Thinking you know everything is the beginning of the end. The formula that brought me here is not the formula that will take me where I want to go. And that is exactly what makes your leadership inspiring, what makes you a person who, through example, also shapes other leaders with their heads in the right place.
Guilherme Benchimol, co-founder of XP. I've been working there for almost 16 years.
All of that. And you've been putting up with me all this time, can you believe it?
The question I wanted to ask you: 25 years of XP this year, a landmark year, and you turn 50. What have you learned most in these 25 years that you could pass on to Brazilian entrepreneurs, what they could learn from your 25 years of XP experience?
If you could sum it up, I think the biggest lesson is being aware that you have to always be learning, that there is no formula for success, that formula changes every year. Learning that the formula that got you to a certain stage is not the formula that will take you to the next stage. And learning to abandon what you do well and jump into what you have never done. Unfortunately, business life is inherently unstable. And that is why I think that, at some point, most companies become stagnant, because entrepreneurs end up wanting to stay in their comfort zone, wanting to keep the character, so to speak, they had before, right? To keep growing, you need to learn to abandon your previous character and create a new one. And it is learning, learning, learning to jump into what you have not done before. That is what makes you evolve as an entrepreneur, as a human being, as a man.
Beautiful in theory. In practice, you founded XP in 2001, you come from a middle-class family, your father was a doctor, your mother an artist, so you were not poor, you started from a certain level, but you became very rich with this IPO story, with the company we did with Itaú, XP in 2019, when we went public, the company was worth 12 billion dollars. I remember everyone wanted to talk to us, we were riding the wave. Two years later you make the decision to no longer be the CEO of the company, to no longer be the guy carrying the Brazilian flag there ringing the Nasdaq bell. How was that decision made, in the face of all that?
You asked about practice, right? In practice, that is it. I was from the company, I was a good investment advisor. At one point, I had to learn to stop being a good investment advisor, abandon my clients, so to speak, right? Learn to stop being a good team leader and learn to be the CEO of a small office, and so on. It was 20 years as CEO, learning to reinvent myself every year. You mentioned leaving the CEO position or making the transition. That was more of what I did my whole life. Learning to unlearn, learning to work with people better than me, learning to give autonomy, learning to see the company from a different angle. That does not mean I am less committed to the company. I am simply giving space and learning to look at the company from another angle. And that is exactly what makes the company grow.
The partnership at XP, its importance, what was its contribution to the company's success?
I have no doubt whatsoever that the company is much better off today with Thiago at the helm than it would be with me. Not that I am not important, but I can help XP much better with my experience. I can focus and give it the size it needs. We are a company with 8,000 employees today, 300 different business areas. I think every entrepreneur who starts a company knows they are an entrepreneur. After a certain stage, being an entrepreneur is not enough, because the entrepreneur is very instinctive, less skilled in the management process, less of a manager in the strict sense, less of a manager trained in management, very driven by instinct.
They go by feel, they go by feel, a part of it by feel. So, and it always worked out that way. My question is: how do you tell the guy, 'you can't keep running on feel anymore, or it will go wrong'?
Right. So that is it. You have to be aware that the formula that brought you to a certain stage, it all starts with the basics. You have to be humble and know that the formula that brought you to a certain stage is not the formula that will take you to the next stage.
But I think that my whole life, maybe the moves that people on the outside see are tough. But I have done this my whole life. I kept abandoning various things along the way that I did. At one point, I was good at that too. But there comes a time when you say: 'Look, I need someone better than me. I need to fill my schedule differently. I need to have the mindset, the time and the competence to look at the company with a longer horizon. I need to focus on what I do best. The company is more complex today, I need people who are more skilled.' And that is it, it is an exercise of great humility, at the same time awareness, that makes these changes happen in an increasingly natural way.
Now, the partnership at XP, its importance, what was its contribution to the company's success?
