The Exchanges

Q What's the most painful lesson that you're also pleased to have gone through?

A You know, when, um, we almost sold my previous company, Plaid, to Visa, um, at a pretty good time in the market back in 2020. And it ended up getting blocked by the Department of Justice for antitrust issues. It's kind of like the first part of that phase. Um, I think it was super painful and I, I, you know, there's some pros and cons for it not to get through, but I think what you realize is that things can still happen even if they aren't correct or rational and the government is in the end of the decision maker. And that changes a lot of ways how you think about life and how you think about product building. Right. As you have to view, I think government and stuff like this as a static entity, that's probably not going to change. And I think you need to build with that knowledge in the back of your head. And I think that was a good, it was a really good lesson for me. Right. Is I don't think it was fair. I don't think it was correct, but it doesn't, my opinion doesn't matter is, you know, the government is a decision maker at the end of the day.

AI assessment note: “we almost sold my previous company, Plaid, to Visa... blocked by the Department of Justice”

Q It is great to finally do this. Now, I want to start with a little bit of context. We see Plaid. We now have Column. How did you make your way into the world of startups? And what was that aha moment for you with Column most recently?

A You know, I probably have a slightly less traditional than a lot of people who maybe start companies, you know? So I grew up on a farm out here in central California and I grew up building everything, right? So, you know, welding with my grandpa, building buildings with my dad. I always just liked building. I was probably less of like the, uh, the, the mathlete, the mathlete child genius, kind of more of the, uh, more, more of the tinker and the builder. And then going up, going to college, started programming. It was kind of the only, I don't know, like socially acceptable way to build things. Um, you know, Can't really do construction or welding in college. And so, and so started programming and realized pretty quickly that I wanted to just do something. And so sort of building a bunch of fun side projects with my best friend, Zach. Um, and we ended up starting plaid, which is a pretty large financial infrastructure company these days together my senior year in college. Um, and, and kind of throughout that process, you know, we, you know, are pretty large. You get a chance to work with a lot of financial institutions, a lot of kind of FinTechs. Pretty much anybody building in financial services in the U.S. is some way associated with Plaid. And so I got to see this market at a very intricate level. And, and it went, and I realized pretty quickly that there's actually this mas…

AI assessment note: “realized actually is you can drive a huge amount of value if you actually jump in”

Q I always say speed of execution is everything. Help me out, understand why I'm wrong. Why is actually building slowly more advantageous?

A Depends what industry you're in, but I think being thoughtful up front, I think actually takes a little bit more willpower because you have so much pressure on top of you. I think we all say here, like I've, I've been, I've been bred in Financial services and infrastructure software and stuff like that. We have hundreds of thousands of people relying on you. And so actually pushing out features every single day doesn't really move the needle. Pushing out the right ones the right way is much more of a, um, an exponential move. I don't know if you're, if you're, you know, be real or you're a photo sharing app that's like on the bleeding edge and you have Instagram right on your back. Yeah, maybe that's a different execution strategy, but I think you have to understand where you are in the market and what level of execution you need to deliver at and at what pace.

AI assessment note: “Pushing out the right ones the right way is much more of a, um, an exponential move.”

Q So sorry, just so I like understand, when you say we could do 90 to 95% of what people expect and want from crypto, kind of by innovating on the protocol layer, what, what does that actually look like in reality? I'm sorry, it sounds, you could be a VC almost. Sounds incredibly intelligent, but I'm like, huh.

A Let's take something like, um, let's take something like, you know, inter-day, twenty-four-seven payments, right? Something that people always talk about, right? A lot of what people like about Ethereum, right, is you can set it 24 seven, three 65, uh, you can set it at, like, relatively low cost, and so you can settle with all these intermediaries. You know what? You can actually do that on top of the Fed, right? A lot of this, like, hey, I can't send a wire past four p.m., that has nothing to do with when you can actually send a wire at the Fed. It's all about when the bank is open for you to send that wire. And so you start to kind of look at all these tropes that people complain about, and you realize that actually that's the implementation by the bank. The underlying thing is actually quite strong. So as we think about, you know, proof of, you know, proof of verification reserves, as you think about intermediaries, you think about counterparts, you think about faster payments, all of that stuff you can do. People like it in crypto, but you can also do it inside the US financial system, which I think is something people really miss. You can't do it right now With a lot of the banks. That's a flaw at the banks, not a flaw at the financial system.

