# Marcelo Claure & Shu Nyatta on Lessons from Investing $7.5BN at Softbank & Why Dumb Money has Gone Why "LATAM is Under Construction" and the Next 10 Years Will Be the Best & Investing Lessons from Missing Nubank & OpenAI & Investing in FTX 20VC · Jul 31, 2023 · 58 min · 12,701 words Speakers: Marcelo Claure, Harry Stebbings, Shu Nyatta Source: https://www.996.fm/episodes/20vc--ep-eb5bfe5c/ ## Cold open **Marcelo Claure** [0:00]: We don't wanna be the biggest. The biggest doesn't necessarily mean you're the best. We're bringing more than $200,000,000 of our own money. The days of just dump capital with access are long gone. Tourist capital is gone. Latin America is under construction, and we're builders. **Harry Stebbings** [0:15]: This is 20 BC ## Intro **Harry Stebbings** [0:16]: with me, Harry Stebbings. Now last month, Marcelo Claure and Shu Nyatta announced Bicycle Capital, LATAM's newest growth equity firm with 500,000,000 in fresh capital. Today, I'm so excited to welcome back to the hot seat Marcelo and Shu to the show for the first time. Keeping the intro short, Marcelo was the CEO of SoftBank Group International, where he launched SoftBank's $8,000,000,000 Latin America funds and had direct oversight for SoftBank's operating companies. Now as an entrepreneur, Marcelo built Brightstar from a small local distributor to the world's largest global wireless distribution and services company. As for Shu, Shu was most recently a managing partner at SoftBank Group International where he launched and managed two separate funds, the SoftBank Latin America Fund and the Opportunity Fund. And I wanna say huge thank you to Neil Mehta, Mickey Malka, and TJ at Base Ten. Some amazing questions, suggestions today. I really did so appreciate that. But before we dive into the show today, ## Sponsor read **Harry Stebbings** [1:09]: this episode is brought to you by Tigas, the go to research destination for bold investing. 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And Secure Frame uses over a 150 integrations, so you have built in security training, vendor and risk management, and more to make compliance uncomplicated. Secure Frame makes it fast and easy to achieve and maintain compliance, so you can focus on serving your customers. Automate your security and privacy compliance with Secure Frame, and you can schedule a demo today at secureframe.com. Hello. You have now arrived at your destination. ## Conversation **Harry Stebbings** [3:35]: Champs, I am so excited to make this happen. First, thank you so much for joining me in person. **Shu Nyatta** [3:40]: It's a pleasure. Like I said on Twitter, this is the Abbey Road adventure. You you're a lot bigger than in Zoom. **Harry Stebbings** [3:46]: Do you know what? So you must, Alex. So we have that in common. You do. I love a good romance and love story. So when we get back to the beginning of Bicycle and the first conversations, can you take me to those discussions and how that formation talk really came to be? **Marcelo Claure** [4:02]: I met Shu a few years back who was referred to me as I was dividing SoftBank into two. And a lot of people told me that I should have somebody called Shu join my team. So I called him one day, and your kid was giving birth the same day. My wife was giving birth. Your wife was giving birth to a new kid, and it was my kid's birthday. So we immediately bonded because that was special. **Shu Nyatta** [4:23]: Our two daughters were born on the exact same day, and that's when we met. **Marcelo Claure** [4:26]: Yeah. So I wanted to have a new talent, join what I was doing at SoftBank, and Shu's background is fantastic. And we immediately liked each other. We worked well. We decided to open the SoftBank Latin America Fund together, and we just had a blast, you know, finding founders, helping make Latin America better. So when it was time to do something new, you know, we both look at each other and say, hey. Maybe we should go do something together. When you think about yourselves **Harry Stebbings** [4:51]: as partners, what is Marcelo Wild Cost? Adam Marcelo, what is Shu Wild Cost? **Shu Nyatta** [4:55]: Marcelo, I call him the master of momentum. Nobody else generates momentum like Marcelo does. Any idea, any geography, any topic, if you want somebody to get the ball rolling, he'll do it. It's impressive to see because often it means bringing together all these different people and capital and spheres of things into one project. I've never seen anything like it. And so the gift is you just get this momentum that comes from the sky like mana from heaven, and you have to do something with it. And so I've learned that you get out of the way of the momentum, and then you try and capture that magic and push it forward in an organized way with a team. And we've done that now a few times in a row. Marcelo, when you think about, like, **Harry Stebbings** [5:35]: speed of execution, how do you think about when is the right time to just go fast and momentum is everything versus when it should be a little bit more considered and we need to go slowly to get it right? **Marcelo Claure** [5:46]: Different times, different industries, different investments, different phases of your life. Now is the time to go slow. Now is the time to be wise. SoftBank was the time to go fast. So it all depends. Once you have something good going, you have to go fast. You always have to accelerate, and that happens to every great company. First, you build. You're cautious. You figure out what you're great at. And once you have it, then you press accelerator. What is SHEW world class at on the flip side? SHEW brings an incredible diverse knowledge. Hardly ever do you see an African Kenyan thriving in The US that wants to invest in Latin America. And secondly, he's a great investor. Right? I don't think I'm a good investor. I think I can spot good businesses. I can spot good entrepreneurs, but there is a master to investing. And what I can do is I can bring opportunities, and I can then pass them up to Shu. And Shu often analyzes them a lot better than me. He's a little more conservative than I am, so we make a good balance. I think I'm a good operator, and I think Shu is a great investor. And at the end, believe that the new firms are going to be the ones that have the ability to help entrepreneurs alter the course of their business. I think the days of just dump capital with access are long gone. Those were the days in which capital was free and it was readily available. Today, comes at a high cost and not readily available. Before we dive into kind **Harry Stebbings** [7:05]: of the models of venture in the future, I I just have to ask the obvious question, why Bicycle? **Shu Nyatta** [7:09]: At the simplest level, it's a magnificent technology. It's one of the most empowering things we've ever invented. The passenger is also the engine. So that's a core inspiration. But the other is it's timeless. I mean, bicycles look the way it's looked, a triangle in two circles for a hundred years, and it's very democratic. Any street corner, anywhere in the world, you'll see bicycles changing people's lives. So as a manifestation of what technology means, you'd struggle to find something that embodies that better than bicycles. And in places like Latin America where the opportunity is the middle of the pyramid, the bottom of the pyramid, nothing represents that better than a bicycle. **Marcelo Claure** [7:40]: So Shu Shu came up with the name. And at that at that point in time, I was in a phase in my life. I started riding bikes heavily. I was training with Lance Armstrong, so I thought Shu was being nice with me, and he's saying, hey. Let's name the new fun bicycle. But then you start reading about bicycle, and you see what Steve Jobs called the Mac, and that was the bicycle of the mind. So when you combine that with what a bicycle really means, I thought we have a really, really cool name. Plus, Shu and I love riding bikes together. So They're amazing. **Harry Stebbings** [8:08]: It just it all works. I do have to ask. When I think about it, always say think about the cyclist. And you mentioned Lance. I I love this because it's not about the bike. But my question to you was when you said about the models of the future being where you really help and help some builders operators, I actually tend to find it always in the same vein as like a founders fund. The best founders never need me, and they just operate in isolation. And I might be there, but they don't need me. How do you respond to the best founders