How to bet on yourself (without venture capital) | CEO OS

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William Hockey — co-founder of Plaid, now founder/CEO of Column — sits with Patrick O'Shaughnessy for a 77-minute argument against the default path. Column is a bank that ships software, funded entirely by its own earnings. No VC. No dilution. No preference stack sitting above common. Hockey's thesis is that Silicon Valley has quietly engineered Founder Risk out of company-building, which is exactly why so many companies today are derivative, pivot-prone, and built for other tech founders instead of real humans. The episode is part operator memoir (funding a bank on margin debt, almost going bankrupt three times), part macro tour (why 75% of global trade still settles in dollars, why AI will make incumbent banks more powerful, not less), and part philosophy (why you can only learn risk tolerance as a child). For a bootstrapped founder running FeatureOS and SupportWire from India, this is the closest thing to a permission slip you'll get all year: being distance from the Valley consensus and funding from cash flow is not a handicap. It's the edge.

Key Takeaways

The market is not other tech founders. Silicon Valley has become "more akin to Wall Street in the 1990s than to a Cambridge research lab in the 1950s." Elites build for elites, call it a product, and wonder why it doesn't resonate outside the bubble. Hockey's counter-move: fly to Kinshasa and watch how people actually live. 90% of his ideas come from walks in emerging-markets capitals, not SF demo days.
VC money is heroin. "It feels good, it's amazing, but you gotta keep shooting up." The structural problem isn't venture per se — it's that the 12–18-month raise cadence optimizes founders for the next round instead of the business. That's how you end up with a stablecoin strategy one year and an AI strategy the next, with the real business taking the long way around.
Match your capital structure to the shape of your business, not the playbook. Venture was engineered for companies that can grow 30%+ off a billion-dollar revenue base. Most software companies cannot. Hand Column a billion dollars tomorrow and Hockey doesn't grow 1,000x — he can't even spend it productively. Hockey's three-bucket split of annual earnings: employees, growth, and a 10-year war chest. Survive the decade, not the quarter.
Founder risk has been engineered out of tech — and it's why the crop is derivative. The modern path has a floor: good school → YC → $3M seed → worst-case soft landing at Google with "founder" on the resume. Hockey's inversion: the early employee now takes more risk than the founder. A 24-year-old leaving a $450K TC for 1% of equity is making a bigger bet than the founder who secondarys out at the next round. Fix the incentives by making Skin in the Game mandatory again.
Write the press release before you raise. Hockey's Column "funding round" is January 1st every year: profits fund growth, and 25% goes to a yearly Founder Liquidity tender that buys back employee shares. No dilution, no preference stack above common, and employees can actually model their equity. It only works for second-time employees who've seen a dilution stack crush their expected value — but for them it's the strongest offer in tech.
The boring thing is the edge. Finding "the most boring thing humanly possible interesting over a multi-decade period" is the only moat left when AI has flattened generalist knowledge work. For a SaaS operator: your obsession with churn mechanics, onboarding friction, and billing edge cases has to go deeper than a smart generalist would tolerate. That's the moat. Not your AI wrapper.
Mercenaries, Missionaries, and the hybrid you should actually hire. Mercenaries are pedigreed option-collectors — useful short-term. Missionaries go to the ends of the earth but fracture when commercial trade-offs arrive. Hockey hires a third group: people who want upside AND stability, warm coworkers AND financial value. LinkedIn is useless for sorting these. You find them by talking, not by filtering.
Profitability is a trust product, not a finance line. In B2B with high switching costs (banking, customer support, feedback infrastructure), buyers are betting on whether you'll still exist in 10 years. Burning cash is a promise you might not be there. Paying the bills yourself is a promise you will. Longevity is free marketing to every CFO evaluating your contract.
The US dollar is America's nuclear weapon. 75% of global trade still settles in dollars — even between countries that hate the US AND each other. Sanctions are the first instrument of war, reached for before any boots hit the ground. Hockey's unfashionable take: keep the dollar system US-bound. He's explicitly against the stablecoin-as-offshore-workaround crowd.
Incumbent banks are the biggest winners of AI, not the losers. They have distribution, brand, regulatory moat, and a fat cost base to cut. The historical parallel isn't railroads winning — it's Standard Oil winning because Rockefeller harnessed rail infrastructure best. The same pattern will play out in banking. For SupportWire: don't position as "the AI-native one" — position as "we cut the cost base the incumbent can't touch, for the customers they over-serve."
You can only learn risk tolerance as a child. Hockey's closer, when asked about the kindest thing anyone's done for him, is his parents — not for one dramatic act, but for the quiet engineering of a childhood where falling down was safe and expected. Risk tolerance is childhood-encoded; you can't retrofit it as an adult.

[0:00] Column, Bank-as-Software, and Why This Conversation Matters

Patrick O'Shaughnessy opens by framing William Hockey as a founder worth studying — co-founder of Plaid, now running Column, his second company, which he is funding entirely himself. Patrick's hook: Hockey is "maniacal" about studying his field, willing to dig through 2,000-page books about ancient Japanese banks to steal one idea. This is a founder winning by doing everything.

Hockey explains Column in one line: "We are a software company that also owns a bank." [0:35] The regulatory moat is unusual — most fintech infra players rent a bank. Column is one, and sells APIs on top. Customers like Brex, Mercury, and other embedded fintech players run their payments, deposits, and credit on Column's rails. 90%+ of revenue is software (per-API-call SaaS economics), and the bank-side economics get passed through to customers. A regulated entity priced like a tech company.

[0:35]

"We are a software company that also owns a bank." — William Hockey

The product bet underneath it: as AI commoditizes "software for software's sake," the next durable enterprise software has to touch the money itself — lending, holding, credit. Whoever controls the dollar primitive wins [2:35].

[4:09] Emerging Markets, Kinshasa, and Where Real Ideas Live

Patrick notes Hockey is always somewhere strange — last time they met, it was Kinshasa. Hockey's explanation is the spine of this section: Silicon Valley is seductive but isolating, and a founder who only sees SF ends up building for SF. He cites Dan Wang's observation that the two most consensus societies on Earth are San Francisco and Beijing [4:50].

That consensus is simultaneously SV's biggest asset (outlandish ideas get funded before the world catches up) and its deepest liability (total disconnection from how normal humans live). Hockey's counter-move: go to constrained places. Emerging Markets founders operate under real scarcity, and scarcity breeds a different creativity than abundance does [5:57].

Kinshasa, capital of the DRC, will be one of the largest cities in the world within 5–10 years, yet 95% of SV couldn't place it on a map. Mobile penetration is under 25%, banking penetration under 5% [9:20]. His point for a builder: the dollar is a global product, and the places that need US financial services most are the dollarized emerging markets — not London or Paris. That's the customer Column is actually built for.

He walks, he ideates, he meets CEOs of multinationals and ground-level founders. He claims 90% of his ideas come in the shower or walking around an emerging-markets capital. The method isn't romantic — it's deliberate de-biasing of his own inputs [8:52]. The punchline business insight: constraint-driven systems leapfrog. Hockey points to Kaspi in Kazakhstan — bought a bank, verticalized into everything (taxes, driver's licenses, e-commerce) — and to a Congolese bank whose mobile app is better than anything Chase or Wells Fargo ships [12:40]. Financial services are most innovative where the incumbent system is most broken.

[10:15]

"There's stuff we need to do before we think about embedding an LLM in everybody's brain." — William Hockey

[13:52] The Elite Consensus Problem — Why Silicon Valley Builds for Itself

Patrick pushes on the consensus observation. Hockey — self-described product of SV since age 21 — gets surgical. Silicon Valley today, he argues, is "more akin to Wall Street in the 1990s than to a Cambridge research lab in the 1950s" [14:33]. It is an elite-dominated society, and elites end up building software for elites. That worked historically because aspirational consumer products trickle down — but the feedback loop has degraded into self-congratulation.

[15:10]

"We talk to each other, we build for each other, and we think that the market is each other." — William Hockey

Hockey concedes AI Research Labs are the exception: pure consensus environments are great for frontier research because you just need a room of extremely smart people sharing ideas with the outside world blinded off. That's why the labs are winning. But for applied software — products that actually resonate in real lives — SV is at a "low point" in his entire career [15:48].

For a bootstrapped founder in India, this is the whole mechanics of "bet on yourself." Being distance from SV, distribution-starved, paying your own bills, is not a disadvantage — it is the same constraint Hockey flies 20 hours to manufacture for himself. The founders who figure out that the market is not each other do really well.

[16:03] Rejecting the VC Hamster Wheel

Hockey rejects the binary Patrick sets up: either you're a venture-funded, world-class-talent, build-something-massive company, or you're a bootstrapper writing thought pieces on Twitter, hiring subscale people, running a "cute lifestyle business" [18:55]. There's a third path. At Column, he's building with top-tier talent, growing fast, and still letting 100% of employees plus himself own the company for the foreseeable future — funded entirely by earnings [19:08]. At Plaid he ran the standard playbook: pitch 80 firms, move up the alphabet year by year [18:34]. It worked, but it isn't the only way to be ambitious.

The core argument against Venture Capital is structural. If you're burning capital and raising every 12–18 months, you optimize for the next round, not the business [20:01]. That's how founders end up bolting on a stablecoin strategy one year and an AI strategy the next — "your business maybe is going kind of the general direction, but it's definitely taken a pretty windy way to get there because you need capital" [20:28]. Rational for the operator, but never the straightest line to the goal.

[20:39]

"VC money is kind of like heroin. It feels good. It's amazing, but you got to keep shooting up. It's very challenging to get off." — William Hockey

Hockey's test: how many people do you know who raised a $100M Series A and said "I'm done"? It doesn't happen. San Francisco is "a factory by design" [21:10], and for a founder willing to trade 80% growth for 110%, it's the wrong optimization. Being profitable bought Column the freedom to make a 10-year bet — buying a regulated bank under the first Biden administration, a move that required 2–3 years of not focusing on revenue [21:49]. No VC would fund that.

[23:06] Equity, Liquidity, and the Preference Stack

Column treats each year's profits as its funding round. Every January 1st, earnings become a fresh raise — part funds growth, 25% goes into a yearly tender that buys back employee shares [23:06]. The company grants equity like any Silicon Valley startup, then provides annual Founder Liquidity through structured Secondary Sales. No Dilution. No Liquidation Preference stack sitting above common shareholders. Employees can actually plan around what they're told they own.

[24:25]

"I can hire someone to say over a 10-year period, you're not going to be diluted." — William Hockey

This is the pitch Hockey thinks early-stage founders never stress-test. His numbers: a venture-backed founder will lose 50–75% of their equity value to dilution alone, plus another 10–80% of upside to the preference stack [24:31]. Most people don't internalize this until 5–10 years in or until they've seen an exit. Column's counter-offer — "what I give you is what you're going to have, and you have liquidity on a yearly basis going forward" [24:53] — is straightforward once the listener does the math.

The targeting is sharp. Hockey explicitly pitches second-time employees, not new grads. A new grad's rational calculation is different: where are my friends going, what's on Hacker News, who are the Twitter thought influencers hyping — all reasonable heuristics that skip the dilution math entirely [25:28]. For second-timers who've watched equity get crushed, the Column story actually lands.

[26:03] Funding a Bank Without the Billionaire Cushion

The romantic version of Hockey's story is the tidy one: Plaid co-founder exits, buys a tiny bank, self-funds Column, builds the future of banking infrastructure. Hockey dismantles that myth on the record. When the Visa-Plaid deal got blocked by the DOJ, he walked away with a paper fortune and almost no liquidity. His public reputation — "oh, this guy's rich" — bought him credibility. It did not buy him the Banking Charter.

[28:15]

"I pretty much funded the entire company with debt. I went to a bunch of banks and said, here's a bunch of Plaid shares, please give me money. The best I got was SOFR plus 10% at 5% LTV. I pledged over a billion dollars of stock to get $70 million. I bought the bank for $70 million." — William Hockey

So the cleanest case study in Self-Funding in modern fintech is actually a case study in Margin Lending. Hockey got margin-called three times. He almost went bankrupt multiple times. The first three years of Column were the most stressful period of his life [29:33] — he had a loan hanging over him while running a newly-acquired bank through a hostile Bank Regulation climate, trying to keep 100% of the equity with himself and employees. The Keynes line kept looping in his head: markets can stay irrational longer than you can stay solvent.

The lesson isn't "take on a billion dollars of margin debt." It's that the mythology of the well-funded second-time founder is mostly marketing. Even the people who look liquid are often scraping conviction against a cliff. Bootstrap constraint isn't a handicap; it's the same structural pressure Hockey paid a billion dollars of collateral to manufacture.

[31:20] The Necessity of Extreme Founder Risk

Hockey's bigger point — the one he's willing to make enemies over — is that Silicon Valley has quietly engineered Founder Risk out of company-building, and the product is worse for it. The modern founder path has a floor: decent school, Y Combinator, $3M seed, and a worst-case exit into a senior engineering seat with "founder" on the resume. That floor is the bug, not the feature.

[32:40]

"Good founders bet on themselves and take an extreme amount of risk to do that. When there's literally only one door in front of you, you don't have a choice. You have to go in. That fear creates another part of you. It creates creativity. It creates inspiration." — William Hockey

His inversion is sharp and worth sitting with: the early-stage employee now takes more risk than the early-stage founder [34:10]. A 24-year-old leaving Google at $450K TC for 1% of a startup is making a five-year trade on their housing, their savings, their life. The founder gets secondary at the next round, a softer landing in failure, and a resume line. We have de-risked the person asking for belief while leaving the person giving it fully exposed. That's backwards. Hockey's fix isn't to coddle employees — it's to make Skin in the Game mandatory for founders again.

[35:40]

"Of the $100 million they've made, they're putting a million dollars of their capital at risk and they've raised $500 million. If you believe in this so much, why the fuck aren't you going all in? If I'm an employee, I'm like — you're asking me to go all in, but you can't?" — William Hockey

This is where the thread ties to safe, derivative companies: OpenAI Wrappers, Anthropic wrappers, pivots dressed as strategy. Hockey argues the "wrap the foundation model" crop is a downstream symptom of founders who never needed the business to work. They can't think in decades because they never had to think in months. Today, he owns two things — Column and Plaid — and not even a majority of his house [36:31]. He knows that's financially indefensible for a 36-year-old with a six-month-old son. He also knows it's the reason Column exists.

