Be fundamentally different, not incrementally better | Jag Duggal (Nubank, Facebook, Google)

Jag Duggal is chief product officer at Nubank, a decacorn neobank founded in Brazil. It’s valued at over $30 billion, is bigger than Coinbase, Robinhood, Affirm, and SoFi combined, has 100 million customers (more than Bank of America!) while only operating in three countries in Latin America, and 80% to 90% of its growth comes through word of mouth. Prior to Nubank, Jag was a director of product management at Facebook, a senior vice president at Quantcast, and a product leader at Google. In our conversation, we discuss: • How Nubank builds a fanatical user base • Tactics for driving word-of-mouth growth • Measuring customer love through the Sean Ellis score • The importance of strategic clarity • The role of category design in creating successful products • Why companies should strive to be “fundamentally different,” not “incrementally better” • Nubank’s vision for an AI-powered banking future — Brought to you by: • WorkOS—Modern identity platform for B2B SaaS, free up to 1 million MAUs: https://workos.com/lenny • Mercury—The powerful and intuitive way for ambitious companies to bank: https://mercury.com/ • OneSchema—Import CSV data 10x faster: https://oneschema.co/lenny Find the transcript and references at: https://www.lennysnewsletter.com/p/be-fundamentally-different-jag-duggal Where to find Jag Duggal: • LinkedIn: https://www.linkedin.com/in/jagduggal/ Where to find Lenny: • Newsletter: https://www.lennysnewsletter.com • X: https://twitter.com/lennysan • LinkedIn: https://www.linkedin.com/in/lennyrachitsky/ In this episode, we cover: (00:00) Jag’s background (04:34) Nubank’s remarkable achievements (06:01) Nubank’s product development process (11:23) Nubank’s values (12:16) Building products people love fanatically (15:21) The Sean Ellis score (21:27) An example project using the Sean Ellis score (25:07) Picking up the phone and calling customers (28:20) The importance of starting small and iterating (30:42) Pushing back effectively (34:10) Uncovering pain points through customer research (37:53) An example of setting a clear hypothesis (43:11) Developing a strategy (52:16) “Be fundamentally different, not incrementally better” (53:10) Category design (57:37) Nubank’s founding story and goals for the future (01:00:46) Advice for adding new product lines (01:03:46) The future of fintech and banking (01:09:23) AI corner (01:12:34) Failure corner (01:20:24) Key takeaways (01:22:11) Lightning round Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email [email protected]. Lenny may be an investor in the companies discussed.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Lenny Rachitsky?

  Nubank is bigger than Coinbase, Robinhood, Affirm, SoFi and Lemonade combined. Eighty to ninety percent of Nubank's growth is through word of mouth.

• 0:10Speaker 01

  We're not trying to be incrementally better. We are trying to be fundamentally different. We want our customers to love us fanatically.

• 0:17Lenny Rachitsky?

  It feels like Nubank is one of the historically most successful companies of launching new business lines.

• 0:22Speaker 01

  We built a lending product. We built an investments product. We built an insurance product. We built a series of small business products. We rarely scale a project until we know the Shawn Ellis score hit the threshold that we find really compelling.

• 0:35Lenny Rachitsky?

  I want to talk about strategy.

• 0:36Speaker 01

  Kevin Systrom, in the early days of Instagram, I heard him say it at a conference. "We may not be right, but at least we are clear. Even if your strategy isn't right, you have a very clear idea of what was supposed to be happening."

• 0:49Lenny Rachitsky?

  Where do you think all this goes in the future?

• 0:51Speaker 01

  Why not have the company that reinvents banking come out of Sao Paulo, Mexico City, Bogota?

• 1:01Lenny Rachitsky?

  Today, my guest is Jag Dugle. Jag is Chief Product Officer at NewBank, which is one of the most under-the-radar monster businesses that you'll ever come across with a fanatical user base and a really unique approach to building product. Before NewBank, Jag was Director of Product Management at Facebook, leading monetization of video and third-party content, including news, gaming and influencer content. Prior to Facebook, he was Senior Vice President of Product and Strategy at Quantcast and Group Product Manager and Head of Strategy for Display Ads at Google, which was Google's second-largest business at the time. In our conversation, we cover how to build products that people become fanatical about, how to develop a strategy, category design, product line expansion, the future of fintech and tons more.

• 1:47Lenny Rachitsky?

  With that, I bring you Jag Dugle after a short word from our sponsors. And if you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcasting app or YouTube. It's the best way to avoid missing future episodes and it helps the podcast tremendously.

• 2:03Lenny Rachitsky?

  This episode is brought to you by WorkOS. If you're building a SaaS app, at some point, your customers will start asking for enterprise features like SAML authentication and SCIM provisioning. That's where WorkOS comes in, making it fast and painless to add enterprise features to your app. Their APIs are easy to understand so that you can ship quickly and get back to building other features. Today, hundreds of companies are already powered by WorkOS, including ones you probably know, like Vercel, Webflow, and Loom. WorkOS also recently acquired Warrant, the fine-grained authorization service. Warrant's product is based on a groundbreaking authorization system called Zanzibar, which was originally designed for Google to power Google Docs and YouTube.

• 2:49Lenny Rachitsky?

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• 3:20Lenny Rachitsky?

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• 4:04Lenny Rachitsky?

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• 4:34Lenny Rachitsky?

  Jag, thank you so much for being here. Welcome to the podcast.

• 4:38Speaker 01

  Lenny, I'm honored to be here. A big fan of the show and look forward to the conversation. So thanks for having me.

• 4:44Lenny Rachitsky?

  I'm even more honored. Thank you for being here. I want to start by sharing just some facts about Nubank that I think are gonna blow people's minds. I think a lot of people in the US especially are sleeping on Nubank. And I think this is gonna help people that are listening pay even more attention to the stuff we're gonna talk about and the lessons we're gonna share. So, one, Nubank is bigger than Coinbase, Robinhood, Affirm, SoFi, and Lemonade combined. Eighty to ninety percent of Nubank's growth is through word of mouth. Three, Nubank has more customers than Bank of America, which is one of the four big banks in the US, while also only operating in three countries in Latin America.

• 5:29Speaker 01

  That's right.

• 5:30Lenny Rachitsky?

  And then also, you guys held the Guinness World Record for the world's largest simultaneous unboxing for a credit card that you launched at some point, although I think somebody beat that record. Is that accurate?

• 5:42Speaker 01

  I believe that is, that is correct. We recently set a new world record for the first underwater credit card transaction. So we're always looking for some fun, some fun things to do there.

• 5:54Lenny Rachitsky?

  I like that that's a record no one can break because it was the first one. That's a sneaky way to get a record. That's hilarious. So my sense is the reason that Nubank thrived and made it is there's this obsession with building a product that customers are fanatical about. The stat that I shared of eighty to ninety percent of growth is word of mouth. And this, this idea of growing through word of mouth in this way is the dream of every company, whether your consumer business, B2B, a bank especially, it's very unlikely that you grow at this rate through word of mouth. So I want to try to help people learn from what you guys have figured out about how to drive such massive word of mouth growth. And maybe just to start from the product perspective, how do you build a product team and a product development process

• 6:37Lenny Rachitsky?

  that enables you to build a product that people get fanatical about and just want to tell other friends about?

• 6:43Speaker 01

  Yeah, I think there are a few things that are the fundamentals of making that happen. And to be clear, a lot of this predates my joining the company about a little short of five years ago. But I think is an incredible story and is part of what inspired me to join. But first, I would say, really think hard and tap into a very deep pain point. The large incumbent Brazilian banks were amongst the most profitable in the world. They were also amongst the most hated in the world. And my personal experience with that is early in my career, 20 years earlier in the late 90s. I had done a consulting project in Sao Paulo.

• 7:29Speaker 01

  And I remember walking to lunch one day with the client, who was a friend of mine. And we were going to classic Churrascaria in Sao Paulo. And we were walking by his bank branch. And we were at a stoplight and he basically said, that's my bank and I hate them. It's 1997 and it always stuck in my head. It stuck in my head for 20 years later when, you know, David first reached out to me. So we were tapping into a deep pain point. We can go into exactly why, but that was, I think, one thing. The second thing that I would say, and this is very intentional from David and Ed and Chris, our founders, is

• 8:10Speaker 01

  we have a culture at New Bank, which is the most alive in our employees' minds that I've ever experienced. Having worked at Google and Facebook and other places like that. I would bet that probably 80 to 90% of our employees could recite the five values to you if you stopped them in the hall. It's not just on the wall somewhere. And the first of those values is a very peculiar phrase, set of words strung together. We want our customers to love us fanatically.

• 8:45Speaker 01

  And I remember when I interviewed at New Bank for the first time and actually flew down to Sao Paulo. I remember seeing that phrase and thinking, these are my guys. These guys are taking this seriously. And a lot of my interview process from my side was really vetting if that was real or if that was a sign on the wall. So I think you start with the intent that you are going to make your customers love you. And there are a million reasons, operational, convenience,

• 9:16Speaker 01

  short-term financial viability, which is a real thing when you're a venture-funded startup.

• 9:25Speaker 01

  And number of reasons why you can compromise those things on the edges in a decision, sort of day-to-day, minute-to-minute. Ah, we can cut the edges, cut the corner here on that.