AI assessment note: “Let's take something like, you know, inter-day, twenty-four-seven payments, right?”

Q Can I ask you bluntly? And this is probably a very stupid question. Why does everyone do it outside of the regulatory perimeter versus inside? Is it purely a pain of regulation and cost of setup?

A It's a pretty multifaceted question. I'll try to give you like the high level. I think Silicon Valley really isn't set up. To build regulated businesses. So what we had to do is we actually went out and we personally bought a financial institution. We bought an OCC regulated bank out here in California. And if you think about the investment you have to put up front and then the time you have to spend to actually, you do something that's pretty long, you know, we've been doing this for almost three years and we will do this for many, many more years before we kind of get that hockey stick growth, because it'd be in a regulated space. It by design moves a lot slower, and it has way more upfront build. It's not really a market that, you know, I could have started when I was 21 with Zach, right? Two kids in a garage who are really smart engineers, which Silicon Valley does very well with, they can't really build this. It's just not really structurally set up to do that.

AI assessment note: “It by design moves a lot slower, and it has way more upfront build.”

Q you spend your time on. I think one thing we certainly idealize in Silicon Valley is kind of the hero founder and the hero leader. My first question there is, you know, with that in mind, you know, performance as a leader is pretty much everything. How do you think about high performance today? Having led huge teams and plan to great success, what does high performance mean to you?

A Yeah, I think I probably have a somewhat nuanced answer to this. I think You know, being, being able to be quiet, grinding and building in the shadows and be okay, not being recognized, I think is the highest sort of high performance. You know, the first time around, we knew when you first start building out, like you want to be famous. Maybe you want to be noticed. You want to get invited to the cool parties. You want to make a ton of money. And so you think kind of like playing the angle to get that, that gives you validation that you're working at the highest level. But over time you start to realize it's actually like, what are the biggest orders of success, right? It's like, how long can you grind? How, and how quietly can you do this for as long as possible without external recognition? Any company of value takes at least 10 plus years to realize. And so it's all about how long can you do that? And can you do that in the shadows? And I think the people that are able to do that, to be able to do that quietly and be very focused with Without that external recognition, they are operating at the highest, highest level, and they are the ones that are the most successful over time.

AI assessment note: “being able to be quiet, grinding and building in the shadows”

Q that I think a lot of people love to hear and it's helpful, you know, it's an employee owned and, you know, you've obviously invested a huge amount into this business. When you think about kind of wealth planning for yourself, how did you structure your personal portfolio construction? You know, you've got cash, uh, property, you've got directs, funds. How did you think about the right construction for you?

A Yeah, it's an area that I'll, I'll be very candid. I'm not like uber thoughtful in. I think I'm a, I'm engineered by train and I'm relatively single focused. I like to go deep in one thing. I think my ability to go broad in a lot of things is relative And I'm not an asset manager, and I'm not an investor. I, I'm good at, I think I'm good. I hope I'm good at building companies. And so, 99.9% of my wealth is in platinum column. That's kind of it. You know, I've done some stuff and, you know, invested in, you know, great funds like yourself, a little bit on the edges, but I'd say that is very much the, the, um, the long tail, not the majority. And so, I probably don't think about portfolio construction. I think, can't believe I did too much. If I thought about that too much, I probably would have taken that money and throw it all in some like structured credit vehicles and made like, I don't know, compounding eight percent or something. And that would make more money than investing in Comm over five to 10 year period. However, I think investing in yourself, as you think about from a 10, 20, 3040 year perspective, that's probably going to be the highest IRR can do, even if it means you're probably gonna, you know, have way more risk. And I think from a five to 10 year horizon, It's probably not going to be as successful.

AI assessment note: “99.9% of my wealth is in platinum column. That's kind of it.”

Q only available or possible to a certain type of founder or people because of the success before. Do you know what I mean? Um, I have to ask, in terms of like, that was change. In terms of the same, what really worked? And you were like, you know what, I've got to carry it across. This is, this is really important and worked well. Anything there that was important?

