Marcelo Claure & Shu Nyatta: LATAM's New $500M Growth Fund; Investing Billions at SoftBank | E1042

1. 0:00 – 6:18

   Epic Partnership: Marcelo Claure & Shu Nyatta

   1. MCMarcelo Claure0:00

      There's one fundamental, basic rule of life, and that most people don't follow it and they say they do. And that is, you gotta do what you love.

   2. HSHarry Stebbings0:11

      (instrumental music) Chaps, I am so excited to make this happen. First, thank you so much for joining me in person.

   3. SNShu Nyatta0:17

      It's a pleasure. Like I said on Twitter, this is the Abbey Road of venture.

   4. HSHarry Stebbings0:22

      (laughs)

   5. MCMarcelo Claure0:22

      You're a lot bigger than in Zoom.

   6. HSHarry Stebbings0:24

      Do you know what? So are you, Marcelo.

   7. SNShu Nyatta0:25

      Right.

   8. HSHarry Stebbings0:25

      So I think we have that in common.

   9. SNShu Nyatta0:27

      Mm-hmm.

   10. HSHarry Stebbings0:27

       Listen, I love a good, uh, romance and love story, and so when we go back to the beginning of Bicycle and the first conversations, can you take me to those discussions and how that formation talk really came to be?

   11. MCMarcelo Claure0:40

       Uh, I met Shu a few years back, who was referred to me as I was dividing SoftBank into two. And a little people told me that I should have somebody called Shu join my team. So I called him one day and or his ki- your kid was giving birth the same day-

   12. SNShu Nyatta0:59

       M- my wife was giving birth.

   13. MCMarcelo Claure0:59

       ... your wife was giving birth to a new kid. Your first one.

   14. SNShu Nyatta1:02

       No, second one.

   15. MCMarcelo Claure1:03

       Second one. And it was my kid's birthday, so we immediately bonded because that was special.

   16. SNShu Nyatta1:09

       Our two daughters were born on the exact same day, and that's when we met.

   17. MCMarcelo Claure1:12

       Yeah.

   18. SNShu Nyatta1:12

       (laughs)

   19. MCMarcelo Claure1:12

       So we wanted to... I wanted to have a new talent join what I was doing at SoftBank. And Shu's background is fantastic. He can tell you all about it. And we immediately liked each other. We work well. We decided to open the SoftBank Latin American Fund together.

   20. SNShu Nyatta1:30

       Yeah.

   21. MCMarcelo Claure1:31

       And we just had a blast, you know, finding founders, helping make Latin America better. So when it was time to do something new, you know, we both look at each other and say, "Hey, maybe we should go do something together."

   22. HSHarry Stebbings1:43

       Now, you said you didn't read the questions beforehand. That's great 'cause I just decided to go off schedule. Um, when you think about yourselves as partners, what is Marcelo world class at? And Marcelo, what is Shu world class at?

   23. SNShu Nyatta1:54

       Marcelo is... I call him the master of momentum.

   24. HSHarry Stebbings1:57

       Hmm.

   25. SNShu Nyatta1:58

       Nobody else generates momentum like Marcelo does. Any, any idea, any geography, any topic, if you want somebody to get the ball rolling, he'll do it. And it's impressive to see because often it means bringing together all these different people and capital and spheres of things into one project is incredible, uh, incredible. I've never seen anything like it. And so the, the gift is you just get this momentum that comes from the sky, like manna from heaven, and you have to do something with it. And so I've learned that you get out of the way of the momentum and then you try and capture that magic and push it forward in an organized way with a team. And we've done that now a few times in a row.

   26. HSHarry Stebbings2:47

       If I just latch onto that, Marcelo, when you think about like speed of execution, how do you think about when is the right time to just go fast and momentum is everything versus when it should be a little bit more considered and we need to go slowly to get it right?

   27. MCMarcelo Claure3:02

       Different times, different industries, different investments, different phases of your life. Now is the time to go slow, now is the time to be wise. SoftBank was the time to go fast. So it all depends, depends what you're up to. And now, once you have something good going, you have to go fast. You always have to accelerate, and that happens to every great company. First you build, you're cautious, you figure out what you're great at, and once you have it, then you press accelerator.

   28. HSHarry Stebbings3:30

       What is Shu world class at, on the flip side?

   29. MCMarcelo Claure3:34

       Shu brings an incredible diverse knowledge, you know, hardly ever do you see an African, a Kenyan thrive in the US that wants to invest in Latin America.

   30. HSHarry Stebbings3:47

       (laughs)
2. 6:18 – 11:45

   How Bicycle Capital Helps Founders

   1. HSHarry Stebbings6:18

      ironic. But my question to you is, when you said about the models of the future being where you really help and help some builders, operators, I actually tend to find that it was in the same vein as like a founder's fund. The best founders never need me and they just operate in isolation. (laughs) And I might be there, but they don't need me. How do you respond to the best founders don't need you?

   2. MCMarcelo Claure6:39

      I think every founders, every founder will always need something, right? You know, I believe that we're lucky to have had an experience to have done a lot, right? There's, at least in my career, I'm lucky to have 32 years of probably some of the most diverse experiences that few people had a chance to build a company that became the number one company in the world, to merge a company that became the largest telecommunications company in the planet today, the most valuable one. But more importantly, I think sitting at SoftBank for two years and seeing so many industries, so many different founders, so many different models, how do you scale? How do IPO? How do you grow? How do you hire? How do you expand? And so on. I think we can always add a little bit, and there will be founders who will ask for a lot and we'll be there to provide them, and there'll be founders who will ask for a little, and that little might be a phone call that might need some guidance. You know, by no means do we think we know it all, but it's nice, I think every founder that I met, doesn't matter how smart they are and how ... and every executive in the world, they, we've always had something to add. Us, we're lifelong learners, right? Every time we meet a founders, I walk out of that room smarter than I was before because I learned so much from founders. So I think we'll always be able to add, a little bit or a lot.

   3. SNShu Nyatta7:59

      And, and just to add to that, there's a great quote that was used in basketball, but I repurpose a lot for founders. "Average founders want to be left alone. Good founders want to be coached. Great founders want to hear the truth." Great founders do not want to be left alone. And often just having a reflection in the form of a really good board meeting, I'm sure you've been in board meetings that are bad and board meetings that are good.

   4. HSHarry Stebbings8:24

      (laughs)

   5. SNShu Nyatta8:25

      And a good board meeting, even if the founder's world class, makes a difference for the company. Botha and Sequoia love this crucible, uh, analogy, and it's, it's true. There are moments when that discussion, that truth seeking in a group, even for the best founders is transformative. So I push back on this notion that founders don't need anything.

   6. HSHarry Stebbings8:45

      I always think advice is slightly rooted in context, if I'm honest. And I think the reason why that kind of mantra is so spoken is because a lot of VCs maybe don't also provide the value that you can. I mean, bluntly, few people can open the doors, have the momentum for companies that you can. I think that might be why. If you are a bluntly, tier two, tier three firm, as non-disparaging as I can be-

   7. SNShu Nyatta9:08

      (laughs) .

   8. HSHarry Stebbings9:08

      ... there's little that you can do. Do you see what I mean? And maybe that's where it originates from.

   9. MCMarcelo Claure9:13

      Well, I'll tell you a big difference though with us, right?

   10. SNShu Nyatta9:15

       Mm-hmm.

