The Exchanges

Q terms of the distribution of volunteer. In terms of the competitive elements, as we said there, kind of, a lot of your clients offer lending services and lending products. You know, a couple of people that I spoke to before the show mentioned a question of how do you think about the potential competitive tension between SoFi and then the clients themselves, and is that a challenge to your clients?

A SoFi itself will continue to be a business focused on the consumer experience, very much like any of the other fintechs that are out there. They've got a certain demographic that they're going after. Galileo will Continue to be an independent business. We are putting in place policies and ring fencing of strategies, consumer information, et cetera, and contracting around that. So think about Galileo as an infrastructure provider out to the broader ecosystem. That role that Galileo has established will continue. And on the competitive note, there is several successful role models here. If you look at Amazon, a great consumer business, AWS, incredible infrastructure provider. Very much like Galileo. And yet one of AWS's largest clients is a company called Netflix, which by all accounts is one of Amazon's largest competitors.

AI assessment note: “AWS's largest clients is a company called Netflix, which by all accounts is one of Amazon's largest competitors”

Q terms of the distribution of volunteer. In terms of the competitive elements, as we said there, kind of, a lot of your clients offer lending services and lending products. You know, a couple of people that I spoke to before the show mentioned a question of how do you think about the potential competitive tension between SoFi and then the clients themselves, and is that a challenge to your clients?

A SoFi itself will continue to be a business focused on the consumer experience, very much like any of the other fintechs that are out there. They've got a certain demographic that they're going after. Galileo will Continue to be an independent business. We are putting in place policies and ring fencing of strategies, consumer information, et cetera, and contracting around that. So think about Galileo as an infrastructure provider out to the broader ecosystem. That role that Galileo has established will continue. And on the competitive note, there is several successful role models here. If you look at Amazon, a great consumer business, AWS, incredible infrastructure provider. Very much like Galileo. And yet one of AWS's largest clients is a company called Netflix, which by all accounts is one of Amazon's largest competitors.

AI assessment note: “We are putting in place policies and ring fencing of strategies, consumer information”

Q terms of your journey. I think the thing that struck me when I was thinking about the schedule here was, you know, when we look at the demand for infrastructure growing so fast, and then you look at your position with Galileo being so strong, when you look at the forward looking growth, and I hope it's not too personal, but Why sell to SoFi with so much road ahead?

A The sale to SoFi makes a lot of sense to me, and let me explain the thesis. Galileo had been dominant in banking, payments, debit. We've established an absolute leadership role in fintech. Something like 70% of the top 100 fintechs are clients of ours. By a recent study, 95% of digital banking was occurring in the United States and North America was occurring on our platform. That will continue throughout Latin America. And Asia Pacific as well. So this dominance in debit and payments, SoFi on the other hand, had built a tremendous business. They've taken on a lot of money, two and a half billion dollars, built an incredible business based largely on lending. All of our clients, the challenger banks, have got lending products in their roadmaps, and so the ability to be able to bring what SoFi offers, wrap an enterprise-grade API around that, make that available through our distribution, out through our clients, Is extremely exciting to us, and it's been extremely exciting to our clients. So the thesis is playing out and playing out well, and I'm really excited. I believe that we have created something that can't be rivaled in the marketplace for the next at least three to five years. I believe we've created something that's three to five year head start. And if you really look at the deal that we did with SoFi, there's a tremendous amount of upside and opportunity, both for SoF…

AI assessment note: “The sale to SoFi makes a lot of sense to me, and let me explain the thesis.”

Q terms of your journey. I think the thing that struck me when I was thinking about the schedule here was, you know, when we look at the demand for infrastructure growing so fast, and then you look at your position with Galileo being so strong, when you look at the forward looking growth, and I hope it's not too personal, but Why sell to SoFi with so much road ahead?