• 9:37Speaker 01

  And look, I don't think we have been perfect on that, but we try very hard. And when, when there are hard decisions to be made, we bias in favor of the customer, the customers love, will they want to tell their friends and neighbors and family about it? And so I think that's the heart of it. Once you get those things right, the deep pain point and a culture that is maniacal about making your customers fanatical, then you start to do the tradecraft of product development. You make sure that you focus on customer discovery before you start building. You make sure that that discovery

• 10:21Speaker 01

  is focused, not simply on asking the customer, but on innovating on their behalf. You make sure that you take techniques from all over the place, from Procter and Gamble to Google to you name it. Of maybe you can't ask the customer to tell you what massive new innovation they would love. You've got to observe them and find their pain points, even when they aren't noticing it.

• 10:49Speaker 01

  And then you you build, as you build, you you commit to measuring whether they in fact love the product, not fooling yourself about that, and iterating like crazy over and over and over again until you get it just right. So those are some of the principles. But I think the tradecraft follows the the focus on finding a real deeply held, emotionally held pain point, and a culture that says that's your north star.

• 11:23Lenny Rachitsky?

  Amazing. There's so many threads there I'm gonna follow. First of all, I want to go back to the values. You said there's five. You mentioned one. Can you just quickly share the rest?

• 11:30Speaker 01

  You know, the five, I'll I'll mention them in the the order that that, you know, most resonate with me. First, we want our customers to love us fanatically. Second, we are hungry and we challenge the status quo. Third, we build strong and diverse teams. Fourth, we pursue smart efficiency. And one that is that is in many ways underlying all of it is we think and act like owners, not renters. We do what is right even when no one is telling us to do it. And we have many instances of of our employees sort of taking that degree of extreme ownership as they build products and get them launched.

• 12:16Lenny Rachitsky?

  Okay. And then going back to this idea of building products, people love fanatically. You talked about how there's this, the number one principle, and it's gonna be on everyone's minds when they're building is like, build products, people love fanatically, talked about you index towards if you had to make a decision, we're gonna do something people love. Is there anything more you could share about just how you operationalize this? For example, is there like designer views or just like you come in or your head of design comes in like, is this helping customers love us fanatically? Like, what what's in the systems and processes of how you operate that allows you to build that other than just cool? Everyone has to remember this. This is what we're trying to do.

• 12:52Speaker 01

  Yeah, we do a few, we do a few things. And again, I don't want to also overstate that, you know, we've achieved some kind of Nirvana. We we honored many of these things in the breach sometimes. But we we have a a series of of techniques that we've, you know, beg, borrowed, stolen from other places, some of which we've invented on our own. But some examples, we love.

• 13:18Speaker 01

  The Amazon Mock Press Release Technique. Explain to me, before we've put a single engineer on the project. Not explain to me, actually. Explain to the intended customer why they should care. Because if you can't tell me in two paragraphs why the customer you're building this for should care, then there's still work to do. So that's one technique. We do have product and design reviews several times a week, where we're asking ourselves that question. Why is this great for the customer? Why is this fundamentally different for the customer? How does this redefine the category that we are thinking about?

• 14:00Speaker 01

  On the dimensions of quality, on the dimensions of complexity, on the dimensions of price, and usually on the dimensions of all three of those at the same time, and breaking some of the trade-off constraints that you often wrestle with, and seeing if that's possible. Which isn't always possible, but we frequently reach for that and sometimes find it. And then there are the things you do after you've built and launched a product, whether it's alpha, beta, or a later stage. The measurement stuff.

• 14:34Speaker 01

  And some of your previous guests have talked about product-market fit and how do you measure? We, actually, it's strange because, you know, I was sitting here in Silicon Valley for, you know, well over a decade. I land in Sao Paulo when I first joined Ubank, and the small product team at the time was telling me about this thing called Shawn Ellis Score. And we recently had Shawn visit us in Sao Paulo and talk to all of the product managers and designers. But we are amongst the most fanatical followers of his methodology anywhere in the world. We rarely scale a project. A product we've launched until we know the Sean Ellis score and we know that it's

• 15:19Speaker 01

  hit the threshold that we find really compelling.

• 15:21Lenny Rachitsky?

  Can you describe the actual score and the approach?

• 15:24Speaker 01

  Yeah, the Sean Ellis score is a really simple methodology used by lots of, lots and lots of companies that a gentleman named Sean Ellis popularized well over a decade ago, which basically asks your customers at each stage and at each stage you have a small number of customers, then a larger group and growing over time, but at each stage you ask them, um, how disappointed would you be if this product went away? And what Sean has said is that if at least forty percent of your customers are not very disappointed, not just a little disappointed, but very disappointed, he has sort of essentially a three-point scale, uh, not disappointed, somewhat disappointed, very disappointed.

• 16:09Speaker 01

  If at least forty percent are not very disappointed, you haven't reached product market fit. Now, we've had to do some things in New Bank. Brazilians are a culturally happier group than the global average. So for us, our threshold isn't forty percent. We've generally moved it up to fifty percent. I don't believe we have product market fit unless fifty percent of Brazilians are telling us they, they would be very disappointed because Brazilians are inherently polite. Um, uh, more, more polite and more optimistic than average. So we make our own little tweaks and adjustments, but we find that to be very, uh, very helpful. As a company, this extends beyond product.

• 16:48Speaker 01

  We are addicted to our NPS score and we reach for world beating net promoter scores as a company and product vertical by product vertical as well. And we, we are maniacal about tracking how we do. And again, we, we.

• 17:08Speaker 01

  We compensate for some cultural biases and we make sure that we hold ourselves to a high bar. But there have been, for example, in Mexico, we've recorded an NPS when we when we launched first couple of years of ninety-four, ninety-five, right?

• 17:21Lenny Rachitsky?

  That's absurd. I've never heard of that.

• 17:23Speaker 01

  Yeah, which is way better than we got in Brazil, but our NPS scores skew in the seventies, eighties and occasionally nineties. And when they dip down even one or two points, like, that's a reason for alarm. And we we try to figure out why and we try to make sure that we we make the iterations. So those are the things we build in. Those are the things we build in.

• 17:44Lenny Rachitsky?

  I'm glad you got into this. I was gonna get into how you measure this stuff. So what it sounds like is the Shawn Ellis survey is used kind of as you iterate and kind of launch towards launch, and then NPS is maybe post-launch to see how people like the product.

• 18:00Speaker 01

  NPS is post-launch. We also look at metrics like churn to make sure that we're not building a leaky bucket. And that's part of this viral customer acquisition loop that we've built. We want to make sure we're building products that are great enough that our customers will tell their friends and we don't have to invest as much in marketing to drive our growth. And that only works if the customers you get, you retain. I have built earlier in my career products that have leaky buckets. And that's a very frustrating treadmill to be on. So so I am personally maniacal about making sure that the bucket doesn't have a hole in the bottom.

• 18:41Lenny Rachitsky?

  So on this Shawn Ellis piece, which is really interesting, because I think it's something a lot of people can adopt if they're trying to build products people love and also that succeed. Is this like a goal for every project? And like, I don't know, the strategy or the one pager, it's like, or is it just implied? Okay, we're not gonna, we're not gonna move past this gate if fifty percent, less than fifty percent of people are not very disappointed. Is that how it's kind of operationalized?

• 19:04Speaker 01

  Yeah, we basically operationalize it. We don't have it as a hard and fast rule that is, you know, in black and white. But essentially, that's the question people know they're going to get in any product review. That's a post-launch, you know, post-data kind of product review is what's the Shawn Ellis score? How do you know that customers love it? Not just, not just like it, but love it to the degree that they're going to tell their friends about it. That's, that's pretty baked in culturally at this point.

• 19:29Lenny Rachitsky?

  This is an incredible insight, and I think it explains a lot of the success you guys have had, because that's a very high bar. Like, many people run the survey and getting, getting it to pass like 20% is very hard. Like, very, like, you have to be very disappointed if this new product they've never used goes away. That's a high bar, right? Most people are like, ah, whatever. I don't need this thing. And you're saying you look for 50% of people feeling very disappointed if this new thing they've never used before goes away.

• 19:58Speaker 01

  Yeah, that's right. There are several sort of on the newer, newer side of products that we're launching now. We're at borderline 50. And my push to the team is, what are the three, four, five things you need to build to really get decisively beyond, beyond 50? And what are the, what are the segments or cohorts where it is above 50? And what is that telling us versus the cohorts where it's, you know, lower than that? So we, we put a lot of analytical effort and a lot of depth of thinking to, you know, we were, we were in a product review several years ago, and our lead designer, um, uh, who's ex-Google, ex-Facebook, um, we, we were in a review together and, and the team was saying, we think this is good enough for

• 20:41Speaker 01

  launch. And he used the phrase, which both, uh, Christian, Cara, one of our co-founders, and I have now adopted, which is good enough isn't good enough. Is it great enough? Is it great enough? Because that's the bar, particularly for some of our 10-pull products, but, but we try to apply it largely across the board. A lot of companies, not just in Brazil or LatAm, but everywhere, spend a ton of money on marketing. Their VC budgets, VC funding basically goes to Google and Facebook. And I've spent a lot of my career taking that money on board for Google and Facebook. But it is a much better scenario if that's a small portion of what you're doing, and the main portion of what you're doing is actually investing in making the product great, that you don't have to do that.

