Nubank's Rise: How Contrarian Hiring & a Pitch Deck Built a $30B Empire

Nubank's Origin: Identifying Opportunity in a Challenging Market

Many startups initially struggle to pinpoint a viable market and a corresponding product. However, this wasn't a hurdle for David Velez, the CEO of Nubank. He recognized the significant opportunity for success by entering Latin America’s largest economy with a relatively advanced banking solution.

The primary difficulty wasn't market identification, but rather reimagining the very idea of a bank within a nation where traditional banking institutions are often viewed negatively.

This challenge was compounded by the resistance of established banks, deeply connected to the government, who actively attempted to impede Nubank’s progress.

Founding and Early Strategy

Nubank possessed a clear understanding of its target market and geographic focus. Through persistent capital acquisition, innovative marketing strategies, and focused product development, Velez and his team successfully dismantled the complexities of the Brazilian banking system.

Their efforts resulted in the creation of a globally recognized and highly successful fintech company.

Early Days and Cultural Influences

This EC-1 will first examine how Velez leveraged his expertise and background to address this specific market. Nubank was established in 2013.

Interestingly, the founding team intentionally cultivated a Californian work environment, rather than mirroring the typical Brazilian corporate culture, even choosing an office location on California Street in the Brooklin district of São Paulo.

This deliberate choice reflected their ambition to disrupt the status quo and introduce a fresh approach to financial services.

The Genesis of an Entrepreneurial Spirit

From a young age, growing up in Colombia within a family steeped in business – his father operated a button manufacturing plant – Velez harbored a strong inclination towards self-employment. “My father consistently emphasized the importance of establishing one’s own enterprise,” Velez stated.

However, considerable time elapsed before Velez identified a specific path to pursue. To occupy his time and immerse himself in an environment of entrepreneurial drive, he enrolled at Stanford University – supported in part by proceeds from livestock sales – and subsequently gained experience as an analyst with Goldman Sachs and Morgan Stanley. He later transitioned into venture capital roles at General Atlantic and Sequoia.

how contrarian hires and a pitch deck started nubank’s $30 billion fintech empire

Despite his growing expertise in investment, Velez had not yet ventured into entrepreneurship himself, leading him to question his ability to effectively advise founders. He reflects, “I was simply advising others to ‘take action, accelerate hiring, and pursue acquisitions.’” He desired the enthusiasm and commitment he observed in entrepreneurs. “I noticed a certain passion in the eyes of founders that was absent from my own work.” Yet, Velez remained uncertain about the type of business he wished to launch.

A turning point arrived when Sequoia, having assigned him to explore investment opportunities in Brazil, decided to discontinue its operations within the country. Doug Leone, the firm’s global managing partner, explained that they observed a prevalence of similar companies in Brazil, which did not inspire confidence.

Velez perceived this withdrawal as a catalyst for self-reflection and a chance to determine his life’s direction. Considering his future endeavors, it’s unsurprising that he sought a significant challenge. He recalls contemplating, “What represents the most demanding undertaking I can envision?” His list included establishing an asset management firm in Colombia, pursuing opportunities in edtech or healthcare, and fundamentally changing the banking landscape in Brazil.

The first option held some appeal, as it would allow him to leverage his Colombian background and financial knowledge, while edtech and healthcare consistently present opportunities for new ventures due to their expansive scale. However, the idea of disrupting the banking sector seemed unconventional – he lacked proficiency in Portuguese, limited knowledge of banking, and a rudimentary understanding of Brazil’s financial infrastructure.

Despite these obstacles, being an outsider ultimately proved advantageous, enabling Velez to identify opportunities that those with more experience overlooked.

Unburdened by ingrained assumptions about the existing system, he did not automatically accept its limitations. Having spent much of his adult life in the United States, Velez was accustomed to the convenience of banking. Consequently, his attempt to open a bank account in Brazil exposed him to frustration, inefficiency, and the disconcerting feeling that, despite being the customer, he was doing the bank a favor.