A The sale to SoFi makes a lot of sense to me, and let me explain the thesis. Galileo had been dominant in banking, payments, debit. We've established an absolute leadership role in fintech. Something like 70% of the top 100 fintechs are clients of ours. By a recent study, 95% of digital banking was occurring in the United States and North America was occurring on our platform. That will continue throughout Latin America. And Asia Pacific as well. So this dominance in debit and payments, SoFi on the other hand, had built a tremendous business. They've taken on a lot of money, two and a half billion dollars, built an incredible business based largely on lending. All of our clients, the challenger banks, have got lending products in their roadmaps, and so the ability to be able to bring what SoFi offers, wrap an enterprise-grade API around that, make that available through our distribution, out through our clients, Is extremely exciting to us, and it's been extremely exciting to our clients. So the thesis is playing out and playing out well, and I'm really excited. I believe that we have created something that can't be rivaled in the marketplace for the next at least three to five years. I believe we've created something that's three to five year head start. And if you really look at the deal that we did with SoFi, there's a tremendous amount of upside and opportunity, both for SoF…

AI assessment note: “The sale to SoFi makes a lot of sense to me, and let me explain”

Q ask specifically going back to the Galileo journey, because as we mentioned, it's a little bit atypical compared to what we see in the news today in terms of the go fast, the big raises. And so when you think about the 15 years or so of going through the desert with profitability, but not raising. What do you think the benefits were of really going the distance without raising?

A You know, it forces the founder to be efficient and the business to be efficient, to make decisions differently, getting back to making sure that the unit economics are right. You just fundamentally run the business in a very different way. You don't tend to overspend in categories. You try to be more strategic, more gorilla-like in the way that you might get your message out or attack the market or attack these different types of problems. And each one of them, the number of T that you might hire, et cetera, each one of these types of decisions becomes cultural. And over time, what happens is you're looking at the top line and very much looking at the bottom line and knowing that you're not taking money, that bottom line needs to be there regardless of the overall macro events that are going on around you. So when a 2008 rolls through, can you respond and do you have enough reserve in the tank to get through that type of a challenge? These are the types of things and decisions that the founder needs to make. If they're going to decide to go it alone, it isn't necessarily a guarantee for success. What it is, is an ability to control your own destination, but there are trade-offs that are made, and hopefully we'll get to that here in a few minutes, but this cultural kind of focus on top-line growth coupled with bottom-line profitability is rare and unique in FinTech, and it's ev…

AI assessment note: “forces the founder to be efficient and the business to be efficient”

Q ask specifically going back to the Galileo journey, because as we mentioned, it's a little bit atypical compared to what we see in the news today in terms of the go fast, the big raises. And so when you think about the 15 years or so of going through the desert with profitability, but not raising. What do you think the benefits were of really going the distance without raising?

A You know, it forces the founder to be efficient and the business to be efficient, to make decisions differently, getting back to making sure that the unit economics are right. You just fundamentally run the business in a very different way. You don't tend to overspend in categories. You try to be more strategic, more gorilla-like in the way that you might get your message out or attack the market or attack these different types of problems. And each one of them, the number of T that you might hire, et cetera, each one of these types of decisions becomes cultural. And over time, what happens is you're looking at the top line and very much looking at the bottom line and knowing that you're not taking money, that bottom line needs to be there regardless of the overall macro events that are going on around you. So when a 2008 rolls through, can you respond and do you have enough reserve in the tank to get through that type of a challenge? These are the types of things and decisions that the founder needs to make. If they're going to decide to go it alone, it isn't necessarily a guarantee for success. What it is, is an ability to control your own destination, but there are trade-offs that are made, and hopefully we'll get to that here in a few minutes, but this cultural kind of focus on top-line growth coupled with bottom-line profitability is rare and unique in FinTech, and it's ev…

AI assessment note: “it forces the founder to be efficient and the business to be efficient”

Q basically, we chatted about kind of the show and my background before. I love using the show as a vehicle for my personal learning and growth, so I have to ask, you've been at the forefront of fintech and tech for the last 20 years with Galileo. How did seeing the previous booms and busts of the dot-com of 2008, how did that impact your operating mentality, do you think?