• 21:27Lenny Rachitsky?

  Is there an example of a project that comes to mind that was kind of below that bar, and then you pushed it above, where you're like, here's the thing we were missing?

• 21:35Speaker 01

  Yeah, I'll give you one that we're wrestling with right now. We have a product called Assistência de Pagamentos, a payments assistant.

• 21:43Speaker 01

  Paying bills, it's right now only launched in Brazil. We haven't yet launched it in Mexico and Colombia. Paying bills in Brazil is quite complex. There are four different ways, four different payment rails. Different payments have to, you know, that are different payments use. From the mobile payment system that has exploded in Brazil the last three years called PICS. That's become fairly world famous in the fintech world. To more standard and some more archaic rails as well. So if you're a customer, you've got to keep track of your bills like we all do. You've got to keep track of which rail. You've got to collect your bills. You've got to make sure they are, that you pay them. And some of the rails actually aren't that reliable.

• 22:28Speaker 01

  So you've paid it, it doesn't go through.

• 22:32Speaker 01

  And the consequences for not paying a bill is getting reported to the credit bureau and becoming what is called negativado, having a negative mark on your credit report. And that can be a big deal for the average customer. And so this was a real deep pain point. And as we launched the product in a, you know, Reid Hoffman style, you know, if you, if you are not embarrassed by V1, you've waited too long. As we, as we've done that last year, we found that a very interesting pattern. We had a decent Shawn Ellis score, borderline 40. I forget the exact number, but basically in that ballpark.

• 23:13Speaker 01

  But we found that customers who had, there was a small cohort of a customer base who had more than four plus commitments registered. And even more so within that small cohort, an even smaller bozai cohort, who had more than four commitments on at least two of the four rails. And their Shawn Ellis score hits 70.

• 23:39Lenny Rachitsky?

  Oh, wow.

• 23:40Speaker 01

  And we're like, okay, the key is we need to consolidate across these rails, not have them one by one. And we need to make it easy for customers to onboard multiple bills across multiple rails. And, and, and then the automation takes over and people see the real benefit. Because there are ways, on the surface, if you said to the average person, anywhere, you know, any sort of developed country, we're going to auto, you know, we're going to have a bill auto pay, that's, on the face of it, not necessarily exciting. But if you build it right, it is actually a fundamentally different experience rather than incrementally better experience.

• 24:23Speaker 01

  And, uh, and that's what we've done. We've systematically made dozens of iterations on the product to allow customers to, in one go, do multiple bills across multiple rails and make that tiny bullseye cohort that we had, segment that we had, a larger and larger proportion of the customers who are trying. And, uh, and, and by the way, that's a journey still underway. We have a whole roadmap for the next year of, of lots of small quality adjustments that we're gonna, gonna make. And we're seeing some great feedback. We're now over 10 million monthly actives on that product when we were struggling in the hundreds of thousands about 15 months ago.

• 25:07Lenny Rachitsky?

  That is a really interesting insight there of just using the score and survey to narrow in on who actually loves this the most and see if there's something there. Is that something that you generally do or is that just like, oh, wow, that was, came up in this exam?

• 25:20Speaker 01

  We, we do that fairly frequently. When we did our, we have a, a high income rewards credit card, we, it's called Ultravioleta. We went through a similar process where at launch, there were many different customer segments.

• 25:35Speaker 01

  But there was one that really loved the product. And it was not surprising. There were the ones that the where the customers spent enough each month that they got the fee waiver. And then all of the other benefits that we had built in really resonated. Whereas if you're paying the monthly fee, those other benefits were were not quite as exciting or didn't quite compensate. So we've done this several times and we've started recently combining it with trying to get very agile in getting that feedback from that bullseye segment. So we've told many of our product managers and designers over the last two years, don't worry about surveying a thousand customers, taking three weeks, surveying a thousand customers,

• 26:19Speaker 01

  getting a bunch of cross tabs, or even at the end of which it's very hard to read the real fine-grained customer feedback. So we just tell them, call 10 of them. Pick up the phone yourself. Don't have, ask a researcher to come up with a plan, to go do the research, to then summarize it, to then bring it to you, which has so many degrees of distance built in. You pick up the phone, call 10 of them. And nine times out of 10, by the time you've made your fifth call, you can predict what's customer six, seven, eight, nine, and 10 are going to tell you. And then you know what it is that is the gap or what it is that is truly resonating that you want to double down on. So we're constantly trying to iterate in small ways,

• 27:04Speaker 01

  the ways to get really that voice of the customer straight line in to the people who are building the product.

• 27:11Lenny Rachitsky?

  I love this advice. I imagine as a PM, that is extremely scary to go call a customer. Most people don't do that. By the way, do you actually, operationally, is it actually a call? Or do you recommend the email? What do you actually recommend they do?

• 27:23Speaker 01

  We literally pick up the phone.

• 27:25Lenny Rachitsky?

  Okay.

• 27:26Speaker 01

  Pick up the phone. Because you can get tone of voice. You know, Brazilians and Mexicans are incredibly expressive. There is, there is a degree of real fine-grained sense that the statistics never tell you.

• 27:43Lenny Rachitsky?

  Yeah.

• 27:44Speaker 01

  And it's very aligned with, you know, design thinking. And there's a lot of literature around how this works well.

• 27:52Speaker 01

  And I wouldn't say we're doing it especially to the best practice scientific. We're just like, just make the call, make it as simple as unobtrusive with as little overhead as possible to make sure the voice of the customer is coming directly into the teams that are building.

• 28:09Lenny Rachitsky?

  Jeff Bezos had this quote on his Lex Friedman podcast where if you're, if you have data and you have an anecdote, usually the anecdote is right.

• 28:16Speaker 01

  I love that. That's, that sounds exactly right to me.

• 28:20Lenny Rachitsky?

  To make it even more tactical for the surveys you run, is there any tool you find? Like, how do you actually collect this data? Is there anything interesting there you could share of just like how to operationalize collecting this data?

• 28:30Speaker 01

  You know, we've, we've used a series of tools, many of this, the, the main survey vendor tools, we still use many of them, but we don't standardize or find one that dramatically changes our life beyond the mindset of we are going to make sure that this product has product market fit before we scale it. One of the things I've seen throughout my career as a product manager and, and, and CPO, we live with it today at New Bank every, every month, is the pressure on the line product manager to scale the product that the entire company, the entire executive team, the entire management chain has been counting on. We're

• 29:14Speaker 01

  launching this thing, así se está haciendo, pagamentos. We all want it to scale. We all are very excited about it. We had the product review six months ago and we thought this is going to be amazing. And the pressure on that product manager to scale a product is immense. And the job of the product manager in many instances is to say no. And you know, one of the things I try to say frequently within the walls of New Bank is we are not going to take a small problem and scale it because if we do that, we end up with a big mess. Something isn't working at small scale, no problem, especially if we have a strong hypothesis and a lot of ways of getting good customer feedback. We iterate, we iterate, we iterate, we get it right.

• 29:59Speaker 01

  And then, once we get it right, scaling, if you do it right, in many cases, takes care of itself because the customer is now excitedly telling their friends. Whereas you can pour a lot of money and a lot of effort. And when you have a big app like New Bank or places like Google or Facebook, you can make any product look great for months, if not years, because you have such a large customer base. You can always get them to try it with all sorts of basic techniques. But you're bouncing a dead cat. And then you've got a real big mess to untangle when the thing is much, much larger. So we try to be pretty disciplined about that. And that's a lot of what the Sean Ellis does is to bring science to some of that art of making that judgment call.

• 30:42Lenny Rachitsky?

  This point you made about it's the PM's job to push back and stop bad things from happening, I think is such an important one. A lot of PMs are just told here, build this thing. And they kind of know this is not going to work. This is a bad idea. But either they don't think they should be pushing back or they are not good at it.

• 31:00Lenny Rachitsky?

  From the PMs you've worked with that are good at convincing and pushing back, like we should not do this yet. Do you have any tactics or ways of communicating that you found effective for pushing back to, like you said, all this pressure that's coming down on them?

• 31:14Speaker 01

  One of the things I've learned, you know, relatively later in my career, I wish I'd learned it, you know, decade earlier, decades earlier even, is how important culture is. And I talked about the five cultural tenets. But this idea of we are owners, not renters. You're an owner of that product as the product manager or the lead engineer or the lead designer, or in fact, anyone on the team.

• 31:39Speaker 01

  If you really don't think it's going to work, don't tell me what I want to hear. Incumbent on you, it's expected of you as an owner to tell me the bad news and tell it to me early, even when it's convenient, even when there's a promotion at stake. You know, these dynamics get very real, very quickly. Then look, I don't think it's going to work and here's why. Or it's not working and here's why. Or we should kill it and here's why. The second thing I would say is

• 32:10Speaker 01

  Senior leaders at companies that have gone, especially startups that have scaled well, you usually have people who have been in that boat, who have seen products that weren't working, who have killed them, or pivoted them pretty dramatically. And there's a lot of respect for someone who has a real clarity of thought and brings a high bar and is not simply going with the flow. So I think that's the main thing is bringing that ownership mindset. And the second is bringing clarity and bringing data and understanding that

• 32:48Speaker 01

  most senior executives in whichever company are strong willed and bring strong opinions.