[37:18] Bet On Yourself, Then Go Unforgivably Deep

Hockey opens this stretch with a blunt reframe on capital allocation for founders: the best investment you will ever make is usually the thing you already own and control. Pulling money out is tax-costly, compounding on yourself is tax-free, and Solvency as a goal is what gets him out of bed. But the real argument isn't financial — it's about identity. Hockey insists he is a Specialist, not a generalist, and warns against the trap where "builders think they're investors and investors think they're builders."

[38:42]

"I'm probably the best in the world at a couple small boring things. I'm really good at creating really confusing, boring sounding companies. That's my niche." — William Hockey

At [39:00] he describes reading a 2,000-page book on 19th-century Banking in China and studying 1800s Japanese banks — not as trivia, but as hunting ground for leverage. The asymmetry is wild: 20,000 pages might yield one insight, but that insight — if it lands on a business you actually own — can generate hundreds of millions in value. This is the Column thesis in miniature: knowledge compounds only when paired with ownership.

The "fun" categories — AI, geopolitics, generalist software takes — are overfished. At [41:20] Hockey argues you cannot create value there because a thousand smart people already have the same take.

[41:30]

"Finding the extremely boring thing that requires you to read hundreds of thousands of pages that you cannot Gemini deep research your way through — that's where value is. But it's boring for a lot of people." — William Hockey

His screening question for founders [40:31]: Can they find the most boring thing humanly possible interesting over a multi-decade period? That is the only moat left when AI has flattened generalist knowledge work. The test for a B2B SaaS operator: is your obsession with the unsexy substrate — churn mechanics, onboarding friction, billing edge cases — deep enough that a smart generalist would tap out before matching you?

[42:44] Longevity Economics and the Case for Actually Being Profitable

Hockey at [42:54] makes the case that building a second company is radically easier — not because the playbook is different, but because "fail forward" on someone else's dime is cheaper than on your own dilution. Then at [43:50] he lays out his talent framework: Mercenaries (pedigreed option-collectors, useful in churn-and-burn cultures), Missionaries (go to the ends of the earth but fracture when commercial trade-offs arrive), and a third hybrid group — people who want upside and stability, warm coworkers and financial value. He argues LinkedIn is nearly useless for sorting these types.

On Mission itself, he is refreshingly heretical [45:51]. Yes, you need one — otherwise your best people go work at hedge funds. But mission is maybe fifth on a list of five priorities, not first. He blames investor theater for inflating its importance.

[46:20]

"In the end, you want to convince somebody to buy your product and deliver them enough of an experience that they can't build it themselves and they're going to pay a lot of their hard-earned money to you. That person doesn't give a flying f*** about what your mission is." — William Hockey

The segment at [47:18] is the one that matters most. Patrick asks how Hockey thinks about Profitability and margin in a high-growth business. The answer reframes Unit Economics as a trust product: "Our customers pay us for safety and our companies pay us for longevity." In banking, switching costs run 10–15 years, so customers are effectively betting on whether you will still exist. That makes Earnings not a finance output but a feature of the product itself.

The direct read-across for FeatureOS and SupportWire: in B2B SaaS with high switching costs, profitability is a signal to buyers, not just a line to investors. Burning cash to grow is a promise you might not be there. Paying the bills yourself is a promise you will. That is Longevity as a distribution channel — free marketing to every CFO evaluating your contract.

[48:46] Matching Capital Structure to the Shape of Your Business

Hockey opens with a warning most founders never hear from their VCs: the venture model is an Asset Class, not a law of nature. It was engineered for a very specific kind of company — one that can ingest hundreds of millions, put it to work, and still grow 30%+ off a billion-dollar revenue base. That last part is the hurdle most people skip.

[53:22]

"Growing 100% on a $10 million base — it's not that hard. You know what's much harder? Going above 30% a year off of a billion-dollar revenue base. That is 99 times harder than going from zero to $100 million in three years." — William Hockey

At [49:20], Hockey flips the question every founder should sit with: is my business the type that actually converts capital into growth? Most Enterprise Software companies cannot. Hand him a billion dollars at Column tomorrow and he doesn't grow 1,000x — he probably shouldn't even try. The venture machine only works when a dollar in produces roughly $1.30 out, like an ATM. Most real markets don't behave that way.

So instead of chasing top-line, Column splits earnings deliberately into three buckets [49:48]: employees, growth, and a war chest — capital reserved for the decade when everything breaks. Hockey's framing is strikingly long-duration: not "can we survive a bad quarter," but "can we survive 10 bad years." He sketches a scenario [50:09] where markets go sideways for a decade and asks whether the business could weather it. Most incredible companies die not from bad strategy but from being unable to sit still through a couple of ugly years.

His advice for founders [52:11]: chat with 80–90 investors, get rejected, but pick the ones whose time horizon matches your business. There is almost no transparency in the market on which VCs are truly 10-year investors versus 7-year tourists.

[54:49] The Unseen Power of the US Dollar

Patrick asks what Hockey has learned from sitting at the operating system of the global US Dollar system, and the answer reframes trade itself. Official stats say most economies trade less than 10% of GDP with their neighbors [55:09]. Dig into the unofficial flows — and it's closer to 90%. Money is the actual connective tissue of cultures, and almost all of that tissue runs through US financial rails.

Hockey gives the killer examples [56:37]: gas shipped from Qatar to Switzerland — neither country a particular fan of America — still settles in dollars, still routes through US banks. China buying Russian oil, the two countries explicitly trying to decouple from the West, still settles the vast majority of that trade in dollars. Russia doesn't want yuan. China doesn't want rubles. They distrust each other almost as much as they distrust the US — and the dollar wins by default. Roughly 75% of global trade still lives in dollars [58:00].

[57:42]

"Russia doesn't want Chinese currency. China definitely doesn't want the ruble. They almost hate each other as much as they hate us. And the fact that they then choose a dollar is still so critical." — William Hockey

This is where Hockey makes his most provocative claim [58:18]: Column's mission is, in part, national security. He says it plainly to his team. Financial services is the first instrument of war — the generals reach for a sanction before a missile [59:05]. Venezuela was softened by a collapsed economy long before any boots considered the ground. The US has a lever — the ability to switch off a country's access to the dollar system — that no one else possesses at scale.

[61:16]

"Financial services is the first end to war for our country. We start with sanctions. We start by cutting them off from US trade. We start with that before we put boots on the ground." — William Hockey

Hockey's hope for the future of global finance [61:40] is unfashionable in parts of Silicon Valley: keep it US-bound. He's directly against the crowd pushing to move financial power offshore via Stablecoins or Eurodollars-style workarounds. The dollar is America's nuclear weapon, and he wants it to stay that way.

For a founder operating internationally from India — where USD gravity shows up in every Stripe payout, every SWIFT wire, every invoice — you are not in a neutral financial universe. You are a tenant in an American-controlled operating system. Price, contract, and hedge accordingly.

[62:30] Fragmentation, Infrastructure, and the Real Bottleneck

Hockey pushes back on the lazy narrative that US Legacy Banking is broken. He argues the opposite — financial services is one of the most decentralized sectors in America, and that's a feature worth protecting. Most countries concentrate banking power in three or four institutions; Canada has four banks for 95% of consumers, Australia is even tighter. The US by comparison is still fragmented, and Hockey's position is clear: keep fragmenting it. Disperse the power further.

He also dismantles the "banks run on COBOL" meme. As someone who racks his own hardware inside the Federal Reserve, he insists the Fed's tech team is genuinely strong — capable of moving and clearing money 24/7, faster than stablecoins or crypto, and has been for decades.

[64:15]

"The problem isn't in the fundamental infrastructure, it's in our implementation of it." — William Hockey

The reason your community bank can't send money on a Sunday isn't missing rails — it's that a 50-person rural bank literally cannot staff a weekend liquidity desk. The constraint is business model, not technology. Before you build a "we fix X" startup, find out whether X is a tech gap or a staffing/regulatory/economic gap. They need completely different solutions.

[65:38] Where AI Value Accrues in Financial Services

When Patrick asks what's been missed, Hockey goes straight to AI. His thesis: value will not accrue to "AI companies." It will accrue to whoever already owns distribution, brand, and a fat cost base ripe for compression. The historical parallel he reaches for is railroads — the railroads didn't win, Standard Oil did, because Rockefeller was the one who harnessed the infrastructure best.

[66:10]

"I think the biggest, fattest, most inefficient brands are the best beneficiary of AI because brands have a massive moat and man there's a lot of cost to cut there." — William Hockey

Applied to banking, this is the uncomfortable conclusion: legacy banking incumbents may be the biggest winners of AI, not the biggest losers. Banks are absurdly profitable ("if you own a bank and you aren't profitable, you've clearly done something wrong"), their cost base is mostly headcount and tech (not physical capex like railroads), and they're nearly impossible to take over because of regulation. A large bank that actually executes on AI has the distribution, the moat, and the fat to cut. That's a real bull case.

He also reframes the "banks are slow and clunky" complaint: the friction is a feature. Most of the UX pain in financial services exists to protect the 5–10% of users vulnerable to fraud, romance scams, and elder abuse. AI changes this equation. Build detection models as good as a human — running instantly — and you can strip the friction away for the other 90% without exposing grandma. That is where the UX revolution happens.

For SupportWire, the framing matters. Don't position against incumbent support tools as "we're the AI-native one." Position as "we cut the cost base the incumbents can't touch, for the customers they over-serve." The distribution-plus-AI playbook is the one to steal — and the adjacent insight is that a lot of customer support friction is also compliance theater that AI can finally dissolve.

On where to start a company today: Hockey's contrarian read is that a 90%+ AI YC batch means non-AI spaces are now the least crowded they've been in years. His heuristic is almost mischievous — find the industry with the dumbest people that makes the most money, and go there. Consensus requests-for-startups are where you go to get outcompeted.

[72:14] The Kindest Thing — Risk Tolerance as a Gift

Patrick's signature closing question lands on Kindness, and Hockey's answer is his parents. Not for a single dramatic act, but for the quiet engineering of his childhood. His parents didn't have an easy life, but they insulated him from most of it — and more importantly, they taught him it was okay to fall, okay to get punched in the face.

The through-line back to founding is sharp. You cannot learn risk tolerance as an adult. If you grew up in an environment of fear, constantly de-risking as a child, moving up the risk spectrum later feels impossible. Resilience is childhood-encoded.

[74:30]

"You can only teach that as a little kid. You can only have that childhood that makes that comfortable in a very specific environment." — William Hockey

Now, with a six-month-old of his own, Hockey is skeptical of the peer consensus around optimized childhoods — best schools, nicest people, linear algebra at seven. He wonders aloud whether that produces the children the next 20 years will actually need, or just very polished AI researchers. His bet is on raising kids who are good at taking risks and good at getting back up.

[75:45]

"The fact that I am pretty damn resilient is a complete product of my parents. I think that's a huge gift." — William Hockey

A fitting close for a founder who chose to build the boring, regulated, unglamorous thing — because someone, decades ago, made sure he wasn't afraid to fall.

People Mentioned

William Hockey — co-founder of Plaid, founder/CEO of Column. The guest. Full bio in his note.
Patrick O'Shaughnessy — host of Invest Like The Best, founder of O'Shaughnessy Asset Management. The interviewer.
Zach Perret — William Hockey's co-founder at Plaid, still CEO there.
John D. Rockefeller — Standard Oil founder, cited as the Rockefeller-won-not-railroads AI parallel.
Dan Wang — China analyst whose letters on San Francisco and Beijing consensus Hockey references.

One Thing to Act On

Draft the FeatureOS press release for v2.0, then draft the Column-style January 1st earnings split — three buckets, in writing: employees, growth, 10-year war chest. Not an exercise. A forcing function. Write the actual split — if FeatureOS does $300K in profit next year, what exact percentage goes to each bucket, and what does that unlock in 2027, 2030, 2035? The point is not the numbers. The point is to operate like a founder who has decided the company will still be around in ten years — and make every hire, every pricing change, every quarter-over-quarter decision resonate against that 10-year war chest, not against a 12-month runway. Hockey's edge is that he has structurally made it impossible to think in quarters. You can copy the posture for free. Start Sunday. 90 minutes. Pin it to the wall next to the press release.

Raw Transcript

Auto-captions from YouTube. Folded by default — expand if you need to grep the source or pull an exact quote.

