I started the company completely by accident, so I confess that in the beginning I didn't have a structured business plan. I was fired from the brokerage where I worked in 2001, and all I wanted was to have no bosses and have freedom. So I started without a business plan. I simply wanted to be an investment advisor, to serve clients, and that's how it began. So, from 2001 to 2010 it was like that. Obviously I improved year by year, I became a little more experienced, but it was really by the skin of my teeth, right? In 2007, we bought the securities brokerage. So, all the money I had accumulated up to that point, I went all-in again, bought the securities brokerage, and right after that came the crisis, the American crisis. So you have a securities brokerage that was focused on equities and a crisis in the stock market — it's the worst business there is, it was really complex. And then right after that the market started to come back again and we started having conversations with investment funds, and we ended up meeting the ACT team, who thought our thesis was an interesting thesis. Our story was about how we became a counterweight to commercial banks and showed people there was a better path to investing that wasn't through the banks. And the ACT team bought our thesis and then made an investment in us at the time of R$100 million. At the time that was about 60 million dollars. And I think that was the moment when I realized we really had a business and I started to have more of a long-term mindset. And then I met the people from the D.E. Shaw...
...with them and we did this other round. When the D.E. Shaw came in, there was a secondary sale, so I only had some breathing room in life in 2012. I see that sometimes entrepreneurs keep the rope around their necks, and I lived with the feeling of being on the edge for many years, for about 11, 12 years. That's not good. So I think when funds invest, it's important that they manage at some point to understand that entrepreneurs are also human beings who also have lives, who also want to buy their apartment, their house, right, want to bring a little more comfort to their family. So I think the D.E. Shaw was very empathetic with us and said: 'Look, I think it's important for you to have more quality of life, for you to do the secondary.' That was super important, because it takes away that pressure, right? Because if you stay under pressure for many, many years, at some point you start to wonder if it's worth being an entrepreneur. Come on, building a great company, a business worth billions, but I have no liquidity, right? And then, sometimes, right? I've seen many entrepreneurs who prefer — look, what I want most now is to sell my company. I always had a lot of clarity about what I wanted in the long run, right? I think most of my partners are the same, right? But the operation with Itaú was very emblematic because it was very large, and my concern at that moment was: 'Guys, look, we've never seen this kind of money in an individual's hands. It's important that we stay focused on the company. It's important that we get used to this liquidity and that we understand that we're here because we want to transform the financial market, right?' So I not only wrote that letter, but I had several conversations about this theme until the Pix landed in the account, right? And I think that kind of conversation helps, right? It helps show the way, right? In all the deals we did, we always made it clear to all the investors, including Itaú, that control of the company was ours, that we liked having an active board, a warm board, in the good sense, that we would love to be convinced of paths, that we might be wrong on certain paths, but that in the end the final word would be ours. So all our shareholder agreements were structured within these concepts, right? We were always transparent with all the investors. Everything we were convinced of, we did with great agility, right? And the investors always trusted us, because otherwise they wouldn't have accepted this format. And whenever we had doubts, we put them on the table and in the end the discussion happened. When you have, let's say, intellectual humility and you like good people who talk to you and who push back on your ideas, having partners is good. So you'll have good people who will ask you if that really makes sense, maybe once, twice, three times. It's possible that at certain moments the temperature rises a little, but it's all in the interest of your business. It simply makes you smarter. And it doesn't mean that I gave up control. We never gave up control, but we put ourselves in a position of: look, I want very good people by my side who ensure that the path I'm on is a consistent and solid path, right? So to believe that you can do this alone, I think it's possible. I'm sure I wouldn't have gotten here if it weren't for my internal partners and my external partners, because they certainly made me smarter and vice versa. So I think the challenge is this: to have a shareholder agreement that allows you to keep having control, that you're not tied down, and above all to have investors who are aligned with the long term, right? There are many funds that are more short-term funds. Then that money gets in the way, because that short-term fund can lead you to an IPO at the wrong time. It can lead you in the direction of doing a strategic deal that maybe isn't the best, but the investor has influence over you, right? So it's important that this investor is aligned with you. I've always seen entrepreneurship as a lifestyle. So you have to start changing your character, you have to start having more quality of life, you have to start being a more strategic person, you have to have people better than you, you have to create shields, and then you start taking more and more pleasure in being an entrepreneur. Every entrepreneur has the right to be able to sell the company if they want, right? But I was always transparent: I don't want to. I don't want to. So all the moves I made, whether ACT, whether Itaú, whether going public, ended up being moves that made us stronger. Every entrepreneur, I think, dreams of going public, right? And having shares on the exchange, etc. That's the good part. But I think it's important for entrepreneurs to understand the bad part. The bad part is that you become a publicly listed company. I think the most important thing when you go public, what changes, is that when you're privately held, people have a sense of stability and that their assets — which are the company's shares — don't move, right? You have a company, right? I'm a partner in the company, it's growing, and fine, right? But when you're a public company, your wealth fluctuates every day. So conversations about this topic are very important, right? Because no matter how much you talk, people spend a lot of time watching the share price. And the share price doesn't necessarily reflect