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

1. 0:00 – 4:34

   Jag’s background

   1. LRLenny Rachitsky0:00

      NewBank is bigger than Coinbase, Robinhood, Affirm, SoFi, and Lemonade combined. 80 to 90% of NewBank's growth is through word of mouth.

   2. JDJag Duggal0:10

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

   3. LRLenny Rachitsky0:17

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

   4. JDJag Duggal0:22

      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 Sean Ellis Score hit the threshold that we find really compelling.

   5. LRLenny Rachitsky0:35

      I want to talk about strategy.

   6. JDJag Duggal0:36

      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.

   7. LRLenny Rachitsky0:49

      Where do you think all this goes in the future?

   8. JDJag Duggal0:51

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

   9. LRLenny Rachitsky0:59

      (instrumental music) Today, my guest is Jag Duggal. 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. With that, I bring you Jag Duggal 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. 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. This enables fast authorization checks at enormous scale while maintaining a flexible model that can be adapted to even the most complex use cases. If you're currently looking to build role-based access control or other enterprise features like single sign-on, SCIM, or user management, you should consider WorkOS. It's a drop-in replacement for Auth0 and supports up to one million monthly active users for free. Check it out at workos.com to learn more. That's workos.com. This episode is brought to you by Mercury. Mercury knows your financial operations are complex. It doesn't have to be this way. I've been a super happy customer of Mercury for over a year now, and it's honestly hard to imagine a better online banking experience can exist. Most founders and finance teams have to cobble together a patchwork of tools to reconcile transactions from different sources, work extra hard just to get a holistic view of cashflow and how it maps to company priorities, and struggle to get answers from platforms that all speak different languages. Mercury knows that there's an art to simplifying this complex patchwork. With new bill pay and accounting capabilities, you can pay bills faster, stay in control of company spend, and speed up reconciliation. The end result is the precision, control, and focus that startups need to transform how they operate. Apply in minutes at mercury.com and join over 200,000 ambitious startups like mine that trust Mercury to get them to perform at their best. Mercury, the art of simplified finances. Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank & Trust, Members FDIC.

2. 4:34 – 6:01

   Nubank’s remarkable achievements

   1. LRLenny Rachitsky4:34

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

   2. JDJag Duggal4:38

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

   3. LRLenny Rachitsky4:44

      I'm even more honored. Thank you for being here. I want to start by sharing just some facts about NewBank that I think are going to blow people's minds. I think a lot of people in the US especially are sleeping on NewBank, and I think this is gonna help people that are listening pay even more attention to the stuff we're going to talk about and the lessons we're gonna share. So one, NewBank is bigger than Coinbase, Robinhood, Affirm, SoFi, and Lemonade combined. 80 to 90% of NewBank's growth is through word of mouth. Three, NewBank 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.

   4. JDJag Duggal5:29

      That's right.

   5. LRLenny Rachitsky5:30

      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?

   6. JDJag Duggal5:42

      I believe that is, that is correct. We've 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.

   7. LRLenny Rachitsky5:54

      Uh, I like that that's a record no one can break 'cause it was the first one. That's a sneaky way to get a record.

   8. JDJag Duggal5:59

      (laughs)

   9. LRLenny Rachitsky5:59

      That's hilarious.

3. 6:01 – 11:23

   Nubank’s product development process

   1. LRLenny Rachitsky6:01

      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 80 to 90% 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 you're a consumer business, B2B, a bank especially, (laughs) 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 that enables you to build a product that people get fanatical about and just want to tell all their friends about?

   2. JDJag Duggal6:44

      Yeah. I think there are a few things that are the fundamentals of, of making that happen. And to be clear, a l- a lot of this predates my joining the company ab- a, a, 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 Paolo. And I remember walking to lunch one day with the client, um, who was a friend of mine, and we were going to a classic churrascaria, uh, in Sao Paolo. And we wa- we were walking by his bank branch. And we were at a, a stoplight, and he basically said, "That's my bank, and I hate them." It was 1997. And it always stuck in my head. It stuck in my head for 20 years later when, you know, Dawid first reached out to me. So we, we were tapping into a deep pain point. We can go into exactly why, but that was, I think, one, one thing. The second thing that, that I would say, and this is very intentional from, from Dawid and Ed and Chris, our founders, is we have a culture at Nubank 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 set of peculiar phrase, set of words strung together. We want our customers to love us fanatically. And I remember when I interviewed at Nubank for the first time and actually flew down to Sao Paolo, 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, sh- uh, short term financial viability, which is a real thing when you're a venture funded startup, um, any number of reasons why you can compromise those things on the edges in, in a decision sort of day to day, minute to minute, "Ah, we can cut the, the edges, cut the corner here on that." A- 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 customer's love. Will they want to tell their friends and, and, 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, the, the, the trade craft of product development. You make sure that you focus on customer discovery before you start building. You make sure that that discovery, uh, is, 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 & Gamble to Google to you name it, of maybe you can't ask the customer to tell you what massive new innovation they, they would love. You've got to observe them and find their pain points even when they aren't noticing it. And then you, uh, you build... As you build, you've, 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 trade craft follows the, the focus on finding a real deeply held, emotionally held pain point, and a culture that says, "That's your North Star."

