David Vélez - Building the Branchless Bank - [Founder’s Field Guide, EP. 41]

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick O'Shaughnessy, and this is Founder's Field Guide. Founder's Field Guide is a series of conversations with founders, CEOs, and operators building great businesses.
I believe we are all builders in our own way, and this series is dedicated to stories and lessons from builders of all types. Founder's Field Guide is part of the Colossus family of podcasts, and you can access all of our podcasts, including edited transcripts, show notes, and resources to keep learning at joincolossus.com.

**SPEAKER_2** (1:47)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions, and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only, and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (2:12)
My guest today is David Vélez, founder and CEO of Nubank, the world's largest digital bank with over 40 million customers. In our conversation, David talks about his venture capital background at Sequoia, and how that led him down an entrepreneurial path in Latin America. We also talk about the pros and cons of building a digitally native business, and what gets him most excited about innovation and technology in emerging markets. Before we start the episode, I'd also like to highlight our newest Colossus show, Business Breakdowns. Since launching in early April, we have published over 15 breakdowns and continue to release a new episode weekly. To learn more, check out joincolossus.com.
I hope you enjoy my great conversation with David Vélez.
So David, I think an interesting entry point here is a fun and interesting one since the news was just announced that Berkshire Hathaway made a very large investment into your company. And you just told me that they're the largest bank investor ever. So that's quite an interesting dynamic. Can you walk us through this story? Why do you think Berkshire was so interested in your business? How did this go down?

**David Vélez** (3:15)
To be completely honest, we never really considered him as a potential investor, as we've seen him very actively investing in traditional banks and traditional incumbents. We're one of the biggest investors in Goldman Sachs through the financial crisis. Today, they're one of the biggest investors in Bank of America.
And they tend to look more at traditional incumbents in more mature industries. But we had a conversation with them a few months ago, and they started digging in, and they were very, very curious, asking really, really good questions about the market size, about the unit economics of the business, about cohorts, very thoughtful understanding of financial services and what we're doing here in the markets and how we're competing with some of the traditional banks in Latin America. And in a few weeks, they were very excited and very willing to lead around in Nubank. And so for us has been, we see this and I think the market has perceived is a bit of the big validation of the business model, big validation of our ability to compete with traditional banks and eventually your ability to surpass traditional banks in the future of financial services.

**Patrick O'Shaughnessy** (4:26)
What do you think are the most important differentiators between what we'll call the incumbent banks that maybe Berkshire invested in more traditionally versus Nubank? What are the largest important differences for those out there listening to understand?

**David Vélez** (4:40)