The Exchanges

Q who will follow them. They have a list of people they've worked with before who would join them wherever they move to. I spoke to many of our mutual friends and your old colleagues, and they said her followership is amazing. Everyone would leave wherever they are to do whatever she's doing. What do you think you do to create that loyalty and followership with the people you've worked with?

A That's super nice of people. You know, I, first I focus on the long game with people. I really care about their career, and it could be someone who is multiple levels down for me. I don't care. If I've built a relationship with someone and I want to help them, you know, I will take a 20 year view of how to build their career and know that they'll show up over time. The second thing I do is I focus on them to my own detriment. And I will send people to business school. I'll send them to other companies. I will want them to go learn something. Even if it gets in the way of our roadmap, I'll move them to other departments if I think it's better for their career. And I genuinely believe that's the way to kind of build that kind of followership where people trust that you have their best interest at heart. And I have so many examples of this where You know, I've sent someone, you know, to business school, even though they were my best person in a particular field. Um, and then I pay attention to, you know, true, just genuine principles of, like, being a good human around the understanding of who they are, being honest with them, listening to them. Um, I spend a lot of time listening to people I work with. Sometimes they just want to vent. And sometimes they need a little bit of a smack where I'll say, like, yeah, I gotta call bullshit on ya. That's just not, I, I don't see it that w…

AI assessment note: “I focus on the long game with people. I really care about their career”

Q December, 20, 24. Will we be in a better or worse place, kind of, macroeconomically?

A By the end of 2024, I think we'll be in a better place. We're in a bit of a market of volatility and uncertainty because we have this tale of inflation that has really plagued us for the last few years, and the Federal Reserve trying to control that with a dramatically different raise in interest rates in the way that they have ever done. I mean, the slope of the interest rate raise has been extraordinary. And interestingly, we are at a, a fifty-year mark on unemployment levels, and so there's this odd moment of uncertainty where, you know, Larry Summers predicted that you needed to have, uh, unemployment being at, you know, five or six percent for a persistent number of years in order to bring down inflation, yet we're at this weird inflection point in the market where that's not Happening yet. Inflation is coming down. So I think 2023, we're still suffering through the uncertainty about whether there's going to be a recession, how deep that recession will be. And once we get the uncertainty out of the market of the next two quarters around unemployment, around inflation levels, I think that will start to create a more even market that there's less uncertainty out there for players in the market.

AI assessment note: “By the end of 2024, I think we'll be in a better place.”

Q And listen, I, I always believe that we're a function of our histories, and I'm, you know, secretly an armchair psychologist without the degree. We're all running from something. What do you think you're running from, Jackie?

A Oh, now we're gonna go deep in psychology, because I am absolutely running from my childhood. So I had a very unusual childhood, in the sense that I ended up moving out of my house when I was 14. I sent myself to boarding school, and I got myself out of a household of chaos. And so, when you're in that kind of environment, you have to stand up for yourself, and be independent on your own. And so I was always involved in entrepreneurial endeavors, And making sure I could support myself and get myself to a different place in the world. And so I saw the dreams of building businesses that my parents established, but then also knew that I had to survive on my own. And in order to improve my own life, I was just going to have to do it on my own. And so I, you know, got lucky. I only went to three years of high school because I needed to work. I needed to put myself through school. And I left high school as a junior. I went to college. And then when I was in college, I ran a bunch of businesses that helped put myself through college. And so, when you're stuck in that kind of environment as a kid, you learn what grit is, and you learn what entrepreneurialism is, and I ended up having a drive to succeed, to get myself out of that environment that I think is unending. Uh, you know, I wanted to be successful. I wanted to be independent. I wanted to have a lot of things that didn't exist i…

AI assessment note: “I am absolutely running from my childhood.”

Q What have you changed your mind on in the last 12 months?

A I've changed my mind on my willingness to try psychedelic drugs. I am so squeaky clean, um, and I think my biggest vice is my obsession with carbohydrates, um, and I read Michael Pollan's book, and I am truly inspired by his exploration of psychedelic drugs, and I have not gotten up the courage to really go out there in the way that he did. But I really would like to. Like, I look at what's happening with PTSD, with veterans, with people who have depression, And I really want to learn more, and, you know, as I said, I'm always someone who wants to learn and do something that's new, and that is something that I would really like to try. And because I've kind of lived in a very constrained, controlled way, you know, and not intentionally, but I have. I'm like a Girl Scout. That's the one area of my life that I really would like to explore.