4. 11:23 – 12:16

   Nubank’s values

   1. JDJag Duggal11:23

   2. LRLenny Rachitsky11:23

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

   3. JDJag Duggal11:30

      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. Um, and we have many instances of, of our employees sort of taking that degree of extreme ownership, um, as they build products and get them launched.

5. 12:16 – 15:21

   Building products people love fanatically

   1. JDJag Duggal12:16

   2. LRLenny Rachitsky12:16

      Okay. And then going back to this idea of building products people love fanatically. You talked about how there's this th- the number one principle in, 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 where 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?

   3. JDJag Duggal12:52

      Yeah. We do a few, we do a few things. And again, I, I don't wanna also overstate that, you know, we've achieved some kind of nirvana. W- we, we honor many of these things in the breach sometimes. But...

   4. LRLenny Rachitsky13:04

      (laughs)

   5. JDJag Duggal13:04

      We, we have a s- a s- a series of, of techniques that we've, you know, begged, borrowed, stolen from other places, some of which we've in- invented o- on our own. But some examples, we love 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. 'Cause if you can't tell me in two paragraphs why the customer you're building this for should care, then you have still work to do. So that's one technique. We do have product and design reviews, um, several times a week, uh, 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, um, on the dimensions of quality, on the dimensions of complexity, on the dimensions of, of price, uh, and usually on the dimensions of all three of those at the same time, uh, and breaking some of the trade-off constraints that you often wrestle with, and seeing if that's possible, which, which i- isn't always possible, but we, but we, we frequently, uh, 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, uh, the measurement stuff. Um, and y- some of your previous guests have talk- talked about product market fit, and how do you measure. We, actually, it's strange 'cause, you know, I was sitting here in Silicon Valley for, for, you know, well over a decade. I land in Sao Paolo when I first joined Eubank, and the small product team at the time is telling me about this thing called Sean Ellis score, and we recently had Sean visit us in Sao Paolo and talk to all of the product managers and designers. But we ha- are, are amongst the most fanatical followers of his methodology anywhere in the world. We rarely scale a project, a, a, a product we've launched until we know the Sean Ellis score, and we know that it's hit a threshold that we find

6. 15:21 – 21:27

   The Sean Ellis score

   1. JDJag Duggal15:21

      really compelling.

   2. LRLenny Rachitsky15:22

      Can you describe the, the actual score and the, and the approach?

   3. JDJag Duggal15:24

      Yeah. The s- the Sean Ellis score is a really simple methodology used by lots of, lots and lots of companies that, that a, a gentleman named Sean Ellis, uh, popularized well over a decade ago, which basically asks your customers at each stage... And, and at each stage you have a small number of customers, then a larger group and, and growing over time. But at each stage you ask 'em, um, "How disappointed would you be if this product went away?" And what Sean has said is that if, if least 40% of your customers are not very disappointed, not just a little disappointed, but very disappointed... He has sort of a essentially a three point scale, uh, not disappointed, somewhat disappointed, very disappointed. If at least 40% are not very disappointed, you haven't reached product market fit. Now, we've had to do some things in Eubank. Brazilians are a, um, culturally happier group-

   4. LRLenny Rachitsky16:20

      Mm.

   5. JDJag Duggal16:20

      ... than the global average. So for us, our threshold isn't 40%. We've generally moved it up to 50%.

   6. LRLenny Rachitsky16:26

      Oh, interesting.

   7. JDJag Duggal16:26

      I don't believe we have product market fit unless 50% of Brazilians are telling us they, they would be very disappointed, 'cause Brazilians are inherently polite. Um-

   8. LRLenny Rachitsky16:36

      That's fascinating.

   9. JDJag Duggal16:37

      Uh, uh, and 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, 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, a- as well. And we, we are maniacal about tracking how we do. And again, we, we, we compensate for some cultural biases, and we make sure that we hold ourselves to a high bar. But, uh, there have been, for example, in Mexico, we've recorded an NPS when we f- when we launched the first couple of years of 94, 95, right? So, um-

   10. LRLenny Rachitsky17:22

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

   11. JDJag Duggal17:23

       Yeah. Which is way better than we got in Brazil, but our NPS scores skew in the 70s, 80s, and, and occasionally 90s. 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, uh, those are the things we build in. Those are the things we build in.

   12. LRLenny Rachitsky17:44

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

   13. JDJag Duggal18:00

       NPS is post-launch. We also look at metrics like churn to make sure that, uh, we're not building a leaky bucket, and that's part of this-... viral customer acquisition loop that we've built, we wanna 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 (laughs) frustrating treadmill to be on. So, um, so I am personally maniacal about making sure that the bucket doesn't have a hole in the bottom.

   14. LRLenny Rachitsky18:42

       So then this Sean 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 50%, less than 50% of people are not very disappointed." Is that how it's kind of operationalized?

   15. JDJag Duggal19:04

       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 gonna get in any product review that's a post-launch, you know, post-data kind of product review is, "What's the Sean 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 gonna tell their friends about it?" That's- that's pretty baked in culturally at this point.

