In this episode of Fintech Thought Leaders, QED's Head of Early Stage Investments Bill Cilluffo speaks with Partner, Head of UK & Europe, Yusuf Özdalga.
In this episode of Fintech Thought Leaders, QED's Head of Early Stage Investments Bill Cilluffo speaks with Partner, Head of UK & Europe, Yusuf Özdalga.
You're listening to the FinTech Thought Leaders podcast from QED Investors. You're deep dive into the world of venture capital and financial services with today's digital disruptors. Qed is a global venture capital firm focused on investing in FinTech companies all the way from pre-seed to IPO. Fintech Thought Leaders brings together the most talented entrepreneurs tackling today's biggest problems. If you're looking to learn more about what motivates our founders and team members to succeed, you're in the right place. Hello and welcome to the FinTech Thought Leaders podcast. I'm Bill Salufo, head of early stage investments at QED Investors. Today on the podcast, I'm very excited to be joined by colleague and QED's head of Europe, yusuf Azdalga Yusuf. Welcome to the podcast.
Speaker 2:Thanks, bill, thanks for having me.
Speaker 1:Yeah, it's awesome to have you on. We've known each other for a very long time, going back to your college days in Virginia at UVA, but I wonder if you can share with our listeners a high level overview of your journey, on how you eventually came to QED.
Speaker 2:And a different way to say it is you're my first boss at Capital One and very instrumental in my career, as I'm clearly working for the same person. I'm more than 20 years later, which is great.
Speaker 1:Don't say that, yusuf. It makes a sound old. I'm scared.
Speaker 2:I know Time goes by very fast and we're still building FinTech businesses, which is good. Yeah, I was at UVA and I wanted to study a few different things. I was even thinking between economics and math as a double major, or finance and MIS as a double in the business school and the economics department wasn't top notch at UVA back then I will not comment about it today and neither was the math versus the business school was quite highly rated. So I joined the Mac entire school of commerce, which is just a small plug for that and I did a finance MIS dual degree. So for me there was a combination of money and technology, combining both. My dad always likes to joke that he asked me when I was like four years old what I want to be when I grow up and I said I don't know, but something that has to do with money. And I guess I added computers to that and did this finance MIS thing.
Speaker 1:So you're doing FinTech back in college already.
Speaker 2:Exactly it wasn't a term, as you know. But sure enough that dual degree put me in the gravitational pull of capital one because I graduated in 97 again reference to our age that goes by here, but Katwan's IPO is 94. And they were recruiting quite heavily on the UVA campus in addition to a lot of the Ivy League schools on the East Coast and West Coast. So joined in 97. I think the interview process started in 96. And I was meant to join as an intern in the summer of 96. It didn't happen but I was fortunate enough, I'd say, to join as a faculty. I had a full time in 97 working with Bill Salufa.
Speaker 1:Excellent. You were at Capital One for a time and went to business school and had an interesting path post business school as well. I wonder if you can share a little bit of your career path into investing.
Speaker 2:Yeah, absolutely so. You know, my years at Capital One were transformative. I thought about going to investment banking out of college actually out of UVA but when I realized as an analyst at an investment bank there's a good amount of groundwork versus at Capital One, you get a lot of experience and get to build businesses and do real decisions and all that kind of stuff, I chose Capital One. It turned out to be a great, great choice. We had more responsibility at that age and at that stage than I think I would ever get or anybody else out of college should get, so that was an amazing experience. As the years went by, though, capital One started becoming more and more like a bank. In those years, in the late 90s, it was a bit more like a scale up startup and it started becoming more bank. Like I said, you know, maybe I want to reconsider my options, do something else, and also I want to be close to Europe, where my family lives Swedish, turkish by background so I said let me do an MBA at Chicago. I actually had an uncompete with Capital One, so, again, fortunate enough that my salary was paid in the second year, so enabled me to get a free business school education at the University of Chicago, or not free but paid for by Capital One, and then from there I joined JP Morgan's FIGM&A team, where Capital One actually became our first client.
Speaker 2:And those days were different days for Capital One. They actually had an MOU with the Fed, as you well remember, and they ended up agreeing to having to buy a bank, and so we worked on that deal, which ended up becoming the hiberny acquisition, and then, with JP Morgan again to get close to my family came to London. Eventually I wanted to move into a career investing, so that was something that was always fascinating for me, and I got an offer from Lehman's principal investing team to join them. So I did that. I think the year was 2006. So very interesting timing to be joining Lehman, turns out.