AI assessment note: “I've changed my mind on my willingness to try psychedelic drugs.”

Q learning from you already. When you look at my mistakes, I always looked at the CV when, oh, they were a tier one fund before, they are a good investor. Wrong. Lend too much on CV. Often a common mistake of young founders, I find. When you review your hiring mistakes, what do you think is the most prominent one, and how did you change your approach having made it?

A I made a lot of mistakes when building some of the functions at Square around hiring for domain knowledge. You know, when we were building out banking and lending at Square, it was a pretty new concept, and we were trying to find particular expertise in a product set that really hadn't been done before, which, so, fundamental mistake there. And in reality, I think I have indexed away from domain knowledge, Than I ever did, because a lot of what we're creating hasn't been done before, or you want first principles thinking, and I would rather focus on things like raw intelligence, judgment, curiosity, grit, ability to manage ambiguity, Rather than looking for things like domain knowledge or operators with prior scale experience, you know, that's another big mistake where you assume because someone had a lot of zeros around the output that they created at a big company, that that means something. And I, I would rather look for people who are scrappier and have an ability to just manage an ambiguity than I would someone who's been an operator, a high profile company at scale. You know, I, I ran HR at Yahoo, and one of the observations from Yahoo, because there's an incredible diaspora at Yahoo, is that anyone who went to Yahoo was grittier than a lot of the people who worked at higher profile companies that were just minting money, and when you came to Yahoo, you had to work a litt…

AI assessment note: “I made a lot of mistakes... at Square around hiring for domain knowledge.”

Q What are the, sorry, I, I'm, what are the characteristics of those that enable those to versus those that don't? Is it purely David and Jack, and you name the great, great people, or is it the market themselves, the intricacies of them? Like, what is it that enables those to expand versus those not to?

A You know, you mentioned two great founders who have incredible consumer instinct, and I do think there, there is an, an instinct and an appreciation for understanding what consumers want in the future that exists within those two particular founders. I mean, they've, they've created extraordinary and legendary companies, and I think it's, I think their power Is seeing what consumers want and maniacally focusing on it and going after it. You know, I remember in 2017, maybe, yeah, it was end of 20 16 when Jack wanted to put Bitcoin into Cash App. And he, ah, two engineers sat, ah, on the sixth floor of 14 55 market and wouldn't leave the office until they were able to build that product. And it was inspiring to watch. Like, he had a point of view about what the future was going to look like with Bitcoin as a part of that, and the power of what that could achieve for consumers, and no matter how many naysayers thought it was crazy at the time, he wasn't leaving the office, and I do mean that literally, until that product was built. And so, I think there's a power to that kind of conviction, Um, in having a hypothesis and building back to it. Um, you know, one of the things I, I love to do is take a point of view about, ok, so what will the future look like? Right? Like, you know, this is something that we did a lot of at Square. I have a hypothesis about what the future is. This i…

AI assessment note: “their power Is seeing what consumers want and maniacally focusing on it”

Q We normally ask about book that you read. I don't, fuck it, I don't want to ask about the book. Why did you write your own book? Which I loved, by the way. Thank you so much for sending it.

A So I wrote a book called Self Made Boss with Lauren Weinberg, and interestingly, the book is not about me, which so many people write books about themselves, their leadership skills. Well, I did not do that. The book is for small businesses to help them start, run, and grow. Their companies, and what I saw in the pandemic was an absolute dearth of information for the tiniest companies, and this book is a pragmatic how-to on how to build a business, and I think of it as a love letter to the little guy, because they really needed help, and I saw that in a crisis mode in the pandemic, and I really just wanted to help small businesses across the United States and Capture the wisdom of incredible leaders across the country in a pragmatic way and help get information out there to help them build their companies.

AI assessment note: “what I saw in the pandemic was an absolute dearth of information for the tiniest companies”

Q I have to ask, and I, I think one of the biggest problems is kind of fear mongering, but, you know, important to cover. On the back of everything we've discussed, you know, some people suggest subsequent bank runs on, on different banks. How likely do you think alternate bank runs are and what type of companies get impacted?