He recounts a particularly negative banking experience in São Paulo, a city often surprising to newcomers with its modernity and high-end amenities. The level of service at a luxury hotel in São Paulo, for instance, often rivals that found in Asia rather than the U.S.

However, this level of service is conspicuously absent within the banking sector. Velez remembers being subjected to a pat-down search for weapons upon entering a bank, triggered by his laptop in a backpack. He described feeling like a “captive,” as a superior banking experience was unavailable, and he was forced to accept the existing subpar service.

However, he refused to accept the status quo.

Brazil: A Nation Poised for Financial Innovation

Brazil, with a population of approximately 213 million, stands as the most populous nation in Latin America. Historically, the banking sector has been largely controlled by five dominant institutions: Itaú Unibanco, Banco do Brasil, Bradesco, Santander, and Caixa Econômica Federal.

Despite the established profitability of these banks, their presence extends to only around 80% of Brazilian municipalities. Furthermore, a World Bank analysis reveals that nearly one-third of the Brazilian population remains completely without access to banking services.

However, the nation’s financial infrastructure is considerably more sophisticated than commonly portrayed in international news. The Central Bank of Brazil has developed agility due to the country’s historically volatile economic conditions, including rapid fluctuations in inflation and exchange rates.

Unlike the United States, where an ACH bank transfer can take several days to clear, Brazil has always facilitated swift bank transfers, albeit with associated fees. Delays in money transmission would be problematic, as currency values could shift significantly within that timeframe.

Edward Wible, the co-founder and former CTO of Nubank, commented on the strength of the Brazilian Central Bank. He stated, “The Central Bank of Brazil is very robust, modern, reliable and competent. It’s actually very different from other bureaucracies in Brazil, which are known for being slow.”

He further added, “Nine of 10 bankers will complain that it’s too fast. I’m not going to lie, there have been moments where it’s been too fast.”

The speed of transactions has increased even further with the 2020 launch of “Pix,” a state-owned instant payments system akin to Zelle in the U.S. Pix eliminates the need for credit or debit cards and offers free transfers for individuals.

Despite these advancements, market entry presents substantial challenges. Brazil demonstrates a strong preference for domestically produced goods and local investment. This is reflected in high taxes, potentially reaching 40%, levied on imported items like clothing and automobiles.

Similar protectionist measures are in place within the banking sector. The Brazilian constitution restricts foreign investment in, or the establishment of, Brazilian banks. Obtaining a presidential decree to bypass this restriction is a complex and often difficult undertaking.

David Velez successfully secured this decree within four years of launching Nubank.

The Power of a Vision: Nubank’s Early Funding

Leone remarked that encountering certain individuals sparks an immediate desire for collaboration, describing his experience with Velez, whom he recruited to Sequoia directly following graduation from Stanford University.

Beyond his affiliation with Sequoia, Velez also maintained a strong relationship with Kaszek Ventures, the preeminent venture capital firm in Latin America based on capital raised. The principals at Kaszek were previously high-ranking executives at Mercado Libre, the dominant e-commerce platform in Latin America, and contributed both financial backing and valuable regional operational expertise.

Through these connections, Velez secured a $2 million seed funding round for Nubank in July 2013. Nicolas Szekasy, co-founder and CEO of Kaszek, and formerly the CFO of Mercado Libre, noted, “He hadn’t yet assembled a team of co-founders at that point. The probability of success was minimal, given the ambitious nature of his undertaking. Essentially, it was David and his presentation; we invested in the vision presented.”

Building the Founding Team

Having secured initial funding, Velez prioritized the recruitment of co-founders. He determined the need for a Chief Technology Officer (CTO) and an individual fluent in Portuguese with a comprehensive understanding of the Brazilian banking landscape. The search was constrained by the requirement that candidates either reside in São Paulo or be prepared to relocate, as remote work was not a viable option in 2013.

The process proved to be both lengthy and challenging. Velez stated, “With every potential CTO I interviewed, the initial question invariably revolved around compensation.” He observed that many candidates viewed the opportunity solely as employment and expressed skepticism regarding the company’s potential for success.

