#64 — Immad Akhund — The Unlikely Banker

Hello, friends and listeners. Below the Line, at least today's episode, is brought to you by a little project of mine called Magic Mind, the world's first productivity drink. Want more creativity, more flow, more energy, and less stress? Go to magicmind.co to get the 2-ounce shot that contains 12 magical ingredients that are scientifically designed to improve your productivity. Along with CEOs, doctors, musicians, Even Navy SEALs. I take it every morning and have been for about 6 years after a trip to the ER from drinking too much coffee day to day. And it is the single most important part of my morning ritual to do more and stress less. Listeners know that I go to pretty extreme lengths to talk about the science behind sleep, diet, exercise, alternatives to coffee, stress management, nootropics, adaptogens, anti-inflammatories, et cetera. And you can find the peer-reviewed research on the ingredients of Magic Mind on the site to learn more. Go to magicmind.co, that's magicmind.co, and enter promo code BTL for Below the Line to get 15% off and try it for yourself. I also wanted to tell you about MetaLab. You probably didn't know it at the time, but MetaLab has been the secret sauce behind products used by billions of people around the world, with a B, billions. They've been creating apps and products for over a decade with startups like Slack and Coinbase, as well as industry leaders like Google and Uber. And I have been recommending them to friends and founders of companies for years, way before starting this podcast. From delightful design to world-class engineering and everything in between, Meta Lab works with teams of all sizes to sweat the details and build products that your users will love. I am a massive, massive fan of MetaLab. They are one of the only agencies that I consistently recommend and have been since my friends at Coinbase used them maybe 6 years ago and loved working with them. There are a lot of agencies out there, but if you're like me and obsessed with pixel-perfect products that people love to use, you've got to talk to MetaLab. Check them out at metalab.co. That is metalab.co, metalab.co. And when you get in touch, let them know that James sent you. And if you dig below the line, we'd love a review. That's how podcast platforms rank and suggest podcasts. So every review matters. And if you're one of the fine folks that have already left a review, especially all the 5-star ones we've gotten, know that we appreciate and read Every single one. It only takes 2 or 3 seconds, and we really, really appreciate it. So thank you. Hello, friends and listeners. Today's episode is with Immad Akhund. Immad is a serial entrepreneur and serial investor. He has been through Y Combinator a couple times. His current business, Mercury, is the bank built for startups, but really it's It's the bank built for all businesses. And full disclosure, I'm a tiny investor in Mercury, but we talk about why I'm a tiny investor instead of a large investor and my hesitations with the idea when he first mentioned it to me and talk about his idea maze, finding himself in starting a bank from his previous startup experiences. It was a bit of a leap and it is a really interesting conversation for— Every time that I talk to a serial entrepreneur of why they chose this idea or that idea with all of their experience of— with him, about 15 years of building businesses, why he started Mercury and the reasons behind it and why he persisted through many, many, many negative conversations and people that weren't fans of the idea, why he did it anyway. And he's looking pretty smart for doing it despite all of the pleas from smart people, seemingly smart people telling him not to do it. We talk about the ups and downs of entrepreneurship. We talk about the real experience of an acquisition with his previous company and what it's really like, something that does not get discussed nearly enough, the acquisition process. And it was a fascinating conversation to dive below the line with that part of the entrepreneurial journey with Immad. We talk about all of these things and more. And I really loved the candor and the simplicity in which he's able to articulate just what he was going through. Yeah. Or what decisions he would have made differently. So without further ado, let's get into it with Ahmad Akund. This is Below the Line. And we are live. Ahmad, cheers.

Hey James, how's it going?

Virtual cheers. What are you drinking over there?

I got my PG Tips. It's the same tea I've had since I was, I don't know when I started, like 14 years old or something.

Oh nice.

From the UK. But yeah, it was when I first moved to the US, it was a pain to get it. Nowadays you can just get it on Amazon. So it's still a prized possession.

I've heard of the brand before. Is it a really well-known brand?

Yeah, there's like 2 big brands in the UK, PG Tips and Tetley's, and everyone drinks one or the other generally.

Nice. What kind of tea?

Let's see, in the US they would call it English breakfast, but in the UK it's just tea. Oh, nice.

Well, I've got some green tea over here. And so, you know, virtual cheers. Thank you so much for coming on to the podcast.

Yeah, thanks for having me.

I've been looking forward to this conversation for a little while now. And the reason is because I think, and because we're friends and have been for several years, I know that you're a simplifier. So in situations when things can get quite complicated or seem complex, you really break them down and you simplify them really well. You've done that as advisor and friend and, and moments in my career, but also just as I've watched Mercury grow. It is your current company. It has been— even actually Haysapp, your previous company. I remember, you probably don't remember this, but I remember you telling me how to create a board deck, and it was just so simple. And creating a deck for your board, your investors, Seems like you could go in a million different directions and they'd all be maybe incomplete or not quite there, and you simplified it for me. So I'm really excited to chat with you about all things, you know, entrepreneurship, um, because you're such a simplifier. So I'm excited for our conversation, but I actually want to kick it off with the first question is, what is on your mind today, Friday, Here in May 2020, what is on your mind this, this morning, taking up the most mindshare?

Hmm. That's a good question. Uh, you know, I'm an extrovert. So I think this, this whole kind of stay-at-home pandemic thing has been not easy. Thankfully I have a wife and 2 kids. So, you know, I'm not by myself or anything, but, you know, I like the social aspect of like doing a company and Whether it's meeting external people or just seeing your colleagues and things like that. So that's probably been on my mind. I guess it's been on a lot of people's mind as we're 2 and a half months into this, and it's not obvious that there's an obvious end in sight. So let's see, I don't really have an answer to that. We've tried to do better social things around the company and things like that, but nothing really replaces just— kind of unplanned, unconstructed social kind of settings. But I did have a poker night the other night this week, which was actually quite fun. So I'm going to—

You didn't invite me. You've invited me to so many poker nights, but you didn't invite me to this one.

Sorry. I wanted to just have like 10 people and I tried to invite the people that come the most often. And I don't think that's you, James.

No, I know it isn't. I'm not much of a poker player. But it is fun when I've been over to your place to play. Especially with the caliber of people, it's just the IQ power in, uh, in the poker rooms at, at your, at your house, uh, it's through the roof.

Really. Luckily it doesn't translate to poker playing ability.

That's— I don't know, the get— the last game I was in, I was playing along, um, I can't remember who it was or the name. We had just met and then he was saying— I was like, yeah, I gotta get better at poker. And he was like, Here, what's your email address? I'll send you 3 books. And I was like, oh shit, I'll play next to that guy.

