Bill Cilluffo, Partner and Head of Early Stage Investments, sits down with Chris Dean, Treasury Prime's co-founder and CEO, to discuss how Treasury Prime is revolutionizing banking.
Bill Cilluffo, Partner and Head of Early Stage Investments, sits down with Chris Dean, Treasury Prime's co-founder and CEO, to discuss how Treasury Prime is revolutionizing banking.
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 investment security investors. Today on the podcast, I'm excited to be joined by Chris Dean, co-founder and CEO of Treasury Prime. Chris, welcome to the podcast. Hi, welcome to the podcast, Thank you. Later on in the podcast, we're going to get into a bunch of the details on Treasury Prime, but as we kick things off, I wonder if you can just give us a 60-second commercial on what Treasury Prime is and what the company does.
Speaker 2:Sure, treasury Prime is a software company. We make banking as a service software for banks and tech firms in the US. So think of that like FinTech's an embedded banking. We make an API that lets the tech firms open up bank accounts and do any sort of deposit operation at a bank that the bank allows. We make software for the banks, we make software for the FinTechs. Everybody's happy. We have a large network of banks. Really, our success has been based that we have two factors that no one else has. We have a deep technology moat that no one else does the way we do it. We have a large interactive network of banks where the banks actually work together with the FinTechs.
Speaker 1:Awesome. I know we're going to explore that a lot more, especially that network of banks, which I know has been a big secret of your success, so I look forward to getting into that later. For the time being, I'd love to dive a little bit into the history, maybe starting with how you entered the startup world. I believe you took a job as one of the first employees at a machine learning startup as one of your first forays into the tech world. Can you tell us about what led you to do that as a first entree? Sure?
Speaker 2:I was a machine learning researcher back in the day at JPL, which is NASA, one of NASA's national labs. My advisor at school was running the lab at that point and he said you should take a job here until you decide what to go for at school, because I was having a lot of difficulty deciding what to do. And I did that for a while and that was great fun. And my wife at some point said we need to move to San Francisco to take care of her parents, which seems like a great reason. So we did that and we took care of her folks and I needed a job and I was like I don't want to work down in Stanford because I didn't. So I got a job at a startup in San Francisco. I literally did not know what the word startup meant. I went out into my network of people and said hi, you all know me. I published this paper, that paper I'm looking for a job in the commercial world. And someone reached out and I was the first employee at that startup and I didn't know that that was important and I just was like OK, what do you need? Let's get going. They said can you find an office? So I found an office. Can you get furniture? So I found furniture. Can you build out the data center? So I built out the data center.
Speaker 2:I didn't know these were unusual because no one told me that this wasn't normal. So I did all those and that was a terrible startup for everything except my friends who are there, who I'm still friends with. They were fantastic and I loved that. But there's a lot of drama, like they're in startups. The founders hated each other, they would throw chairs across the room with each other and there was court orders preventing people from entering the building, security guard making sure the wrong people didn't enter, and it was just awful. Actually, I really liked the parts that weren't the drama. So I've been doing that ever since.
Speaker 2:I found another startup who I thought I could teach them how to do it correctly. I did. I ended up founding a couple of businesses with those people from that company and we sold one of them for a good amount of money. And at some point my friend, dan Kimmerling, who you know too, called me and said, hey, I'm having some issues with the product and tech side of my company. Will you help? And I said, dan, I love you, but no way I'm retired. And he's like no, just have coffee with me. And so I'm like, yeah, I'll have coffee with you all day. And we spent all day having coffee. And he convinced me in the room at the coffee shop, basically to help them out. And that was, I don't know, eight years ago or something.
Speaker 1:So that's quite the journey. So there's a bunch of things I need to dive into which you just said. So when you said the startup wasn't very good, I did not guess your next sentence was going to be throwing chairs at each other, restraining orders et cetera. That had to be pretty crazy. But then you also said a second later that you loved it at least the drama free parts. Can you talk about what was so great looking back in hindsight and such a bizarre situation?
Speaker 2:Sure, the leadership was not great there, clearly, and the problem chosen was bleeding address. I'm always reluctant to that. Now that I know what I'm doing, hopefully that's a dangerous startup problem. Like basically, if you're going to do your doctoral dissertation during the startup, that's probably a bad idea because it just takes too long, there's too many unknowns and we had a bleeding edge problem we were doing and we did okay at it. We solved it as much as we wanted to, but there wasn't really a good product market fit there. That also was bad. So if it was making a ton of money hand over a fist, we might have gotten through the problems that we had, but it wasn't. It was struggling, but the product people I worked with I really liked because it was.