   16. LRLenny Rachitsky19:29

       This is an incredible insight and I think it explains a lot of the success you guys have had, 'cause 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?

   17. JDJag Duggal19:45

       Yeah.

   18. LRLenny Rachitsky19:46

       Most people are like, "Ah, whatever. I don't need this thing."

   19. JDJag Duggal19:48

       Yeah.

   20. LRLenny Rachitsky19:48

       And you're saying you look for 50% of people feeling very disappointed if this new thing they've never used before goes away?

   21. JDJag Duggal19:58

       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 in- we were in a product review several years ago and our lead designer, um, uh, who's ex-Google and ex-Facebook, um, w- we were in a review together and- and the team was saying, "We think this is good enough for launch." And he used the phrase which both, uh, Christian Kiera, 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? 'Cause that's the bar. Particularly for some of our tent pole 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, V- VC funding basically goes to Google and Facebook. (laughs) 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.

7. 21:27 – 25:07

   An example project using the Sean Ellis score

   1. LRLenny Rachitsky21:27

      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, like, "Here's the thing we were missing."

   2. JDJag Duggal21:35

      Yeah. I'll give you one that we're wrestling with right now. We have a product called (Portuguese) a payments assistant. Paying bills in... It's right now only launched in Brazil. We haven't yet launched it in- in Mexico and Colombia. Paying bills in Brazil is quite complex. There are four different ways, four different payment rails different payments have to g- you know, that are, that different payments use. From the mobile payment system that has- that has exploded in Brazil over the last three years called PIX that's become fairly world-famous in the fintech world to more standard and some more, uh, 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 got to collect your bills. You got to make sure they are... That you pay them. And some of the rails actually aren't that reliable. So you've paid it, it doesn't go through and the consequences for not paying a bill is getting reported to the credit bureau and becoming what is called (Portuguese) 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've, if you are not embarrassed by V1, you've waited too long. As we, as we've done that, uh, last year, we found that a very interesting pattern. We had a decent Sean Ellis score. Um, borderline 40. I forget the exact number, but basically in that ballpark. But we found that customers who had... There was a small cohort of the customer base who had more than four plus commitments registered and even more so within that small cohort, an even smaller bullseye cohort who had more than four commitments on at least two of the four rails. And their Sean Ellis score hit 70.

   3. LRLenny Rachitsky23:39

      Oh, wow.

   4. JDJag Duggal23:40

      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 gonna auto- you know, we're gonna 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 an incrementally better experience. 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, the 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

8. 25:07 – 28:20

   Picking up the phone and calling customers

   1. JDJag Duggal25:07

      ago.

   2. LRLenny Rachitsky25:07

      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 what came up in this exam?

   3. JDJag Duggal25:20

      We, we do that fairly frequently. When we did our... We have a, a, a high income rewards credit card. We, it's called Ultra Violeta. We went through a similar process where at launch, there were many different s- customer segments, but there was one that really loved the product and it was not surprising. There were the ones that the cust- where the customer spent enough each month that they got the fee waiver, and then all of the other benefits that we had built in really, um, resonated. Um, whereas if you're paying the monthly fee, those other benefits were, were not quite as exciting-

   4. LRLenny Rachitsky25:56

      Mm-hmm.

   5. JDJag Duggal25:56

      ... um, 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 1,000 customers, taking three weeks serving 1,000 customers, getting a bunch of crosstabs." All... Even at the end of which it's very hard to read the real fine-grain customer feedback. So I'm, we just tell them, "Call 10 of them. Pick up the phone yourself. Don't ha- 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 de- of, 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 could predict what's customer 6, 7, 8, 9, and 10 are gonna tell you. And then you know what it is that is the gap, or what it is that is truly resonating that you wanna double down on. So we're constantly trying to iterate in small ways, the ways to get really that voice of the customer straight lined into the people who are building the product.

   6. LRLenny Rachitsky27:11

      I love this advice. I imagine as a PM that is, uh, extremely scary to go call a customer. Most people don't do that. Um, by the way, do you actually operationally, is it actually a call or do you recommend an email? What do you actually recommend they do, 'cause-

   7. JDJag Duggal27:23

      We literally pick up the phone.

   8. LRLenny Rachitsky27:25

      Okay. (laughs)

   9. JDJag Duggal27:26

      Pick up the phone. Um-

   10. LRLenny Rachitsky27:27

       They call. Okay, great.

   11. JDJag Duggal27:28

       ... because you can get tone of voice. You know, Brazilians and Mexicans are incredibly expressive.

   12. LRLenny Rachitsky27:35

       Mm-hmm. (laughs)

   13. JDJag Duggal27:36

       Um, there is, there is a degree of real fine-grain sense that the statistics never tell you.

   14. LRLenny Rachitsky27:43

       Yeah.

   15. JDJag Duggal27:43

       That, uh... And it's very aligned with, you know, design thinking and there's a lot of literature around how this works well. 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 min- as little overhead as possible to make sure the voice of the customer is coming directly into the teams that are building it.

   16. LRLenny Rachitsky28:09

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

   17. JDJag Duggal28:17

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

9. 28:20 – 30:42

   The importance of starting small and iterating

   1. JDJag Duggal28:20

   2. LRLenny Rachitsky28:20

      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?