Yeah, like, I don't want to get that good.

Yeah, exactly. And I don't want to play next to a guy that can just rifle off the 3 best books that someone should read to get good at poker. But, um, yeah, the social aspect, it's certainly— obviously the serendipitous social aspect is, is pretty non-existent right now. The having these podcast conversations has certainly come in handy, um, especially with with friends like yourself, but what is— do you think Mercury will become one of the companies that stays remote for an indefinite future, or is this just the thought in your mind this morning making you lean towards, no, we should have an HQ?

You know, we've always been flexible, so half our engineers were remote anyway, and, you know, we always had a flexible remote from work— oh, sorry, work from home philosophy. I think we are more open to it probably than we were before even. Like we would previously only hire engineers remote and we would try to keep most other things in San Francisco. Now I'm kind of open to everyone everywhere. I personally really like being in an office and, you know, not working from home. Like I want to have a change. I want to work around people. I think there's a lot of kind of, you know, I'm not doing work just to get paid or just to be successful. Like, I also just want to enjoy myself and like, I just enjoy that. I think other people don't. And, you know, I think that's fine. I think, you know, 100% remote companies, I think, you know, if the founders have a good, like, if they enjoy it and like every, they end up employing everyone that enjoys it, that's great. I don't think the reality is that, I have no idea what percentage it is, but I'm guessing like at least 50% of people don't enjoy working from home. And because of that, there's going to be some companies that go fully distributed and many companies that have some sort of in-between.

Where is the HQ of Mercury? It's in San Francisco. Where in San Francisco is it?

Second Mission.

Just for listeners to get a sense, right now, y'all are just paying rent for a really great office. I imagine you're paying rent, right?

You know, I actually think this rent thing is a little overblown. I don't quite understand why people get so fussed about it. Yeah, it's less than 10% of our burn. I think it's actually less than 6% of our burn, and it's enough of an office for like more than half our employees. Actually, it's enough of an office for all of our employees. So I don't really understand why people like get so worked up about like, oh, you know, you get to save rent, et cetera. I'm like, it's like 6, 7% of your burn, you know, why is it that important?

Yeah, it's, I've heard, I remember Sam Altman saying that Uh, for every, for every employee, it's about $15,000 a year in overhead for everything in an office. And this was years ago, so this was before remote was kind of a conversation, but it was just like the, the desk, the square footage, the, um, the snacks, uh, beverages, things like that. It was about $15K, which that's not too crazy, but you add in a San Francisco you know, amplified salary and, and then a $15K overhead expense on top of it. It's, it's not nothing, but I totally hear you on, on rent being a pretty small portion of burn overall.

Yeah. I mean, I do think the, like, the important aspects are a, like, global talent pool, right? That's huge, right? There's no way everyone wants to be in San Francisco that is, you know, qualified for a given job. So that bit is huge. And then the cost of living part is like also huge. But both of those are separate points, really.

Zooming out, with a purely online digital bank in Mercury, what has this pandemic been like for a business like Mercury, essentially created for a world where people aren't going to wait in line? I've tweeted about this before. I'll put it in the intro, as well, that I'm a small investor in Mercury. But instead of that being the reason why you're on, it's the other way around. I'm an investor because I've always loved your insights and thoughts on things. But how has this impacted your business beyond just the actual logistics of work day to day, but the receptivity to a purely digital bank, especially one for businesses? I've tweeted about just— I used to go into Wells Fargo for 2 hours to get things done in a way that I can do on Mercury in about 6 minutes. I imagine it's been a boon, but tell me about what it's been like running a digital bank in this world that is craving digital tools for everything.

Yeah, we've definitely seen a boon, especially right now. You just literally can't sign up for a business bank account because previously you'd have to go into Wells Fargo, Bank of America, or something to do it, whereas now at Mercury, you can just do it online. Some of those things are a little incidental, and I also invest quite a bit, and I see this across a lot of software investments I've done where, you know, no one was going, oh, you know, our biggest selling point is that everything is online. I mean, that was part of it, but no one was like, this is my main thing. And you just don't have to have these in-person interactions anymore. And like software has always been an enabler for that, right? Like it's all online, it's automated, et cetera. And now it's just suddenly become like, not just an enabler, it's like a necessity. So that part's been good. You know, I think there's lots of We're well situated to capture kind of this banking moving even more online. Outside Mercury and a few other kind of competitors like us, it's pretty much impossible to sign up for a bank account online. So yeah, that bit's been good. Obviously, from a general economic perspective, businesses are getting hurt right now, and that has an impact on us. And yeah, it's not a great situation. Like, I'm not like, I'm wishing we come back to the pre-pandemic norms, but software businesses generally are pretty well situated for an online-only world.

And I want to go to— I want to zoom way out to go to your entrepreneurial beginnings, even life beginnings starting in Pakistan, if it comes up naturally. But I want to spend a little more time about the here and now. with you. And this is a super high-level question, but I have a feeling it will be still helpful for listeners. And I'm curious as well. How long have you been building businesses now?

So, my first company I started on October 4th, 2006. That date is seared in my memory.

Okay. Well, why is it seared in your memory?

Oh, it was like one year I worked. The only job I've ever had was at Bloomberg. And it was like, You know, one year in, I got my bonus and I quit like the next business day. So that was the date I quit. So it was like, you know, there was many months where I was like kind of coming to this date and I was thinking about it a lot.

Okay. We're, we are going to come back to that. And so 14, but 14 years in running your, uh, your own company and being an entrepreneur for 14 years, what are the aspects that you'd say are your favorite aspects of running? I know this sounds like a generic question, but it's going somewhere. What are your favorite aspects of being a CEO and founder of a startup, and what are your least favorite aspects? And you can start with the top 2 or 3 that you just wake up each day loving.

Yeah, I think that, like, I do think it's like a massive privilege. Like, there's not, there are constraints, but as an entrepreneur running your own company, there aren't that many constraints, right? Like, you can change directions, you can like think of a product idea and like work on it. You can hire great people and like you have the privilege of working with the people that you hire. I mean, you're not the only one that does it, but you help construct the company culture and like, you know, that can be esoteric in some ways, but, and unique to you. And that's, yeah, that's like a lot of things are like really good. And I don't, I think it's a really, like, I can't imagine doing anything else. And yeah, I've had, I guess, one job at least. And it's just nothing like it. Like, I think that aspect is my favorite part. And in terms of things I don't like, I think the hardest things I've at least find is things that where an external person or people have like an impact on like the way your company goes, right? So the most obvious one is like VC fundraising. I think I personally find it very draining.