0:00 My guest today is William Hockey, the 0:02 founder of Column. William was also the 0:05 co-founder of Plat, one of the more 0:07 famous fintech businesses from the last 0:09 decade. Column is his second business, 0:11 which he's built from scratch and 0:14 funding it entirely himself and building 0:16 it his way. I think you will find this 0:18 conversation utterly fascinating, not 0:21 just because of the incredible quality 0:22 of the business that he's built, but how 0:24 maniacal he is about studying and 0:26 implementing ideas in this specific 0:29 field. This is a great example of a 0:31 founder that is winning because he is 0:33 willing to do everything. My favorite 0:34 example from our conversation today is 0:36 that he went and found some obscure book 0:39 about some ancient bank in Japan and 0:41 found one idea buried in the 2,000 pages 0:43 that gave him a simple idea for his 0:45 product. He's willing to do that over 0:47 and over again. And he explains his very 0:50 different, maybe even heretical views on 0:52 a lot of what's happening in the world 0:53 of startups and technology today. He 0:56 offers a very different way of building 0:58 that I think will be inspiring and 1:00 interesting to those that want to build 1:01 a company. Please enjoy my conversation 1:03 with William Hockey. 1:11 Usually I don't start with a description 1:14 of the company that someone's building, 1:16 but in your case uh one I don't think a 1:19 lot of people are yet familiar with 1:20 column and I want to fix that 1:22 >> and it's such an interesting beast in 1:25 and of itself that it it'll be our 1:27 excuse to talk about many fascinating 1:29 things in the world. 1:30 >> Can you just start by explaining what 1:32 the business is and does at a high 1:33 level? We are a software company that 1:36 also owns a bank. And what we do is we 1:40 say, okay, we have this interesting 1:42 regulatory mode. We have a bank that 1:43 most other people don't have, and we're 1:46 going to build just incredible software 1:48 behind it that nobody else can build 1:50 because they're not a bank. We started 1:52 out by serving a lot of software 1:54 companies that want to get into 1:55 financial services in the US. So with a 1:57 back-end infrastructure that powers the 1:59 payments, deposits, credit of amazing 2:02 companies like built, wise, ramp, brex, 2:05 mercury, these type of companies, they 2:07 run on our software than our regulatory 2:09 rails. And then we also expand that to 2:11 anybody want to do things with the 2:12 global dollar. So that could be 2:14 international fintex, that could be a 2:16 lot of times global banks or banks in 2:18 emerging markets that need to transact 2:20 hold things in the dollar. So in the US 2:23 you have you know vertical software 2:25 people building business software. This 2:27 is an area that is you know probably 2:30 going to get changed as AI kind of rolls 2:33 through. So people need to go deeper 2:35 down into the business. Just building 2:36 software for software sake is not the 2:38 case. And so now people actually need to 2:40 control the underlying finances of 2:42 business. The bre ramps of kind of the 2:44 world have proven that you can actually 2:45 build enterprise software that also 2:47 touches the money. But in order to do 2:49 that you actually have to control the 2:50 dollar. you have to control the money 2:52 whether it be lending, money, holding, 2:53 credit, etc. And so we just expose a set 2:56 of primitives and APIs to allow anybody 2:59 to do that super easily. 3:00 >> Could you maybe like pick a customer 3:02 that people might recognize and describe 3:04 literally what services or products they 3:06 use and then how they pay you for those 3:07 products or services just to like really 3:09 nail it home? 3:10 >> So maybe I'll use a a company out here 3:12 that recently relaunched company called 3:13 Built, which is made a lot of New 3:15 Yorkers have, a lot of people in the 3:16 cities have. If you look at the card on 3:18 the back, it says like, you know, like 3:19 issued by column. And so we're the one 3:20 that is actually connecting with the 3:22 networks, managing the networks, and 3:24 we're actually the regulated entity 3:25 behind that. And then when you need to 3:27 go pay your rent or your landlord is 3:29 going to detect money from your built 3:31 account, if you look at like, oh, the 3:32 account and routing number there, oh, 3:34 that's actually a column account routing 3:35 number. So they build the application, 3:38 they build the website, they build the 3:39 consumer marketing, and we're going to 3:41 handle everything kind of behind the 3:43 scenes that has to deal with the Federal 3:45 Reserve or TCH or the card networks or 3:48 Swift. We're the ones that kind of build 3:51 the software for that and handle all 3:52 that complexity. We are technically a 3:54 bank, but unlike banks, we make 90 plus% 3:56 of our money off of software. And so 3:58 similar to a any kind of SAS company, 4:01 it's a per API call. It's a pure play 4:03 tech business. And then we pass most of 4:05 the economics from the actual bank side 4:07 of the business down to all of our 4:09 customers. 4:09 >> One of the things I love whenever we 4:11 talk is you've always been somewhere 4:13 strange and interesting. Kinshasa, I 4:14 think, was the last time we were 4:15 together. I don't know a lot of founders 4:17 going to Kenshasa very often. Why are 4:18 you so often in interesting kind of 4:21 bizarre local around the world? 4:23 >> This is my second company and I started 4:25 Plaid back in 2012. It's very easy to 4:29 stay in Silicon Valley. It's like 4:31 quality life is amazing. There's a lot 4:33 of money to be had. There's a lot of 4:34 super smart people, but you can start to 4:37 get quite isolated and you can start to 4:40 get very consensus focused. Probably a 4:42 lot of your listeners read Dan Wang's 4:44 last letter on China and he has this 4:46 like great and I think accurate but 4:48 somewhat harsh criticism where he says 4:50 the two the two most consensus societies 4:53 he's ever been to is San Francisco and 4:55 Beijing. And I think that's like quite 4:57 accurate actually. Um where San 4:59 Francisco is probably the most consensus 5:01 place I've ever been to. And I think 5:04 that is both a huge clutch for us, but 5:08 it's also probably our most valuable 5:10 asset because as a founder, if you're 5:13 building in like, I don't know, like AI 5:14 or like stable coins or something that 5:17 San Francisco believes is very 5:18 consensus, but the world does not 5:20 believe yet, that's actually a great 5:22 operating environment because you can go 5:23 and you can have these like outlandish 5:25 ideas that other people are going to 5:26 believe in that nobody across the world 5:27 would believe in. And you can build this 5:28 in a very like safe way. I think that's 5:30 why Silicon Valley in San Francisco is 5:32 so is so dynamic and we're so a front of 5:35 the curve, but we also have completely 5:37 lost touch with how the rest of the 5:39 world operates or even like everyday 5:40 American operates. And you've probably 5:42 seen this kind of smack us in the face 5:44 over the past of the past decade or two. 5:46 And so I think it's very important to go 5:47 to places that don't have that same 5:50 bias. And I think if you think about 5:52 emerging markets specifically, the 5:54 founders who build there, there's the 5:55 everyday people, they live in this 5:57 constrained society. the constraint in a 5:59 way that like San Francisco and New York 6:00 isn't. And that breeds a different type 6:03 of creativity. It breeds a different 6:05 type of innovation that you really can't 6:06 get anywhere else. Like if you go to 6:08 talk to people in London or Vienna or 6:12 Mexico City or San Francisco, whatever, 6:14 like people are living in to an extent 6:16 in a world of abundance and that causes 6:18 a very like specific creation cycle. 6:21 Why? If you go to Kinasha, which is a 6:23 capital democratic republic of Congo, 6:25 it's going to be the largest city in the 6:26 world than in probably 5 to 10 years. I 6:28 think it's already larger than most of 6:30 the mega cities. 6:31 >> Wow. Probably 95% of people in Silicon 6:33 Valley couldn't tell you what Kasha is a 6:35 capital of. But like, you know, just 6:37 tens of millions of people that live in 6:39 an highly highly constrained society. 6:41 And so that breeds a sense of 6:43 creativity, that breeds ideas, that 6:45 breeds stuff that you can't really get 6:47 anywhere else outside of emerging 6:48 markets. So that's one. I think second 6:50 for my business like the dollar is 6:51 fundamentally global and the dollar 6:54 tends to be strongest in places that we 6:56 could imagine are relatively dollarized. 6:58 Places that are dollarized tend to be 7:00 more emerging markets where they are 7:01 using the dollar as their main currency 7:03 either unofficially or officially 7:05 because maybe they can't trust their 7:07 central bank. Maybe they have a history 7:09 of like super bad inflation and the 7:10 country got implicitly dollarized. And 7:12 so those places tend to actually need US 7:15 financial services more than I don't 7:17 know you know UK and the GBP is pretty 7:20 strong or you know France those places 7:22 don't need American financial services 7:24 as much as maybe some parts of the 7:25 emerging world do 7:25 >> so sticking with Kinshasa as an example 7:28 so you go there what are you doing there 7:30 what are you discovering say more about 7:32 like this con the constraints you 7:33 encounter there like teach us a bit 7:35 about I've never been to Kinasa 7:36 >> they operate in a world where there's 7:39 actually like relatively large markets 7:40 you know DRC that's an example is you 7:43 know one of the largest exporters if not 7:45 the largest exporter of some critical 7:46 minerals in the world right so there is 7:48 a lot of money flowing through there 7:49 it's a massive exporter it's a place 7:51 where um it's a lot of Chinese 7:54 investment you know Africa broadly has 7:56 had more Chinese investment than 7:57 anywhere else in the world outside of 7:58 Pakistan and so there is money and 8:01 there's a lot of people doing things and 8:03 the population growth is absolutely 8:04 bananas I mean the population growth in 8:06 Africa is probably larger than western 8:09 Europe North America and parts of Asia 8:10 combined why they maybe you know GDP per 8:13 capita quite small there's still a lot 8:14 of going on where there is there are 8:16 founders that are building super cool 8:18 things the large companies actually tend 8:20 to be quite innovative and I can kind of 8:22 talk about that in a second and so you 8:24 just I talk to them I meet a ton of 8:26 people I'm meeting CEOs of largest like 8:28 multinational companies there I'm 8:30 meeting kind of founders on the ground 8:31 and I'm talking them through like what 8:32 are you building what is your perception 8:34 of America what is your perception of 8:35 American financial services like how can 8:37 we be helpful and you're just honestly I 8:39 spend a lot of my time just like walking 8:41 around kind of ideulating just like 8:43 taking in the scenes and sometimes you 8:46 know quarter of the time I come up with 8:47 like a really interesting idea that ends 8:48 up building us like a cool product or 8:51 just a good market. It's an example of 8:52 that. I probably have 90% of my ideas 8:54 either in the shower or like walking 8:57 around like a random emerging markets 8:58 country. It kind of expands your senses 9:00 a little bit. If I'm like walking down 9:01 the Marina Green, I'm like walking 9:02 through the mission in San Francisco. 9:04 Like kind of the only thing I'm thinking 9:06 about is like oh my gosh like how is AI 9:08 going to change things? Because you 9:10 can't walk around San Francisco and just 9:12 not get like completely hit with AI FOMO 9:14 24/7. But there's other stuff we need to 9:16 do in order to get people up to like 9:18 mobile penetration. Like take DRC like 9:20 mobile phone penetration is still less 9:21 than 25%. Banking penetration is like 9:23 still less than 5%. 9:25 >> That's crazy. 9:26 >> There's like stuff we need to do before 9:28 we think about like embedding an LLM in 9:30 everybody's brain. 9:30 >> If that penetration is that low, will 9:33 you and your business naturally benefit 9:34 from that going up based on the products 9:36 that you're building? Like is that how 9:37 you think about some of these 9:38 opportunities where it's much lower 9:40 hanging and just no one's paying 9:41 attention? 9:41 >> The leaprogging that happened in Asia is 9:44 obviously quite well known, right? Like 9:46 China skipped the laptop, went straight 9:47 to the mobile phone. Most famously, uh 9:49 you know, we strip we we we shipped, you 9:51 know, online e-commerce and like went 9:52 straight to straight to social commerce 9:54 in China. Like there's going to be 9:55 leaprogging as well. And you're going to 9:56 see the same thing in financial 9:57 services. Like financial services tend 10:00 to be most innovative and most 10:02 progressive in like their worst 10:04 countries. You can see this in 10:05 Argentina. You can see this in Iran. You 10:07 can see this in other places. Like the 10:08 Iranian financial system, like say what 10:10 you will, like it's complicated. They 10:12 have to deal with a lot of incredible 10:14 constraints. And thus, they've built a 10:16 lot of bespoke stuff just for themselves 10:18 because they do not have access to 10:20 global financial markets. And when you 10:21 get to design things from scratch, you 10:23 end up actually building things, you 10:24 know, a little bit differently. And 10:25 that's actually quite interesting. If 10:26 you look at these emerging markets, 10:28 take, you know, like Africa for example, 10:30 they were the first ones to do mobile 10:31 payments and empa like decades ago, well 10:33 before like, you know, Venmo. If you 10:35 talk to them, they are actually like 10:37 quite a bit more open and they are quite 10:40 more like they are used to this their 10:42 their category being somewhat 10:43 disruptive. They also have a like an 10:45 interesting thing is they have a a bit 10:46 of an access to differentiated capital 10:48 which is if differentiated talent if you 10:51 are in if you're in the US like you know 10:54 pardon pardon the banks I'll kind of 10:55 [ __ ] on here but you do not have access 10:58 to the top talent the top talent's going 11:00 to they're going to anthropic they're 11:02 going to Google etc but if you believe 11:05 that you know brains are distributed 11:08 equally you go to you go to Congo and 11:10 there's going to be like some proportion 11:11 of like equally smart people as there 11:13 are in France there are like there's no 11:14 like anthropic to go to. They don't have 11:16 the ability to move to move to London 11:19 and go to Deep Mind, but there's a still 11:22 like a pretty decent talent pool there. 11:24 They're going to go to where there is 11:25 job safety and where there is money. 11:27 That tends to be in a lot of emerging 11:29 markets. What like the breweries and the 11:31 banks, that's where the money is. And so 11:33 the talent, I'd say at the middle level 11:35 and top can actually be like quite a bit 11:37 higher than people than people think. 11:40 I'd say you take your like emerging 11:42 markets bank executive team, they're 11:45 hands down is way better than I think 11:48 probably what you see in the western 11:50 world. They also have the ability to to 11:52 verticalize much better than they do in 11:55 the US because we already have amazing 11:58 software, amazing retail experiences 12:00 down the entire stack in most emerging 12:02 markets or developed countries like 12:03 everybody has like a bank account. Well, 12:04 a lot of the people who have a phone 12:05 have a bank account so they can actually 12:07 cross-ell there effectively. And you and 12:09 I talked about this before, but I think 12:11 one of the most interesting companies 12:12 out there is Caspby in Kazakhstan. 12:14 >> Fascinating. Can you explain it? They 12:16 started out by by buying a bank and then 12:18 they just kind of built 12:20 >> did everything. 