The Exchanges

Q Johan, what risks were you underwriting when you did the deal? When you were analyzing this, what were you like, these are the question marks we have, which we are not sure about yet.

A Market looked great, but is it really there? Uh, do you have to steal customers from somebody else or can you get into new generation of savers that will join the platform at scale? Can you build an international product that goes across and can work in other countries than Germany, which is, this is a difficult is because it's regulated as tax driven in many countries, et cetera. Will payment for order flow be sustainable in Europe over the long term? If it's, if it's in the medium term, it will be okay for the company, because we will always find revenue sources. How can we get a satisfied Buffin, which is one of the toughest, um, you know, FSA's, um, bank authorities in Europe, and they just had Wirecard, which wasn't a great Uh, incident and, and how can, how can, how can you build, uh, you know, sufficient structure and team in order to, to make sure that you operate under the regulation? Of course it's financial services. It's savings. It's about trust. So those were the things that we thought about the, the, the most we saw very little. I mean, we, we, we love the team and the people that hired and came around and we'd love the product. Uh, but those were the things we thought about. And of course, I would say also, how do you efficiently acquire customers? CACLTV is of course a very important subject, but we can come to that later, uh, because everything went better tha…

AI assessment note: “So those were the things that we thought about the, the, the most”

Q You mentioned that, like, E-Trades, Johan, and like, when you know an industry so well, it's so easy to think that, actually, oh, I know everything, and that's, like, not a good industry, or you have these preconceived ideas. Did you have preconceived ideas when you first met Christian?

A Well, actually, I did. Uh, that story is kind of interesting. I didn't have preconceived ideas when I met Christian, When I met Christian, I fell in love with him and his team and what they were doing, but my colleague came to me one evening in, in, in March, nine, 2019 and said, we have this opportunity to look at a Robin Hood of Germany. Do you want to take a look? No, I said, and, and, uh, and that was a, that was, so I said to myself, this is, this has been around for 25 years. I've done this before. Nothing has happened. Uh, Robin Hood is coming and Germans, they don't save anything else, but in the mattresses. And, um, and then I woke up the next day and I said, Hey, maybe there is something there. Why don't we, why don't we take a call with, with the team? And I did, and the rest is history, and, uh, I can come back to that later, but, uh, so I did have a preconceived idea.

AI assessment note: “Well, actually, I did... so I did have a preconceived idea.”

Q Johan, what risks were you underwriting when you did the deal? When you were analyzing this, what were you like, these are the question marks we have, which we are not sure about yet.

A Market looked great, but is it really there? Uh, do you have to steal customers from somebody else or can you get into new generation of savers that will join the platform at scale? Can you build an international product that goes across and can work in other countries than Germany, which is, this is a difficult is because it's regulated as tax driven in many countries, et cetera. Will payment for order flow be sustainable in Europe over the long term? If it's, if it's in the medium term, it will be okay for the company, because we will always find revenue sources. How can we get a satisfied Buffin, which is one of the toughest, um, you know, FSA's, um, bank authorities in Europe, and they just had Wirecard, which wasn't a great Uh, incident and, and how can, how can, how can you build, uh, you know, sufficient structure and team in order to, to make sure that you operate under the regulation? Of course it's financial services. It's savings. It's about trust. So those were the things that we thought about the, the, the most we saw very little. I mean, we, we, we love the team and the people that hired and came around and we'd love the product. Uh, but those were the things we thought about. And of course, I would say also, how do you efficiently acquire customers? CACLTV is of course a very important subject, but we can come to that later, uh, because everything went better tha…

AI assessment note: “Will payment for order flow be sustainable in Europe over the long term?”

Q You mentioned that, like, E-Trades, Johan, and like, when you know an industry so well, it's so easy to think that, actually, oh, I know everything, and that's, like, not a good industry, or you have these preconceived ideas. Did you have preconceived ideas when you first met Christian?