Yeah.

better at it over time, but it's just, you know, there's a lot of emotion that goes into it. It's a difficult, you know, you're trying, you're basically like pitching someone and trying to persuade them, understand what their ideas are, what their question's really trying to get at. And like, it's a very, you know, even if you do like 3 of them in a day, and often when you're going through like this fundraising process, you're doing like 6 of them in a day, it can be very kind of draining. No matter how good you are, you get a lot of nos. And yeah, that's like, you put your kind of heart and soul into this thing and then like you hear a no, right? So that's always kind of frustrating and something that's even worse than that, although it's also a privilege to go through it. Like we went through an acquisition and I think, and you've gone through an acquisition. I think that's even worse than VC fundraising. It has a lot of the similar elements where someone else has like your fate in their hands and you have to like be persuasive and all of this stuff, but it also has like this very prolonged time period. And I just, I hated that experience. So those types of things are bad. I think anything to do with like product and like selling and like talking to customers, I personally generally enjoy that. There's like tedium to it, right? There's just, you know, sometimes you have to send off 100 emails and sometimes you have to do that. But I don't think like that's painful. I think that's like part of anything really.

Yeah, and it's, it's, it kind of sounds like that if your favorite aspect is the freedom and agency, then it would make sense. And I'm, I'm similar in that fundraising or acquisition is, it's the opposite of that. It's like this provisional, provisional opportunity that someone else decides whether it happens or not versus the obvious, uh, the, um, the agency and, and, uh, liberation that comes from just deciding your own path. with most other parts of, of the job.

The—

and I want to chat about the— we'll definitely cover the acquisition, but going back to either 2006 or wherever you want, one of my favorite questions for guests is tell me 3 stories that have helped shape who you have become, either personally or professionally in your life. And so what are 2 or 3 stories that come to mind that have helped shape who you have become as, as, you know, Yeah, there's a whole bundle of stories, I guess, around like my first company, which I will run as one story.

Number one, like, you know, before I started that company, I was working at Bloomberg. I would, you know, I wasn't a good employee at all. I would work the least amount possible and, you know, get home. But I found it like really tiring. Like I'd get home, you know, there was a 50-minute commute attached to it. And I would just have no energy at the end of the day. I just wouldn't feel good at all. And then when I first started my startup, I was working way harder, right? Like, yeah, I was single, doing my first startup. I was like at it for like 12 hours a day or whatever. And then at the end of that, I would go to lots of these kind of tech events. Yes, London was just kind of starting off as like a tech VC startup ecosystem. And there was lots of these events and I was just like super into it at that time. I would like work that hard and then go to these events. And even after that, I would feel like pretty energized. And I realized that actually, you know, what I actually, previous to like starting that first company, I thought I was just kind of not that hardworking. Yeah, that was like my self-image a little bit. I was like, not, I guess, lazy or something. Whereas like after I started, I was like, actually the thing I was lacking was like something I was passionate about. So, Yeah, I think it's really important to find your passion and be passionate about something. And yeah, that would be like the biggest kind of advice. And it was somewhat accidental. Like, I mean, you know, I happened to be good at programming, but it was never like that much of my passion. And I always thought I would start a company, but, you know, I didn't really know what that was about, but actually doing it, like, I was like, oh shit, this is the thing that I should have been doing all along. So. I was very lucky in that way.

Did you feel that instantaneously?

Just very, you know, that first company only went for 7 months and I've, you know, within, I would say a few months, I was like feeling it. So relatively instantaneous. But I mean, it was a big step, right? Like quitting your fairly well-paying, stable job in a, you know, this is 2006. Like, yeah, maybe in Silicon Valley people were doing startups, but no one was doing startups in London.

So it was just getting to that step What were the conversations like with parents or friends? Did you have to have any of those conversations to, you know, assuage fears?

I've always been like a kind of free-willed kind of guy. And my parents have always been like very kind of hands-off, which I've always appreciated. Like, they've kind of let me be fairly independent. My dad did go like, hey, are you sure you want to pay your well-paying job to do this thing? And, but he was, yeah, They weren't like, yes, you should do this kind of thing, but they were definitely not like, don't do it kind of thing. I think one thing that also relates to this is I think people aren't overly rational when they make choices that involve risk, right? They worry too much about the downside. And I often thought about this. I was like, okay, I have a job. I mean, it was a well-paying job at the time. It was about $50K per year. But I was like, okay, you know, maybe I'll do this for a year and I'll lose that $50K. But then afterwards, I'm pretty sure I can get another job that's similar. So that's my downside. And my upside is, you know, I could— back then I used to think I could make like millions in the first couple of years or whatever. But yeah, that's like, it's got this asymmetric upside kind of thing. And I don't think people are very good at like thinking about things with like— asymmetric upside. I think they tend to value the downside in a similar way. And actually, like most of the kind of value creation is in these situations where you have asymmetric upside. So I think that's like a good way of viewing the world. And yeah, so that's kind of what I was thinking about. Yeah, I was like 20, whatever, 22, 21. And I was like, yeah, whatever. Actually, the UK makes it really easy. Like I quit my job. I only had Like £3,000, maybe £5,000, so like $7,000 in my bank account. And yeah, the UK government paid for my house. Like there's this thing called housing benefit. If you don't have salary, they'll just pay for your house. So yeah, I was like, my house is paid for. I just didn't eat very expensive. I went to lots of these tech events where, you know, they give me free pizza. And that's like, I survived for like at least 7 months. And I don't even think I ran out of that money. Maybe I did.

You mentioned in other interviews that people should start companies when they're young and should become entrepreneurs.

I mean, I think you should do it when you're young or old, but it's just much easier when you're younger. Your cost of living is lower. There's not the other side, like you don't have to support a family. It's just much easier, right?

What would the asymmetric risk be like just right now in your life, if you were to think through it to, let's say you stayed at Bloomberg for the last 14 years and now you're thinking of starting your first company?

Yeah. I mean, the only, you know, if you are, if you're the kind of person who can be like really disciplined and like, you know, always live below your means and, you know, really save up, then you can do it at any point in life. Right. Like I could have, I could have potentially like worked at Bloomberg, maybe worked somewhere else. increased my salary and saved up consistently. And yeah, maybe I'll be in a position where I can like relatively freely do it. I am not like that disciplined, to be honest. So I don't know if I would've been that kind of person. I think more likely I would've increased my cost of living as my salary went up. And then I would probably be looking at it like a situation where like my life costs like $100K a year and I have like $50K in savings and I would, you know, be pretty worried about like starting a startup.

All right. So, is there any more to add to that first story that helped shape who you've become, that first startup?