• 32:57Speaker 01

  That's part of the job description. That's okay. It is your job, whether product or design or engineering or whatever function as a leader, to... If you think you are practicing for one of those senior jobs, it's sort of, let's say, a mid-level, then it doesn't come miraculously when you get a C-suite title. It's something that's going to be practiced and it's something that is expected. And I think that's not a Justin Eubank thing. Certain cultures promote it better than others, but I think it's pretty universally important. And so I would just encourage people to try it.

• 33:39Speaker 01

  Understand the trade-offs, understand the challenge, articulate the other side.

• 33:46Speaker 01

  But if you genuinely believe it's not yet ready to scale your product, at the end of the day, the big mess is a thing you're still going to hold. And we're all going to forget that we told you to scale the thing. We're all going to still blame you at the end of the day. So you might as well bite the bullet earlier, pivot it when it's easier to do.

• 34:07Speaker 01

  And it'll work out better in the end.

• 34:10Lenny Rachitsky?

  I want to come back to one more thread and then I'm going to go in a different direction. You talked a bit about just all about talking to customers, finding innovative ideas, not just listening to what they're telling you. There's this whole skill of user research and interviewing customers and finding the pain point, figure out to build. Do you have any just, I don't know, tips or tactics or lessons you've learned about just how to do this well? How to uncover the pain point and then figure out what to actually build when you're interviewing customers?

• 34:39Speaker 01

  I'll share a couple of thoughts, but I will tell you as a preface that it's, it is arguably the area right now that I still wrestle with. I still think I and we are not doing it as well. I've never seen it done quite as consistently great as it could be.

• 34:59Speaker 01

  And I think it's an area for where like design thinking and a lot of the design function can help us.

• 35:07Speaker 01

  But, but it's very, very, it's one of the areas of greatest inconsistency that I see in product development. Having said that, a couple of things that I see that we sometimes do really well at New Bank and other times we, we, we miss on one dimension or the other. First off, per your, your Jeff Bezos anecdote, the anecdote usually trumps the data. And there are many times when I see teams that are, you know, doing very sophisticated analysis. And they've sort of forgotten what the question is or what the conclusion they can draw from it truly is.

• 35:47Speaker 01

  So never lose sight of the value of the customer's words and the anecdote. That's one. The second

• 35:59Speaker 01

  one that I believe very, very strongly in is I think teams often skip the step of clearly, very, very clearly, working very hard to be super crisp in articulating their hypothesis.

• 36:16Speaker 01

  If you don't have a hypothesis, you're going to spend a lot of time researching, you're going to get a lot of data back, qualitative, anecdotal or quantitative. And you're not going to know what to make of it because it's not either validating or invalidating your hypothesis because there isn't a hypothesis. So it just becomes an interesting conversation.

• 36:34Speaker 01

  The third one is I've got a hypothesis. I've got it really crisp. And now the pitfall is I've fallen in love with my hypothesis. I'm a lawyer for my hypothesis. I'm not a judge of whether the hypothesis is right or not right. So I think that's another common pitfall. I've fallen into that one too many times to count. And then the last thing I would, I would highlight is even when you have a strong hypothesis and you're actually in the mode of doing the research.

• 37:07Speaker 01

  Observe more than ask questions if you can. Ask indirect questions more than direct questions. Would you love this product, right? Excited product manager has been working for two months on a, on a design.

• 37:23Speaker 01

  You're searching for the problem more than the solution. You're, you're, you're searching uh for, you're looking indirectly and asking in more, from multiple directions, the same question, rather than trying to find a yes. They love the thing you've been thinking about and sweating on for a long time. And if you can, observing is better than asking, although that's a tricky, that's a tricky skill. Uh, those are the things that I, that I look for.

• 37:53Lenny Rachitsky?

  With the hypothesis point, just to make sure people understand your suggestion there is before you start talking to customers, doing easy researches as a PM or just anyone on the team, essentially have a perspective on what you think is gonna be true. Is that how you think about it?

• 38:07Speaker 01

  Exactly. Have a point of view on what you think the customer will say that is, that, that will lead them to be really excited about your product.

• 38:17Lenny Rachitsky?

  Hmm.

• 38:18Speaker 01

  That way you will get very clearly, eh, or, or yes, bang the table excitement. And you will know when you're getting that reaction.

• 38:26Lenny Rachitsky?

  Is there an example of that, just to make it even more concrete? Cause I imagine many PMs are kind of feeling like they have to be unbiased and just like, let's see, let's see if this is something we should do. And I don't want to bias anyone against it. Is there, is there a quick example of a hypothesis?

• 38:41Speaker 01

  One of the famous examples that's, that's somewhat hypothesis related and somewhat observation related, um, is the, you know, the invention of the Swiffer from Procter and Gamble, right? The people hate mopping and they, the.

• 38:57Speaker 01

  They will do it and they won't even realize how painful an experience it is because they've just developed the workarounds and they just deal with the burden. But if you observe very granularly what the problems are, then you can, you can, you can see where the problems are. And so bring a strong hypothesis to that this is a real problem, even if customers aren't telling you it's a problem because they've just sort of gotten used to it. So that's one. We have a hypothesis at New Bank, I'll give you one that's live. We have a hypothesis at New Bank that the joint bank account, I was doing some research on this just last week. The joint bank account was invented in the early, it's actually hard to say,

• 39:41Speaker 01

  but, but it was invented depending on where you, what source you believe, in the late 19th or early 20th century. And it was basically invented coincident with the social movement, sort of the women's liberation, social movements before women in the US were legally allowed to vote. Where women were not allowed to open a bank account without their husbands' prior approval. That is the era from which the joint bank account that we still live with today came from. It's 120 to 150 years old. I don't think it's surprising, our hypothesis is it's not surprising that that artifact, that that product

• 40:25Speaker 01

  is not made for the modern customer. That it is easier for me to share a Spotify playlist with my wife or my daughter than it is for me to share a savings goal. Just mechanically. So we're going into a product development cycle that says there is a new social banking arrangement that is not about tweeting and it's not about social very broadly defined. It is about our financial lives are inherently social and it is very hard to share with my spouse, with my kids, with my parents

• 41:09Speaker 01

  who might be helping me pay for my child's education as an example use case. It's a very strong hypothesis. But when you go into the research with the customer, you don't try to sell them. You try to see if they are experiencing pain points. And it becomes very hard when you're in and they say even something a little bit in the direction of what you hope they would say to not be like, jump in with a lot of excitement and then get into more of a sell mode with them. And almost try to sell against your idea, push back against your idea, make the customer sell you in the interaction. And you play the devil's advocate.

• 41:53Speaker 01

  So that those are the kinds of things we, we, um, we search for as, as we build products.

• 42:01Lenny Rachitsky?

  That sounds like a great idea. I believe in this hypothesis. Today's episode is brought to you by Oneschema, the embeddable CSV importer for SaaS. Customers always seem to want to give you their data in the messiest possible CSV file. And building a spreadsheet importer becomes a never-ending sink for your engineering and support resources. You keep adding features to your spreadsheet importer, but customers keep running into issues. Six months later, you're fixing yet another date conversion edge case bug. Most tools aren't built for handling messy data, but Oneschema is. Companies like Scale AI and Pave are using Oneschema to make it fast and easy to launch delightful spreadsheet import experiences. From embeddable CSV import to importing CSVs from an SFTP folder on a recurring basis.

• 42:45Lenny Rachitsky?

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• 43:12Lenny Rachitsky?

  I want to talk about strategy. I know that you have a very strong perspective on how to think about strategy and approach strategy. This is something that everyone always wants to get better at. Every PM is always told, you want to get, build your strategic thinking muscles. And this is really important to your career. I'd love to hear your take and how you approach developing strategy and your advice to folks.

• 43:34Speaker 01

  I will readily admit I bring a bias. I spent almost a decade at the beginning of my career, right after college, working in a strategy consulting firm. Right. So I bring a bias, which is in, to some degree, certainly for the length of time I did it, an unusual background for a product manager. When I first showed up at Google, it took me a couple of years to realize my job was not to produce a nice PowerPoint. It was to ship code and I was doing a poor job of that for at least the first 12 to 18 months. But I think there is almost a countervailing dogma

• 44:12Speaker 01

  in Silicon Valley or in tech companies more generally, that strategy is easy and execution is everything. And I think that's probably because there are a small number of companies that get the strategy right. But the legendary companies that we all know about not only got the strategy right, but then executed it really crisply. What we don't hear about are the companies that got the strategy wrong, never got even into the conversation. And all of their great execution was multiplied by zero. Great execution multiplied by a poor strategy is a waste of everyone's time. And because the strategy isn't clear,

• 44:53Speaker 01

  you can waste a lot of time executing years and years against something that was destined never to work. One of my favorite quotes from the valley was from Kevin Systrom in the early days of Instagram. I heard him say it at a conference. This is pre the Facebook acquisition. He was like, I don't know how old he had just left Google. He was probably, I don't know, 20 some years old. He said, "We may not be right, but at least we are clear." And what I love about that is even if your strategy isn't right, and it will never be exactly right, because no plan ever is. You will have a clearer read on if you are going off course because you kind of have,

• 45:36Speaker 01

  you have a very clear idea of what was supposed to be happening. And so I think being very clear in your strategy is really important. You've had some great guests on the podcast. Richard Rumelt is one of my absolute favorites. He's written a couple of books, one called Good Strategy, Bad Strategy, another more recent one called The Crux, where he, he does a great service to the world by even more than describing what strategy is, focusing at the beginning about what strategy isn't. Strategy isn't an ambitious goal. It's not an aspiration. It's not a set of financial outcomes.

