Most people thought he was crazy to try and build a neobank in Brazil. Why?
Because of the “Big Five,” incumbent banks with huge control.
/2
Stats on the Big Five:
- Controlled +80% of assets
- Held +85% of loans
- Interest rates of up to 450% per year (!)
These banks had oligopolistic power, as well as regulatory and political influence. Trying to disrupt them was considered as possible.
/3
Vélez disagreed.
He realized that consumers hated these banks, both for the exorbitant fees/interest and the terrible service. They had so much power that they’d gotten lazy.
He thought they could be disrupted.
/4
It didn’t hurt that Vélez had the education and experience to challenge the status quo.
Before starting Nubank, he’d worked for Sequoia, trying to build a presence in Brazil. Though that didn’t work — the ecosystem was too immature — he knew what made great companies.
/5
Sequoia agreed to invest in Vélez’s idea, though apparently, it wasn’t unanimous. They also had a precondition: he had to find a Latam investor to co-lead.
Kaszek Ventures, founded by ex-Meli leaders, jumped aboard. Each firm put in $1M.
/6
Sequoia also wanted Vélez to add some co-founders, particularly with banking experience. Roelof Botha was apparently adamant on this point.
Vélez delivered. He brought in Cris Junqueira, an exec with credit card experience & Ed Wible, a killer engineer.
The team was set.
/7
Rather than get a swanky office, Vélez had the team work out of a small house on “California Street” in Sao Paulo.
It was essentially a Palo-Alto-style hacker house. That created a scrappy culture that hasn’t left the company.
/8
Initially, Vélez expected Nu to be a sales-driven organization.
During his days investing, he’d gotten to know Nigel Morris, founder of Capital One. Morris had turned C1 into a giant through incredible customer targeting.
Vélez planned to do the same. He hired marketers.
/9
As it turned out, Nubank didn’t need them.
Consumers loved Nu’s first product: a purple credit card you could get thru your mobile phone. That was a huge upgrade over the traditional process of visiting a bank branch 3-4 times.
The product went viral.
/10
Nubank rode that initial wave incredibly well, but regulatory issues almost forced them to shut down in 2016.
The Big Five lobbied to change the country’s credit deadlines, which would have put Nubank out of business.
Customers revolted and regulators sided with Nubank.
/11
Over time, Nubank has added a ton of new products to its suite.
Why: I think I captured some of what makes this such a special firm. I also got to talk with a lot of those familiar with the origins which made for a rich story.
Toucan brings carbon-credits on-chain. This unlocks new uses like using carbon as a DeFi collateral. It's a major player in the Regenerative Finance (ReFi) space.
Farcaster is a "sufficiently decentralized" social media platform. Greater wallet adoption and higher-quality usage makes it a good time to start a web3 social network.
As outsiders in Silicon Valley, Coatue won competitive deals by conducting extensive research *before* meeting founders.
Arriving prepared changes everything, making for better conversations and connections.
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