Yeah. So, I think one other thing that is interesting is, you know, sometimes, like, people undervalue their skills, maybe. I don't know what the right way to phrase it is. But, you know, what was surprising to me back then, but I think it's even true now, is that there wasn't that many entrepreneurs that had, like, programming skills, right? And it's not Making a website is not that hard. Obviously, there's much harder parts of programming, but just being able to do that made me stand out. And I do think it's a— some people downplay programming sometimes, some people play too much, but I think if you can get good at it, it is a very valuable skill to have, both as just like, you can be a software engineer and be paid well, but also it just lets you be in this position where Like most other skills in entrepreneurship are soft skills, right? Like sales or design. Design's a hard skill. But I think those are the 3 main skills, like engineering, design, and sales. And if you can have one of the hard skills, it just enables you to much more easily do things, right? So the second startup I joined as a co-founder wasn't my idea, but it was from an entrepreneur who already raised some money. He was already in YC. He was a programmer, but, you know, wasn't, didn't want to do it full-time and he wasn't as committed to it. So it was very easy for me to get that position. And at that time it was like a dream position to kind of co-found something that already raised money and do that and move to San Francisco. So I think like having that skill, which I had undervalued, was like pretty powerful in the end for me.

Yeah. I mean, growing up, it's the, Especially before Zuckerberg and Facebook, 2004, but probably got more famous in 2007 or '08. Yeah, just the images of the CEO, it was not the programmer. It was the slick-looking salesperson. So I could see why it was undervalued. And was the company Heyzap that you joined for YC?

No, that was the one before. It was called ClickPass. It was a 2007 company.

Oh, very cool. Okay. So I don't want to get derailed. What's the second story that comes to mind that helped shape who you've become?

Yeah, I think this was— I'm pretty sure it was end of 2014, although it might have been end of 2013. This is Heyzap, which is my previous company. We were kind of going from 2008, and then we did this pivot in 2011 where we switched to becoming a mobile social network for gamers. So mobile was a big thing. We were already in gaming and like, yeah, everyone was launching social networks back then. I don't know if you remember. I don't think we were very passionate about it, but like it would seem like an obvious pivot. We started off in like Flash games, which were obviously a dying market with mobile kind of blowing up. So we decided to launch this mobile social network and we were pretty good at selling and we got a bunch of users, like 10 million users, but we just could not figure out how to retain them, which like really just means we just didn't make anything interesting enough for people to really care. So then like, I'd say like 2013-ish towards the end, you know, we're running out of money. We haven't convinced anyone else to give us extra money. We had like, I think around 15 employees back then. We'd already raised a $3 million Series A. Back then Series As were smaller. And then, so we're running out of money and then Basically, we found this company and it was a Japanese social gaming company. I want to— it's not Gree, there was another one. I'm failing to remember its name now, starts with D. But anyway, they gave us like $60K and they said, you know, we want to buy users in your social network to like play our game. And it was like the Wild West of like kind of app install advertising back then. Like they weren't doing any tracking, they just literally sent $60K to our bank account. And we were like, oh, this is kind of cool. Like this is like Yeah, we were doing a social network. So this was the first money we'd made pretty much since like we'd started this company in 2009, right? So we were like, okay, you know, we're going to run our money, but maybe there's something to be built here where, you know, we were Android focused and we were like, maybe there's something to be built where we milk and make like an Android ad network. And back then, like there was reasonable numbers of ad networks on iOS, but the Android space was like very kind of underdeveloped. So We managed to persuade our investor, which was Union Square Ventures, to give us an extra million, which I think rationally speaking, I still don't quite understand why they did it, but they're very supportive investors. And we just—

And they're a great, great firm.

Yeah, they're a great firm.

What do you think was going through their mind to give you more money in the midst of running out in a pivot?

They had been like very successful, right? Like they'd done like Twitter, Zynga, Indeed. Like that fund that we were invested in was like already paid off like 10x probably. And I think they were just like, okay, you know, it's $1 million, maybe these guys have a chance. And like, I think they really did it not as charity because like there was, yeah, there's like, there's this concept of like pot committed in poker, but that concept actually exists in VC world as well. Like, yeah, if you've already put like $3 million behind something, putting an extra million to like give it a chance and it doesn't die is actually like— you know, it kind of protects your previous $3 million as well. So it's kind of funny. And yeah, I mean, in the end we made the money, so it wasn't, it was a good choice. But so yeah, they gave us a million and like, this was like a pretty, you know, difficult and like situation for the company, right? Like we had to, and we were like very, very transparent with the employees. And like, that was the first time I think we, you know, before that point we'd, I don't think we were like untransparent, but we'd never been, you know, we would like kind of cushion things and like paint things in a pretty picture and like, you know, not really tell people how much was left in the bank account and all of this kind of stuff. And at that point, you know, I don't know why we decided to do this, but we just decided to be like very transparent where we were just like, hey, you know, we're going to die in 9 months unless we can make this thing profitable. And that was basically the The aim, right? We were just like, we have to make this thing profitable. Here's how we can do that. I mean, there was a plan attached to it. It wasn't just like, we're going to die in 9 months. But the plan was like pretty hard to imagine that we would succeed at, right?

Like we were going for— What was your, what was your just mental and emotional state with, with 9 months of runway and feeling like you had fired off a couple of bullets and it wasn't taking, now it's going to be a big pivot?

Yeah, that's a good question. I mean, it was, I'm always like an optimistic person and as long as I have like some idea, like I'm willing to like put like a lot of energy behind it. So I think there was that aspect, but it was definitely like hard, right? Like at that point I had like a kid, it wasn't obvious that like, you know, we'd get an acquisition or a soft landing or something. And we were just like looking at this thing with like a fairly tight timeline. And I'm pretty sure I took like a pretty aggressive salary cut, not that I had a good salary anyway. And so did my co-founder. So like it was a, you know, it was a difficult situation, but like it was, I think it helps when it's like a shortage timeline and a difficult situation. And, you know, it was really in our control again, like to come back to that previous position, like we just had to like make it work. And yeah, so we built this like ad network product and like, you know, a few people did leave the company. But I've always been impressed how many people did stay. I think like, yeah, there was, it was obvious at that point, like we weren't going to be a rocket ship. I mean, maybe some people had faith in it, but like, you know, it was, it was very much like survive or die kind of situation rather than rocket ship or not rocket ship situation. But I think like, again, like having a tight timeline, like, and the fact that we were very transparent about it, people were like, okay, you know, we will stay for this much time and let's see if we can make this work. And if we can't make this work, you know, at least we know when we've run out of money and like we need to get another job kind of thing.