don't need you? **Marcelo Claure** [8:33]: Every founder will always need something. I believe that we're lucky to have had an experience, to have done a lot. Right? This at least in my career, I'm lucky to have thirty two years of probably some of the most diverse experiences that few people had a chance to build a company that became the number one company in the world, to merge a company that became the largest telecommunications company in the planet today, the most valuable one. But more importantly, I think sitting at SoftBank and seeing so many industries, so many different founders, so many different models, I think we can always side a little bit. And there will be founders who will ask for a lot, and we'll be there to provide them. And there'll be founders who will ask for a little, and that little might be a phone call that might need some guidance. Every founder that I met, it doesn't matter how smart they are and how and every executive in the world, we've always had something to add. And just to add to **Shu Nyatta** [9:22]: that, there's a great quote that was used in basketball, but I repurpose a lot for founders. Average founders wanna be left alone. Good founders wanna be coached. Great founders wanna hear the truth. Great founders do not wanna be left alone. Often, just having a reflection in the form of a really good board meeting. I'm sure you've been in board meetings that are bad and board meetings that are good. And a good board meeting, even if the founder's world class, makes a difference for the company. Botha and Sequoia love this crucible analogy, and it's it's true. There are moments when that discussion, that truth seeking in a group, even for the best founders, is transformative. So I pushed back on this notion that founders don't need anything. **Marcelo Claure** [9:58]: When you look at Bicycle Fund one, we're bringing their own capital. We're bringing more than $200,000,000 of our own money, and we're blessed by all the stuff that we've seen, and we're bringing pretty good contacts. There are some founders who will say, no. I got it, and they will eventually need some help. And there are some founders who will take as much as they can from you. One is not better than the other one, and we're there. We're on demand. And when you bring your own capital, it's a different game. Right? Because we're putting a significant amount of our wealth behind every single one of those investments. How do you think it changes the mindset of investing when it is your own capital? Know, You you're talking entrepreneur to entrepreneur. Right? You're not managing someone else's money. You're managing a certain percent. This is a big amount of capital of our own capital, so you're truly a partner of the founder, and that's the mindset that we're going into. And you stop thinking in bets. It's **Shu Nyatta** [10:46]: not about placing bets and having passive beta on tech. It ceases to be these abstract concepts about capital allocation becomes very personal. Each relationship is a real partnership. It really matters to you because those returns matter to you personally, and that makes it much, much deeper than just a bunch of bets, which is how a lot of investors have come to think lately. We'll **Harry Stebbings** [11:06]: talk about kind of portfolio construction and kind of slightly financial mechanics in some ways, but I do wanna ask. I had Hunter and Sachar on from Homebrewer Fund in San Francisco, and they said the best partnerships are actually where the partners do not need the money when they start, because it actually changes the decision making that can be challenging in a lot of partnerships. Do you think that's right? And do you think being financially independent as partners makes a stronger partnership? **Shu Nyatta** [11:30]: Well, we're in very different phases of our life. I wouldn't call myself financially independent, but I disagree with that. Caring matters. The more you care, the more it matters. Second time founders can be successful if they don't need the money, but first time founders can be successful if we really need the money. I just think you need to care. Having your own skin in the game makes you really care. That's not a bad **Harry Stebbings** [11:48]: thing. You mentioned also the best founders seek the truth. I think what's very hard is the right way to deliver the truth. How do you deliver really effective but hard feedback to founders? Neil Major at Green Oaks told me that you guys do it the best. **Marcelo Claure** [12:00]: So I'll I'll give you my perspective. And every single great founder has something called healthy paranoia. Some have an unhealthy paranoia, but we're all always nervous on what we're building. And sometimes we think that what we're building is not strong enough, or we're always scared it's going to be the end of the world and it's a constant roller coaster. Every single founder has been in the verge of bankruptcy. Very few have not been. Every single founder has put their entire life to building their company. Probably the best advice I even give founders is tell them the mistakes that I've made And just people are with them, and some people like to take it in a board. If if a founder doesn't want your advice and you're always gonna have to be telling what they wanna hear, I don't think that's a company you wanna be invested in. **Shu Nyatta** [12:40]: And so if you're lucky enough to have that wealth of experience, that works wonderfully. If you're not, in my case, I haven't built a company. It's much more about listening. Don Valentine said the single advice he'd give people is to have big ears. And that's the most important thing. Listening, asking the hard questions, but not necessarily pontificating. It's much more about finding the question that can really make the founder pause and think. Do you think there are any areas of misalignment between founder and VC? Yeah. Often. I mean, VC's wanna mark up the company. Often, that's the goal, especially if you're at early stage. Right? You want the a to be lower than the b by some margin, and then you wanna raise a new fund on the back of the b or the c. That's a very different goal from the founder's goal, which is to build a lasting company. At the growth stage, it tends to be less the case because the markups are not fast and furious the way they are at the early stage. The later you go in a company's life, the more aligned you are trying to create something that's long term durable and successful because you can't hide anymore. It's not about the markup. It's about whether you have a real business. **Harry Stebbings** [13:37]: And we've learned the hard way. You mentioned the mistakes that you often tell founders. Is there one common one that you find yourself saying more than others? **Marcelo Claure** [13:43]: So what I've learned from founders and from myself is, you know, trust your gut. You know, you you know the answer. I've seen so many board meetings, VCs who've never built businesses or who've never been around great businesses. I'm just everybody gives advice is is cheap. It's free. Right? And many founders sometimes get confused. At the end, a great founder is what you know what they'll do? They're gonna listen to all of us, but at the end, they're gonna trust our god. And their god is 90 our founder is 90% right. And when you go back to them and say, look at the last 10 decisions you made, and which ones were yours, and which ones was because you listen to the last person that talked to you, you realize that most of them are always right. That's why they build great companies. And by the time we get to in the growth stage or in other areas of our businesses, they already have a proven business model. They already know what they have to do. You know, that's often the case that they sometimes don't trust themselves and they listen to others. And at the end, listen to others just so you can check that your gut was correct. I do wanna **Harry Stebbings** [14:40]: discuss Bicycle specifically. We had the fundraise announcement a couple of months ago, I think it was. And my question to you is, you know, it was mentioned as growth equity, and it's a $500,000,000 vehicle. Can you talk to me about the focus, where it is specifically, and how you view that, both from a stage and an insertion point? **Shu Nyatta** [14:55]: The answer is very specific to Latin America as well. So there there are a lot of really good early stage funds in Latin America. Some local, some foreign, but it's a solid base of early stage