Jag Duggal spent the last 15 years of his career serving people at the top of the economic pyramid. So when he came across an opportunity to be part of a company that served people on the other end of the economic spectrum, he found the challenge appealing and compelling.
When Duggal joined Nubank, the Brazilian fintech company was known for providing credit cards to Brazil’s young urban middle class. But the company was transitioning from being a single-service product to a multi-product, full-service financial institution and had started working to expand its clientele outside of Brazil.
Taking on the role of Nubank’s Chief Product Officer wasn’t going to be a small undertaking. But Duggal was adamant to take what he learned from working at Google, Facebook and Quantcast to serve — as he puts it — “a different global part of the economic pyramid.” That meant broadening the company’s focus, which involved launching new products, making acquisitions, and expanding into new territories, while continuing to build on the consumer growth that the company has amassed.
A Latin American company with a Silicon Valley flair
Nubank entered the market in 2013 as Brazil’s first digital-only bank. According to a report by Business Insider, there were some key factors that played a large role in Nubank’s rise and success. First, it took advantage of local regulations to stimulate fintech competition early on. Second, there was also a sense of distrust of incumbent banks. These banks also tended to charge high fees, making them inaccessible to a significant portion of Brazil’s population. Nubank sought to fix that gap.
By the beginning of 2021, Nubank was valued at $25 billion, and had a 34 million customer base, all without reportedly spending a cent on customer acquisition.
But Duggal believes a major part of Nubank’s success so far has to do with the company’s decision to operate like a Silicon Valley start-up. The company’s co-founder and CEO, David Vélez, was a former partner at Sequoia Capital who was in charge of Latin America prior to co-founding Nubank. When Duggal arrived at Nubank, for example, the company was already using Objectives and Key Results (OKRs).
“Right now, we want to liberate 100 million customers from financial complexity and for them to love us fanatically. Eighteen months ago, the company had no right to set such a crazy goal.” Duggal says. However, the company started setting Objectives in that direction and asked themselves, “What would have to be true to get there?” They realized that the answer lies in being more than just a credit card company. Nubank needed to be a full-solution, full-service company, and expand its operations and services beyond Brazilian shores.
That realization led to a series of transitions, from focus areas to the way the company sets OKRs, “part of which was triggered by my arrival,” says Duggal. They broadened their scope and focus, and changed how often they set OKRs. Before Duggal arrived at the company, Nubank was setting OKRs every quarter. In 2020 they changed the cadence to setting OKRs every six months. The rationale for this, according to Duggal, is that with quarterly OKRs, “You spend a lot of time planning and it incentivizes the team to think in the short term.” On the other hand, he says, “If you tell someone they have six months, they think they have forever, so they set ambitious goals.”
Turning a crisis into an opportunity
COVID-19 hit just as Nubank was getting ready to tackle their big goals. Like many other companies, Nubank was forced to reassess their plans. Duggal was also facing a personal challenge. He’d joined the company in January 2020 and was in the process of relocating his whole family to São Paulo. The pandemic put a hold on that plan, forcing Duggal to work remotely from San Francisco as he waited for a vaccine.
Still, he and the leaders got to work to figure out what was in the company’s control. “Around the world, spending just went off a cliff around a two-week period.” The company spent about a month diagnosing the situation, before rewriting their OKRs in April. But rather than scaling back their ambition, they opted to be more aggressive. “It became very clear that the metrics were improving rapidly. If we could navigate this rapid fall and rapid increase, everything would be fine,” says Duggal. “We realized we can end the year further ahead.” As a result, the company reset their Objectives. The mindset, says Duggal, was “basically… we’re leveraging this crisis, we’re going to be more ambitious.”
A large part of executing that ambition was acquiring customers outside of Brazil. Nubank set their eyes on Mexico, which is Latin America’s second-largest economy. “Deciding to build a business in Mexico was a major crossing the Rubicon moment for the company,” Duggal says. The company had to staff a whole new team in a new country and redesign their policies, processes, and technologies that were built with the Brazilian context in mind. “A lot of the teams that built technology platforms in Brazil had to start thinking explicitly, what part of this is inherently critical to the business and what part of it is local country context?” says Duggal.
The new focus required some teams to shift their mindset away from optimization. Because Brazil was in hyper growth mode, it would have been much easier for the company to add one million customers from Brazil than it would have been to get 10,000 customers from Mexico. This is where an OKR narrative became extremely crucial for Nubank’s leaders. The OKRs had to motivate teams to value progress in Mexico and constantly communicate the long-term importance of acquiring customers there, which meant that the companies needed to set OKRs that aren’t Brazil-centric, Duggal explains.
“You cannot communicate context enough,” Duggal says. “If employees understand that ‘Hey, we’re moving from being a Brazilian company to a Latin American company, we’re moving from a single credit card company to a full solution financial company,’ numbers that might seem small are actually big steps forward.”
Making trade-offs between good ideas
The Mexico expansion is an example of the importance that Duggal places in treating OKRs like a narrative exercise. “I think a lot of companies are loosey-goosey about how they write an OKR. Grandma should understand your Objectives,” Duggal says. Key Results should be clear, precise, and contain quantitative metrics wherever possible. “There are some cases where you can’t quantify it,” he acknowledges. But “you can use a milestone,” he suggests, like “We’re going to launch X products.”
Ultimately, Duggal sees OKRs as a priority-setting exercise. “At the end of the day, the main thing is to keep the main thing the main thing. It’s obvious, yet it’s so powerful. You can only get a few things done at any given time,” says Duggal. That’s why it’s important to be laser-focused on “What is the binding constraint of the growth of the business?” Nubank’s main focus in 2020 might have been to expand beyond credit card services. But in doing so, they had to say no to goals that didn’t serve that purpose, and dedicate the resources they did have to get closer to being a global financial company. Part of the OKR discipline is saying no to things that are a really good idea, says Duggal, and telling those at the company, “This really cool thing, this really important idea, it’s off the docket right now.”
If there’s one thing Duggal has learned from his experience with OKRs across multiple tech companies, is that for many companies, “Surplus of opportunities is as big of a problem as having not enough… the hardest thing is to make trade-offs between good ideas and good ideas.” He finds OKRs are a powerful tool to engender focus and remove distraction. “[But] if you don’t have the underlying focus, then the mechanics doesn’t really matter.”
For Nubank, it seems like their decision to focus on Mexico at the expense of optimizing growth in Brazil is proving to be fruitful. In January 2021, the company raised $400 million in Series G round, after announcing in September 2020 that it would expand to Colombia.
2020 might have forced Nubank to tweak and re-evaluate a few things, but using OKRs gave them a structure to charge ahead towards their vision. “The crisis gave us a chance to re-evaluate a little bit, and on the margin we tweaked our focus,” says Duggal.
“But we didn’t trim our ambition very much.”
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