What do you, just to pursue the kind of the, that your own personal emotional state as well as this, the team going through these realizations, just to pursue that further. What is, what were some of the things you look back on that you, that you feel like, okay, that was extremely helpful to ensure that so many team members stayed? Were there things that you did that you look back on and you're like, I'm really glad we did this or that? that helped people feel more comfort in staying in an obviously super uncertain situation as it went from a rocket ship to maybe just survive mode?

Yeah, I think there's a few things. I mean, there's definitely like that transparent aspect is like probably the main reason. I think the other aspect is we just had a pretty good culture. You know, I'm— I've never been very much a micromanager. Like, we gave people a lot of freedom and And we had a lot of people join relatively young in their career, either straight out of school, within 2, 3 years out of school. So yeah, they'd been there several years and I think friendship and like the— it's just the general cultural feeling was pretty strong. And I think that was very important. People enjoyed working there and they wanted to kind of try to see it successful. So I think those were like pros. Probably the main aspects. I mean, it helps that right now there's obviously this recession. And when you're in these downturns, I think people are a lot more worried about what happens next if I lose this job kind of thing. Whereas 2013 was relatively a Silicon Valley boom. So people probably had some comfort in thinking there was other opportunities they could go to.

Yeah. I remember Justin Kan telling me that One of the biggest surprises in his career is when they had to reduce staff and lay people off from— as they went from Justin.tv to Twitch. One of the biggest surprises was how committed the team was on the other side of it. And as a founder, he thought, man, this is going to be an obvious sign. This is just kind of starting from scratch and not— that we're not great leaders. And People will bail. But he was really surprised by the commitment of the team on the other side. And that was always a really huge fear of mine with Tilt. I think that's one of the things that led to a lot of just maladaptive tendencies of just wanting to just feel like we're winning all the time because I was afraid that people would bounce if We weren't winning all the time. And yet the experience of going through layoffs was right in line with what you're talking about and what Justin was talking about, that the commitment actually rose. And the amount of transparency, it's like an inverse relationship or actually a pretty on-point relationship. The more transparency you give of how dire a situation is, the more committed— people around you end up, end up becoming, uh, surprisingly. So you have a few that, oh, at least we had maybe, um, I don't know, 5%, um, that did bounce, but 95% were probably twice as committed on the other side of immense transparency and, and candor of how dire the situation was.

Yeah. I mean, I think it's, it comes back to this like slightly abstract point that like you kind of construct your own reality. I think if you view this world as like, you know, you have to like cushion everything and hide everything from your employees and like they need that, otherwise they're going to leave you then, like, and then you end up doing that and then they will probably leave you when something goes wrong because they're like, you know, I don't know when the hell this company is going to die and I have no information about this company. I'm just going to leave and like get another job kind of thing. Whereas if you separately construct a reality where you're very transparent and they understand what like You know, what the goal is and like the goal, I think people actually like really prefer revenue-based goals because, you know, everyone's got these like KPIs and like, this was big back in 2013 where people would have like MAU as a KPI or whatever.

We were squarely in that camp. It was, yeah, it was about 3 different, 3 different KPIs that weren't revenue.

Yeah, exactly. But, but people can like kind of smell that, right? Like they're like, hey, you know, so I'm being paid the salary, but the KPI is MAU. Like, who's MAUs ain't paying my salary, right? Whereas like, if you can, you know, and like, it doesn't always make sense to make revenue as a target, but like, especially in these difficult times, if you can just simplify it and go, hey, we just have to make money, otherwise we're going to die. And this is how we're going to make money kind of thing. It's like, I think that's like a very clear thing. And people are like, okay, you know, this is kind of cool. Like, we're going to make revenue and like, that's my goal. And I'm going to either work on product that makes revenue, I'm going to make sales that make revenue. And that's like, just simplifies like, I think people's like, Yeah, bullshit kind of smellometer or whatever is like way lower on that.

Out of curiosity, what are Mercury's main KPIs that you think about on a daily basis? And KPIs mean key performance indicators for listeners.

It's always difficult because like, yeah, we're a bank and there's just so many obvious ways we're going to make more revenue in the future than we do today. So there's definitely like that aspect to it, but I don't love it. And we do have revenue, so I try to still make that key KPI. So our biggest KPI is deposits, which is kind of, yeah, I like it because it kind of ties to the size of the company and the number of companies we have. Whereas if you just look at number of companies, it kind of misses the fact that like there's some companies are 100x bigger than other companies. So deposits is our main KPI. And then we have Active kind of businesses as another KPI, and then revenue as our third KPI.

And do you look on a daily basis or think on a daily basis on KPIs beyond that? I think a question that I remember thinking early on was like, do businesses just look at 20 different metrics and 20 different numbers and keep them all in one's head as they're building the business? So Just pointedly, do you think about any other KPIs beyond that on a daily or weekly basis?

Definitely. I mean, I don't even think about those KPIs on a daily basis. Like, there's lots of like spikiness and stuff like that. Like, there's no point in thinking daily. And I regularly think about all our KPIs on a monthly basis. I have like 4 or 5 other ones. There's like transaction ones, you know, how much, how many debit card spends, how much international wires and all of that kind of stuff. Which kind of shows the health of like kind of different pieces of the product and like how people are engaging with it. And like they do sometimes work independently from just active growth. And then, you know, if we launch something new, like we just launched an iOS app, obviously, like we're interested in like, is it working? What percentage of our customer base is doing it, et cetera? I don't think we're overly like a metrics-focused company. Like, yeah, there's—

Yeah.

I would say we are much more a customer-focused company, both internal customers and external customers, but external customers are easier to think about. If you take the iOS app, that was the biggest requested feature people would ask us all the time. And that was, I don't know if you could use metrics to drive that. And then on the other side of, yeah, what are the things that really frustrate customers? I think those are, yeah, I'm a— I like these big features as well, but I also like just like, you know, if you can just keep hitting away at like, pick the thing that like, yeah, frustrates like 10% of customers and like get rid of that. Right. And like, you can almost always like fix it with product, I think. And then you do the next thing that hits the 10% of customers. And then when you're like 100x bigger, it's just much easier because you've removed like these kinds of things that were frustrating, like a large percentage of people. So you get this like. compounding effect as you grow. So yeah, that's how I like mostly drive the company. I think KPIs are like, yeah, they're useful to investors obviously. And they're useful to you to go, hey, you know, if I, ideally I have like a plan to become like profitable or something, or if I want to raise money, like this is kind of where I need to go. So it's useful in that sense, but it's actually like most decisions don't, are not KPI driven. In my opinion.