A So Chris commented on the six hundred billion dollars of mismarked assets if everything were to be priced to mark to market on Monday. That is in totality across the U.S. banking system. I think, um, the bigger issue to focus on is that around the impact of psychology and whether a bank has issues around concentration within an industry Or a customer base in particular. And so there are some banks that have been named that are digital asset focused, or they might have an, an imbalance in their customer base versus being diversified. And I do think those banks will start to see deposit pulls just out of panic, even if they have a very strong balance sheet. You know, there was one bank in the West Coast, First Republic. Very strong bank. They put out a notice on, on Friday that said, only 15% of our securities are, or, uh, 15, 15% of our, um, assets are, you know, securities. Nine percent of our deposit base is tech, you know, broadly diversified. And what they're basically saying to you is, we're not SVB. We're highly diversified. Our balance sheet looks good. Don't pick on us and create this dynamic around us. We are in a very different situation from a balance sheet point of view.

AI assessment note: “I do think those banks will start to see deposit pulls just out of panic”

Q So we're going to move to the outcome, speaking of who could say, and I want to start with, um, a really tough one, but I think we have to start here. So first, why have the FDIC not acted already, and what happens now at SVB?

A Yeah, so this is a pretty standard process, and if you even go back to oh, you'll find that Thursday nights are really important nights for the FDIC and weekends, because what they do is they go in, and there's a, there's a whole series of outcomes that the FDIC can pursue, um, but they go in and take over a bank on a weekend, and they do that very purposefully so that they have a moment when There's not a constant pull on deposits, and they're able to do the work to assess what is in there in a balance sheet. And so that work typically happens on a weekend. And so what happens in a bank failure is as follows. So first of all, you're right. It is the FDIC. Um, they take over a bank. They resolve it. They are the ultimate resolution authority, even despite a bank being regulated by a different regulator. Other than credit unions, they are the institution whose job it is to go in and resolve, ah, how to manage bank deposits and then how to therefore resolve the issues with the, with all the assets. They, um, send their team in. They actually send people in. They work part and parcel with bank employees to do their job. So in the case of SVB, for example, the team at SVB has signed four-week contracts with the FDIC. So that they're now being employed by the FDIC, and they are doing the work to be able to pull data in the systems, be able to count up deposits, so they could be prep…

AI assessment note: “they go in and take over a bank on a weekend, and they do that very purposefully”

Q Jackie, what can they do to instill confidence? Like, if you were in charge today, what, what can you do now to instill that confidence?

A So, I would want to see an announcement that a buyer has taken over the depository accounts, and two, those depository accounts will be paid out at par. That's optimal, right? All, and Monday morning, people will have immediate access to liquidity. Those are the three things that really matter. And so, Monday, people will definitely be able to pull capital out. The question is how much? It depends on this addition of the insured amount plus the advanced deposit. Assuming they do, in fact, do this advance deposit, and I'm almost certain they will. And then the third thing is, is someone standing behind my deposit a hundred percent and went, you know, and so if they're able to do all three things, that really goes a long way to giving, ah, depositors confidence, and that would delay a lot of the immediate panic that could happen Because the, the broader amount of contagion across different industries that's unintended is pretty extreme. You know, you don't think about companies in all different states who also work with SVB. You think of schools. You think of clubs. You think of all kinds of institutions. It's not a one percenter problem. There are employees at those companies that do all kinds of jobs, and those companies, it's the wine industry, so farm growers across Northern California, And so, as much as we want to think of SVB and its clients and then its clients' clients a…

AI assessment note: “I would want to see an announcement that a buyer has taken over the depository accounts”

Q What do you think many people get wrong in deal-making and negotiating?

A Oh, they can be jerks. They think, like, it's their way or the highway. They're only, there's only one way to get to the right answer. And, you know, I think sometimes people overplay their hand around leverage. And you may have all the leverage in the world, but you gotta decide, like, do you need to have an operating relationship with this person? So having that negotiating leverage is only gonna burn the relationship. And so, you know, I think there are just so many interpersonal relationships in the way that you need to manage these things, and, uh, you know, and so I think you have to draw that into the components of the discussions you're having. You know, I'll give you an example. I have investors, and this is in Lead Bank, and I wanted these investors because I thought they'd make us more disciplined as a group of founders, and I thought, The smarter and better they were. I wanted their brain power. I wanted their advice, and I wanted them to kick us in the ass. We had a lot of leverage when setting up this company because I was also willing to fund it myself. And the, the only reason I was taking folks was because I wanted their brain. And when we set the terms for our investing rounds, I was very comfortable letting our investors get a lot of their way on a lot of different components of the transaction because I knew I needed certain things. I needed a structure that…

AI assessment note: “They think, like, it's their way or the highway.”