funding. And then crossover funds, once you get to the d or the pre IPO round, they always show up. If a company has good numbers, they will show up. The gap is in the middle. So starting at the Series B, it's a bit of a desert in Latin America. For a few years there, from 2019 to 2021, it was not a desert. And in 2021, notably, venture went from something like 4,500,000,000 a year to 16,000,000,000 a year. Now it's back to less than 1,000,000,000 a quarter, so we're back to the 4.5. So there's a real gap in funding at the b and later, and the b tends to be the trickiest round because you need some meaningful amount of capital. The a can't lead the b. They could do maybe some pro rata in the b. You really need someone to step in and lead the round and price the round, and there's still some risk in the business. That's the real, real opportunity. And then, of course, you get opportunistic stuff at the C and D at good prices, maybe some secondary here or there. That's the gap that we wanna fill with the Fund. That's a product, so to speak, that founders don't have, and that's a product that LPs can't buy, which is growth exposure **Harry Stebbings** [16:00]: in **Shu Nyatta** [16:00]: Latin America. **Harry Stebbings** [16:00]: Is the fund size big enough? If you think about a Series B being thirty, forty million, and you wanna lead a Series B, it's $2,530,000,000 check from you. Is that big enough you've got 12 to 14 checks in the fund? **Marcelo Claure** [16:11]: Start. Right? We didn't have a lot of time. You know, we had an idea of what we wanted to do. I had a non compete. And to be quite honest, we haven't even fundraised yet. It's Mubadala. Mubadala wanted to make a bet in Latin America. We've known Mubadala for a while, both Shu and myself. And then we called five other LPs. We made five phone calls, and the five of them said yes, and they were in my family office. So we really haven't started. But we wanna make sure is this time around, we don't wanna be the biggest. The biggest doesn't necessarily mean you're the best. We wanna get started. I think 500,000,000, maybe a little more, is a good start, and then we'll see where it takes us. But I think we're lucky. I mean, we're grateful to be able to pick up the phone, call six people, and raise a fund, which is probably the largest first time fund launch in Latin America. In this time where nobody's raising money or very hard to raise money to shop with a 500,000,000 fund a couple of weeks after your noncompete expire. We're blessed. We're grateful. A lot more will come. I mean, we have big aspirations, but we need to deliver. You you win a game playing minute by minute, and we gotta deliver the first few minutes, which is this. When you say the biggest isn't **Harry Stebbings** [17:16]: always the best, you deployed, you know, 7.5 to $10,000,000,000. There were different numbers that I saw, so I'm not sure which one it was, but 7.5 to $10,000,000 with your time in SoftBank, what were some of the biggest lessons from that deployment period? **Marcelo Claure** [17:28]: Different times. At that point in time in SoftBank, the mandate was to build a portfolio play. Right? I wanted to make sure that we were investing into most successful technology companies. That was the mandate of SoftBank. And I wouldn't call it unlimited capital, but we had a significant amount of capital. So that was our job to go deploy that. This time, it's all about quality nor quantity because we have a different amount of capital available to us. We need to make sure that the returns that we provide are absolutely the best. So we're a little more cautious in terms of which companies we're going to invest and which founders we're going to back and how we're going to allocate our time. And that **Shu Nyatta** [18:05]: 12 to 14 that you mentioned of number of companies is a feature. It's not a bug. We want a small portfolio. We want it to be personal with every single company. We'll only invest in companies that are excited to have us as investors. We're not fighting to get into rounds. If they don't want us, it's okay. We don't have to be in there. And so knowing that it's only going be 10 to 14 is really clarifying an investment a quarter. So it has to be real mutual love to do that. And if it's not, it's okay. How do **Harry Stebbings** [18:29]: you want to build the firm? You can build firms in different ways. You know, your insights on one with huge, huge teams and your benchmarks on another. When you think about the firm that you wanna build with Bicycle, it's something that I think about a lot with 20 VC. What type of firm do you wanna build? **Shu Nyatta** [18:42]: We're lucky because we have three people who joined Bicycle day one, who we've worked with for four years. It's hard to imagine we're gonna get dramatically bigger than that. So we already have the seeds of a multi decade firm. Our goal is to not screw that up. That you have to build capability sequentially over time, but not damage the core that got you started. **Marcelo Claure** [19:02]: I wanna make sure that the team that I've put together is the best performing team. I need to make sure that Shu and team, they don't make the same mistakes I've made. And at the end, they're gonna be running the fund. You know, I'm the chairman of the fund. You know, my dream is for this fund for them to run this fund alone and let this be fund one of many more to come. People often underestimate Latin America. I was having lunch with a very prominent Indian businessman. And Latin America, if you add the GDP of Latin America, we happen to be 2x India with one quarter of its people or one third of the people. So Latin America has a size, 600 plus million, a big population. So there's a lot to be done in Latin America that we just got started as SoftBank. The few success stories that you have have given birth to a lot of other hopes, dreams that are in the process of being made. You look at Nubank, to me, the world's best digital bank. When we were investors in Uber, you know, we had to keep it a secret that after New York, three of the top five cities were Latin America. So Latin America, the economy is one that will take on any new digital disruption on accelerated pace. **Harry Stebbings** [20:08]: How do you think about what your biggest challenge is in terms of the firm build ahead? **Shu Nyatta** [20:11]: I think it's really tied into the region. Nobody doubts that you can create a growth equity firm. Lots of people have done that. Question is, can LATAM support a multi fund growth equity firm? We strongly believe the answer is yes. We think it's obviously yes, but that's something the rest of the world doesn't quite believe yet. And so it'll take time to prove that out. In a sense, that makes the task very simple. We just have to execute, and the the proof will emerge over time. And that proof is in the form of big outcomes. So you want the next new bank to go public in New York. That'll kind of quiet the critics. But it's getting over the regional argument, really, because we're very tied into the story of Latin America. **Marcelo Claure** [20:46]: It's a misconception of the region. You ask some people and they think, oh my god. This is the land of drug trafficking, high inflation, and constant political turmoil. It's the opposite. You know, Latin America is to me the land of opportunity, and I think Latin America is the only place there are more opportunities than capital available. Everywhere else, there's more capital and opportunities available, which drives crazy valuations and others. And I think the next ten years are going to be the best ten years of Latin America for two very, very simple reasons. One is near shoring. Long are the days where companies will have one supply chain and be only China. And if you wanna serve the other side of the world, Mexico suddenly becomes a place to serve The US. So nearshoring, it's real, very important. And secondly, commodities are gonna be an important part of the whole new energy model or the electrification of the world. And few people know that between Bolivia, Argentina, and Chile, that's 60% of the world's lithium. Bolivia alone is one third of the world's lithium. So suddenly, the prices of those commodities are gonna be steady for the next ten years, and Latin America is sitting on that. Brazil will become the largest food exporter in the world. So all that means is these countries are gonna be, I will call them, economically sound. I'm not gonna say they're gonna thrive because a lot of people have said