🎧🍌 From Zero to 90 Million Customers with Nubank Co-founder Cristina Junqueira
A crash course on Fintech in LatAm, stories from Nubank's early days, spending $0 on customer acquisition, building a brand, surviving existential threats, and growing as a founder after IPO
Cristina Junqueira is the Co-founder and Chief Growth Officer of Nubank, the largest neobank in Latin America – and in the world – with more than 90 million customers across Brazil, Mexico, and Colombia. She is also the second self-made female billionaire in Brazil.
Cris and her co-founders David Vélez and Edward Wible started Nubank in 2013, essentially building the fintech category in a market where it was nonexistent, and went on to release a no-fee credit card, app, and other banking products across the three largest markets in Latin America.
Cris takes us through the rise of Nubank, from the scrappy early days building in a house in Sao Paulo to being backed by investors like Sequoia, Founders Fund, DST, TCV, Tiger Global, and Warren Buffett, and then on to their IPO in December 2021. We also touch on the impact of Nubank’s distinctive brand choices, how they navigated government regulations that nearly shut them down, and how they were able to spend $0 on marketing throughout most of the company’s history.
Timestamps (click to open YouTube):
00:00 Intro
02:39 LatAm FinTech in 2012
05:32 Educating investors on LatAm
07:35 LatAm's scale of unbanked and underbanked
08:21 Expanding access to credit
12:06 Brazilian bank profitability
15:30 Starting NuBank to prove people wrong
17:52 Taking 6+ months to receive the Seed money
19:29 Launching the first product, a no fee credit card
21:09 Scrappy early days
24:03 The very first card transaction failing
26:44 Inside the Series A with Sequoia
29:33 Why Nubank's CAC was low
31:14 Moving slow to launch new products
36:55 Inside Nubank's Dec '21 IPO
39:35 Navigating the recent macro environment
40:40 How NuBank built its brand
42:57 Surviving an existential regulatory surprise
46:34 How the team evolved from three co-founders into a global public company
48:10 Why the founders stayed together for 11+ years
49:02 How Cris grew as a founder
👉 Find Cris on LinkedIn
Transcript
Find transcripts of all prior episodes here.
Turner Novak:
Cris, how's it going?
Cristina Junqueira:
Pretty well, and you?
Turner Novak:
I'm doing amazing. I'm excited to learn about FinTech and LatAm and story of Nubank. Getting started, can you give us sort of a crash course on FinTech and LatAm? I know you created the category almost, so just give us a deep dive on everything that's going on and get us up to speed.
Cristina Junqueira:
Sure, absolutely. And first, thanks for having me here. Here at Nubank, we operate currently at Brazil, Mexico in Colombia, which are three of the largest economies in Latin America. They represent actually over 60% of Latin's GDP and population, so those are very large countries if you think about the size of the region.
And financial services historically has been a huge industry across LatAm. I think it's over a trillion dollars market cap, but it has also been extremely concentrated within very few companies. Every country in Latin America that you would pick, you would find that financial services industry is concentrating four, five players, maybe six here and there. But it's definitely not a competitive or it wasn't a very competitive market, which led to customers being underserved. The reality is that the banks or the financial institutions, they never really had to compete. They never really had to be better and to compete for customers.
Turner Novak:
Why was that?
Cristina Junqueira:
Customers didn't have much of a choice. They were like, "Well, if I'm being mistreated by this financial institution or if their products are in the bank, where should I go?" Because it was the same. Products were all commodity ties and there wasn't much of a differentiation.
At the same time, margins were really high because again, customers had nowhere else to go. And then we came in. this was about 10 years ago, we started a company and we launched the next year. And when we begun, it was unthinkable. It was like this industry was a little bit of a sacred cow. Because you saw technology disrupting many other industries, entertainment, hospitality, transportation, but financial services, to your point, you mentioned that we invented a category. When we started, the word FinTech was not used. It wasn't a thing.
When we tried to explain what we were trying to do in Brazil 10 years ago, people were like, "It's like a bank, but with no branches?" They didn't have a frame of reference to even think about the categories. Once we launched and once we started getting traction, people realized, "There's something here. These guys, they're onto something, so maybe we can also do something."
What we saw on these 10 years is that the FinTech space has really boomed in Latin America. I think we now have over 1,000 FinTech companies in Brazil and over 500 of them in Mexico. We also saw a lot of inflow of capital into the region. Nubank was the first investment for a lot of funds that led our rounds through the years. If you think about Sequoia, if you think about Founders Fund, TCV, DST, all those guys, they had never... We had to educate them on the opportunity in Latin America, what Brazil is about, what consumers saw.