   11. MCMarcelo Claure9:15

       When you look at Bicycle Fund 1, we're bringing our own capital. We're probably one of the few funds who were bringing more than $200 million of our own money, right? So we're bringing our own capital. We're bringing many years of experience and we're blessed by all the stuff that we've seen, and we're bringing pretty good contacts, right? We've been in so many different industries, and we bring that to the founder. And I'll go back and I'll say, there are some founders who will say, "No, I got it," and they will eventually need some help. And there's some founders who will just take as much as they can from you. And doesn't make one is not better than the other one, right? And, and we're there. We're on demand. And when you bring your own capital, it's a different game, right? Because we're putting significant amount of our wealth behind every single one of those investments.

   12. HSHarry Stebbings10:05

       How do you think it changes the mindset of investing when it is your own capital?

   13. MCMarcelo Claure10:09

       You know, you're talking entrepreneur to entrepreneur. This is a partnership, right? You're not managing someone else's money, you're managing a certain percent, but this is a, this is a big amount of capital, of our own capital, so you're truly a partner of the founder, and that's a mindset that we're going into.

   14. SNShu Nyatta10:25

       And you stop thinking in bets. It's not about placing bets and having passive beta on tech. It, it ceases to be these abstract concepts about capital allocation, becomes very personal, that each relationship is a real partnership, it really matters to you 'cause those returns matter to you personally. And that makes it much, much deeper than just a bunch of bets, which is how a lot of investors have come to think lately.

   15. HSHarry Stebbings10:50

       W- we'll talk about kind of portfolio construction, kind of, um, slightly financial mechanics in some ways. But I do want to ask, I had Hunter and Sacher on from Homebrewer Fund in San Francisco, and they said the best partnerships are actually where the partners do not need the money when they start because it actually changes the decision-making that can be challenging in a lot of partnerships. Do you think that's right? And do you think being financially independent as partners makes a stronger partnership?

   16. SNShu Nyatta11:15

       Well, we're in very different phases of our life. Uh, I wouldn't call myself financially independent, but I disagree with that. I think caring matters, and the more you care, the more it matters. Second time founders can be successful if they don't need the money, but first time founders can be successful, they really need the money. I don't think there's a clean rule. I just think you need to care, and having your own skin in the game makes you really care. That's not a bad thing.

   17. HSHarry Stebbings11:42

       Can I ask, you mentioned also the best founders seek the truth.

3. 11:45 – 16:28

   How to Give Hard Feedback

   1. HSHarry Stebbings11:45

      I think what's very hard is the right way to deliver the truth and how to provide that effective feedback, which isn't always nice. If you were to advise me, I don't always do this the right way. (laughs) Um, I'm English, so often we, we, you know, don't do it very well. Um, how do you deliver really effective but hard feedback to founders? Neil Mater at Greenotes told me that you guys do it the best.

   2. SNShu Nyatta12:07

      Not much for Neil to say. Thank you, Neil.

   3. HSHarry Stebbings12:08

      (laughs)

   4. MCMarcelo Claure12:09

      So I'll, I'll give you my perspective. And at least from my end, it's easy to talk entrepreneur to entrepreneur, right? I mean, we, every single great founder have something called healthy paranoia. Some have an unhealthy paranoia. But we're all always nervous on what we're building, and sometimes we think that what we're building is not strong enough and we're always scared it's gonna be the end of the world and it's a constant rollercoaster. And I found that founders have a lot of respect when you've already lived that, when you can walk through, walk them through some, an experience that you have already lived. Every single founder has been in the verge of bankruptcy. Very few have not been. Every single founder has put their entire life to building their company, and it's helpful for them, at least for me, to share experiences, you know, that I learned while I was building my own company. You know, it was, it's helpful for them to understand how we scale companies and what's wha- And last thing I'll tell you, probably the best advice I even give founders is tell them the mistakes that I've made, because I made tons of mistakes, and tell them, "Be careful here, because even though it might seem obvious, it's not." And just be blunt with them. And some people like to take it in a board, some people like to be taken aside and say, "Hey, you know, this is what I'm seeing. Just be cautious here." And that worked, just being honest, blunt, and, and, you know, if, if a founder doesn't want your advice, and you're always gonna have to be telling what they wanna hear, I don't think that's a company you wanna be invested in.

   5. SNShu Nyatta13:39

      And so if you're lucky enough to have that wealth of experience, that works wonderfully. If you're not, in my case, I haven't built a company, it's much more about listening, and y- y- you have to learn from the greats who did this business, right? Don Valentine said the single advice he'd give people is to have big ears, right?

   6. MCMarcelo Claure13:56

      Mm-hmm.

   7. SNShu Nyatta13:56

      And that's the most important thing. Listening, asking the hard questions, but not necessarily pontificating. Sometimes a boardroom can turn into a bunch of people speaking their mind. It's much more about finding the question that can really make the founder pause and think and potentially make a good decision.

   8. HSHarry Stebbings14:16

      Can I ask a hard one? Do you think there are any areas of misalignment between founder and VC?

   9. SNShu Nyatta14:22

      Yeah, often. I mean, VCs wanna mark up the company. Often that's the goal, especially if you're early stage, right? You want the A to be lower than the B by some margin, and then you wanna raise a new fund on the back of the B or C.

   10. HSHarry Stebbings14:34

       Mm-hmm.

   11. SNShu Nyatta14:34

       That's a very different goal from the founder's goal, which is to build a lasting company. Um, at the growth stage, it tends to be less the case because the markups are not fast and furious the way they are at the early stage. So I would actually think the later you go in a company's life, the more aligned you are with trying to create something that's long term, durable and successful, 'cause you can't hide anymore. It's not about the markup, it's about whether you have a real business.

   12. HSHarry Stebbings14:59

       Marcelo, any... Yeah?

   13. MCMarcelo Claure15:01

       Same.

   14. HSHarry Stebbings15:02

       (laughs)

   15. MCMarcelo Claure15:02

       And we've learned the hard way.

   16. HSHarry Stebbings15:04

       Okay, now there's one for, I have to ask this one, which is, you've mentioned the mistakes that you often tell founders. Is there one common one that you find yourself saying more than others? A mistake that is the most commonly told for you where you find founders most resonate with it?

   17. MCMarcelo Claure15:20

       So what I've learned from founders and from myself is, you know, trust your gut. You know, you, you know the answer. In many cases, I've seen so many board meetings, VCs who've never built businesses or who've never been around great businesses, and just everybody gives advice is, is cheap, is free, right? And many founders sometimes get confused o- At the end, a great founder, well, you know what they'll do? They're gonna listen to all of us, but at the end they're gonna trust their gut. And their gut is 90, or found is 90% right. And when you go back to them and say, "Look at the last ten decisions you made, and which ones were yours, and which ones was because you listened to the last person that talked to you," you realize that most of them are always right. That's why they build great companies. And by the time we get to in the growth stage or in other areas of our businesses, they will, they, they will already have a proven business model. They already know what they have to do. So that's, and that's often, uh, you know, that's often the case that they, they sometimes don't trust themself and they listen to others, and at the end, listen to others just so you can check that your gut was correct.

4. 16:28 – 21:32

   The Details of $500M Fund

   1. MCMarcelo Claure16:28

   2. HSHarry Stebbings16:28

      I, I do wanna discuss Bicycle specifically. Um, we had the fundraise announcement a couple of months ago, I think it was.

   3. SNShu Nyatta16:35

      A couple weeks ago, yeah.

   4. HSHarry Stebbings16:35

      Couple of weeks ago?

   5. SNShu Nyatta16:36

      Yeah.

   6. HSHarry Stebbings16:36

      Time flies.

   7. SNShu Nyatta16:37

      Time does fly.

   8. HSHarry Stebbings16:38

      Um, my question to you is, you know, it was mentioned as growth equity, and it's a $500 million vehicle. Can you talk to me about the focus, where it is specifically, and how you view that both from a stage and a insertion point?