A Well, actually, I did. Uh, that story is kind of interesting. I didn't have preconceived ideas when I met Christian, When I met Christian, I fell in love with him and his team and what they were doing, but my colleague came to me one evening in, in, in March, nine, 2019 and said, we have this opportunity to look at a Robin Hood of Germany. Do you want to take a look? No, I said, and, and, uh, and that was a, that was, so I said to myself, this is, this has been around for 25 years. I've done this before. Nothing has happened. Uh, Robin Hood is coming and Germans, they don't save anything else, but in the mattresses. And, um, and then I woke up the next day and I said, Hey, maybe there is something there. Why don't we, why don't we take a call with, with the team? And I did, and the rest is history, and, uh, I can come back to that later, but, uh, so I did have a preconceived idea.

AI assessment note: “Well, actually, I did. Uh, that story is kind of interesting.”

Q There is, but is there a generation of, like, really, really great founders, enough to supply that capital?

A Absolutely, and I think it's just about time. We're seeing all these new companies coming out, we're seeing new unicorns, they're coming from 65 cities, you know, 10 years ago, they came from three cities coming all over Europe, much bigger market, remote working, can put teams together that we couldn't see before. I think the one thing that we're missing is exit markets. I mean, still, the, the, the, many of the, of the companies go to the US market for IPOs, etc. I think that that's something that we, that we, that we need more. But I mean, it's, hey, the US ecosystem is 60 years old. We are, you know, maybe at 20. We just need some more time. The ingredients are there. I'm, I'm, I'm really bullish. I'm a bit, I'm a bit, uh, um, drinking my own Kool-Aid, but I'm, I'm fine with that.

AI assessment note: “Absolutely, and I think it's just about time. We're seeing all these new companies”

Q How do the best founders manage a board, Johan? You've worked with some of the best outside of Trade Republic as well as with Christian. How do the best managers manage a board and how would you advise them if they were listening to this?

A I think it's hard to, I think Christian asked me every time, every, after every board meeting, how was this board meeting? What should we have done better? And it's always something to do, but I think the key points are to, um, decide on what are the two or three points I want out of this meeting. And make pre-reads around that comprehensive so that when the board starts, you have enough information provided to everybody that you can actually have a fruitful discussion on two to three points and make a decision on them. That's hard to do, but I think that's would be my, my, my primary recommendation. Make sure you decide what you want to discuss and make ample preparation for those subjects. And then I would say, uh, making sure that the, um, that you, that you, Prioritize time in a way that you have time to discuss and make sure that you don't fall into the trap of a lot of reporting and fact checking, et cetera, but rather focus on those subjects.

AI assessment note: “decide on what are the two or three points I want out of this meeting”

Q There is, but is there a generation of, like, really, really great founders, enough to supply that capital?

A Absolutely, and I think it's just about time. We're seeing all these new companies coming out, we're seeing new unicorns, they're coming from 65 cities, you know, 10 years ago, they came from three cities coming all over Europe, much bigger market, remote working, can put teams together that we couldn't see before. I think the one thing that we're missing is exit markets. I mean, still, the, the, the, many of the, of the companies go to the US market for IPOs, etc. I think that that's something that we, that we, that we need more. But I mean, it's, hey, the US ecosystem is 60 years old. We are, you know, maybe at 20. We just need some more time. The ingredients are there. I'm, I'm, I'm really bullish. I'm a bit, I'm a bit, uh, um, drinking my own Kool-Aid, but I'm, I'm fine with that.

AI assessment note: “Absolutely, and I think it's just about time. We're seeing all these new companies”

Q Okay. 600,000 euros and then 75% of the company. What happens then? Because that seems like quite a broken cap table that's almost in some, I mean, Johan, obviously as both venture investors are like, oh,

A Yeah, but you know, this is, so what happened was, I took that call with Christian and Thomas that morning afterwards, and I was just, then, then they had refined their pitch to world class, I must say. It was one of the best pitches I ever saw. But more importantly, they had built a full stack and they've thought about every single banking detail to be able to scale this business and have, keep to have low transaction costs, et cetera, all the things that you want if this is to scale. And then we flew down and met them in Berlin and said, Hey, there might be a situation. First of all, they build a great product. They have some, you know, a thousand, a couple of customers are very early, but they're engaging a lot in the app. So they show all the right trends and engagement metrics. And more importantly, I think we realized that, hey, maybe there's a shift in time now. Maybe there's a transition with a new generation of savers. They are going to have to mind to save the pensions. So we realized that. And then we fell in love with everything that we saw, the team, the product, et cetera. And of course we looked at the cap table and say, Jesus, how are we going to, to, to, to, to manage this? And of course, I mean, Um, in the end of the day, you, you, you want to make sure that you invest in a, in every, everything as, as good as possible cap table. And of course, going from, fro…

AI assessment note: “we had several meetings with, um, the, the seed investor”

Q How do the best founders manage a board, Johan? You've worked with some of the best outside of Trade Republic as well as with Christian. How do the best managers manage a board and how would you advise them if they were listening to this?