   3. JDJag Duggal28:30

      You know, we've, we've used a series of tools, um, many of this, the, the main survey vendor tools, we still use many of them. But we don't standardize or find, uh, one that dramatically changes our life beyond the mindset of we are gonna 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 NewBank 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 launching this thing, (Portuguese) . 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 gonna be amazing.'" And the pressure on that product manager, uh, 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 NewBank is we are not going to take a small problem and scale it, 'cause if we do that, we end up with a big mess. If 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. And then once we get it right, scaling, if you do it right, in many cases, takes care of itself, 'cause 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 NewBank or places like Google and Facebook, you can make any product look great for months, if not years, because you have such a large customer base that you can always get 'em to try it with all sorts of basic techniques. But-... you're bouncing a dead cat and, uh, 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 it brings science to some of that art of making that judgment call.

10. 30:42 – 34:10

    Pushing back effectively

    1. JDJag Duggal30:42

    2. LRLenny Rachitsky30:42

       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 gonna work, this is a bad idea. But either they don't think they should be pushing back or they are not good at it. From the PMs you've worked with that are good at convincing you 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?

    3. JDJag Duggal31:14

       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, we 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. Um, if you really don't think it's gonna work, don't tell me what I wanna hear. It's 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. Um, you know, these dynamics get very real very quickly that, "Look, I don't think it's gonna 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, 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 who have, you know, pivoted them pretty dramatically, and there's a lot of respect for someone who has a real clarity of thought and a, 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 most senior executives in whichever company are strong willed and bring strong opinions. That's part of the job description. That's okay. It is your job, whether product or design or engineering or, or whatever function as a leader to, if you think you are practicing for one of those senior jobs at sort of, let's say, a mid-level, then you got to be, the... it doesn't come miraculously when you get a, a, a C-suite title. It's something that's gotta be practiced. And, and, and it's something that is expected. And I think that's not a just a Nubank thing. Certain cultures promote it better than others, but, um, but I think it's, it's pretty, uh, universally important. And so I would just encourage people to, to try it. Understand the trade-offs, understand the challenge, articulate the other side, but if you genuinely believe it's not r- yet ready to scale your product, at the end of the day, the big mess is the thing you're still gonna own. And we're all gonna forget that we told you to scale the thing. We're all gonna 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 and, uh, and it'll work out better in the end.

11. 34:10 – 37:53

    Uncovering pain points through customer research

    1. LRLenny Rachitsky34:10

       I wanna come back to one more thread and then I'm gonna go in a different direction.

    2. JDJag Duggal34:13

       Yeah.

    3. LRLenny Rachitsky34:13

       Uh, 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 what to build. Do you have any just, uh, I don't know, tips or tactics or, uh, 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?

    4. JDJag Duggal34:40

       I will 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, um, we're, I and we are not doing it as well. I've never seen it done quite as consistently great as it could be. Um, and I think it's an area for where, like, design thinking and a lot of the design function can help us. Um, but, uh, 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 Nubank and other times we, we, we miss on one dimension or the other. First off, per your, uh, your Jeff Bezos, uh, uh, anecdote, uh, 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. So never lose sight of the value of the customer's words and the anecdote. That's one. The second, uh, 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. If you don't have a hypothesis, you're gonna spend a lot of time researching, you're gonna get a lot of data back, qualitative, anecdotal or quantitative, and you're not gonna know what to make of it 'cause it's not v- either validating or invalidating your hypothesis 'cause there isn't a hypothesis. So it just becomes an interesting conversation.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. Uh, so I think that's another common pitfall. I've fallen into that one (laughs) 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, observe more than ask questions if you can. Ask indirect questions more than direct ques... Would you love this product, right? Excited product manager has been working for two months on a, on a design. 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 mul- 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.

12. 37:53 – 43:11

    An example of setting a clear hypothesis

    1. JDJag Duggal37:53

    2. LRLenny Rachitsky37:53

       With the hypothesis point, just to make sure people understand your suggestion there is, before you start talking to customers, doing your user research is, 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?

    3. JDJag Duggal38:07

       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.

    4. LRLenny Rachitsky38:17

       Mm.

    5. JDJag Duggal38:18

       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.

    6. LRLenny Rachitsky38:26

       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 wanna bias anyone against it." Is there, is there a quick example of a hypothesis?

    7. JDJag Duggal38:41

       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 & Gamble, right? The... People hate mopping and they... The... Uh, they will do it and they won't even realize how painful an experience it is 'cause 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 bringing strong hypothesis to, that this is a real problem, even if customers aren't telling you it's a problem 'cause they've just sort of gotten used to it. So that's one. Um, we have a hypothesis at NewBank. I'll give you one that's live. We have a hypothesis at NewBank that the joint bank account... I was doing some research on this just last week. Uh, the joint bank account was invented in the early... It's actually hard to say, 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, um, where women were not allowed to open a bank account without their husband's 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 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, uh, 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 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're experiencing pain points. And it becomes very hard when you're in and they say even a... 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.

    8. LRLenny Rachitsky41:51

       Mm.

    9. JDJag Duggal41:52

       And you play the devil's advocate. So that, those are the kinds of things we, we, um, we search for as, as we build products.