A Yeah, I'll give kind of like a trite answer, but I think it is, it is important. I think at Plaid, what my co-founder I think is excellent at the exact, and like we had a really good philosophy on this, is you have to be very patient on hiring, and you have to be willing to deal with a huge amount of pain, even if it hurts your business. And so one of the things that we had like a very clear ethos at Plaid was around like, we are gonna rate until we would get to that A candidate. Maybe it would take 12 months, maybe it would take 24 months, who knows, but we're gonna put everybody through a lot of pain, In short term, hurt the business because we're gonna wait for the right candidate. And everybody talks about it, but 99% of companies in Silicon Valley, they don't do it, right? They, they don't wait for the great candidate. And having that just exceedingly high bar, something I think I applauded excellently. And I think we have definitely, you know, tried my damnedest to do that at a column as well.

AI assessment note: “tried my damnedest to do that at a column as well”

Q So when you think about like comparing Plaid and comparing Column, like, what did you decide to do very differently this time other than the funding? Obviously with Plaid you took venture funding, like, and here you didn't. Like, are there any other things that you were like, I really want to do it differently this time?

A Yeah, there is. So I think if you look at a lot of the most successful companies in Silicon Valley, they are, I'll put this nicely. They are abstractions around complexity. So if you look at Stripe or if you look at Twilio or you look at plaid or something like that, right? What are they, they like identify this big problem. They're like, Hey, look at all these systems. They suck. It's really hard to use. We're going to write an abstraction on top of this. And then we're going to make it really easy to use said system, right? This is a huge amount of Silicon Valley starts because it's a great market, um, because you can start it with relatively limited capital. If you're just like a smart first principles thinker, good engineer, it's a relatively approachable problem set. However, what it doesn't totally do is it doesn't totally fix like the stomach issues, right? Sometimes what you're doing is you are putting a little bit lipstick on the pig. And I think what we get to do the second time, right? We're doing a column is we're saying, actually, let's go all the ways down. Let's go like all the ways down below all the turtles and say, Hey, what's at that very bottom. And you actually get a build from that bare metals. And so you don't have to worry about kind of abstracting all the complexity. You get to push all the complexity away. And go all the way to the bottom. That's reall…

AI assessment note: “what we get to do the second time, right? We're doing a column is we're saying, actually, let's go all the ways down.”

Q Do you think that these, um, potential incumbents of the future, do you think that they will be able to acquire given the tightening regulatory environment around competition? And I think we're going to see a real constriction in terms of the amount of acquisitions that happen of these niche providers. Do you think that they will be able to consolidate in the way that you kind of discussed?

A Yeah, I think it's probably less consolidation from an M&A perspective. I do agree with you. I think, um, Acquiring is probably gonna be much more challenging over the next 10 years. And so I think you'll probably see these people just build more in-house, right? It's kind of why I exist is, you know, a lot of my sales pitch is like, hey, financial services can be a commodity service. Like, build on top of us, you're gonna build this regulatory perimeter, and you can offer this service cheaper, better, faster, stronger to your consumer, and it can ten-x your revenue, right? Like, that pitch is, I think, quite compelling, and I think you will see that trend more. I think it will be less of a Roll up, you know, there's three people that dominate industry and it's gonna go to two to one. I think the FTC and the DOJ, especially if, you know, the, the, the executive branch stays where it is, I think that will kind of, you know, diminish for good or for bad.

AI assessment note: “Acquiring is probably gonna be much more challenging over the next 10 years.”

Q Can I ask you bluntly? And this is probably a very stupid question. Why does everyone do it outside of the regulatory perimeter versus inside? Is it purely a pain of regulation and cost of setup?

A It's a pretty multifaceted question. I'll try to give you like the high level. I think Silicon Valley really isn't set up. To build regulated businesses. So what we had to do is we actually went out and we personally bought a financial institution. We bought an OCC regulated bank out here in California. And if you think about the investment you have to put up front and then the time you have to spend to actually, you do something that's pretty long, you know, we've been doing this for almost three years and we will do this for many, many more years before we kind of get that hockey stick growth, because it'd be in a regulated space. It by design moves a lot slower, and it has way more upfront build. It's not really a market that, you know, I could have started when I was 21 with Zach, right? Two kids in a garage who are really smart engineers, which Silicon Valley does very well with, they can't really build this. It's just not really structurally set up to do that.

AI assessment note: “Silicon Valley really isn't set up. To build regulated businesses.”

Q I always say speed of execution is everything. Help me out, understand why I'm wrong. Why is actually building slowly more advantageous?