that and made mistakes, but I feel very good about the future of the economy of the two most important markets in Latin America, which is Mexico and Brazil. **Harry Stebbings** [22:07]: One thing that I'm always struck by is the difference of opinion I get on homogeneity of LATAM, where some people kind of block it together. LATAM is an opportunity, is this huge opportunity, and look at the collective audience we have here of 650,000,000, and it's basically the, you know, whatever we want to choose this huge market. And then others say, no, it's incredibly fragmented. Each country is very individual. It's much more European in its structure where you have to win Mexico, Argentina. And you can't look at it as a kind of block opportunity. Which one's **Shu Nyatta** [22:36]: right, do you think? Well, for sure, there's Brazil and everything else. And Mexico. But even language is different in Brazil. So you have what's generally called Spanish speaking LATAM in Brazil, which is not Spanish speaking. Brazil is its own beast. Mexico is also a large entity within Spanish speaking LATAM. So if you were to disaggregate two countries and pull them out, it would be Brazil and Mexico in that order. And if you ignore everything else, those are huge markets. That's more than half of the population of 650 that Marcelo mentioned and most of the purchasing power. And two very well run central banks, the currencies of Brazil and Mexico have been some of the best performing currencies in the world because the central banks hiked early. Brazil's already on the phase of easing interest rates. These are two really interesting economies with tailwinds. And then you have as a plus some of the other markets. Some will always be challenging. Argentina has perpetually been a challenging market. It's never gotten currency under control. It's very difficult to figure out what the value of your peso is over time. Colombia is having a challenge now, but we're long term bullish on Colombia. But if you really had to focus, it's Brazil and Mexico. In Europe, there's a similar answer to that. The same is true in Latin America. **Marcelo Claure** [23:40]: And I will add two things. Right? It is expected that both the Brazilian and the Mexican economy will be among the top 10 economies of the world. So it's not Top six? **Shu Nyatta** [23:49]: Yeah. **Marcelo Claure** [23:49]: By 2050. And then secondly, Argentina is great because in Argentina, you have something that you can export, which is services, people, the amount of engineers, the amount of lower priced labor because of inflation and others. And I think that if you can play in two of the top 10 world's economies and be strong there, right, I think you can build a great firm around that. **Harry Stebbings** [24:10]: If we think about you mentioned that the services and the amazing talent. If we kind of go up the stack or down the stack, whatever way we wanna take it, but to the kind of financing, we saw the evacuation of kind of foreign capital in the last year with the kind of economic changes that we've seen. Is that a good thing for you or not? In a way, there's less competition, and also in a way, there's less financing available for LATAM companies and less co investors. How do you analyze the foreign capital withdrawal? **Shu Nyatta** [24:38]: It's a balance sheet. There there are pluses and minuses. One of the biggest minuses is you have big pref stacks all over the place. All these companies that raised a lot of capital whose valuations right now should be much lower than the round they did in 2021, who have pref stacks that are underwater. And it's very difficult to finance those companies even at a discount because what are you buying? Right? If you're buying secondary early a shares or common shares, then you're under this huge pref stack. So I think that's a very big negative. The positive is there are fewer people competing, and prices have become much more rational. **Marcelo Claure** [25:10]: To me, I love it. Tourist capital is gone. This is left for people who understand the market, who understand the opportunity, who are really gonna help entrepreneurs. So it's better. It's cleaner. There were people who showed up there in late twenty twenty one because they were like sheep. Right? SoftBank was leading the way, and they all came behind. I think there's they're gonna be left to two great ones. You know? I have a lot of respect for GA. People often don't know, but if you truly study GA, the great returns have come from Latin America. It's gonna be GA. Hopefully, it's gonna be us. And then the rest, you know, they don't even know what the capital of some of these countries are. So it's great. We like it that way, and hopefully, it will stay like that. I want people to be busy thinking about The US, thinking about China, thinking about Europe, and we'll do our thing in Latin America. **Shu Nyatta** [25:53]: And we like to be collaborative. I think the a is where the elbows are sharpest. Seed, you get a lot of people coming together. Growth, you get a number of people coming together. We're happy to be that catalyst for other capital, whether it's local or foreign, but we wanna price it. We wanna assess the risk and bring other capital to the region. How important do you think it is having feet on the ground, being there, having offices in the cities? Extremely. There's a lot of adverse selection. There's some founders who might or might not be great who play really well in New York and San Francisco. And so if you wait for them to come to you, that's all you'll think Latin America is. We were just in Brazil, and we went to the middle of Brazil, to a state called Goias, to a town called Goyenia. I don't know how many investors have been there. They said we were the first ones to go visit them at their offices. Really interesting company. Those folks are not going to New York to raise capital from 57th Street. You have to go and find them and build a relationship. **Marcelo Claure** [26:41]: And you have to understand what Latin America is all about. Right? You have to have lived in Latin America, and we have good group of people who lives there. You have to understand how people think in Latin America if you wanna be a great investor. I mean, you gotta, in many cases, speak their language. It's not about just good showing up in Silicon Valley about it. I'm a believer that those days are long gone. **Harry Stebbings** [27:02]: I'm naive, Marcelo. How do they think differently? You know, I I could describe how Europeans think differently to US. If you were to compare US to Latin American people, how do they think differently? **Marcelo Claure** [27:12]: We have different issues. Our education is way worse. Our health systems are broken. So anytime you bring technology to help you, with help, people adopt it extremely fast. Education in many cases is pretty bad. So suddenly when you start bringing online learning methods, it's really, really helpful. Transportation was broken. This is why Uber exploded. The way retailers used to mark up their goods made it so expensive that they were charging interest rates up to 80%. So when the data sheet shows up with something that's 70% cheaper, it grows beyond what anybody can ever dream of because you're solving people's need. It's a different approach. **Shu Nyatta** [27:50]: And on the other hand, you have a lot of different kinds of sophistication. I was just in Scarsdale, New York, and I tried to buy a bagel, and they said, sorry. Cash only. In Brazil, that's a laughable statement. Nobody would say cash only. You pay instant real time transfer from your bank account to the merchant's bank account using your phone everywhere. Latin America has something like 25% of the world's fintechs. 