There was a lot that changed over these past 10 years, but it was really a market that was really ripe for disruption because again, few incumbent players, heavily concentrated, poor customer experience, fat margins in a population that was young, very connected. The Brazil and Mexico are really high in terms of the ranks of social media usage and connectivity and smartphone adoption. All those things made this viable at this moment.
Turner Novak:
And I've heard you say before that you think specifically FinTech and LatAm is the biggest opportunity in the world when you just think through the margin potential, revenue potential, size of the population. That's insane. Why is it the biggest in the world?
Cristina Junqueira:
Yeah, I mean, people can look at the problem in different ways, but the way that we think about this is not only, to my previous point, is it already a pretty large market and a region that is very populated, there's a lot. We're talking about hundreds of millions of people in an industry that is already pretty valuable. But also, the penetration of banking services or financial services in general is very low.
Brazil is probably ahead of the curve when you compare it to everyone else in Latin America. But let me give you some references. When you look at paying credit card penetration here in Brazil, we're talking about 40% of the adult population. In Mexico, that's 11%. It's much less.
Turner Novak:
Do you know what we're at in the US maybe just as a frame of reference for people?
Cristina Junqueira:
In the US I think the penetration is higher than Brazil. I don't know, maybe 50, 60%. But Brazil is pretty ahead of the curve when we compare to everyone else. And still, not only there's an unbanked population, people that don't have access to financial services, but there's also a lot of people that are under-banked. They have some access, but not to good or competent products.
I think Brazil, which is in Latin America, the most advanced country as far financial services go. We've launched, it's recent, it's early, but we've launched insurance products here in Brazil. Our first insurance product has sold few hundred thousands of policies very early on. And over 80% of the people that bought it had never had an insurance product before. We're really talking about expanding the pie.
Mexico for instance, we are now north of 3 million customers for credit cards in Mexico. About half of those had never had a credit card before. We're really talking about not only taking market share of a highly profitable, highly valuable industry, but also growing the size of the market in the region as we expand access to those products and services.
Turner Novak:
Yeah. And when you talk about expanding access, if you want to buy a car, typically in the US you get a loan. If you want to buy a house, you have a loan of some kind. And if you don't have access to that, you can't own a car, you can't get to work, you can't have a family maybe if you don't own a home. Really, giving someone access to credit as long as it's done responsibly, can be a pretty big unlock for somebody's quality of living, in my opinion.
Cristina Junqueira:
No, for sure. It can be very transformational. You're talking about access to goods and to consumption, but if you think about even entrepreneurship, Latin America is a region where many people are self-employed, they're autonomous workers. And a lot of them have no access to credit whatsoever. Colombia, I believe, is the market in Latin America that has the highest percentage of people that are over self-employed.
Turner Novak:
Really?
Cristina Junqueira:
It's 50% of the population. Yeah, I think it's about 54% of the population. The fact that those people might have, even if those are tiny lines, but that they can use for working capital lines, that can help kick off lots of small businesses that can grow and employ other people and generate other work on consumption opportunities and help the economies also turn and grow.
It can be very transformational. The lack of access, the lack of reliable, and frankly, financially efficient savings mechanisms for its population to do better in terms of access to homes, in terms of aging, in terms of how well they can retire. There are so many second and third order implications for these economies. It's something that we're very excited about.
Turner Novak:
Maybe we'll get into a little bit more about how you evolved the product roadmap and the suite of offerings that you have over time. But yeah, it's just start with a nice, easy to use product, that leads into my next question, that consumers enjoyed. I heard you say something that consumers don't like banks. Do you know why do they hate banks?
Cristina Junqueira:
Yeah, that is even a little bit of an understatement. I usually say that there aren't liked anywhere, but they're especially hated in Latin America. Yeah, when we first started this, if you were to Google, "I hate banks," that would be pages and pages of hatred.
They've improved. Let me tell you that. For sure, I think the rise of competition, frankly, customers being for the first time even aware of different possibilities and of options, of having options, I think has really transformed how the industry thinks about this. But I think it's a combination of many decades of extremely expensive products and service being pushed through them, through not great sales practices.
I used to work for an incumbent bank. I worked for them for five years. And I tried to do a lot of change, to drive a lot of change from within a field miserably. Well but, I mean, I'm glad I did, otherwise we wouldn't be here that day. The reality is that there wasn't a need for them to really put customers first because customers had nowhere to go.
But that type of relationship in which customers are almost held hostages to your services because they don't have an alternative, they don't end well. The first real option that will show up, they're going to jump. And that's a little bit of what has happened since then.
Turner Novak:
Yeah, I remember seeing, this is a couple years ago, so it's probably changed a little bit, but I think Brazil had one of the highest interest rate spread. That's essentially profits for a bank in the world. And then also it was the highest return on equity for banks of any country in the world, which is essentially profitability. If you're getting high returns on your equity means you have a good business, a high margin business.