A Depends what industry you're in, but I think being thoughtful up front, I think actually takes a little bit more willpower because you have so much pressure on top of you. I think we all say here, like I've, I've been, I've been bred in Financial services and infrastructure software and stuff like that. We have hundreds of thousands of people relying on you. And so actually pushing out features every single day doesn't really move the needle. Pushing out the right ones the right way is much more of a, um, an exponential move. I don't know if you're, if you're, you know, be real or you're a photo sharing app that's like on the bleeding edge and you have Instagram right on your back. Yeah, maybe that's a different execution strategy, but I think you have to understand where you are in the market and what level of execution you need to deliver at and at what pace.

AI assessment note: “Pushing out the right ones the right way is much more of an exponential move.”

Q So sorry, just so I like understand, when you say we could do 90 to 95% of what people expect and want from crypto, kind of by innovating on the protocol layer, what, what does that actually look like in reality? I'm sorry, it sounds, you could be a VC almost. Sounds incredibly intelligent, but I'm like, huh.

A Let's take something like, um, let's take something like, you know, inter-day, twenty-four-seven payments, right? Something that people always talk about, right? A lot of what people like about Ethereum, right, is you can set it 24 seven, three 65, uh, you can set it at, like, relatively low cost, and so you can settle with all these intermediaries. You know what? You can actually do that on top of the Fed, right? A lot of this, like, hey, I can't send a wire past four p.m., that has nothing to do with when you can actually send a wire at the Fed. It's all about when the bank is open for you to send that wire. And so you start to kind of look at all these tropes that people complain about, and you realize that actually that's the implementation by the bank. The underlying thing is actually quite strong. So as we think about, you know, proof of, you know, proof of verification reserves, as you think about intermediaries, you think about counterparts, you think about faster payments, all of that stuff you can do. People like it in crypto, but you can also do it inside the US financial system, which I think is something people really miss. You can't do it right now With a lot of the banks. That's a flaw at the banks, not a flaw at the financial system.

AI assessment note: “You know what? You can actually do that on top of the Fed”

Q It takes a very egoless person to not need that external validation. How do you think about your relationship with your own ego, and how has it changed from starting Plaid with Zach many years ago to today?

A Yeah, I think everybody's vain, right? And so anybody that tells you that they don't need that, myself or otherwise, they're lying to your face, right? Everybody, everybody craves that. And so I think it's just about, you know, how do you balance that? I mean, it's ironic that I'm sitting here saying that like on your podcast, right? But, and so, you know, we'll take that at face value. But I do think over time, when I've seen the people around me that I think make the biggest difference, and I've honestly accumulated the The most amount of capital. They aren't necessarily the ones that are going to be on the front cover of Fortune or the front cover of Forbes or the ones that are, you know, getting invited to the coolest parties. They're probably doing stuff that you don't really understand. That's kind of complex. It's really boring. It's behind the shadows. And I think those are the ones that I try to follow. I'm, I'm far from perfect. And I definitely, you know, we all need some level of external recognition, but idealizing them Over the ones that maybe, you know, everybody else does is something that I've really had to force myself over time to do.

AI assessment note: “idealizing them Over the ones that maybe, you know, everybody else does is something”

Q Identity. I tie my identity to my company. It's very much me and who I am, which is why I hate going on holiday because you're suddenly detached from your identity. And it's like, who, who the fuck am I and what the fuck am I going to do? How do you think about like your own identity and detaching it from what you do in your company?

A That's a, it's a very deep question. I think it's something that I think, honestly, it's probably one of my superpowers. I think I'm actually, um, um, quite good at, you know, I stepped away from Platt at its very, very peak to start something that was very high risk and, um, and much smaller. And all people are like, oh my gosh, how, why? And I think I've had a couple benefits. One is I've had this really strong group of friends that I've had way before I was successful. And we still are all, they're all still my best friends. I think a lot of people only hang out with Founders or people that are kind of at like their economic caliber or whatnot. And the moment you do that, really, you start to build your identity and your self-worth around wealth, fame, brand, your company. And those things are super ephemeral. What they also do is if you're so focused on keeping that, you're never going to take the big risks. But if you have a base that you can really fall back on and that kind of loves you and your friends with you, you hang out with, Irrespective of kind of who you are to the outside world. I think that makes you way more secure and it actually enables you to take much bigger swings.