12:20 >> Did everything like they're like the 12:22 just like e-commerce company, the 12:24 largest bank like you pay your taxes on 12:26 Caspie. You like renew your driver's 12:28 license. It's on Caspby. Because what 12:30 they realize is like where people start 12:32 is people okay maybe people start in 12:33 social media but they also start in 12:34 financial services. And so if we require 12:36 financial services, we can cross-ell and 12:39 we can distribute products there. The 12:40 largest bank in in Congo is bank called 12:43 Raw Bank. Highly sophisticated. You 12:45 download the mobile app. It's way better 12:46 than we have here in the US. You can 12:48 like upgrade like your TV subscription 12:50 on it. Imagine like JP Morgan doing that 12:52 or Bank of America doing that or Wells 12:53 Fargo doing that or Candle even like US 12:55 FinTech doing that. Even if they could 12:56 build that, there's no market for that. 12:58 And so their ability to land and expand 13:00 is fundamentally different. And you know 13:02 the good thing for us is you know all 13:03 these countries the main currency is is 13:06 a dollar. Um and so our ability to kind 13:09 of innovate with them is is much more 13:11 akin to what a fintech looks like in the 13:14 US than maybe a large traditional bank. 13:16 >> Do you end up earning similar amounts of 13:18 revenue from outside the US as you do 13:20 inside because of these potential 13:22 relationships? the US market is so good 13:24 and and fintech is so developed and and 13:26 I do think you know like one of our 13:27 thesis is like fintech is probably going 13:30 to be like the last area that is 13:31 somewhat maybe disrupted by AI. I think 13:34 what you'll see is you'll see a 13:35 collapsing of like domestic fintech and 13:36 enterprise software and you already 13:38 seeing this with like the ramps and 13:39 stuff of the world as they go kind of 13:40 deeper into the workflow management 13:41 side. Good thing for us like some of our 13:43 customers are growing just like so 13:44 quickly but the rest of the world is 13:46 also it's it's a big part of our 13:48 revenue. It's something that we're super 13:49 excited about as well. It could be both 13:50 like Western Europe or emerging markets. 13:52 Can you say more about this comment that 13:54 the Silicon Valley along with Beijing is 13:56 the most consensus place? Like as you 13:58 trapes around California, what strikes 14:00 you as the strangest? Like you're 14:02 building something so different, you 14:03 spend so much more of your time away 14:04 from there. Uh you're able to kind of 14:06 get outside perspective despite being 14:07 kind of that place originally. What 14:09 would you say is like stands out as the 14:11 strangest elements of it and its culture 14:13 today? 14:14 >> I'm a product of Silicon Valley, right? 14:15 I I I've been there since I was 21. 14:17 Started kind of like some of the top 14:18 companies in Silicon Valley. I am like a 14:20 product of that. But I think as you get 14:22 older and as you travel more, you think 14:24 you have the ability to probably look 14:25 back and be more retrospective on the 14:27 society you grew up in. SF and Silicon 14:29 Valley like it's an elite dominated 14:30 society whether we like it or not. It's 14:32 probably more akin to Wall Street in the 14:33 1990s than it is to what we want it to 14:36 be which is like you know a research lab 14:38 in Cambridge in like the 1950s. Like 14:40 maybe that was Silicon Valley in the 14:41 '90s but it's not anymore. And what that 14:43 happens is like you know elites end up 14:46 building software for elites. And I 14:48 think that has somewhat made sense 14:49 because if you look at like consumer 14:50 buying patterns, people buy something 14:52 that's aspirational and then it moves 14:54 down market. But when you do that, you 14:55 can start to drink your own Kool-Aid a 14:57 little bit too much. And I think that 14:59 has probably happened in Silicon Valley 15:01 because we talk to each other, we build 15:03 for each other, and we think that like 15:06 the market is each other, but we don't 15:08 actually look broader than that. And the 15:10 companies that figure that out, they do 15:13 really well. If you look at AI, like our 15:14 research labs are are doing fantastic. 15:17 Because that's like a consensusoriented 15:19 problem. It's you take a bunch of people 15:21 that are super smart and you like pretty 15:24 much like blind off everything from you 15:26 and you can all talk and you can all 15:27 share ideas and that's like a fantastic 15:29 research place and we are going to win 15:31 on that alone. But as you think about 15:33 like applicability to people's like 15:35 everyday lives, people in Silicon Valley 15:37 don't live everybody else's lives. They 15:38 don't live the lives of like Americans. 15:40 They don't live the lives of like other 15:41 people outside the world. And so our 15:43 ability to think actually build software 15:45 or have ideas or perspectives that 15:46 really resonate is probably at the low 15:48 point in the entire time I've been here. 15:50 Like Silicon Valley is not a popular 15:52 place and I think we we tend to forget 15:54 that. Like we think we're on the top of 15:55 the world, but I don't know what our 15:57 approval ratings are, but I think 15:58 they're probably pretty dang low. And I 16:01 think that's for good reason. I think 16:02 it's something that, you know, I at 16:03 least try to focus on a lot because I 16:05 have to build software. I have to build 16:06 products are applicable to like outside 16:08 the walls of of of San Francisco and New 16:10 York. But that's probably less and less 16:12 the case. 16:13 >> Most software companies try to maximize 16:15 your time on their app to juice 16:16 engagement. RAMP does the exact 16:18 opposite. RAMP understands that no one 16:20 wants to spend hours chasing receipts, 16:22 reviewing expense reports, and checking 16:24 for policy violations. So, they built 16:26 their tools to give that time back using 16:28 AI to automate 85% of expense reviews 16:31 with 99% accuracy. 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That's why so many of the top AI 17:55 teams you hear about already run on work 17:57 OS. Work OS is the fastest way to become 17:59 enterprise ready and stay focused on 18:01 what matters most, your product. Visit 18:03 works.com to get started. One of the 18:05 things that you've done that's so unique 18:07 is not raise money, uh, but but built at 18:10 a a pace and a scale that looks as 18:13 though you raised a ton of money. So I 18:14 say it's huge. Talk about that decision. 18:17 What what building a company where you 18:19 and the employees basically own the 18:20 whole thing feels like relative to 18:22 having built, you know, a marquee 18:24 company that was venturebacked. and just 18:26 like I want to go into all the various 18:28 lessons that you've learned. We spent a 18:29 lot of time in this section, but at a 18:31 high level like why did you choose to do 18:32 it this way uh in the first place? 18:34 >> I started applaud and I kind of did like 18:36 the the standard Silicon Valley playbook 18:38 where like you have to like ideate, you 18:39 have to build stuff and then you like 18:40 put a deck together and you go to like 18:42 these like 80 venture capital firms and 18:44 like hopefully one of them gets you 18:45 money and then like every year you like 18:47 move up the alphabet and I think that 18:48 worked and you know Plaza a very 18:50 successful company. I'm very lucky to 18:52 have started it. But the things that 18:54 Silicon Valley sometimes gets confused 18:55 by is they're like, "Okay, you're either 18:56 like a venture funded company." And if 18:57 that's the case, you're like ambitious 18:59 and you're going to build amazing 19:00 software and you can like amaz like 19:02 amazing products or you're like a like a 19:05 bootstrapper and you're going to like 19:06 write like thought pieces on Twitter, 19:08 but you're going to like hire like 19:09 subscale people and you're going to like 19:10 grow small amounts. It's like a cute 19:12 lifestyle business. And I think you can 19:14 actually be highly ambitious. I think 19:16 you can hire like the world's best 19:17 talent. you can build like a massive 19:19 doubling company without actually being 19:21 being able to be addicted to to venture 19:23 money. What we do is we say okay like we 19:27 are going to grow by our earnings. We're 19:29 going to make sure that 100% of 19:30 employees and myself like like own the 19:32 company for foreseeable future. It makes 19:34 it a lot harder. It does definitely put 19:35 some constraints on your business, but 19:37 not only for, you know, the net worth of 19:39 like myself and my employees, but also 19:42 culturally, it's actually quite a bit 19:44 more effective because, you know, being 19:46 long-termism is is probably a little 19:48 like a trit saying. Um, but I think it 19:50 does actually help us do that. I think 19:54 yes, Silicon Valley companies are 19:56 probably like more long-term oriented 19:58 than your average business in the US, 20:01 but I think the hamster wheel of VC 20:04 doesn't actually allow us to be 20:05 long-term because if you are having to 20:08 spend a lot of money for employees and 20:09 you're you're burning a rate of you have 20:11 to raise every like year, year and a 20:12 half, you end up optimizing for that 20:15 next fund raise and you say, "Okay, 20:17 stable coins are like cool this year, so 20:19 I need a stable coin strategy. Okay, AI 20:20 is cool this year because like I need an 20:23 AI strategy. And so your business maybe 20:25 it's like kind of going the general 20:26 direction, but it's definitely taken a 20:28 pretty windy way to get there because 20:30 you need capital. And so I think it's 20:32 very rational what you are doing, but 20:34 that's not going to be the straightest 20:36 line to your goal. I sometimes make this 20:37 joke, maybe not appropriate, but like 20:39 like VC money is kind of like heroin. It 20:42 like feels good. It's amazing, but like 20:44 you got to keep shooting up. Like it's 20:46 very challenging to get off. Like I I 20:48 know very few people that have like 20:49 >> tried heroin once. 20:50 >> Yeah. Like I tried to hear her once and 20:51 they're like, "Wow, that was awesome. 20:53 I'm off." Right. It's like how many 20:54 people you know have like raised like a 20:55 $100 million series A and then like I'm 20:57 done. It just doesn't happen. And and I 21:00 kind of think that man like if you raise 21:02 $100 million, you should be able to 21:03 raise like you should be able to build a 21:04 couple billion dollar business after 21:05 that. Why why do you need to keep 21:07 raising it? And there's a lot of 21:08 structural reasons for that. And in the 21:10 fact that San Francisco is a bit like a 21:11 factory like is by design and I think 21:13 that is it can be like quite effective. 21:15 But I think for like the ambitious 21:16 founder, I actually don't think it's 21:18 it's it's the right thing. And for us, 21:20 you know, I can I can I can invest in 21:22 things that I think are going to have 21:23 like a 10-year payback, I'm like totally 21:25 fine with it. If we grow 80% versus like 21:28 110%. Like it doesn't really matter that 21:30 much. Like as long as we're profitable, 21:32 as we're building the software we want, 21:33 and as long as we're growing at the rate 21:34 that we want, I just don't have the same 21:36 constraints. And that is, I think, 21:38 freeing in a way that most companies 21:41 can't operate. What's an example of 21:42 something that you've done or made an 21:44 long-term investment in that you think 21:46 you wouldn't have done if you had been 21:48 venturebacked? 21:49 >> I mean, like like we bought a regulated 21:51 bank when we were early. I think that's 21:52 like, you know, it's probably like a 21:53 little bit cooler now in this new 21:55 administration, but we bought a 21:56 regulated bank during the first Biden 21:58 administration and that required us to 21:59 like not grow or like not focus on 22:01 revenue for like 2 three years and do a 22:04 bunch of stuff that inherently didn't 22:05 scale. Like it's not like buying a bank 22:06 is not a software defined problem. 22:08 that's not like a great use of like 22:10 venture capital dollars that you expect 22:12 to grow. And that was a relatively 22:13 non-conensus bet at the time. Like I 22:16 there's just no way that could have 22:17 happened. There's no way somebody would 22:18 have been like, "Oh, we want to company, 22:20 right? We want you to do stable coins. 22:21 We want to do AI." That's just not a 22:23 that's not a fundable thing. So I think 22:25 and and then able to just kind of invest 22:27 behind that for a multi-year period 22:28 before we actually take on clients. Like 22:30 people think they're long-term focus, 22:32 but it's just not. I think we're able to 22:33 also do like weird stuff with employees 22:35 that doesn't scale. like what we like 22:38 pay employees like you here's $2,000 a 22:41 month to go to a rent or mortgage if you 22:42 live two miles with the office. Oh, like 22:45 that doesn't inherently scale, but it's 22:47 like massive because now I can get 22:49 people who live close to the office. 22:51 They feel great because they're getting 22:53 like a huge part of like all of their 22:54 housing stipen in San Francisco 22:56 subsidized. But like I don't know, is 22:58 that going to like is that going to be a 23:00 good use of like venture capital money? 23:02 Like probably not. So we can just do all 23:03 this stuff from an employee perspective, 23:04 from retention perspective. You know 23:06 what we do every single year, we take 23:08 25% of our earnings and we just buy back 23:10 our shares with employees. 23:11 >> So we used to run our own tender every 23:12 single year. It's been great for 23:14 retention able to actually get liquidity 23:16 to employees when they need it and it 23:18 allows people to like hey believe that 23:20 we're like in this venture grow 23:21 business. But if you're if you know 23:23 you're in a VC business you're like hey 23:24 you should be using like a 100% of that 23:26 money for growth. we say, well actually 23:29 we don't necessarily think that like 23:30 we're quite profitable so we can afford 23:31 it so we can invest in growth but we can 23:34 also invest in employees. 23:35 >> That's a really good example maybe just 23:36 to pull it apart a bit more. Are you 23:38 vest are you granting equity to people 23:40 in a similar way that a normal startup 23:42 would vesting over some period of time 23:44 and then just every year saying we'll 23:45 buy back some portion of that to provide 23:47 that's how that's how it works 23:48 literally. 23:48 >> Yeah. I mean like structurally we look 23:50 exactly the same as like a high growth 23:51 startup right we go after the same 23:52 people we have like all the same perks 23:54 if not more. So we operate very much 23:56 like a high growth Silicon Valley 23:57 startup. we happen to also be like quite 23:58 profitable. So I what I kind of tell 24:00 people is okay like our profits every 24:02 year it's like imagine that's like our 24:03 funding round like each year like on 24:06 January 1st we like raise a massive 24:08 round each year. That's how we view it. 24:10 There's part of it that's going to be 24:11 used as like a tender that we're going 24:12 to like buy back company shares and the 24:14 rest of it we're going to put to growth. 24:16 Oh by the way you also haven't diluted 24:19 at all. By the way you also don't have 24:21 any prep stack by the way like we get to 24:23 make our own decisions. That's super 24:25 compelling. So, I can hire someone to 24:26 say over a 10-year period, you're not 24:28 going to be diluted. I think what 24:30 sometimes people kind of forget is if 24:31 you're an early stage founder, like 24:33 you're going to lose probably 50 to 75% 24:36 of your equity value due to dilution 24:38 alone. You may lose 10 to 80% of your 24:42 upside by the preference stack. These 24:44 are like weird economic things that 24:46 people don't really understand until 24:47 they've been doing this for like 5 6 7 8 24:49 9 10 years or seen an exit. Like with 24:51 us, we say, "Hey, like just don't worry 24:53 about that stuff. like what I give you 24:54 is what you're going to have. And by the 24:56 way, you have liquidity. You have 24:58 liquidity on a yearly basis going 24:59 forward. That's like super compelling to 25:01 people. 