David Vélez
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Invest Like the Best with Patrick O'Shaughnessy · David Vélez - Building Nubank and the Future of Global Banking
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Why Do Founder-led Companies Keep Outperforming?
David Vélez says founder-led companies continue to outperform for decades because, when a leader has to choose, the founder mode wins, especially in big technology shifts where the founder's assets show up more clearly than the advantages of a chief executive.
A founder and a chief executive are different functions that do not necessarily fit together. The founder is impatient, carries a huge sense of urgency, and wants to move extremely fast. The chief executive has to be more patient, more systematic about decisions, and bring systems thinking into scaling the organization. The two sides can conflict: impatient on one end, patient on the other. Chief executives tend to be better managers
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Why Is David Vélez Still Focused on Nubank?
David Vélez is still focused on Nubank because about a year or two of asking whether he should do something beyond the company ended in a clear answer: nothing he can imagine would have more impact than taking Nubank from three countries to 100 countries, or from 100 million customers to a billion customers.
He is motivated by impact and by putting time and energy into work that has meaning. Founders start a company, watch significant growth, and then ask what else they could be doing. On the other side of that analysis, the larger prize is access to financial services for billions of people. The same scale is also a way to understand himself through bigger challenges and to grow as a leade
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How Did Nubank Rebuild Itself Around AI?
David Vélez says Nubank rebuilt its organization around AI after it missed the December moment when the new models started writing Clojure well. The team only caught that switch about 60 days later, then cut the bank from 10 layers to five and grew his direct reports from one to 20.
Back in Brazil, the team mapped 120 workflows across the company. Coding is only one. The rest run from product design and know your customer flows to internal audit, compliance, and regulatory capital management. The 120 workflows are being reinvented natively with AI tools, with eval infrastructure built to measure every step. Some areas are further along than others. Often the huge productivity gains are not
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How Profitable Is Nubank With No Fees?
David Vélez says Nubank charges no fee and still ends up with a return on equity two to three times the return on equity of the big incumbent banks in the countries where Nubank operates. Less fee income means less revenue, and the higher return still stands.
A higher return on less revenue is a cost structure advantage: a way to offer a product at better quality at a much lower cost. The advantage generally comes through technology. In markets like banking that are in ways commoditized, a technology cost advantage is a moat and a comparative advantage.
Customer growth, net promoter score, and the cost to acquire a customer come first. User count and net promoter score show whether an unde
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Why Is Nubank Launching in the United States?
David Vélez says Nubank is launching in the United States because digitally native companies solve cost, access, and intelligence better than branch banks, and the US market is still dominated by a few incumbent banks.
Most people still see Nubank as a Brazil or Latin American neobank. The 2013 seed deck had nothing specific about Brazil or Latin America. The past 13 years proved the model in Latin America. Nubank is now the largest private financial institution on the entire continent, with the highest net promoter score and the highest return of equity in a country like Brazil. The next step is a multi-decade vision of taking the model global. The United States is the biggest market in th
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Why Did Nubank Start Credit Lines at Twenty Dollars?
David Vélez says Nubank started a lot of people with a twenty dollar credit line because twenty dollars was better than zero. Over a period of time, twenty dollars became one hundred dollars and one hundred dollars became one thousand dollars, and the right product let them create a credit history.
Nubank was the first credit card for 30 million people in Latin America. Banks said people do not want credit and do not want a credit card because they are scared about paying taxes and would never use the product. What customers lacked was a product that matched their needs. Banks thought a twenty dollar first line was absurd, and people appreciated it. An AI co-pilot then tells the customer wh
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How Does Going Cashless Unlock Credit for Small Businesses?
David Vélez says going cashless unlocks credit for small businesses because a digital sale leaves a cash-flow record a bank can underwrite. In most economies, business is still offline, so a cash sale is never recorded and a small seller cannot borrow against daily cash flow.
A taco stand on a corner in Mexico City sells through cash. The transaction is not recorded anywhere and then it goes away, so the stand cannot get credit today. The seller has a history of selling tacos and taking in cash flow, but nobody can underwrite on top of it. The moment the transaction goes into a digital ledger, the seller can take the record to a bank, show the cash flow, and ask for credit to open two taco
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How Many Currencies Will Exist in Twenty Years?
David Vélez expects about 190 currencies around the world to fall to maybe 10 within 10 or 20 years. Fiscal trouble in so many countries is so dire that a lot of fiat money is not real money and works like crypto tokens.
More mobile people will live between a home fiat system and a global offshore system without always noticing the switch. In many countries, access to Bitcoin and stablecoins already pushes people to bank offshore because they do not trust the local banking system or the local fiat currency. Billions of people will bank in the offshore world on a US stablecoin, Bitcoin, and other assets, while the fiat system and the offshore system keep interrelating.
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How Does Nubank Test New Features So Fast?
David Vélez says Nubank has treated itself since the beginning as a technology company that happens to be in financial services, so data and analytics drive every decision, and Nubank's own foundation model cut the cost of putting a feature into a model far below the old process of spending six months to add a new feature and several weeks to test one in a model.
Traditional banks competed on banking branches. Consumers picked a bank with a branch nearby, so effort went into real estate, physical infrastructure, brands, and trust, which financial services still has to protect. Nubank did not spend energy on an offline world and treated technology and data as the comparative advantage. Befor
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Why Is Banking Still in a Blockbuster Era?
David Vélez says banking is still in a Blockbuster era because about 90% of a roughly $10 trillion consumer financial services industry still goes through branches owned by incumbent banks. Neobanks and fintechs together are less than 10% of the market.
The gap matches a moment when 90% of people still went to Blockbuster for VHS tapes and DVDs while Netflix-like services held something like 10%. Media already moved to Netflix, retail moved to Amazon from Barnes & Noble, and transportation moved to Uber. In financial services, the shift from incumbents to digitally native companies is still very early. Nubank is the exception in Brazil and Latin America, the one digital bank that has fully