Speaker 2:But those years, I mean, were transformative in many ways. I was on a desk which consisted of structured loan traders and securitization people and I was the only one who had FIGM&A and business building experience. So when they saw loan platforms they sort of scratched their head and said how do we buy these? How do we build these? How do we value these? We just care about the loans they spit out. So sort of that part was my job to value them and help build them.
Speaker 1:That's fantastic, and you've already alluded to this. You've lived in many different countries over the years Sweden, turkey, us, uk. I know you're in Dubai for a little while before coming back to the UK. How has all this international experience really adapted your view and helped round you as an investor today?
Speaker 2:So my mom is Swedish, my dad is Turkish. I was born in Sweden but grew up in both countries. I always joke that my mom tried to mess me up by taking me back and forth between the two countries constantly, and she succeeded splendidly in creating that outcome. No, but joking aside, I think it's been transformative. Sweden and Turkey, I would say, are on the opposite sides of the European spectrum, and being part of two very different cultures has given me a great perspective in life.
Speaker 2:Not to take anything for granted People may have very different views across the aisle always forces me to think that the way you do things shouldn't be taken for granted. There's a very different way to do the same thing in a different circumstance. So I think it's been very beneficial. And then, to add to all this, as I said, I came to the US for college very transformative and loved American culture at a great time there, with college, business school, working at Capital One, and then came to London. So, when you all added up, I've now lived in six different countries and, I think, 11 different cities and looking forward to settle in London now, god willing, but in the meantime it's been a good experience.
Speaker 1:Yeah, so in preparing for the podcast we had a chance to interview Portman Wills, co-founder of Waystream. That's a company both of us spend quite a lot of time with and he says you have very strong views on what the optimal number of passports are. Love to hear about this, yeah.
Speaker 2:I mean, I think the optimum number is very difficult to answer, but I think having many different ones is good. I'm very biased in me saying that probably shouldn't come as a surprise to anyone, but I mean, having looked at how the world evolves and starting a business or doing any other thing, having optionality is good and having different passports give you optionality. I think more than one is one way to answer that question. Portman should know he has two, so he came from Silicon Valley to help set up Waystream as a co-founder with Peter here in London and him having a UK passport helped in that process. And I believe his kids had passports as well. So having more than one is good. There's a lot of forces in the world today that are a bit more protectionist anti-immigrants, whatever you want to call it but I think open borders, more people moving around, can only be a good thing.
Speaker 1:Well, a little bit of a family story on our end. We lived in Toronto for five years and want to become a permanent residence of Canada. Back at the time and my daughter, when she was applying to college, wrote her college essay on how mad she was at us that we never were able to take that last step and get her a Canadian passport. We're stuck at one. She desperately wishes she had multiple, but hopefully it'll all work out. Yusuf, I know you have a lot of interests. We're going to spend most of today talking about investing, but I think it's fair to say that you're a bit of a history buff in that you have a number of talking points around the economics of finance and business cycles. She talked about studying some finance back in college, but how did she develop this love of history and finance and the connection of the two?
Speaker 2:I did think about studying economics and some of the good classes I took were economic history, so that was actually a big part leading into it. And the other thing was, believe it or not, inflation. So growing up in Sweden and Turkey, I saw a very stable country in Sweden where you would go to the same shoe store a year after a year and it would be the same people working in that same shoe store. And then on the other extreme you had Turkey, where the shoe store itself may not be there and you had inflation sometimes of 140%. So that made me really think like what are the historical circumstances that create such different outcomes in different societies and what exactly leads to inflation and why can't they keep it stable and what prevents that? So the historical context of that always interested me and my interest in history really comes from a very large extent from my interest in sort of economic outcomes and wealth distribution outcomes.
Speaker 2:You know I went to Sweden. I was quite young when I first came to the US in 86. It was just for a summer, but I was there for four months and seeing these vastly different economic outcomes in different societies with older pluses and minuses in their own ways was really interesting and trying to understand the really big, deep, macro forces that drive this has been interesting. And then you start on peeling that onion and you find very interesting things. You think why did the First World originate in Sarajevo, in Bosnia? And you realize, well, you look at, you know where the Roman Empire split up and how that continued with the Byzantine Empire and then later the Ottoman Empire, and how were those empires rubbing up against each other. So you know, before the war started you had the Austro-Hungarian Empire, the Russian and Ottoman empires, all sort of grinding against each other. There you realize those big historical forces have a huge impact in the lives of us average people trying to, you know, make a living, if you will.
