Sep 11, 2023 · 1h 8m · news
David Velez: How AI Changes The Future of Finance | E1059 · 20VC with Harry Stebbings
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In this episode of 20VC, host Harry Stebbings sits down with Nubank co-founder and CEO David Vélez to discuss how early lessons from Sequoia Capital shaped Nubank's company culture, strategic focus, and ongoing transition into an AI-driven consumer platform.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 14.2% of the talking time here. How this is scored →
Harry as informed peer 2.1 Guest teaching 2.7 Guest disagreement 0.7 Harry pushing back 1.6
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 12:45 Guest directly rejects host premise on LATAM market depth
Guest explicitly tells host 'I think you're wrong now' when host asserts LATAM venture markets lack depth for growth funds.
Hardest push from Harry ▶ 12:03 Host directly challenges LATAM growth fund viabilityHost pushes back on regional market potential, citing his prior on-air debate with Marcello and asserting that Nubank is the sole venture-scale outcome.
Biggest teaching moment ▶ 35:34 Guest contrasts Western regulatory stagnation with emerging market leapfroggingGuest educates host on how Brazil and India's open regulations allowed instant, fee-free payments to replace cash, leaving US and EU financial systems behind.
Harry holds his own ▶ 46:52 Host exposes structural conflict of interest in AI bankersHost challenges guest's idealized vision of neutral AI bankers by pointing out that transaction fee take-rates incentivize AI models to push bad trades on consumers.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| The Sequoia Interview Process & Doug Leone's Radar | 1 | 1 | 0 | 0 | Host prompts guest about Doug Leone's unique Sequoia interview process. Guest details how Sequoia interviews from top management down and focuses on personal character questions. | |
| Early Days of Sequoia LATAM & Intense Business School Trips | 1 | 1 | 0 | 0 | Host asks about wild trips while building Sequoia LATAM. Guest describes juggling Stanford Business School with 4am prospecting calls and red-eye flights to Sao Paulo on Doug's plane. | |
| Doug Leone's Superpower: Reading People & Character-Centric Hiring | 1 | 2 | 0 | 0 | Host asks for key takeaways from working with Doug Leone. Guest highlights Doug's ability to read character, valuing extreme strengths over well-roundedness, and treating junior team members as equal partners. | |
| From Setback to Startup: Sequoia's LATAM Exit as Nubank's Catalyst | 1 | 2 | 0 | 0 | Host asks how guest handled Sequoia's decision to cancel the LATAM office expansion. Guest explains that Doug's directness provided clarity and served as the key catalyst to start Nubank. | |
| The Untapped Power of the LATAM Venture Market | 6 | 7 | 4 | 7 | Host explicitly pushes back on LATAM venture market depth, arguing Nubank is the only true venture-scale winner. Guest politely disagrees, backing up his thesis with regional GDP metrics, population scale, and incumbent disruption opportunities. | |
| Navigating Liquidity: US IPOs, Local Exchanges, and M&A | 2 | 3 | 2 | 2 | Host asks where regional liquidity originates and why Nubank won where others failed. Guest pushes back against the framing that Nubank has already won, stressing that they are still in the early stages of market penetration. | |
| Geo Expansion vs. Product Expansion & The Primary Bank Strategy | 3 | 2 | 1 | 3 | Host asks about product customization versus geographical expansion. Guest explains Nubank's strategy of obtaining local banking licenses to secure primary bank account status, and host presses for specific account metrics. | |
| The Biggest Threat to Nubank: Complacency & Expanding the Platform | 2 | 2 | 0 | 1 | Host asks what poses the greatest threat to Nubank today. Guest identifies complacency and resting on laurels as the main danger, outlining how Nubank maintains a paranoid startup culture despite its size. | |
| The Non-Obvious Opportunity: Becoming a Broader Consumer Platform | 2 | 4 | 1 | 1 | Host asks about Nubank's most non-obvious opportunity. Guest explains why high trust and customer NPS enable financial institutions to successfully migrate into broader consumer platforms and commerce. | |
| CEO Resource Allocation & The Platform Partner Model | 4 | 5 | 2 | 4 | Host questions resource allocation away from high-margin financial products into partner marketplaces. Guest clarifies their platform aggregator approach and schools host on how emerging markets like Brazil and India have leapfrogged Western financial tech. | |
| Advice for Founders and Regulators in Regulated Markets | 2 | 4 | 1 | 1 | Host asks for advice to founders and regulators operating in tightly controlled markets. Guest notes that fintechs must embrace regulatory status directly rather than attempting to bypass banking licenses. | |
| Disrupting Wealth Management: AI and Private Banking | 3 | 4 | 2 | 3 | Host poses a challenging question on whether digital banks can ever displace high-net-worth private banking giants. Guest outlines how AI private banking will offer superior, conflict-free advice at zero marginal cost. | |