Speaker 2:Here's a brand new problem and the measure of whether you're solving the problem isn't whether you publish it and the right people say good job, it's whether someone uses it or buys it. Cap One actually was an early customer. It was like a modeling for in the Cap One's case. Who do I send card promotions to? Basically, you should get the Michigan co-branded card and there's a lot of Michigan people, so maybe that's a good idea. You should do the Caltech co-branded card. That's a terrible idea because there's hardly any Caltech people and we would predict that. And I love the product, I love the feedback.
Speaker 1:Well, I spent a lot of time working on that problem, long before your company came to exist, so I'm sure you helped a lot 100%.
Speaker 2:It's not easy, right, but it's a machine learning problem in many ways. If you can get enough data, you can predict this in aggregate, and I liked that part of the problem. I liked that when we did a bad job, people said no, thank you, and when we did a good job, people said sign me up. I want to use this and that was a great feedback loop and I felt I could solve meaningful problems and know if they were meaningful in the get-go. My original plan was to be a professor at some kind of mid-tier college somewhere and I Thought I could make a better impact and I was certainly having a lot more fun at the startup world, so that's why I stayed there. My next startup, which I usually I don't always say the name to, was baby center, which is a dot-com company. Baby center, yeah, I figured like what is the opposite of what I've been doing? And that was baby center and that was a great choice because those guys were amazing.
Speaker 1:And what was? Was that like a babies are us type thing, or what did? What did they do?
Speaker 2:It's like it's a content site for you know, parents, new parents, like moms, like 80, 90 percent moms, and it would be like, hey, you're pregnant and here's what your baby looks on week 12 or whatever. Here's what's going on with the baby. You know the baby's now it's born, it's, you know, eight weeks old. Here's what's going on with brain development, stuff like that. Just a content site and it was personalized very cleverly, personalized on the age of the kid, on the baby and so like expecting, you can like here's what's happened to your body because happened to baby and afterwards for a couple years.
Speaker 2:It's very predictable and that was useful and I built that. And then I built a Commerce site, you know, attach to that, which sold like strollers and stuff like that, and Selling strollers is like not what I had on my you know dance card that I was gonna do, but I did, it worked and I liked the fact that I Got to help people who were having kids, which I liked. It was such a nice group of people as you can imagine, because who's attracted to helping babies, right, like a certain kind of person and like that was great because that was not the same kind of person as my last my gig before that, the machine learning company.
Speaker 1:So, from NASA to machine learning startup, to a site focused on babies, an obvious next step would be getting into banking as a Service you can see the linear trajectory there right.
Speaker 2:That's right.
Speaker 1:So talk to me about. Talk to me about standard treasury, kind of your first foray into banking as a service. You know how did that come to be and you know that one was a much more linear getting. You know, getting to Treasury Prime, I think it was.
Speaker 2:Dan and Zach Founders guy Dan Kimmelin, who we know they just had this idea that the amount of technical innovation that was gonna happen outside of the Traditional banks was large and that that needed a way to be managed. That every tech firm doing this individually to every bank Was probably not sustainable. So they said we should make a platform that we can sell to the top 50, top 100 US banks and so they can use our software, which we built, to talk to tech firms. Our first client was Silicon Valley Bank but that was really reluctant for anyone else to sign up. You know, you go to a meeting, you go to City or Goldman or something whatever, and they go this is a great and idea, says the innovation group. And then you get to the risk group or the, you know, the operations group and they're like oh hell, no, I'm so busy and I don't want to do this. And at the time it was, you could only sell to banks most banks actually in the US as an on-premise Offering and they had to install in their data center and actually wasn't until, really until cap one announced they were doing stuff in the cloud that all the other banks said, oh, I guess that's okay, because capital one knows what they're doing. I'm like, yes, they absolutely do. You listen to them? And I tell you that if cap one and done that, treasure prime will not exist, because that we are, we're all hosted sass platform and that would never Worked otherwise. But we tried to sell that to all the banks and it was hard and At some point there's a rumor that Wells was gonna buy us and we were like we should just pivot. And right then Silicon Valley Bank said no, no, no, don't pivot will buy you. And so they bought us and the software we had worked. It could open banking accounts, could do everything the bank in the service players do now, basically, and SVB bought us.
Speaker 2:I expected to stay there, you know, three months, maybe to get my folks settled, and it was a. It was a very minor Acquisition, but it was enough for the, the engineers, to buy houses. So I'm like that's, that's a good exit, so that's worth it and I'll stay there and make sure they're fine and then I'll go and do something else. We go back to retirement and I stayed there two years just because SVB people were very nice and that mattered to me and Every week or two I would learn something about banking operations that I did not know, and I was gobsmacked by how and from my impression, how terrible it was.