Speaker 1:What a timely topic. We're sitting here less than a week after, you know, the latest conflict in Israel and Gaza has taken place, and there's a part of the world where it goes back thousands and thousands of years. You know, and understanding what's going on requires a tremendous amount of historical context. So ironic that you're diving into that topic as we sit here recording today. One of the things that sets QED apart is that most of our team members have been former operators, whether at Capital One or other companies or entrepreneurs. We talked a little bit about kind of your corporate journey from Capital One to JPM to layman, but I know that you've also got a kind of parallel entrepreneurial journey of a number of things that you've done in the past. I wonder if you could share a little bit of that with our listeners.
Speaker 2:The Lehman experience was formative. I was in this principal investing team that was basically investing in anything securitizable, a lot of which were mortgages. I used to joke that the front row seats to the financial crisis. Now I have modified it to say I was actually an actor on the stage a very, very small one and I don't want to take any blame for it and that was a tough time. I mean, when I joined that Lehman team I think there's 150 people in the team their P&L of those people in terms of how much money they made, was mind staggering. I will not share it here, but the sort of crisis started coming, wave after wave, in late 2006 onwards, and it was always one thing after the other, and by the time those two years were done, right before the bankruptcy, there was just 25 people in that team out of 150. And then sort of the collapse happened and the GFC, as we all know. So we can have a whole podcast on that if you want. Sometimes it's a lot of learnings.
Speaker 2:I was left with a sense of just wanting to do something more positive after that experience, which was quite taxing mentally, and I said, whatever I'm going to do, it's not going to be fintech or finance or mortgages, and it's probably not going to be in London, which is where I was with Lehman. So I decided to build a business and I decided that Turkey was a good place for that, so moved back to Turkey, set up a business in the sort of agro food space. We did a few sort of pivots and tried a few different things, but where we ended very fast was logistics for cold storage chains. So there's some EU funds available by which you could actually build a cold storage facilities very cheap and there's a huge gap in the market where the existing quality of stock was terrible. And once you build these cold storage facilities, you can rent them at a pretty high yield in the high teens. It's close to zero credit risk, because if somebody doesn't pay, you have the fruit as collateral.
Speaker 2:So built that business and I was just talking about it to someone else actually didn't take VC money as I did that. It was me and my business partner. I set it up to tend to be a little conservative and maybe that's not the best trait for an entrepreneur, but I set it up such that a year into it there would be a decision point where I would either go all in, sell all my properties and put all my net worth into the business or basically find a way to exit it. And going a year into it and I realized the dynamics with my business partner was very positive, but their incentives were slightly different than mine. So I said, listen, great, this is probably a good time for me to sell you my shares and I exited it in that way.
Speaker 2:At that point I'd also met my wife. She's Bosnian and she was moving to Turkey and we were getting married. So I thought it's a good time to actually do something non entrepreneurial and went into private equity and the first deal I did was actually in the agro food space in Turkey and that company recently went public, so kind of full circle there. But yeah, so that was the journey. You know the rest bill. So I was doing private equity and then, as a political situation in Turkey started changing and the investment climate turned a bit more sour, and as our kids were growing up, me and my wife decided we wanted to move back to London where I'd lived for a long time, and I gave you a call to see if there would be anything to do operationally in some of the QD portfolio companies and seemed like QD had decided to set up a London office, which turned out to be for Judas timing.
Speaker 1:It was a very well timed phone call, that's, that's for sure. So glad it turned out that way. You've been with QD about six years leading our London office and our European investment business and we've built a really exciting portfolio of companies within Europe. I wonder if you could just take a minute and highlight a couple of the breakout companies that we've been fortunate enough to partner with.
Speaker 2:Incredibly excited about the entire portfolio and we've been very fortunate to have very exciting companies before I joined as well. So prior to me joining we had amazing names like Clarna. We had ClearScore Nigel is still on the board Zopa, where Nigel was also on the board. So we've had an amazing portfolio to build on. You and I did Waitstream as my first deal, as you know, bill, and that's one where we're still both quite involved and super excited about. And then, more recently, wayflyer in Dublin has been a really exciting one. Payhawk, based out of Sofia and the UK but covering Europe and even increasingly looking towards the US, is another exciting company in corporate and expense management space, corporate card and expense management.