| AI: The Banker in Every Pocket & Democratizing Wealth Services | 2 | 3 | 0 | 1 | Host asks how AI transforms financial services short and long term. Guest describes the evolution from putting a bank in every pocket via smartphones to putting a personalized private banker in every pocket via AI. | |
| AI and Org Design: Salesperson vs. Neutral Advisor | 2 | 3 | 0 | 2 | Host asks about the impact of AI on internal org structure. Guest addresses the strategic debate between designing AI agents as sales tools versus neutral, trustworthy consumer advisors. | |
| Programming AI Incentives & Aligning with Customer Satisfaction | 4 | 4 | 1 | 4 | Host challenges guest on how AI agents handle financial conflicts of interest when take-rates incentivize transaction volume. Guest explains that objective functions must be programmed around long-term customer NPS rather than short-term fees. | |
| Epistemic Humility & The Power of Great Listening | 1 | 2 | 0 | 0 | Host quotes Nigel Morris praising guest as a world-class listener. Guest explains how launching Nubank without domain expertise forced him to adopt epistemic humility and rely on asking deep questions. | |
| Deliberating the First 90 Days & Scaling Culture | 2 | 2 | 0 | 1 | Host prompts guest for his best and worst decisions at Nubank. Guest cites establishing early organizational culture deck as his best decision and rushing an M&A investment acquisition as his worst. | |
| Defining Success as a Lifetime Adventure | 1 | 2 | 1 | 1 | Host asks if guest always knew he would be successful. Guest reframes success around the adventure of the journey rather than monetary targets and discusses systemic philanthropy leverage. | |
| Raising Children with Drive and Humility in Wealth | 2 | 2 | 0 | 1 | Host asks how guest instills drive and humility in his children despite extreme wealth. Guest emphasizes building healthy struggle, chores, and responsibilities so children develop genuine self-confidence. | |
| Quick-Fire: The Importance of Experienced Hires | 2 | 3 | 1 | 2 | Host kicks off quick-fire round on early startup lessons, regulatory near-death moments, and public market timing. Guest describes a 2017 weekend crisis where central bank regulation almost forced massive capital requirements overnight. | |
| Quick-Fire: Parenting Advice on Fatherhood and Sleep | 2 | 1 | 0 | 1 | Host asks quick-fire questions on parenting advice, remote work stance, and historical dinner guests. Guest shares his appreciation for sleep and lists Steve Jobs, Karl Marx, and Friedrich Nietzsche as his ideal dinner companions. | |
| Quick-Fire: A Secret Passion for Opera Singing | 1 | 1 | 0 | 0 | Host wraps up with fun personal questions and future company outlook. Guest admits to a secret passion for opera singing and outlines Nubank's five-year trajectory as an AI-driven global platform. |
Statements from this episode (49)
Velez: Almost 50% of Brazilian adults are Nubank customers
“We're getting to a point where almost 50% of the Brazilian adult population is a customer of Nubank.”
Velez: Nubank's Brazilian market penetration exceeds JPMorgan's in the US
“I don't think JP Morgan can say that about customers of theirs in the US.”
Velez: Sequoia interviews job candidates top-down, starting with firm leadership
“The first thing that came to mind was the first interview was with the head of the firm, not with the youngest analyst. In most firms, you start from the bottom, and then you go up, and Sequoia is the opposite. You go from the top, and then you go down, and yo…”
Velez: Sequoia signed three term sheets on a single Brazil trip
“I just, I remember specifically one trip where we signed three term sheets.”
Velez: Doug Leone's greatest superpower is his ability to read people
“The people rater that Doug has, he has an uncanny ability to read people. I think that's his single biggest superpower.”
Velez: Nubank interviews focus entirely on character traits over career experience
“My interviews today are not interviews about career experience. They, all the interviews, when I interview somebody that's a newbie, it's all about character traits.”
Velez: Spiky hires with obvious flaws outperform well-rounded candidates
“I rather have the people that have the There's incredible strengths in the weaknesses than the people that are okay in just certain areas. Those tend to be, if you manage them adequately, those are much more powerful type of hires.”
Velez: Nubank requires every employee to contribute opinions like a partner
“That was an insight that I took to Novak, and that was a foundational insight around the culture that we have today, where we want to treat everybody as a partner. Everybody needs to feel that they have a seat at the table, the youngest, The oldest, the person…”
Velez: 2012 Latin American startups were unambitious Silicon Valley clones
“Why would Sequoia, who had access to best entrepreneurs in the world in Silicon Valley, spend time just going and investing in some of these businesses that in a way were just wanted to be clones of Silicon Valley businesses. They were not really shooting that…”
Velez: Latin America's GDP per capita is three to five times India's
“Latin America as a region is the third largest GDP in the world. It's a region that has six hundred fifty million people, very large GDP, a GDP per capita that is three to five x India,”
Velez: Financial services holds the largest market cap in Latin America
“Financial services is the single biggest market cap in the region.”