   9. SNShu Nyatta16:49

      The answer is very specific to Latin America as well.

   10. HSHarry Stebbings16:51

       Mm-hmm.

   11. SNShu Nyatta16:51

       So there, there are a lot of really good early stage funds in Latin America. Some local, some foreign, but it's a solid base of early stage funding. And then crossover funds, once you get to the D or the pre-IPO round, they always show up. If a company has good numbers, they will show up. The gap is in the middle. So starting at the series B, it's a bit of a desert in Latin America. For a few years there, from 2019 to 2021, it was not a desert.

   12. HSHarry Stebbings17:16

       Yeah.

   13. SNShu Nyatta17:16

       And in 2021, notably, venture went from something like four and a half billion a year to 16 billion a year. Now it's back to less than a billion a quarter, so we're back to the four and a half. So there's a real gap in funding at the B and later. And the B tends to be the trickiest round, because you need some meaningful amount of capital. The A can't do, can't lead the B. They could do maybe some pro rata in the B. So you really need someone to step in and lead the round and price the round, and there's still some risk in the business. That's the real, real opportunity. And then, of course, you get opportunistic stuff at the C and D. You get good prices, maybe some secondary here or there. So that's the gap that we wanna fill with the fund. That's a product, so to speak, that founders don't have, and that's a product that LPs can't buy today, which is growth exposure in Latin America.

   14. HSHarry Stebbings18:02

       Can I ask, is the fund size big enough? If you think about a series B being 40 million, say, 30, 40 million, and you wanna lead a series B, it's 25, 30 million check from you, is that big enough? You've got 12 to 14 checks in the fund.

   15. MCMarcelo Claure18:15

       It's a start, right? We didn't have a lot of time.... you know, we had an idea of what we wanted to do.

   16. SNShu Nyatta18:22

       Yeah.

   17. MCMarcelo Claure18:23

       I didn't know compete. Or know compete was announced, my, the end of my non-compete was a couple of weeks from when we announced the fund. And to be quite honest, we haven't even fundraised yet, right? It's, uh, Mubadala who, Mubadala wanted to make a bet in Latin America-

   18. SNShu Nyatta18:40

       (laughs)

   19. MCMarcelo Claure18:40

       And we've known Mubadala for a while, both Shu and myself. And then we called five other LPs. We made five phone calls, and the five of them said yes. And they were my family office. So we really haven't started, but we wanna make sure it's, this time around, we don't wanna be the biggest. The biggest doesn't necessarily mean you're the best. We wanna get started, I think 500 million, maybe a little more is a good start, and then we'll see where it takes us. But we're, we're, I think we're lucky. I mean, we're grateful to be able to pick up the phone, call six people, and raise a fund, which is probably the largest first time fund launched in Latin America. And I think in this time where nobody's raising money or very hard to raise money to show up with a 500 million fund a couple of weeks after your non-compete expire, you know, we're lucky, we're blessed, we're, we're grateful. A lot more will come. I mean, we have big aspirations, but we need to deliver-

   20. SNShu Nyatta19:33

       (laughs)

   21. MCMarcelo Claure19:33

       ... you know, you win a game playing minute by minute, and we gotta deliver the first few minutes, which is this.

   22. SNShu Nyatta19:38

       (laughs) Can I ask, when you say the biggest isn't always the best, you deployed, you know, 7.5 to $10 billion, there were different numbers that I saw, so I'm not sure which one it was, but seven and a half to $10 million, uh, billion dollars, sorry.

   23. MCMarcelo Claure19:51

       Both.

   24. SNShu Nyatta19:51

       (laughs)

   25. MCMarcelo Claure19:51

       It was 7.5 through Latina fund, and it was two and a half billion through the other -

   26. SNShu Nyatta19:55

       (laughs)

   27. MCMarcelo Claure19:55

       ... I just never heard it's-

   28. SNShu Nyatta19:56

       Okay. So combined we have a 10, but seven and a half, uh, you know, in, in, with your time in SoftBank, what were some of the biggest lessons from that deployment period?

   29. MCMarcelo Claure20:05

       Different times, right? At that point in time in SoftBank, the mandate was to build a portfolio play, right?

   30. SNShu Nyatta20:13

       Mm-hmm.
5. 21:32 – 28:17

   Best Ways to Build a VC Firm

   1. SNShu Nyatta21:32

      How do you want to build the firm? You can build firms in different ways, you know, your insights on one with huge, huge teams and your benchmarks on another. When you think about the firm that you wanna build with Bicycle, it's something that I think about a lot with 20VC. W- what type of firm do you wanna build? I'll start and, and Marcelo can complement. We're lucky because we have three people who joined Bicycle day one, who we've worked with for four years, and they've been part of the journey from 2019 with the SoftBank Latin America Fund. So there's already a lot of inbuilt tribal trust and knowledge and way of working together. That's the core. And that core is very important because there's a shorthand in how we communicate. Uh, we all have the same general ambitions. People come from multiple different places. It's hard to imagine we're gonna get dramatically bigger than that. They all, the nice thing also is it's a whole spread of ages. So we already have the seeds of a multi-decade firm now. Our goal is to not screw that up, right? You have to build capability sequentially over time, but not damage the core that got you started.

   2. MCMarcelo Claure22:37

      So I, I wanna make sure that the team that I've put together is the best performing team, right? At the end, I need to see Shu and the investment team. I'm the oldest one here, right?

   3. SNShu Nyatta22:50

      (laughs)

   4. MCMarcelo Claure22:50

      And I, I need to make sure-

   5. SNShu Nyatta22:51

      Great sk- ... experience. ... great skincare routine- Yeah. ... is the answer.

   6. MCMarcelo Claure22:53

      I, I n- I need to make sure that Shu and team don't ma- though, they don't make the same mistakes I've made. And at the end, they're gonna be running the fund. You know, I'm the chairman of the fund and I just gotta make sure that they don't make the same mistake that I made. You know, my dream is for this fund for them to just run this fund alone and let this be fund one of many more to come because I think Latin America, you know, people often underestimate Latin America. I was having lunch with a very prominent Indian businessman and Latin America, if you add the GDP of Latin America, we happen to be 2X India with one-quarter of the people or one-third of the people. So Latin America has the size, has 600 plus million, a big population. So there's a lot to be done in Latin America that we just got started at SoftBank. And the few success stories that you have today have given birth to a lot of other hopes, dreams that are in the process of being made, new journeys that are being made because now Latin America has a lot of futures of success, right? You look at Nubank, great example, to me, the world's best digital bank. Look at MercadoLibre, nothing to envy to an Amazon or to, uh, an Alibaba, et cetera.

   7. SNShu Nyatta24:09

      You look at Globant, which is real software building shop from Argentina that serves clients globally. Not the sort of thing people associate with Latin America. So different kinds of companies get created in the region, which is-

   8. MCMarcelo Claure24:20

      And the market-

   9. SNShu Nyatta24:21

      ... surprising to most people.

   10. MCMarcelo Claure24:22

       The market is amazing.... a lo- you know, when we were investors in Uber, you know, we had to keep it a secret that after New York, three out of the top five cities were Latin American cities. Latin America, uh, the economy is one that will, that will take on any new digital disruption at an accelerated pace. Look at Netflix, WhatsApp, and all that.

   11. SNShu Nyatta24:42

       You mentioned TikTok.

   12. HSHarry Stebbings24:43

       Mm-hmm.

   13. MCMarcelo Claure24:43

       Yeah. Latin America is a huge market for them.

   14. HSHarry Stebbings24:46

       Uh, it's been unbelievable for us in terms of-

   15. MCMarcelo Claure24:47

       Helping, helping Shein.