Speaker 1:Probably the three largest of the investments that you've made since you've been here, wonder if you could just maybe give a 30 or 60 second view on what each of these companies do and why you're excited.
Speaker 2:So maybe starting with Waitstream, the wage stream does earn wage taxes. They have a very strong number one market position in the UK and basically the idea is quite simple. So if you work for a place like Starbucks or a coffee shop or a pub, or if you're in any way an hourly worker, you have your shifts. So that's one target demographic. But more broadly, zooming back from those kind of everyday workers, half the country, both in the UK and in the US, actually live paycheck to paycheck, and what that means is at the end of the month they have about less than 300 pounds or dollars in their bank account. So financial stress is very high for these people. If something unexpected happens, they will need to find money from their family. If they can't do that, they may have to go to a payday lender. What earned wage access solutions like wage stream enable is that they can actually access their earned wages as a first step before having to go to either family or any other alternative lender, and that's a huge value proposition for these people. It's a unique product where it has benefit, even if people don't use it. Just knowing that they have access to that extra buffer of their already earned wages in case they need money is a huge relief. And then, as we see with wage stream, a lot of the people use it. So, in a nutshell, it's this earned wage access as the first product. But what makes it even more exciting is this concept of they're combining the world of work and the world of banking and basically creating what we call the workplace bank.
Speaker 2:If you go back, you know a propose, your comment of being interested in history. When we look historically, you know people's bank accounts, their bank and their jobs were quite intertwined. Even today in Turkey, many times when people join a new place to work, they open up a bank account with the bank that that employer works with. And this is common in many places across the sort of developing and emerging world. Now in the western world, in US, in UK, that's kind of been modified over the years. So people have their bank account that's totally separate and they have their job that's totally separate. They get a paycheck into that bank account and those worlds don't communicate to each other. Wage stream actually opens up those communication lines and that enables a whole world of innovation that can happen there. So that's just a sort of glimpse into what wage stream can do.
Speaker 1:Wage streams are a really interesting case in that it was our first of several investments in the earn wage access space around the world, something that resonates deeply with me, just in terms of building a business that can be a fantastic business but also adds so much value to consumers in terms of this kind of almost emergency spending account, which is so critical. You mentioned Wayflyer. Can you share a bit of what Wayflyer does?
Speaker 2:Yeah, I mean Wayflyer is revenue based funding and they work exclusively with e-commerce merchants, and for an e-commerce merchant meaning e-commerce, they don't have physical stores and they're selling out there in the whether you call it MetaWare or the Matrix or the Internet, or they sell their goods online. And the challenge is either you can have a really amazing brand, which few of them do, or you could have a very, very dominant position like an Amazon. But most of them need to acquire customers and to do that they end up paying either Google or Facebook usually, but also now increasingly other players as well to acquire those customers, and that marketing spend needs to be financed. And what the innovation that Wayflyer had was twofold. One is we can actually finance that spend and then get paid back via merchant cash advance. Effectively, as you acquire the customer and they buy the goods that you're selling, we can get paid back via deductions from your point of sale.
Speaker 2:And the more I think exciting innovation is they understand, because they themselves are so digital. They understand this e-commerce merchant better, both at a sort of empathy and sort of understanding level, but also from a sort of ingesting their data level. So the example I always use is if a bank goes and tries to lend to an e-commerce merchant, they'll ask for historical statements, the financial statements that, by definition, are already stale by the time they get them. But what Wayflyer can do is they can look at those financial statements and, by the way, they get them via open banking, so they get them much more real time and much more fast. But, more importantly, they can also look at the marketing analytics data, and what they can then know is that what is the ROI on this marketing spend?
Speaker 2:And just to use a theoretic example, if the ROI on the marketing spend is 300% or 250%, they know that maybe the financials from six months ago don't tell the full story, but this particular merchant is selling something that is really resonating with consumers, because the sales are going really well today.
Speaker 2:They can really make a very accurate prediction about the financial state of the company, not just in real time today, but over the next two, three months, which is the cycle during which the financing will sort of pay itself back. And that insight enables them to lend to a lot of customers that others would find it hard to lend to, and they could do that at a pretty low very low, I would say loss rate and very fast in real time. So it's one of those unique examples as win-win-win the merchants win, sort of the banks that finance this operation. They win because the losses are low and the returns are attractive for the banks and the company wins by sort of being the one who still takes this and in the end also consumers win because e-commerce merchants now have more funds, can do more marketing and can bring better and more products to the world.
