Nubank IPO: Only the Beginning
About a decade ago on a busy São Paulo street, I got a glimpse of the problem Nubank co-founder and CEO David Vélez would later make it his mission to solve. David was a new partner at Sequoia at the time, focusing on opportunities in Latin America, and I was traveling to Brazil every month or two to visit. Together, we would meet local founders over coffee or bacalao, get stuck in traffic, and walk Faria Lima, a busy shopping avenue similar to Union Street in San Francisco or Fifth Avenue in New York.
At one bustling intersection, David pointed out there was a bank on every corner—and each of them had a line out the door. Rather than competing fiercely for customers, this handful of financial institutions controlled 90% of Brazil’s market, and the consumer experience was largely being ignored. They were among the most valuable companies in the country, yet simply getting a credit card from one of them often took months. To David, the long lines represented something much deeper: a broken system.
When we hired him in 2011, we thought Latin America could be the next frontier in our ongoing efforts to find opportunities outside of Silicon Valley. But as we discovered, the entrepreneurial fervor we’d seen in the region was not yet matched by truly innovative ideas, and there was a shortage of existing technical talent. David decided to do something about that—by starting his own company.
He could have moved back to the U.S. and continued working with Sequoia. But he couldn’t shake the opportunity he saw in those lines on Faria Lima—to disrupt the status quo with a financial services business that was actually built around its customers. So he stayed in Brazil to make that years-long dream a reality.
In those early days, Nubank was little more than an idea; our decision to partner at the seed was largely based on David. But we did share his excitement about building not just a credit card company, but a technology company with a consumer-obsessed culture that offered a full breadth of financial services online —especially for the relatively young population of Latin America.
The true brilliance of David, however, lay in his less-obvious choices—starting with his two co-founders. Rather than hire a conventional engineering lead, David made former private equity associate Edward Wible his CTO—and Edward impressed our partner and founder coach Bill Coughran, a former SVP Engineering at Google, by making all the right decisions on architecture and more. In co-founder Cristina Junqueira, a veteran of the financial sector, David saw not simply an insider, but someone ready to shake up the staid industry practices that had frustrated her for years.
More non-obvious choices would follow. When we encouraged David to reconsider the company’s first name, EOS, he proposed Nubank—an edgy choice given that “nu” means “naked” in Portuguese, but one that conveyed his vision for a transparent organization stripped of the inefficiencies of traditional banks. Nubank’s now-signature bright purple, too, was a wildly unconventional color in banking at the time. And even their office—with some 30 team members crammed into the first floor of a small rented home—was so unusual in the financial services world that it became what David calls “the best interview filter we could possibly have wanted.” Some candidates ran the minute they saw the building.
At first, the competition failed to take Nubank seriously; they didn’t understand the deep technological work involved in the backend of the deceptively-simple user experience, and thought the company was nothing more than an app. But customers did notice how that work made their lives easier, and a waiting list began that continues to this day. In Nubank’s first eight years, those customers—now 48 million and counting—have kept an estimated $4.8 billion in fees out of the pockets of traditional banks, instead fueling economic growth throughout the region in health care, education and more. As David posted recently on LinkedIn: “First they ignore you, then they laugh at you, then they fight you, then you win.”
But as Nubank has transitioned from upstart to major player in financial services—first in Brazil , and now across Latin America—David and his team have continued to question conventional wisdom. They’ve also wisely championed diversity at all levels, including on their board: the addition of singer Anitta this summer was not about her famous name, but about her journey from favela to pop stardom, and the insight her personal life experience has given her into what millions of Brazilians want and need. And while several venture firms have invested in Nubank, Sequoia is the only financial institution that serves on the board.
We knew right away that David was special—a fire-breather who had both IQ and EQ beyond his years, and an all-around terrific human being. In the 10 years since those walks down Faria Lima, we have watched him grow into a highly respected leader as well. He is principled; he is not afraid to admit what he doesn’t know and hire people who help shore up his blind spots; and he makes ample use of that all-important pronoun, “we.”
And while there’s no one quite like David, we are pleased to see that the example he and his team have set is helping spur the growth in Latin America that we dreamed of together all those years ago. Like Silicon Valley before it, São Paulo is now home to a new generation of young founders making their own non-obvious decisions. We believe that market leaders will continue to emerge, and that some may become global companies over time. For Nubank and for all of them, today’s milestone is only the beginning.