   16. HSHarry Stebbings24:49

       ... Latam audiences. Yeah.

   17. MCMarcelo Claure24:50

       You know, Latin America is absolutely booming, right? So it's great to be in a market where you have, it's the early stage of entrepreneurship, but with great founders. But also you have a market that's ripe for consuming any digital good-

   18. HSHarry Stebbings25:06

       (laughs)

   19. MCMarcelo Claure25:06

       ... at an accelerated pace.

   20. HSHarry Stebbings25:07

       I, I am, before we dive into Latam, I did just have to ask, on the firm itself, you know, what do you think is the biggest challenge that you are yet to prove out? So an example, like when I think of mine, is so I can build a firm beyond myself. (laughs) Every fucking LP asks that. Um, how do you think about what your biggest challenge is in terms of the firm build ahead?

   21. SNShu Nyatta25:27

       I think it's really tied into the region. Nobody doubts that you could create a growth equity firm in this day and age.

   22. HSHarry Stebbings25:33

       Sure.

   23. SNShu Nyatta25:33

       Lots of people have done that. The question is, can Latam support a multi-fund growth equity firm? We strongly believe the answer is yes, we think it's obviously yes. But that's something the rest of the world doesn't quite believe yet, and so it'll take time to prove that out. And in a sense, that makes the task very simple. We just have to execute. We have high conviction in what we're doing. We just have to put one foot in front of the other and the, the proof will emerge over time. And that proof is in the form of big outcomes. So you want the next new bank to go public in New York. Like that'll kind of quiet the critics. But it's getting over the regional argument really, 'cause we're very tied into the story of Latin America.

   24. MCMarcelo Claure26:15

       There's a misconception about the region, right? I mean, you ask some people and they think, "Oh my God, this is the land of drug trafficking, high inflation and constant political turmoil."

   25. HSHarry Stebbings26:26

       (laughs)

   26. SNShu Nyatta26:26

       Soccer.

   27. MCMarcelo Claure26:26

       And, and soccer, which is great.

   28. SNShu Nyatta26:28

       (laughs) .

   29. MCMarcelo Claure26:28

       Football, for you, sure.

   30. SNShu Nyatta26:29

       Football, yeah.
6. 28:17 – 37:30

   Deep Dive into LATAM’s Market

   1. HSHarry Stebbings28:17

      One thing that I'm always struck by is, it is the difference of opinion I get on homogeneity of Latam, where some people kind of block it together and go, "Latam is an opportunity, is this huge opportunity, and look at the, uh, kind of collective audience we have here of 650 million," and it's basically the, yeah, whatever we wanna choose, this huge market. And then others say, "No, it's incredibly fragmented. Each country is very individual. It's much more European in its structure, where you have to win Mexico, Argentina, and you can't look at it as a kinda block opportunity." Which one's right, do you think?

   2. SNShu Nyatta28:50

      Well, for sure there's Brazil and everything else.

   3. HSHarry Stebbings28:53

      Yeah.

   4. MCMarcelo Claure28:53

      And Mexico.

   5. SNShu Nyatta28:54

      But even language is different in Brazil. So you have what's generally called Spanish-speaking Latam, and Brazil, which is not Spanish-speaking. Brazil is its own beast. Mexico is also a large entity within Spanish-speaking Latam. So if you were to disaggregate two countries and pull them out, it would be Brazil and Mexico, in that order. And if you ignore everything else, those are huge markets. That's more than half of the population of 650 that Marcelo mentioned, and most of the purchasing power. And two very well-run central banks that have performed incredibly over the last two years. The currencies of Brazil and Mexico have been some of the best performing currencies in the world because the central banks hiked early, Brazil is already on the phase of easing interest rates. So these are two really interesting economies with tailwinds. And then you have, as a plus, some of the other markets. Some will always be challenging. Argentina has perpetually been a challenging market. It's never gotten currency under control. It's very difficult to, uh, figure out what the value of your Peso is over time. Colombia is having a challenge now, uh, but we're long-term bullish on Colombia. But if you really had to focus, it's Brazil and Mexico. And in a sense, I suppose that would be like Germany and France, you know, if you wanna pick the EU example. I'm, I'm sure in Europe there's a similar answer to-

   6. HSHarry Stebbings30:08

      Mm-hmm.

   7. SNShu Nyatta30:08

      ... where here are the two markets that really matter. And that's, th- the same is true in Latin America.

   8. MCMarcelo Claure30:12

      But I will add two things, right? It is suspected that both the Brazilian and the Mexican economy will be among the top 10 economies of the world, so it's nice-

   9. SNShu Nyatta30:20

      Top six, yeah, 2050.

   10. MCMarcelo Claure30:21

       Okay? And then secondly, Argentina is great because in Argentina you have something that you can export, which is...... services, people. The amount of engineers, the amount of lower-priced labor because of inflation and others. So I look at, you know, Argentina, that's why you have created companies. I wanna say that's why I think they're great on their own, you know, global and all over the world, but that was the beginning. And I think that ... And if you can, if you can, if you can play in two of the top 10 world's economies and be strong there, right? I think you can build a great firm around that.

   11. HSHarry Stebbings30:54

       If we think about, you mentioned that the services and the amazing talent, if we kind of go up the stack or down the stack, whatever way we wanna take it, but to the kind of financing. We saw the evacuation of kind of foreign capital in the last year with the kind of economic changes that we've seen. Is that a good thing for you or not? In a way, there's less competition. Fantastic. And, and also in a way there's less financing available for LATAM companies and less co-investors. How do you analyze the foreign capital withdrawal?

   12. SNShu Nyatta31:26

       It's a balance sheet, the, the pluses and minuses. One of the biggest minuses is you have big pref stacks all over the place.

   13. HSHarry Stebbings31:33

       Mm-hmm.

   14. SNShu Nyatta31:34

       All these companies that raised a lot of capital, whose valuations right now should be much lower than the round they did in 2021, who have pref stacks that are underwater. And it's very difficult to finance those companies even at a discount, 'cause what are you buying, right? If you're buying secondary early, uh, A shares or common shares, then you're under this huge pref stack. So I think that's a very big negative. The positive is there are fewer people competing and prices have become much more rational.

   15. MCMarcelo Claure32:03

       To me, I love it, right? There's tourist, you know, tourist capital is done.

   16. SNShu Nyatta32:08

       (laughs)

   17. MCMarcelo Claure32:08

       I mean, which is great. I mean, this is left for people who understand the market, who understand opportunity, who are really gonna help entrepreneurs. So, eh, it's better, it's cleaner. It's, uh, it's people who ... I mean, there were people who showed up there in late 2021 because they were, they were like sheep, right? Softbank was leading the way, and they all came behind. I think there's still gonna be left two great ones. You know, I have a lot of respect for GA.

   18. SNShu Nyatta32:34

       (laughs) They're very good.

   19. MCMarcelo Claure32:34

       I mean if you look at the returns of GA, b- people often don't know, but if you truly study GA, the great returns have come from Latin America.

   20. HSHarry Stebbings32:42

       It's very funny.

   21. MCMarcelo Claure32:43

       Uh-huh.

   22. HSHarry Stebbings32:43

       I just got off a call with Martin Escobar, uh, and he said exactly the same thing as you did in terms-

   23. MCMarcelo Claure32:49

       That's true.

   24. HSHarry Stebbings32:49

       ... of the tourist capital.