AI assessment note: “I've had this really strong group of friends that I've had way before”

Q about changes in your leadership, I think one of the big ones to me was when I started my own fund, and I was kind of like, oh, shit, I've got to grow up, um, and like, like, really, it's on me now. Were there, like, specific one or two moments where you're like, wow, I really had to change as a leader and as a person with this event?

A I think leadership is probably, I think it's probably slightly more linear than like step stone. And so I don't think that as a leader, I'm like fundamentally different than I was two years ago. I think it's probably more of a gradual increase as you mature, get older, have more experiences. I think more so what's been a change for that leadership style is I think at column compared to plaid, you know, plaid very, very successful, has a lot of money. It was started kind of, and ran in the boom. And I think we're in a different world right now, and we're completely self-funded and employee-owned. So I think we work in a world of constrained resources. And so I think having a leadership style where you have much more constrained resources, when you have much more resources is very, very different. You have to be, right, slightly more ruthless, a little bit more pragmatic. I think you have to focus on delegating a lot more. So I think there's a lot of kind of nuances But I think it's probably more towards that resources issue necessarily as just like, hey, it's a second company or something like that.

AI assessment note: “I think leadership is probably, I think it's probably slightly more linear than like step stone”

Q So when you think about like comparing Plaid and comparing Column, like, what did you decide to do very differently this time other than the funding? Obviously with Plaid you took venture funding, like, and here you didn't. Like, are there any other things that you were like, I really want to do it differently this time?

A Yeah, there is. So I think if you look at a lot of the most successful companies in Silicon Valley, they are, I'll put this nicely. They are abstractions around complexity. So if you look at Stripe or if you look at Twilio or you look at plaid or something like that, right? What are they, they like identify this big problem. They're like, Hey, look at all these systems. They suck. It's really hard to use. We're going to write an abstraction on top of this. And then we're going to make it really easy to use said system, right? This is a huge amount of Silicon Valley starts because it's a great market, um, because you can start it with relatively limited capital. If you're just like a smart first principles thinker, good engineer, it's a relatively approachable problem set. However, what it doesn't totally do is it doesn't totally fix like the stomach issues, right? Sometimes what you're doing is you are putting a little bit lipstick on the pig. And I think what we get to do the second time, right? We're doing a column is we're saying, actually, let's go all the ways down. Let's go like all the ways down below all the turtles and say, Hey, what's at that very bottom. And you actually get a build from that bare metals. And so you don't have to worry about kind of abstracting all the complexity. You get to push all the complexity away. And go all the way to the bottom. That's reall…

AI assessment note: “what we get to do the second time... is we're saying, actually, let's go all the ways down”

Q point is they are the one percent. And if you think about scaling a company to 500 plus people. The very definition of 500 plus people is not one percent. Like it, and so at some point you have to have B team players or C team players even. And so I guess my question is like, do you think it's possible to maintain such high standards at true scale?

A Well, it depends, right? I think most companies shouldn't be 500 person companies, right? I think as we're learning and have learned that most companies that are over a thousand people, you can probably do the same damn thing with a hundred people. And so they got probably pushed back on the premise that like, you need that many people to solve a lot of the problems we're solving today. But I do understand your point, which is like, you know, as you get to a point, you know, not everybody's going to want to be like the top one percenters aren't going to want to be employed like 1200. And so I think that you just kind of have to be very introspective on yourself and say like, Hey, I need soldiers and generals. Like, is this role? Do I need a soldier or do I need that? And yeah, like not every, not every role needs that a plus player. Sometimes it's actually the opposite, right? If you get an a plus player and they're in a role, they're not going to be super happy. They want to move quickly. You can have attrition risk or they want new responsibilities in nine months or something like that. So sometimes it's actually better. To have that B player that's in it for the long period of time. But I think, especially in the early days, you do need a lot of those A's, and a lot of times we fool ourselves in thinking that, hey, the person right in front of me is one of those, and they're…

AI assessment note: “not every role needs that a plus player. Sometimes it's actually the opposite”

Q And a final one, I promise you, um, you said there about kind of vertical specialists, like you mentioned Procola, which is a brilliant kind of vertical specialist. Do you think we'll see that over Apple have long suggested taught and had kind of financial ambitions over the aspirational, beautiful brands, which consumers resonate with?

