Jag Duggal: evaluation

Transcript context

…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 Lochhead, 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 camp of this is actually very good and important. I'd love to hear your perspective and also just how Nubank did this. You know Lenny, literally earlier in this week, I was listening to your podcast with I believe it was 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 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. Netflix, Airbnb, you can go down the long list, Salesforce, et cetera, et cetera. That's really important. In Nubank's case, we were the first, and actually, it's not that important that we were the first, but we were very intentionally 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, 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 massive wave of success, multiplied by, unlike almost everywhere else in the world, including in the US where the answer was, "We're going to do the bank account first." Nubank'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 everything up. The money's never coming back. Those two, again, concentrated bets, defining a new category, were I think the key to our success. Now, there are times when you're trying to go into an adjacent market. 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 it D to C, and we've been able to undercut the pricing pretty dramatically. So even within an established category, we've tried to build a fundamentally different experience, but there are also times when, look, it's not quite me too, but the differentiation's 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. the differentiation's 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.…

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