I want to get to the third story, but you mentioned just revenue versus MAUs in 2013, and you're talking about KPIs right now being not something that you think about daily, and the company's not a data-driven machine of a place to work and much more customer-focused. Those 2 things are contrary to trends in Silicon Valley the last 10 years. It's a very broad stroke question, but what are some other things that you think you personally lead with or think about that is contrary to just how the broader technology market or Silicon Valley thinks about things? An example that comes to mind for me is I think there was this insane fascination with metrics on every front. You know, 4, 5, 6 years ago and A/B testing everything. And, and I remember just being like, this doesn't seem like the way to build a business. It seems too safe. If it worked, then everyone would do it and you could build a business by just testing red and blue buttons. But it just felt off. And then it kind of clicked. I don't know, a few, maybe 18 months or 2 years into every one of my PMs just being like, we should use this tool. We should be measuring this data and make all of our decisions based on data, that it was because of all the rise of analytics companies that were putting out content that like, this is the surefire way to build a business, is to test everything and make decisions based on that. And I think it really led a lot of software companies astray because of just that, that really hollow but, but very seductive, you know, goal that you could have just, uh, analytics platform tell you what you need to do to build a billion-dollar business. Are there other trends that come to mind that you think are kind of out of whack or ones that you don't agree with?

I think like you can abstractly, right, there's a reason that like certain types of news that has like good headlines and like all of this stuff like blows up, right? Like there's like these kind of memes that are like extreme are just like more interesting to talk about, right? Like if you take an extreme view that like, hey, A/B test everything, like you got to be metrics-driven and like Facebook had it. So like if you launched a feature, like you could tell like how much revenue was like A/B tested against it and how it affected retention and all this like crazy stuff. And everyone was like, whoa, Facebook's extreme. I think there's like, there's just like this tendency in human nature. And especially if you're like on like VC/entrepreneur Twitter that like one thing becomes like a meme. I mean, like, like the most obvious one right now is this work from home meme, right? Like everyone's just like, Facebook just turned work from home. Twitter did it. That's the future, et cetera. And unfortunately, the reality is the right way to do some things are normally in the middle between the extreme, and it's just not fun to talk about it, right? I'm just like, when I'm like, oh yeah, some people work from home, some people enjoy working in offices, that just doesn't sound contrarian and fun enough.

Right.

So, it's just like as a meme, it doesn't do as well. People talk about balance as a meme, but when you attach it to a given topic, it's always the extremes that are most interesting. You know, the one that was like always very, there's a lot of people that are like in this religion, so I'm going to like offend people here, but you know, I've always been like pretty out on this lean startup movement, which is actually kind of tied to the metrics movement, which is just like, you know, throw up a landing page and like, before you even build something, throw up a landing page and like send some ads to it and see how many email addresses you get. I'm just like, you know, if I put up an ad for like a business bank and like see how many email addresses I get, I just don't think like that would be a good metric for You know, it's just not how the world works, right? Like you need to, you need to like really have a vision of like, what is the thing you want to bring and like work hard to bring it. And then people are going to go, oh, that was cool. Like I'm going to talk about it with my friends. And like, that's what, that's what you get successful with. So, I mean, yeah, the reason the Lean Startup thing was huge was it was a counter to this like other prevailing thing where like people were just like spending like, you know, way too much money and like not launching anything. And like, You know, like if you look at like Magic Leap or something like that. So like the other extreme is also bad, right? Like the super fat startup meme or whatever, whatever we want to call it, right? So like it's just somewhere in the middle. Like you want to launch, like you want to get out there, but also like you kind of have to like work hard to do that. Like you can't just, you can't just like have this like super soft version of that. Like I don't think that's how like big companies are built.

That's, yeah, I think that's fascinating and that not enough people Talk about, uh, yeah, it is kind of a religion, the Lean Startup. Just test everything, and then it can get into the, the water of a culture of 3, 4, 5, 10 team members, and, and then no one remembers or has any muscle built up to make big risks. Everything is just this iterative, tiny, uh, micro metric-driven decision process.

I think reality is like most entrepreneurs don't, especially the successful ones, don't like fall for the extreme version of these things. Yeah, some people pull it off, right? The thing that's always hard in entrepreneurship is you can almost take any path, and if you have a good market and you work hard, you can almost do it in any way, right? So there's always examples for every kind of path. And then people are like, oh, look at this example, look at that example, et cetera. And actually, one of the things that's really hard about entrepreneurship is the most interesting things are done in these kinds of ways where no one else is doing them, right? And then by the time that becomes successful, it's too late, right? If you take a market like no-code, if you look at these companies that are successful in no-code, they're mostly from 2013. No one cared about it back then, whether it's Airtable or Notion. Whereas now everyone's like, oh, no-code's huge. And it's just, yeah, that's where the And you could probably make a new no-code company now, but it's just much harder. Whereas like when you have a belief, whether it's like how to build a company or like what market to go after, et cetera, like it tends to only be successful if no one cares about it at that point, which is like, it's always a difficult part of entrepreneurship because people, you know, people want to learn, right? Like they want to go, okay, how am I going to do this? Like, what's my path? And like, it's difficult. Like it's a difficult endeavor anyway. But the fact that it's so hard to just learn it from other people's examples actually makes it way more annoying. Okay.

Well, back to your 3 stories. What is the 3rd story that comes to mind that has helped shape who you've become?

Yeah. I mean, there's 2 others, so I couldn't decide which one to focus on.

Tell me both.

Tell me both. So, we went through this acquisition, right? And this is 2015. I think people don't talk about acquisition experiences very much. I think partly because a lot of people have very unique acquisition experiences, partly because like they literally have non-confidentiality agreements normally, partly because I think externally, like, you know, everyone's like, wow, you got acquired, like you made money and like, you know, that's great. So people should feel good about that. And, but like, it makes it hard to kind of be kind of honest about it when like everyone's like, okay, you, you know. Congratulations, right? It's actually kind of ties to VC stuff, right? Nowadays people are like a lot more open about it. Previously everyone was like, wow, you raised VC money, you must be amazing kind of thing. Whereas like actually you're like, oh, that was a really shitty experience. And I think like that acquisition experience like was pretty painful and I can talk about why that was. And like, so the reason I think acquisitions abstractly are just painful is like, number one, they just take a really long time. Like I think we were, Started in April and closed in January the next year. So that's like 8 months or something. And maybe that's on the slight long side, but like I've talked to lots of people and they—

No, ours was probably 5 months. And I remember thinking, man, with the amount of interest, this might be like 8 weeks. And it was, you know, 2.5 times that. Yours being around 9 months. Yeah, that's— I mean, I've heard of some that are 12 months. What was the first interaction In April, and how long did you think it was going to go?

