How to Earn The Right To Expand, The First Question To Ask To Know If A Team Is Executing Right and More - Tactician #0043

25/01/2024

How to Earn The Right To Expand

Turner Novak, Investor at Banana Capital, interviews Cristina Junqueira, Co-Founder at Nubank to understand the journey and strategies behind Nubank's success in Latin America in “🎧🍌 From Zero to 90 Million Customers with Nubank Co-founder Cristina Junqueira”

• Start with a Product That Requires Low Regulatory Barriers:

  • "The first product was a credit card... We didn’t need any type of financial license back then... It was a faster way for you to build trust and to build a brand."

  • Insight: Begin with a product that navigates around heavy regulatory requirements, allowing for quicker market entry and brand development.

• Focus on Building Trust and Brand Through Customer-Centric Products:

  • "It allows you to build trust and to build a brand in a way that is more consistent and efficient... A credit card where we're the ones trusting customers... That was very important."

  • Insight: Develop products that not only meet customer needs but also establish trust, crucial for long-term brand loyalty.

• Leverage Market Gaps and Poor Competitor Performance:

  • "People were just so ready for this, that having a much better product would be that much more efficient in terms of customer acquisition."

  • Insight: Identify and exploit gaps left by incumbents, especially in markets where competitors provide poor customer experiences.

• Keep Operational Costs Low in Early Stages:

  • "We were really scrappy. Our first office was this little house... We made every penny count... focused all that towards paying engineers."

  • Insight: Minimize early-stage expenses and maximize the use of available resources, focusing spending on essential growth drivers like product development.

• Emphasize Culture and Values in Branding:

  • "We invested a ton in... our culture... The brand is the way that the culture materializes to customers."

  • Insight: Develop a strong company culture and let it reflect in your branding, enhancing customer trust and loyalty.

• Earn the Right to Expand:

  • "We wanted to earn our right into doing the next thing... We only did credit cards in Brazil for many years until we felt that we had earned the right to do the next thing."

  • Insight: Prioritize mastering one product or market before expanding to ensure stability and sustained growth.

• Take on Challenges; Let Life Happen:

  • "I signed the Series A papers at the hospital the day after [my daughter] was born. And we launched the company that month because we couldn’t be stealth anymore after raising a round with Sequoia […] If you’ve seen any of the IPO photos or footage, you’re going to see me eight months pregnant at Nasdaq, ringing the bell with my daughters in tow, including the one I was pregnant with. It’s just life happening."

The First Question To Ask To Know If A Team Is Executing Right

Nikhil Basu Trivedi, Co-Founder & General Partner at Footwork VC, highlights the importance of gauging how a product is improving in order to understand a Founding team’s performance in “Does the product get better over time?”

• Assessing Continuous Improvement of the Product:

  • "A question I find myself asking founders, often in first meetings with them, but sometimes even after working together for a while, is some version of: 'is the product or service actually getting better over time?'"

  • This point underscores the necessity for founders to constantly evaluate whether their product or service is improving, indicating this should be a recurring theme in discussions with investors.

• Development of Network Effects and Data Moats:

  • "If the product’s actually getting better over time, there’s probably a network effect or a data moat being developed. This can lead to a natural compounding in the product’s usefulness, which in turn can lead to compounding growth, and to defensibility."

  • The author highlights how continuous improvement can lead to network effects and data advantages, which contribute to a product’s competitiveness and market strength.

• Quantitative Evidence of Improvement in Retention Metrics:

  • "If the product’s actually getting better over time, it should show up in quantitative data, such as newer cohorts retaining better than older cohorts, and, in general, net retention growing over time."

  • Trivedi suggests using data-driven metrics to validate product improvement, specifically through user retention rates across different user cohorts, emphasizing the importance of objective measures.

• Effective Execution by the Team:

  • "If the product’s actually getting better over time, the team is likely doing a few things right in how it’s executing. Perhaps it’s prioritizing and sequencing well, or iterating quickly."

Why Not Being A Well Known Company May Destroy You When You Go Enterprise

Harry Stebbings, Founder at 20VC, interviews Sean D. Murray, Chief Revenue Officer at Greenhouse Software on various aspects of sales, including the transition to enterprise sales, sales team compensation, and the evolution of the sales process in “20Sales: How to Scale Into Enterprise Effectively [...]”

• Credibility is Key When Scaling into Enterprise:

  • "The three biggest hurdles in taking that Holy Grail of moving up into the Enterprise [are] first The credibility - no one knows who you are especially in the Enterprise and it will destroy you."

• Ensure Real Product-Market Fit for Enterprise:

  • "The second [hurdle] is do you have a real product Market fit for those big companies because those big companies they all believe that they're special snowflakes."

• Structured Hiring Process for Sales Teams:

  • "The interview is highly structured. [...] Here's what I'm going to do I'm seeking and checking for negotiation competencies, persuasion competencies and drive for results. Here are the questions I'm going to ask and hears how they will be assessed."

• Leverage Customer Feedback for Product Improvement:

  • "Our marketing organization runs our Customer Advisory Board so our core key customers help drive our product and drive our Innovation [...]"

• Effective Use of Discounting and Negotiation in Sales:

  • "Discounting is okay in different environments. It's important that you adjust when you need to. We all believe that our products are the best, especially those Founders that are listening, I know, but there are moments that when everyone on the block is charging $80 for a beautiful steak and then the market goes south and then the rest of the street is selling those stakes for $20. You can't keep charging $80 for your stake."

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