Q Jackie, I'm with you. I'm, I've never tried any form of drugs ever, and I'm, everyone's like, oh, it's great, the creativity, it's like better for you than booze and cigarettes. I'm like, oh, mum would still kill me. Uh, not that I'm not a mature adult, obviously. Uh, uh, they tell me crypto does more harm to income inequality than help. Agree or disagree?

A I don't think we've seen any use case where it has benefited or created a detriment for income inequality. I mean, today the use case that you've seen a most prevalent is that around investment speculation. And so I have yet to see it really move the needle for societies, even in places like El Salvador, where you've seen governments adopt it. As a currency, it really has not created an environment where it is used day in, day out as a, as a core tender type. And so, um, I think what crypto means is that around access, and I do think access will create dynamics where it will reduce the number of underbanked people around the world, but access can be created in lots of different ways, even outside of the crypto market.

AI assessment note: “I don't think we've seen any use case where it has benefited or created a detriment”

Q on this show, and we had a little nice debate. He said that micromanagement is absolutely a productive way to manage teams, um, and actually that you are always involved in processes as a founder that you shouldn't extrapolate yourself from. I vehemently disagreed, um, obviously with absolutely no credentials to back up my disagreement, but, uh, do you agree with him on that aspect of the importance of micromanagement?

A I don't agree with micromanaging at all, unless there's someone who needs to be micromanaged because there's a particular performance issue. Um, I, you know, I am a believer in, uh, setting direction, providing goals, and then focusing on outcomes as a leader, and that you hope that you're hiring the right people who know how to get the job done in their own way. I think everyone has such different work styles and They go about things in a different way. I don't focus on the inputs of how they do it. I focus on the outputs of what gets done, and so, um, I am not a micromanager, maybe to a fault. The people I work with, I absolutely trust. I adore. I believe in who they are. It doesn't mean that I don't push them in profound ways. I think they push me as well in many cases, but I like to hire certain Kinds of entrepreneurial people and let them run.

AI assessment note: “I don't agree with micromanaging at all, unless there's someone who needs to be micromanaged”

Q and individual needs that actually lending facilities are very different, product expectations are very different, service requirements are very different, And actually, for you at LEED to, like, cater to this homogenous group of people is so difficult. What I want is so different to what my mother wants, and what, you know, my brother wants, and I don't know, do we see that as an unbundling of consumer banking?

A Well, I think we go through these cycles of bundling and then unbundling, right? Like, you attack a horizontal, and I'll use Square as an example. Um, you know, Square attacked a horizontal, right? Point of sale. It went all the way across every industry, and they were gonna serve customers with the same product set. And then from that grew a whole series of verticalized solutions. Shopify is one. Stripe is one. Toast is one. And you started to get verticalized products that went after the horizontals, even like B to B marketplaces are other ways of coming at that market. You could take Uber and say they took away the transportation market for horizontal point of sale providers, right? You, you take away all these verticals, but then you find that the verticals aren't broad enough from an LTV point of view in order to serve a market. And again, you start to go into this This bundling phase, where now, as you see people talking about killer apps, like we're gonna have one consumer app is like many people's obsession, and they're obsessed because they're trying to build LTV, particularly in a rising interest rate market where the cost of a lot of products and financial services got more expensive. So you have this idea, well, once we get a customer in, we're gonna sell them a whole series of product and build this super app. And so, You know, you go through these movements.

AI assessment note: “Well, I think we go through these cycles of bundling and then unbundling, right?”

Q lot of reduction more broadly is M&A activity with, I think, increased scrutiny and regulation around a lot of potential M&A transactions. Some people say we're going to see this kind of consolidation or like wave of M&A in fintech. You mentioned a return to first principles earlier. Do you think we will see this kind of consolidation wave of M&A, or we just see shutdowns and companies going bust?