• 46:16Speaker 01

  It is a coherent plan for how you will apply your strengths in a leveraged way against a core important problem. And that's a very, very rough paraphrase of, of the way he thinks about the world. And I find that we often confuse strategy with a vision, a broad idea, a very, very broad, vague aspiration. New Bank's strategy isn't, we want to be the world's largest neo-bank. We do, but that's not an interesting way to dimensionalize the problem.

• 46:54Speaker 01

  In 2014, we had millennial, middle-class, urban Brazilians who hated paying credit card fees and were not able to get credit in the first place because they were too young and without a credit history. And we could offer them not just a lower-priced credit card, but a no-fee credit card, which was an emotional thing. That fee got people angry.

• 47:23Speaker 01

  And we could do that because we were branchless and digital. Now, that is a coherent description of a very specific problem for a very specific set of customers with a very specific solution based on a very specific advantage. By the way, all of this predated my, this has got nothing to do with me, I wasn't there. But that's what I mean, strategy is very specific, it's very detailed, it's very locked in. And working backwards from that, I think, is really, really important. And if you get that strategy right, it informs the minimal set of activities you need to do to get traction and to win. Whereas if you don't have that degree of coherence,

• 48:07Speaker 01

  you're trying to surveil the customers, you maybe we should go to Mexico prematurely. All sorts of things happen and your execution gets very diffuse. And you can't even tell why you're not getting traction across the company. Whereas strategy allows focus and it allows a much more rapid read of whether your focused bets, your concentrated bets are actually working. You've had some investors on your podcast over the years and they will tell you that concentration is what builds wealth. Diversification is what preserves wealth. And you're a startup, you're not trying to preserve anything, you're trying to build something.

• 48:51Speaker 01

  It requires concentrated bets, not hedging. And because you're concentrating bets, those bets are high stakes. You need to be very, very clear on what bets you're making and why you think it's going to succeed.

• 49:04Lenny Rachitsky?

  When you work with PMs on your team and in the past that are trying to get better at this muscle and following this advice that you're sharing of strategy, what do you find most helps them build this muscle? Is it just doing it over and over and over and over? Is it, you know, reading good strategy, bad strategy, practicing it? What do you find is most helpful in helping you build this muscle as a PM?

• 49:24Speaker 01

  One is taking it seriously. It's a little bit like what we talked about with New Bank's culture. First, you gotta want the customer to love you fanatically as something that you value. After that, I think frameworks really help, whether it's good strategy, bad strategy, whether it's play to win from a relatively recent guest of yours, Christopher Lockhead, who I really admire.

• 49:47Speaker 01

  Whether it's where to play, how to win from Roger Martin, which is a phenomenal book. He's coming on the podcast in a few weeks. Is he? He's fantastic. And having those frameworks, all of which, in many ways, if you synthesize them, are getting at the same thing around focus, around a clear understanding of the customer, around not trying to be, in the words that we literally have them on New Bank coffee mugs, we're not trying to be incrementally better, we are trying to be fundamentally different. These are all very similar ideas expressed in slightly different ways. Once you understand the frameworks and you've distilled them, then it's about practicing them, and practicing them is scary.

• 50:31Speaker 01

  Hedging is appealing. Hedging means you don't have to make choices.

• 50:42Speaker 01

  Hedging sounds smart.

• 50:45Speaker 01

  Concentrating all your bets is the thing that desperate people do. And startups are desperate entities because they're burning cash in almost every instance. But successful startups, the ones that become profitable, I'm very wary, having, giving the places I've worked, of the successful company with one or two monster products, and New Bank's now in that fortunate position, that starts to get conservative, that starts to forget that focus, concentration, customer obsession are every bit as important. That even though the company won't go bankrupt if products three, four, five, and six don't succeed

• 51:29Speaker 01

  because products one and two are monster cash flow drivers, that's a slow path to death. And so. Practicing that discipline and having, and I use this word very intentionally, having the courage to make those hard choices and to concentrate the bets is, which goes against, by the way, a lot of what's taught in business school and a lot of PMs or MBAs, is really important. And then it's a matter of you get better the more you do it. And you get more practiced and more grooved and more principled in how you get to a methodology, the more you do it.

• 52:15Lenny Rachitsky?

  Did you say the mugs at New Bank Save be fundamentally different?

• 52:20Speaker 01

  The product team, a little over a year ago, we put together some schwag, which was fundamentally, I have a mantra within the company since roughly the time I joined, which is we're in the business of being fundamentally different, not incrementally better. Again, it goes back to only fundamentally different gets customers to tell their friends. Incrementally better, and by the way, there are certain features, I don't want to overstate the case. There are certain features where you're in the incrementally better business. Not every single thing of a hundred things you launch in a year can be fundamentally different. But we're searching for those anchors that are going to be fundamentally different all the time, around which you build some sustaining innovation as well.

• 53:04Speaker 01

  But we are in the fundamentally different business, not the incrementally better business.

• 53:09Lenny Rachitsky?

  I love that. And that's a great segue to where I wanted to go, which is, I know you're a big fan of category design. You mentioned Christopher Lockhead, former guest. This is actually one of the more common debates on this podcast of, do people believe in we should be creating our own category or should we not? Is that a terrible idea? Is it a good idea? It feels like you're in the campo. This is actually very good and important. I'd love to hear your perspective and also just like how New Bank did this.

• 53:34Speaker 01

  You know, Lenny, literally earlier in this week, I was listening to your podcast with, I believe it's Todd Jackson, ex Gmail product leader and now venture capitalist. And you guys had a very interesting discussion about it. And I think he took largely the other side of the argument, that you go in a category where customers are already spending money. And I think it's hard to argue with that fairly robust logic. I will tell you how I think about it. It forced me to think about where are the nuances in how I believe. I think overall, particularly at a company level, successful companies are typically in the fundamentally different business. They're in the new category business. Google was in the new category business.

• 54:20Speaker 01

  Netflix, Airbnb, you can go down the long list, Salesforce, et cetera, et cetera.

• 54:28Speaker 01

  And that's really important. In New Bank's case, we were the first, and it is actually, it's not that important that we were the first, but we were very intentionally

• 54:41Speaker 01

  trying to build a branchless bank based on the rise of the smartphone in Brazil and Latin America at that time, the sort of rapid inflection. And a branchless bank that could bring, as David likes to say, a bank branch, put a bank branch in your pocket, where at the time, access was the big problem. And that you could do that on a digital cost structure that allowed you to essentially disruptively price across the board was the thing that led to the the massive wave of success, multiplied by unlike almost everywhere else in the world,

• 55:25Speaker 01

  including in the US, where the answer was, we're going to do the bank account first. New Bank's answer was, no, we're going to do credit first. And credit is 10 times harder and 100 times more risky, because you get credit wrong as a young company that doesn't know how to do it yet. You've blown, you've blown everything up. The money's never coming back. Those two, again, concentrated bets defining a new category

• 55:51Speaker 01

  were, I think, the key to our success.

• 55:55Speaker 01

  Now, there are times when you're trying to go into an adjacent market.

• 56:01Speaker 01

  We've recently gone into a market called Consignado in Brazil, which is secured lending for government employees. Very stable job, easier to underwrite against their salary at a much lower interest rate. That's a market that's existed for a couple of decades in Brazil. And our job was to go in there and we believe we built something that is fundamentally different. It wasn't digital. It went through middlemen. We built a D to C and we've been able to price it very, uh, to undercut the pricing pretty dramatically. So even within an established category, we've tried to build a fundamentally different experience.

• 56:43Speaker 01

  But there are also times when, look, it's not quite me too, but the differentiation is a bit more incremental. But at the company level, I think it's absolutely imperative to be designing your own category. So you can then dominate it and defining your own category. And even when you're entering a place where customers are spending money, I think going in with a mindset that says this is going to be a bit better. And I think Todd would probably agree with this, given the way he described it. You should try to be reinventing that category, even if you're not inventing that category.

• 57:17Lenny Rachitsky?

  Amazing. I like, I like this battle we're forming here of people on two sides of this debate. And I'm excited to see where it goes over time. It feels like the, uh, do not create a category side is winning so far in terms of volume. But, uh, there's a lot of passion from this other side.

• 57:34Speaker 01

  I'm happy to be on the contrarian side with.

• 57:36Lenny Rachitsky?

  Okay, there's a few more things I want to touch on, uh, before we wrap up. It feels like New Bank is one of the historically most successful companies of launching new business lines. I think you guys are maybe like 10 years old and how many products slash business lines are there at this point?