25:01 >> How have you honed the communication of 25:02 that idea to a new employee so that they 25:05 get it? Because I think so often people 25:07 just say, "Oh, I got this many shares 25:08 and like this is the, you know, this is 25:10 the valuation and if it goes to this 25:11 valuation, I can just do the mult I can 25:13 do the math." But that's not actually 25:14 the math of what like they'll take home. 25:16 So, how do you how do you frame it to 25:17 people? 25:18 >> We're far from perfect. Um, I think one 25:19 of the things we do is we target people 25:20 that this is their second company. like 25:22 we are um like we are not we're probably 25:25 like not the best place for a new grad 25:27 to land because new grad to land they're 25:29 going to they're going to go through 25:29 this calculation of where are all of my 25:31 friends going what is the like what is 25:34 the number one company in hacker news I 25:36 read all the time what's all like the 25:37 thought influencers talking about on 25:39 Twitter and it's like actually like not 25:40 a bad strategy like if you're new grad 25:42 that's probably relatively fair but you 25:43 aren't really going to be thinking about 25:45 some of this some of this kind of nuance 25:46 and it's honestly not as like hard as 25:48 you as you think it's actually like 25:50 quite refreshing we go to people and 25:52 we're like, "Hey, we like are super fast 25:54 growing, but we provide you yearly 25:55 liquidity. Oh, by the way, here's like 25:57 some very basic math on preference and 25:59 dilution, and here's why you can 26:00 actually make way more money for the 26:02 same equity value." It's a hard story 26:04 for a 21-year-old. It's actually a 26:05 pretty easy story for a 25-year-old 26:08 that's been through like six rounds and 26:10 four pivots at their previous company 26:11 and don't have anything to show for it. 26:13 >> Does this empirically show up in 26:14 employee retention numbers versus like 26:16 Silicon Valley norms? we have almost 26:19 almost close to no no regretted 26:21 attrition which means kind of people 26:23 that we like to stay end up end up 26:25 staying. I think there's probably a 26:26 couple there's a couple reasons for 26:27 that. I think one is second time around 26:30 it's a lot easier you know like I think 26:32 I learned from a lot of mistakes at BL 26:34 and I I know where to spend time and 26:36 where not to. And so I think generally 26:37 like a it's like a a probably more 26:39 mature company than your average Silicon 26:40 Valley startup. So I think a that 26:41 helpful. We're probably better at 26:43 picking talent but also I think we know 26:45 what matters to people. I think 26:47 sometimes as like founders or VCs like 26:50 we think that people join companies 26:52 because they want to become billionaires 26:55 and I think maybe that's true up to a 26:56 point but a majority of people join 26:58 companies because you know they hit into 27:01 like their late 20s or their early 30s 27:02 and like what are they optimizing for? 27:04 They're like okay I want to like send my 27:05 kid to like a good school and private 27:06 school. I want to like maybe not live 27:08 with roommates and like a one-bedroom 27:10 apartment up until like I'm 35. Like how 27:12 is it in education that's super 27:13 important? You can't feed that on 27:16 illquid stock. So how do you think about 27:17 optimizing for that? Think about like 27:19 basic things like team culture, all that 27:21 stuff. Like people want to work for 27:23 somebody who feels like they are taken 27:26 care of. Not just over like a 20-year 27:28 period or like here's your path to being 27:29 like a deca millionaire. They'll say 27:30 like do people do they understand my 27:32 short-term needs? Can you take care of 27:34 me in the short, medium, and long term? 27:36 And I think sometimes we are maybe like 27:38 too long-term oriented sometimes. Say 27:40 hey yes of course come with me. We'll 27:42 work on this for 20 years. and you're 27:44 going to be like a decade million after 27:46 that. That resonates with a certain type 27:47 of person, but it doesn't resonate with 27:49 everybody. And so building a company, 27:50 building a culture that actually 27:52 optimizes for every single point of an 27:54 employes journey and employees life, 27:56 that's actually quite unique. And that 27:57 actually can lead to really good 27:58 numbers. How much of this was just 28:00 possible because you were already rich 28:03 at the start and had money to fund 28:05 something like this? Like is this is 28:07 this portable advice? like could someone 28:08 else that hadn't had the experience you 28:10 had with Plaid do something like this 28:13 without taking outside money? 28:15 >> I think it's hard. I think I was 28:16 definitely successful at first, but what 28:17 I would say is, you know, I without kind 28:20 of going too much details, like I yes, I 28:22 started a very large company. I think I 28:24 was probably less liquid and less rich 28:25 than probably everybody everybody 28:26 thought at the time. Um, you know, when 28:28 I started this plaza a funny story, you 28:30 know, we we attempted to sell to Visa 28:32 for like $5 billion and that's kind of 28:35 the point I left to go start something. 28:36 It didn't go through. we got blocked by 28:37 the DOJ and I did not sell my company 28:41 thus I did not have any money and so I 28:45 had like you know maybe like my 28:46 liquidity versus paper wealth was you 28:49 know pretty pretty extreme and so I 28:52 think I got a lot of credibility from 28:53 people like oh this guy's like this guy 28:55 >> yeah easy yeah but like I did not have 28:57 any money without kind of going too much 28:58 details of it like I pretty much funded 29:00 the entire company with debt I went to a 29:02 bunch of banks and I said here's a bunch 29:05 of plaid shares like please give me 29:06 money. You know, I got like a the best I 29:08 got was like a sofur plus 10% loan at 29:11 like 5% LTV. And so, you know, I pledged 29:14 over a billion dollars of stock to get 29:16 $70 million. I bought the bank for $70 29:18 million. I haven't had a lot of money in 29:20 my bank account for a long period of 29:21 time. And um and yes, and I ended up, 29:23 you know, the business became 29:24 profitable. I got to pay off that loan a 29:26 period of time, but in the process, I 29:27 probably got margin called three times 29:29 and almost went bankrupt multiple times. 29:31 Talk about that stress. Like, you got to 29:33 like let us in the room on that. The 29:34 first three years were definitely the 29:35 most stress of my life because I I had a 29:38 fundamental thesis that we could pull 29:40 this off and we could build a business 29:42 at 100% of employees and myself owned. 29:44 But to do that in a world where you need 29:46 to invest and not make money for 29:49 multiple years is very very challenging. 29:51 And at the regulatory climate of the 29:53 time and the build come like that it was 29:55 it was intense and you know I have this 29:56 loan I have to pay off. It was it was 29:59 probably the most intense period of my 30:00 life. And as a founder you have to 30:02 shelter that from everybody. You need to 30:03 be transparent. You need to bring people 30:05 in, but you also need to like not bring 30:06 people all the ways in. I had like 30:08 pretty extreme conviction myself and I 30:11 thought I like knew 100% over a 30:13 multi-deade period I can I can pull this 30:16 off. But there's that quasi quote of, 30:18 you know, markets markets can stay, you 30:20 know, irrational longer than you can 30:22 stay solvent. And it's it's kind of 30:25 true. And, you know, I look at that 30:26 quote and I'm like, which side of that 30:28 equation am I on every day? 30:32 And um you know we ended up making it 30:33 through but I think the the idea of like 30:36 oh like you know billionaire buys thing 30:37 and selfunds it is probably a little 30:39 further from the truth than people 30:40 think. 30:40 >> What's it like getting margin called in 30:42 that like what do you like what is the 30:43 literal thing happening? How do you 30:45 manage through that 30:46 >> surface to say you know you own a you 30:48 know you owe a bank a million dollars 30:49 like you know they owe you you bank a 30:52 billion dollars like you own them. Like 30:54 I think that's a little bit I think 30:55 that's a little bit true. I mean, 30:57 there's a reason that like margin 30:58 lending in private companies is not um 31:01 is is like not a great business because 31:04 when you want to take collateral that 31:06 stock, that's usually the exact time 31:08 when you do not want to hold that 31:09 private stock. I have like immense 31:11 appreciation for the people that did it 31:12 for me. Uh I'm not quite sure they got 31:14 like a great deal out of it and I'm not 31:17 quite sure I would definitely be in that 31:18 business. The reason I feel the the 31:20 story is important to tell is that it's 31:22 these things where so much of the value 31:24 gets created like the the extreme 31:26 entrepreneurial risks, the act itself, 31:29 but also the psychology behind it. And 31:31 I'd love you to just riff like one bit 31:33 more what the psychology was like and 31:35 how your mind is different after that 31:38 through your experience than it was 31:39 before even though you I know you'd 31:41 already been through the entrepreneurial 31:42 ringer with Plaid. What changed about 31:44 your mind, your perspective on the 31:46 world? like how did that experience 31:48 affect you? 31:48 >> I think that the good founders bet on 31:52 themselves 31:54 and take an extreme amount of risk to do 31:56 that. And I think the extreme amount of 31:58 risk part is something that we no longer 32:02 have. But when like when there's like 32:06 literally only one door in front of you, 32:09 you don't have a choice. You have to go 32:10 in. And that in that fear and that like 32:15 in innate desire creates like another 32:18 part of you. It creates creativity. It 32:19 creates inspiration. Like it's extremely 32:21 valuable part of the founder journey. 32:22 And in many ways I think in Silicon 32:24 Valley we've actually removed that. If 32:26 you think about most founders these days 32:27 like like I talk all the time like hey 32:29 you talk to a 23-year-old. I'm like you 32:30 know what I'm thinking about go going to 32:33 be like the 12th employee at this 32:35 company or starting a company between 32:37 for myself. And I don't know, I'm like 32:38 kind of like mixed. And we've created 32:41 this like incredible environment in 32:43 Silicon Valley that it's really safe to 32:45 start a company and there's like a 32:46 playbook and you go through YC and 32:47 assuming you're like moderately 32:49 competent and went to the right high 32:50 school in college, you're going to get 32:51 like a $3 million seed round and worst 32:54 case scenario, you can like, you know, 32:56 you can go work at like a great company 32:57 as an engineer and like you'll be like 32:58 have a founder on your resume and like 33:00 life is good. And that has created a lot 33:02 of value, 33:04 but I'm not quite sure it's created a 33:05 lot of great founders and a lot of great 33:07 companies because there is no risk in 33:09 that proposition. And if you go back to 33:10 even like, you know, pre208 or something 33:12 like that, like you're like on you're on 33:15 the edge of the knife. And I think that 33:18 creates just so much intensity and 33:21 creativity and fear that is such a 33:24 critical part of the founder journey. 33:26 And I don't know why we don't talk about 33:28 it more. like we don't create 33:30 environments where a founder has to bet 33:33 themselves. And I think if we did that, 33:35 like I think we'd actually be in a 33:37 slightly different place. I always am 33:38 somewhat perplexed by, you know, like 33:40 I'm a second time founder, but I'm not 33:42 alone. Like there's a lot of great 33:43 founders I shall not name that, you 33:44 know, have made a bunch of money. And 33:46 you go dig into like, oh, here's my like 33:48 second company or third company. And you 33:49 dig into that and like of the $und00 33:51 million they've made, they're putting 33:52 like a million dollars to their capital 33:53 risk and they've raised like $500 33:55 million. And I'm always like, why? like 33:58 if you believe in this, if you believe 33:59 in this so much, if you're going to 34:00 dedicate your life to it, like why the 34:02 [ __ ] aren't you going all in? And if I'm 34:04 an employee, I look at them, I'm like, 34:06 you're asking me to go all in, but you 34:08 can't go on. Because the weird thing is 34:10 an early stage employee takes way more 34:13 risk than early stage founder. 34:14 >> Explain that. 34:15 >> Kind of messed up. Yeah. So, let's talk 34:16 to an example here. So, I'm a I'm a 24y 34:19 old. I'm making TTC perspective 400K, 34:23 500K at Google or Meta or something like 34:24 that. Okay. and I'm going to go to an 34:27 early stage company and I'm going to go 34:29 get 1% of this company and I'm going to 34:31 make like $90,000. 34:33 Well, I've now changed the trajectory of 34:35 my life. I can no longer buy a house. I 34:39 can no longer go on the vacations I 34:40 want. So, I'm making like a four to five 34:42 year trade-off where I'm said I'm going 34:43 to make pretty much no money over the 34:45 next four or five years, but maybe in 34:47 five, six years, I'm going to make like 34:48 millions of dollars that I couldn't make 34:49 at Google and Meta. That's like that's 34:51 actually a lot of risk. I'm now going to 34:53 now like say I'm going to live with my 34:54 my friends instead of living by myself. 34:56 Like I'm making massive massive changes 34:59 to my life. But as a founder like you're 35:03 not like you know like it's a much 35:05 higher likelihood at the next round 35:06 regardless of your company you'll be 35:07 able to sell some secondary. You know 35:09 that you'll be able to like if it if it 35:11 shuts down you can go be an employee at 35:12 a great company. You have a CEO on your 35:13 resume. That first employee they have 35:15 like first employee like a failing 35:17 company. That's actually not a great 35:19 resume line item. And so we've derisked 35:22 the founder, but we haven't d-risked the 35:24 early stage employee. And I don't think 35:26 we should actually derisk the early 35:27 stage employee for what it's worth. I 35:30 just think we need to I think we need to 35:32 increase the the the risk for founders. 35:34 I think we need to make failure much 35:36 more expensive. I think we need to say, 35:37 hey, you're a second time founder. You 35:38 have liquidity. Like put all of your 35:40 money into that. Like if you're going to 35:42 be asking this of employees, you just 35:43 ask it for yourself. And don't think 35:44 we're having that conversation enough. 35:45 And I think starting companies just it's 35:47 too it's too [ __ ] safe. 35:48 >> Yeah. And it's caused a lot of companies 35:51 to be just super safe companies like hey 35:54 we're going to like pivot to AI and like 35:55 wrap open AI wrap anthropic whatever 35:57 like that's not bold that's not 35:58 ambitious and it's because we're 36:00 attracting founders that actually maybe 36:03 just like want to be employees they 36:05 don't actually think about the long term 36:08 they actually don't think say hey if I 36:09 don't pull this off like I'm going to 36:11 become bankrupt my life is over. 36:14 >> Um and I think that's that's pretty 36:15 healthy. That's when you bring out like 36:17 the raw the rawness of humanity and I 36:19 don't see that very much anymore. 36:21 >> How have you felt that in yourself? Like 36:22 so how has your behavior changed or your 36:24 perspective changed or like just the 36:26 ways that you show up that are different 36:28 now than prior to this pretty extreme, 36:30 you know, extreme three-year period. You 36:33 know, I am not the most diversified 36:34 person on the planet. I own two things. 36:38 I own column and plaid. That's it. Like 36:41 I don't even own a majority of my house. 