Velez recounted interviewing approximately 50 candidates before ultimately selecting Wible. “When I spoke with Ed, he demonstrated immediate enthusiasm; he wasn’t focused on salary and was content with equity. Crucially, he genuinely believed in our mission, so I prioritized cultural alignment over resume credentials,” Velez explained. “It was a calculated risk based on dedication, cultural compatibility, and shared vision.”

Wible, an American engineer holding a computer science degree from Princeton University, had primarily worked in private equity until 2013. He was residing in London at the time, having taken a sabbatical and engaged in sailing in Indonesia when Velez contacted him. The two had initially connected when Wible sought Velez’s feedback on a startup concept he was developing.

“David reviewed my initial project and quickly advised me to abandon it, suggesting instead that I join him in Brazil to establish a bank,” Wible shared. “This resonated perfectly with my aspirations to contribute to a project I could truly call my own.”

However, Wible lacked the extensive technical experience typically expected of a leader in a complex, regulated industry like banking. Leone at Sequoia expressed reservations about Velez’s choice and initially tasked a Sequoia engineering leader with monitoring Wible’s work, particularly his architectural decisions.

Over time, Leone’s perspective shifted. “He consistently made the correct choices,” Leone acknowledged, impressed by Wible’s capabilities. He now attributes Velez’s “unconventional hiring decisions” as pivotal to Nubank’s rapid ascent to unicorn status. “These are hires I doubt I would have made myself,” Leone conceded.

Strategic Hiring and Nubank's Foundation

The recruitment of individuals like Wible signaled Velez’s commitment to establishing a company distinct from previous ventures that had failed to meet Sequoia’s expectations. Velez articulated, “From the outset, our decision was to emulate a Silicon Valley-style organization rather than a traditionally Brazilian one.”

Leone further encouraged Velez to adopt a wider perspective. Initially, Velez expressed his intention to launch a credit card company, but was advised, “Do not begin a credit card company; instead, create a technology firm that provides a credit card.”

However, initial progress required both skilled engineers to develop the product and individuals possessing substantial banking expertise within the Brazilian financial landscape. Vitor Olivier, one of Nubank’s earliest ten employees, possessed capabilities in both areas.

When presented with the opportunity to join Nubank, Olivier was employed at BTG Pactual, a leading investment bank in Brazil. Upon hearing Velez’s vision for Nubank, Olivier reflected, “I recognized two possibilities: continuing on a predictable career path with assured success, or embracing a significant risk with the potential for substantial rewards.” He likened the choice to selecting a clear, yet ultimately unproductive route, versus forging a new path that demanded continuous effort.

He recalls, “I transitioned from banking to a position offering one-fifth of my previous salary, accompanied by approximately $5,000 in equity.” This decision, he admits, lacked financial rationale, necessitating a strong conviction in the company’s potential for significant growth.

Currently serving as VP of operations and platforms at Nubank, Olivier remembers the shift from working in a prestigious São Paulo building to a modest, rented house that functioned as the company’s initial headquarters.

Wible resided upstairs without rental costs, and Velez continued to expand the team. Soon, the house accommodated 30 employees sharing a single bathroom, all dedicated to bringing the company’s first product to market within eight months.

Initially, Velez requested Olivier to contribute to coding efforts, leveraging his computer science degree from Duke University and existing foundational knowledge, despite his background in finance. Alongside Olivier, Wible, and a small team of other engineers, the development process commenced.

Velez still faced the challenge of identifying a leader capable of unlocking the Brazilian market for Nubank. This individual proved to be Cristina Junquiera, a Brazilian engineer who transitioned into business roles, most recently serving as a credit card portfolio manager at Itaúcard.

Junquiera joined Nubank as a co-founder, motivated by a desire to move beyond “facilitating wealth accumulation for the affluent.” As detailed in part 2 of this EC-1, she would spearhead Nubank’s expansion within Brazil, striving to deliver a customer experience comparable to that of Disney World.