So April, like we were approached by this company and, you know, we had actually tried to get acquired like a couple of times in a few years and like nothing had worked out and we just pivoted to this like, not full pivot, like kind of like within the market and like we finally like found something that was really working, which is like a, I won't bore you with it, like mobile mediation thing. So we were just like, oh, we finally found some product market fit. top game on iOS and Android was like using us right then. And we were like, okay, this is working. And then suddenly we were like, you know, approached by this acquirer that we didn't know anything about. I won't say who they were. And we were like, okay, you know, whatever, like, let's just ignore these guys kind of thing. And, you know, they kept like pestering at it and we were like, you know, just to see, like, and we were not serious about it. We're like, okay, you know, what's like the number, right? And they put out like a number that they would consider, which was actually like way bigger than we were like, we were thinking they'd be willing to do. Uh, and we're like, oh, this is kind of interesting. And—

And this was in April.

This was pretty much in April.

In the very beginning.

So we start, and then they were like, okay, you know, you have to fly to meet our team kind of thing. And, uh, I guess I won't say where they were because this isn't the company that actually acquired us eventually. Uh, but we did. Yeah, we did go to them and there was this super intense day. Literally, I'm going to— it was this crazy day. We arrive at 11:00 AM, do meetings all the way, and then have dinner with them and literally go to sleep at 11:00 PM. And this is after an international flight. And then wake up again at 9:00 AM and do meetings all the way until 4:00 PM. And they were like, meeting, having us like meet every single part of their team, talk about, yeah, talk about every plan we had, every metric, all this stuff. It was super intense. Like it was probably like 2 days. Those 2 days were like some of the most intense I've had probably. At the end of it, like we were discussing numbers a little bit and then, you know, we went home and then there was this like prolonged process where we were like going back and forth and like couldn't kind of come to terms. And then there was another acquirer that like did finally acquire us, this German company called Fyber that we That we had had, you know, they were like competitors to us and we'd had on and off kind of conversations with, just like friendly conversations with their founders. And then we mentioned to them, hey, we were, you know, getting acquired by this other company and then they jumped in the race. And that just, you know, that whole process was like, we're like 2 months in of doing this. And acquisitions are like really distracting because A, you can't talk about it with your team. So like coming back to this transparent thing in my I guess maybe we could be transparent about it, but generally speaking, it's hard to be transparent about it because everyone gets pretty worked about, what's my number? What's my job going to be? All this kind of stuff. And you just don't have those answers. And you also don't want to get people's hopes up because most of these things don't work out, right? So yeah, we went through that process for maybe 2, maybe 3 months, and then we finally actually managed. And this was some amazing— either skill or luck, we managed to get like a final term sheet from both of them within a week of each other, which was like entrepreneur terms. It's like a dream come true when you can get 2 deals directly together and like fight them off against each other. And we managed to do that actually, partly because like we had this like kind of investment banker dude that was kind of advising us and he was pretty good at choreographing that situation.

Did you have a formal investment banker or was he just—

Yeah, he was a formal guy.

Would you do it over again with— it sounds like you would bring on a formal advisor.

Me? Yeah, I don't know. I think probably yes, but maybe a different type. I think I'm generally suspicious of people that take a percentage no matter what the outcome is kind of thing. I think people that have incentives a little better aligned are better. Like I've heard of other people do it with, not with like a banker type person, but just like with like an entrepreneur type person that's like a little bit more kind of experienced and like it's kind of, you know, really like on the side of the company kind of thing. You still have to worry about like how you align the incentives properly. But one of the things that's difficult with acquisition is like, it's hard for the entrepreneur to like negotiate for themselves because you're going to be— You have to negotiate really hard, but then you're going to be working at this company afterwards. And you have like all of this like emotional baggage because like this is going to be your life and you've like worked on this for so many years. And it's very, I think, hard for an entrepreneur to be negotiating for themselves. Like I think you could tend to have like a little bit too much emotion in there. And like often the other side is like way more experienced than you are at negotiating, right? Because they've done it. Probably lots of times and they're like corporate, corp dev people, all of that kind of stuff.

So, and they might not even want it as badly as you do. There's not as much emotion tied up.

Yeah. And they can, they can wait it out. Right. Like you'll, and like, this is part of the game, which is why it takes so long. Right. You know, you have this like rush, you're like, this is my life. I want to get this done. Let's go. And they're like, yeah, if it takes an extra month and I get like a million dollars off this deal or whatever, maybe even $100K off the deal, like it might be worth it from their perspective.

Okay. And so this, this acquisition process, um, yeah, tell me more about just— you're in April, you get both of these term sheets, or were the term sheets in April, or when, when did they come in?

No, no, that was way later, right? Like April, May, maybe June or July.

And whoa, so you got the term sheets in July or June, July, and it still wasn't until January before the deal was closed?

Yeah. So I think one thing I tell Entrepreneurs, when I talk to them is, yeah, you have the most leverage before you sign that term sheet. So there's a long process of like due diligence after you sign the term sheet, but normally you have to sign a no-shop along with it or an exclusivity deal. So, and that's got a timer attached to it. So you basically say to that company, hey, you're going to put all this time and effort behind this. As long as these are the high-level terms, you know, I agree to not talk to anyone else. whether it's about fundraising or acquisition. And at that point, you actually kind of lose a lot of leverage, both mentally and actually, because you've kind of committed to this deal. You can't shop it around. There's a timer attached to it. And one thing we did very badly is we kind of agreed to a 90-day timer to the exclusivity, which I think is unusually high. And nowadays I tell people to like go for 30 or 45-day timer. Because 90 days, especially in a young kind of company, there's just not that much due diligence to do to require 90 days. And it actually gives leverage to the acquirer to kind of stretch it out and like ask more questions and try to get a better deal. And also just wait it out. Like they had this, did this thing and like, I don't want to like speak badly of them, but basically like we had our October numbers come in. So like this is already pretty far in, right? July, August, September, October. So actually, we must have signed the deal a little later than July even. So September, maybe. Yeah, I think we must have signed in September. So our October numbers came in and they were a little down, not like massively down, like maybe like 5% down or something. And they got like super worked up about it and they were like, oh, your October numbers are down. And we're like, this whole thing is done, right? The deal is done. Like we're months into it, the due diligence. And then they were like, okay, we can't do it like this. Here's another construct. And it was It's way complicated. But part of the reason this whole process was painful was also like, A, you know, there was this like continuous negotiation throughout this. It wasn't just like done and done. And then B, they were in Germany. So we would literally like talk to them at 11 PM and discuss a bunch of things. They would say, okay, we'll work on it. And then we talked to them again at 7 AM when we woke up. So you could imagine, like, it just completely destroyed my sleep for like months because, yeah, I'd have this kind of stressful conversation just before I sleep. And then I'd be thinking about this like stressful conversation I'm going to have in the morning. And, and, you know, we were like fairly committed to it. We'd been working on this thing for 8 years already. We just wanted to get this acquisition done. So yeah, it was, it was, it was an intense experience.