36:43 Um that is that is truly it that those 36:45 are the only two things and and that's 36:48 and that's that's motivating to me like 36:50 yeah like at at some point in my life 36:51 you know I I have a I have a six-month 36:52 old son and um I I I do need to probably 36:56 diversify and so that like is you know a 36:58 a a goal for me at some point as a 37:00 36-year-old. You should probably not be 37:01 this concentrated. Um but it's also like 37:04 that's that's what makes building 37:06 companies unique. like yes like there's 37:08 probably a lot of people that look at me 37:09 and they're like oh man like you know 37:11 billionaire amazing maybe California 37:12 will look at me and be like oh yeah 37:14 billionaire amazing but it's probably a 37:16 little 37:17 >> liquid equity 37:18 >> but I think that's what makes it special 37:19 I think that's what that's what drives 37:20 me every day which is if you don't have 37:22 something you are driving towards so 37:24 such as for me like you know like 37:25 solveny that is it it's really hard to 37:28 be motivated every day the other thing 37:30 though too is that um very often the 37:33 thing you own and control and are 37:34 building might be your best investment 37:35 and and getting money out of something 37:37 is costly from a tax standpoint and 37:40 other things. So in some ways you're 37:41 just like continue to be allin on what 37:43 you're building. 37:44 >> I mean I you know it's like bet on 37:47 yourself. I'm sure like every like you 37:48 know fancy executive has probably told 37:50 you that but I I think it is it is 37:52 somewhat true. Compounding on yourself 37:54 is probably the best investment they 37:55 make. Like I like I'm not a generalist. 37:58 Like I'm a specialist. I'm like probably 38:00 the best in the world at like a couple 38:02 small boring stuff. I I'm like really 38:05 good at creating really confusing, 38:08 boring sounding companies. That's really 38:10 hard to explain on podcasts. And I think 38:12 that's like that's like my expertise. 38:13 That's like my niche. I feel pretty 38:15 confident in my business because I do 38:17 not think in my business you want to 38:19 compete with me. I'm like I'm mean. I'm 38:21 hungry. And I know my little niche space 38:24 better than anybody in the entire world. 38:27 And if I'm like investing or doing 38:29 something else, I'm like there's like a 38:30 me on the other side of that trade. like 38:32 like I don't want to do that. I'm a 38:34 builder. And I think sometimes there's a 38:35 trap where builders think they're 38:38 investors and investors think they're 38:40 builders. And there are rare cases when 38:42 you can do both. Um but in a world where 38:44 it's increasingly competitive, um I do 38:47 think the world for builders is going to 38:50 is is the world of specialists. Um and 38:54 you have to go extremely extremely deep 38:56 into your area. And that's where you 38:58 find that's where you find value. And 39:00 like I I probably have read more about 39:03 just like the history of my space, the 39:05 history of financial services like like 39:07 like I studied, you know, I studied 39:09 banks in Japan in like the 1800s. I, you 39:12 know, read like a very boring 2000page 39:14 book on the history of like banking in 39:16 China in the 19th century and there's 39:19 stuff I got out of that. 39:20 >> What's something not necessarily that 39:22 book, but like what's something you get 39:23 out of that degree of extreme study? 39:25 >> The hard part about this is you probably 39:26 get like one small thing in a 20,000page 39:28 book. And so it's probably like not 39:30 efficient unless you own a thing that 39:32 happens to be in that leverage. And that 39:35 like one little thing can create like 39:37 millions of dollars of value to the 39:39 creates like hundreds of millions of 39:40 dollars of value. And so without kind of 39:42 going too much into detail on it, like 39:44 like that is like that's where you find 39:46 that's where you find your leverage. Um 39:48 and you I'm pretty good at that. This 39:50 notion of being the best in the world at 39:52 the thing you do is really interesting 39:54 to me. It seems the environment today 39:57 makes that harder than ever because 39:59 there's so much distraction. 40:00 >> Totally. 40:01 >> And there's such a high rate uh and ease 40:03 of comparison. 40:04 >> Um which is certainly the thief of joy. 40:07 >> Yeah. 40:07 >> Um but but it's really hard to ignore 40:10 people doing other stuff, spending a 40:12 30-year day reading about anthropic or 40:14 or whatever. It's exciting. 40:15 >> Totally. So, what have you learned about 40:18 how to become apart from reading, you 40:20 know, obscure 19th century Chinese 40:22 banking books? Like, what else have you 40:24 learned about how to become the best in 40:26 the world at what you do, assuming that 40:28 there's less people interested in that 40:29 like that mission or that idea? 40:31 >> So, I think one of the best determiners 40:35 for success of founders is can they find 40:38 the most boring thing humanly possible 40:42 interesting? And can they find that 40:45 interesting over a multi-deade period? 40:47 Like who doesn't find like AI 40:50 interesting? Like yes, geopolitics 40:51 fantastically interesting. There's all 40:53 these like general topics that are quite 40:55 broad that is very like mass market 40:58 interesting. And that's what makes 40:59 Twitter so fascinating. That's why 41:01 podcast so fascinating is because people 41:03 like to feel that they are they are like 41:05 really smart across a broad swath of 41:07 categories. Um but that that doesn't 41:09 really align to company building. Um so 41:12 many people right now are thinking about 41:15 and are have a lot of knowledge around 41:17 how AI is going to disrupt software, how 41:20 AI is going to disrupt vertical 41:21 software, how AI is going to like be the 41:24 next like serum. These are like 41:25 generalist topics that I can probably 41:27 find a thousand people that have like 41:29 pretty like interesting compelling ideas 41:31 and can go pretty deep on that, but you 41:33 can't create value there. You can create 41:34 value if you're like I'm the number one 41:36 person in the entire world at this 41:38 little niche thing and I think this 41:40 niche thing can be like can generate 41:42 billions of dollars forever over time 41:44 but the problem is is those places are 41:47 really boring like the fun ones like 41:50 food and like surfing in Thailand or 41:52 whatever like those are solved 41:53 categories like yes I would also love to 41:55 be an expert on like hospitality in like 41:58 Thailand and Southeast Asia like that's 42:00 a fun problem I could imagine one going 42:02 niche on that for like a multi-deade 42:04 period. But that's solved problems. But 42:06 I think finding the extremely boring 42:09 thing that requires you to read hundreds 42:11 of thousands of pages that you cannot 42:12 like Gemini deep research your way 42:14 through, that's where value is, but it's 42:17 [ __ ] boring for a lot of people. Like 42:20 you have to like you have to suffer in 42:22 silence for a huge amount of time. And 42:24 if you can find that, you know, if you 42:26 can find that like super fascinating, 42:28 you can like love to learn that, then I 42:30 think you'll be successful. But I think 42:32 it's a it's a it's a minority of people 42:33 like like like my partner kind of gives 42:35 me [ __ ] all the time, but like how on 42:37 earth do you find that book interesting? 42:38 Like what is wrong with you? 42:40 >> Um I was like wow like if I don't like 42:42 you and I are going to be super poor. 42:43 You you said earlier that building a 42:45 company for the second time is a lot 42:46 easier than the first time. Yeah. What 42:48 are the most uh extreme ways that that's 42:50 true? Like what what are the things that 42:51 you've done the most differently this 42:52 time than the first time? 42:54 >> Yeah, experience is valuable. I started 42:56 uh I started Plaid right out of college 42:58 and I think um Zach who was my 43:00 absolutely incredible incredible 43:01 co-founder we both kind of said like man 43:03 if we would have just like worked at a 43:05 company for like 9 months we would have 43:07 learned a lot like we probably would 43:09 have saved like 3 years because the 43:10 amazing thing about working at a company 43:12 an early stage company is you just like 43:15 you just get like fail forward all the 43:17 time and that's like incredible that's 43:19 incredible lesson but like when you fail 43:20 forward as a founder that's a lot of 43:22 dilution that's a lot of time that's a 43:24 lot of like wasted resources and if you 43:26 could do that on somebody else's dime, 43:28 amazing. Now I think it's like a little 43:30 bit easier cuz like everybody's YouTube 43:32 videos on like you know YC startup 43:33 school and there's like a playbook 43:34 there's like some PDF for everything and 43:36 you can probably like Gemini your way 43:38 through like the early stage part of a 43:39 company but experiences matter a lot. 43:41 What about picking talent? Like how how 43:43 what things do you optimize for now that 43:47 uh have been honed because of your prior 43:49 experience? I 43:50 >> mean people always think about employees 43:51 and it's like like a missionary 43:52 mercenary framework, right? which is 43:54 like like you have to look into employee 43:56 and like what like what do you want to 43:57 do? There's like the mercenary type 43:59 which is okay super smart probably super 44:02 pedigreed and like and really what 44:05 they're doing is they are using your 44:07 company as a launch pad for something 44:08 else. They are using they're using their 44:10 company to like collect a bunch of like 44:12 two-year vested options from like the 44:14 top five companies and like hoping one 44:16 of them goes up. that can be a valuable 44:18 employee, but you have to have a very 44:19 like specific type of company that is 44:22 used to like that churn and burn in 44:24 order to take advantage of them. Then 44:26 you have like the missionaries, right, 44:28 which is um hey, like this person is 44:32 very mission focused. They're very like 44:34 inspiration is super important to them. 44:36 And if you get that right, they will go 44:38 to like the ends of the earth for you 44:40 regardless of like their short-term 44:41 benefits. People also have some 44:45 downsides as well which is you know the 44:47 moment maybe you want to be a little bit 44:48 more commercially oriented and the 44:49 moment you have to maybe make trade-offs 44:51 on your mission or something like that 44:52 that can cause a lot of like societal 44:54 unrest inside of your company right and 44:56 then there's like the third category of 44:57 employees which are um you know 44:59 generally what I think are probably like 45:00 the best which is like there's a kind of 45:01 a combination of everything but really 45:02 what they care about is they care about 45:05 yeah we want a ton of upside but we also 45:07 want like we want some stability we also 45:09 want people that hey like I get I like 45:11 to be friends with my cooworkers ers. I 45:13 like to be in an environment that is 45:15 like warm and welcoming, but also gives 45:17 me like the near-term and long-term 45:18 financial value. And I'm willing to like 45:20 work really hard to get there. Everybody 45:22 has personality types. Everybody has 45:23 different styles. And you kind of have 45:24 to figure out what is right for your 45:26 business. But I think it's very 45:28 challenging to tell that on LinkedIn. 45:29 Like everybody's like, "Okay, cool. Like 45:30 you went to the right New York prep 45:32 school, thus you went to like the right 45:33 like Ivy League school that happens at 45:35 like this good engineering program." And 45:36 then you have like, you know, these 45:38 these couple like LinkedIn things that 45:39 are like good for me and like boom, 45:40 done. that can be super successful, but 45:43 that is also that's also not the right 45:45 for everything. And so just I think 45:47 getting that kind of hone for talent is 45:50 is super important. 45:51 >> How much do you care about mission? It's 45:52 like such an interesting part of the 45:55 equation. 45:55 >> You need a mission, right? Otherwise 45:57 people just go work at hedge funds. Like 45:58 you need to say like hey we are building 46:00 something bigger and I think we 46:01 absolutely are. Um but I think mission 46:04 can actually be a little bit 46:05 distracting. I think a lot of times 46:07 people focus a ton on like, hey, what 46:09 are like the values of my company? What 46:11 good are we doing? And I think that's 46:12 like an important part of the equation, 46:14 but I think it's like on a list of five 46:15 things most important. I think it's 46:16 probably on the bottom end of that five 46:18 list. And I think a lot of times we can 46:20 be kind of distracted by that. And I 46:22 think that's because when you're 46:23 pitching investors, like investors want 46:25 to feel like they are like they are part 46:28 of something. They want to feel that 46:29 like man like I'm not just like 46:31 recycling pension fund money into like 46:33 other capitalists. Like even that's what 46:35 we do. like we want to feel like it's 46:37 it's bigger than that. And so I think 46:38 we've taught people that like, man, you 46:40 need to focus on like the millennia 46:42 journey. You need to focus on like the 46:43 impact that we're doing. And like yes, 46:45 like you know, numbers go up, but like 46:47 numbers go up as like only like one part 46:49 of the equation. Um, and I think that's 46:51 like important for employees, but I 46:53 think it's like it's sometimes not the 46:55 best. Like in the end, like what do you 46:56 want to do? You want to convince 46:57 somebody to buy your product and like 46:58 you deliver them enough of an experience 47:00 that they can't build it themselves and 47:01 they're going to pay a lot of their 47:02 hard-earned money to you. Like that's 47:04 the goal and that person doesn't give a 47:07 flying [ __ ] about what your mission is. 47:09 They just care about does this product 47:11 create value for me and am I willing to 47:13 pay for it? That's it. And if you if you 47:16 start to like you know drink your own 47:17 Kool-Aid too much, you kind of forget 47:18 that. It makes me smile to think about 47:21 your earnings and cash flows. It's like 47:23 such a novelty that a company like yours 47:24 would have a bunch of this uh at this 47:26 you know so young in its life and at 47:28 this scale. How do you pick your 47:30 margins? like how do you think about um 47:32 how profitable to be and why you 47:35 mentioned earlier that's like having a 47:37 funding round every year. Does that 47:38 imply that you're you're actually 47:39 spending it so you're not paying taxes 47:40 so spending on growth? Like how do you 47:43 think about 47:45 >> earnings in a high growth technology 47:48 business? 47:48 >> Our customers pay us for safety and our 47:50 companies pay us for longevity. It's a 47:52 unique thing around financial services 47:54 where I'm going to look at you as a 47:55 customer like I'm going to be your best 47:57 partner over like a 10 to 15 year 47:58 period. switching costs are really high 48:01 and they are putting a lot of like your 48:03 customer trust and risk in you and and 48:05 so I am playing like a longevity to risk 48:07 game just as much for me as my 48:10 customers. I take that extraordinarily 48:11 seriously and I think earnings and being 48:13 profitable and sustainable and not and 48:16 not relying on somebody else's 48:17 decision-m framework is extremely 48:20 critical for our customers and and 48:22 that's extremely important to me as 48:24 well. I I I I tell people I'm like like 48:26 the risk falls on me. Like I can't pass 48:29 my risk to some other venture fund or 48:31 like their LPs or something like that. 48:33 Like I I want to be like I want you to 48:35 be successful. I want you to be 48:36 successful. If we're not like I'm the 48:37 one who takes the pain here. That's like 48:39 quite that's like quite unique in 48:41 Silicon Valley because you know at some 48:43 point like this company could get like 48:45 your critical vendor could get like 48:46 acquired or maybe the the founder could 48:49 get like a $20 million offer from 48:51 Enthropic and like it's the rational 48:53 decision for them to do that. In many 48:55 ways like we aren't competing with other 48:56 Silicon Valley companies. We're we're 48:58 competing against maybe them doing it 48:59 themselves or maybe competing with them 49:00 trying to like build a patchwork of 49:01 software vendors on top of like a legacy 49:03 bank or something like that. And so I 49:04 have to show that I am more sustainable 49:06 than you. And I think that earnings is a 49:07 critical part of that. And I think, you 49:09 know, people like, oh, like, you know, 49:10 like your margin is my opportunity type 49:12 thing. And my argument would be like, 49:14 you run this business at like a lot 49:15 lower margins. You're going to be 49:17 dependent on somebody else that you 49:19 probably don't want to be dependent on. 49:20 You also have to be introspective about 49:22 your business. Is is my business the 49:25 type of business that if I raise a bunch 49:28 of money or I have a ton of earnings, I 49:30 can throw all of that back on growth. 