Speaker 1:Lending exists in both of those places today, you know consumers, if they need an emergency loan, can go to a payday lender, can go to other places. Some of these e-commerce merchants can go to the small business equivalent of those to get super high-priced loans. And one of the reasons those businesses are so hard is that losses tend to be really high and both wage stream and way flyer have developed mechanisms that both use data but then also use kind of the interception of payments as ways of running businesses serving the same need, but with loss rates that are way, way lower. I mean, I know wage stream is in the single-digit basis point. Way flyer might be a little higher than that, but it's a pretty impressive use of data technology and operational process to really reinvent those businesses. You also mentioned payhawk in the expense management space. Just maybe one minute on them, and then I'd love to talk more generally about what you're seeing throughout Europe.
Speaker 2:Payhawk also a very exciting one from the Balkans in Bulgaria. And again going back to historical context, my family the Turkish side of my family's origins is from the Baltan Peninsula as well, so it's the region that's very close to my heart and what they do is corporate cars and expense management. And as you know, bill, we have several big thesis around both expense management and corporate cards being QD and having so much capital-1 DNA going through our veins. Obviously we like cards. So that was a big sell and that was very interesting. And there's a number of interesting players in the card space corporate card space in the US that we thought looked interesting and we thought what is the sort of translation of that into Europe? But I think almost more importantly is this idea of back office automation and CFO tools. As we always say in our sort of thesis-driven meetings where we bat around ideas, some of the biggest companies have come out of that space. If you can automate back office successfully, whether it's CFO tools or otherwise, expense management or otherwise, it's where you can easily build multi-billion companies and it's not one that's obvious necessarily from the get-go, but one that we feel very excited about as a big thesis. So those two things corporate cards and expense management, back office automation came together in Payhog along with a very impressive team.
Speaker 2:So Christo and Boiko were both ecstalletic. And ecstalletic was, I think, the biggest exit in Bulgaria. It was $160 million exit, if I'm not mistaken back in the days and by the standards of those days, there was a really big exit. They came from that ecosystem and they were both very strong product and tech-driven founders, which is something we also like, as you know. And when all that coalesced we thought it was a great occasion to lead their Series A, which we did, and it's been exciting so far, growing really really fast, doing well. Product is delivering really beyond our expectations. Obviously a lot of wood to chop still, but a company we're really excited about. And the other exciting thing about it is it's really pan-European and actually pan-global now, so they're able to sell successfully in multiple, multiple countries and a lot of interesting insights there for other companies that are looking to go cross-border.
Speaker 1:Yeah, I mean it's interesting. You've brought up companies Headquartered in London, dublin, Bulgaria, all of which are serving multiple countries in Europe, all of which are also serving the US. So it's kind of interesting to see these business models that have proven to be able to jump to your graphic boundaries.
Speaker 2:As you know, at Wastream we used to joke that the only one that's gone to the US successfully from London has been the Beatles and everybody else is trying to match it since then. But yeah, you pointed out, we've been lucky that some of our companies we've been able to help and I think that's in large extent thanks to our strong presence in the US and in Europe and sort of the strong communication lines we have between the teams and how we can share our insights.
Speaker 1:You said in London. I would say historically the bulk of our focus has been on the UK, but over the last several years we've started to look more broadly throughout Europe. What are some of the unique kind of opportunities and challenges that you see as you look at the landscape over the next couple of years in Europe?
Speaker 2:Yeah, I mean I think there's a lot of challenges if we decide to think about it. I will not get into the global political macro too much Obviously, a lot of sad developments that we're seeing and we can only hope for peace across all of Europe in the very near future, whether it's in the Middle East or it's in Russia and Ukraine. We just hope that innocent people stop dying. I think there's no better way to say it other than that it's super, super tragic and really depressing to see that. So that macro backdrop is really worrisome and I think there's nothing worse than a war or terrorism or whatever form of conflict where innocent people die. So finding solutions to all those conflicts and all the other ones across the globe but speaking about Europe, those two are really paramount Fast is really the key. We can only pray for peace and do what we can. So I think that's one sort of negative and worrisome trend and there are some other sort of worrisome trends that go along with that and that could include, like the rise of sort of very hard right politics and other things. But I think there's a lot of things to be optimistic about. I think the EU has withstood the shock of Brexit quite well and the EU is now talking about expanding again. Brexit was a bit of a sort of unexpected event in the UK, but UK is still very vibrant and shows that it can be successful and thrive outside of EU. So I think that points to a sort of different path to success. Eu can be very successful, uk can be very successful without being within the formal block, and innovation can be strong, and I think there's a lot of regulatory sort of innovations happening in the UK as well, as Europe, especially the FCA in the UK, is constantly innovating. Open banking was one of those almost a decade or, if not more ago now, and that's been, in some cases you would say, copied, but in many cases improved upon in other places in the world, like Brazil and India, as we know really well from our investments in those GEOs. So that's exciting in Europe. I think the VC ecosystem is just that day one here in Europe. It's so much more to go. It's growing very fast. There's now founders that have had multiple exits, they're setting up funds, they're setting up new companies. The ecosystem is only getting richer, whether it's AI or all these new technologies. All that is really transforming the system here across Europe. So I think those are the things to be excited about.