Velez: LATAM stock exchanges remain dominated by century-old incumbents
“About 25, 30% of companies in the Nasdaq today didn't exist 23 or 30 years ago. If you look at Ivo Vest by Brazil and Mexico, there's still incumbents that existed a hundred years ago. So the opportunity for disruption, a lot of these markets exist today.”
Velez: More Nubank-scale tech giants will emerge in LATAM within 10 years
“I do think now that the kind of the setup for more new banks in the region exists. And you'll see them over the next five to 10 years.”
Velez: Single-country startups in Chile or Colombia face severe exit constraints
“I think you run a little bit into more of the liquidity constraints where you see the businesses just building for Chile or building just for Colombia. Those tend to have much much harder exit opportunity. But when you really get Brazil and Mexico, you'll find…”
Velez: Nubank sees path to become largest bank in Brazil, Mexico, Colombia
“When we go to these three countries, Brazil, Mexico, and Colombia, we go after big markets where we see a path to be Probably the largest financial institution in each one of these countries eventually, because we are the primary bank account and we become the…”
Velez: Nubank is the primary bank for nearly 30% of adult Brazilians
“So if we have 50% of the population and 60% of primary bank account, we have already close to, we have the primary bank account for close to 30% of adult Brazilians. Which, by the way, is now the highest among any bank in Brazil. We are now the most often, mos…”
Velez: Nubank holds 15% credit card and 5% personal loan market share
“In credit cards, we have about 15% market share, but in personal loans, we have five percent market share. In investments, we have about two percent. In insurance, we have one percent.”
Velez: Nubank is redefining itself into a broad consumer platform
“We're in the early days of using these eighty-five million digitally only consumer base to build a marketplace to go beyond financial services and enable our customers to access non-financial services products. So this is almost a redefine of what Nubank is. M…”
Velez: Nubank's first São Paulo office cost $500 monthly for 20 people
“We started the business in a very small house in Sao Paulo. We paid, I remember the partner of Sequoia, Michael Abramson was there. His mind was blown when I told him we paid 500 dollars per month in rent, and we had 20 people working out of the house.”
Velez: Under-celebrating success is a feature, not a bug, for urgency
“We under-celebrate. Some people complain that we don't celebrate enough. And they're probably right, but you know what, that's probably a feature at the end of the day, not a bug.”
Velez: Nubank's Mexican credit card achieves world-leading 94 NPS
“The highest-rated-NPS consumer product in the world in any category is our purple, is Nubank's purple credit card in Mexico. It's a 94 NPS.”
Velez: Nubank reaches 85 million customers in Latin America
“By now we have one of the largest digitally native consumer platform, consumer basis in Latin America with eighty five million customers.”
Velez: Nubank marketplace counts millions of DAUs across 180+ partners
“We have several million daily active users today on, on our marketplace where our customers are Consuming or buying goods or services from over 180 different partners”
Velez: Nubank will not enter e-commerce logistics or direct retail
“We're not the e-commerce. We don't want to be the e-commerce. We don't want to get into logistics, but we are a platform that cross sells all our products to these consumers.”
Velez: Nubank allocates 80% of its resources to core financial services
“We allocate today about 80% of all resources and energy to financial services, so that core continues to have most of the allocation of resources.”
Velez: Five incumbent banks controlled 85% to 90% of Brazil's banking market
“The fact that you have five banks in the hands of 85, 90, about 85, 90% of the entire market in the hands of banks was something to be solved.”
Velez: Complacency allowed emerging markets to surpass US and Europe in fintech
“I think that level of complacency in these industries, in these big countries, has stopped innovation and have permitted that a lot of these emerging markets, these technologies have leapfrog to a place today where, where Brazil, China, India are ahead of U.S.…”
Velez: Emerging markets' fintech lead will accelerate over next 5-10 years
“And this is just the beginning. You'll see this trend just accelerating, I think, over the next five, 10 years when you start thinking about open banking, when you start thinking about the uses of crypto, when you start thinking about how, what AI could do in …”
Velez: Fintech startups should obtain banking licenses instead of avoiding regulation
“The sense is that in a lot of our geographies, entrepreneurs try to almost do everything except embracing the space, except becoming a bank. Because of some arguments that if you became a bank, then your valuation multiple was going to be lower and you're goin…”
Velez: Diversified portfolios render private banker commissions unnecessary
“Today you don't really need a very sophisticated personal bank to tell you where to invest. If you realize that almost all returns comes from having a very well diversified investment portfolio and fixed income and equities, you should just do that yourself an…”
Velez: AI private bankers will disrupt ultra-wealthy management within 10 years
“I think then AI and this vision around AI really private banker could become the catalyst for accelerating the immigration towards a fully digitalized private banker. And at that point, then you really start attacking the one percent. You really start offering…”
Velez: Branchless digital banking lowers cost-to-serve by 20x to 50x
“The moment we don't need to put a banking branch in every quarter, the cost to serve a customer goes down by 20 to 50 X. The cost to serve somebody goes close to zero.”
