Invest Like the Best with Patrick O'Shaughnessy
01:03:22 · David Vélez
[01:03:22] S1: I think first is vision. You have to be able to see something that few people see. A world that is not as obvious right now. I think with the massive information overload that we all live in, it's increasingly harder to have a differentiated point of view about something, about your industry, your company, about how things are going to move. So you have to have some kind of vision about the future that is differentiated. But then you have to be able to sell that vision. And selling is about inspiring people. And a lot of the time that vision will be very hard or almost feel impossible. And the natural reaction of most people when they are presented with an impossible vision is to push back and to declare it non realistic. This phrase, it's not realistic that this is going to happen. What is not realistic? I mean, look at every single meaningful development in the history of the world. At some point, it was defined by somebody to be non realistic. The amount of confidence that a lot of the experts or people use when they say it's not realistic. You have to be able to sell that vision in a way that a lot of people get motivated by that. That drives following and motivation. But then you have to be able to be a good listener and understand that sometimes you're actually going to be wrong. That vision that you have might not be fully complete. There is a mode in which you go against the consensus and you completely declare consensus as wrong. And you are the complete revolutionary. Nothing about the consensus makes any sense. And you will reinvent absolutely everything. That is one mode. The other mode is you're consumed by consensus. You think about progress as being unrealistic and things will be the way they are today. What's hard, I think, a great leader is you navigate in the middle. The consensus exists or status quo exists because you think about it from an evolutionary perspective. The vision of the world competed with our visions of the world and it won. And so the world we see today was superior to our possible wars that happen. And so there are elements of that status quo that exists because of a reason. And so you have to be able to understand what are those elements and they will continue to be here. But also you have to be able to fight that conventional wisdom to see what are the elements will need to be changed.
01:05:41 · David Vélez, Patrick O'Shaughnessy
And I think leadership is about knowing what doesn't have to change and pushing to change the things that have to change. That's a combination of conviction, but also active listening and humility to know that you might not have all the answers and that you're going to need to change your mind actively when you do that. So combining all those different factors, I think is pretty critical for good leadership. [01:06:05] S0: If we think over the next five years for new banks specifically, I'd love you to paint what you think is like the bear case for the business and the case you worry about and are actively making sure it doesn't happen. And then if I think about my rose colored glasses on, like the best possible story for NewBank over the next five years, I'd love to hear the two ends of the spectrum from your perspective.
01:06:24 · David Vélez
[01:06:24] S1: The bear case is we are in these three countries in Latin America. We've saturated them completely. Growth declines. We haven't really been able to find any other growth alternatives from a customer perspective. We've, I mean, we have 65% of Brazil. Very soon we're going to run out of Brazilians. Ideally, we would see the natality rate in Brazil and current people having more children, but that's not happening. So we're going to run out of Brazilians. We did not succeed internationalizing. We ended up being restricted to these three countries and growth saturated. That's the bear case. Partly of that would also mean that we could not take advantage of a lot of the AI opportunities that enable us also. And so that's one reason why we're not able to internationalize. The bull case is the opposite of that, is we truly took advantage of this thesis that we have around how much market share is going to be transferred from incumbent banks to digital native companies over the next two to three decades. And how that is going to be accelerated by technology shifts, like real time payment systems, open finance, and AI. We're able to ride those tailwinds from technology shifts. And we were able to execute through a multi country platform, a global vision of Nubank taking us to 100 plus countries over the next few decades. And we were able to solve a lot of these big problems that we think that would be solved. 3,000,000,000 people don't have access to credit. Cash is becoming digital. More people need access to banking. If we have these cost structure advantage versus our competitors, versus the industry players that still own 90% of the $10,000,000,000,000 profit pool. If we have a cost structure that is 50x theirs, and this is pre AI, then that meant we were able to pass a lot of the efficiency back to the customer via higher yields, lower fees, better experience, fully digitalized, integrating advice in our products, and truly taking advantage of these internationalization opportunities. So that is the bull case.
01:08:14 · Patrick O'Shaughnessy, David Vélez
[01:08:14] S0: When I had you last time five years ago, I already asked you my traditional closing question. So I have a different one for you today. Again, NewBank and the incredible experience that you've had building it so far. What is the most interesting lesson that you've learned about entrepreneurship? [01:08:29] S1: How to quickly ignore the imposter syndrome and how the fact that you are the person that had the vision and the energy to build something out of nothing, to give birth, that already is giving you a level of care for that company so high that it will make you become the right leader for a very long time. I don't think anybody in the world cares as much for this company as I do, right? To a level that is almost miserable. You're a father, right? You have children. Nobody will ever care so much about this company, about this company being successful than I will. And that will make you put so much energy and focus to make it successful to the point that that ultimately is what it's going to make you be the right leader for the organization for a very long time. Independently of your expertise or your knowledge or whether you have the right experience, just that insight, just that energy will make you the right person.
01:08:29 · David Vélez, Patrick O'Shaughnessy
[01:08:29] S1: How to quickly ignore the imposter syndrome and how the fact that you are the person that had the vision and the energy to build something out of nothing, to give birth, that already is giving you a level of care for that company so high that it will make you become the right leader for a very long time. I don't think anybody in the world cares as much for this company as I do, right? To a level that is almost miserable. You're a father, right? You have children. Nobody will ever care so much about this company, about this company being successful than I will. And that will make you put so much energy and focus to make it successful to the point that that ultimately is what it's going to make you be the right leader for the organization for a very long time. Independently of your expertise or your knowledge or whether you have the right experience, just that insight, just that energy will make you the right person. [01:09:26] S0: It seems like you could decompose that into have more faith in yourself and be really persnickety about the vision that you want to go work on. Because if it's not something that's like coming deep from your heart, from your gut, you won't get the benefit of this thing you just laid out. Do you think those are the right two parts of that really interesting insight?
01:09:26 · Patrick O'Shaughnessy, David Vélez
[01:09:26] S0: It seems like you could decompose that into have more faith in yourself and be really persnickety about the vision that you want to go work on. Because if it's not something that's like coming deep from your heart, from your gut, you won't get the benefit of this thing you just laid out. Do you think those are the right two parts of that really interesting insight? [01:09:46] S1: Yeah, especially the second part you mentioned around the mission. It's a luxury and a blessing to find a mission that you truly are excited about, because then that will really make you go the long way. Scaling a company won't be easy. It will be much more painful than anybody anticipates. And if you don't have the level of conviction for the mission, will be just harder to go. [01:10:05] S0: How would you encourage other people to do a good job on that search? Like if someone's searching for a mission that's perfect for them, any advice that you would give them or any sign that they've got the right one?