49:32 And I think a lot of times enterprise 49:34 software companies they they cannot 49:37 ingest like a huge amount of capital. 49:38 Like if you give me like a billion 49:40 dollars right now, I don't know if I 49:41 grow it like you know a thousand times 49:44 faster than I am right now. And I don't 49:45 necessarily think I I I should. And so 49:48 what we do is we say okay like of this 49:50 earnings what goes to employees? What's 49:52 going to go what's going to go to 49:53 growth? and what's going to go to like 49:55 capital which is pretty much like in 49:57 case something goes wrong or like we 49:59 have a couple bad couple years like NBD 50:02 we good let's keep moving down to the 50:04 extent of now we're like hey if 50:05 something goes wrong for 10 years how 50:07 are we like we're good like there's a 50:09 lot of societal change going on there's 50:11 a lot of like crazy stuff going on in 50:12 the environment I can totally paint you 50:14 a picture where like the markets gets 50:16 insane for the next 10 years 50:18 >> how do I make sure I can survive that 50:20 even if a lot of our companies go up or 50:23 you know the economy These are no 50:24 changes. That kind of goes back to that 50:26 like that that war chest. Markets go 50:27 like this. Like sometimes like Yes. Like 50:29 the line through it goes like this. 50:32 >> You forget it when you one of the good 50:33 ones. 50:33 >> Yes. Exactly. And you know and and we 50:36 you know and we look at slope but a lot 50:38 of times like we have down years and you 50:40 need to be able to weather through those 50:41 down years. And there's so many 50:42 incredible companies that just like 50:45 couldn't survive through like a couple 50:46 bad periods. And you really want to make 50:47 sure you're not one of those. As your 50:49 business scales up, everything gets more 50:51 complex, especially your compliance and 50:52 security needs. With so many tools 50:54 offering band-aids and patches, it's 50:56 unfortunately far too easy for something 50:57 to slip through the cracks. Fortunately, 50:59 Vanta is a powerful tool designed to 51:01 simplify and automate your security work 51:03 and deliver a single source of truth for 51:05 compliance and risk. 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Schedule a demo at 51:50 ridgeline.ai. 51:52 If you were in a a classroom setting and 51:55 it was a bunch of founders or would be 51:57 founders. And it was a Chattam House 51:59 rules off thereord uh session teaching 52:02 them about working with investors and 52:04 what investors care about, how they 52:06 behave. Yeah. 52:07 >> Uh things to look out for. What what 52:09 would be what would you what would you 52:10 tell them? 52:11 >> I actually feel pretty lucky where you 52:13 know at Plaid in the early days we we 52:15 actually had a pretty hard time 52:16 fundraising. But first of all, I think 52:17 we probably chat with like 80 90 52:19 investors and we got rejected. And so I 52:21 uh like sometimes I think I have a 52:22 reputation being like, "Oh, like whims 52:23 like someone anti-VC." It's actually 52:25 like not further from the truth. I like 52:26 Plaid would not exist without VCs 52:28 straight up. I just don't necessarily 52:30 think like the VC model is perfect for 52:32 every single type of company. Um or like 52:34 maybe like a VC owns like you know 10% 52:36 of your company or 20% of your company. 52:38 Um and maybe the employees yourself own 52:40 like 80% like like there are different 52:41 cuts of this you can make. But I think 52:43 for me, I think picking investors is 52:45 important. I don't think there's a lot 52:47 of transparency in the environment on 52:49 like which investors are seven-year 52:51 timelines, which ones are 10 year 52:52 timelines, and which ones are like 52:53 actually truly super long-term oriented. 52:55 So, I think figuring that out. But I 52:56 think the most important thing you 52:57 should do is say, okay, like how like 53:01 realistically, 53:03 what does my margin profile look like? 53:04 What is my revenue growth over time? And 53:07 how should I find a capital structure 53:09 that matches that? And am I actually 53:11 going to grow at a consistent enough 53:14 period? Do I want liquidity in 10 years 53:17 that the venture the venture model makes 53:20 sense for me? Because the thing that 53:22 people forget is yes, growing 100% on a 53:25 $10 million base or $20 million base or 53:28 $30 million base. You know, it's not 53:29 like it's not like that hard. Everybody 53:31 like shows these graphs on LinkedIn like 53:32 we're the fastest company to get to $100 53:34 million like of all time. Like that's 53:36 awesome. But you know what's like much 53:38 harder? going like above 30% a year off 53:40 of a billion dollar revenue base. That 53:42 is like 99 times harder than going to 53:46 zero and 100 million in three years. 53:48 However, the venture model on only works 53:51 is if you can grow above 30% off of a 53:55 billion2 billion dollar base and you 53:57 have to like really look inside yourself 53:58 and be like does my model make sense for 54:01 that? And can I do that in a way that I 54:04 can ingest hundreds of millions if not 54:07 billions of dollars of capital on the 54:08 way and put really good use to that? 54:11 Because I think sometimes businesses 54:13 grow at the rate of the market or 54:15 businesses grow 54:17 differently than just dollar and dollar 54:19 out. And the venture model is built off 54:22 a fact of you can make a company like an 54:24 ATM which is you put in a dollar, you 54:26 get a$130 back. That's not the case with 54:28 most markets. And so I think you have to 54:30 look really intensely at yourself and 54:32 your business to make sure that works. 54:33 And and there's like so many amazing 54:35 tech companies that works for and that's 54:36 why that venture is like a a really good 54:38 asset class and Silicon Valley is 54:40 probably like the best place to 54:41 accumulate capital of anywhere in the 54:42 entire world probably throughout all 54:44 history. But that's not every single 54:46 business and you have to look really 54:48 intensely at yourself in order to do 54:49 that. Given your unique perch, what have 54:52 you learned about how the world works 54:54 through the lens of this like dollar, 54:56 this dollar focus, this demand for 54:58 dollars, being the operating system for 54:59 the, you know, global dollar system like 55:02 through the lens of the dollar? 55:03 >> Yeah. 55:04 >> What what are your takes on like the 55:06 ways the world works or or interest you 55:08 that might surprise people? what the 55:11 dollar does in it connects countries in 55:14 like very interesting ways that I think 55:16 in the US when you can pretty much just 55:18 build a incredible company by like the 55:21 by the US alone you you kind of lose 55:24 that perspective if you look at the 55:26 official stats um like like most 55:29 economies spend less than 10% of their 55:31 GDP um trading with their neighbors 55:34 >> um and that's like been a big focus 55:35 point of um of the OECD over over the 55:40 while But when you actually dig into it, 55:41 like the unofficial trade that's going 55:44 like not over like government rails, 55:46 it's actually closer to 90%. And it just 55:49 shows like how trade and how money and 55:52 how that stuff like really connects 55:53 these cultures and connects these 55:54 societies. And I find that like super 55:55 fascinating, but it's it and we can talk 55:57 about like how that's impactful in a lot 55:59 of ways, but that is something that we 56:00 don't really get in the US because the 56:02 US has this like very unique luxury of 56:05 like we can almost somewhat sustain 56:07 ourselves like you can sustain 56:09 businesses only building for yourself. 56:11 US market is just so fantastic. Like I 56:13 am so long in the US as I'm sure anybody 56:15 building you can sustain yourself. You 56:17 become a billionaire by like never truly 56:19 ever leaving America or never interact 56:21 with anybody outside of America. And 56:23 that's what makes America so [ __ ] 56:25 unique. I don't think we get like how 56:27 much of a luxury that is. But outside of 56:29 the world, like it is not. And that 56:32 comes down to trade. That comes to like 56:33 financial connectivity. That is so 56:36 impactful and it's so important. I think 56:37 you also forget how reliant the world is 56:41 on the US financial system. Like let's 56:43 take let's take two like insanely 56:45 developed countries. Let's take Qatar 56:48 and let's take Switzerland. Okay. 56:53 You're shipping gas from Qar to 56:56 Switzerland. I would argue right now 56:59 like you know probably neither one of 57:00 these countries like love America like a 57:02 ton. That trade is denominated in 57:04 dollars that the the money that's moving 57:07 from Switzerland to Qar from like Glenor 57:10 to Qar the Qatari gas company crosses 57:14 through US financial institutions. It's 57:16 crazy to think about. Let's think about, 57:17 you know, who are maybe our two like 57:19 quoteunquote enemies like China, Russia. 57:22 Okay. Um, China is a big importer of 57:25 Russian gas and oil. It's kind of crazy 57:27 to think about. That trade is still 57:29 denominated for a vast majority in the 57:32 US dollar. That's mindboggling. That's a 57:36 luxury and that's such an insane 57:39 national security strategy that like 57:42 nobody else has. Russia doesn't want 57:45 Chinese currency. China China China 57:47 definitely doesn't want the ruble. They 57:49 have access to it. They almost like hate 57:51 each other as much as they hate us. And 57:53 the fact that they then choose a dollar 57:54 is still so critical. Then you could 57:56 argue that like maybe the dollar is 57:57 eroding over time and stuff like that. 57:59 But like still in the vast majority like 58:00 like 75% of global trade still lives in 58:02 the dollar. That's that's that's crazy. 58:05 And we don't recognize that like the 58:07 soft power the American has or even the 58:09 hard power with the American has with 58:11 that is so is so fundamental to our life 58:16 and the fact that like we have such a 58:17 strong economy. 58:18 >> Do you talk to your team as though this 58:19 is part of the mission that that like 58:22 almost like national security is part of 58:24 the mission because of the importance of 58:25 the dollar? 58:26 >> 100%. One of the best kind of shifts I 58:29 think Silicon Valley has done is we now 58:31 are like hey like Silicon Valley like we 58:33 take an active role in the national 58:35 security of the country. I we we didn't 58:38 six seven years ago even though like 58:40 like America like American society 58:43 American GDP growth is even more than 58:45 ever completely indexed on the success 58:47 of Silicon Valley like probably too much 58:49 and it's like way too levered in that in 58:51 that regard. But now Silicon Valley 58:54 whether it be whether it be social media 58:55 whether it be defense or whether it be 58:56 software whatever we're starting to 58:57 recognize like our role in the world and 59:00 financial services is probably the most 59:03 important component of that you can ask 59:05 like you ask any general and like I have 59:07 it's like like they want to use a 59:10 sanction before they use a missile. The 59:12 great thing about a sanction the great 59:13 thing about the dollar is you can 59:14 enforce American dominance without 59:16 putting boots on the ground without 59:18 putting anybody at risk. And sometimes 59:20 you're showing Venezuela it's like hey 59:22 like you kind of need both but like like 59:24 the reason we were able to go to 59:25 Venezuela is because we had 59:27 fundamentally destroyed the economy 59:28 before. How sanctions right like we had 59:32 completely collapsed like their ability 59:33 to export oil. We completely collapsed 59:36 their ability to actually trade with 59:38 other people. That those that those that 59:40 friction is real. And so when we went in 59:43 there Venezuelan people were probably 59:44 like yeah okay like we good like we're 59:47 maybe not going to try to like shoot 59:47 these helicopters from the sky. like 59:49 we're pretty happy here. That is 59:50 fundamentally so amazing. If France 59:52 wants to like shut down another country 59:54 in order to go like enforce their will, 59:57 like they have like an option. Well, 59:59 they have like two options which is like 60:00 I don't know like don't drink our wine 60:02 and like here's like some here's some 60:05 missiles. Okay. Like the missiles can 60:06 enforce their will. Like they have a 60:08 strong military, they have strong 60:09 special forces, they can go do that. but 60:11 their lives, the special forces on the 60:13 ground, like they're going to have a 60:14 much harder time because they haven't 60:17 kind of in many ways control that 60:19 economy before. And that is so so unique 60:23 to the US. And I think China's obviously 60:25 developing this with trade and exports. 60:26 Like one of the things that China can do 60:28 is they can start to enforce their will 60:29 by shutting down a country from exports, 60:31 right? And so that that is real. So I 60:32 think China has definitely this like 60:34 increasing might but the strength of the 60:37 dollar and that is so fundamental for 60:39 national security and in many ways like 60:40 we we don't talk about it because it's a 60:42 little bit uncomfortable truth right 60:44 like I don't think anybody wants to sit 60:45 up there and say like like a a global 60:46 bank doesn't want to sit up there and 60:48 say like like we're part of the national 60:49 security strategy because like if the 60:51 government tells us to like we're going 60:52 to collapse this economy right like 60:53 that's not a that's not like a fun 60:55 narrative that people want but I think 60:56 there is a there's a way to tell that 60:58 narrative that says like hey like we are 61:00 a weapon that can be used like when our 61:02 citizens come to harm when we need to do 61:04 something that is like super important 61:05 for the US interest and we are part of 61:06 that strategy just in the same way that 61:08 Palanceier is part of that strategy 61:09 locked Martin's part of that strategy 61:11 Boeing's part of that strategy 61:13 and financial services is like is a key 61:16 pillar like you can argue that financial 61:18 services is like the first end to war to 61:21 our country right like we start with 61:23 sanctions we start on cutting them off 61:24 from the US from the US trade we start 61:26 with that before we put boots on the 61:28 ground 61:28 >> what do you then hope is the future of 61:30 global financial services Like obviously 61:32 you're bu you're actively building the 61:33 technology backbone for it but if you 61:36 think big picture how do you hope the 61:38 system changes what would be best for it 61:40 >> I still hope it's very USbound 61:42 >> and I think we sometimes want to believe 61:44 this world where um there's a lot of 61:46 people in Silicon Valley that I 61:47 fundamentally disagree with that want to 61:50 put the power of financial services 61:52 outside of the US and the US has a lot 61:56 of problems that we can spend hours 61:58 talking about 62:00 I still think we're the greatest country 62:01 in the world and um we have change of 62:04 power every four years like we change 62:05 our mind on stuff. Yes, there's like 62:07 there's like some problems but we are 62:09 still we are still the best place to be 62:12 and I think we are the ones that we 62:14 should still have the nuclear weapons. 62:16 We should still have the nuclear weapons 62:17 of financial services which is we 62:19 control the world's the world's trade. 62:21 Um and I hope that continues to exist. 