A When we founded the company, we knew we wanted to be bootstrapped. We wanted to go it alone. We weren't intending on taking money or significant amounts of money, which meant we were going to go slow by definition. It's an important decision for the founder to make in contrast with split scaling or growth at all costs model, which we see so prevalently. And then the situation is, is that whenever something comes along like a Pandemic, money dries up, and all of a sudden, there's real and difficult decisions to make, as opposed to the model that we took, which was, we're going to go slow, make sure the unit economics are working, make sure that we're cash flowing, that cash is king, and we can control our own destiny. That was the conscious decision we made, and then that very much helped us in the earlier boom and bust cycles that you mentioned.

AI assessment note: “That was the conscious decision we made, and then that very much helped us”

Q basically, we chatted about kind of the show and my background before. I love using the show as a vehicle for my personal learning and growth, so I have to ask, you've been at the forefront of fintech and tech for the last 20 years with Galileo. How did seeing the previous booms and busts of the dot-com of 2008, how did that impact your operating mentality, do you think?

A When we founded the company, we knew we wanted to be bootstrapped. We wanted to go it alone. We weren't intending on taking money or significant amounts of money, which meant we were going to go slow by definition. It's an important decision for the founder to make in contrast with split scaling or growth at all costs model, which we see so prevalently. And then the situation is, is that whenever something comes along like a Pandemic, money dries up, and all of a sudden, there's real and difficult decisions to make, as opposed to the model that we took, which was, we're going to go slow, make sure the unit economics are working, make sure that we're cash flowing, that cash is king, and we can control our own destiny. That was the conscious decision we made, and then that very much helped us in the earlier boom and bust cycles that you mentioned.

AI assessment note: “helped us in the earlier boom and bust cycles that you mentioned.”

Q Totally get you in terms of kind of being one element. Do you think as part of that, and with the proliferation that we've seen both in the unbundling and the verticalization, do you think we'll see mass consolidation in the space moving forward?

A I certainly do. I believe that we'll see consolidation. We're going to see new entrants in the market. For example, in Mexico, 90% of payments still are in cash to Today. So somebody is going to come in and democratize those payments. And this is true all throughout Latam in India. Same thing. Geo money's had a great run here. China, same thing. We're seeing a number of dominant players come, but I believe with everything that I just said, I believe we are in our infancy in FinTech and there will be a second round. We saw this with the internet and it will happen here in FinTech. We will see a FinTech two point O and players will emerge that we have not thought about yet. It have not even been imagined. And we're going to see them three years, five years, 10 years down the road. The next Facebook, the next internet two point O type company will come about. Big tech is going to play an important role here. Apple, Google, Amazon, they've got massive captive audiences and adding those financial services. We've already begun to see that will continue. And then the incumbent banks are going to need to respond.

AI assessment note: “I certainly do. I believe that we'll see consolidation.”

Q So even in quarantine, I'm failing on my book commission. So what's your favorite book, and why?

A I read a lot, and if I can, I'll just mention a few. Why Nations Fail, Rise and Fall, American Growth, Creativity Inc., Ed Catmull, Utah Native, Age of Surveillance Capitalism, Our Final Invention on AI, Stress Test by Geithner, Steve Johnson, Where Good Ideas Come From, Christensen's Innovator's Dilemma, Yvonne Chouinard's Let My People Go. Blueprint was an incredible book. A Crack in Creation by Jennifer Duadna. I made a decision about a year ago. On that year, I was only going to read Nobel Prize winners, and I think she'll be one. Singularity is Near by Ray Kurzweil, but to answer your question, going back to Nobel Prize winners, Kahneman's Thinking Fast and Slow. I've read the book, Twice, and it's absolutely incredible. He is so insightful and so broadly quoted across the literature base that anybody that has not read that book is missing out.

AI assessment note: “to answer your question, going back to Nobel Prize winners, Kahneman's Thinking Fast and Slow.”

Q Totally get you in terms of kind of being one element. Do you think as part of that, and with the proliferation that we've seen both in the unbundling and the verticalization, do you think we'll see mass consolidation in the space moving forward?