A So I think we see it already. You know, companies that were funded in twenty-twenty, twenty-twenty-one have done everything they can to streamline their cash flow burn, and they have used twenty-twenty-two to try to achieve product market fit. They are now suffering the consequences in many cases of upside down cap tables. And so where you have environments where they've raised more than their company is worth, they need to do another round. That is upside down for current investors. In many cases, they will choose to pursue M&A exits and try to yield an outcome to investors that can be positive. And a positive outcome in some cases can be a shutdown. It could be a sale. It could be, you know, a multiple of money type of positive return. But all of those yield a rationalizing of the market in Uh, FinTech. And given the increase in funding that happened, I think there's a 10 X increase in funding over the last few years, you will see the rationalizing of this market with companies that just haven't achieved product market fit. I know we look at a lot of M&A opportunities for LeadBank. Um, we'd love to buy some technologies that we haven't built yet, and where we can find that in companies that haven't been able to succeed, we would love to bring those founders into our company. We'd love to find entrepreneurial, entrepreneurial people to work with, you know, so we're always oppo…

AI assessment note: “So I think we see it already.”

Q learning from you already. When you look at my mistakes, I always looked at the CV when, oh, they were a tier one fund before, they are a good investor. Wrong. Lend too much on CV. Often a common mistake of young founders, I find. When you review your hiring mistakes, what do you think is the most prominent one, and how did you change your approach having made it?

A I made a lot of mistakes when building some of the functions at Square around hiring for domain knowledge. You know, when we were building out banking and lending at Square, it was a pretty new concept, and we were trying to find particular expertise in a product set that really hadn't been done before, which, so, fundamental mistake there. And in reality, I think I have indexed away from domain knowledge, Than I ever did, because a lot of what we're creating hasn't been done before, or you want first principles thinking, and I would rather focus on things like raw intelligence, judgment, curiosity, grit, ability to manage ambiguity, Rather than looking for things like domain knowledge or operators with prior scale experience, you know, that's another big mistake where you assume because someone had a lot of zeros around the output that they created at a big company, that that means something. And I, I would rather look for people who are scrappier and have an ability to just manage an ambiguity than I would someone who's been an operator, a high profile company at scale. You know, I, I ran HR at Yahoo, and one of the observations from Yahoo, because there's an incredible diaspora at Yahoo, is that anyone who went to Yahoo was grittier than a lot of the people who worked at higher profile companies that were just minting money, and when you came to Yahoo, you had to work a litt…

AI assessment note: “I think I have indexed away from domain knowledge, Than I ever did”

Q What have you changed your mind on in the last 12 months?

A I've changed my mind on my willingness to try psychedelic drugs. I am so squeaky clean, um, and I think my biggest vice is my obsession with carbohydrates, um, and I read Michael Pollan's book, and I am truly inspired by his exploration of psychedelic drugs, and I have not gotten up the courage to really go out there in the way that he did. But I really would like to. Like, I look at what's happening with PTSD, with veterans, with people who have depression, And I really want to learn more, and, you know, as I said, I'm always someone who wants to learn and do something that's new, and that is something that I would really like to try. And because I've kind of lived in a very constrained, controlled way, you know, and not intentionally, but I have. I'm like a Girl Scout. That's the one area of my life that I really would like to explore.

AI assessment note: “I've changed my mind on my willingness to try psychedelic drugs.”

Q mentioned the increase in funding going from venture to, obviously, you know, new fintech startups. Like, what trend in terms of investor hype did you go, oh, no, over the last few years? Was it, It could be debit cards, it could be verticalization of neobanks, it could be anything that you want to name. B to B expenses, you name it, where you're like, oh no, this is ridiculous.

A Well, I do think it's really hard to build a consumer-facing neobank if you don't truly have an advantage or a use case that is differentiated. You know, like, today, debit cards are a dime a dozen. There are table stakes for any fintech at this point. And there are only so many beautiful designs that will win you customers. I think, uh, that is a, that is a really tough business model to try to gain users, particularly after Apple changed their ad models. I think winning, uh, you know, if you're solely operating in the digital ad market, you really need to have a unique product that Stands out amongst your peers. And so I do think there are many consumer fintechs where I just don't see the differentiation in the product to truly stand the time or their, their features. They're not companies. Um, and they should be integrated into other products that can help build LTV. Cause I, I do think we ended up where people built companies out of features. Um, and I, and I think those will disappear over time.

AI assessment note: “I do think it's really hard to build a consumer-facing neobank”

Q suck at hiring. I think one of the reasons the show has been successful is because I'm very open, not good at hiring. Um, and I spoke to Mickey before the show, and he was like, you gotta talk to her about hiring. And so, I'm just gonna ask a very broad question of, like, what have been some of your biggest lessons on hiring and building the best teams?