Cristina Junqueira:
For sure. When you look at the spreads, you can debate that because there's a high spread, but there are lots of costs that aren't counted when you calculate that spread related to inefficiencies, to labor costs, to fraud rates, to taxes, to a bunch of things that are going to eat away like that spread.
But the ROEs, to your point, they're hard to dispute. The reality is this has been historically a pretty good business. And that's built largely on customers not having a real choice. Related to that now we're seeing the industry ROEs being compressed through competition, eating away a lot of those margins, and then having to frankly try harder to acquire and keep customers.
Turner Novak:
Yeah. You said you had a lot of learnings pre-Nubank, working at some of these bigger incumbent banks. What were some of the lessons that you learned?
Cristina Junqueira:
Again, I don't want to sound excessively negative about the competition. I think it's very hard to be in the position that they're at. No one wakes up every day and goes to work and say, "Okay, I'm going to treat customers horribly today and I'm going to sell horrible products." Nobody does that. Nobody wants that. But the reality is that their lives or their companies are full of organizational barriers, of legacy technology, of a lot of things that get in the way of serving customers much better.
A lot of the learnings comes from just simplifying everything, making sure that your processes, your organizations are lean, they're agile, they're fast. It's always zero basing your thinking in terms of the friction that you're creating, the processes that you're creating so that you don't let things grow and come back and overwhelm you and bleed into the customer experience that you're seeing.
The other thing is just for us, being able to start from scratch, from a technology standpoint, not having to deal with legacy platforms and things that have been over decades, connecting a bunch of acquired companies through M&As that were potentially poorly connected. That's a huge advantage That translates not only in a customer experience advantage, but also in a cost advantage.
There's a lot to learn in terms of how to do things differently, especially from the beginning. When you can start in the right way, I think that takes it a long way. But on top of that, I would say one of the things that we were more intentional about that we spent a lot of time on was making sure that we had the right culture. We invested a ton in that, in what we wanted to stand for, what we wanted everyone and the bank to live by, the values and the purpose of the company. I think that that's a pretty powerful North Star for everyone that works here to make sure that they're making good choices and doing the right thing every day.
Turner Novak:
Yeah. You mentioned starting from scratch. I'm interested, the story starting Nubank, how did you come up with the idea? How did those first couple months go, getting everything started?
Cristina Junqueira:
I had resigned from my job at this incumbent bank, determined not to do financial services anymore. I was like, "I'm done," because I was just so tainted. I was like, "Well, these guys are supposed to be the best out there, and if my experience was that miserable here, can you imagine going somewhere else?" I was like, "I'm good. I'm going to do something else."
And I wasn't even going to start a company, but when I met David, so he was coming from the venture capital industry. He had spent the past few years working for Sequoia Capital in Latin America, trying to scout companies to invest on and try to find someone that was building something truly original. And this was 2012, early 2013. And it was like, well, there's nothing really here. Because the ecosystem here was mostly some people trying to copycat what was happening in Europe, what was happening in the US. But not really tackling the big problems, not really building companies that had the potential to really be transformational.
And he was scratching his head, especially why not tackling the financial services opportunity? Why? Why are we seeing so much disruption, so much innovation coming from other industries, but just not here? And he decided to leave Sequoia and go do that. And we met through a mutual acquaintance and he was looking for someone.
David is a Brazilian. He's Columbian, but he had been in the US for a very long time. He was looking for someone that was local, that knew the industry, knew from within, had management experience, had operating experience. And that's when we met. I was like, "Well, there's..." I was determined to do something else, but-
Turner Novak:
Yeah. What convinced you?
Cristina Junqueira:
It was just such a great opportunity to prove a lot of people wrong. I couldn't pass on that. I remember thinking, well, if there's someone in this country that could actually execute on this, it would be me. At the moment, I had a few other offers, and this was by far the less compelling one from a financial standpoint. We put money out of our pocket. It took a while before I could even get a salary coming out of this. But it was just such a big opportunity, I couldn't pass on this.
Turner Novak:
You mentioned, I think it was in another interview, you said it took six months to go from incorporating, getting your bank account set up, getting the money wired into Brazil to be able to pay yourself and start operating the company. Why did that take so long? That just seems that's another really broken problem, it feels like.
Cristina Junqueira:
Yeah, not even pay myself, pay the first employees, Pay myself, it was it took a little longer. We bootstrapped our beginning for sure with our seed money and a lot of our pocket money. The reality is Brazil and LatAm, I don't suppose, I wouldn't stipulate that it's different in other Latin American countries, but it's a really hard environment. There's a lot of bureaucracy for you to even set up a company, incorporate a company, it takes a while.
