Building the Branchless Bank

💡JC's Newsletter #83

Dear friends, 

In JC’s Newsletter, I share the articles, documentaries and books that I enjoyed the most in the last week, including a must-read. 

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👉David Velez (Nubank) - Building the Branchless Bank (Join Colossus)

  • The world's largest digital bank with over 40 million customers.

  • About 50X more customers per human, than traditional banks.

There numbers and growth is just astonishing.

  • Ultimately, that translates into significant cost efficiency, that we can pass to the end consumer via lower fees. We don't need to charge so many fees. We don't charge any fees.

  • 90% of our customers come through word of mouth, completely referred by other friends. We've been really growing fully by word of mouth, no customer acquisition costs since 2014, when we launched.

  • Some of the bets that we had an initially was, let's charge nothing to the consumer. Hopefully, that translates into no customer acquisition cost. Google, Facebook, they lose. That money stays in the customer's pocket. That bet worked. We charge no fees, but our customer acquisition cost is effectively zero even today. So that was the first bet.

I really like this approach. When product differentiation leads your growth, you are in a very healthy position because you can re-invest the marketing money into the product. 

  • The last thing I'll add is, one of the big pains in this market is, over 40% of the population are blacklisted in the consumer bureaus.

Targeting the underserved is very important. It is a topic we are thinking about. If you have any ideas, or want to work on it, ping me; 

  • A lot of the opportunity here was for us to build new credit methodologies, build our own FICO, proprietary. Allow us to underwrite most of the population.

  • Since 90% of our customers come through referrals, we use the credit information of their referral as an input into our credit model.

I love when companies rebuild from scratch the core infrastructure. It is what we did with Alan and we are still doing. 

  • I heard so many times, "You are not even Brazilian. You have no idea what you're talking about. It's impossible to go against these guys. You don't know these local." We were sharing the no and the skepticism so often from so many different people, that there was a huge sense of urgency to prove everybody wrong.

  • Forced us to ask why five times everybody told us that we couldn't do it.

  • Because a lot of the times what we found is when a lot of those industry experts told us, you cannot do it, what lied beneath, was ultimately a lot of fear.

  • We had to go all the way to the President of Brazil, to get out presidential decree, to create an exception for us to get a banking license, because we had foreign investors.

Fighting for what is right is so important. We also had so many people telling us that we would not be able to launch the company. 

  • When you look at the cost structure of the business, obviously, my ability to negotiate a better contract with data providers, with logistics companies, with MasterCard, with any other type of provider, today, when I have 40 million customers is way, way, way, way better than what I had 10,000 customers. That's not debatable.

When you reach market leadership, your economics improve in many businesses, making you even more competitive.

🏯 Building a company

In addition to selected articles, I share one of Alan's leadership principles every week - the same one that I share internally every Wednesday.

👉We try new things and know how to follow our intuition

  • We make sure that the good ideas we have are put into practice. Instead of talking about what could go wrong, we talk about what can go right

  • This way we generate more creativity, more progress and Alaners are more empowered.

  • At Alan, we believe that the status quo is a bad thing. That is, instead of having to prove why something should be done, the burden of proof is on those who think it should not be changed.

👉 This GTM-Leader-Turned-Investor Crowdsources Early Lessons From Stripe, Figma & More (First round review)

  • “The key piece was meeting our customers where they were”

  • So while my team and I were talking to them about payments, often the conversation would broaden to company building

  • How could a founder get value from talking to someone on our team, whether or not they ended up using Stripe's product?” 

  • “Credibility with founders was core to our brand and DNA and it was cross-functional work — Stripe Atlas and Stripe Press were a part of this effort. But my team was focused on putting a human element on that work, and getting more one-to-one or one-to-a-hundred interactions with our target customers — founders.”

  • We wanted people to feel like Stripe was a fountain of wealth for building and scaling an effective business — regardless of whether or not they became a customer.

What do you think of events?

  • His colleague Kenny Mendes (Head of Finance, People & Operations at Coda) agrees. “Our value of 'right over familiar' led down some very unique paths that still seem crazy to the outside world but feel so obvious to us. Now, we're seeing other companies switch their pricing model to be more like ours,”

Being able to innovate in pricing is super important.

👉 Twitch · Bessemer Venture Partners investment memo (July 2012) (BVP)

  • CBS Interactive sells advertising on Twitch’s behalf with 60% of the inventory sold as premium “e-sports content” generating $35-$40 CPMs and the remaining 40% on private exchanges with $8-$9 CPMs. It shares half of this revenue with Twitch. Eventually Twitch may build a direct advertising sales team.