Speaker 2:Like Don't you realize you could just write a piece of software to automate like these 20 people's jobs and they could do something interesting instead of like move, shuffling you know proverbial paper around, and that was kind of the aha moment. I did that for two years. At some point I'm like okay, either I have to like take over the bank or I have to leave, because I'm just all I'm doing is like Playing whack-a-mole here with all these problems. So I left at Gemini, starting to trip your prime.
Speaker 1:Did you start Treasure Prime right away, or did you sort of based on what you learned at SVB or did you think about sort of a bunch of different types of problems again?
Speaker 2:No, we actually figured out the model for Treasure Prime at SVB. We couldn't come up with a model for a long time. We were there like maybe a year in and I'm like the product market fit on the banking as a service stuff. It's so good that any dummy could like launch something and you'd have like amazing growth the next day. And that's I'm a startup guy. That's very unusual. It's very hard. I'm like we should do something here, like we could Do something interesting.
Speaker 2:And first of all and Jim's a very good strategic thinker and he's like let's think through this and like what's our actual goal? And so we came with our actual goal, which is very touchy-feely, you know, high concept, and Then we tried to figure out how to accomplish that. And it took us, I think, a good Six or eight months to figure out the business model, and it's a business model we have now and we can get into that. But I tell you that took a long time. Jim and I didn't feel comfortable discussing this in the SVB office because it would just like seem like, you know, not kosher, not nice. So we would always take these long walks outside the office like for lunch, and I have walked many, many miles around San Francisco trying to figure this out.
Speaker 1:And I know how many hills San Francisco has, so that must have burned a few calories.
Speaker 2:Yeah, it's like you want to go to charitone so far.
Speaker 1:So you, you saw, you know, with standard treasury you kind of saw the power that look if the banks could find a way to talk to fintechs more effectively. You know that would be useful. Obviously, you added to that, given some of the knowledge you learned at svb. I'm going to go back to something you started with, which is one of the key premises of treasury prime, as this notion of multiple banks Is. Is that something that came out of this experience or is that something that you guys came to later?
Speaker 2:That was from a get-go, like we looked at it and said, well, we could go to a couple banks, you know, a decent size banks, like once again, like top 50, top 100, and we probably couldn't get one of them. We need two of them because, you know, we needed to be not beholden too much. We said, like we could be, pretend to be a bank, which is what most of the folks would have thought of since then and during them, like if you look at synapse and solid and unit, that's what they do. They pretend to be a bank and we're like To do the right amounts of volume. You actually need a pretty big bank. And so I went and talked to them when talked to them all and everyone was like no, thank you. You know, I talked to, I talked to goldman and city and talked to cap one and folks like that, and no one was really that interested and which makes sense. But all the small banks were interested and we, our basic premise was Look, you actually need to be a bank to do this correctly. You need to be a bank to manage the risk properly.
Speaker 2:It's hard to outsource the compliance when the regulators show up, so we need a bank who's really on our side, and so we need a big bank, or maybe two big banks, and I couldn't do that and Jim or I can't remember which had the idea. Well, you know, it's the same as a couple big banks. It's a lot of smaller banks. So if we go to a lot of community banks, you know a billion dollars or five billion, instead of you know 100 billion. Really, you only need 25 billion dollar banks to equal that one. So that seems possible.
Speaker 2:And when you start from that premise I think everything else flows from that where you say like, oh, if I have that many, then it's really a marketplace and it's really more about a matching problem between the fintechs and the banks than it is just about finding the fintechs.
Speaker 2:And it's more about building software so that the banks can run the compliance portion, the governance portion, of the fintech properly, and that will keep the fintech safe. And that's important, because what you do not want under any circumstance Is your best, biggest, largest customer to churn and leave the platform because they can get a better deal across the street or because you've they reach your growth limit or, god forbid, there's some compliance issue. They said we can do this if we have lots of banks because we can always find them a home. We can split them up between bank a and bank b, so that three or four different banks and it all flowed from that and that was the business model we had, and then it was just a matter of like, how do we get there? You know, once we realize the destination, figuring out the path to get from where we are to there was actually pretty easy. It only took like a couple weeks probably.
Speaker 1:So it sounds like you arrived on that model in part out of necessity, right Then you started out trying to get one of the the big dogs to play. What if one of them knocked on your door today? Do you think that that's an interesting model? Or, given the path you've gone, have you learned? Hey, this multiple marketplace, many different banks, is actually the, the superior answer anyways, have you? Have you thought that through?
Speaker 2:Yeah, I think it's a superior answer. Anyway, I think if you look at even the big banks, they're only going to do 10 or 20 deals per year, like in my. I always just say 10, sometimes a little more. But Even a big bank, but if you're only do 10 or 20 year in your goldman, while they're better be pretty big, 10 or 20 a year. So what does that leave? All the smaller folks you know who only have like you know they're, they're too small for that. They still need a home.