But that was, as hard as that was, wasn't even the biggest hurdle. I think the biggest hurdle was opening the bank account and getting the money into the country because there's just a lot of paperwork. The vast majority of banks wouldn't even open an account for a company as young as that. You would need to be two years old to even be able to open an account. Which begs the question, how do you get to be two years old if you can't get a bank account before?
Lots of chicken and eggs that we found along the way. Luckily, we're now in the position to solve for that. Nubank has already become the largest SMEs' retail bank, so to speak. In Brazil. We have over 3 million SMEs accounts today here at Nubank, and we make it extremely easy for them to open the account. That problem for now, for people starting out like we did, we're helping them.
Turner Novak:
Quick plug for the Nubank product. Well, I guess level setting then, what was the very, very first product that you launched and went to market with?
Cristina Junqueira:
Yeah, the first product was a credit card, like an international MasterCard branded credit card customers. We started there. There were many advantages to starting with a credit card. One of them was on the regulatory side, so we didn't need any type of financial license back then.
Today if you were to launch a credit card, you would need, but this was 10 plus years ago, so we didn't need a specific license from the Brazilian Central Bank to do so. But that was a good argument for that, but it wasn't even the main one. I think one of the main ones is first credit card is a very fast cycle product in the sense that very quickly you can learn from customer behaviors, you can see spending, you can see payment behavior, you can get a lot of data from those early cycles in the credit cards.
And also, it allows you to build trust and to build a brand in a way that is more consistent and efficient, I guess. Because if you think about the deposit side or savings, that's a route that many FinTechs in Europe I guess took, opening an account with a debit card. That requires a lot of trust because customers, they need to trust you.
Turner Novak:
Will it be there when they need it? Can they get it out?
Cristina Junqueira:
In opposition of a credit card where we're the ones trusting customers, we're the ones that got the credit risk if they don't pay us, that's a faster way for you to build trust and to build a brand. That was very important.
Turner Novak:
And then I think because you came from the incumbent side, you were used to spending a lot of money on marketing to acquire customers. But it sounds like, at least from what I've seen and heard, it was actually the opposite for you. Why was it so much easier for you guys and why was it so much different from your prior experience?
Cristina Junqueira:
Yeah, that was very surprising. This was unheard of really in the world for somebody to grow a financial services business with very little, negligible, zero customer acquisition cost. I told David many times, I was like, "We got to be prepared to make big marketing investments because people, they hate banks, they hate credit cards. How are we going to do that?"
The industry has been historically really a push industry. You needed to make a ton of effort. But what we realized was people were just ready for an alternative. Historically, they had been pushed these bad products so hard that the minute that something good actually showed up, they just flocked to it. What we got wrong was we didn't realize people we're just so ready for this, that having a much better product would be that much more efficient in terms of customer acquisition.
Turner Novak:
Yeah. And then I think I saw you spent a total of about a million dollars to launch the very first card and get it all scaled up. That's pretty impressive, especially considering there was not a lot of infrastructure. How did you pull that off? Was it just that you didn't have to spend anything on marketing?
Cristina Junqueira:
Certainly zero on marketing. It was less than a million dollars until we had our product. We had the first version of our app. We were issuing the first credit cards. We had a team, I want to say about 10 or 12 people back then. All engineers and one designer, me and my other two co-founders, and that was it. That was the team.
I think it was a combination of multiple things. First, we were really scrappy. Our first office was this little house. And one of my co-founders, he lived upstairs for the better part of a year because he had just gotten to Brazil. He had no home, no family, no nothing. He just worked all the time, like we all did. We were just so... We made every penny count really. And focused all that towards paying engineers and the little stuff that we needed to get that off the ground.
And we were just really thoughtful about how to build that business and how to maximize our runway because we really, there was just so much uncertainty. We didn't know if customers were going to care. We didn't know if there's going to be money for a series A, if regulators were going to pull our plug. There was just so much uncertainty, so much risk.
And one of the things that we wanted to do was de-risk a little bit on the type of runway that we could afford. We were really mindful of that.
Turner Novak:
Yeah, I think you launched beginning of April, 2014. That was the first transaction that I saw. Do you remember what it was?
Cristina Junqueira:
Yeah, it was April 1st. We were very excited because we had gone live and we're like, okay, let's go and use the card. And we went to this place, think about a diner, coffee shop type of situation, but very simple, very simple place. And it was about a block away from the little house where we were pimped, I guess. And we're there just buying a snack or something just to see if the card would go through.
Turner Novak:
Oh, gee.
Cristina Junqueira:
And embarrassingly enough, the first attempt with the David's card didn't go through. The second attempt with my card didn't go through, only the third attempt was one of the engineer's card went through, and that was enough for us to celebrate that day. It was very important.
