Fregenal grew up in Brazil, leaving at the age of 14. In the mid-1990s, he was heading offices for the New York and New Jersey branches of Pagenet, a large telecommunications firm. In 1996, Warburg Pincus gave Pagenet $40 million to start a branch from scratch in Brazil. Fregenal headed the project. In less than three years, Pagenet-Brazil had generated $70 million in annual revenues and had a staff of 850 employees.
This is just one of Fregenal’s entrepreneurial successes. He is also the mind behind HowStuffWorks.com, recently sold to Discovery for $250 million. He became president and COO at Ultimus in January 2001 when it was very small. But by the time he left five years later it had 450 employees and 18 offices around the world.
Most of his team has been with him for 5-12 years, and have similar international backgrounds and experience.
“The most important thing you need to do is build a great team – period,” Fregenal says. “The ability to recruit and build a team over time, and have them come work with you again and again is extremely powerful.”

Early Success
Though Carpio Solutions was founded only 13 months ago, it has already generated a great deal of excitement – and investment capital.
Fregenal has been able to attract investment from such serial technology executives as Richard Holcomb – co-founder of Q+E, HAHT, StrikeIron – and Tim Buckley – former COO of Red Hat and senior vice president of Visio Corp., which was recently sold to Microsoft for $1.5 billion.
Most impressively, Carpio Solutions is New York-based Palladium Equity Partner’s first deal in the Triangle. Palladium typically provides $10-$20 million of equity capital to middle market companies seeking to achieve the next level of growth.
“The Triangle has many good VCs, but to attract outside capital is very hard,” Fregenal says.
The Palladium partnership was helped by Fregenal’s relationship with its managing director Gary Nussbaum, formerly of Warburg Pincus. The two men worked together on the successful Pagenet-Brazil project.
Holcomb, Buckley and Nussbaum also serve on the Carpio board.
The nascent company will soon announce two new acquisitions in Brazil, totaling about 100 employees, and plans to add about 20 new jobs at its RTP headquarters.
The startup company’s client list includes such notable names as Nestle, HowStuffWorks.com, and Bayer Pharmaceuticals. The company will soon announce a global partnership with MicroStrategy, a leading business intelligence software vendor.
Fregenal attributes the company’s early success to his team.
“Show me a great CEO and I’ll show you a great team around them,” he says.
“You can’t execute without a great team, and execution is everything. That’s not true only here in the U.S., but also in the rest of Latin America. We have a very multicultural team.”

Why RTP?
Clearly, Fregenal could have started Carpio Solutions anywhere in the United States – or abroad. But he chose the RTP area for a number of reasons – some corporate and some personal.
First, he and his wife, Renee, wanted to settle down and provide roots for their two boys – Alex, 12, and Andrew, 9. The couple believes the Triangle is a great place to raise a family.
In terms of business, Fregenal said the entrepreneurial energy and wealth of universities makes it an optimum area for new business ventures.
“When I hire people and bring them in from other cities, they just love it here. So it’s easy to attract personnel,” he says.
“The area offers a great deal of positives, not only professionally but for my family as well.”


About Marco Fregenal
• Born in Brazil
• 1989: B.A. in economics – Rutgers University
• 1992: MBA with focus in econometrics – Monmouth University
• 1987-93: Worked for Fleetwood Mail Management, a direct mail printing company. Within three years, was running the operations. “I made every mistake there was. If there is a mistake out there to make, I’m pretty sure I made it,” he says.
• 1993-96: Pagenet – Ran N.J. and N.Y. offices; the N.Y. office moved from one of the worst operations in the country into its No. 2 performer, out of 90 operations.
• 1996: Started Pagenet-Brazil. Grew it to a $70-million, 850-employee enterprise in less than three years.
• 1999: Founded HowStuffWorks.com. Recently sold to Discovery for $250 million.
• 2001: Became president and COO at Ultimus when it was a small company. By the time he left five years later, the company had 450 employees in 18 offices worldwide.
• 2007: Founded Carpio