   25. MCMarcelo Claure32:50

       So it's gonna be GA, hopefully it's gonna be us, right? And then the rest, you know, they don't even know what the capital of some of these countries are. So it's great, we like it that way, and hopefully it will stay like that. I want people to be busy thinking about the US, thinking about China, thinking about Europe, and we'll do our thing in Latin America. We're gonna help entrepreneurs, and we're gonna go help them build some of the most amazing companies-

   26. SNShu Nyatta33:14

       And, yeah, and, and-

   27. MCMarcelo Claure33:15

       ... that they've proven they're capable of building.

   28. SNShu Nyatta33:16

       ... and we like to be collaborative. So the, the, their other firm, QED, has had a presence on the ground for a long time.

   29. MCMarcelo Claure33:21

       Mm-hmm.

   30. SNShu Nyatta33:21

       Warburg has a presence on the ground. There's a new firm that spun out of GIC, um, that has a presence on the ground, uh, Temasek, sorry, not GIC, that has a presence on the ground. W- w- we love to co-invest with these firms. I think the A is where the elbows are sharpest.
7. 37:30 – 45:16

   The Liquidity Challenge of LATAM

   1. HSHarry Stebbings37:30

      kind of liquidity, and it's often another, not criticism but challenge discussed about LATAM and LATAM investing is, where is the liquidity? Nubank is one that has pr- proven immense amounts of liquidity. Dlocal, another, but not huge. How do you think about the liquidity challenge/opportunity and how do you evaluate that and discuss it internally?

   2. SNShu Nyatta37:51

      Well, so, so there's a lot missing from what you've... the examples you just gave. For example, local listings. Brazil has a very deep-

   3. HSHarry Stebbings37:58

      Yep.

   4. SNShu Nyatta37:58

      ... liquid capital market, extremely. There are a lot of tech companies public i- in Brazil, and they've made investors a lot of money.

   5. HSHarry Stebbings38:06

      So I'm, I'm naive. How big are they?

   6. MCMarcelo Claure38:09

      Multi-billion.

   7. SNShu Nyatta38:10

      Yeah.

   8. HSHarry Stebbings38:10

      They're multi-billion.

   9. SNShu Nyatta38:11

      Yeah. From, from 500... Y- you get a, a lower scale to be viable as a public company in Brazil than you do... You don't wanna be a sub-billion dollar company on the NASDAQ. You'll be-

   10. HSHarry Stebbings38:19

       Sure.

   11. SNShu Nyatta38:19

       ... you'll be a rounding error for people. But from, I don't know, 500 million up to a few billion, you can list very comfortably in Brazil. And the other is M&A. Uh, Pismos just got bought. It's a Brazilian company. I'm not sure if you've heard of it.

   12. HSHarry Stebbings38:32

       Uh-huh.

   13. SNShu Nyatta38:32

       They make financial infrastructure for banks, and they've been bought, arguably, I think by Visa. That's the rumor. Um, there are a number of companies from Argentina that have been bought. Okta bought an Argentine company, for example. SoFi bought an Argentine company. All of these are companies making technical infrastructure, often in financial services. And LATAM is a bit of a center of excellence for that. So liquidity doesn't have to be a big listing on the New York Stock Exchange. It could also be local listings and it could be M&A.

   14. HSHarry Stebbings39:02

       Do you not think it does... Sorry, I'm, I'm pushing, but friendly.

   15. SNShu Nyatta39:05

       Yeah.

   16. HSHarry Stebbings39:05

       Uh, do you not think it does have to be, if you wanna fund returner, if you wanna have scaled returns?

   17. SNShu Nyatta39:11

       Well, it depends on your entry price. And f- you need some exits that are big, uh, on the scale of the New York Stock Exchange, but you don't need all of them to be that.

   18. HSHarry Stebbings39:21

       You don't?

   19. SNShu Nyatta39:21

       Not all of them, no.

   20. HSHarry Stebbings39:24

       What do you think, Marcelo?

   21. MCMarcelo Claure39:26

       I think it's a market in evolution. I mean, it's nice to have a, a m- a local market in Brazil that is growing fast and that's a very innovative market. So that's gonna create some liquidity for some of those companies. And it's also nice that NASDAQ will remain open to Latin American companies that have proven scale-

   22. HSHarry Stebbings39:47

       Mm-hmm.

   23. MCMarcelo Claure39:47

       ... that they can grow. And that's the case of Nubank and all that. I think there'll be a few IPOs coming of some great Latin American companies. Again, that makes it a little more challenging, right? Which again, there's gonna be few players, and that's what we like, right? I mean, if, if, if you're gonna be just another investor opening a new fund into something that's already been done many times like in the US, that doesn't excite me. What excites me is to go help build an entrepreneurial landscape, which we started with SoftBank, generate sufficient exits, which are starting to happen, what has happened in the last couple of years, and that's gonna create all the people who can dream that they can do the same. Latin America is under construction, right? If it was already built, there'll be other people there. And we're builders. We love that. That, at least that's what excites me.

   24. HSHarry Stebbings40:35

       (laughs)

   25. MCMarcelo Claure40:35

       I made a commitment to the next few years to go deep into Latin America-

   26. HSHarry Stebbings40:40

       Just like... Yeah.

   27. MCMarcelo Claure40:40

       ... so we can equalize Latin America. And that's, that's our mission.

   28. SNShu Nyatta40:44

       And, and there's a presumption, y- you talk about fund returners, growth is different from early stage. Not every investment has to have the potential to be a fund returner. You could have every investment have the potential to be somewhere between 2 and 4X in growth, and that's great. So if you speak to LPs, the exposure they're looking for in growth is pretty different from the exposure they're looking for at the early stage. So we don't underwrite to 20X or 10X potential for every investment. It's much more modest than that, but it has a lot less risk.

   29. HSHarry Stebbings41:13

       So loss ratios. How do you think about loss ratios as part of that? I'm an early stage investor. My tolerance-

   30. SNShu Nyatta41:18

       Very high.
8. 45:16 – 47:50

   Biggest Mistakes Made at SoftBank

   1. HSHarry Stebbings45:16

      look at, you know, the investing period with Softbank, what are the biggest mistakes you think you made that you're looking to correct with Bicycle?

   2. SNShu Nyatta45:23

      That's a fine question to ask.

   3. HSHarry Stebbings45:24

      I'm British. It's very uncomfortable. This is why people like coming on my show (laughs) most to most journalists there.

   4. SNShu Nyatta45:29

      So, so the investing business, as you know really well, Harry, I mean, you've been doing this for long enough, the investing business is a mistakes business. It's all about making mistakes, because then you find really good things. So you can't not make mistakes. Um, I think the opportunity we saw was a lack of capital, and we tried to pursue that aggressively wherever we saw a lack of capital, and tried to build a big support organization to help the companies after we invested. Um, that worked for that scale, but I think the more... The smaller, selective, more personal touch, uh, trying to change a company's trajectory one at a time is a better approach for a region that still doesn't have the full ecosystem maturity. So that's the f- the most fundamental thing I'd change. I think slightly smaller is better for LATAM.

   5. HSHarry Stebbings46:19

      What would you say, Marcelo?

   6. MCMarcelo Claure46:21

      Be more selective. As I said, Softbank was a portfolio play.

   7. HSHarry Stebbings46:25

      Yeah.

   8. MCMarcelo Claure46:26

      It's about choosing the winners with trying to avoid any big losses. And the way we're investing into these companies are ones in which I think we're going to minimize the losses and we're not aiming for, you know, 10X, 20X. We wanna ma- If you understand the concept of baseball, which some British people do-

   9. HSHarry Stebbings46:47

      (laughs) Oh, I've seen Moneyball, don't worry.

   10. MCMarcelo Claure46:49

       This is, this is about hitting doubles or triples-

   11. HSHarry Stebbings46:51

       Yeah.