It was one of those stories of companies that really scrappy, that very humble beginnings. It gave us such a sense of accomplishment because we were just so tiny and such a team of contrarians try to accomplish this huge thing, compete in this gigantic industry. It was just such a special moment for sure.
Turner Novak:
It's almost like proving people wrong. Like, Hey, you can actually do this.
Cristina Junqueira:
Yeah. Well, it took a while for us to start proving people wrong, but that was a good first step, going live.
Turner Novak:
Yeah, I mean, it is almost like, I can't even imagine those couple minutes between trying all the cards and you're like, "Oh, shit."
Cristina Junqueira:
Oh, we have it on video, don't worry.
Turner Novak:
Oh, do you really?
Cristina Junqueira:
We do. It's in Portuguese though. But you can understand. You can feel the desperation.
Jump to the 25:50 mark below for footage of Nubank’s very first transaction:
Turner Novak:
You've said something publicly a couple of times that I thought was really interesting. Just raising and signing the series A was a big hurdle, not only because you were creating this category, new market, you were starting a family at the exact same time. What was that experience like getting that series A done?
Cristina Junqueira:
As I mentioned, we were really scrappy with our seed money. We have always been extremely respectful of our investors' money. I think over the past 10 years, we've seen a lot of startups, I don't want to name it, but that didn't take that seriously. And we didn't want to be one of them. We were always so mindful. To this day, we're so thoughtful about what feels like excess, what feels like waste.
It was such a big deal for us to have a product, to have something live, to have a team, to have the first few thousand customers, which we had by then by series A. It was truly an accomplishment to raise our first round. And Sequoia led around. And as you mentioned, I was pregnant, so I flew to California with David. I was about seven months pregnant I believe on the series A pitch. It was something to pitch.
But it was also, you know what? It's life happening. And I wanted to have a family, and I got pregnant very, very early on. And I love my daughter to death. I say that she's Nubank's twin because she was born the month that we launched the company because we were in stealth mode until we had the first few thousand customers. We were really under the radar.
But I signed the series A papers at the hospital the day after she was born. And we launched the company that month because we couldn't be stealth anymore after raising a round with Sequoia. It was very challenging. But you know what? I have three daughters now. They all were born in challenging moments. Bella, my second daughter was born the year that we launched Mexico. I was also very pregnant in Mexico talking to customers and figuring out what we're going to do there.
And then Ana, my third daughter, she was born shortly after the IPO. If you've seen any of the IPO photos or footage, you're going to see me eight months pregnant at Nice, ringing the bell with my daughters in tow, including the one I was pregnant with. It's just life happening.
Turner Novak:
When I started my fund, Banana Capital, my second daughter was a couple months old. And it was not a good time, all things considered, but it was just. It's life. You got to do it. And wouldn't trade it for anything. It's been a lot of fun. Then you've got this series. How big was the series A?
Cristina Junqueira:
It was small. I see these companies raising say 100 million shares. I'm like, what? I think ours was 10 or 15 maybe, but it wasn't more than that. It was something like that. Yeah.
Turner Novak:
You had, we'll say 10 to 15 million in the bank on the balance sheet. What did you do next? What did the roadmap look like? What were some of the key decisions that you made?
Cristina Junqueira:
Yeah. At that moment? What we needed, we had a product live. It was an MVP type of product, but it was live. It was all about growth. And again, not that traditional type of growth that you buy. We continue to do very little, if any. I don't think we did any marketing after CSA. We continued to rely on lots of member get member type of situation, word of mouth flowing.
Turner Novak:
Like referral rewards?
Cristina Junqueira:
No, we never incentivized reward. It was never a hard incentive. People were just so amazed by the experience that they would just spontaneously tell their friends and family to come. We wanted to be ready for that growth. And in credit cards, in some other products too, but especially in credit cards, growth costs you. Not necessarily marketing, but you've got to pay to buy bureau data, you got to pay to issue the card, you've got to pay the shipping fee for the card. You've got to pay a lot of... There's a lot of upfront costs.
I would say a lot of that money went to fund growth, but the cost of growth, not necessarily marketing. And also to fund our team's expansion. Being able to hire more people, more engineers to continue to improve the product and to continue to scale. That was mostly the focus.
Turner Novak:
And then, at what point did you add the second big product beyond just credit cards? Or was it market expansion that you did next?
Cristina Junqueira:
One of the things that philosophically we also defer from other startups is there's a lot of companies. And this is not a judgment, it's just very different strategy. There are lots of companies out there, they're just going to launch a bunch of products. They're going to launch a bunch of countries and they're going to fill a lot of spaghetti on the wall and see what sticks. It doesn't work out, they just shut down. They'll move on to the next thing.