Speaker 2:And the wonderful thing about the us Banking system there's lots of terrible things, but the wonderful thing is it is a highly competitive capitalist system. There are many, many commercial banks out there and they are all interested in doing business and you just need to find enough when they are willing and happy to work with your customers, their customers really. And and that's easy to do because they're competitive the smaller banks are competing with each other. The big banks eventually care. We have a couple big banks, right, and the thing is they do the same amount of work the little banks do, like our biggest bank has maybe what four fintechs, but they're all gigantic right, and our smallest bank has maybe 20 fintechs, but that's it. I mean, there's not, it's not. You know, one has a thousand and one has two. You know they're. They're really much closer than that.
Speaker 1:Yeah, that's pretty interesting. Now, if you're out talking to clients, I mean, I know you have competitors, as you mentioned. Most of those competitors, to use your words, pretend to be a bank. You know what are the major advantages of the system that you've built and, if any are there, are there disadvantages to the system you've built?
Speaker 2:Yeah, there's both those are true. We compete against two really kind of different entities, which is irritating. Surprising. The main one we compete against is actually other banks. So, like the you know the green dots of the world, please, the coastal. When you make people like that, these are good, well-run banks. They know what they're doing.
Speaker 2:The common wisdom here is that you should have a direct relationship with the bank if you're a fintech and I think that's I agree with that. However, we are also a direct contact with the bank, because we're just a software company, we're not a bank, and if you have a relationship with the bank directly, either with one of our banks or you know A regular bank, that's a big competing force and those we compete with all the time and I don't think that's going to stop our strategy there is like to try to get them on their platform. Then, whatever, whenever they win, we win. The other ones we talk about are just our tech firms. Right there. The banking is a service company. It's like the synapses of the world. It's kind of the og player here.
Speaker 2:And what? When we compete against them, what we say is look, you're essentially outsourcing compliance to a third party that has no regulatory oversight and eventually the regulators are going to notice that and there you're going to have a challenging day and you don't want that also. So maybe you don't want to be just at one bank, like look at the chaos of silicon valley bank this year. You probably want two or three banks that you can flip between, and that's a hard technology lift, unless you're with treasury prime. And then we have a large network of banks and you can switch between them whenever you want.
Speaker 2:It's a commercial deal. You can have one more than one bank if you want. And those are the arguments that like look, we're not a bank. You can have a direct relationship to bank which gives you the economics incentives you want. We're safe because you want, you have the economic incentives. And the one thing we have that other banks don't is we have lots of banks. You're not just making a deal with one, you can make a deal with four or five if you want, which our customers do. One of your portfolios and one of my customers has, I think, five banks. It's a lot right.
Speaker 1:Well, let me, let me jump into that. I mean you referenced it a second ago, the crazy weekend that SVB, you know, had some issues and not just SVB and no one. Number of others did as well. I mean this was a situation that probably we all thought kind of went away in the era of the Great Depression, the old run on the bank, and clearly that did not go away. I mean you had a complete front row seat to all of this. I wonder if you can kind of take us inside that weekend. What did it do for you guys? I know it was a crazy hectic weekend, but it was also a big catalyst for you. I wonder if you can just kind of take the listeners, you know, a bit inside the ropes, so to speak, for your front row seat there.
Speaker 2:Yeah, it was chaotic, for sure, but chaos brings opportunity. And so, you know, we were lucky enough to be in the right position there and have the right mindset. I worked at SVB for a long time, for a couple of years, and I knew something was happening, right just because a rumor mill. And you know, silicon Valley is a small community and my office is blocked from SVB's office. You know, I just see people on the street and you could tell something was up. And I remember I was at some dinner with our friend Nigel and like a lot of other people, and I was like, oh, what's going on? I'm like, yeah, this is terrible, but I mean, it's a well run bank, they're fine. They did some stupid thing, they're fine. The only thing that could happen. Unless there's a run on the bank, that'll never occur. And then that happened. And as soon as that started, I was like, okay, let's have to make sure we Treasury Prime is safe. You know we had tens of millions of dollars at SVB that we were like, well, let's make sure we're not. You know, move some of our capital of the one of the backup banks we have, because we have a lot and our first impression was to move it to First Republic because that was our main backup bank. That was not a good backup. So we ended up moving it to one of our client banks and I had to call the CEO and said look, I'm about to deposit a significant number of capital in your bank. And they're like thank you, that's good. Please don't move it for a quarter or I'm gonna look like an idiot. I'm like no problem. And so I did that there. She was very nice about it and that happened for us.