A Well, I'd say Apple is actually like the original vertical specialist, right? Is what do they know? They knew consumers really well. One of the reasons that Microsoft, I think, is always troubled in the consumers. Microsoft knows enterprise well. Apple knows consumers well. I think Apple just happens to have the largest vertical play out there. There's kind of a reason, right? Like you don't see a lot of Apple products in the enterprise, right? You don't see Apple servers or something like that, right? They don't really know that market. They know the consumer market super well. And so, you know, they happen to play in the largest vertical, but I kind of view Apple as a specialized player, just like Procore is just like Appfolio is or something like that.

AI assessment note: “Apple is actually like the original vertical specialist”

Q company and move to the space. The one thing that just struck me when I hear about kind of your patience and willingness to wait, it's hard sometimes to imbue that with employees who want to see milestones, who want to see growth, who want to see momentum. How do you imbue that patience and willingness to wait in a team that is naturally ambitious and wants to see progress?

A Yeah, I think it's a great question. I think the one thing is we don't hire a lot of new grads. Like, I think the youngest people on our team are like, 26, 27, and the average age is over 30. And I think that's probably less so by design. I think it's more outside of, like, self-selection. I think after you see a couple companies boom and bust, you start to recognize that coming out of the gate too strong can actually be a potential negative, and actually real value is created over a longer period of time. And I think you start to realize that probably in your mid to late twenties. Um, but also, you know, we probably, there's probably some self selection. I think we're a very specific type of company. We focus a lot on size. I think we focus a lot on, Hey, we're going to do things the right way over a longer period of time. And that really, really resonates for a category of people. And that really does not resonate for a category of people as well. And so I think, you know, Over time, we've been lucky. We have found amazing people and we have a phenomenal team. Um, but you know, it's, it's not for everybody.

AI assessment note: “after you see a couple companies boom and bust, you start to recognize”

Q And so just so I'm What's the problem? The problem is the fees that the intermediaries bring, because actually the process of moving money, I, I don't know, for me, it's not a problem. Um, I move quite a lot of money. Um, like, so what, what is the problem? Is it the fees? Is it the time to move money? Why is this a problem?

A Yeah, I think it's a, it's a great question. So I think one, it's around how developers build. I think we are going to get innovation in financial services. Both in the US or the EU, Pakistan or wherever, because people are going to want to build new companies and financial services, and you do that by lowering the barrier to entry. However, anytime you build in financial services, you have to build on top of the bank. And to do this right now, it takes nine, 1218 months. It's extremely painful. It's extremely expensive. And you can only probably ship 10% of the products that you want, right? That inhibits a huge amount of growth and innovation. And so what happens is there's two things that happen, right? People just raise a bunch of money and deal with the pain. Or what do they do? They build outside the regulatory perimeter. They go build crypto exchanges in the Bahamas. They go build crypto exchanges in China, and they go work outside the regulatory perimeter and end up causing a lot of consumer harm. And they end up kind of blowing out because they're building outside the regulatory perimeter. And I think what we're saying actually is there's actually a nice middle ground, which is we can be a bank. We can be that regular entity. We can make sure everybody's building a very safe and sound way. But you also get to move super quickly. You could have great developer infrastru…

AI assessment note: “it takes nine, 1218 months. It's extremely painful. It's extremely expensive.”

Q I've got two questions for you. One is, what do you think is the difference between people who are able to make a niche product superior, but then transition out into a much more broad services play with many different products? What's the difference between a niche product that delivers superior like service and sells to one of these big brands and big platforms versus one that becomes one itself?

A Yeah, it's a good question. I think, you know, one of the things that I believe is that technology, both technology and financial services are becoming increasingly commoditized. And so building software is cheaper and easier than it's ever been. And so what's most important is to have an audience and to know that customer. And if you have a lock on that customer and you know them, you have a relationship with them and you know how they make decisions, You are best set up for success long-term because whether you're offering them financial services or you're building them a SaaS app or something like that, those things have become commoditized and they are cheap. And so that is the most valuable. I think I'm slightly more bearish on the people that like, Hey, I have this broad portfolio of products and I'm going to go sell this to a broad portfolio of audiences. The people that know their audience know their swim lane and do really well. Those are the people that I think we're going to win over the next 10 to 20 years.

AI assessment note: “what's most important is to have an audience and to know that customer”

Q they're only human. I get you, but I kind of don't like, you know, the family and the friends and they provide security to allow you to take the big swings. Yeah, but so does the wealth, bluntly. Like, I take bigger swings now. How do you think about your relationship to money? And, and especially, how do you think about the relationship between money and risk, and risk appetite?