    10. LRLenny Rachitsky42:01

        That sounds ac- 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 sync 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. Spreadsheet import is such an awful experience in so many products. Customers get frustrated by useless messages like, "Error on line 53," and never end up getting started with your product. OneSchema intelligently corrects messy data so that your customers don't have to spend hours in Excel just to get started with your product. For listeners of this podcast, OneSchema's offering a $1,000 discount. Learn more at oneschema.co/lenny.

13. 43:11 – 52:16

    Developing a strategy

    1. LRLenny Rachitsky43:12

       I want to talk about strategy.

    2. JDJag Duggal43:14

       Yes.

    3. LRLenny Rachitsky43:14

       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-

    4. JDJag Duggal43:26

       Mm-hmm.

    5. LRLenny Rachitsky43:27

       ... 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.

    6. JDJag Duggal43:34

       I will readily admit I bring a bias. I spent almost a decade at the beginning of my career, right after college, working at a strategy consulting firm, right? So I bring a- 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- a nice PowerPoint. It was to ship code, and I was doing a poor job of (laughs) that for at least the first 12 to 18 months. Um, but I think there is almost a countervailing dogma 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- a poor strategy is a waste of everyone's time, and because the strategy isn't clear, you can waste a lot of time executing, uh, years and years against something that was destined never to work. One of my favorite quotes from The Valley, um, 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 and 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 'cause no plan ever is, you will have a clearer read on if you are going off course 'cause you kinda ha- you have a very clear idea of what was supposed to be happening. And so I think s- being very clear in your strategy is really important. Um, you've had some great guests on the podcast. Um, Richard Rumelt is one of my absolute, uh, 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. It is a coherent plan for how you would 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, a- aspiration. Nubank's strategy isn't, "We wanna be the world's largest neobank." We do, but that's not an interesting way to dimensionalize the problem. 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 'cause 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. 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, uh, working backwards from that, I think, is- is really, really important, and if you get that strategy right, it in- 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, you're trying to serve all the customers, "Maybe we should go to Mexico," uh, 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 country. 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. When you're a startup, you're not trying to preserve anything. (laughs) You're trying to build something. It requires concentrated bets, not hedging.And because you're concentrating bets, those, those bets are high stakes. You need to be very, very clear on what, what bet you're making and why you think it's gonna succeed.

    7. LRLenny Rachitsky49:04

       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?

    8. JDJag Duggal49:24

       One is taking it seriously. It's a little bit like what we talked about with Nubank's culture around 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 re- relatively recent guest of yours, Christopher Lochhead, who I, who I really admire, um, whether it's Where to Play/How to Win from Roger Martin, which is a phenomenal book about-

    9. LRLenny Rachitsky49:52

       He's coming on the podcast in a, in a few weeks.

    10. JDJag Duggal49:54

        Is he? He's, he's f- he's fantastic. And, um, 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, that we literally have 'em on Nubank 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, in, in slightly different ways. Once you understand the frameworks and you distill them, then it's about practicing 'em, and practicing them is scary. Hedging is, hedging is appealing. Hedging means you don't have to, you don't have to make choices. Um, hedging sounds smart. Uh, concentrating all your bets is the thing that desperate people do. And startups are desperate, are desperate, uh, entities because they're burning cash in almost every instance. But successful startups, the ones that become profitable, I'm very wary having, you know, giving the places I've worked, of the successful company with one or two monster products, and Nubank's now in that fortunate position, that starts to get conservative, that starts to forget that focus, concentration, customer, uh, obsession are every bit as important, that even though the company won't go bankrupt if products three, four, five, and six don't, don't succeed, 'cause product one and two are, are, are monster cash flow drivers, that's a slow path to death. And so, practicing that discipline and having i-... and I use this word very, um, intentionally, having the courage to make those hard choices, uh, 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 are, are, are MBAs, is really important. And then it's a, it's a matter of you get better the more you do it and, uh, and you get more, more practiced and more grooved and more principled in how you get to a methodology the more you do it.

    11. LRLenny Rachitsky52:15

        Did you say the mugs,

14. 52:16 – 53:10

    “Be fundamentally different, not incrementally better”

    1. LRLenny Rachitsky52:16

       uh, at Nubank say, "Be fundamentally different?"

    2. JDJag Duggal52:20

       My... Uh, the product team-

    3. LRLenny Rachitsky52:22

       Uh-huh.

    4. JDJag Duggal52:22

       ... um, uh, a little over a year ago, uh, we, we put together some schwag, which was fundamentally, I have a mantra within the company s- 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 wanna overstate the case, there are certain features where you're in the incrementally better business. Not every single thing of the hundred things you launch in a year can be fundamentally different. But we're searching for those anchors that are gonna be fundamentally different all the time, around which you build some sustaining innovation as well. But we are in the fundamentally different business, not the incrementally bet- better business.

    5. LRLenny Rachitsky53:09

       I love

15. 53:10 – 57:37

    Category design

    1. LRLenny Rachitsky53:10

       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 me- mentioned Christopher Lochhead, uh, former guest. This, 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? It is a good idea? Uh, 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 like how Nubank did this.