Speaker 2:Meanwhile everyone else at SVB is panicking. My phone's ringing off the hook, because everyone's like what do we do? What do we do? And I'm like first of all, make sure your payroll is covered, just make sure that. And they said but what about all our clients?
Speaker 2:We had someone I know who's a runs a payroll company or did run a payroll company out of SVB and they're like we're doing another payroll on Monday. It's Thursday night, can I be live by Monday? And I'm like you'll have to work all weekend. I'm not guaranteeing I can find a bank, because it's not my decision, because I'm not a bank, I'm just a software company. But I'll call in all the favors I have and we'll make it work.
Speaker 2:And that happened half a dozen times more and we worked all weekend, all the next week and all the next weekend and we got a lot of new business from that. And what happened first was that everyone moved over. And then there was a sigh of relief and everything was fine, everyone's happy. And then there was a beat and maybe a month later everyone called me again and said now I need another bank, because not that I want to move banks, but I just want to back up because I didn't have one before and I felt that pain. So what do we got? And we turned on a lot of people using more than one bank, and so that's, that's just a. That's a very common occurrence for anyone over even a modest scale now.
Speaker 1:Yeah, and I would imagine that prior to that weekend You're probably fighting a little bit of an uphill battle. Hey, come to this marketplace model because you don't want to take compliance risk and you want backups. But it was all kind of somewhat esoteric, right, even though your arguments make sense, I would imagine to clients this weekend really helped. That hit home on from a very practical way why this is so important. I mean, did you find a notable increase in the amount of your sales message resonating?
Speaker 2:100%? I mean no question, but was I remember most of the tech? The embedded banking folks especially, are not really sophisticated banking people. They don't really understand that banks are real businesses that have people running them, that good things can happen to and bad things can happen to. They think, oh, it's a bank and that's perfect and permanent, right. I'm like no, they're businesses like any others. They're generally well run, but not always, and bad things can happen.
Speaker 2:And when SVB was a real example, that changed everyone's attitude. Before then we had what? Three clients just three who use their multiple bank product. Because they were just big and they were like we want our deposit spread around. They had some cannabis stuff they were doing. The only one bank would do the cannabis stuff and but they yield on that bank was small, so they only want to limit the cannabis stuff and they spread it around. And others were like we have a lot of deposits and we just want to make sure that we don't overwhelm the $2 billion community bank with deposits, so we want to spread that around. And those people were fine and happy and the product worked.
Speaker 2:But post SVB it's completely different. Everyone I need a backup just for safety. And once they started using more than one bank, they realized oh, actually this is really beneficial to me. We have our own private payment rails between our banks so we can move money around between our banks. And pretty soon all the FinTech start treating the banks as kind of one large virtual bank and they move money between accounts and they. It just works for them, right? They basically have different costs and different yields and different kinds of customers. They can onboard at different banks, but otherwise to them it's the same. It's the commercial terms which are different, it's not the operational and for them that's a big deal and once they've tried that, they never go back. They never want to go back.
Speaker 1:You mentioned that some of your first adopters, even before this weekend, were the large companies that had a sufficient number of deposits or complexity that it just makes sense. What's your advice to younger companies when they should start thinking about this? Is it literally hey, I just took in $200,000 of angel money or does somebody really need to get to a certain scale before they really start to think about this diversification?
Speaker 2:It's a scale issue. So I always say to people and this is very self-serving, but I definitely believe it Don't start. There's your first move to have two banks, but it's going to be your second move. So make sure you can make that second move, because if you're growing, you don't want to also have to switch banks. You want to add a bank, not switch banks, and you don't want to have to get your engineering staff to integrate with two separate banks because that's just a real big lift, because that's like it's. Basically. My whole job is to do that work and we're very busy doing that. So you, as some random fintech, don't want to have to do direct integrations to multiple banks. It's too expensive. So don't start there, but realize that's your next move. So start with us at just one bank. Make a deal, get to a certain scale, prove your product market fit as you start to scale. That's a good reason. Do another round, do a C or an A, get a few million dollars in the bank and then say now's the time to add that.
Speaker 1:So switch gears a little bit less laser focused on treasury prime for a second, but more broadly, you've got a ton of experience and adventure across a number of different stages and number of different types. You know, amias Garity, one of QED's partners and our lead partner who works with treasury prime, asked me that I had to ask you a question here today, so let me let me just put it in now. Oh shoot, it's terrible. No, this one isn't too embarrassing. Maybe there's some more embarrassing stuff later.
Speaker 1:But if you're a younger operator and you've spent your whole career really in venture in the last 10 years or so, what is it about the venture ecosystem? You might not understand or you may not get right, and I think some of the context for that is you know, we had, I don't know, a 10 year. I think Frank likes to call it super cycle. You know where kind of everything was working in venture. We've now seen about a year and a half where that's not the case, maybe two years where that's not the case, but having, you know, seen a lot more than your typical new to the venture ecosystem, what are some things that they may kind of get wrong or they may not understand if they've really only lived this over the last 10 years or so.