25%, a quarter of the world's fintechs are in Latin America. Brazil is probably the most sophisticated financial market I've ever come across. You can securitize any stream of cash flows and sell it to the market tomorrow, it'll be purchased and distributed and bought by investors. These levels of sophistication are not really understood outside LATAM, and so you'll come across a company in Brazil that is very capital intensive, but most of it is debt. And in Brazil, that's not a risk because you can actually raise a lot of debt really easily through a bunch of different avenues. So as long as it's not equity intensive, it's still an interesting capital efficient company. But that's more difficult to explain to somebody who hasn't spent time there. You said about **Harry Stebbings** [28:43]: 25% of the world's fintechs. I suppose David at Nubank before the show Fun people to talk to. They are pretty cool people to talk to, I have to say. But when we think about kind of liquidity, and it's often another criticism, but challenge discussed about LATAM and LATAM investing is where's the liquidity? Nubank is one that has proven immense amount of liquidity. Delocal, another but not huge. How do you think about the liquidity challenge slash opportunity? And how do you evaluate that and discuss it internally? **Shu Nyatta** [29:09]: So there's a lot missing from what you the examples you just gave. For example, local listings. Brazil has a very deep liquid capital market. There are a lot of tech companies public in Brazil, and they've made investors a lot of money. So I'm I'm naive. How big are they? Multibillion. From from 500 you get a a lower scale to be viable as a public company in Brazil than you do. You don't wanna be a sub billion dollar company on the Nasdaq. You'll be Sure. You'll be a rounding error for people. But from, I don't know, 500,000,000 up to a few billion, you can list very comfortably in Brazil. And the other is M and A. Pismo is a Brazilian company. I'm not sure if you've heard of it. They make financial infrastructure for banks, and they've been bought by Visa. That's the rumor. There are a number of companies from Argentina that have been bought. Okta bought an Argentine company, for example. SoFi bought an Argentine company. All of these are companies making technical infrastructure, often in financial services. So liquidity doesn't have to be a big listing on the New York Stock Exchange. It could also be local listings, and it could be M and A. **Harry Stebbings** [30:04]: Do you know anything it does sorry. I'm I'm pushing, friendly. Yeah. Do you know anything it does have to be if you wanna fund returner? If you wanna have scaled returns? **Shu Nyatta** [30:12]: Well, it depends on your entry price, and you need some exits that are big on the scale of a New York Stock Exchange, but you don't need all of **Marcelo Claure** [30:18]: them to be that. What do you think, Marcelo? I think it's a market evolution. I mean, it's nice to have a local market in Brazil, so that's gonna create some liquidity for some of those companies. And it's also nice that Nasdaq will remain open to Latin American companies that have proven scale that they can grow. And I think there'll be a few IPOs coming of some great Latin American companies. Again, there's going to be few players, and that's what we like. If you're gonna be just another investor opening a new fund into something that's already been done many times like in The US, that doesn't excite me. What excites me is to go help build an entrepreneurial landscape, we started with SoftBank, generate sufficient exits, and that's gonna create all the people who can dream that they can do the same. Latin America is under construction. Right? If it was already built, there'll be other people there. And we're builders. We love that. That's what excites me. I made a commitment to the next few years so we can equalize Latin America, and that's that's our mission. **Shu Nyatta** [31:13]: And there's a presumption you talk about fund returners. Growth is different from early stage. Not every investment has to have the potential to be a fund returner. You could have every investment have the potential to be somewhere between two and four x in growth, and that's great. If you speak to LPs, the exposure they're looking for in growth is pretty different from the exposure they're looking for at the early stage. So we don't underwrite to 20 x potential for every investment. It's much more modest than that, but it has a lot less risk. So loss **Harry Stebbings** [31:38]: ratios, how do you think about loss ratios as part of that? I'm an early stage investor. My tolerance for loss ratios is Very high. **Shu Nyatta** [31:44]: Plus in some cases. As we said, this is gonna as you said, actually, it's gonna be a 10 to 15 company portfolio. Ideally, none of those go to zero. You you said **Harry Stebbings** [31:53]: a brilliant thing, is, like, you know, South America is under construction. What do you think is yet to be constructed that needs to be constructed in the next three to five years? **Marcelo Claure** [32:01]: We have a great Series A, Seed, amazing funds, very well covered. Series B, Series C, GA or self, QED, and a few others. And now we need the pre IPO and the IPO rounds. But I'll tell you something, you're never gonna get there unless we are successful. We need to be successful in B, C, and D in order to create that IPO market. Because for great companies, there's always gonna be rooms for IPOs. Call it in Brazil. It in The US. Call it in London. Call it everywhere. But we need that piece, the piece that's missing, the piece that we're gonna go attack in order to create those companies that are gonna be ready to do an IPO. So it's not about the market. I think that's a misconception. They're not big in market. No. We haven't had those companies yet because there wasn't that sort of investors, which is what SoftBank started, and we sort of have an obligation. Like like, if you ask me why are you doing this, I felt we started something special at SoftBank. And then suddenly when SoftBank decided they don't wanna focus there, we left a huge vacuum. And I personally feel that we have unfinished business that we need to go continue. So it's more than just going and deploying capital and generating good returns. To me, I set a goal for the team in SoftBank and that way that was we need to equalize Latin America. Latin America had the lowest percentage of venture investing as a percentage of GDP or whatever than any other region in the world, I think as close to Africa. And with SoftBank, we started something special. We equalized Latin America, and suddenly, that's starting to fade. So we need to get back there. 500,000,000 is a good start, but we're gonna require a lot more in the future. **Shu Nyatta** [33:29]: The other thing that's needed is talent, and that's changing. Two sources of talent in the ecosystem. One is successful companies spawn talent. Rappi is one of the largest contributors to Y Combinator in terms of alumni. Rappi alumni becoming YC companies. One of the largest contributors within the YC universe. That's pretty stunning. It's a Colombian company that went through YC itself. The other is foreign talent going to LATAM. We've seen all kinds of people, whether they're working remotely or they move full time to the region, working for companies in Mexico, in Colombia, in Brazil because they're exciting, they're interesting. And, **Harry Stebbings** [34:02]: Cameron, as we mentioned the many references that I did, literally every fund that you mentioned there in LATAM, I spoke to kind of the the GPs there. And a lot of them asked a question, which I wasn't sure if I was allowed to ask, but we'll ask it and we'll see if I'm allowed to. And they said, when you look at, you know, the investing period with SoftBank, what are the biggest mistakes you think you made that you're looking to correct with Bicycle? That's a fine question to ask. I'm British. It's very uncomfortable. **Shu Nyatta** [34:24]: This is why people like coming on my show. Most most journalists are So so the investing business, as you know really well, Harry, mean, I you've been doing this for long enough, the investing business is a mistakes business. It's all about making mistakes. Then you find really good things. So you can't not make mistakes. I think the opportunity we saw a lack of capital, and we tried to pursue that aggressively wherever we saw a lack of capital and tried to build a big support organization to help the companies after we invested. That worked for that scale, but I think the more the smaller selective, more personal touch, trying to change a company's trajectory one at a time is a better approach for a region that still doesn't have the full ecosystem maturity. So that's the the most fundamental thing I'd change. I think slightly smaller is better for LATAM. **Marcelo Claure** [35:08]: What would you say, Emerald's other? Be more selective. SoftBank was a portfolio play. This is about choosing the winners, trying to avoid any big losses. And the way we're investing in these companies are ones in which I think we're going to minimize the losses, and we're not aiming for 10 x, 20 x. We wanna make if you understand the gossip of baseball, which some British people do, this is about hitting doubles or triples in the first fund. This is not about trying to invest a significant amount of capital to generate, you know, a grand slam, and we're very cognizant of that. We have no choice than to deliver a great fund because this is the first time fund. You're as good as your last fund, and we need to make sure that this is a great one. How long do you think it'll take to invest the first fund? **Shu Nyatta** [35:49]: Well, vintage matters a lot. It's a tricky question. 