    2. JDJag Duggal53:34

       You know, Lenny, literally earlier in this week, I was listening to your podcast with, I believe it's Todd Jackson, uh, ex-Gmail product leader and now venture capitalist, and you guys had a very, uh, interesting discussion about it. And I think he, he took largely the other side of the argument, that you go in a category where customers a- already spending money. And I... 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, 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, the long list, Salesforce, uh, et cetera, et cetera. Um, and that's really important. In Nubank's case, we were the first, and it is actually is 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, this sort of rapid inflection. And a branchless bank that could bring, as Daveed likes to say, "A bank branch, put a bank branch in your pocket," where ac- at the time, access-... was the big problem. And that you could do that on a c- 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, including in the US, where the answer was, "We're gonna do a bank account first," Nubank's answer was, "No, we're gonna do credit first." And credit is 10 times harder and, and 100 times more risky. 'Cause you get credit wrong as a young company that doesn't know how to do it yet, you blow it, 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 D2C and we've been able to price it very, uh, to undercut the pricing pretty dramatically. Um, 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 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 gonna be a bit better," and I think Todd would probably agree with this, eh, given the way he described it, you should try to be reinventing that category even if you're not inventing that category.

    3. LRLenny Rachitsky57:17

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

    4. JDJag Duggal57:34

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

    5. LRLenny Rachitsky57:36

       Okay. There's a

16. 57:37 – 1:00:46

    Nubank’s founding story and goals for the future

    1. LRLenny Rachitsky57:37

       few more things I wanna touch on, uh, before we wrap up. Um, it feels like Nubank is one of the historically most successful companies at launching new business lines.

    2. JDJag Duggal57:46

       Mm-hmm.

    3. LRLenny Rachitsky57:46

       I think you guys are maybe, like, 10 years old, and how many product/business lines are there at this point?

    4. JDJag Duggal57:51

       Eh, it depends on how you categorize it. But I would, I would say we have roughly a dozen to 20...

    5. LRLenny Rachitsky58:00

       Wow.

    6. JDJag Duggal58:01

       ... for our product lines.

    7. LRLenny Rachitsky58:01

       Okay. (laughs)

    8. JDJag Duggal58:02

       Um...

    9. LRLenny Rachitsky58:02

       That's wild.

    10. JDJag Duggal58:03

        Our story started as a Brazil... We were a Brazilian credit card monoliner, in an a- in an app and, and all the rest of it. Around the time, slightly before, but around the time I joined, the m- the phase two of the company, the mandate of what we were trying to do, which has really been the story the last five years, was we're gonna 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 to increasingly a primary banking relationship. About half of our 90 plus million customers are now, uh, f- 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 depend on how you look at that matrix, we are, you know, a dozen plus, uh, products and 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 US, and we're also envisioning a world where banking is, again, to use the phrase that, that we love at Nubank, "fundamentally different" than it is, has been in the last 100 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. We're building a personal banker, which today, I don't know, 10 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, 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 Lochhead and his co-authors, um, language, that's the new category that we are trying to define over on a global basis.

    11. LRLenny Rachitsky1:00:40

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

    12. JDJag Duggal1:00:44

        That's it.

    13. LRLenny Rachitsky1:00:45

        I wanna follow

17. 1:00:46 – 1:03:46

    Advice for adding new product lines

    1. LRLenny Rachitsky1:00:46

       on this thread, but before we get there, so in terms of adding new product lines and business units, watching how Nubank 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 the new businesses we can launch.

    2. JDJag Duggal1:01:06

       Mm-hmm.

    3. LRLenny Rachitsky1:01:06

       Is there anything there you've seen of just like, wow, that's a really-... smart way of thinking about the sequencing/where to expand next that you think other folks can learn from?

    4. JDJag Duggal1:01:16

       I wish I could tell you that there was this predestined master plan that was so scientific. The reality is, smart people around a table with a culture of robust debate and real candor about the pros and cons is, is sort of how we went about it. And a constant re-examination 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 (laughs) 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 is, 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, uh, comes from, from a fairly robust debate. So, uh, I'm, I'm avoiding your question 'cause I have a ter- I have no good answer.

    5. LRLenny Rachitsky1:02:22

       (laughs) Just a lot of complicated, uh, 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 will be very disappointed before launching feels like a key...

    6. JDJag Duggal1:02:35

       Yeah. That's the, that's the one thing is we don't scale... We try not to scale big problems. Uh, and so we, we try to solve our problems when things are small. Our Ultraviolete, our, our sort of, uh, higher income, uh, 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 does 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, um, learning some of the credit dynamics that are different, uh, and, and reinventing some of those methodologies. And there's a second phase of scaling that will come. But, uh, yeah. We, we o- one form of distraction we don't get into is fixing massive problems that we've over-scaled before they were ready. That's a bit of an overstatement, but, uh, (laughs) eh, nothing's quite that clean. But, uh, but generally true.

    7. LRLenny Rachitsky1:03:45

       Coming back to

18. 1:03:46 – 1:09:23

    The future of fintech and banking

    1. LRLenny Rachitsky1:03:46

       your thoughts on the future of fintech in, in LatAm especially. You ta- 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?

