All Industries Will Be Dominated By Tech Companies, Nubank’s Vélez Predicts

The fintech that recently received a $650 credit line to expand in Colombia and Mexico, has a long-term global strategy, its CEO says

Nubank founder David Vélez says that exploring other countries, including Brazil, only makes sense when there is a long-term vision.
April 13, 2022 | 04:55 PM

Bloomberg Línea — Colombian David Vélez, the CEO and cofounder of Nubank (NU), says he believes that all industries in all countries will be dominated by technology companies, and not necessarily big tech, but companies that put technology at the center of their strategy and have an organizational culture around technology.

Vélez, speaking on a panel on Wednesday at VTEX Day in São Paulo, recalled a phrase uttered by U.S. venture capital fund a16z: “Software is eating the world.”

“Everyone is racing to find developers. The biggest bottleneck is talent,” Vélez said.

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For Vélez, however, the new wave of Brazilian unicorns can change this scenario, taking young people into technology because of the success stories of Brazilian startups.

This week, Nubank received a $650 million credit line from Morgan Stanley (MS), Citi (C), Goldman Sachs (GS) and HSBC (HSBC), to invest in Colombia and Mexico, and Vélez said that exploring other countries, as well as Brazil, only makes sense when there is a long-term vision.

“Trying to do too much in the short term doesn’t work. One of the advantages of having a long-term vision is that you can think big. When you have a vision for decades, there is no limit. We always thought of Nubank as a potentially global company at some point.”

Vélez said that before Nubank, startups in Brazil were clones of U.S. companies. Now, he says he gets weekly emails from entrepreneurs who say they are building “the Nubank of Nigeria”, “the Nubank of India,” or “the Nubank of the Philippines”.

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“A Brazilian startup can influence and lead the industry outside of Brazil and in Latin America. We went outside Brazil because we identified a global problem, and have a long-term vision,” the billionaire said.

XP and Nubank: Challenging Big Banks

On the same panel, the chairman and founder of XP, Guilherme Benchimol, said that the financial market takes much inspiration from European and U.S. banks but, Brazilians are “much more competitive workers who dedicates themselves infinitely more”.

Benchimol said that when he started his business career, in 2002, he had 1,000 reais ($213) in his bank account. A friend lent him 5,000 reais, and he took a course that taught him how to invest in stocks.

“If I hadn’t held on a few more days, XP would not exist today,” he said.

As for Nubank, the differential in the company’s trajectory was the press, he said.

“In early 2015 an article published by a news portal focused on technology and put 30,000 people on Nubank’s waiting list. That’s when he realized he was in the game. “In the technology niche, we found early adopters who wanted to take a risk,” he said.

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Benchimol said he gained confidence when he took his first course and saw that it worked, that students became clients. “If I wanted to build a company that could compete with banks, I had to help people, because the incumbents supposedly didn’t help”.

Benchimol also offered some advice, saying that whenever starting a business, an entrepreneur has to find arbitrage, be it better experience or a more competitive price. “A grain of sand that differentiates.”

Entrepreneurs, In it for the Long-Haul

For the founder of XP, the entrepreneur’s life is a long-term project.

“You find an open flank and you go forward, improving the opportunity, you make a lot of mistakes along the way. When I started the company, I had no access to capital. I had to balance income and expenses. There is no short-term magic, things take time. It’s about putting in one grain of sand a day with discipline and resilience,” he said.

And he called Brazil a country of opportunity. “We have an established democracy, a continental size, a unique language. If each of us believes more in Brazil, the one who changes the country is not the government, it’s us. The more entrepreneurs we have in Brazil, pulling the train, hiring people, taking risks, innovating, is what transforms the country,” he said.