Speaker 2:Yeah, I mean there's been. I've been through multiple cycles of this. Now you know I didn't found a company then I found it right after, but I was part of the dot com companies that baby said our company I mentioned was a dot com. We got purchased by a larger company that went public and that, face planted, I went from being worth a lot of money on paper to worth no money on paper pretty quickly. That was a good learning experience.
Speaker 2:And then, you know, the 2008 crash was also indicative because it was a time of constriction, and two things I really noticed then. One is that the companies that started right around that after that ended usually were great companies and they were very strong and did well. I mean you can point to lots and lots of examples there and I always wondered why was that? I thought it's because they had to get their basic problem right, because they couldn't just go and say I need a series A, a series B, a series C, a series whatever, at some inflated price to like patch up any problems. They actually had to have their unit economics work out well, their product market fit, their ability to serve their customers right. I mean there's lots of capital things that happen. But really it's like you really need to focus on making sure that your unit economics are correct, because if they are not correct, then no amount of capital is really going to fix that and you can say like, well, I don't worry, I'm going to make it up in volume.
Speaker 2:Generally, that doesn't work. It's true that you can spend a lot of capital to grow quickly once you know what you're doing. So take the time to know what you're doing. That's the thing I usually see. That's wrong and the one thing I say to everyone and no one really gets this but taking venture money from someone, be careful who you take it from, be careful of the person, be careful of the firm. Like I, like a Myas. You know the story, I don't know.
Speaker 2:Myas and Frank were my first choice for us doing our series A and I met a Myas and he preempted the offer and I'm like well, just say yes, even though the offer was lower than I wanted. Right, and I guess when the right person comes along because you're, you're marrying them and the firm, you can't really divorce them. They're on your board forever until you have an exit and you want someone you can trust over the long good and bad times. The capital matters less than the people and the support you're going to get along the way. You're going to face plant one day Everybody does and you need to make sure that there's someone there can like, dust you off and say you're doing fine, keep going. Here's some advice you need, and I don't think most people in the boom years cared about that. They're just like sure. Crypto money FTX seems fine. Let's just take it. I'm like dude, you're not getting anything good from that, so just stop.
Speaker 1:It is actually the single biggest surprising thing for me as I look back over the you know, 2020, 2021 boom, when rounds started to take four days long and companies started to get you know 10 different term sheets, why that was the result right. So, in some level, if you get 10 different term sheets, why not take the time to figure out which ones you like best? Because you have them rolling in your place. When the market got hot, it all collapsed to speed. That's sort of the one thing I never quite internalize why that was the equilibrium there, but anyways, that'll be a subject for many PhD research papers probably. But look, so I appreciate that advice. Let me switch a little bit to kind of leadership and kind of culture within Treasury Prime and just personally. So let me start with a bit of a personal question how would you describe your biggest superpower? And, conversely, is there one thing that if you could be instantly better at, what would you pick?
Speaker 2:Sure, I'm a very, very good engineer, very, very, very good. I know I'm not the best engineer, because I met the best engineers and they're better than me and it's like so this is like sort of an answer, sort of not an answer. It's like you've been a great baseball player a whole life and all of a sudden you get into the major leagues and you go oh wait, there are other people who are just as good. And oh, that guy over there, they're way better. Or change sports you want. Well, it turns out Michael Jordan's a better basketball player. No, no, no, shocking, and I know people like that.
Speaker 2:My superpower is really being able to recognize talent. I think that I'm good at that. I'm good at recognizing when people are good at their jobs and that they are going to be good at it for a while, and they're not too crazy. You can be a little bit crazy, but not too crazy. Hiring is very important to me. I think that's kind of the one thing that makes startups work or not work. There's like four or five things, but that's one of the biggest ones and I'm good at that, and so I use that all the time.
Speaker 2:My staff generally hates me because I'm like nope, this person's terrible, kick them and they're like but everyone else loved him. Well, everyone else is wrong, so you have to deal. Ah. And they'd say is that fair? It's like if you said that to me, I would also say that's fine. So I'm saying it to you, so you have to say it's fine. The thing I could be better at I'm very impatient in a harsh judge of situation and I wish I had more patience in my life than I do. Sometimes, if something doesn't work out, I'm like nope, blow it up and move on, and I think that can be a good instinct, but generally I wish I had more patience in my life.