    2. JDJag Duggal1:04:04

       Yeah. Uh, you know, there are, there are a, 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, 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, et cetera. 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, uh, iterating through is, we are trying to build, and, and some might argue this is, uh, 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. I come from a world, places like Google and Facebook. Yeah, G- 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. Um...

    3. LRLenny Rachitsky1:05:40

       (laughs)

    4. JDJag Duggal1:05:42

       And there are good reasons why ad bu- 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, uh, "We're just gonna 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 f- on distinct code, code bases and, and technology infrastructures. We believe there's a lot of leverage 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 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? Um, 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? Um, 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. Um-How do we make the life, the s- life cycle of managing your financial life exponentially easier leveraging these technologies and then using AI, which is an over-hyped term right now, but AI to sort of turbo boost these, these, um, these tasks. Y- we have a phrase we started using at Nubank, which I, I really like it, that Daveed 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 of sort of life stage, uh, o- 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 opening a savings account of a specific kind that's tax advantaged in this way. These are, these are, these are imminent, these are problems that should be solved and should be solved soon, uh, 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 that think they're the most sophisticated are the ones who burn the most money in casinos that they call the slot market. 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've 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 Paolo, 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 gonna give it a whirl.

    5. LRLenny Rachitsky1:09:22

       Amazing.

19. 1:09:23 – 1:12:34

    AI corner

    1. LRLenny Rachitsky1:09:23

       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 this podcast called AI Corner. So let's walk over to AI Corner.

    2. JDJag Duggal1:09:34

       All right.

    3. LRLenny Rachitsky1:09:35

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

    4. JDJag Duggal1:09:51

       We use some of the, the tools that everyone is, is using these days, um, you know, our, our, you know, uh, ring-fence, ring-fenced version of, uh, of ChatGPT and, 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? Uh, if you're fanatical about customers, you're fanatical a- about customer experience and Nubank has always been that way, how can we make it even better, uh, 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, or so, so months. 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, uh, spoke, spoke a while ago, um, uh, Fidji Simo, who's now, uh, the CEO at 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, companies today need to figure out what does AI native mean? Not how do we append AI at the, 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, 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, um, even seven, eight years later when I joined about the company had IPO'd and needed to find a business model and Fidji was sort of responsible for making that happen, and the core of it was, was bringing this mobile, mobile native mindset. So we are trying to think through what is an AI native mindset? Um, 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, their income or wealth had a private banker, uh, sit- sat next to them that they could turn to whenever they, whenever they needed to is a good metaphor. And so we are, we are using that metaphor and seeing where it takes us.

    5. LRLenny Rachitsky1:12:33

       Let's, uh, now

20. 1:12:34 – 1:20:24

    Failure corner

    1. LRLenny Rachitsky1:12:34

       move on to a different corner, failure corner. This is another recurring segment on the podcast.

    2. JDJag Duggal1:12:38

       Mm-hmm.

    3. LRLenny Rachitsky1:12:39

       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.

    4. JDJag Duggal1:12:53

       There, there's a pretty seminal story from my career, um, uh, that, that ultimately ended in failure, and that, uh, that I had to, had to sort of rebuild from. Um, I had done strategy consulting for just shy of 10 years. I decided I was gonna go to grad school, I was gonna pivot my career into public policy and politics, I was at the Kennedy School of Government, uh, at Harvard and, um-A year into that, a friend of mine had had his, the startup he was working at get acquired by Google. 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 large... The 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. My friend convinced me to drop out of grad school, both the Kennedy School and business school. Um, I'd done a year of the Kennedy School, I was one credit short, and, uh, in business school I had done a week of, and move out here to California and join Google. First off, the premise of the, the hypothesis proved to be wrong, or at least harder than we thought, and, uh, in the following way. Terrestrial radio or, for that 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, uh, 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? Um, some very interesting technology. At the end of the day, one of the things that you really needed was a surplus of inventory, of ad inventory, 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, you know, bloggers and, uh, and small websites. So the fragmentation wasn't there, the methodology was different, it was going to be a tougher slog. 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, of, 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, 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, um, 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 and moved 3,000 miles west. That felt really crappy. There's a, there's a, a great song from around that time, which is a, a mashup from Coldplay and Jay-Z. It's c- uh, 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. Um, uh, within a couple of years, or within a year probably, a year and a half maybe, um, I was also, that was around the time I was getting married, so it was, uh, a lot going on. Um, it turns out that, uh, within a year, sort of post the DoubleClick deal, Google decided, look, with YouTube as a, as an anchor asset and some other things and Dub- the DoubleClick acquisition, there was a technology now, now pretty well established 15 years later called real time bidding, and we were gonna bring the search auction methodology across the entire web for all of display advertising. And we were gonna 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, not just incrementally better, to essentially dislodge Yahoo from owning brand advertising online. And I ended up getting that, that mandate, because I had learnt a lot about how brand advertising worked 12, 18 months earlier. So, that was a s- fairly spectacular failure. The acquisition, by the way, ended up in, uh, arbitration, big lawsuits, um, depositions, and it was messy from all sorts of, uh, angles. Um, so we, we all worked our way through that, and then in the end we ended up building what is s- even still today I believe, Google's large, second-largest business, which is the, the display advertising business. But-That transition was messy. (laughs) Excruciatingly difficult from a strategy perspective, as we talked about earlier, but from a, from a emotional toll as well in 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 gonna be good at it or not.