Speaker 2:I think there's a few things as an investor we got to be mindful of, and that is basically thinking about the right course for the right course, if you will. So a company coming out of Bulgaria or Ireland is very different from a company coming out of Germany or the UK. So I think there's all these different filters we put, one of which is the domestic market really big. That's interesting, because if your domestic market is small, it's going to force you to be more export minded and globally oriented in your vision. If you're in a bigger market, like France, uk, germany, etc. There's a temptation to say local. That could be fine, but then you have to assess is that market big enough? And in many cases, certainly by far it is. These are some of the biggest economies in the world. So those are some of the things to keep in mind. So some things to worry about, many things to be excited about, and then just a lot of learnings we've gathered here over the, I think, 15 plus years we've been investing in Europe.
Speaker 1:Obviously, one part of this is the macro in which countries and how's their outlook. Another is just kind of what industry are folks in? Are there a couple industry verticals that you're particularly interested in right now, or you're seeing a particular amount of activity as you and the team are out hunting.
Speaker 2:I think international payments and FX related plays is very interesting to pick one. London, from a capital markets point of view, is a FX foreign exchange clearing hub and we do think that very exciting companies will come out of that in the future from London. Obviously it's a huge market and there are some very big players and, depending on where you play in the market, there could be a lot of sort of competition from the incumbents. But then there's a lot of interesting gaps. I think if you look at even from an enterprise company all the way down to an SME, how companies solve their FX problems is far from optimal. I mean I can just give you QED as one example, bill, where you think about how much foreign investing we do and how much FX exposure we have and then how much we think about hedging that on the other hand and we've had a lot of internal conversations about it, obviously but so that's just one example where I think there's a big space for somebody to come and basically innovate on how companies consume hedging and FX solutions. So that's one interesting area.
Speaker 2:Embedded FinTech is one we talk about a lot, as you know, and I think that we're just starting the journey on embedded FinTech. The example we always use is Uber, with their drivers really transform mobility. But a big part of the transformation is you could just sort of close the door gently, not slam it and leave the car, and the payment just happened in an embedded, invisible manner. And that revolution is just starting. Whether you think about travel payments, insurance payments, how those payments become smarter and how that gets orchestrated and feels like invisible and magical to the consumer, a lot of companies will be created there.
Speaker 1:Great example and again, you know, as we're, as we're covering the whole landscape of a continent. Obviously we talked to companies and just about every sector within fintech, but I didn't give in time and there's always a couple that stand out in terms of having lots of activity. Clearly, as we're making investments, a big part of the decision is based on what is the business, what are they building, what's the space they're in. But the founder and founding team are also, you know it's very central in that effort. You know, I wonder if you can describe kind of what you look for in a founder and how you think about sort of the founder versus the business model and Kind of evaluate both of those.
Speaker 2:So, starting with the latter question first, I think this idea of the right course for the right course is super important. As we said, we apply that to ourselves Right. So as investors, we try to invest in areas where we the right investor for that, meaning we know the space. Can we help the founder and I think the same applies to founders Is this the right founder for this idea? The big challenge maybe go to market and then you may think about how the sales team and the sales function is built up differently. The other one may be very engineering and product driven, and then you think about how the founders Stack up in those areas and if they have the right skill sets across the leadership team to tackle that. Some businesses that need to be built will have some sort of temptations to spend a lot, but actually the right answer is to be very scrappy. So then you look at the founder and think is this person going to be very scrappy and not get tempted by Capital that may get thrown at them from other investors? So I think doing that fit is very, very important.
