The Exchanges

Q I mean, it is astonishing to see that 40%, but I do want to dive straight into it, because you kind of mentioned there the origins of the core offering today with ClearBank, but what type of business, Michelle, does this work for versus maybe not work for in your mind?

A Yeah, this works for anyone who Has positive unit economics and is spending a lot on customer acquisition, which I think, you know, the first natural vertical is any e-commerce company. I mean, you look at the big e-commerce brands, they were spending 70, 80, 90% of their dollars on customer acquisition. You know, the second place this works for is consumer apps, where you're acquiring a consumer to get a download, and then, you know, someone's buying a subscription off that. Subscription boxes fit that. I mean, even the repeatable parts of B to B SaaS companies really fit that as well. And so, you know, I think about if you are spending, you know, Money on Facebook and Google ads. We can fund that for way cheaper than equity can, and ultimately that means that founders will be able to keep way more of their companies by the time they go public.

AI assessment note: “this works for anyone who Has positive unit economics and is spending a lot on customer acquisition”

Q very best of both worlds with that segmented ad spend through ClearBank. I do have to ask, because the other element is it's almost egotistical. And in some cases, you know, we often see the unicorn celebrations when companies raise these mega rounds. When you chatted before, you said that we need to stop Stop celebrating funding. So why do you think we need to stop celebrating funding rounds, Michelle?

A It's not about celebrating funding rounds. It's actually celebrating founders giving up a piece of their company, often a very large piece, 20 to 30% around, and giving up control of their companies. And I think that there's been a big difference that not a lot of people are talking about. You know, the founders of Lyft went public, and they owned three and a half percent of Lyft, an incredible success story by any metric, and an incredible service. You know, when Microsoft went public, Bill Gates owned half of that company, and you can see the extraordinary impact that that wealth had on the non-for-profit world and all sorts of things going forward, but I want to live in a world where founders can own more of their company. That's when we know that we've made it, and so that's, I think, why, you know, if you look at where this capital is being spent, it's really, really important, and it doesn't mean no VC. It just means, how do we get founders to take less solution? Back to your question, and so I think that what's happened is that we are just Celebrating when founders are giving up control or they're giving up pieces of their company. And I think there are way better milestones to celebrate. Launching new products, getting a critical user traction, hitting your millionth user. Like that is what the tech press should be celebrating. I think that what this became is it doesn'…

AI assessment note: “It's actually celebrating founders giving up a piece of their company”

Q very best of both worlds with that segmented ad spend through ClearBank. I do have to ask, because the other element is it's almost egotistical. And in some cases, you know, we often see the unicorn celebrations when companies raise these mega rounds. When you chatted before, you said that we need to stop Stop celebrating funding. So why do you think we need to stop celebrating funding rounds, Michelle?

A It's not about celebrating funding rounds. It's actually celebrating founders giving up a piece of their company, often a very large piece, 20 to 30% around, and giving up control of their companies. And I think that there's been a big difference that not a lot of people are talking about. You know, the founders of Lyft went public, and they owned three and a half percent of Lyft, an incredible success story by any metric, and an incredible service. You know, when Microsoft went public, Bill Gates owned half of that company, and you can see the extraordinary impact that that wealth had on the non-for-profit world and all sorts of things going forward, but I want to live in a world where founders can own more of their company. That's when we know that we've made it, and so that's, I think, why, you know, if you look at where this capital is being spent, it's really, really important, and it doesn't mean no VC. It just means, how do we get founders to take less solution? Back to your question, and so I think that what's happened is that we are just Celebrating when founders are giving up control or they're giving up pieces of their company. And I think there are way better milestones to celebrate. Launching new products, getting a critical user traction, hitting your millionth user. Like that is what the tech press should be celebrating. I think that what this became is it doesn'…

AI assessment note: “It's actually celebrating founders giving up a piece of their company”

Q love to talk about geographic distribution, maybe of current funding. I'm sure you've seen some incredible data points from the time already with ClearBank. So in terms of the decentralization of entrepreneurs, Entrepreneurship and maybe a lack of in terms of funding. What have been some of the big learnings on distribution of venture dollars for you having seen that with the process with ClearBank over the last few years?

A Yeah, it's a great question. You know, the way that, look, I think great founders come from everywhere. It's one of these careers that if you have, you know, the right set of ambition and drive, it shouldn't matter where you come from. And I look at the challenges of the world as something like climate change, where, um, Governments have put a trillion dollars to work, if not more, to try and solve these problems. And it's effectively going to be one or two entrepreneurs that are going to build cars and trucks we want to drive that will have the biggest impact on that problem. And so if you take the view that founders are the ones that fundamentally change the world for the better, we have to be able to find them in more places than just Silicon Valley and New York. And so one of the interesting stats that I read recently in Bloomberg was last year, California, New York, Massachusetts, and Texas. And there was actually nine states in America where there was zero dollars in venture funding. There was no companies that got venture funding. So the logical conclusion of that is certainly that there was not nine states in America that had no entrepreneur. It's that there was nine states where VCs truly had no reach into that. And so I think that became one of the incredible side effects of ClearBank is that we built everything through data science and AI. You know, you plug into you…

AI assessment note: “there was nine states in America where there was zero dollars in venture funding”

Q public that is owned by the founder ultimately, but I have to ask, the thing that I see more and more today when I invest is that actually there's kind of extreme volatility of ad performance on these channels, and they reach these saturation rates and suddenly cash flows. So how do you think about the volatility of CACs over time when lending on what seems predictable, but maybe isn't?