   12. MCMarcelo Claure46:51

       ... in the first fund. This is not about s- trying to invest a significant amount of capital to generate, you know, a Grand Slam. And that's... And we're very cognizant of that. We wanna make sure... We have no choice than to deliver a great fund because this is the first time fund. And as you know, you're as good as your last fund-

   13. HSHarry Stebbings47:11

       Yeah.

   14. MCMarcelo Claure47:11

       ... and we need to make sure that this is a great one.

   15. HSHarry Stebbings47:13

       How long do you think it'll take to invest the first fund?

   16. SNShu Nyatta47:16

       Oh, a month and a half.

   17. HSHarry Stebbings47:17

       (laughs) 2021, baby (laughs) .

   18. SNShu Nyatta47:21

       Well, vintage matters a lot. It's a tricky question-

   19. HSHarry Stebbings47:23

       Yeah.

   20. SNShu Nyatta47:23

       ... because 2023, 2024 should be very good years to deploy capital, just statistically speaking.

   21. HSHarry Stebbings47:30

       Yeah.

   22. SNShu Nyatta47:30

       But you have to resist the urge to overdeploy, especially at the beginning when every company's exciting. And so we have to pace ourselves. I would imagine something like three years.

   23. HSHarry Stebbings47:39

       Yeah. No, I totally agree. Now, before we move into a quick fire, we mentioned a conversation before the show, and it wasn't in my notes at all, but I really enjoyed it, uh, and so I'm gonna ask

9. 47:50 – 53:39

   Work-Life Balance Tips

   1. HSHarry Stebbings47:50

      it anyway. You know, often we think and we hear about kind of work/life balance, and one thing that... Uh, the reason the show's successful is 'cause I bring my own, you know, life into it sometimes, is like I'm terrified of losing an inch on work with the expansion of personal life. I wanted to ask you, how do you think about having a personal life, having a family, and still excelling in what you do and the strategy and the execution with Bicycle? What advice would you give?

   2. SNShu Nyatta48:16

      So I'm gonna, I'm gonna embarrass Marcelo here. One of the biggest things I've learned from him, he has this wonderful quote that I saw in Tokyo first and then it travels with him, so clearly it matters.

   3. HSHarry Stebbings48:25

      (laughs) It travels with him.

   4. SNShu Nyatta48:26

      You can see it in every office. And th- the general gist of this quote is, "Work and play are not different things. They are the same thing, which is life." And that's a beautiful concept, 'cause there's not this partition of what you do and who you are. It's all of one piece. And Marcelo's...... wonderful quality, is it's- it's always happening together. So whether it's family, or work, or play, they co-exist. That idea of coexistence I think is a really powerful one and it enriches each of those spheres. So I've learned not to try and draw sharp boundaries between now I'm working, or now I'm at home, or now I'm playing. It's just life. And the beauty of doing something you love, as much as I love this particular job, is it's not some other thing you're doing other than your life. It's a, it's a hobby, and it's a job, and it's a passion. And it's okay if seeps into your family.

   5. HSHarry Stebbings49:19

      Can I ask you a really hard one? What if your work is who you are? And I know that sounds like, uh, well, taking this into a therapy session, but like, you asked me how long I've been doing this. I've been doing this for nine years. I was 18 when I started. I never traveled. I never studied in university. I've only ever known my adult self to be this. I don't really, like my work is who I am, it is my identity. What do you say when, uh, play and li- li- life, it- it's all just that one?

   6. MCMarcelo Claure49:45

      It's a phase, right?

   7. HSHarry Stebbings49:46

      Yeah.

   8. MCMarcelo Claure49:48

      Sometimes people ask me, like, "How do you do this?" Because I'm in a different country every day and I'm traveling constantly. And there's one fundamental basic rule of life, and that most people don't follow it and they say they do, and that is you gotta do what you love. I mean, if you, if you love your job, that's your life. But that doesn't mean your family doesn't come into it. I'm here, I'm in London, I'm on holiday, but it's a combination of, I don't know, taking my kids to Wimbledon yesterday, walking around the streets of London this morning, by being here with you, having dinner with Orelpis. And it's one of the same. And it's, uh, you know, uh, it's- it's every, every day, every week is like that. It's a combination of my kids being at work, or when I travel, you know, I usually take one or two of my kids and sometimes I'll go visit a company and say, "Hey, do you have an extra room? My kid, let's put my kid there so he can play on his iPad while I'm doing this meeting with you."

   9. HSHarry Stebbings50:43

      (laughs)

   10. MCMarcelo Claure50:43

       And then I take my kid to gra- grab a, grab an ice cream in the streets of Sao Paolo. It just, it's, if- if- if you're truly happy and content with what you're doing, you will bring your family into it. And your family loves that you're happy, so therefore they're happy and you make them happy at the same time. So to me, you know, there's no such thing as a work life. It's one of the same. It's, uh, it's, there's no Sunday for me. Sunday is as good as a Monday. Or I might take a Tuesday off and I might work Sunday. I mean, just, to me, it's, as long as I'm happy what I'm doing, I will give it all my best. And most people are not, and that's where they struggle with this division where, okay, work finished, I start my life. There's no such a thing. If you're happy, work and life are one of the same.

   11. HSHarry Stebbings51:25

       Can I ask, do you think that's a luxury of being very successful already? Like, you can go into anything and say, "Oh, my kid's here, my partner's here," and, you know, everyone will kind of bow and give, you know, their house and, you know, any room that you need for your child to play on their iPad? Like, when you are more junior or younger, you almost feel guilty for bringing them along, for integrating them. Does that make sense?

   12. MCMarcelo Claure51:49

       No. You know, I, you know-

   13. HSHarry Stebbings51:50

       You don't think that's true?

   14. MCMarcelo Claure51:51

       No, I, I've done, I've been doing... At least, at least for me, and my life not similar to a lot of people, but, hey, I was a struggling entrepreneur and it was the same thing. I mean, it was, you know, we used to have these staff meetings in my house. And, and, and my employees became an integrated piece of my life, and, and I became an integrated part of their families. And so I, I disagree. Obviously you gotta keep boundaries, right? I mean, don't, don't show up with your kids to a board meeting and-

   15. SNShu Nyatta52:18

       (laughs)

   16. MCMarcelo Claure52:18

       ... sit in the same table because-

   17. SNShu Nyatta52:19

       Don't ask my opinion.

   18. MCMarcelo Claure52:20

       ... that is, that doesn't happen.

   19. HSHarry Stebbings52:22

       They might be more helpful than the VC and then you're really screwed. (laughs)

   20. SNShu Nyatta52:25

       (laughs)

   21. MCMarcelo Claure52:25

       I think, I think if you're vulnerable to people, and hey, we're all normal people, right? I mean, we all got kids, we all got problems and, and just bring that on, because, I don't know, at least I found that the combination of, uh, of bringing work and your normal everyday life together, it allows you to maybe execute better. So I don't feel I'm losing an inch.

   22. SNShu Nyatta52:46

       And I, uh, uh, one thing I've learned in my fewer years on this earth, there, there are no rules. We, we're, we're born into a context and we kind of look around and say, "Okay, I guess those are the rules." But the reality is there are no rules, and so you just have to do what works for you and ignore the advice and ignore the noise and just make it work for you.

   23. HSHarry Stebbings53:06

       I- I- I love that and, um, thank you for that.

   24. MCMarcelo Claure53:09

       Create your own path. Don't follow everybody's footsteps.

   25. SNShu Nyatta53:13

       (laughs) 'Cause nobody knows what they're doing.

   26. MCMarcelo Claure53:14

       And then-

   27. HSHarry Stebbings53:14

       It's a secret.