• 57:51Speaker 01

  It depends on how you categorize it, but I would, I would say we have roughly. A dozen to twenty four product lines. Okay, that's wild. Our story started as a Brazil, we were a Brazilian credit card model liner in an, in an app and all the rest of it. Around the time, slightly before, but around the time I joined the, the phase two of the company, the mandate of what we were trying to do, which has really been the story of the last five years, was we're going to go from a Brazilian credit card company to a full solution Latin American bank, which meant we launched five new products. We launched a bank account, which allowed us to go from being a secondary banking relationship

• 58:36Speaker 01

  to increasingly a primary banking relationship. About half of our ninety plus million customers are now, uh, we are the primary relationship. We built a lending product. We built an investments product. We built an insurance product. We built a series of small business products. While we were doing that, we were also making the leap to prove, despite a lot of skepticism, that our business model was exportable and not a unique Brazilian phenomenon. So we launched into Mexico and launched into, into Colombia. And now we are starting to take the full suite of products and go beyond credit card in Mexico and Colombia as well. So depending on how you look at that matrix, we are, you know, a dozen plus products and

• 59:20Speaker 01

  we're working on the phase three of our products, which is, um, moving beyond financial services. We've launched a, an e-commerce marketplace within our app, um, which is perhaps a bit counterintuitive if you're coming from the U.S. And we're also envisioning a world where banking is, again, to use the phrase that, that we love at New Bank, fundamentally different than it has, has been in the last hundred years. And we believe that social technologies, self-driving, uh, and AI technologies can build a, a just completely different experience where we're not building a bank branch and putting it in your pocket.

• 1:00:03Speaker 01

  We're building a personal banker, which today, I don't know, ten million people around the world have access to, and you gotta have a lot of money to, to do it. We believe that job can be done.

• 1:00:15Speaker 01

  That we believe that job can be democratized ultimately to all eight billion people on the planet. And we believe it can be done better for those eight billion even than the 10 million are getting today. But that's a lot of that's a lot of work and that's, you know, to use Christopher Lockhead and his co-authors. Language, that's the new category. That we are trying to define over on a global basis.

• 1:00:39Lenny Rachitsky?

  It's gonna be a tiny little banker to fit in your pocket. Tiny little person.

• 1:00:44Speaker 01

  That's it.

• 1:00:45Lenny Rachitsky?

  I want to follow on this thread, but before we get there, so in terms of adding new product lines and business units. Watching how new bank has done this, is there something you've learned about just how to do this well? Like I'm imagining there's a spreadsheet where here's all the things we're gonna do in the future. Here's how we're thinking about all the factors of all new businesses we can launch. Is there anything there you've seen of just like, wow, that's a really smart way of thinking about the sequencing slash where to expand next that you think other folks can learn from?

• 1:01:15Speaker 01

  I wish I could tell you that there was this predestined master plan that was so scientific.

• 1:01:24Speaker 01

  The reality is smart people around the table with a culture of robust debate and real candor about the pros and cons.

• 1:01:36Speaker 01

  Is is sort of how we went about it and a constant reexamination of how things are going, what's going well, what's not going well, what's taking off, what's not yet taking off? Um, what are the principles by which we're making these decisions has been important? Some of these things are obvious. If you're running a bank, a bank account is is probably a good product at some stage. But uh, but a lot of it in terms of sequencing and when we invest where some of it's obvious, you know, where's what's the TAM? And and and and what do where's the customer pain? But a lot of it is art and a lot of that resolution of the art and the debate comes from from a fairly robust debate.

• 1:02:18Speaker 01

  So I'm avoiding your question because I have a terror. I have no good answer.

• 1:02:22Lenny Rachitsky?

  Just a lot of complicated decision making. But I think what's interesting is coming back to your very early lesson is using the gate of is this hitting this 50% of people be very disappointed before launching feels like a key.

• 1:02:35Speaker 01

  Yeah, that's the that's the one thing is we don't scale. We try not to scale big problems and so we try to solve our problems when things are small. Our ultraviolet, our sort of higher income rewards based credit card. We launched, it happened to be, I think it was July 4th, 2021 was the launch date. So it's easy for me to remember. We we started scaling it two to two and a half years later. In the meantime, we were in the lab figuring out where is the product market fit? Why is it not resonating? Oh, it's resonating with these guys. What do they particularly love? Let's iterate there. And now we're at a point in the last six to nine months where we can start scaling aggressively.

• 1:03:20Speaker 01

  Learning some of the credit dynamics that are different and reinventing some of those methodologies. And there's a second phase of scaling that will come. But yeah, we we one form of destruction we don't get into is fixing massive problems that we've overscaled before they were ready. That's a bit of an overstatement, but nothing's quite that clean, but but generally true.

• 1:03:44Lenny Rachitsky?

  Coming back to your thoughts on the future of fintech and in LatAm especially. You chat, you talked about how the vision is essentially a banker in everyone's pocket. Is there anything more there? Just like, where do you think all this goes in the future in terms of fintech banking for people in LatAm and then globally?

• 1:04:04Speaker 01

  Yeah, you know, there are there are a handful of principles. Call them hypotheses that we believe and there are. I should be super clear, unproven hypotheses that will take years for us to prove out. And I'm sure there will be pivots along the way as we learn that things aren't quite the way we would have hoped at the beginning. But first off. The idea that banking should be holistic, that we need to provide a full solution across what we call the the five or six financial seasons of someone's life. Right? We spend, we save, we invest, we borrow, we protect, etc.

• 1:04:47Speaker 01

  And that's a lot of what we've been working on for the last handful of years. So one is, we want to be a full solution bank. Second, something we have started, we have had some real success in on the business side. We've made some mistakes on the technical side that we are iterating through is we are trying to build, and some might argue this is, I'm overstating a bit, but, but just to be clear, we are trying to build what we believe is the first global bank on a single code base.

• 1:05:20Speaker 01

  I come from a world, places like Google and Facebook. Google, my first product management experience. I was not allowed to launch unless my product was ready for 40 countries and 40 languages. I believe language number 40 was Finnish. So we were always making sure the thing worked in Finnish.

• 1:05:42Speaker 01

  And there are good reasons why ad, you know, global online advertising worked that way and was a great principle by Google. When you get into fintech and into banking, where the regulations are very local, where the stakes are much higher than that you serve the right 300 by 250 ad, there, there is a lot of pushback on that kind of, we're just going to scale this everywhere, sort of mindset. And so, how do you marry those two things? There are global banks like Citi or Santander. A lot of them have been built up through acquisition. A lot of them are on distinct code bases and technology infrastructures. We believe there's a lot of leverage

• 1:06:25Speaker 01

  if you can build a global bank on a single code base. That's another principle that we are trying to make real. The third is that social

• 1:06:40Speaker 01

  Mechanics around your financial life, not in general, not another WhatsApp, not another Twitter, and self-driving automation. Why do I have to remember to pay this bill every month? Why do I have to remember to save for my child's university education every month? Why can't I keep my life goals really well organized? Which is almost impossible to do. My wife and I open up different bank accounts at different banks just to try to do that job, which is talk about customer workarounds.

• 1:07:17Speaker 01

  How do we make the life, the life cycle of managing your financial life exponentially easier leveraging these technologies and then using AI, which is an overhyped term right now, but AI to sort of turbo boost these, these, uh, these tasks? We have a phrase we started using at New Bank, which I really like, that David first, first introduced it. Customers everywhere around the world live harshly unoptimized financial lives. I think that's true, regardless of income level, regardless of geography, regardless

• 1:07:59Speaker 01

  of sort of life stage of where people are at. If you have a young child, it is very hard to keep track of all the things you should be doing. You should be hoping your savings are kind of a specific kindness, tax advantage in this way. These are, these are, these are imminent. These are problems that should be solved and should be solved soon and can be automated and can be where insights can be brought to bear for customers who are not super sophisticated in their level of financial education, which by the way is almost all of us. Some of the people who think they're the most sophisticated are the ones who burn the most money in casinos that they call the market.

• 1:08:39Speaker 01

  And so, uh, so these are some of the principles around which we are envisioning the next phase. What if there were someone right next to you who could tell you what the smart move was to make today at this life stage? You've just had a child, you've just gotten married, you've just bought a house, you just want to remodel, whatever it might be. We think the technology is there or thereabouts to be able to do that. Why not have the company that reinvents banking come out of Sao Paulo, Mexico City, Bogota? Why does it have to come out of San Francisco, New York, or London? We see no reason why it can't, it can't be us. So we're going to give it a whirl.

• 1:09:22Lenny Rachitsky?

  Amazing. I love all of this. I can't wait for this to be real. You mentioned AI, so I just have a couple more questions. You mentioned AI. We have a recurring segment on the podcast called AI Corner. So let's walk over to AI Corner.

• 1:09:34Speaker 01

  All right.

• 1:09:35Lenny Rachitsky?

  Usually I ask how you use AI in your day to day and your team, just like what are the tools and things you find useful to help your team operate with AI and tooling? But I'm also curious just how you're integrating AI into the product. You mentioned this a little bit, but just how AI is going to supercharge the stuff that you're building.

• 1:09:51Speaker 01

  We use some of the, the tools that everyone is, is using these days. Um, you know, our, our, you know, uh, ringfest, ring fenced version of, of chat GPT and, and some of the standard tools. We're using them in some of the obvious initial wave ways. How can we improve our customer experience? If you're fanatical about customers, you're fanatical about customer experience and new bank has always been that way. How can we make it even better while we're also making it more efficient? So we're doing all of those things as part of our coming up the learning curve in the last 18 or, or, or so, so months.