reality. Events happen that don't affect the company but affect the market, and your wealth drops 10%, 20%, 50% eventually. So how do you, together with your team, manage these issues? So that's an example of things that aren't so good, that you only learn after a few years of experience. A public company is a scrutinized company. The smartest people in the world will cover you monthly — all the international banks, local ones, etc. The competition will have more information about you. So we were talking about IPO here since 2010, so when we did the ACT operation, the plan was to go public a bit, and then ACT appeared. So, my tip is: the IPO is Plan Z, right? You have to have done some things, right? You have to have done some earlier rounds, you have to have solidified your governance, you have to have a very clear plan, you already have to have a pretty big market size, because the scrutiny and all the energy loss you have from being listed is a difficult part. Today I would say that in the private equity market, which is a market that already has quite a lot of liquidity, you can often do a round at the price of your IPO. So if that's possible, my advice is: take that path, stay private a little longer, and only go public when it's really super important, right? When it's clear that the advantages are really, really big. In Brazil there's no supervoting shares. So in Brazil you can only maintain control of the company by holding 25.1% of total capital, provided those shares are all ordinary shares. In other words, you need 51% of the ordinary shares. Abroad you can have supervoting shares, you can have control of the company with 10% of the capital. So you have more leverage abroad. So we had already done some important rounds with ACT, with D.E. Shaw, with Itaú, and we wanted more leverage. The second thing is that we had a business model that had no benchmark in Brazil. So the big thesis investors like ours — like Charles Schwab, like Fidelity, etc. — were international investors. So we thought our valuation abroad would be better understood because there were clearer benchmarks. When you start talking to the investor, it's important that you have an easy story to tell, that you have external benchmarks. Look, I want to follow this inspiration, this is my concept, so I started like this, but this is where I want to get to, and with that it's easier for the investor to understand who you are. And in our case it was something very clear, right? We want to compete against commercial banks, we want to be the Charles Schwabs, we want to be an independent place that's focused on the client, not the product. And in Brazil there's a very, very large banking concentration. So we had a very, very nice storytelling, but sometimes it's not enough to just have a well-told story — you also have to have a macroeconomic scenario that helps, right? Today I'm very happy to have created a company that lives without me. I'm important, I'm important, but the company lives without me, right? And I remain a shareholder, and as the company grows, it pays more dividends, and that's what I'm after. I always mark my shares, okay? Note that I have a lot of shares, okay? I mark them at zero. I only worry about the dividends that will be generated. So what I have here in shares, I consider worth nothing. I only value the dividend that will be delivered in the coming years, because I don't intend to sell. I've never sold a share of the company, right? So what I see is: wow, this company is going to generate more and more good dividends for me. And that's exactly what I'm concerned about. I want to improve the company more and more, I want a business that generates more and more revenue, that has more and more efficient expenses, that delivers more and more quality to your client, to our client. And that's exactly what generates consistent net income over time. And therefore I'll have dividends that are compatible with that net income. I think that's a concept I learned from Joel College, right, which is 'build to last', right? How do you create a company that endures over time, right? And that's the best thing there is. If you build a business with the mindset of selling it, you've already started off wrong. You'll transmit the wrong concepts, the wrong values internally, and it'll be a flash in the pan. Try to think of it as forever, right? Worry less about the share price and more about the dividends you generate. Worry at some point about becoming less of an operational person and more of a strategic person, who can take care more and more of people and culture. That's the main lever you have for growth. Going public — Plan Z. Plan Z, you can look for a fund that will help you, and being a privately held company allows you to fly under the radar for longer. That makes you stronger in many cases. Going public is a good thing, but it also brings bad things. And to go public, you have to find the right moment. It has to be something that's really relevant. And it's very important that you talk a lot with your team so that people don't understand that as the finish line, and above all don't lose focus, because with a listed company the stock fluctuates, and when the stock fluctuates people lose focus. So those conversations with the teams about who we want to be, how we're going to act, the importance of money, etc., are conversations that help a lot to keep our feet on the ground. Unfortunately you have to make changes on the team. So all these stages the entrepreneur goes through — not everyone believes in these things. And you have to be very attentive, you have to have a very robust people function, and you have to have a lot of sensitivity so that you can make changes on the teams and not let this union of people, this culture, this will to win, get watered down over time, which is exactly what kills a company. Most companies break down in the long run, right? We know that, right? There are few companies that have lasted more than 100 years, very rare companies that last more than 120 years, and so on, right? So how do you build a company that really doesn't depend on you? So doing succession is not a synonym of weakness, it's a synonym of intelligence, right? And you can do it well if you build good teams and you don't turn into a vain person. You have to worry about making your work of art — which is your company — better and better, right? Whoever ends up leading it hardly matters. Every business person, right, every group of partners, etc., has to also worry about their ecosystem, right? Has to try to help, help, I think, inspire other entrepreneurs. In other words, I'm here with you, right, talking with the Évor team, etc. I think all of this helps, right? All of this helps raise the bar, right? Because I'm sure that maybe some of the tips I gave here, which I hope were good, will help other entrepreneurs tell even cooler stories than XP. And I think that's what makes things work out.