A I think it's hard to, I think Christian asked me every time, every, after every board meeting, how was this board meeting? What should we have done better? And it's always something to do, but I think the key points are to, um, decide on what are the two or three points I want out of this meeting. And make pre-reads around that comprehensive so that when the board starts, you have enough information provided to everybody that you can actually have a fruitful discussion on two to three points and make a decision on them. That's hard to do, but I think that's would be my, my, my primary recommendation. Make sure you decide what you want to discuss and make ample preparation for those subjects. And then I would say, uh, making sure that the, um, that you, that you, Prioritize time in a way that you have time to discuss and make sure that you don't fall into the trap of a lot of reporting and fact checking, et cetera, but rather focus on those subjects.

AI assessment note: “decide on what are the two or three points I want out of this meeting”

Q Tough question for you to finish before the quick fire, Johan. When we, we mentioned kind of the reserves pricing earlier and kind of that never being a question, there are sometimes misalignments between venture investors and founders. What do you think from your, you know, many years in venture now, Are the biggest misalignments between founders and VCs that we should just acknowledge more?

A Maybe first time founders that haven't, um, made, uh, any money yet, and they come to a situation where, uh, do you have a BOC round at a nice valuation and the paper, paper gain of these founders or Healthy and they haven't taken much off the table. I think that's a sensitive question for many investors that why do you want to sell now? What's the story? Something we don't know, et cetera. But I think what, what investors can really do is be proactive in this matter and making sure that there is an opportunity for founders at some point to get some exit and liquidity, um, and in order to be able to swing the whole way. And I think that's, that's something that, uh, we think Some, some investors think is, is, is pretty difficult to understand, but I think as investors we have a duty to do that.

AI assessment note: “a sensitive question for many investors that why do you want to sell now”

Q Can I ask you, you know, there's some U S venture investors in particular, you know, Reid Hoffman, who says, you know, raise as much as you can, when you can, how do you think about that? Raise as much as you can versus the more disciplined approach to this is how much we need. And this is why we're raising it.

A Well, that's a difficult conversation, right? Because founders want to want to raise sufficient capital, have minimum dilution. And, and at the same time too, they get the advice that you shouldn't get, you know, Too roughly on valuation because it's hard to, to grow into it. The truth is somewhere in between, but I think at the pace where you have a business model that works business unit, business unit economics that works and you have money on the table that you can get some extra cushion and everything else works. Why not take that little extra money, uh, to be able to execute on a rainy day? Uh, now, if you can do that on valuations, that's, that's okay. Why not? So I think it's, it's not so easy to just say, uh, be careful about valuation, just raise the amount that you need. I think there is some merit to, to raising when you can.

AI assessment note: “I think there is some merit to, to raising when you can.”

Q Tough question for you to finish before the quick fire, Johan. When we, we mentioned kind of the reserves pricing earlier and kind of that never being a question, there are sometimes misalignments between venture investors and founders. What do you think from your, you know, many years in venture now, Are the biggest misalignments between founders and VCs that we should just acknowledge more?

A Maybe first time founders that haven't, um, made, uh, any money yet, and they come to a situation where, uh, do you have a BOC round at a nice valuation and the paper, paper gain of these founders or Healthy and they haven't taken much off the table. I think that's a sensitive question for many investors that why do you want to sell now? What's the story? Something we don't know, et cetera. But I think what, what investors can really do is be proactive in this matter and making sure that there is an opportunity for founders at some point to get some exit and liquidity, um, and in order to be able to swing the whole way. And I think that's, that's something that, uh, we think Some, some investors think is, is, is pretty difficult to understand, but I think as investors we have a duty to do that.