A I certainly do. I believe that we'll see consolidation. We're going to see new entrants in the market. For example, in Mexico, 90% of payments still are in cash to Today. So somebody is going to come in and democratize those payments. And this is true all throughout Latam in India. Same thing. Geo money's had a great run here. China, same thing. We're seeing a number of dominant players come, but I believe with everything that I just said, I believe we are in our infancy in FinTech and there will be a second round. We saw this with the internet and it will happen here in FinTech. We will see a FinTech two point O and players will emerge that we have not thought about yet. It have not even been imagined. And we're going to see them three years, five years, 10 years down the road. The next Facebook, the next internet two point O type company will come about. Big tech is going to play an important role here. Apple, Google, Amazon, they've got massive captive audiences and adding those financial services. We've already begun to see that will continue. And then the incumbent banks are going to need to respond.

AI assessment note: “I certainly do. I believe that we'll see consolidation.”

Q I mean, I think it just places also an incredible amount of emphasis also just on like efficient resource allocation for the leadership team. I always say the best CEOs are the best resource allocators. Would you agree with that? And how do you think your mindset changed in terms of resource allocation when you did then raise?

A No, it's a hundred percent agree. That's the absolute essence of what I was trying to communicate there. So yeah, Yes, I agree. When we did make a decision to raise, you know, we were profitable and had been profitable for quite some time. We had a large and scaling business, but it was hard to get analysts and press to pay attention to you or to consider you as an alternative. It's an interesting conversation. I was speaking with Anand Sanwa yesterday, actually, of CEO of CB Insights, and I mentioned to him, I said, you guys are writing all this incredible research on all of our clients, and yet we're not included on the cover of your report, like all of those And teasing, we were having a great conversation, but for three years, we tried to get them to pay attention. If they pay attention, the VCs pay attention, press pays attention. It changes that dynamic a bit, and I'm not naive to that, and so that was ultimately one of the reasons why we chose to do the deal with Excel, and I'm very glad that we did. Excel's an incredible company. John Locke's an incredible partner, and at some point or sometime, the entrepreneur, bootstrapped or not, is going to want to consider who are their capital partners. Because they can do things, they can open doors, they can make things happen that you just simply can't do on your own.

AI assessment note: “No, it's a hundred percent agree.”

Q I mean, I think it just places also an incredible amount of emphasis also just on like efficient resource allocation for the leadership team. I always say the best CEOs are the best resource allocators. Would you agree with that? And how do you think your mindset changed in terms of resource allocation when you did then raise?

A No, it's a hundred percent agree. That's the absolute essence of what I was trying to communicate there. So yeah, Yes, I agree. When we did make a decision to raise, you know, we were profitable and had been profitable for quite some time. We had a large and scaling business, but it was hard to get analysts and press to pay attention to you or to consider you as an alternative. It's an interesting conversation. I was speaking with Anand Sanwa yesterday, actually, of CEO of CB Insights, and I mentioned to him, I said, you guys are writing all this incredible research on all of our clients, and yet we're not included on the cover of your report, like all of those And teasing, we were having a great conversation, but for three years, we tried to get them to pay attention. If they pay attention, the VCs pay attention, press pays attention. It changes that dynamic a bit, and I'm not naive to that, and so that was ultimately one of the reasons why we chose to do the deal with Excel, and I'm very glad that we did. Excel's an incredible company. John Locke's an incredible partner, and at some point or sometime, the entrepreneur, bootstrapped or not, is going to want to consider who are their capital partners. Because they can do things, they can open doors, they can make things happen that you just simply can't do on your own.

AI assessment note: “No, it's a hundred percent agree. That's the absolute essence”

Q So even in quarantine, I'm failing on my book commission. So what's your favorite book, and why?

A I read a lot, and if I can, I'll just mention a few. Why Nations Fail, Rise and Fall, American Growth, Creativity Inc., Ed Catmull, Utah Native, Age of Surveillance Capitalism, Our Final Invention on AI, Stress Test by Geithner, Steve Johnson, Where Good Ideas Come From, Christensen's Innovator's Dilemma, Yvonne Chouinard's Let My People Go. Blueprint was an incredible book. A Crack in Creation by Jennifer Duadna. I made a decision about a year ago. On that year, I was only going to read Nobel Prize winners, and I think she'll be one. Singularity is Near by Ray Kurzweil, but to answer your question, going back to Nobel Prize winners, Kahneman's Thinking Fast and Slow. I've read the book, Twice, and it's absolutely incredible. He is so insightful and so broadly quoted across the literature base that anybody that has not read that book is missing out.