2023, 2024 should be very good years to deploy capital, just statistically speaking. But you have to resist the urge to overdeploy, especially at the beginning when every company is exciting, and so we have to pace ourselves. I would imagine something like three years. Before we move into **Harry Stebbings** [36:06]: a quick fire, we mentioned a conversation before the show, and it wasn't in my notes at all, but I really enjoyed it. And so I'm gonna ask it anyway. You know, often we think and we hear about kind of work life balance, and one thing that the reason the show is successful is because I bring my own, you know, life into it sometimes. It's like, I'm terrified of losing an inch on work with the expansion of personal life. How do you think about having a personal life, having a family, and still excelling in what you do and the strategy and the execution with Bicycle? **Shu Nyatta** [36:34]: I'm gonna embarrass Marcelo here. One of the biggest things I've learned from him, he has this wonderful quote that I saw in Tokyo first and that travels with him. So clearly, it matters to him. Travels with him. It I see it in every office. And the the general gist of this quote is work and play are not different things. They are the same thing, which is life. And that's a beautiful concept because there's not this partition of what you do and who you are. It's all of one piece. Marcelo's wonderful quality is it's it's always happening together. So whether it's family or work or play, they coexist. That idea of coexistence, I think, is a really powerful one, and it enriches each of those spheres. I've learned not to try and draw sharp boundaries between now I'm working or now I'm at home or now I'm playing. It's just life, and it's okay if it seeps into your family. What if **Harry Stebbings** [37:19]: your work is who you are? You asked me how long I've been doing this. I've doing this for nine years. I was 18 when I started. I never traveled. I never studied in the university. I haven't even known my adult self to be this. Like, my work is who I am. It is my identity. What do you say when playing, like, life, it is all just that one? **Marcelo Claure** [37:36]: Sometimes people ask me, like, how do you do this? Because I'm in a different country every day, and I'm traveling constantly. And there's one fundamental basic rule of life. Most people don't follow it and they say they do, and that is you gotta do what you love. If love your job, that's your life. But that doesn't mean your family doesn't come into it. I'm here. I'm in London. I'm on holiday. But it's a combination of, I don't know, taking my kids to Wimbledon yesterday, walking around the streets of London this morning by being here with you, having dinner with our LPs, and it's one of the same. And every every day, every week is like that. It's a combination of my kids being at work. Or when I travel, you know, I usually take one or two of my kids, and sometimes I'll go visit a company and say, hey. Do have an extra room? My kid let's put my kid there so he can play on his iPad while I'm doing this meeting with you. And then I take my kid to grab a grab an ice cream in the streets of Sao Paulo. It's just if you're truly happy and content with what you're doing, you will bring your family into it. And your family loves that you're happy, so therefore they're happy and you make them happy at the same time. So, you know, there's no such a thing as a work life. It's one of the same. There's no Sunday for me. Sunday is as good as a Monday or I might take Tuesday off, and I might work Sunday. I mean, just to me, as long as I'm happy what I'm doing, I will give it all my best. Most people are not, and that's where they struggle with this division where, okay, work finished, I started my life. And also just think if you're happy, work and life are one of the same. **Harry Stebbings** [38:57]: Do you think that's a luxury of being very successful already? You can go into anything and say, oh, my kid's here. My partner's here. And, yeah, everyone would bow and give their house and any room that you need for your child to play on their iPad. Like, when you are more junior or younger, you almost feel guilty for bringing them along, for integrating them. **Marcelo Claure** [39:15]: Hey, I was a struggling entrepreneur, and it was the same thing. I mean, it was, you know, I wish to have the staff meetings in my house, and my employees became an integrated piece of my life, and I became an integrated part of their families. And so I disagree. Obviously, you gotta keep boundaries. Right? I mean, don't show up with your kids to a board meeting, and I ask them to sit in the same table because Don't ask for their opinion. Ain't what the statute and plan. They might be more helpful than the VC, and then you're really strange. I think I think if you're vulnerable to people and, hey, we're all normal people. Right? I mean, we all got kids. We all got problems. And just bring that on. I don't know. At least I found that the combination of bringing work and your normal everyday life together, it allows you to maybe execute better. I So don't feel I'm losing an inch. **Shu Nyatta** [39:57]: One thing I've learned in my fewer years on this earth, there are no rules. We're born into a context, and we kind of look around and say, okay. I guess those are the rules. But the reality is there are no rules. And so you just have to do what works for you. Ignore the advice and ignore the noise and just make it work for you. Create **Marcelo Claure** [40:12]: your own path. Don't follow everybody's footsteps. You're gonna be another one of them, and you don't wanna be another one. You you didn't build this podcast following the normal routine. This place where I'm now is not a normal routine place, normal office. Imagine if you were just for a normal guy. You wouldn't have the amount of followers that you have. This is true. It's the short shorts that **Harry Stebbings** [40:31]: Yeah. Yeah. Yeah. They're in now, Yeah. Yeah. They're very in. Short one Short trousers too. Final one before we do a quick follow-up. Having the hard discussions is the most important thing. When you think about having the hard discussions as a partnership today, how do you have them? Often people say, have them straight away. It's the right time to do it when you feel it. How do you think about having the hard conversations between **Marcelo Claure** [40:51]: get personal. You know, we had a third partner. Yeah. We've had hard discussions already. And we we are only two partners, and we were three. And it was those hard discussions that made us be two. And Shu and I have difficult discussions, but we we learn to compromise. Right? And I'm I'm a tough person. I I I usually like it my way, but I I tell you that Shu and the other partners that we have have taught me, hey. Listen to others. Lately, they're changing my mind more often than ever before. And I think that's what partnership is all about. You gotta bring your opinion. You gotta bring your boldness. You gotta bring and at the end, compromise works in a marriage. Compromise works in a partnership. And I think we're building a relationship of compromise where we respect each other's opinion incredibly well, even in our investment committee meetings where I might have a high level of conviction, but if my other partners don't, I'm gonna retrench. And I've done the same. I've been able to convince them most things that at the beginning, they say no way. And I think that's that's what is great. Nobody is the owner of the truth in our firm. **Shu Nyatta** [41:49]: Back to the idea following your gut that Marcelo mentioned earlier. I think you always know when a discussion is gonna be hard. Your body tells you because you don't wanna have it, and that's the strongest signal that that's exactly the conversation that should happen. You have to go into the difficult places that your body is telling you you do not wanna go to, whether it's discussing an investment or discussing something about the partnership. You're