Henrique Dubugras: those who only WORK HARD will be LEFT BEHIND!

I think there are a few things that are important for accumulating wealth. The first and perhaps least talked about, because I think every entrepreneur likes to have the hero's journey where they are the center of success. But I think when I look at my circle of friends, entrepreneurs, and we're just talking among ourselves, many of us recognize that we were very lucky to have surfed the right wave. I think building a company and making money has a lot to do with surfing. It's like, you can keep pedaling, rowing, rowing, rowing, but if there's no wave, it's not going to happen. But then you catch a wave and you paddle on it, you go very far. To give a very specific example, let's start with an example of Jorge Paulo Lemann, analyzing his story a bit. Jorge Paulo, as you know, is one of my mentors and we are very close. So among my mentors, the people I admire most in the world, I think a lot about what he did right and how he became so successful. I think there were two very important waves that Jorge and his partners surfed. The first was building Banco Garantia, which was the beginning of the financial market in Brazil. I can't speak for everyone, but many people who were there at that time and worked in the financial market at the very beginning made a lot of money. You had to work hard. I'm not saying everyone would succeed, but those who worked hard and surfed the wave of the early financial market built Banco Garantia and all that, and did very well. The second wave they surfed, and still surf today, is the wave of LBOs, these leveraged buyouts, which is the idea of buying companies using debt guaranteed by the company itself. What many people don't know about this market, which is now much more mature and hard to do from scratch, is that often when you buy a billion-dollar company, you don't actually need to put up a billion dollars. You can put up 300 million and have 700 million in debt. This is very common and started more or less in the 80s and 90s, and really took off. There's a guy named Mike Milken who created something called junk bonds in the US, which made this take off. So everyone who took advantage of this financial innovation of junk bonds, which were a type of debenture that paid higher interest for companies, did very well. Debenture is a loan to a company, issued in the public market, so you can buy a debenture from Gerdal, etc. Everyone who surfed that wave did very well. If I look at my own story, I also surfed some waves. The first wave I surfed was when we started Pagar.me, which was the first company that worked out. It was right at the beginning, when the Brazilian payment system was opening up. Before, it was only Cielo and Rede, nobody could enter the market.

Yes, but it was several years before. So if it were a few years earlier, Braspag already existed. If you were to do the same thing Braspag did, there wasn't much room. But Pagar.me was different. What did Braspag do? Exactly, man.

That's cool, man.

So Pagar.me was different, we were a much more integrated business. And it was because of the timing of this opening of the acquiring market in Brazil that the business worked out. Obviously we worked hard and had a good product, but the wave helped a lot. And when we arrived in the US with Brex, the fintech wave helped a lot too. Stripe and Square had started a few years before and were starting to do very well. So there were a lot of investors wanting to invest in fintech. We already had the experience. And there was another very interesting thing: there was a company called Plaid, which I also did a podcast with the founder, that started a bit before and allowed us to see our clients' bank accounts in real time. That wasn't possible before.

Like open banking that happens in Brazil today. And that allowed us to give credit by monitoring their bank accounts. Before, you couldn't do that. Even American Express couldn't do it if they wanted to. And that was one of the things that opened up opportunities for us again. We did well, we did the right thing, we got many things right, but the fintech wave helped a lot. And today it seems cliché, but if you're not taking advantage of the AI wave, you're doing something wrong.

I think I'll get the numbers wrong, but I think the total spent on software per year is on the order of 200 or 300 billion annually. I'm not sure of these numbers, but the proportion is roughly right. The amount of money spent on services, which is people doing things on computers, is on the order of two to three trillion. So the service market is 10 times larger than the software market. And now AI is allowing you to automate a lot of things that before you would have to spend on services, paying someone to do it, which you can now do automatically. And obviously there are the employment issues, and I think that's something society will have to adapt to. But I think the interesting opportunities are where you use AI to do something that didn't exist before. For example, let's take the example of your sponsor here, e-commerce. Often, you wouldn't put a salesperson to talk to a very small customer because the economics didn't make sense. And now, if you can put a salesperson for 100% of customers to answer questions in real time.

Now suddenly it can.

Exactly. But we're not for that, no. We don't work that way. So imagine, for example, at Brex, one of the things we're working on. One of the functions that exist in large companies is called internal audit. Basically, you take someone internally, when the company is big, and say, 'You're going to be an auditor, you'll go and randomly find some things in the company and check if they're correct.' And by statistics, if you pick some random expenses and everything is fine, you assume the rest is fine. Now imagine you don't need just one person looking at a few random things. AI can look at all the company's transactions to see if they're correct. That would have been economically unfeasible before, but now it's possible. So there are many things where the abundance of being able to look at markets that only a few people had access to, or that weren't economically viable, now you can make them ultra-economically viable for everyone. Another example I like is in the US with prenuptial agreements. Many people didn't make prenuptial agreements and then had fights in divorce because it was too expensive. It cost at least $5,000 in the US. Now, there are several companies where with a few clicks everyone can have a prenuptial agreement. So I think this greatly expands the market and access for people. And another thing that I think is very important is that before, you needed to have many skills, you needed to be a great programmer, you needed to be a great business person, and today these skills are available.

Exactly. I swear to God that today technology is already at a level where I can't live without it. I'd say I'm already completely dependent on it for many things I do in my life. And if you're an AI hater and don't want to adapt to AI, you'll probably be out of a job soon, man.

Yeah, right. Someone was telling me, I didn't verify this information. Nowadays on ChatGPT, if you say these things, people verify you. So I didn't verify this, but someone told me that there used to be a job called the 'knocker-up'. He would knock on your door to wake you up in factory towns and such. Then when the alarm clock came, the knocker-up jobs disappeared. But that's okay, they figured out and found something else to do.