• 1:10:34Speaker 01

  And then we're starting to think about what are the ways in which we can build AI native products? And I will not pretend to you that we've cracked that code, but a former boss of mine spoke, spoke a while ago, um, Fiji Simo, who's now the CEO of Instacart, but she was talking about the evolution when she was the product lead for Facebook ads back when the big migration from the desktop to mobile was happening. And she talked about we needed to become mobile native. And by analogy,

• 1:11:15Speaker 01

  Companies today need to figure out what does AI native mean? Not how do we append AI at the corners of the product? But how do we build it at the heart? What would you design if these tools existed from the start? I mean, Facebook's migration to mobile is a phenomenal example of that pivot. And they like to joke, and I wasn't there at Facebook at the time, but they like to joke at Facebook, even seven, eight years later when I joined, about the company had IPO'd and needed to find a business model. And Fiji was sort of responsible for making that happen. And the core of it was bringing this mobile native mindset. So we are trying to think through what is an AI native mindset?

• 1:11:58Speaker 01

  In financial services, what would that look like? And that requires analysis as much as analogy. And we are very much in the middle of that process. And we don't know all of the answers. The metaphor of a what if everyone in the world, regardless of their income or wealth, had a private banker sat next to them that they could turn to whenever they needed to? Is a good metaphor. And so we are using that metaphor and seeing where it takes us.

• 1:12:33Lenny Rachitsky?

  Let's now move on to a different corner, failure corner. This is another recurring segment on the podcast. Is there a story you could share of a time in your career where you failed? Where something went wrong, ideally really wrong? And how that impacted and helped you in your career? Kind of a lesson you learned from that experience?

• 1:12:53Speaker 01

  There's a pretty seminal story for my career that ultimately ended in failure and that I had to sort of rebuild from. I had done strategy consulting for just shy of 10 years. I decided I was going to go to grad school. I was going to pivot my career into public policy and politics. I was at the Kennedy School of Government at Harvard. And a year into that, a friend of mine had had his, the startup he was working at, get acquired by Google.

• 1:13:32Speaker 01

  This company was premised on the idea that you could bring AdWords, AdSense-style advertising to the terrestrial radio market. And Google, one of Google's, perhaps the largest, biggest diversification bet Google was working on at the time, beyond search and display, which were up and running, was let's go disrupt TV, radio and print. 2006.

• 1:13:58Speaker 01

  My friend convinced me

• 1:14:02Speaker 01

  to drop out of grad school, both the Kennedy School and Business School. I'd done a year of the Kennedy School, I was one credit short. And in Business School, I had done a week of. And move

• 1:14:16Speaker 01

  out here to California and join Google.

• 1:14:20Speaker 01

  First off, the premise of the hypothesis proved to be wrong, or at least harder than we thought. And

• 1:14:34Speaker 01

  in the following way. Terrestrial radio or frat matter TV advertising, broadcast media advertising works very differently. It serves actually a different market. It serves brand advertising, top of funnel kinds of goals, as opposed to the bottom funnel that Google really knew well back then. So that was one piece. There were all sorts of technical methodologies, like reach and frequency, that are really important, that we simply didn't know about. We were determined to run an auction. We have patents to our name to this day that were, how do we bring auction methodologies to work in a broadcast medium? Some very interesting technology.

• 1:15:19Speaker 01

  At the end of the day, one of the things that you really needed was a surplus of inventory, of ad inventory,

• 1:15:27Speaker 01

  which there actually isn't that much of, relatively speaking, compared to online. The other thing that is true is the people who control that inventory are not nearly as fragmented. So when you're negotiating with NBC or CBS or Clear Channel, they have much more leverage than in the online world of bloggers and small websites. So the fragmentation wasn't there. The methodology was different. It was going to be a tougher slog.

• 1:16:00Speaker 01

  And in the meantime, Google made actually a very smart bet. And this was a pivot on Google's part, based on a lot of learnings from the failure on the one side and some of the success happening on the side of YouTube. In the meantime, Google had acquired YouTube. And somewhere along the way, and this was over multiple years, Susan Wojcicki and the leadership team of Google, and Google Ads in particular, came to the conclusion that rather than Google chasing TV, let's have TV come to Google, i.e. YouTube. And we've seen what's happened in the ensuing 15 years, where cord cutting and all of the rest.

• 1:16:41Speaker 01

  And now, the ad, online digital ad methodologies that Google is best in the world at can be applied in a much more straightforward way. But I was collateral, me and some of the teams I was a part of, we were collateral damage in that evolution. There was a point where, you know, Google did a small layoff and it was largely concentrated in my group of this acquisition. Along the way, Google acquired YouTube. Google also acquired DoubleClick. And DoubleClick served all of the brand advertising online. And a couple of years later, well firstly, at the time, I was within weeks of being laid off, having dropped out of two grad schools,

• 1:17:25Speaker 01

  and moved 3,000 miles west. That felt really crappy. There's a, there's a great song from around that time, which is a mashup from Coldplay and Jay-Z's "Lost." You should listen to the lyrics. "Just because I'm losing doesn't mean I've lost," is literally the first line. And I would have that on repeat at that time. Within a couple of years, within a year probably, a year and a half maybe. I was also, that was around the time I was getting married. So it was a lot going on.

• 1:18:02Speaker 01

  It turns out that within a year, sort of post the DoubleClick deal, Google decided, look, with YouTube as an anchor asset and some other things, and the DoubleClick acquisition, there was a technology now, now pretty well established, 15 years later, called real-time bidding, and we were going to bring the search auction methodology across the entire web for all of display advertising. And we were going to use that core, underlying infra to be able to build not just a spot market, direct response advertising, but a futures market, which could apply to brand advertising. And we were going to use that disruptive vector, something fundamentally different,

• 1:18:43Speaker 01

  not just incrementally better, to essentially dislodge Yahoo from owning brand advertising online. And I ended up getting that mandate, because I had learnt a lot about how brand advertising worked 12, 18 months earlier. So that was a fairly spectacular failure. The acquisition, by the way, ended up in arbitration, big lawsuits, depositions, and it was messy from all sorts of angles. So we all worked our way through that. And then in the end, we ended up building what is even still today, I believe,

• 1:19:25Speaker 01

  Google's second-largest business, which is the display advertising business. But that transition was messy, excruciatingly difficult, from a strategy perspective, as we talked about earlier, but from a emotional toll as well. And figuring out your way, given I was new to product management, I was new to Silicon Valley, I was new to Google, I was new to advertising, and I had no idea whether I was ever going to be good at it or not.

• 1:19:54Lenny Rachitsky?

  Do you think the lesson there is basically that song? Just because you're losing doesn't mean you've lost or that you're a loser and just keep going?

• 1:20:01Speaker 01

  Yeah, bloody mindedness is a dramatically underrated quality. As we, you know, over intellectualize from strategy to execution and all the other things. Sometimes persistence is key and persistence while still being clear eyed about what the odds of success are is also key.

• 1:20:23Lenny Rachitsky?

  Jag, we've covered everything I was hoping to cover and more. Before we get to our very exciting lightning round, is there anything that you'd love to leave listeners with or share kind of as a last tidbit?

• 1:20:34Speaker 01

  I would just summarize a couple of core points. I think the idea of perseverance and being very clear about

• 1:20:49Speaker 01

  what you're trying to achieve and how much it is worth to you and how much you're willing to fight for it while also being very open and transparent to feedback that you're getting from people, from the market about whether what's working and what's not. And knowing what parts to let go and what to hold on to really tightly is an important lesson. I think the other thing that I would just, you know, emphasize again is, and this goes a little bit back to the the debate you're trying to frame up. On a new category or existing category, I think within that debate, there's really a synthesis that says, and I think most people would agree.

• 1:21:32Speaker 01

  If you're trying to break through as an insurgent, you cannot fight on the ground that the incumbents have stand firm. You have got to find a disruptive vector.

• 1:21:47Speaker 01

  And that means searching hard for what is fundamentally different. So that it breaks through the noise and the noise, the volume of the noise has just gone up so much in the last 15 years. And I think that's even growing in importance. Incrementally better doesn't get you there. It doesn't get you there unless you have that hook.

• 1:22:10Lenny Rachitsky?

  I love that you summarized your key takeaways. Something I've been wanting to do and I might ask every guest to try to summarize what they've shared because that is incredibly helpful. With that, we've reached our very exciting lightning round. Are you ready?

• 1:22:24Speaker 01

  I am ready, let's do it.

• 1:22:26Lenny Rachitsky?

  First question, what are two or three books that you recommend in most to other people?

• 1:22:30Speaker 01

  The business books. One is Play to Win.

• 1:22:35Speaker 01

  I think that is a great, modern strategy book that takes a lot of what's happened in the digital world and summarizes it really well.

• 1:22:46Speaker 01

  Second one that I would highlight, which I think is a really good, non-digital world summary and really distillation of the essence of strategy. And as you mentioned earlier, he's coming on your podcast soon from Roger Martin, is Where to Play and How to Win, which I think is a classic. And then, you know, as I mentioned, I went to, I went to study public policy and politics back 15 years ago. One of the ultimate startups and one of the ultimate startup stories in my mind is the story of Singapore. And there's an autobiography of the founding Prime Minister of Singapore from, you know, 1965 till he retired.