   28. MCMarcelo Claure53:15

       ... you're gonna be, you're gonna be another one of them. And you don't wanna be another one. You, you didn't build this podcast or what you're doing right now by just following the normal routine. This place where I am now is not a normal-

   29. HSHarry Stebbings53:27

       Office.

   30. MCMarcelo Claure53:28

       ... office. Imagine if you were just were a normal guy, you wouldn't have the amount of followers that you have.
10. 53:39 – 56:12

    How to Have a Hard Conversation

    1. HSHarry Stebbings53:39

       My question is, sure, I think qu- uh, having the hard discussions is the most important thing. When you think about having the hard discussions as a partnership today, how do you have them? Often people say have them straightaway, it's the right time to do it when you feel it. How do you think about having the hard conversations between-

    2. MCMarcelo Claure53:56

       I think it's personal. You know, we had a third partner.

    3. SNShu Nyatta53:59

       Yeah, we've had hard discussions already.

    4. MCMarcelo Claure54:00

       And we, we are only two partners and we were three when we started. And it was those hard discussions that made us be two. And Stu and I have difficult discussions, but, but we, we learn to compromise, right? And I'm, I'm a tough, I'm, I'm a tough person. I- I-

    5. SNShu Nyatta54:18

       (laughs)

    6. MCMarcelo Claure54:18

       ... usually like it my way, but I- I told you, I tell you that Stu and the other partners that we have have taught me that, hey, listen to others. And if they, they, lately they're changing my mind more often than ever before. And I think that's what partnership is all about. It's, you gotta bring your opinion, you gotta bring your boldness, you gotta bring... And at the end, compromise works in a marriage, compromise works in a partnership. Cro- And, and I think we're building, we're building a relationship of compromise where we respect each other's opinion-... i- incredibly well, even in our investment committee meetings where I might have a high level of conviction, but if my other partners don't, you know, I'm gonna retrench and in, and I've done the same. I've been able to convince them of things that at the beginning, they say, "No way." And I think that's- that's what is great. Like there's no, n- nobody's the owner of the truth in our firm.

    7. SNShu Nyatta55:20

       And, and back to the idea of following your gut that Marcelo mentioned earlier, I think you always know when a discussion is gonna be hard. Y- your body tells you, 'cause you don't wanna have it, and that's the strongest signal that that's exactly the conversation that should happen. So you have to, you have to go into the difficult places that your body is telling you you do not want to go to, whether it's discussing an investment or discussing something about the partnership. You're always getting these signals about what you should be focusing on, and that's what you tend to avoid, but it's a very strong indication that that's exactly what you should do. So you need a bit of courage just to listen to yourself and not be afraid to say whatever instinctively you feel is important without having a fight about it, which is the- the nuance.

    8. HSHarry Stebbings56:01

       What was the most recent difficult discussion that you can remember?

    9. SNShu Nyatta56:04

       Well, it was about the partnership.

    10. HSHarry Stebbings56:06

        Mm-hmm.

    11. SNShu Nyatta56:06

        So it wa- it was a difficult one to go from three to two, and it took a lot of time and lots of difficult discussions.

11. 56:12 – 58:54

    Quick-Fire Round

    1. SNShu Nyatta56:12

    2. HSHarry Stebbings56:12

       Are we ready for a quick fire round?

    3. SNShu Nyatta56:14

       We are.

    4. HSHarry Stebbings56:14

       Okay, let's do this. I say a short statement, you give me your immediate thoughts. We're gonna start with you, Marcelo. Let's do, what's the biggest challenge ahead do you think for you with Bicycle over the next 12 months?

    5. MCMarcelo Claure56:25

       To convince the world that Latin America is a great place to do business in.

    6. HSHarry Stebbings56:30

       Shu, what have you changed your mind on in the last year?

    7. SNShu Nyatta56:34

       I think, uh, peace is overrated.

    8. HSHarry Stebbings56:38

       (laughs)

    9. SNShu Nyatta56:39

       So just being very practical, I think markets, big markets matter a lot. And I come from Kenya, right, which is a $50 million, uh, 50 million, uh, people population. If Kenya was 150 million people population, it would be a completely different story on the world stage. And so Kenya and Uganda and Rwanda and Burundi and Tanzania and Ethiopia just need to merge. We need more M&A between countries, and I think that's way more important than this idea of sovereignty that everyone's obsessed about. So, I think sovereignty is overrated. I shouldn't say peace is overrated, sovereignty is overrated, we need more country M&A.

    10. HSHarry Stebbings57:10

        (laughs) Now that's a title. Marcelo, what's been your biggest lesson from working with Shu? How has working with Shu changed how you operate?

    11. MCMarcelo Claure57:18

        He's more calm, he's more thoughtful. So I'm learning to-

    12. SNShu Nyatta57:24

        (laughs)

    13. MCMarcelo Claure57:24

        ... t- uh, think a lot, you know, I'm, I'm a lot more thoughtful working with Shu than other people, because he has a strong opinion on things.

    14. SNShu Nyatta57:32

        Shu? The inverse. Uh, I've learned to respect the momentum and the instinct, and not to resist it, and to really channel all that energy in a productive way. So Marcelo brings a lot of really, really special stuff, and you can't get in the way of it, you have to channel it, so that notion of channeling.

    15. HSHarry Stebbings57:52

        Marcelo, who are gonna be the biggest winners in venture in the next 10 years?

    16. MCMarcelo Claure57:57

        Those that can help companies alter the course of their business in a positive manner, not those that can have access to deals.

    17. HSHarry Stebbings58:06

        Shu, on the flip side, who are gonna be the biggest losers in venture in the next 10 years?

    18. SNShu Nyatta58:12

        Oh, it's easy to answer with the opposite of that.

    19. HSHarry Stebbings58:13

        I know, isn't it? Sorry about that. (laughs)

    20. SNShu Nyatta58:16

        Passive beta capture, you know, this whole idea that you just buy an index of tech and you sit aside and let it perform, I think that's gone. I think you have to be a stock picker. And so people that are just trying to place a range of bets, I, I don't think that works. Even in things like AI, I think the, the surge into AI now, just we, we have to place a bunch of bets, I think that's wrong. I think you need to pick, just like if you placed a bunch of bets in search but you missed Google, it wouldn't have mattered. It was the right idea, but you really had to have picked Google, you had to have picked Amazon. So I think picking, those who resist picking and instead go for big trends, that will lose.

    21. HSHarry Stebbings58:53

        (laughs) I-

12. 58:54 – 1:01:04

    Meeting Steve Jobs

    1. HSHarry Stebbings58:54

       I do agree. If you could choose one board member, Marcelo, that you could have to sit on a board of your company, Bicycle, you name it, who would you have?

    2. MCMarcelo Claure59:02

       Dead or alive?

    3. HSHarry Stebbings59:03

       Dead or alive.

    4. MCMarcelo Claure59:04

       Steve Jobs.

    5. HSHarry Stebbings59:05

       (laughs) Why Steve, for you?

    6. MCMarcelo Claure59:08

       He's probably the most intense individual I've ever met in my life.

    7. HSHarry Stebbings59:13

       Take me through this. Sorry, I have to ask this. Take me through this meeting. How come the meeting with Steve Jobs came to be?

    8. MCMarcelo Claure59:19

       So back then I used to own Brightstar.

    9. HSHarry Stebbings59:22

       Mm-hmm.

    10. MCMarcelo Claure59:23

        And I had an idea of how could Apple actually double their sales. And after many emails to Steve Jobs, which he wrote me back, "No interest, no interest." One day he got tired of everybody pinging him that he had to meet me, so he agreed to take a meeting, and that's how buyback and trading of mobile phones got invented. The whole idea of telcos make you sign it to your contract, Apple makes new technology every year, the only way you get people to actually get, uh, their technology every year is by buying back their old phones. And that's something that it took a very long time and some pretty intense meetings of somebody who absolutely seek perfection in everything that was done. And it was just fascinating to me to learn of how you never settle for less than 100%.