    5. LRLenny Rachitsky1:19:52

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

    6. JDJag Duggal1:20:01

       Yeah. Uh, it's bloody-mindedness is a dramatically underrated quali- (laughs) quality, um, as we, you know, over-intellectualize, um, from strategy to execution and all the other things. Uh, sometimes persistence is key and persistence while still being clear-eyed about what the odds of success are is also key.

    7. LRLenny Rachitsky1:20:23

       Jag, we've

21. 1:20:24 – 1:22:11

    Key takeaways

    1. LRLenny Rachitsky1:20:24

       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?

    2. JDJag Duggal1:20:35

       I, I would just summarize a couple of core points. I think the, the idea of perseverance and being very clear about 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 onto really tightly is, 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, um, uh, on new category or existing category, I think within, with, with- within that debate, there's really a synthesis that says, and I think most people would agree, if you're trying to break through as a, as an insurgent, you cannot fight on the ground that the incumbents have, uh, stand firm. You have got to find a disruptive vector, uh, 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 that I think that's even growing in importance. Um, incrementally better doesn't get you there. It doesn't get you there unless you have that hook.

    3. LRLenny Rachitsky1:22:10

       I love that

22. 1:22:11 – 1:29:23

    Lightning round

    1. LRLenny Rachitsky1:22:11

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

    2. JDJag Duggal1:22:25

       I am ready. Let's do it.

    3. LRLenny Rachitsky1:22:26

       First question, what are two or three books that you've recommended most to other people?

    4. JDJag Duggal1:22:30

       The business books. Uh, one is Play to Win. Um, I think that is a great modern strategy book that takes a lot of what's happened in the digital world and summarize it re- summarizes it really well. Um, second one that I would highlight, which I think is a really good non-digital world summary and s- and really distillation of the essence of strategy, uh, 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.

    5. LRLenny Rachitsky1:23:04

       Mm-hmm.

    6. JDJag Duggal1:23:05

       And then, uh, y- you know, as I mentioned, I went to, uh, 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 a autobiography of the founding prime minister of Singapore from, you know, 1965 till he retired. He passed away a couple of years ago, Lee Kuan Yew, um... 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 (laughs) third class to first, w-

    7. LRLenny Rachitsky1:24:05

       Mm-hmm.

    8. JDJag Duggal1:24:05

       ... and, and, and it's a very tricky ride and requires a, a ruthless honesty about where you stand and what it'll take to succeed 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, 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.

    9. LRLenny Rachitsky1:24:37

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

    10. JDJag Duggal1:24:44

        There's a gr- the great series that my wife and I watched fairly recently, um, on HBO called The Gilded Age, which really shines a, a very interesting light on how technology, this is from the, you know, late 19- l- late 1800s, 19th century, how the technolo- technological changes disrupts both the economic world and the world of, of wealth, but also the social dynamics in a society and it's, it's fascinating 'cause we're going through, we're living through a new Gilded Age right now and we're seeing a lot of those dynamics, but turbo-charged on, on social media. So, extra, extra exciting.

    11. LRLenny Rachitsky1:25:31

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

    12. JDJag Duggal1:25:42

        I was listening to your podcast with Christopher Lockett, and I 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 Lomi.

    13. LRLenny Rachitsky1:26:00

        Hmm, I remember that.

    14. JDJag Duggal1:26:01

        Which is your kitchen countertop composter. And my 13-year-old daughter has been, uh, who is, you know, very idealistic and has been honest to do composting for over a year now. And we bought a Lomi. And we are-

    15. LRLenny Rachitsky1:26:22

        That's interesting.

    16. JDJag Duggal1:26:22

        ... we are, I just did, uh, we just did our fifth batch of soil last night, and, uh, 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, uh, it's really a new category of product, of a pl- kitchen appliance that, uh, I remember Christopher talking about that, uh, creating, creating countertop space is a precious asset and we've, we're- we're happy we did it. So, uh, that's a very recent last three week story.

    17. LRLenny Rachitsky1:27:07

        That makes me so happy. Uh, I also think Chris is gonna... This is gonna be his favorite episode of, of all my podcasts.

    18. JDJag Duggal1:27:13

        (laughs)

    19. LRLenny Rachitsky1:27:13

        A lot of love for him. Ah, 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?

    20. JDJag Duggal1:27:27

        In work, in the very, you know, narrow confines of work I've used it at probably at least a dozen times, uh, in this podcast, which is about par for me for an hour and a half at work. Uh, we're in the business of fundamentally different, not, not incrementally better. Um, I think that's, that's the core, car- core motto. And I think it's, it, it works, it works in a, in a slightly, uh, modified way for life as well. You know, you live, you build the life you wanna build and it's not going to be checking the boxes that everyone wants you to, to check. There 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, uh, 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, uh, not that long ago, four years ago, to go join this crazy Sao Paolo-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 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.

Episode duration: 1:35:16