AI assessment note: “first time founders that haven't made any money yet and they haven't taken much off”

Q Can I ask you, you know, there's some U S venture investors in particular, you know, Reid Hoffman, who says, you know, raise as much as you can, when you can, how do you think about that? Raise as much as you can versus the more disciplined approach to this is how much we need. And this is why we're raising it.

A Well, that's a difficult conversation, right? Because founders want to want to raise sufficient capital, have minimum dilution. And, and at the same time too, they get the advice that you shouldn't get, you know, Too roughly on valuation because it's hard to, to grow into it. The truth is somewhere in between, but I think at the pace where you have a business model that works business unit, business unit economics that works and you have money on the table that you can get some extra cushion and everything else works. Why not take that little extra money, uh, to be able to execute on a rainy day? Uh, now, if you can do that on valuations, that's, that's okay. Why not? So I think it's, it's not so easy to just say, uh, be careful about valuation, just raise the amount that you need. I think there is some merit to, to raising when you can.

AI assessment note: “The truth is somewhere in between... there is some merit to, to raising when you can.”

Q think about, like, building the billion dollar business in that way so aggressively, and it was kind of the next thing, the next thing, but then investors want to hear the billion dollar, the pitch that makes it, you know, a huge outcome for everyone involved. How do you advise founders pitching between this is how we accumulate value sustainably versus pitching the big vision? And what do you prefer?

A I think you've got to have some kind of vision in there. Um, but I, I, I, I like better realistic founders than, than, than exuberating founders. So, um, uh, so I, but it needs, it needs to be a part of the vision there. And I think one of the conversations I, you know, Christian will ban me on this, but he says, you asked me so many times with how I can become a billion dollar company. And, um, and, uh, I actually, I think I did, but it was, it was, that was the most challenging Thing, right? How do you make the equation? Germans don't save too much in equity instruments. Uh, Payment for water flow, how's that going to be sustained, uh, et cetera, et cetera. So that was, that was one of the biggest questions.

AI assessment note: “I like better realistic founders than, than, than exuberating founders”

Q Okay. 600,000 euros and then 75% of the company. What happens then? Because that seems like quite a broken cap table that's almost in some, I mean, Johan, obviously as both venture investors are like, oh,

A Yeah, but you know, this is, so what happened was, I took that call with Christian and Thomas that morning afterwards, and I was just, then, then they had refined their pitch to world class, I must say. It was one of the best pitches I ever saw. But more importantly, they had built a full stack and they've thought about every single banking detail to be able to scale this business and have, keep to have low transaction costs, et cetera, all the things that you want if this is to scale. And then we flew down and met them in Berlin and said, Hey, there might be a situation. First of all, they build a great product. They have some, you know, a thousand, a couple of customers are very early, but they're engaging a lot in the app. So they show all the right trends and engagement metrics. And more importantly, I think we realized that, hey, maybe there's a shift in time now. Maybe there's a transition with a new generation of savers. They are going to have to mind to save the pensions. So we realized that. And then we fell in love with everything that we saw, the team, the product, et cetera. And of course we looked at the cap table and say, Jesus, how are we going to, to, to, to, to manage this? And of course, I mean, Um, in the end of the day, you, you, you want to make sure that you invest in a, in every, everything as, as good as possible cap table. And of course, going from, fro…

AI assessment note: “we had several meetings with, um, the, the seed investor and, uh, explaining”

Q think about, like, building the billion dollar business in that way so aggressively, and it was kind of the next thing, the next thing, but then investors want to hear the billion dollar, the pitch that makes it, you know, a huge outcome for everyone involved. How do you advise founders pitching between this is how we accumulate value sustainably versus pitching the big vision? And what do you prefer?

A I think you've got to have some kind of vision in there. Um, but I, I, I, I like better realistic founders than, than, than exuberating founders. So, um, uh, so I, but it needs, it needs to be a part of the vision there. And I think one of the conversations I, you know, Christian will ban me on this, but he says, you asked me so many times with how I can become a billion dollar company. And, um, and, uh, I actually, I think I did, but it was, it was, that was the most challenging Thing, right? How do you make the equation? Germans don't save too much in equity instruments. Uh, Payment for water flow, how's that going to be sustained, uh, et cetera, et cetera. So that was, that was one of the biggest questions.

AI assessment note: “I like better realistic founders than, than, than exuberating founders.”