Speaker 1:No, it makes sense. I mean, not everything works out the first time right, so sometimes things do take a little bit of time to meditate. Well, let me come back to this people topic and the hiring. I mean, I know that you and your co-founder, jim, are incredibly committed to this and the comment that you made once believe the best startups have the best people. That's probably something that 90% of startups would say. What is it about how you guys think about things that really differentiate you? I know that you're a harsh critic at times, and so if you're self-identifying that this hiring great talent is truly the superpower, I'm quite confident that's true. How do you really think about distinguishing yourselves in that type of environment when, if I asked most people what the key to the business is, they would probably say something related to people?
Speaker 2:Yeah, I mean the things are you've got to get product market fit right. You've got to make sure it's a market that you can serve and make money at. You've got to make sure you have enough capital and you can execute properly. But really most of the executing properly is people. You need to write people to do that and I think everyone says they want great people and mostly they don't have the discipline to stick with it. At a startup you're less than 100 people. I would confidently say we should not fill that slot if we can't find the right person like we want a new engineer or a new sales leader, something like that. You wait until you can find the right person and you just wait and you keep looking and you look harder, but you do not hire someone because you have a desperate need for another customer success person and this one's okay but not great. You say no and you wait till you find the great one, and I think most people at the end of the day aren't willing to do that.
Speaker 2:When we grade people who are interviewing candidates which we do grade them the common thing would be to grade them like one to five or one to 10, and I don't do that. I say you get one to four, because there's no in the middle. You can't do two and a half, you have to do. One is they're terrible, two is they're not great, three is they're okay and four is they're great. One, two, three, four, that's all you get, and I can tell you we don't hire people unless there's mostly fours and that means we mostly don't hire people and it just takes a long time and that's what you gotta do, and I think most people are not willing to do that.
Speaker 2:They feel the pressure of moving faster than what hire someone and they do that. I can tell you that is a short-term win and a long-term lose. It's like eating that cake Like you want that cake, so you eat the whole cake and it takes great that day. The next day you're gonna feel terrible, right? So maybe don't do that. Like you can hire this person and it'll be fine for three months or six months and then it'll be terrible, so don't do that.
Speaker 1:Yeah, I mean what you described I think is such a common thing that people struggle with right People that I know are unbelievably committed to really hiring the best talent. Yet you just see may compromises because hey, I've gotta get this thing done, and if I don't get this thing done and I need this person, and so you know that's. You know what you're describing, I think, is one of the hardest things to continue to do as time goes along. So kudos to you guys for really living up to that the flip side's true, though.
Speaker 2:I mean like you need to hire people who are good at hiring people. Like one of our early hires was a completely overqualified head of people. She's our chief people officer, think her title is. She's fantastic. I talked to her for 10 minutes and I was like, well, I don't care what else I do this week and we gotta close her. I had a mys call her. I had everybody talk to her until she said yes, and that was one of the best decisions we ever made at Treasure Prime. Like the reason that we a good company is because we have great people. The reason we have great people is because she's there making sure that we only hire the best people and the people we have, we train them, and that has played dividends over and over again.
Speaker 1:Yeah, you know the next part of people. I mean we talked about hiring, but you know creating a great environment, creating a great culture. If you don't have that, then the people aren't gonna stay and they're not gonna be productive. What did you learn about building a strong culture from the various different startups that you've done and I know you've arrived at a strong one within Treasure Prime and how did that kind of serial entrepreneur nature help develop your philosophy on creating a great culture?
Speaker 2:Yeah, I had an office mate a long time ago who was a Navy SEAL you know the, you know the commando guys and he talked about this a decent amount and he said this was true across most of the military elite things. It says that what you think you want is someone who is the best soldier, that is or the best sailor, I guess you call it that you want someone who can run the mile fast, can shoot, the weapon, can do sneak around, can do all the things that you do. It says that's true, but that's not the most important thing. The most important thing is they can work with the team and the team trust them. It's about the trust.
Speaker 2:So if you want to make sure you're building the right culture, you have to have great people, and on a scale from best to worst. Do you want the best performers? You absolutely do, but actually more important that is trust. So you need to find people who actually can work together, who can trust and respect each other, and if you can do that and provide the right model from the leadership side, the culture that you want will create itself in many ways, but it starts from finding the right people who are going to gel together and that's what we do. We care about the people we hire. We make sure that we have a certain set of principles. Here's a fun fact for you, bill, that what our first principle is it's about focusing on the team and that's the most important thing, and it's the team, the team, the team. Because Jim went to University of Michigan and apparently that is something that football people from Michigan say.
Speaker 1:He is definitely a good man. Quoting one Bo Schambekler, that's right.