We didn't want to do that. We wanted to earn our right into doing the next thing. We actually only did credit cards in Brazil for many years, for I don't know, maybe four or five years until we felt that we had earned the right to do the next thing, which was a savings account. And then we worked really hard to be able to launch that. And then we earned the right to do the next thing, which was the debit card attached to the savings account and so on.
And that has been our thinking. We don't want to do too many things that jeopardize the customer experience, the bar that we hold to ourselves in terms of how customers feel. We also want to make sure that we're thoughtful about the process. We want to do fewer things, but do them really well.
And the same thing happened about international expansion. We didn't want to rush into doing country number two or three or four or five. We've only done two. And we're good for now because we want to see them do really, really, really well before... And they're doing really well, but we want to make sure that we're well grounded before we take on the next thing.
And there's so much going on, Mexico and Columbia, the next products. And in Brazil still, there's so much more to grow and to build that let's take one step at a time.
Turner Novak:
Today, what is the product suite? Is it your typical bank, or how do you think through the current offerings?
Cristina Junqueira:
We wanted to cover our bases as quickly as we could responsibly. Again, making sure that the experience was held to a high bar. Let's take Brazil for instance. In Brazil currently we have an account, one that is similar to what you would have somewhere else. We have investment products including fixed income products. We have equities trading, ETFs, and so on, investment funds. We have personal loans, we have secured loans, we have credit cards, of course, we have SME accounts, we have credit cards for SMEs. We have some insurance products.
We've been expanding our product portfolio. And Brazil, of course, is the place, the country that we have the wider product portfolio in this stage. But we don't yet have mortgages, for instance, or auto loans or some other more sophisticated insurance products. We don't yet have everything that a bank would have. Investment banking, wholesale banking, a lot of things that they would do.
And I don't know if we're ever going to have, because I think part of staying lean and agile and simple is choosing where you want to play and how. We're also very thoughtful about which vertical do we believe we are well positioned to compete because we see ourselves as having a significant cost advantage to everyone else. We have a meaningful customer acquisition cost advantage for everything that I said. We acquire customers at a fraction of what everyone else does. That's one.
At this stage, we have a cost of funding almost advantage because we have a very large deposit banks and comparable market rates in terms of cost of funding. We have a lower cost of risk because our models in Brazil, they have been evolving very quickly. Our proprietary models, they're very sophisticated and they allow us to play at different income brackets, at scale with lower delinquency rates than you would see at the market.
And we have much lower costs to serve customers because of how simple our processes are, because how little bureaucracy we have, because how much more efficient our tech platforms are and everything else. We want to make sure that we're thoughtful about our advantages coming into different verticals or even different countries.
Turner Novak:
Yeah. There's a lot of follow-on questions to everything you just said. Any ways that the pandemic really impacted the business? I mean, we're three almost, I guess almost four years in at this point, but were there any big changes or events related to that?
Cristina Junqueira:
Yeah. I think the pandemic was a big catalyzer that accelerated a lot of the trends that we were already seeing. Let me explain what I mean. Before the pandemic, nobody liked going to a bank branch, sitting and standing there in a line to make a payment or to figure something out. That was very inconvenient. But when the pandemic hit, that was not only inconvenient, but it was also unsafe.
Turner Novak:
Yeah. You couldn't do it.
Cristina Junqueira:
It was unsafe and frankly impossible sometimes, because many branches were closed. So people just had to figure out a different way to do things. They had to go digital if they hadn't already. I think he really accelerated the pace at which technology adoption was happening for digital banking. And that certainly helped us in some ways. Growth really accelerated during that period. I think people just got more open-minded about testing something different. That's one very clear, tangible impact that we've seen in that period, for sure.
Turner Novak:
Yeah. And then, you went public in 2021, I think I'm remembering right. What was the thinking on going public and what was that process? Brazilian company but you're operating in Latin America, going public in the US. Can you just take us inside?
Cristina Junqueira:
Sure. Our investor base had always been an international one. Our investors from the VC side were all the international funds, I've named a few. DSC, Tiger, Founders Fund, Sequoia of course has always been a big partner. And so all those guys. Our investor base was always like that. For us was natural. The type of capital that we're accessing was already international capital. Didn't make sense for us to list locally, period. That was one.
Secondly, we always knew that being a publicly traded company was in our future because we weren't going to sell the company. At some point we've got to do liquidity to people. There wasn't much of a choice. Really, it wasn't a question of if it was a question of when. And the reality is that 2021 was a very interesting year for that. A lot of stars aligned in terms of how the capital markets were operating, in terms of how the Brazil operation was doing, how the Mexico operation was doing, how the political risk in Latin America was being perceived.
