Invest Like the Best with Patrick O'Shaughnessy
00:42:48 · David Vélez
[00:42:48] S1: I think agents become a customer segment, important as consumers as a segment, and you have to provide a product for the agent, and you have to market to the agent, and you have to do SEO for the agent. It's the same way we have under 18 segment, and we have a small business segment. This is an entire segment and we're treating it as a segment. We have a team dedicated to understanding that segment and understanding the needs of that consumer, which is the agent. So that will be equally important, but I don't think it's going to be necessarily 100% of that decision. Because I think still specifically in banking, and this might be different in other segments, for example, but in banking, you go back to trust and branding, and the human will want to know where your life savings are deposited. There is the human aspect of that. And so you're still marketing to the human and you're still building the trust with the humans. You've got to do both. And also for some products, there'll be more delegation. And for some products, there'll be less delegation. Specifically for areas like in Brazil, where we have 65% of the entire country as a customer, we have the opportunity to be that agent to the consumer. And the customer is coming directly to our app and asking our agent for support specifically with financial products. And we can do it in a way where it's actually an open agent. It even provides product from third party banks and third party financial institutions. So there'll be a mix of this happening at the same time.
00:44:03 · Patrick O'Shaughnessy
[00:44:03] S0: If I think back to our original conversation five years ago, and you just think about yourself, how you've changed the most in five years, or what surprised you the most in the past five years, what comes to mind?
00:44:13 · David Vélez
[00:44:13] S1: One big change has been this view around five years ago, everybody was working remotely, including us. And over the five years, we've realized how important it is to at least spend some meaningful time in person in an office. And that's, I think a bit counterintuitive even from where you were five years ago. Also in a perhaps counterintuitive way, increases the argument to spend time in person more. Because increasingly the work that AI can do is more or less the work that people at home individually could do. And so the individual at home will be competing with AIs and will lose that battle. But the work around collaboration and coordination in presence physically, which is what humans needs to do, is what needs to be happening inside the office. We went from remote to hybrid and we're spending significant, much more time in the office. That has been one change. I think the second part is how the organisation changes through AI specifically. Start paying attention to the technology, but when we tested it, it just didn't really work. Just to give you an example, we use a lot of Clojure as a programming language. And through 2025, we kept using a lot of the models for Clojure for programming specifically, and it wouldn't work. It was really awful. As our most experienced engineer said, this is not going work. So we were testing and Opus 4.6 came in in December '25. And that was sort of the moment that a lot of people suddenly realized, no, this actually works. We didn't catch that moment, that switch moment in December. We only catched it sixty days after, as a couple of my partners and I were in California and we started meeting with a bunch of early stage entrepreneurs. And we said, well, something fundamentally happened. And we went to starting to test a lot of the new models, the new GPT models from Clojure and said, holy shit, this is actually working out. It can do Clojure very, very well. And we're sixty days where it made a huge amount of difference between us and best in class companies that were using AI. And so we went back to Brazil and we went kind of a cold read around the entire organisation. And we took a step back and we're almost in the process of reinventing the entire organisation. We mapped out 120 different workflows across the entire organization.
00:46:19 · David Vélez
Coding is one of them, but everything from how do you do product design, your customer flows, internal audit, compliance, regulatory capital management, Every part of the organization, 120 workflows were reinvented natively using AI tools. We had to create a lot of eval infrastructure to be able to measure at every single step how these workflows get reinvented. And I would say we are more advanced in some, we're less advanced in other ones, but the entire organisation is being reinvented. That's what's so exciting about this moment is we get to reinvent the way we do things with AI technology. And frankly, lot of the times is that you see huge amount of productivity gains. It's not even because of AI. It's simply, there was always opportunity to be reinventing the way you do things actively. And if we were to do it now without AI, we would find a productivity gains. But AI just augments the possibility to do that. And that creates the opportunity, for example, for larger span of control, less manager, much more visibility. I personally went from having one direct report to 20 direct reports over that period, because it just increases your ability to operate horizontally. It's less layers on the organization. We went from 10 layers to five. So the organization went very horizontal. This is a bolt of adrenaline to the organization as well in terms of our ability to execute. Can you
00:47:36 · Patrick O'Shaughnessy, David Vélez
[00:47:36] S0: say more about what made that possible? So what was happening at One Direct Report and 10 layers, and then now what's happening at twenty and five? I'm interested in literally like the day to day tactical thing. I'm sure most CEOs would rather have a flatter, higher bandwidth of information organization. So how does it work? Like what changed in that? [00:47:56] S1: I think this is partly AI related, partly is the way we manage our organization. I think for a period of time, As we started scaling significantly, and we went from a million customers to 140, the organisation just takes a little bit of inertia of itself and that starts adding layers. Think every fast scaling organisation goes through the same process because you see things breaking all over the place, right? And you have all these growth pains and the easy answer when things are on fire is to just add managers to solve the fire immediately. By sort of a natural organic process, we ended up very verticalised And we ended up with a structure that didn't give a lot of visibility. Partly what AI creates is it allows you to take a step back and reinvent everything about your business. This was a catalyst, I think, for us to think about the way we were structured.
00:47:56 · David Vélez, Patrick O'Shaughnessy
[00:47:56] S1: I think this is partly AI related, partly is the way we manage our organization. I think for a period of time, As we started scaling significantly, and we went from a million customers to 140, the organisation just takes a little bit of inertia of itself and that starts adding layers. Think every fast scaling organisation goes through the same process because you see things breaking all over the place, right? And you have all these growth pains and the easy answer when things are on fire is to just add managers to solve the fire immediately. By sort of a natural organic process, we ended up very verticalised And we ended up with a structure that didn't give a lot of visibility. Partly what AI creates is it allows you to take a step back and reinvent everything about your business. This was a catalyst, I think, for us to think about the way we were structured. [00:48:43] S0: Toby Lukey has talked about this, how he can now ask the company stuff because of AI can tell him stuff. So the separation between him and ground truth based on data is gone. And that used to be this... I like this idea of the dictator's dilemma that as someone gets more powerful at the top of an organization, it's harder for them to know what is real and what is true. How do you stay up to date on what ground truth is or what is happening inside the business when it's gotten so big?