Velez: Nubank profitably serves $50 loan and $200 investment accounts
“Today we can serve customers that need a 50 dollar loan profitably. We can serve customers that have 200 dollars to invest Profitably.”
Velez: AI will act as a banker in every pocket, democratizing finance
“We think that AI is now the second platform shift that might actually be able to take it to its final conclusion. And so if the smartphone was the bank in every pocket, AI is the bank and the banker in every pocket. And that really is the catalyst to Enable hu…”
Velez: Foundational LLMs like OpenAI are just basic infrastructure
“I see the existing LLMs, the open AI, the Entropic as sort of basic infrastructure.”
Velez: Banks do not need proprietary LLMs to build AI bankers
“So I don't think you need to own the model, but I do think you need to own And be very thoughtful around how do you, what are the incentives and what is the objective function of that algorithm when you start actually programming it.”
Velez: Hire people with questions over experienced industry veterans
“We like to hire people that have this ability, that has more questions than answers, that are able to look at a problem with a bunch of questions versus the traditional experienced persons that have been doing it for 30 years, And therefore I know the answer. …”
Velez: Codifying values in a culture deck allowed Nubank to scale
“We were very deliberate around the type of people that we attracted, my co-founders, and how we picked them, and how we spent a lot of time trying to find them, the values that we set up, the way we organize ourselves, we put all our values in a culture deck. …”
Velez: Entering investments via acquisition was Nubank's worst strategic decision
“I think the, perhaps the word decision from a product and kind of strategy perspective has been entering investments. When we enter investments via a big acquisitions, we enter via an acquisition versus organically, and I think we underestimated or I underesti…”
Velez: Nubank will favor organic growth over M&A for the next decade
“I think this means a bias, even a bigger bias to build organically versus an M&A driven strategy as we think about the next five to 10 years of growth in the business.”
Velez: Building a bank in Brazil was chosen for its extreme difficulty
“This is the single hardest thing I can possibly imagine myself doing. Building a bank from scratch in Brazil is the hardest thing I can do, and that's why I wanted to do it.”
Velez: Nubank should have hired experienced industry veterans sooner
“Ah, the importance of bringing people with more experience sooner. I was a bit dogmatic in trying to get people that did not have experience, that had the head with full of Questions. It is also important to have head with full, with some answers. So I would h…”
Velez: 2017 regulatory change almost forced Nubank to raise 1B reais overnight
“They were gonna do it to two. That meant we were gonna need to raise a billion reais. Overnight. And that was going to be quickly the end.”
Velez: 15,000 Nubank customers tweeted at Brazil's Central Bank during 2017 crisis
“Monday morning, there were 15,000 customers on Twitter of the Central Bank of Brazil saying, you cannot do this.”
Velez: Public markets offer the best capital access for capital-intensive companies
“This is a capital intensive business. No matter how well we do it, we're gonna need capital and the best way to get access to capital Is in the public market.”
Velez: Peak positive market sentiment is the optimal time to go public
“Everything is looking so good. The entire environment is so positive. There is only downside from here, which means this is the perfect time to go public.”
Velez: Full-time RTO would cost Nubank top global tech talent
“And so, if we were to say everybody has to be in the office, we would gain a bit in terms of faster decision making, faster ability to innovate. I believe in all the pros of being in the office, but we will lose a lot of the incredible valuable talent that we …”
Velez: Nubank will expand beyond Latin America and fintech by 2028
“We would have Become the leading financial institution in Latin America, especially in these three markets. Clearly, we made that, we kind of checked that box. We've gone beyond Latin America. Not sure exactly where, but we've gone beyond in terms of internati…”
Velez: AI private bankers will surpass smartphones for Nubank interactions by 2028
“And on top of that, AI, the AI private banker, the self-driving banker is the leading platform, the leading way where consumers are interacting with us, probably even beyond the smartphone. So I think those are would be, those would be the key pieces of that.”
Shorts cut from this episode
▶ Friends Recommend This More Than iPhone 😍 · 20VC with Harry (@29:20)
▶ The time Nubank almost collapsed 😱 · 20VC with Harry Stebbi (@1:02:02)
▶ Quick Parenting Tip from a Billionaire · 20VC with Harry Ste (@59:35)
▶ World's Highest Rated Product 🏆 · 20VC with Harry Stebbings (@29:20)
▶ How LATAM’s $32 billion bank started 🏦 · 20VC with Harry St (@25:26)