    11. HSHarry Stebbings1:00:17

        I love that. That's a fantastic story. And-

    12. MCMarcelo Claure1:00:19

        And that's how buyback and trading got in- got invented.

    13. HSHarry Stebbings1:00:23

        I love that. I did not know that. Uh, Shu, again-

    14. SNShu Nyatta1:00:26

        Same question. Uh, I'm gonna pick Neil Shen.

    15. HSHarry Stebbings1:00:31

        Ooh.

    16. SNShu Nyatta1:00:33

        He was a banker, he was a founder, he was an investor. He, he's an incredible investor. I mean, at Sequoia China, I don't even want to guess at the returns, but it's an, an absurd series of funds, you know, hall of fame series of funds. And he's managed to play this incredible role in the Chinese ecosystem, elevating the ecosystem and making great investments at the same time. I just think that wealth of knowledge and experience would be incredible.

    17. HSHarry Stebbings1:01:00

        I totally agree. I think Neil is, uh, uh, awesome. So

13. 1:01:04 – 1:13:48

    Investing $150M in FTX 🚨

    1. HSHarry Stebbings1:01:04

       a line there. Uh, Marcelo, what's your biggest miss and how did it change your mindset as an investor?

    2. MCMarcelo Claure1:01:10

       Probably NewBank. We didn't get there earlier on and we were stubborn. Uh, we were stubborn in evaluation and the founder was more stubborn-

    3. HSHarry Stebbings1:01:19

       (laughs)

    4. MCMarcelo Claure1:01:19

       ... and the founder won.

    5. HSHarry Stebbings1:01:20

       (sighs)

    6. MCMarcelo Claure1:01:20

       Uh, and I think now, you know, at the end, you know, I'm a huge personal investor into NewBank. I got SoftBank to be an investor into NewBank, but we were so new. I think it was our first week and we just said, "No, this is it," and we were wrong. So I always- I always (laughs) tell people- ... it's hard to say you're a great Latin American investor having missed NewBank at the beginning, and I say it publicly. And we bet on another horse and that horse didn't perform as well, you know, as NewBank did. So it's, uh, I mean, I've made lot- lot of bad investment decisions in my life, but that one bothers me because it's within my region, it's within my knowledge, and if there's one thing that I learned is st- don't be stubborn and I was very stubborn.

    7. HSHarry Stebbings1:02:02

       I love that. The first week you're always gonna be disciplined.

    8. MCMarcelo Claure1:02:04

       Exactly.

    9. HSHarry Stebbings1:02:05

       Yeah.

    10. SNShu Nyatta1:02:05

        Yeah.

    11. MCMarcelo Claure1:02:06

        Sure.

    12. SNShu Nyatta1:02:06

        Missing- missing the good ones is as bad as investing in the bad ones.

    13. HSHarry Stebbings1:02:09

        Mm-hmm.

    14. SNShu Nyatta1:02:10

        Maybe worse. Um, I was gonna say NewBank, but now I can't. Probably OpenAI.

    15. HSHarry Stebbings1:02:18

        Hmm.

    16. SNShu Nyatta1:02:19

        So when we were at SoftBank in 2017, I think thereabouts, Masa, correctly, was all over AI and, um, the team was small enough that we were all focused on the topic and looking around at what was interesting and being built in the world of AI. And we came across OpenAI, we knew OpenAI, we had discussions about OpenAI, and we just didn't do it. I think that was a huge miss, that would've been incredible. Um, and I think part of the fear was they're trying to build so much, and sometimes you have to build everything. Um, there are industries or markets that are thin protocol markets, meaning there's just not a lot of infrastructure and so the company has to do a lot of the work that's just not existing in the ecosystem. That's true in Latin America, by the way. A lot of industries in Latin America are thin protocol industries, there's just nothing and so a company has to do a lot, and often that turns investors off 'cause you say, "This is very operationally intensive or capital intensive," or what have you. But you need that to create the business and it's a business that's more likely to endure.

    17. MCMarcelo Claure1:03:16

        Those are ones that we miss. I'll tell you one that we did, that was a terrible miss, and that was FDX. And I did that myself at SoftBank and it was one thing that probably taught me the best lesson ever-

    18. HSHarry Stebbings1:03:29

        Oh fuck it, I've gotta ask this. How was the meeting with Sam?

    19. MCMarcelo Claure1:03:32

        Do not e- uh, I don't even wanna tell you. But do not ever invest in things that you don't truly understand just because of FOMO. And I remember, it was one day before and Sam shared with me the list of old investors and I was very lucky, right? I had- I had a tremendous amount of decision range within SoftBank. You know, I'm- I can honestly say that my entire investment life, Masa never said no to any investment that I ever decided to do. And I went to Masa, I said, "Masa, I just cannot understand what am I missing? Why is everybody investing... Are we going to be the only idiots who are now going to invest in this?" And then Masa looked at me and said, "Your decision." So I invested $150 million on FDX, which, I mean, apologies to SoftBank because I should have never made that investment, but it's probably one decision that has changed my life forever. I'm never gonna invest in something that I don't truly understand, and I'm never gonna invest based on what everybody else is investing. And that's gonna be a great learning decision, that's gonna be a great learning lesson for me of to never break those rules, right? And- and I broke the golden rule because I didn't want to be the only guy left considering I was in charge of also doing crypto within or- or blockchain within the SoftBank ecosystem. Big miss, but a big lesson.

    20. HSHarry Stebbings1:04:54

        Can I ask you a hard one which is, like-

    21. MCMarcelo Claure1:04:56

        Yeah.

    22. HSHarry Stebbings1:04:56

        ... you're a very bus- very busy man. To understand an industry, sometimes you have to study it. Uh, the big challenge that I have is I- I run media companies as well, we do a- a lot and our media teams are big now. I don't have time to study industries well enough to make an investment decision in a week. Do you? And if so, how do you do it?

    23. MCMarcelo Claure1:05:17

        Just loo- we are lifelong learners, right? Like, I am bothered of my not so big knowledge within the AI ecosystem. So now I became a Harvard executive fellow and I'm in charge of- of one of the biggest lab, which is the Digital Cube, the D3 lab at- at Harvard, which is the AI lab at Harvard, and I work very closely to always be my- keep myself informed and you're able to leverage an incredible ecosystem of incredibly intelligent people, Harvard, and be able to bring that knowledge into what I do for everyday living. If not, it would be impossible for me to try to learn it all myself. So now I wouldn't consider my expert, but I have pretty good knowledge of what is going on in the AI world, and you always have to find clever ways to be that. I tried to do that within blockchain and it was so massive and people weren't sharing information and you were just investing in momentum, that- that is never gonna happen. I'm never ever gonna invest into something that I don't have a good level of understanding.

    24. SNShu Nyatta1:06:25

        And also Bitcoin go up. I mean... (laughs)

    25. MCMarcelo Claure1:06:28

        No, now they say Bitcoin can go up to $100,000 again.

    26. SNShu Nyatta1:06:30

        (laughs)

    27. MCMarcelo Claure1:06:30

        I don't know who- who... Uh, uh, very respected analyst.

    28. SNShu Nyatta1:06:33

        Bitcoin go up.

    29. HSHarry Stebbings1:06:34

        I do find stature and success helps that learning though. Like, you can pick up the phone to-

    30. MCMarcelo Claure1:06:40

        Sure.

Episode duration: 1:13:48