No, totally. I would never have gotten here if I hadn't had you, so many other partners by my side, aligned with me for the long term. Learning to build a company of owners. If you ask: 'What is the differentiator XP has?' It is not what we deliver in being an extraordinary company from the standpoint of investments, finance, etc., etc. It is being a company of owners who have skin in the game. There are 8,000 employees, there are 600 partners. When you create this element of ownership, people have no plan B, either it works out or they lose all their money. So that increases the probability of everyone succeeding.
So the partnership is not, again, a silver bullet, but it is an important part of your strategy, because you bring in the people who are really good, who make a difference, who have your culture, and they get to become partners alongside you. That shows generosity, so to speak, it shows an important meritocracy, and it shows that whoever is good will become an entrepreneur alongside you. In an economy where people want to be entrepreneurs so much, that ends up being a super important differentiator.
Now, for those listening to us who are medium-sized, small, entrepreneurs, to build a good partnership, we always say that the partnership has to be alive, because people gain and lose relevance in the company over time as the company changes. What tip would you give to someone building a partnership in their company today? What to do, what not to do?
Partnership. Well, I think every company, all companies call themselves meritocratic. Meritocracy is a very easy word to say, very charming, but very hard to put into practice. My advice is to truly be meritocratic. Meritocratic means ensuring that people truly make a difference more and more over the long term. And internally we use the expression 'fazer mágica' (make magic). People who truly make magic, but make magic with our culture. So it is not enough to just be someone with performance, but also someone who overflows with the company's culture. These people need to have more and more space, to grow in the partnership, and the opposite is also true. So we have so many stories of people like you, I think you joined as an intern almost, wasn't that it? You were an intern for years, an intern, and became a super relevant partner of ours, just as we have stories of partners who were super relevant and are no longer with the company. That does not mean we are no longer friends with them or do not like them, simply they could not adjust to the company's current moment. And it is important that the company keeps adapting, keeps transforming, and transforms itself to serve, as you mentioned earlier.
So, for those building a partnership, it is important to have meritocracy mechanisms in place so that it happens, because otherwise the guy becomes a partner and then becomes a fat cat. How do you keep the other people and keep the business alive?
It is important that you do this within a long-term view, right? It is no use, it is not because a person did not hit their targets for one or two semesters that they have to leave, that is not it. Within a long-term view, adjustments happen, but you cannot let things go wrong, perhaps people who were important but stopped being important, stay too long in that seat, because otherwise you will be killing all the meritocracy you claim exists in the company.
Now, XP has 21,000 investment advisors. Increasingly there is a debate about the conflict of interest between the advisor and the client. How do you see that?
There is no profession in the world without potential conflict of interest, none. In XP's case, I think we have been combating this very effectively. We just launched a little while ago our fixed-fee model. That is, with us, the client can choose three models. They can choose the commission model, where we charge on each transaction; the fixed model, where we charge nothing on any transaction but rather on your net worth; or a third model, where you choose where you want your money to be held at other banks and we come in as a consultancy supporting your choices. So they can choose three models according to their profile, and we charge the client with total transparency. We do a very serious job of training, of educating the teams internally. Our team is a team that works basically with investments. There is not a single one of our products that is not best-in-class. Best-in-class in quality, best-in price. So at XP you do not have a savings account, you do not have anything that is outside market price. And I would say that more or less 80 to 90 percent of everything we offer our clients are the most competitive prices in the financial system. It is always important to emphasize that.
And the tools that enable the advisory work of our internal and external advisors, it is all a CRM job from XP itself. So there is a whole job of artificial intelligence, of tools that ensure that when I am your advisor, your portfolio will not be a decision of Guilherme the advisor, it will be the work of this tool that supports Guilherme, and Guilherme will translate to the client those pieces of information so that you have a portfolio, portfolios that are increasingly customized. And it is proprietary intelligence. The intelligence is not the opinion of Guilherme the advisor. Guilherme the advisor will simply translate the tools that XP offers. And we have, ultimately, extremely solid, robust teams that do this very effectively.
For someone who is an investment advisor, do you think this market is still at the beginning or is it already very competitive? And in your opinion, what are the good characteristics of an investment advisor?