A Yeah, there's no question that our data science team has to be very good. I mean, this is a business where I make, you know, six percent when we put out our money, and so we don't have the luxury of a VC fund where you're picking lottery tickets, and one company can really carry a A bunch of losses. And so we do a lot of work to make sure that your unit economics are profitable. We do a lot of work to understand how saturated your audience sizes are. And we do a lot of monitoring actually, even on a daily basis to make sure that if things are changing, we can, you know, help founders react quickly to that because certainly we've seen big changes. You know, we started in 2015. We've seen big changes in, in the Facebook and Instagram and all of these platforms. And there's lots of creative ways for founders to solve those problems if they're kind of front and center.

AI assessment note: “we do a lot of work to understand how saturated your audience sizes are”

Q I mean, it is astonishing to see that 40%, but I do want to dive straight into it, because you kind of mentioned there the origins of the core offering today with ClearBank, but what type of business, Michelle, does this work for versus maybe not work for in your mind?

A Yeah, this works for anyone who Has positive unit economics and is spending a lot on customer acquisition, which I think, you know, the first natural vertical is any e-commerce company. I mean, you look at the big e-commerce brands, they were spending 70, 80, 90% of their dollars on customer acquisition. You know, the second place this works for is consumer apps, where you're acquiring a consumer to get a download, and then, you know, someone's buying a subscription off that. Subscription boxes fit that. I mean, even the repeatable parts of B to B SaaS companies really fit that as well. And so, you know, I think about if you are spending, you know, Money on Facebook and Google ads. We can fund that for way cheaper than equity can, and ultimately that means that founders will be able to keep way more of their companies by the time they go public.

AI assessment note: “works for anyone who Has positive unit economics and is spending a lot on customer acquisition”

Q I would love, though, to kick off with a little bit about you. We've got Dragon's Den, we've got multiple successful companies, and now ClearBank. So I want to know, and a little bit different to a lot of episodes, but I want to know, what was the first spark of entrepreneurship for you? And then second, what was that real founding moment for your creating ClearBank?

A Yeah, for sure. So I have a totally different story. I mean, I was engineering, started a little sustainable coffee shop on campus, and started brainstorming with a bunch of friends. By the time I had graduated, I figured out that worldwide supply of sturgeon caviar, of all things, So I was crazy enough to move to the East coast and build a fishery from scratch. This is the most unchecked thing. It's everything. It sounds like boats, fishermen, my hands need to fish the whole nine yards. And our thesis was correct. Chefs couldn't get the product. So we had a ton of buyers, but unfortunately then went to a giant recession in 2008. And I'm 21 years old in the luxury goods space being like, I'm not going to make it. So from there, I ended up going to become the director of strategy at a big retailer. Saw e-commerce blow up, and in 2010, started an e-commerce company called Bytopia. We couldn't or didn't raise any money, became one of the fastest growing companies in Canada just through low-cost user acquisition, and then over the next five years, bought 10 of our competitors. And the only difference between us and the companies we were buying is that we had been able to control our cost of user acquisition, which kind of became a big theme in building ClearBank. From there, I built another app called SnapSaves, That digitized coupons for the consumer packaged goods space. So our c…

AI assessment note: “started a little sustainable coffee shop on campus, and started brainstorming”

Q public that is owned by the founder ultimately, but I have to ask, the thing that I see more and more today when I invest is that actually there's kind of extreme volatility of ad performance on these channels, and they reach these saturation rates and suddenly cash flows. So how do you think about the volatility of CACs over time when lending on what seems predictable, but maybe isn't?

A Yeah, there's no question that our data science team has to be very good. I mean, this is a business where I make, you know, six percent when we put out our money, and so we don't have the luxury of a VC fund where you're picking lottery tickets, and one company can really carry a A bunch of losses. And so we do a lot of work to make sure that your unit economics are profitable. We do a lot of work to understand how saturated your audience sizes are. And we do a lot of monitoring actually, even on a daily basis to make sure that if things are changing, we can, you know, help founders react quickly to that because certainly we've seen big changes. You know, we started in 2015. We've seen big changes in, in the Facebook and Instagram and all of these platforms. And there's lots of creative ways for founders to solve those problems if they're kind of front and center.

AI assessment note: “We do a lot of monitoring actually, even on a daily basis to make sure”

Q Can I ask a really personal one, and it's unfair because it's off schedule, so I am apologizing in advance for this. You mentioned when you were 21 the Sturgeon business. How did you respond to that? You know, you were an incredibly young entrepreneur, and maybe it didn't work out. How did you respond to that?