• 1:23:31Speaker 01

  He passed away a couple of years ago, Lee Kuan Yew.

• 1:23:36Speaker 01

  His book about the story of being kicked out, Singapore being kicked out of Malaysia as a tiny, in business terms, subscale little country with no natural resources, is, I think, incredibly inspiring. His book is called From Third World to First. And I think it's a great story that in many ways is a parallel to what startups try to do, which is essentially go from third class to first. And it's a very tricky ride and requires a ruthless honesty about where you stand and what it will take to succeed.

• 1:24:16Speaker 01

  And it usually gets prettified up when told in retrospect, but it is, it is messy every step of the way and I think it's an awesome.

• 1:24:27Speaker 01

  It's an awesome, unapologetic summary of like what it takes to to achieve greatness in a very different sphere than we're used to talking to.

• 1:24:37Lenny Rachitsky?

  I love that. I definitely want to read that now. Uh, next question. Do you have a favorite recent movie or TV show you've really enjoyed?

• 1:24:44Speaker 01

  There's a great, the great series that my wife and I watched fairly recently um on HBO called The Gilded Age, which really shines a very interesting light on how technology, this is from the, you know, late nineteen, late eighteen hundreds, nineteenth century, how the technological changes disrupts

• 1:25:09Speaker 01

  both the economic world and the world of of wealth, but also the social dynamics in a society. And it's, it's fascinating because we're going through, we're living through a new Gilded Age right now. And we're seeing a lot of those dynamics, but turbocharged on on social media. So extra, extra exciting.

• 1:25:31Lenny Rachitsky?

  Good times. Do you have a favorite product that you have recently discovered that you really like? Either an app, some physical, anything that's bringing you joy?

• 1:25:42Speaker 01

  I was listening to

• 1:25:45Speaker 01

  your podcast with Christopher Lockett.

• 1:25:49Speaker 01

  And it was on the treadmill when I was doing it. And in the middle of it, he mentioned a product around the idea of category design. I think I forget what question you asked him. And he mentioned the low meat.

• 1:26:01Speaker 01

  Kitchen countertop composter. And my thirteen year old daughter has been who is, you know, very idealistic and has been on us to do composting for over a year now.

• 1:26:20Speaker 01

  And we bought a Lomi and we are here. I just did, we just did our fifth batch of soil last night and it works exactly as advertised and it is fantastic and I get a great amount of joy, as does the whole family actually, in doing the right thing and doing it in a modern way and doing it in this accelerated timeframe overnight. And it's really a new category of product of a kitchen appliance that I remember Christopher talking about, that creating countertop space is a precious asset and we're happy we did it. So that's

• 1:27:04Speaker 01

  a very recent, last three week story.

• 1:27:07Lenny Rachitsky?

  This makes me so happy. I also think Chris, this is gonna be his favorite episode of all my podcasts. A lot of love for him. That's incredible. I gotta, I gotta get me one of those. Two more questions. Do you have a favorite life motto that you often think about, come back to, share with friends or family that's been useful in work or in life?

• 1:27:27Speaker 01

  In work, in the very, you know, narrow confines of work, I've used it probably at least a dozen times in this podcast, which is about par for me for an hour and a half at work. We're in the business of fundamentally different, not incrementally better. I think that's, that's the core motto. And I think it's, it, it works, it works in a, in a slightly modified way for life as well. You know, you live, you build the life you want to build and it's not going to be checking the boxes that everyone wants you to, to check. There

• 1:28:10Speaker 01

  was a time when I was at a consulting firm and I Was a partner and I dropped out to go back to grad school and people thought I was crazy. Then there was a time when I dropped out, you know, like to the horror of my parents, I dropped out of Harvard. Like, what the hell was I thinking to come out to Silicon Valley? And that went, as we talked about, pear shaped. Within weeks, there was a time when I left Facebook to, not that long ago, four years ago, to go join this crazy Sao Paulo based bank. What did I know about banking? What the hell did I know about Brazil, really? If you're not clear on what it is you are trying to do,

• 1:28:52Speaker 01

  and if A, and B, if you are not willing to tolerate failure, then you're just checking the boxes of someone else's expectations. And so fundamentally different is important. Now, it's a luxury good. You gotta be, you gotta be, it's easy for, for some of us who live in, you know, the Bay Area and in Silicon Valley to, and so I'm very conscious of that, that it's a privilege and it's a luxury good. But I think everyone should, should strive for their version of it.

• 1:29:23Lenny Rachitsky?

  I love that you extend that idea not to just business, but also your life. I didn't even think that it goes that far. Final question, I know you have to run really soon, but I can't not ask about this. Apparently you were convicted of smuggling mangoes at some point in your life. Can you share that story?

• 1:29:43Speaker 01

  Yes, as I mentioned, I grew up in Trinidad in the Caribbean.

• 1:29:49Speaker 01

  And outside, my brother in my bedroom was a mango tree that was

• 1:29:57Speaker 01

  abundant and spectacular quality set of mangoes. And here in the US, and I can speak very definitively for California, the mangoes are, are subpar. Forget about incrementally better, they are simply subpar. And Americans, I don't think realize what a good mango actually is and what a joy it is to behold. So every time I would Go home, I would try to bring mangoes back. And one time, coming through Miami International Airport from the Caribbean, I had a dozen mangoes wrapped in newspaper, slipped in between my clothes. And I hadn't counted on the fact that this was several months before nine eleven.

• 1:30:43Speaker 01

  But I hadn't counted on the fact that the US Department of Agriculture had got smart to the fact that if people are coming from the Caribbean, they are bringing in food. That is a given. And they're going to try to smuggle it by. So they ran the entire plane through agricultural inspection. The guy looked through the x-ray machine and said, you've got 11 mangoes in your bag, sir. At which point I knew I was caught. And I said, well, you've missed that one. I could see the picture. I was like, you missed that one. It's actually 12. I ended up on a agricultural watch list. But then nine eleven happened. And there were three or four years where, as a management consultant,

• 1:31:24Speaker 01

  I was at an airport twice a week. You know, you used to get on your ticket SSSS, which they said was random. Every flight for three years, I was flagged for a special screening

• 1:31:41Speaker 01

  because of my love of mangoes. So it was worth it. Mangoes are a misunderstood, underappreciated fruit. So if you grew up in the Caribbean, you can't, you can't, it's hard to go without top quality mangoes. And so I still struggle here in Cali.

• 1:32:01Lenny Rachitsky?

  I hope you've been rehabilitated from your life of crime.

• 1:32:04Speaker 01

  I have been rehabilitated. And one of the great things about working with the Brazilian companies, the quality of mangoes in Brazil are top notch. So I get to, I get to partake fairly regularly these days.

• 1:32:14Lenny Rachitsky?

  It's unfair. I am going to ask you for your some mango recommendations. Jag, I've kept you long enough. I feel like this podcast episode was definitely not incrementally better. It was certainly fundamentally different. Thank you so much for being here. Two final questions. Where can folks find you if they want to reach out, maybe follow up on stuff? And how can listeners be useful to you?

• 1:32:33Speaker 01

  Thank you. Lenny, I really enjoyed it. I appreciate it. Very kind words. Best place to find me is probably on LinkedIn, Jag Google.

• 1:32:44Speaker 01

  A relatively unique name, fairly easy to spot and find there. And I am always looking for stories and for opportunities. I'm always looking for stories of fundamentally different, so I would love to hear those. Especially when they're done against the odds or when there's a more convenient or easy choice. And we are in the business of building the world's first social and self-driving AI-powered bank, which sounds like a lot of MBA gobbledygook, I know, but Silicon Valley buzzwords, but

• 1:33:24Speaker 01

  but we mean it. And so anyone who wants to join the, what we call the purple revolution, our brand color is purple, love to hear from you wherever you are in the world because because we have people everywhere.

• 1:33:41Lenny Rachitsky?

  And if they're interested, is it like newbank.com/careers?

• 1:33:44Speaker 01

  I believe that's right, yes.

• 1:33:46Lenny Rachitsky?

  Amazing. By the way, do you have a color, a name for your purple brand color?

• 1:33:51Speaker 01

  We call that, we, our customers call the little purple credit card, the hoshinho. Hosho in Portuguese is, means purple. Hoshinho basically means little purple card. And there was actually a moment, a point when there was a risk because of some regulatory issues that were happening in Brazil in 2016, where there was a chance that New Bank would have to shut down. And it turns out the central bank, our customers called the central bank and said, you cannot let this happen. And from that day, one of the engineers said, when it was just a hundred or so people, the future is purple. And we have T-shirts all

• 1:34:34Speaker 01

  over New Bank saying the future is purple. So that's, that's part of our origin story.

• 1:34:41Lenny Rachitsky?

  I'll let you go, Jag. You're awesome. I feel like this is going to help a lot of people. Thank you so much for being here.

• 1:34:47Speaker 01

  Lenny, enjoyed it so much. Thanks a lot. Great to chat.

• 1:34:50Lenny Rachitsky?

  Bye, everyone.

• 1:34:53Lenny Rachitsky?

  Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, please consider giving us a rating or leaving a review, as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at lennyspodcast.com. See you in the next episode.