AI assessment note: “but to answer your question, going back to Nobel Prize winners, Kahneman's Thinking Fast and Slow.”

Q said, unique hindsight and experience that you have having done both so successfully, both Raise VC and then also Bootstraps, when you think about advising entrepreneurs to What advice do you find yourself giving, and it's a broad question, so apologies for this, but what advice do you find yourself giving to entrepreneurs who are approaching growth in a similar way and who are thinking about reaching profitability before raising?

A So hopefully for any VCs that are listening, there needs to be a modified or a different way of appraising the value or importance of a business. Again, going back to the CB Insights, writing these incredible reports, and yet they'd sort of missed the essence of what was truly going on. Who was actually powering 95% Of the digital banking movement or evolution in the United States. Well, it was this company they weren't even covering. And so how do you go about doing that and go about getting noticed, if you will? And Anand widely admitted yesterday on the call, he's like, you're right. And VCs need to take a look at this. Back to your question and kind of flipping it around, I would just say to me, it's tenacity for the entrepreneur. It's staying after it and then making that decision at the right time to take on a capital partner.

AI assessment note: “it's tenacity for the entrepreneur. It's staying after it and then making that decision”

Q said, unique hindsight and experience that you have having done both so successfully, both Raise VC and then also Bootstraps, when you think about advising entrepreneurs to What advice do you find yourself giving, and it's a broad question, so apologies for this, but what advice do you find yourself giving to entrepreneurs who are approaching growth in a similar way and who are thinking about reaching profitability before raising?

A So hopefully for any VCs that are listening, there needs to be a modified or a different way of appraising the value or importance of a business. Again, going back to the CB Insights, writing these incredible reports, and yet they'd sort of missed the essence of what was truly going on. Who was actually powering 95% Of the digital banking movement or evolution in the United States. Well, it was this company they weren't even covering. And so how do you go about doing that and go about getting noticed, if you will? And Anand widely admitted yesterday on the call, he's like, you're right. And VCs need to take a look at this. Back to your question and kind of flipping it around, I would just say to me, it's tenacity for the entrepreneur. It's staying after it and then making that decision at the right time to take on a capital partner.

AI assessment note: “I would just say to me, it's tenacity for the entrepreneur.”

Q any opportune sector. When you think about, as we said there, the bundling versus the unbundling, and the rise in demand of banking infrastructure only growing from payments to compliance, maybe for more entrepreneurial listeners, and again, you have the front row seat, are there one or two lesser solved infrastructure problems, actually? That you find your clients faced with where you see inherent kind of innovation needed and potential.

A The need for the underlying tech is so overwhelming, and it can be overwhelming as these companies come into existence with a single thought or idea. What I would say is to the budding entrepreneur is that it takes more. Stay with it. Make sure you've got the tenacity and the staying power to be able to weather the storms and the challenges that come along. If you look at the companies that have been successful and everybody comes along and says, hey, I want to be the next Robin hood or be the next time. Think about how much money has been poured into those types of companies so far and what you need to do in order to be successful. And it's a big challenge.

AI assessment note: “What I would say is to the budding entrepreneur is that it takes more.”

Q any opportune sector. When you think about, as we said there, the bundling versus the unbundling, and the rise in demand of banking infrastructure only growing from payments to compliance, maybe for more entrepreneurial listeners, and again, you have the front row seat, are there one or two lesser solved infrastructure problems, actually? That you find your clients faced with where you see inherent kind of innovation needed and potential.

A The need for the underlying tech is so overwhelming, and it can be overwhelming as these companies come into existence with a single thought or idea. What I would say is to the budding entrepreneur is that it takes more. Stay with it. Make sure you've got the tenacity and the staying power to be able to weather the storms and the challenges that come along. If you look at the companies that have been successful and everybody comes along and says, hey, I want to be the next Robin hood or be the next time. Think about how much money has been poured into those types of companies so far and what you need to do in order to be successful. And it's a big challenge.

AI assessment note: “What I would say is to the budding entrepreneur is that it takes more.”