A I focus on what I think the person's innate skills are as a human, not what jobs they've had in the past, and so someone could be amazing at people skills, and you could pull someone from sales and get them to be a recruiter, and so it doesn't matter that they had a totally different function. That That function has a certain level of underlying experiences that attach to it, and that, that often attaches to where someone's true spike is in who they are. That may have nothing to do with their resume. I remember when I was at Square, I ran HR. People used to look at my background, which was extremely financial, right? I worked in private equity for 20 years. I've always created esoteric financial products, and then I ran HR For a decade at two tech companies, I used to say my best skill was that around understanding the good in people and what they might be good at in their jobs. That had nothing to do with finance. But, like, if you really abstract what private equity is, private equity is judgments about people, where you need to place them in their jobs, and what levers of growth you give them in order to help them grow a business. That is recruiting, and that is leadership, and that is HR. And so, as much as someone might look at my background and say, oh, you'd be an amazing CFO, I was like, no, no, no. If you truly understand what I'm good at, I'd be an amazing head of HR.…

AI assessment note: “I focus on what I think the person's innate skills are as a human”

Q You mentioned calling bullshit and being direct. I heard that you're one of the master deal makers and negotiators. I think this is, like, one of the most fascinating topics, actually, and, like, there's not enough discussed about deal making itself. Well, like, weird question, but, like, what have been the biggest lessons on what successful deal making actually is?

A I don't think of it as a zero sum game. I think there's always ways to be creative in getting an outcome that enables both parties to feel good about something. And that doesn't mean that every point is going to be a love fest where everyone is super happy, but it means that you can make trade-offs in what's absolutely the most important things to you, and what can you give up. And I think, um, you know, I try to focus on understanding what someone needs. And truly understand, like, what's the outcome that they need? Do they need to look good? Do they need a certain economic outcome? When do they need certain economic outcomes? And I think if you're really creative in first understanding what's driving their decision-making process, it could yield a lot of optionality in what you negotiate for, and so I don't see things as black and white as an outcome, and I think it yields good long-term relationships, and I think it yields great economic outcomes.

AI assessment note: “I don't think of it as a zero sum game.”

Q on this show, and we had a little nice debate. He said that micromanagement is absolutely a productive way to manage teams, um, and actually that you are always involved in processes as a founder that you shouldn't extrapolate yourself from. I vehemently disagreed, um, obviously with absolutely no credentials to back up my disagreement, but, uh, do you agree with him on that aspect of the importance of micromanagement?

A I don't agree with micromanaging at all, unless there's someone who needs to be micromanaged because there's a particular performance issue. Um, I, you know, I am a believer in, uh, setting direction, providing goals, and then focusing on outcomes as a leader, and that you hope that you're hiring the right people who know how to get the job done in their own way. I think everyone has such different work styles and They go about things in a different way. I don't focus on the inputs of how they do it. I focus on the outputs of what gets done, and so, um, I am not a micromanager, maybe to a fault. The people I work with, I absolutely trust. I adore. I believe in who they are. It doesn't mean that I don't push them in profound ways. I think they push me as well in many cases, but I like to hire certain Kinds of entrepreneurial people and let them run.

AI assessment note: “I don't agree with micromanaging at all, unless there's someone who needs to be”

Q Can I ask, I always believe that the best companies are built on the back of insight development, seeing the world in a different way to how it currently is. What did you see with lead that made you pursue it as the next chapter of your career and, you know, the really meaningful next segment in your life?

A You know, when I was at Square, I saw how painful connecting into the financial services market was. I mean, I truly, truly understood the pain of the banking system, and at Square, we operated and worked with many different banks, and so I had the vantage point of being a customer to many different banks across the country, and then I started a bank. You know, oddly, I started a bank at Square because there was no provider in the market that I thought met the needs of what we needed to do across all the products. And so, you know, I first built a bank within a tech company. It's very unusual to do that. And I, I understood how to build it in the construct of a tech company and understood how difference the culture of tech is to the culture of banking. And so, when we went to go build lead, we built the bank we wanted to see in the world. Full stop. We built the bank we wanted to see, and we wanted to use. And that means building a high quality bank platform that's scalable, that enables, um, product teams to have strong compliance and control so that they believe they're not at existential risk. Of having issues with the underlying rails of what they're working with. It means being creative and inventive around financial services products and understanding products. And I do think there's a place in the world for a bank that applies a lot of creativity and invention to a busin…

AI assessment note: “when I was at Square, I saw how painful connecting into the financial services market was”

Q Jackie, I'm with you. I'm, I've never tried any form of drugs ever, and I'm, everyone's like, oh, it's great, the creativity, it's like better for you than booze and cigarettes. I'm like, oh, mum would still kill me. Uh, not that I'm not a mature adult, obviously. Uh, uh, they tell me crypto does more harm to income inequality than help. Agree or disagree?