A It was so important because I had been a good student in school, and I needed that early setback to realize that, you know, the world owes me nothing, and that I was just going to have to be creative in the way I came out of that, and I remember You know, the embarrassment of seeing all my friends at parties and like, how is the business going? And not having the heart to be like, oh my gosh, it's a disaster. And I don't know how to say this. And I think that that was really important. I mean, I can remember, you know, another really personal moment early in my career is we had an e-commerce store, had a problem with a merchant and, you know, we're told by kind of the early payment processors that we had inadvertently signed a personal guarantee when we signed it for payment processing. And I remember the total fear going through my mind. When I was like, okay, so we've done a million dollars of processing. I have 10,000 dollars in my bank accounts. If these guys are asking me for this money, like I'm going to have to declare bankruptcy. Like I'm just not going to make it. And it was a lot of those early experiences that inspired me to build better products for founders because the catch-all has just been put a personal guarantee on something and then the bank is covered. But I believe that data tells us way more than that story. And so I think ClearBank was, was about building…

AI assessment note: “I needed that early setback to realize that, you know, the world owes me nothing”

Q Can I ask a really personal one, and it's unfair because it's off schedule, so I am apologizing in advance for this. You mentioned when you were 21 the Sturgeon business. How did you respond to that? You know, you were an incredibly young entrepreneur, and maybe it didn't work out. How did you respond to that?

A It was so important because I had been a good student in school, and I needed that early setback to realize that, you know, the world owes me nothing, and that I was just going to have to be creative in the way I came out of that, and I remember You know, the embarrassment of seeing all my friends at parties and like, how is the business going? And not having the heart to be like, oh my gosh, it's a disaster. And I don't know how to say this. And I think that that was really important. I mean, I can remember, you know, another really personal moment early in my career is we had an e-commerce store, had a problem with a merchant and, you know, we're told by kind of the early payment processors that we had inadvertently signed a personal guarantee when we signed it for payment processing. And I remember the total fear going through my mind. When I was like, okay, so we've done a million dollars of processing. I have 10,000 dollars in my bank accounts. If these guys are asking me for this money, like I'm going to have to declare bankruptcy. Like I'm just not going to make it. And it was a lot of those early experiences that inspired me to build better products for founders because the catch-all has just been put a personal guarantee on something and then the bank is covered. But I believe that data tells us way more than that story. And so I think ClearBank was, was about building…

AI assessment note: “I needed that early setback to realize that, you know, the world owes me nothing”

Q love to talk about geographic distribution, maybe of current funding. I'm sure you've seen some incredible data points from the time already with ClearBank. So in terms of the decentralization of entrepreneurs, Entrepreneurship and maybe a lack of in terms of funding. What have been some of the big learnings on distribution of venture dollars for you having seen that with the process with ClearBank over the last few years?

A Yeah, it's a great question. You know, the way that, look, I think great founders come from everywhere. It's one of these careers that if you have, you know, the right set of ambition and drive, it shouldn't matter where you come from. And I look at the challenges of the world as something like climate change, where, um, Governments have put a trillion dollars to work, if not more, to try and solve these problems. And it's effectively going to be one or two entrepreneurs that are going to build cars and trucks we want to drive that will have the biggest impact on that problem. And so if you take the view that founders are the ones that fundamentally change the world for the better, we have to be able to find them in more places than just Silicon Valley and New York. And so one of the interesting stats that I read recently in Bloomberg was last year, California, New York, Massachusetts, and Texas. And there was actually nine states in America where there was zero dollars in venture funding. There was no companies that got venture funding. So the logical conclusion of that is certainly that there was not nine states in America that had no entrepreneur. It's that there was nine states where VCs truly had no reach into that. And so I think that became one of the incredible side effects of ClearBank is that we built everything through data science and AI. You know, you plug into you…

AI assessment note: “nine states in America where there was zero dollars in venture funding”

Q I would love, though, to kick off with a little bit about you. We've got Dragon's Den, we've got multiple successful companies, and now ClearBank. So I want to know, and a little bit different to a lot of episodes, but I want to know, what was the first spark of entrepreneurship for you? And then second, what was that real founding moment for your creating ClearBank?

A Yeah, for sure. So I have a totally different story. I mean, I was engineering, started a little sustainable coffee shop on campus, and started brainstorming with a bunch of friends. By the time I had graduated, I figured out that worldwide supply of sturgeon caviar, of all things, So I was crazy enough to move to the East coast and build a fishery from scratch. This is the most unchecked thing. It's everything. It sounds like boats, fishermen, my hands need to fish the whole nine yards. And our thesis was correct. Chefs couldn't get the product. So we had a ton of buyers, but unfortunately then went to a giant recession in 2008. And I'm 21 years old in the luxury goods space being like, I'm not going to make it. So from there, I ended up going to become the director of strategy at a big retailer. Saw e-commerce blow up, and in 2010, started an e-commerce company called Bytopia. We couldn't or didn't raise any money, became one of the fastest growing companies in Canada just through low-cost user acquisition, and then over the next five years, bought 10 of our competitors. And the only difference between us and the companies we were buying is that we had been able to control our cost of user acquisition, which kind of became a big theme in building ClearBank. From there, I built another app called SnapSaves, That digitized coupons for the consumer packaged goods space. So our c…

AI assessment note: “started a little sustainable coffee shop on campus”