There was a lot to like, a lot of stars aligned for us. And we're very happy that we did because if you think about it, we went through the hardship of 2022, extremely well capitalized, when a lot of companies that hadn't raised capital had to do either severe down rounds or frankly die. Part of it is merit, but a lot of it is just we were very lucky about the timing, so we're very happy that we did that.
Having said that, if there was a way to stay private for longer, it would've been amazing or forever. There are the occasional costs of becoming a public company. But being financial services, for instance, a lot of people talk about the reporting obligations and opening up your numbers and your books. As a financial institution, we already have to do that in a lot of ways. I guess that was less of a cost for us in some ways.
Turner Novak:
Also, when you talk about just cost of deposits or funding or I think generally as a publicly traded company, you generally reduce your cost of equity. Generally speaking, you can access the capital markets, whether it's debt or equity or it's generally a little bit lower. Again, good to have that going into 2022. Has the approach at Nubank changed at all over the last couple of years just with dramatic changes in interest rates?
Cristina Junqueira:
Not really. The reality, not about the interest rates themselves. There are second order implications of that. We did see on the macro environment changes here and there. You saw some delinquency rates go up because of a worse macro here and there. But the reality is we've been at this for a while now, 10 plus years, in a country, Brazil that has historically have very high interest rates.
Turner Novak:
That's fair. Yeah.
Cristina Junqueira:
Right. In very tough macroeconomic environment. We don't really know what reality looks like for a smooth macroeconomic environment.
Turner Novak:
I guess we're almost spoiled in the US where it's usually all really easy and then every once in a while.
Cristina Junqueira:
Up and to the right is the exception, not the rule here.
Turner Novak:
You mentioned a little bit about brand. I'm super curious. How did you come up with and decide Nubank's brand identity, and why is it so important?
Cristina Junqueira:
Well, it's so important. And one of the things that I'm very happy about our story is that I never had to sell David, who's our CO, or my other co-founder, Ed, on the importance of building a brand. They knew. They knew from the beginning that we needed to build a powerful brand, a strong consumer brand, a brand that people would be emotionally connected to. Because we talked a lot and we're very intentional about our culture.
And our number one value is we want our customers to love us phonetically. That's the brand that we wanted to create. That's our number one value. That's our strategy ultimately. And we wanted to build a brand that would translate that to customers. We believe that the brand is the way that the culture materializes to customers. We wanted it to live up to the values that we lived inside and to be a transparent way through which customers would see us for who we were.
And that's where nu came from, because nu in Portuguese means naked. We wanted to be really transparent to our customers. Really let go of all the complexity, of all the smoke mirrors, the lack of transparency. Of all the complexity that really stands between customers and them understanding their money, their finances, and having the control of their lives, of their financial lives.
That's where the name came from. We also have a very unique visual identity. We chose purple, which was something unthinkable for a financial institution back then.
Turner Novak:
Bold color.
Cristina Junqueira:
It was a bold choice. We got teased for it for sure, but we wanted something that stood out. We wanted something that was a statement. Love it or hate it, but people wouldn't be numb to it or indifferent to it. And it was a great choice because it really stood out. It really did help people to identify. And frankly, it was so unique, so original that it helped again to build this aura of new and cool and something that people wanted to be a part of. Lots of thoughts were put into that, and I believe we made some pretty good choices.
Turner Novak:
I've heard you mention before Nubank was almost shut down by regulatory stuff at some point. Or you ran into a regulatory roadblock that was an existential threat. Can you unpack that a little bit because that is very interesting.
Cristina Junqueira:
Absolutely. First, it's important to say that it wasn't regulators wanted to shut us down because we're doing something wrong. It was none of that. Quite the opposite. We have always been so thoughtful about the way that we've embraced really regulation and being compliant. We wanted to be A+ students in that sense. It was nothing like that.
It was a moment a few years ago that of course because it was going through a financial crisis like, the country. The executive branch was thinking about what different measures they could take to stimulate the economy. And at some point somebody was like, "Well, we might do something to reduce the settlement dates to have better working capital for retailers to fund consumption." But that was just such shallow thoughts because that had such severe implications for the whole chain that is that these credit cards are an extremely complex industry. If you think about consumers, credit card issuers, merchants that are accepting payments and acquirers and the networks. There's so many implications of that.
And one of the implications was if they were to make that change, not only in the bank, but everyone in the sector would need to raise capital and funding overnight in the order of billions. It was just something unthinkable. That was the existential threat.
And we got a hold of this very early, thankfully. And we just started working like crazy. We just started articulating with the central bank and the policy makers and people in the executive branch. And just having conversations with them about, do you really understand what you're talking about? Do you understand the implications? You're going to shoot yourself in the foot because you're going to handicap the industry that's actually making consumption viable, giving customers working capital for them to consume.