always getting these signals about what you should be focusing on, and that's what you tend to avoid. But it's a very strong indication that that's exactly what you should do. So you need a bit of courage just to listen to yourself and not be afraid to say whatever instinctively you feel is important without having a fight about it, which is the the nuance. What was the most recent difficult discussion that you can remember? Well, it was about the partnership. It was a difficult one to go from three to two, and it took a lot of time and lots of difficult discussions. Are we ready for a quick **Harry Stebbings** [42:33]: fire round? We are. Let's do this. I say a short statement. You give me your immediate thoughts. We're gonna start with you, Marcelo. Let's do what's the biggest challenge ahead, do you think, for you with Bicycle over the next twelve months? To convince the world that Latin America is a great place to do business in. Shu, what have you **Shu Nyatta** [42:49]: changed your mind on in the last year? I think a piece is overrated. Just being very practical, I think big markets matter a lot. And I come from Kenya, right, which is about 50,000,000 people population. If Kenya was a 150,000,000 people population, it would be a completely different story on the world stage. And so Kenya and Uganda and Rwanda and Burundi and Tanzania and Ethiopia just need to merge. We need more m and a between countries, and I think that's way more important than this idea of sovereignty that everyone's obsessed about. So I think sovereignty is overrated. I shouldn't say pieces overrated. Sovereignty is overrated. We need more country m and a. That's the **Harry Stebbings** [43:20]: title. Marcelo, what's been your biggest lesson from working with Shu? How's working with Shu **Marcelo Claure** [43:24]: changed how you operate? He's more calm. He's more thoughtful. I'm learning to think a lot. I'm I'm a lot more thoughtful working with Shu than other people because he has a strong opinion on things. **Shu Nyatta** [43:35]: Shu? The inverse. I've learned to respect the momentum and the instinct and not to resist it and to really channel all that energy in a productive way. So Marcelo brings a lot of really, really special stuff, and you can't get in the way of it. You have to channel it. Marcelo, who are gonna be the biggest **Marcelo Claure** [43:51]: winners in venture in the next ten years? Those that can help companies alter the course of their business in a positive manner, not those that can have access to deals. So you call it a flip side. Who are gonna be the biggest losers in venture **Shu Nyatta** [44:03]: in the next ten years? Oh, it's easy to answer the opposite of that. I know. I think so many better. I think I think passive beta capture, you know, this whole idea that you just buy an index of tech and you sit aside and let it perform. I think that's gone. I think you have to be a stock picker. And so people that are just trying to place a range of bets, I I don't think that works. Even in things like AI, the surge into AI now, just we have to place a bunch of bets. I think that's wrong. I think you need to pick. Just like if you placed a bunch of bets in search but you missed Google, it wouldn't have mattered. It was the right idea, but you really had to pick Google. You had to pick Amazon. Those who resist picking and instead go for big trends will lose. If you **Harry Stebbings** [44:40]: could choose one board member, Marcelo, that you could have to sit on a board of your company, Bicycle, you name it, who would you have? Dead **Marcelo Claure** [44:48]: or alive? Dead or alive. Steve Jobs. Why Steve? Steve's probably the most intense individual I've ever met in my life. Take me to this sorry. I **Harry Stebbings** [44:55]: have to ask this. Take me to this meeting. How come the meeting with Steve Jobs came to me? **Marcelo Claure** [44:59]: So back then, I used to own Brightstar, and had an idea of how could Apple double their sales. And after many emails to Steve Jobs, which he wrote me back, no interest, no interest, one day he got tired of everybody pinging him, but he had to meet me. So he agreed to take a meeting, and that's how buyback and trading of mobile phones got invented. The whole idea of telcos make you sign it to your contract. Apple makes new technology every year. The only way you get people to actually get their technology every year is by buying back their old phones. And that's something that it took a very long time and some pretty intense meetings of somebody who absolutely seek perfection in everything that was done. And it was just fascinating to me to learn of how you never settle for less than a 100%. That's a fantastic story. And that's how buyback and trading got in got invented. I love that. I did not know that. **Shu Nyatta** [45:50]: Yeah. Shu. I'm gonna pick Neil Shen. He was a banker. He was a founder. He was an investor. It's quite China. I don't even wanna guess at the returns, but it's an absurd series of funds, you know, hall of fame. And he's managed to play this incredible role in the Chinese ecosystem, elevating the ecosystem and making great investments at the same time. I just think that wealth of knowledge and experience would be incredible. Marcelo, what's your biggest miss, and how did it change your **Marcelo Claure** [46:13]: mindset as an investor? Probably, Nubank. We didn't get there earlier on. We were stubborn in evaluation, and the founder was more stubborn, and the founder won. And I think now, at the end, you know, I'm a huge personal investor into Nubank. I got SoftBank to be an investor into Nubank, but we were so new. I think it was our first week, we just said, no. This is it. And we were wrong. So I always I always tell people, it's hard to say you're a great Latin American investor having missed Nubank at the beginning, and I say it publicly. And we bet on another horse and that horse didn't perform as well as Nubank did. So I say I mean, I made lot lot of bad investment decisions in my life, but that one bothers me because it's within my region. It's within my knowledge. If there's one thing that I learned is don't be stubborn, and I was very stubborn. **Shu Nyatta** [46:56]: Missing the good ones is as bad as investing in the bad ones, maybe worse. Probably OpenAI. So when we were at SoftBank in 2017, I think thereabouts, Masayoshi was all over AI, and the team was small enough that we were all focused on the topic and looking around at what was interesting and being built in the world of AI. And we came across OpenAI. We knew OpenAI. We had discussions about OpenAI, and we just didn't do it. I think that was a huge mess. And I think part of the fear was they're trying to build so much, and sometimes you have to build everything. There are industries or markets that are thin protocol markets, meaning there's just not a lot of infrastructure. And so the company has to do a lot of the work that's just not existing in the ecosystem. That's true in LATAM, by the way. A lot of industries in LATAM thin protocol industries. There's just nothing. And so a company has to do a lot, and often that turns investors off because you say this is very operationally intensive or capital intensive or what have you. But you need that to create the business, and it's a business that's more likely to endure. **Marcelo Claure** [47:48]: Those are the ones that we'd miss. I'll tell you one that we did that was a terrible miss, and I was at DX. I did that myself at SoftBank, and it was one thing that probably taught me the best lesson ever. **Harry Stebbings** [47:58]: Oh, fuck it. I've to ask this. How was the meeting with Sam? **Marcelo Claure** [48:01]: I didn't wanna tell you. But do not ever invest in things that you don't truly understand just because of FOMO. And I remember it was one day before, and Sam shared with me the list of old investors. I was very lucky. Right? I had a tremendous amount of decision range within SoftBank. I can honestly say that my entire investment life, Masayoshi never said no to any investment that I ever decided to do. And I went to Masayoshi, Masayoshi, I just cannot understand what am I missing. Why is everybody investing? Are we gonna be the only idiots who are not gonna invest in this? Then Masayoshi looked at me and said, it's your decision. So I invested $150,000,000 on FTX, which I mean, apologies to SoftBank because I should've never made that investment, but it's probably one decision that has changed my life forever. I'm never gonna invest in