Speaker 2:Going to your first question, I think building any business is incredibly difficult and the odds are always stacked against you. So perseverance and speed are probably two things that we look at quite a lot. Speed is is a very important one. To paraphrase Portman, I think this I'm gonna steal that quote from him as long as I'm the fastest, I just have to be correct 50 point one percent at a time, and that's, I think, that something that really resonates with me. Again, speed is not always the right answer. Sometimes you need to be deliberate and make sure that the solution is 100% accurate. So then again, going back to this right founder for the right challenge. You know, knowing the difference between those is crucial, but speed is almost always one that is paramount in the startup world, and being able to execute fast is when we look, for we have a Very long list. I'll just name one more, which is, I think, also the sort of intellectual chops and intellectual honesty to be able to look at a situation, assess it intellectually, honestly, openly, but, you know, very discerningly.
Speaker 1:No, that's great. I've heard you say something that's probably a little bit contrary into what many people are thinking, that the comment that, whether it's five years, ten years, twenty years, people be tired of carrying a phone in their pocket and that there will be technology that voice becomes the largest channel to deliver financial services. For can you talk about that kind of long-ranging vision that you have?
Speaker 2:Yeah, I mean, I think part of that is just sort of looking into the trends and part of that is also wishful thinking, where I'm getting very tired of putting my Fine in trying to. You know, london is real estate constraints, for dinner tables tend to be quite small and I'm always looking for a place to put my you know iPhone 13, max, pro or whatever it is, and it never fits anywhere and then I put it in my pocket and it falls out and it sort of pokes me in Unexpected places as I try to sit. So I'm hoping a peak mobile engagement, I think, especially with AI and all these other things, I think it's just gonna turn to a much more conversational note. I think there's possibilities that it goes a bit more like sort of Google Glass, augmented reality. I find that slightly harder.
Speaker 2:I do think a Disconversational piece may trumpet very hard to predict, but I do think there will be a sort of trend towards just sort of more talking to computers and instead of looking at the screen, you can just say you know what was the growth rate of this business over the last three years, instead of, like you know, squinting at a chart that's showing the same inside. So so that's one thing. And then so what the implication for VC is? That the channels may change. I mean, I think everybody remembers how challenging it was for Facebook to grasp the oncoming mobile revolution and they effectively fell a year behind. But then they quickly caught up and now you know, a lot of things are mainly consumed on the mobile instead of the desktop. I think there will be a sort of channel shift at some point, and certainly mobile will not be forever. I think you'll be maybe in ear set combined with a watch, and you just talk into your ear set and hear back, or Maybe it's a glass, but that's this thought that I have.
Speaker 1:Well, that's one thing fun about the business we're in is some of these trends are really hard to predict and, depending on which way it goes Again, we're not not investing at the primary technology there but, depending on which way the world goes, has a big impact on what types of financial services businesses will be built. Yep, so for our closing segment, I just love to move into talking about you as an investor. How would you describe your biggest superpower?
Speaker 2:For me, I think it's all around people at Capital One. I think you probably remember this quote I think Nigel used to say it that we're not in the consumer finance business, we're in the people recruiting business and to some extent even like a factory with like machines and robots. It's still a people business. But I think, yes, every business is a people business, but none more so than VC, where it is just all about the people, whether it's the investment team, the people that work with us at QED, or the founders, or the People that the founders recruit, everything just starts and ends with how good those people are and how good they are at their job and how good of a fit that person is in what they're doing. That really appeals to me and I think I don't know if I would call it a superpower, but I really find People very interesting. I found founders very interesting.
Speaker 2:I was a part of an angel club in the early days at QED and I would spend all day at work, you know, listening to pictures and ideas, and at night after 9 pm I was set down to the angel club and we went through like eight more pictures until like 11 pm and I thought, if I can do it until 11 pm Like this and still find it interesting. I'm probably doing the right thing. So I find the people elements super interesting and I'm energizing and I just Can't hear enough of different ideas and different people and I find, you know, meeting different people and getting into their thought process super interesting. If I can understand of someone things, that is one of the most fascinating things for me and I don't want to call it getting inside people's heads because that sounds very creepy, but understanding how they think and how they react circumstances is fascinating and, as a result, spend a lot of time thinking about how people react and how they, how they will react in the future.
Speaker 1:What's one thing that you wish you were better at, or actively working on improving?