There were lots of implications. It was a tough moment for sure. Luckily, we were able to convince them that this was not a good idea. And this hasn't been revisited since then because it's really something really tricky to touch. But it was tough. It was one of the biggest challenges that we've led through in these 10 years.
Turner Novak:
Was it essentially you just need a certain amount of reserves if you're doing something in credit?
Cristina Junqueira:
Yeah, it's not even reserves. The way that it works in Brazil is customers will pay their credit card bills on average 27 days after they've made the purchase. Issuers pay acquirers about 28 days after the purchase. And then acquirers pay merchants two days, meaning they get the money in 30 days.
If they were to change, the change that they wanted to make was for the merchants to get paid in two days. Meaning the whole credit card industry would have to have funding, not capital, but funding, that funding to anticipate those funds to merchants much sooner than they would get paid by customers.
And that was just money that did not exist anywhere in the system. Immediately we would have to cut access to credit, to credit cards immediately because no one would be able to fund that.
Turner Novak:
And that was the whole business. That's scary. One other really big question I had was as Nubank has evolved, new markets, new categories, how have you evolved the org structure? Going from fairly simple product, probably relatively, you're in a team, in a house. Now you're a multinational, global, publicly traded company. How have you evolved and changed the org structure over time?
Cristina Junqueira:
We have always thought that the structure should serve the company and our customers rather than us being serving some market. We were always flexible. The team and the structure has changed quite a bit over the years. I don't think a year has gone by without a major change that we've made to adapt to whatever reality we're facing, whatever priorities we have.
The way that we think about this is the structure should adapt to the business goals and the priorities that the company has. We recently made a major change to be able to potentialize the impact that we can have on our international expansion. We recently created global products teams and global platform teams to be able to... And then we separated an actual Brazil team, which didn't exist, it was all just one team. For us to be able to, as we call internally, platform mines a lot of the things that we're doing for Brazil so that Mexico and Columbia can move much faster.
That's a recent change that we just did and that has really enabled us to accomplish more with less and faster and better. But we're always thinking about what else can we do? How differently can we set up the teams to be able to be more efficient? It's something very much alive, and that has evolved quite a bit.
Turner Novak:
Yeah. And speaking of the team, I noticed that all three co-founders are still involved with the business. Yeah. Contrary to maybe what someone might think, that is very, very rare. How did you manage that? I mean, what's the story there?
Cristina Junqueira:
Of course, there's a big component on all of us just getting along. Nobody fought, nobody hates each other, which is a good thing. And we see a lot of those stories. I think all three of us being very committed to doing whatever was right for the company and also being very complimentary to each other.
It's very different skillsets when you think about it, what the three of us brought to the team. All of us being flexible in terms of the different type of role that we've taken over the years or whatever the company needed us to do. But it is, it is something very unique and something that we're proud of, for sure.
Turner Novak:
Yeah. How did you change as a leader or executive as the company scaled over time? Any big surprises or things that worked really well for you?
Cristina Junqueira:
I have, of course, grown. It's been 10 years, so I'm definitely I hope much better today than I was when I first started. Managing a few thousand people today versus no one when we first begun, really. There's a lot of learning and growth from that. But I think what has helped me through was precisely this thinking that I was talking about before, is just I think of my role as someone that does whatever the company needs me to do.
And sometimes people will say, "Oh, but who do you answer to?" I'm like, "To whoever is asking, whoever asks." As long as you keep that type of flexibility, you stay open-minded, and you're willing to grow and to learn, it should be fine. I think you got to watch out for blind spots because when things go well, the company grows exponentially, but people usually grow linearly.
You've got to be thoughtful about that. Sometimes the scope, somebody has grown so much. And as much as they're growing as leaders, they might not grow at the same pace. You might need to adjust to be able to continue moving as fast as you can. Yeah, it's something to watch out for for sure.
Turner Novak:
Yeah, definitely something to watch out for. Well, this has been an awesome conversation. Thank you so much for coming on the show.
Cristina Junqueira:
My pleasure, Turner. This has been a great conversation. I hope this was useful for your audience. And maybe we can do this again some other time, maybe over some more topics.
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Find transcripts of all other episodes here.
Enjoyed reading this interview as part of my research of the NuBank story.
I am particularly interested in the first 16-20 quarters of NuBank's development. Things like specific pieces of PR content, blogposts, social media user generated posts that pushed their user base.
In one of the David's interviews I came across the story of some user's blog post that brought in first 5k customers. And I'd love to take a look at as many of those as possible as I think that's the moment the company is learning to crawl and walk.