something that I don't truly understand, and I'm never gonna invest based on what everybody else is investing. That's gonna be a great learning lesson for me of to never break those rules. Right? And and I broke the golden rule because I didn't wanna be the only guy left considering I was in charge of also doing crypto within our blockchain within the SoftBank ecosystem. Big miss and a big lesson. To understand an industry, sometimes you have to study it. And if so, how do you do it? We are lifelong learners. I am bothered of my not so big knowledge within the AI ecosystem. So now I became a Harvard executive fellow, and I'm in charge of one of the biggest labs, is the dCUBE Lab, which is the AI lab at Harvard. I work very closely to always keep myself informed. And you're able to leverage an incredible ecosystem of incredibly intelligent people, Harvard, and be able to bring that knowledge into what I do for everyday living. If not, it would be impossible for me to try to learn it all myself. So now I wouldn't consider my expert, but I have pretty good knowledge of what is going on in the AI world. And you always have to find clever ways to be that. I tried to do that within blockchain, and it was so massive. And people were sharing information, and you were just investing in momentum. I'm never ever gonna invest into something that I don't have a good level of understanding. **Shu Nyatta** [50:03]: And **Marcelo Claure** [50:03]: also Bitcoin go up? No. Now they say Bitcoin go up to a $100,000. Again, I don't know who who a very respected analysts. **Harry Stebbings** [50:10]: Bitcoin go up. I do find stature and success helps that learning, though. Like, you can pick up the phone to Sure. 99% people in the world, and you will learn from the best. When I'm looking at a fintech deal, I'll call Mickey Malker and say, help me understand, understand, and he teaches you. I do find that as well. Says **Marcelo Claure** [50:24]: Isn't it amazing how highly successful people love to share? Like, you have the same thing. When I call Mickey and and not only Mickey, you can call you know, successful people are actually hungry to share. Yeah. And you would think they wouldn't. That's why they write books. That's why they're getting podcasts. That's why they do these sort of crazy things. And, you know, that's admirable of you that you're able to that you actually call people to learn more. Oh, 100%. **Harry Stebbings** [50:48]: I also think cooling is a lost art. Yeah. Yeah. Penultimate one. What would you be excited to change about the world of venture? **Shu Nyatta** [50:54]: Speed. I think we've fetishized moving quickly. It's just not that valuable, especially at the growth stage. But I think even at the early stage, the whole idea that I have an exploding term sheet that's gonna expire this Friday, first of all, is nonsense. Term sheets don't expire. This is a made up concept. That and the idea that you need to make a decision on limited information, you can't ask for anything else, those are cancers that came out of the zero interest rate regime. I think we just need to all calm down and make good decisions. It's better for founders if a process is a little slower. We're not talking about sclerotic, just a little slower because their company will be diagnosed a little more depth. They'll learn something along the way. They won't think raising money is just snapping a finger. It's much better for investors. So speed, that FOMO speed dynamic, I think, is a really awful trade of venture. **Marcelo Claure** [51:36]: Marcelo, what would yours be? I like where we're going. The whole world got overly excited in the world of tech investing. You have crossover funds. You had corporates. You had everybody who suddenly became a tech investor, and a lot of people learned their lesson. And you have a lot of these funds who we all admire, who when you look at their true returns are truly disastrous. I believe, and and this is why I love my partnership with Shu, being an operator, you know how to operate business. You understand what it takes to scale, but there's an art of investing. So to me, operating is a science. Investing is an art. If you can combine both, I think we're gonna have something really, really special. The venture world is starting to shape up where all these people who thought, hey, let me just mark up a term sheet, lie limit, because I am betting that somebody's gonna come and six months later put a higher valuation and that's how we made our money. I mean, that was a Ponzi scheme. Now we're gonna see who actually got caught in that. So fun times ahead, and a lot of things are gonna get uncovered, and I think great investors are gonna thrive. Do **Harry Stebbings** [52:36]: you think so, though? Sorry. I am just like, you know, fun lives mean that actually it's a very difficult business to die. It's generally very opaque. LPs, in a lot of cases, are quite lazy in their deployment. We've been with them for years. They're quite nice people. They host a good AGM. That will keep going. A lot of things are Do **Marcelo Claure** [52:54]: you think it's I mean, I I realize it's changing, and I love this. Right? When you go to all these Middle Eastern conferences Yeah. Before you used to see the top people of Silicon Valley raising money. Today, you see the great founders there, which is great. Going direct. Going direct. Not DTC, DTF. Uh-huh. All LPs are going direct to founder. Which I think is good. There's gonna be only very few funds that actually create value that are gonna be able to raise money. And I'm talking the next ten years, but, you know, the source of capital is getting incredibly smarter on accelerated pace in terms of going after the best companies. And the best companies know that in many cases, can skip the intermediaries. And when you have so many intermediaries, I believe that the best will survive and the best will thrive, and that's what we're betting on. **Shu Nyatta** [53:41]: And you're seeing really aggressive fund size targets not being met. We've all seen the news, like, 90% below what they thought they would get. So it is changing. I mean, the the funds do have long lives, and the last the tail will be long. But I think we're past the excesses. **Harry Stebbings** [53:56]: Final one. When we think about next five years for you and for Bicycle, in a dream scenario, if everything goes to plan, like we ask founders, what could this be? If I ask you, what could Bicycle be? What would your answer be in a dream scenario over a five year period or a ten year period? Five years isn't too long. **Shu Nyatta** [54:11]: A high quality firm whose decisions mean something to the rest of the ecosystem, whether it's founders or LPs or investors. If we make an investment, it means something. **Marcelo Claure** [54:21]: I wanna be what Sequoia China is to the Chinese entrepreneurs. I've had a chance to visit China, and the gold standard today is when you're part of the Sequoia China ecosystem. And we make no mistake. We went to visit Neil with Shu. We spent time with him. We spent a lot of time with entrepreneurs, and we asked him, what's a great fund for you? And 99% of them, the best ones, basically listed Sequoia China, and they gave us the list of services. So we have a very deep alliance with Sequoia China. I must say more Sequoia China with Neil Shen. And I like Neil a lot and I respect him and I think we want to build something that is similar to that. I want to make sure we're relevant. I to make sure that we don't miss the new banks. I want to make sure that in every single great company that is built in Latin America, we have had a role to play either in the beginning, in the middle, or towards the end. I think we have that opportunity because not a lot of people are in Latin America today. **Harry Stebbings** [55:14]: I can't thank you enough, both of you, for coming on the show. Honestly, I've loved this. Thank you so much for this. I cannot wait to see you build Bicycle. Thank you. Thank you. Latin America is under construction and we are builders. I mean, that has to be a tagline of the century. That was such a fantastic discussion. I wanna say a huge thank you both to Marcelo and to Shu for making that happen. Such a joy there. If you wanna see more, you can find it on YouTube by searching for two zero VC. But before we leave you today, ## Sponsor read **Harry Stebbings** [55:41]: this episode is brought to you by Tigas, the go to research destination for bold investing. 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