A Yeah, no, I think it's a good question, right? I, I think I'm able to kind of take a bigger second swing because I've had validation and the first company before like a hundred percent have to be intellectually honest there. Um, I think what enables you to do is I think enables you to buy time and work on things that have a much, um, maybe longer shelf life that can, the, the, the reward in the return is a little bit more elongated. Cause I, I think, you know, far from, you know, far from, far from liquid, but I think wealth, it does enable you to, you know, hey, maybe take some time. I can work on a problem without having that like sense of urgency of like, hey, I need a job right now. I need to feed my family or something like that. In that, the kind of intensity in that fear, I think definitely drives much more need for immediacy. And when you remove that, you just be more thoughtful over time.

AI assessment note: “I think what enables you to do is I think enables you to buy time”

Q I do want to ask, kind of forward looking, and then we'll do a quick fire. Let's project ourselves 10 years out. Like, pretty unfair thing to do. Um, but like, how will the next 10 years for fintech look different to the prior 10 years, do you think?

A So, one of the things that I do know is the, the financial brands that we think of are, are changing. And we talked about this a little bit before, but the idea of these large banks that are going to service a consumer Creator DeGrave, I don't think is going to happen. It's not going to succeed over the long term. I think what tech has taught us over the past 20 years is if you go solve a niche problem and you do it very, very well, you will win in the long term, right? Like Salesforce builds excellent software for enterprises. It's hard to imagine over the long term that they aren't going to be the dominant financial brand selling to enterprises because they know that audience, they know how to build that really, really well. And so I think what's going to happen is.

AI assessment note: “the financial brands that we think of are, are changing”

Q that I think a lot of people love to hear and it's helpful, you know, it's an employee owned and, you know, you've obviously invested a huge amount into this business. When you think about kind of wealth planning for yourself, how did you structure your personal portfolio construction? You know, you've got cash, uh, property, you've got directs, funds. How did you think about the right construction for you?

A Yeah, it's an area that I'll, I'll be very candid. I'm not like uber thoughtful in. I think I'm a, I'm engineered by train and I'm relatively single focused. I like to go deep in one thing. I think my ability to go broad in a lot of things is relative And I'm not an asset manager, and I'm not an investor. I, I'm good at, I think I'm good. I hope I'm good at building companies. And so, 99.9% of my wealth is in platinum column. That's kind of it. You know, I've done some stuff and, you know, invested in, you know, great funds like yourself, a little bit on the edges, but I'd say that is very much the, the, um, the long tail, not the majority. And so, I probably don't think about portfolio construction. I think, can't believe I did too much. If I thought about that too much, I probably would have taken that money and throw it all in some like structured credit vehicles and made like, I don't know, compounding eight percent or something. And that would make more money than investing in Comm over five to 10 year period. However, I think investing in yourself, as you think about from a 10, 20, 3040 year perspective, that's probably going to be the highest IRR can do, even if it means you're probably gonna, you know, have way more risk. And I think from a five to 10 year horizon, It's probably not going to be as successful.

AI assessment note: “99.9% of my wealth is in platinum column. That's kind of it.”

Q And so just so I'm What's the problem? The problem is the fees that the intermediaries bring, because actually the process of moving money, I, I don't know, for me, it's not a problem. Um, I move quite a lot of money. Um, like, so what, what is the problem? Is it the fees? Is it the time to move money? Why is this a problem?

A Yeah, I think it's a, it's a great question. So I think one, it's around how developers build. I think we are going to get innovation in financial services. Both in the US or the EU, Pakistan or wherever, because people are going to want to build new companies and financial services, and you do that by lowering the barrier to entry. However, anytime you build in financial services, you have to build on top of the bank. And to do this right now, it takes nine, 1218 months. It's extremely painful. It's extremely expensive. And you can only probably ship 10% of the products that you want, right? That inhibits a huge amount of growth and innovation. And so what happens is there's two things that happen, right? People just raise a bunch of money and deal with the pain. Or what do they do? They build outside the regulatory perimeter. They go build crypto exchanges in the Bahamas. They go build crypto exchanges in China, and they go work outside the regulatory perimeter and end up causing a lot of consumer harm. And they end up kind of blowing out because they're building outside the regulatory perimeter. And I think what we're saying actually is there's actually a nice middle ground, which is we can be a bank. We can be that regular entity. We can make sure everybody's building a very safe and sound way. But you also get to move super quickly. You could have great developer infrastru…

AI assessment note: “anytime you build in financial services, you have to build on top of the bank.”