A I don't think we've seen any use case where it has benefited or created a detriment for income inequality. I mean, today the use case that you've seen a most prevalent is that around investment speculation. And so I have yet to see it really move the needle for societies, even in places like El Salvador, where you've seen governments adopt it. As a currency, it really has not created an environment where it is used day in, day out as a, as a core tender type. And so, um, I think what crypto means is that around access, and I do think access will create dynamics where it will reduce the number of underbanked people around the world, but access can be created in lots of different ways, even outside of the crypto market.

AI assessment note: “I don't think we've seen any use case where it has benefited or created a detriment”

Q My management stars, I ask incredibly smart people, are you worried? If you're worried, I'm worried. If you're not worried, I'm not worried. Are you worried?

A I'm not worried, because I look at where unemployment is, and you see, um, how strong, um, the numbers are, and you can only, well, let me rephrase that. I am not worried about the state of the economy today. I think unemployment is an incredibly successful marker today to watch, and we still have such strong numbers that that underpins the success of the economy. There are notes in the market that show weakness. It could be total credit card balances. It could be savings rate levels. It could be auto defaults and things that are starting to mark Um, more debt and lack of consumer sustainability, um, in their own credit profiles, but I don't see widespread fear in the same way that I did a year ago when we were sitting, you know, last December, that I actually was truly worried about the state of the market because of the signals around inflation. You know, when the Fed was signaling that inflation was going to be temporary, I think you had to sit there and look at what was going on in the economy and just Scratch your head. So like, really? I don't know how that could be. Um, but I think we're in a much better place today.

AI assessment note: “I'm not worried, because I look at where unemployment is”

Q Sorry, I'm just intrigued. Given the lack of liabilities, uh, given the customer base SVB being so high quality, is this not actually an extremely strategic and good acquisition for a potential buyer like JPM or Goldman Sachs or, or anyone else?

A So that's a judgment, right? I mean, I personally think it is. I think SVB is a very, very unusual, super high quality, uh, set of customers that many banks would want to have. They're making an economic choice about whether they could do it. There is a significant LTV to these customers. Um, they also have to look at their own regulatory issues, and I'm sure many of them are negotiating with the FDIC over whether they can buy it. And so there's lots of dynamics around that, that cause someone to either pause or pursue it aggressively. But it's not like the situation we had in a way where you'd say there's a time bomb ticking on the, you know, on the client base or in this situation, it's a pretty healthy set of venture capital firms. Um, you know, the innovation economy across the United States that I think anyone would want to have if nothing else mattered. There's, I don't think there's a bank that wouldn't want to have the clients of SVB at their fingertips.

AI assessment note: “I personally think it is. I think SVB is a very, very unusual”

Q I, I want to move money as fast as possible from whichever institution, just say whichever institution. Um, and there's like, is it okay to move it into a startup account being one of the, you know, rising neobanks? I don't want to name names because I don't want to pick any out specifically, but is it okay to do that or that not okay and I shouldn't do that?

A So I think you can do that, and those startups have beautiful abstraction layers on top of underlying banks, meaning they're beautiful, they're easy to use, the account opening process is probably super easy to use, and so I think that might be a great option for Monday, but then I'd actually go and I'd look at what's the underlying bank that supports that entity and decide whether you want to have your money sitting at that bank, and so I actually, um, I think it's worth doing whatever you can to create an account diversification. My, me personally, I would move to a systemically important bank or a strong regional bank, um, or if you have local accounts that you need at different local banks, like we run a bank in Kansas City, you know, our depositors are really sticky, our client base is super sticky at lead bank, and so we look at our situation, our liquidity situation, and You know, I'm not worried about our local clients in Kansas City, you know, reading Twitter and having like a, you're too invested in tech bank run on Monday morning, um, because of the way we're highly diversified and, um, and what they're invested in and the way that our, our loan portfolio looks. But I do think it's worth looking at your account structure and saying, having diversification of accounts and just having them open and have them funded for in a small amount. Is a great option. Working with…

AI assessment note: “So I think you can do that, and those startups have beautiful abstraction layers”

Q Sorry, I'm just intrigued. Given the lack of liabilities, uh, given the customer base SVB being so high quality, is this not actually an extremely strategic and good acquisition for a potential buyer like JPM or Goldman Sachs or, or anyone else?