Interesting take on subcontracting your revenues at the start. 

  • The key reason that Twitch is able to capture so much of the value created on the site is that gamers see the revenue they generate by streaming as purely incremental. A streamer’s primary purpose for purchasing and playing a game is enjoyment. Twitch allows a portion of that purchase, and in some cases orders of magnitude more, to be recouped by simply sharing the experience online. Even beyond compensation, there are very strong social motivations to share content and experiences, especially when competition is involved. This is actually more important than the revenue share for hardcore gamers who seek recognition from their peers.

  • The first of these integrations with a small Swedish game developer Paradox 

  • Many of these publishers have never integrated third-party software into their games previously, so this level of traction is particularly noteworthy, and has only accelerated in the past several months 

Start small & be the first one to integrate

🗞In the news


👉 Robinhood S1 analysis and learnings (S1)


  • Their Robinhood Learn content platform with 7m monthly unique visits (6x growth), and their Snacks daily newsletter with 32m members 

    • Robinhood Learn is a collection of over 650 articles, including guides, feature tutorials and an extensive financial dictionary available to anyone. It is designed to provide everyone with access to a breadth of financial education, and is continually updated to provide relevant information for our customers to learn and grow.

    • Robinhood lists (9.5 million users in 2020). Our customers are able to create custom watchlists to monitor securities, ETFs or cryptocurrencies they are interested in following. → user generated content is a great idea

  • 80% of growth is coming through referral. Their strategy is really smart giving away free shares

  • Their  average revenue payback period is less than five months (it was 13 months before)

  • Their average cost to acquire a new Funded Account declined by more than 60% from $53 in fiscal 2019 to $20 in fiscal 2020. For the periods ending March 31, 2020 and 2021, the average cost to acquire a new Funded Account declined from $32 to $15.

  • Marketing seems to be 20%ish of their revenues in terms of spend.

  • They keep maintaining very high B2C growth, how do we do that at scale?


  • How they rolled-out their phone support and tripled the size of the customer team. 


  • Engagement is 7 visits a day! through great content and notifications

  • On the importance of verticalisation and building the hard things for future gains and flexibility

  • They have a robinhood gold product with some extra features and increased membership. 


“34% of our cryptocurrency transaction-based revenue was attributable to transactions in Dogecoin”

🏥 Healthcare

👉Solera Health partners With Headspace to expand mental health tools for payers, employers (Fierce HealthCare)

  • The Headspace app offers more than 1,000 hours of mindfulness and mental well-being content, and the company has reached 70 million users in 190 countries. 

  • With 28 published research studies in peer-reviewed journals, Headspace has been shown to have favorable outcomes such as reduced stress, increased resilience, increased positivity and improved satisfaction with life.

  • The company's business-to-business operation, Headspace for Work, provides its mindfulness products and services to more than 2,000 companies such as Starbucks, Adobe, Hyatt and Unilever.

👉Ginger Brings On-Demand Mental Healthcare to 14 Million Cigna Behavioral Health Customers Nationwide (BusinessWire)

  • Now, Cigna customers with employer-sponsored or individual and family (IFP) insurance plans can access Ginger’s behavioral health coaching, therapy, and psychiatry services as an in-network benefit.

  • Cigna customers can get started with Ginger by downloading the Ginger app and providing their insurance benefit information, which Ginger will verify in real-time. Eligible customers will have the option to begin texting with a Ginger behavioral health coach within 60 seconds, in addition to accessing Ginger’s robust library of self-guided content and skill-building activities. For individuals who need higher levels of care, a therapist or psychiatrist can be added to their care team for video-based sessions.

👉Mental health startup Headway hauls in $70M series B, expands to 10 new states (FierceHealthCare)

  • Headway developed a full-stack therapy marketplace that deals with the messiness of insurance, building out a first-of-its-kind behavioral health network of therapists who accept insurance. The company's platform lets its users find therapists who match their preferences and book directly on the site and provides transparency about what they'll owe with their in-network insurance plan. 

  • Using Headway, patients can book an appointment directly with a therapist within five days, compared to the 30-day average with an insurance directory, according to the company.

Mental health is a very important topic, and be posted as Alan is going to soon announce something big on mental health :) 

💚 Alan

👉Suppressing Meetings: Alan’s Antidote to “meetingitis” (Humanage)

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