Speaker 2:Team, the team, the team and we say it all the time and that helps create the culture of cooperation and dependency. The team works hard because they want to support the rest of the team. They don't work hard because of some other reason. They want to support each other. They all believe in the mission, for sure, but it's about supporting each other and that's the culture we want. We want that culture around the team. Then we have other principles like innovation and trustworthiness and things like that, but really it's about helping each other. Once a quarter we get together virtually. Usually. Once a year we get together physically, so we fly everywhere out somewhere because we're all remote. We have weekly, all hands Zoom staff meetings where everyone talks and asks questions, hopefully ask questions, and I see my executive team, my direct reports once a month in person, because they're all remote too, and that time we spend together matters and that's how we develop the culture.
Speaker 1:That's wonderful. I've got to ask one shockingly specific question here, because I think you guys have a program that I've not seen anywhere else, that you have a really interesting benefit, which is you give everyone on your team financial wellness education and unlimited financial advisor sessions. You know this is interesting. This is something we have a couple portfolio companies that are trying to make headway on financial education and financial benefits, but it seems like you have a commitment that goes way beyond what most companies do. Can you just talk a little bit about what led you to go down that route for your employees and why you're so passionate about it?
Speaker 2:I think you know, I have too much education, probably like YouTube.
Speaker 1:And.
Speaker 2:I noticed that. Well, I mean, you and I have different degrees but, like mine's in, I study physics and never once did anyone tell you you know, this is how you should manage your financial life. Let's take a class on that, you know, maybe the economics folks did, but probably not. Probably they're talking about big picture things, and I made dumb mistakes in my life and at some point I realized I didn't know what I was doing, so I better learn, and it's some specific way we want everyone in our company to be supported, and that's a good benefit.
Speaker 2:There's another, like more Machiavellian view of this, which is like why it's actually a good business idea. It's that our problem we have is very complicated Learning about how banks work and learning about how fintechs work. There's not a lot of overlap between those two, frankly, and so we need people who are going to be we train and are in for a long term, that have a long tenure, so it makes sense for us to invest in their lives. I don't want them staying around for six months, I want them staying around for five years or longer, and if you're going to do that in the startup world, you really have to invest in people and we have to show people that like, look, we're here for your whole journey, and part of your journey is your financial one and we're going to teach you how to do that, because you don't know. It didn't start out unlimited. It became that when it was obvious. No one knew what they were doing. They're all as bad as I was knowing what they were doing.
Speaker 1:No, I mean it definitely. You know I've been involved in a couple of nonprofits over the years really trying to teach more personal finance to high school kids, and it's stunning how much of an uphill battle any of those are. And you could take that to college. I probably did have a little bit of an advantage taking economics, but you're right, most of it is theoretical and personal finance is only a very small piece of that. So huge kudos to you, and I totally get there's both the kind of humanitarian side of offering it, because it's the right side to do it. But I think you're also making a great connection to why it's a good flat-out business decision to make sure people are stable, especially choosing to join a startup, which probably means they're not maximizing their short-term earnings and instead for a little bit riskier career that could pay off down the line. So that makes a lot of sense.
Speaker 2:A good portion of our staff could go work at Google or wherever tomorrow. Right, that's a good financial life and they're choosing to do this because they believe in the team and the mission and it's fun and all that stuff. And I want to say, good, I appreciate that and we're going to make a lot of money together. That's fine, but you're going to need to wait a little while for that money comes. In the meantime, what can we do to support you? That is more tractable than paying you a Google salary, definitely.
Speaker 1:Well, Chris, I really appreciate you spending the time with us here today. I mean, it's a fascinating story. I mean, Treasury Prime is a company. It's funny Amayas made the case when we invested and certainly talked up the benefit of this bank network in comparison to what other companies did, and it was always made sense on paper, a little bit of a theoretical advantage. And then all of a sudden in one weekend we're like oh yeah, that's one reason why it's right and it just becomes so blindingly obvious and we're thrilled to be partnered with you on this journey. You too, Amayas, is the best.
Speaker 1:So, chris, I'd love to end with just one question. I always ask it of everybody. I've already asked you a little bit longer version of this question early on, but anyways, as we finish up I mean hopefully we have a bunch of young perspective entrepreneurs listening to this podcast over time Is there one tip if you could just share, sort of one tip that a new entrepreneur could take away, what would you suggest?
Speaker 2:Just, one Be committed. You're not going to do it in a weekend. You've got to make sure you're here for multiple years before you decide that it's not for you. You have to commit. I'll do it as a side hustle. That won't work.
Speaker 1:So so true. That's. I think that's wonderful advice. Well, look, thanks for joining, chris. Really appreciate the time and to all you listeners, until next time and take care. And thanks for listening. 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 QEDInvestorscom and be sure to also follow QED on Twitter and LinkedIn at QEDInvestors. Thanks for listening.