Q But just so I get it, the consumer experience problem is then it's an inhibition of product expansion on financial services. Like what, what is the problem for the consumer experience that we're solving?

A So if you think about our business, right, I do not work with consumers. I do not work with businesses. The only people that we work with are people building new financial, financial services, right? So maybe they're building a neobank, maybe they're a vertical software company that wants to offer payments and lending to their customers, right? Maybe it's a big enterprise that wants to do treasury management differently. I don't know what the killer consumer product is, right? 10 years ago, it was, you know, Venmo and Square Cash revolutionized peer-to-peer payments. Chime reinvented, you know, Gen Z. Square Cash and Chime reinvented Gen Z neobanking, right? Wealth management went through big boom, right? There are different sectoral areas that innovate and build in financial services. If I was super smart and I knew what the, like, the next thing was, I'd probably be doing that. The only thing is I know is it will happen. And the trick for me is how do you build that plumbing? How do you build that infrastructure? So the next iteration, they can do that faster, better, and cheaper. Because the moment you lower that barrier to entry, consumers just get way more options and way more flexibility. And also they get to do it in a relatively safe and regulated way. Because when you actually build inside the US financial system, you get a lot of inherent protections. And so it's real…

AI assessment note: “the moment you lower that barrier to entry, consumers just get way more options”

Q It's total shit. Really, the US financial system always makes me laugh. Do you know what I mean? Bizarre. Who's got the best financial system? Which country are you like? Yes, they've done it well.

A I think there's, there's, there's different pieces. And so, you know, the US has a massive, like the US has the dollar, right? Which is probably the strongest implement. And so that probably inherently bar none makes the US the best financial system, but it's really because of our currency. As you think about a lot of the technology, I think China has innovated on the financial system very, very, very quickly, and so I think there's probably a lot of stuff that you can take away from that and we can learn from. I don't think we want the Chinese financial system, but I think you can recognize that they're a part of it that's quite interesting, um, and we could maybe apply it to the US, but I think each country kind of has their own pros and cons.

AI assessment note: “that probably inherently bar none makes the US the best financial system”

Q What do you think happens to Coinbase today? Like, you look at the stock and I'm like, oh, my heart bleeds for Brian, but then I'm like, oh, FTX, my, oh God, poor dude, his week's getting worse. Um, what happens to Coinbase?

A I don't know. I, I hope they do really well, because I think what they have tried to do very well is they've tried to embrace regulation and they've tried to do things the right way. They've tried to do things that are right by the regulators and they're right by consumers. And in many ways they've gotten punished because What's happened is there's been all these other players that do not play by the rules that can move so much quickly and do so much. And so consumers are naturally going to go to that one, like FTX and whatnot. And that's, I think, bad. That's like really scary. And so I think for the health of the U S financial system, for the health of people like me that are trying to innovate and trying to do things in the right way, I hope they do well, because that will be a big determiner. I think a lot of the success in the industry.

AI assessment note: “I don't know. I, I hope they do really well, because”

Q I've got two questions for you. One is, what do you think is the difference between people who are able to make a niche product superior, but then transition out into a much more broad services play with many different products? What's the difference between a niche product that delivers superior like service and sells to one of these big brands and big platforms versus one that becomes one itself?

A Yeah, it's a good question. I think, you know, one of the things that I believe is that technology, both technology and financial services are becoming increasingly commoditized. And so building software is cheaper and easier than it's ever been. And so what's most important is to have an audience and to know that customer. And if you have a lock on that customer and you know them, you have a relationship with them and you know how they make decisions, You are best set up for success long-term because whether you're offering them financial services or you're building them a SaaS app or something like that, those things have become commoditized and they are cheap. And so that is the most valuable. I think I'm slightly more bearish on the people that like, Hey, I have this broad portfolio of products and I'm going to go sell this to a broad portfolio of audiences. The people that know their audience know their swim lane and do really well. Those are the people that I think we're going to win over the next 10 to 20 years.

AI assessment note: “what's most important is to have an audience and to know that customer”