Speaker 2:For me, it's around switching gears to being more slow and deliberate. I think everybody's Strength can also be their weakness. One of my strengths is being able to move quite fast. The flip side of it is and also, as we said, people. The flip side of it is sometimes you need to just take a step back, go very slow, be very deliberate and spend time just thinking deeply, which is something Very important, and making the time for that is very important and that's something I strive to do more of and Try to create a lot of spaces in my calendar to do it, but it feels like those spaces have a way of filling up and I have a way of gravitating towards people and sort of things to do and fires to fight and not enough time to do deep, reflective thinking as much as I'd like to.
Speaker 1:Funny you talk about going fast. So Portman told us we had to ask you a question here. Apparently, you have a test. You watch how slowly or quickly someone eats a meal, thinking that that says something deep about their personality. Let's ask for an analysis of that.
Speaker 2:Yeah, I know this goes back to my business partner when I started my business His grandfather. They had a big construction business as well and his grandfather would have lunch with people and in that lunch he would see how fast they eat and he would only hire the fastest eaters. I know they built their buildings and their construction sites very fast. You also want to make sure that the buildings stood the test of time and didn't crumble. But I think looking at how someone eats is one out of many ways to sort of understand their personality and how they approach things and in my experience at least, people eat fast will be very Fast moving people, and that's important in the startup world. So please don't take this as a criteria. And eating slower is definitely healthier and I try to eat slow myself, but the way you eat can give away a lot about you. Keep that in mind.
Speaker 1:Yeah well, I'm probably way on the edges of eating quickly. I live the downside of being a bit overweight Every day, so I think the slow plan has good, good long-term health benefits and I need to learn how to be better at that. What's one thing that you feel like over your six years of investing that maybe you kind of got wrong or underestimated or kind of big learning that now you take a different approach to investing?
Speaker 2:being able to say no under sort of any circumstance and not getting waited to either A founder or a thesis, and there's been cases where I really liked an idea like a thesis and then that turned into this Work, and I ended up doing a lot of work on the space, thinking about the space, and then that turned into.
Speaker 2:Well, I've done all this work, so we should make an investment, and I think that's Not a good thing necessarily. I think my learning from that is that even if we've done months of work, it's probably better not to invest if we're not at full conviction, because once we make the investment, we're committed and you know the qed brand is all about playing the full 90 minutes and things may not go well and we're still going to be there. So when we do investments and many of them obviously do not Turn out exactly as planned we we end up spending all that time. So it's better to be even more deliberate before plunging in. And just because we've done a years work in a space Doesn't mean that we should invest in it and we should just keep our bar very high.
Speaker 1:Well, you said it's been awesome having you today. Great to explore your background. We almost always end these interviews with the same question to everyone. Hopefully, we have a number of young prospective entrepreneurs listening to this podcast. What's one tip you would share with a young entrepreneur?
Speaker 2:I think surround yourself with good people sounds like I cliche, but I think just find those people that can help you in all these circumstances, and I think the key to doing that is knowing what kind of people you should surround yourself with. It's not about just finding successful people and surrounding yourselves with them. It's more about knowing your own weaknesses and Knowing yourself and knowing where you need complimenting, and finding those people that compliment you, and they could be a co-founder, they could be your chief of staff, they can be your COO or they can be your investor, it doesn't matter but find people that compliment your strengths and weaknesses, and the key to doing it is obviously reaching out to them but also understanding yourself. So that would be the number one thing in my mind.
Speaker 1:Nobody's able to build a great company on their own, so such great advice.
Speaker 2:Yeah.
Speaker 1:So anyone who's listening that would like to pitch you. What should they keep in mind and how do they get in contact?
Speaker 2:Yeah, it's you stuff at qd investorscom, please reach out. We're always happy to talk to Founders working in fintech and to keep in mind yeah, be open and share as much as you can. Share your deck, share your idea very clearly. We will then cut back to you as fast as possible. The more specific you are in your ask, your idea, what you're trying to do, the more specific and quick we can be in reverting to you.
Speaker 1:That's great. Well you so, if it's been awesome having you here today reliving your journey. We talk multiple times a week, but it's great to take this chance to have have a bit of a retrospective. So appreciate you joining and to all of our listeners Take care and thanks for listening.
Speaker 2:Thank you, thanks, bill.
Speaker 1:This has been the fintech thought leaders podcast your window into the world of venture capital and financial services with today's digital disruptors. Qed is proud to provide the best fintech advice you can get. To learn more or to read the full show notes from today's episode, check out qed investorscom and be sure to also follow qed on twitter and linkedin at qed investors. Thanks for listening you.