62:24 And I think if we don't, I think if it 62:26 just hands in the power of other people, 62:28 I think that's a scary place. And I 62:30 don't think people have really like 62:31 thought through the ramifications of 62:33 that. Um, if you look at most countries, 62:37 financial services is still power, but 62:39 it ends up just accumulating to 62:42 government officials. It ended up just 62:44 accumulating in the power like a very 62:45 small elite. And say what you will about 62:48 the US, and there's probably way too 62:49 much power concentration in certain 62:51 industries. Financial service is 62:52 actually quite fragmented. Um, like JP 62:54 Morgan's the largest financial services 62:56 country in the US, but like it's not 62:58 that dominant. It's like it's like it's 63:00 still pretty diversified. Take take 63:02 Canada. 95% of Canadians have four 63:05 banks. Take Australia more concentrated. 63:08 You would have most countries have been 63:09 more concentrated than that. Like we do 63:11 have a little bit in financial services 63:12 today a relatively decentralized 63:15 financial services system. You should 63:16 still keep fragmenting, right? We should 63:17 still disperse the financial power 63:19 throughout multiple US corporations, 63:21 multiple US people. We need to do a 63:22 better job there. But we're actually 63:23 starting from a pretty good baseline. 63:25 And I think the other thing I tell 63:26 people as well is like there's this nar 63:28 like, oh, financial services is 63:29 fundamentally broken. Like our 63:30 institutions are actually pretty damn 63:33 good. There's this narrative sometimes 63:34 people talk about it's like, oh, like US 63:36 financial services, it's like built on 63:37 like cobalt and stuff like this. It's 63:39 just not. It's just like not true. It's 63:41 like a fun talking point. But like like 63:43 I like I rack my own hardware with the 63:45 Federal Reserve and all these like 63:46 places. Like there's no cobalt in a lot 63:48 of these places. Like it's actually 63:49 pretty good. 63:51 like go on the record talking about 63:52 this. The Fed has a pretty good tech 63:54 team. Like their systems are actually 63:55 like pretty good. If you think about 63:57 like the US right now through the Fed 64:00 has a capability to move money and to 64:03 clear money through all these 64:04 institutions 24/7, faster than stable 64:06 coins, faster than crypto right now as 64:08 we speak. We've had that for decades. 64:11 Systems are very good, extremely 64:14 reliant. They're fantastic. I think it's 64:16 very challenging for Silicon Valley to 64:18 build something better. The problem 64:20 isn't in the fundamental infrastructure, 64:23 it's in our implementation of it. The 64:26 reason why community banks 64:30 can't send money 24/7 isn't because like 64:32 the technology doesn't exist at the Fed. 64:34 It's because there are constraints in 64:36 those business models that make it very 64:37 challenging of them to do. Give you an 64:40 example. If you can send money out of 64:42 your community bank 247, 64:46 well, that bank could run on a weekend. 64:48 I don't know if you guys have ever like 64:49 been to a rural community with a 64:51 community bank with 50 people. You can't 64:53 get people to work on the weekends. 64:55 Who's going to go there? Sure, if you're 64:57 JP Morgan, if you're Stripe, yeah, you 65:00 can manage 24/7 liquidity, but if you're 65:02 a small community bank, you can't have 65:05 that. And so, I think like people 65:07 conflate we don't have something, we 65:10 don't have access to something with we 65:12 don't have the fundamentally ability to 65:14 do that. But actually the reason is 65:16 implementation not the online 65:18 infrastructure. 65:19 >> I feel like because of your unique setup 65:22 as a business and your unique focus on 65:24 the boring problem as you describe 65:26 >> um you have such interesting perspective 65:27 on so many things. Is there anything 65:29 that we haven't covered either about 65:31 company building or the way that the 65:33 world works that um that you think is 65:37 interesting that we've missed? 65:38 >> One of the things that I think about is 65:41 like okay like AI is here. we're 65:44 probably like much closer to ASI than 65:46 people would think and it's going to be 65:47 on the title wave through the economy. 65:49 You have to think about like okay like 65:50 what's the implications of your 65:51 business? And and I think in my 65:54 perspective is like if you're not a 65:55 researcher, if you're not a lab, how do 65:58 you play? And I think one of the things 66:00 I think a lot about is okay like I 66:02 actually don't think like quote unquote 66:03 AI companies are very set up for 66:07 success. That's actually probably not 66:08 where value is going to acrue. The value 66:09 is going to acrew like in two areas. 66:12 In the most important area, I think do 66:14 you have massive distribution? Because 66:16 if you have massive distribution, if you 66:17 have massive costs, AI is going to be a 66:20 massive bon for you. And so the thing I 66:23 think a lot about is okay like how do 66:24 you think about not just from a software 66:26 perspective but from a distribution 66:27 perspective and a brand perspective that 66:30 you would best capture to utilize AI 66:33 because I think people talk a lot about 66:35 like you know the railroads like like 66:36 the value didn't like yes the value 66:38 acrewed to the railroads. Yes, the value 66:40 acrewed to the ISPs. Yes, the value 66:42 acrewed to the people like building the 66:44 mobile phones, but the value actually 66:46 accrewed to the people that could like 66:48 harness that the best. Like the value in 66:51 railroads acrewed to the oil companies. 66:53 That's like not like that's like a 66:54 little bit like hard to fundamentally 66:56 understand. The standard oil is the 66:58 biggest beneficiary, biggest boom for 67:00 railroads by by an order of magnitude. 67:02 Um what is like the equivalent area for 67:05 AI? And I sometimes don't think we're 67:07 focused on that enough. Like like hot 67:09 take here. I think like the biggest, 67:10 fattest, most inefficient brands are 67:13 even the best beneficiary of AI because 67:15 brands have a massive moat and man 67:17 there's a lot of cost to cut there. 67:18 >> How do you think AI will most affect 67:20 financial services specifically maybe 67:22 even just like your own products and 67:23 services? 67:24 >> Financial services especially like take 67:26 like large banks um they suffer from the 67:28 fact that the business model is too 67:29 good. Um like banks are pretty 67:33 profitable. financial services. It's 67:35 like it's like if you like own a bank 67:36 and you aren't profitable, like that's 67:38 like that's a problem. Like you've 67:40 clearly done something wrong. Like the 67:41 business model fundamentally is really 67:42 good. And so that's that's that's made 67:44 them lagards in a lot of ways. Um but 67:47 that also I think makes their massive 67:49 opportunity where I think financial 67:51 services and like legacy banks tend to 67:52 be like the largest inefficiencies out 67:54 there. They also are very hard to take 67:56 over. Like there's not a lot of private 67:58 equity activity in financial services 68:00 because it's highly regulated. And so I 68:02 think the the large banks that can 68:03 actually effectively harness that are 68:05 going to be some of the largest 68:08 beneficiaries because banks don't have a 68:10 lot of like like physical assets. Like 68:13 places have like massive capex and 68:14 physical assets. It's like hard to like 68:16 tell a good AI story there. Like how's 68:18 AI going to make railroads more 68:19 efficient if 99% of your money is spent 68:21 on like like fuel track maintenance and 68:24 people like the human cost in railroads 68:26 is like dimminimous. Like cool you take 68:28 you take conductors down from like a,000 68:30 to 500. it doesn't doesn't like change 68:32 the equation at all. But if you think 68:33 about a traditional bank, it's pretty 68:36 it's pretty headcount focused and it's 68:37 pretty technology focused. That's where 68:38 a majority of the money goes to. Like 68:40 the actual like physical branch 68:41 infrastructure is like such a minority 68:43 of your balance sheet. And so so I do 68:45 think they will be either be the most 68:48 disrupted or probably actually like the 68:49 largest beneficiaries. And so the banks 68:51 that are like the most effectively run, 68:52 have the largest distribution, have the 68:53 largest cost structure are going to be 68:56 uh the largest beneficiaries. I think 68:57 also the I think the UX of financial 68:59 services will change a lot because like 69:02 people think like oh my gosh like my 69:04 bank is hard to use. My bank is hard to 69:06 move money. It's like slow to move 69:07 money. That's that's actually a feature 69:10 not a bug. I think what fintech 69:12 sometimes start with is they start with 69:14 like hey we're going to make it like 69:15 super easy to like super free to move 69:17 money all over the place. It actually 69:18 starts to slow down. The reason it slows 69:20 down is because fraud is like super 69:23 expensive. And if you make it like 69:24 really easy, if you're a grandma to send 69:26 money to somebody in Nigeria, like yes, 69:28 that's like great for remittances, but 69:29 that's like really bad for romance 69:31 scams. That's really bad for fraud. And 69:33 so, but I do think with AI, we can 69:37 actually we can actually like build 69:39 those detection models like a lot 69:40 better. And so, it's probably less 69:42 likely your grandma is going to fall 69:44 fall prey to elder abuse. And if the 69:46 banks don't have to optimize so much for 69:48 that and it's it comes a little bit for 69:49 free, we can actually make the UX better 69:52 for everybody else because we have the 69:53 technology right now to make to make 69:56 financial services like almost entirely 69:59 instant and like entirely friction free. 70:01 All the friction is actually built to 70:04 protect the 5 to 10% of consumers that 70:07 can't get hurt and people kind of forget 70:08 that. But I think if we can build like 70:10 models that are just as good at human at 70:12 detecting that stuff and that can happen 70:14 instantly, we can actually take that 70:15 tail away and it actually is massively 70:18 beneficial for everybody else. 70:19 >> Do you think it's a good time to be an 70:21 entrepreneur, a new entrepreneur in 70:23 financial services? 70:24 >> Anybody who tells you that it's a bad 70:26 time to be an entrepreneur, that 70:28 probably means it's a good time to be an 70:29 entrepreneur. If you look at um like 70:31 there's all these like stats on Twitter 70:32 that I'm sure people have seen where 70:35 like the best companies are created in 70:37 the worst environments 70:38 um and I think that's generally true. It 70:41 is cheaper than ever to be an 70:43 entrepreneur and so it is as we talked 70:45 about it's probably it's probably the 70:47 least risky time to be an entrepreneur. 70:49 It's also pretty crowded. Um, but here 70:52 like 70:54 like I don't know, you probably look at 70:55 like the last YC batch. I'm sure like 90 70:57 plus% of them were like AI related. So 71:00 yeah, I think it's actually probably a 71:02 pretty good time to be a founder in a 71:04 non AI related place right now 71:06 >> because there's like like less 71:10 competition, less smart people. I I 71:12 think if you want to be successful, you 71:14 can go look at every single industry and 71:17 you can say, "Okay, who has the dumbest 71:20 people 71:21 and what makes the most money?" And if 71:24 you go like attack that area, it's 71:27 probably pretty good space. The problem 71:30 is sometimes Silicon Valley or founders, 71:31 you look and say like, "Hey, we're all 71:34 like the smartest people." Okay, that's 71:37 like yeah, it's like maybe like a cool 71:38 space, but that's probably like the most 71:40 crowded with the smartest people. And so 71:42 your ability to compete is like like 71:44 your competition is pretty intense. You 71:46 know, YC puts out this um you know, 71:48 request for startups. My recommendation 71:50 is like that should be a list of 71:52 startups you should not start because by 71:54 the time like it's so consensus that 71:57 this is a good area or super 71:58 interesting, the amount of capital and 72:00 the amount of smart people, it's like 72:02 it's like, you know, like moth delight. 72:04 I would almost go the opposite way like 72:06 hey YC I love you guys. Please stop like 72:08 continue to fund like you know our 72:09 customers. You guys are amazing. Um but 72:11 as a founder I would maybe be a little 72:13 bit skeptical. 72:14 >> I think your perspective is so unique 72:16 and interesting. I always love talking 72:18 to you. I always find it very 72:19 inspirational 72:20 uh on the dimensions of just really 72:22 going your own way but also just the 72:24 willingness to fall in love with some 72:26 part of the world and get devoted to it 72:28 and and just outarn everybody and stick 72:30 with it. Uh, I love your I love your 72:33 diversification strategy of illquid 72:34 plaid and the liquid column. I think you 72:36 know my traditional closing question. 72:37 What is the kindest thing that anyone's 72:39 ever done for you? 72:40 >> I've had a lot of kind people in my 72:41 life, but I think it's challenging to 72:45 to not look back and be like, "Oh, like 72:46 your mom and dad were like the kindest 72:48 people." Um, my mom and dad did not have 72:50 um have the most like straightforward 72:52 life and not the easiest. and and my 72:55 childhood could could have been a lot 72:56 more difficult than it was because I 72:59 think they they insulated me from a lot 73:02 of a lot of things that were going on. 73:05 Um, and you know, I had a lovely 73:07 childhood and I feel super lucky for 73:09 that. And I think we've talked about a 73:12 little bit like as a founder, you have 73:15 to be willing to take on risk. 73:17 And and if you grew up in an environment 73:20 of fear, if you grew up in an 73:22 environment where like you constantly 73:23 derisking when you're a little kid, it's 73:26 very challenging to feel comfortable 73:27 going up the risk spectrum as you go 73:29 adult. And my and I feel very lucky my 73:31 mom and dad did that, you know. And they 73:33 also kind of taught us like it's okay to 73:35 fall. It's like okay to get punched in 73:36 the face. Like see these they're all 73:37 fake. that time I got punched in the 73:39 face and I've like lost teeth is 73:41 honestly kind of crazy. It's like kind 73:43 of embarrassing. Um but I'm like, you 73:45 know, I was pretty good at getting 73:46 punched in the face and and like that 73:49 you can only teach that as a little kid. 73:51 You can only like have that childhood 73:54 that makes that comfortable in a very in 73:55 a very specific environment. And I 73:57 think, you know, I have I have a 73:58 six-month old and as I look at my peers 73:59 and look at everybody else, we are like 74:02 quite obsessed with creating this like 74:06 perfect environment for our children. We 74:08 send them to like the best schools. They 74:11 have the nicest people in their lives 74:13 and and that is that is valuable, but 74:15 we're maybe creating children that can 74:17 do linear algebra at seven. And I guess 74:19 it's like going to be great. They're 74:21 going to be like great AI researchers. 74:23 But is that what we're going to need in 74:26 20 years from now? Um, or do we want 74:29 kids that are going to be like pretty 74:31 good at taking risks, that are going to 74:32 be pretty good at being punched in the 74:34 face? And and I think my parents did a 74:36 really good job at that. I feel very 74:38 lucky for that. If I copy off my peers, 74:39 I don't know if that's like the that's 74:41 the path we're going to go down. And I 74:43 think the fact that I am like pretty 74:46 damn resilient um is a complete product 74:49 of my parents. And I think that's a huge 74:51 gift. and I I feel super lucky for them 74:53 every day. 74:53 >> A beautiful place to close. Thank you 74:55 for your time. 74:55 >> Thank you. 74:59 >> Most software companies try to maximize 75:01 your time on their app to juice 75:03 engagement. Ramp does the exact 75:04 opposite. 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