A So that's a judgment, right? I mean, I personally think it is. I think SVB is a very, very unusual, super high quality, uh, set of customers that many banks would want to have. They're making an economic choice about whether they could do it. There is a significant LTV to these customers. Um, they also have to look at their own regulatory issues, and I'm sure many of them are negotiating with the FDIC over whether they can buy it. And so there's lots of dynamics around that, that cause someone to either pause or pursue it aggressively. But it's not like the situation we had in a way where you'd say there's a time bomb ticking on the, you know, on the client base or in this situation, it's a pretty healthy set of venture capital firms. Um, you know, the innovation economy across the United States that I think anyone would want to have if nothing else mattered. There's, I don't think there's a bank that wouldn't want to have the clients of SVB at their fingertips.

AI assessment note: “I personally think it is. I think SVB is a very, very unusual”

Q mentioned the increase in funding going from venture to, obviously, you know, new fintech startups. Like, what trend in terms of investor hype did you go, oh, no, over the last few years? Was it, It could be debit cards, it could be verticalization of neobanks, it could be anything that you want to name. B to B expenses, you name it, where you're like, oh no, this is ridiculous.

A Well, I do think it's really hard to build a consumer-facing neobank if you don't truly have an advantage or a use case that is differentiated. You know, like, today, debit cards are a dime a dozen. There are table stakes for any fintech at this point. And there are only so many beautiful designs that will win you customers. I think, uh, that is a, that is a really tough business model to try to gain users, particularly after Apple changed their ad models. I think winning, uh, you know, if you're solely operating in the digital ad market, you really need to have a unique product that Stands out amongst your peers. And so I do think there are many consumer fintechs where I just don't see the differentiation in the product to truly stand the time or their, their features. They're not companies. Um, and they should be integrated into other products that can help build LTV. Cause I, I do think we ended up where people built companies out of features. Um, and I, and I think those will disappear over time.

AI assessment note: “I do think we ended up where people built companies out of features.”

Q I love that answer. Uh, final one. 2028. Me and you sit down for another conversation. Um, where are you then and where do you want LeadBank to be then?

A I think LeadBank will be one of the biggest innovators in fintech infrastructure in the world. And I'm excited about what we're building across banking products. I'm excited about the customers that we work with. They are A++ players in the fintech and crypto market, and I think we're going to continue to change the way banking is operated in the United States. Um, I'd love to be multi-country. I'd love to be deep in, um, compliance products, even beyond core banking products, so that people can come to us for a full slate of banking services that When they want to onboard into the banking system in multiple countries, they could come to us and have it be really easy, and know that they are working with a partner who will help them build at scale in a way that is existentially safe and sound for their business.

AI assessment note: “LeadBank will be one of the biggest innovators in fintech infrastructure in the world.”

Q This is like your Marquesas of the world and your, um, Ray, Rails bank or whatever it is in Europe, but that's it?

A Well, yeah, they're banking. They do banking as a service. They have no underlying bank. They're like middleware players. And I think they're great for small startups that need to really quickly just get access to a bank so that they could test and experiment and go to market. And I think those companies are fundamentally in a, in a middle spot. They're not the final decision maker of a bank. And so if you're a scaled fintech, that's not an optimal place to be. From who you want to work with, because you can't actually control the decisions that the bank underneath them makes. There are companies that have been started by people who have incredible, um, software engineering skills. I think those companies have to show that they actually can operate banks in a highly regulated way without getting into trouble themselves. I think there's a lot to learn in substance around How you operate a bank, and unfortunately, your success or failure can have existential risk on your customers, and so I think it's really important for companies that are, that are in that market to understand how important you are to the success and failure of your customers, and you cannot fail them. You absolutely cannot fail them, and then there's traditional banks that have operated in this, and there are some amazing ones. Again, that I send people to all the time, and if I think we're not the right bank …

AI assessment note: “depending on what kind of company you are and what you need, any of those players”