I remember with with ours and Airbnb, and it was between Airbnb and Amex. And we had this ticking time bomb of, of 3 months of cash left and needed to get the deal done near the, the end of the deal. And it was, you know, we started the conversations around, I guess, probably 6 or 7 months, 7 months of cash left, and thought it was going to take 8 weeks, ended up taking 5 months. And the, uh, so we're getting near the end and And I, I just remember, I just— with a startup, you're so used to moving so fast. I mean, it was, it was literally like speaking to someone from a different planet. You're using language, you're communicating back and forth, you think that it's, it is communication, or you think that it is, uh, dialogue, but their reference for things are just totally different. It's their, you know, time spans of things It's just, just so wildly different. And everything, to your point, got just stretched out. And I think part of it was, uh, was strategic. Part of it was just, oh, we can't talk to our CFO for 5 days, so this email is just going to sit in limbo for 5 days until we can get time on, on the clock with the CFO to, uh, to approve on their end. And it was, it was extremely Just the emotional asymmetry was, uh, was— I remember just a really trying time, a really strange, uh, time for not just us and Airbnb. Like, they just didn't care that much. It was, you know, if things took an extra few weeks, no big deal. For us, it was, you know, it was, it was becoming more and more dire by the, by the week, by the day because of our our runway, but also the emotional asymmetry of everyone we were around, everyone that I was around. My co-founder, Caitlin, and I were going through it together, but I think I was probably feeling it much more with the team, them not knowing that we were in these conversations with Airbnb. And I think, yeah, to your point, I don't know what I would do if I had to do it over again, but telling the team about potential acquisition is— especially with how many fall through, is like telling the team about every BD deal. And if you know BD deals are, you know, 20% chance of, of happening, 10% chance of happening, then you're fine when they fall through. But if the rest of the team is just alerted every time a deal falls through, then it, it can, you know, take its emotional toll. So it's just this really isolating—

You know, in acquisition, their life depends on this deal. Right, right, right. It's, it's like, maybe not their life, but like, that's It's part of their livelihood, right? Yeah, livelihood for sure.

Right. And I hated that isolating experience. I, I would just walk up the steps to— I remember it as if it was yesterday, just walking up the steps every day with this, holding this information in my head. And, and, and it was, um, you know, company-wise, life or death. It was, uh, pretty harrowing, extremely stressful because you're spending every minute of every day trying to do what you can for the previous years. It's just so wrapped into your neurological pathways. Every decision is, is to try to improve the livelihoods of everyone you care about around you. And now it's in this, like we were saying, this, this situation where you don't have agency and you, you can only do so much. It was— God, it sucked. It sucked. And you're right, people don't talk about it nearly enough.

Yeah. I mean, it was a privilege that we got to go through it, right? We made money, we had a successful startup because of it. So it's just hard to talk about. I think we don't want to seem ungrateful and other people have it worse, where their companies fail and they don't have any kind of successful outcome. So it's these kinds of things where You know, I don't want to downplay the positive aspect of it. Like it was positive and I'd do it again, probably if I was back in those shoes. So, so it's, it's just hard to like, like, we don't want to seem like we're moaning about it. Right. Like, right.

But it's, but it, but then, but then it goes on undiscussed and then you or me, I know for me, went through it with almost no expectations of no accurate expectations of what the hell was going to happen. So maybe there is, there's real reason for us to talk about it more openly. What was it like on the other side of the acquisition and you going back to essentially working for another, for someone else? What was that? How long were you a part of the team once you got acquired?

Yeah, I think actually, like, the acquirer kind of played this badly by making this such a bad experience. Like, it actually created like this, like, adversarial relationship, which continued for the whole kind of earnout period. And, you know, one of the, like, basically like from an acquirer's perspective, you're going to get this team in your office, right? Like, and that's a, and it's not just one person, like it's a whole team. So like having like an adversarial relation to start off with like this whole team that like you want them to be like productive is actually kind of silly. And like, I think That was something where like they thought a little too short-term about it. And A, it takes a while when you have this kind of like prolonged negative experience, it actually takes a while to kind of recover from it emotionally and stuff. And actually, you know, I really didn't get into kind of meditating and like calming myself and all that kind of stuff until, until this experience happened. And like, I really did need like some sort of tools to like— Again, I get back to being my normal and more relaxed self. And yeah, so it was—

And this was after the acquisition or during?

Yeah, after the acquisition. Because, you know, a lot of the time when you're in the middle of these stressful experiences, you're just like, so like your adrenaline is going, you're stressed out, and you kind of just deal with it. It's like after when like the experience goes away and you have nothing to be like actually stressful about that, like, I think negative things manifest. At least that's my experience of it. Because, you know, I'm guessing it's like a hormonal thing or something. Like your body gets used to dealing with stress and like it makes these kind of hormones or whatever to like enable you to get better at it. And then when that thing disappears, like you're kind of in this mind frame where you want to be stressed about something. There's nothing specific.

Totally agree.

So there was that aspect to it. And then there was just this adversarial relationship for the next year. Uh, which was like, thankfully our now was really relatively short. And I, I again left like the Monday after the earnout was done. I was like, okay, this was great. Bye.

That is so, it is so shortsighted of, of the company. I feel like some people want to pay the least and some people want to get the most. And the people that want to pay the least when it comes to people and emotions and livelihoods and, and teams and group psychology. That's always the wrong approach because you just piss everybody off. And yeah, maybe you— I don't know if it was the case with you, but I remember there are 2 people that in our experience that I could tell their whole just MO was pay the least, pay the least, pay the least.

It doesn't make sense.

Use every inch of leverage they can to pay the least.

Like the value of what you're paying for is not like— it's not like gold or something where like the value is conserved regardless of like the the next thing, right? Like the value is like the package of like, you know, X years of like these people's lives and like what they, what's the productive thing they gave to the company or something. So like, that's what you should be thinking about, value preservation rather than just, well, or getting like the most quality out of it rather than the best kind of dollar value.

Right, right. Okay. And so you were there a year and how long, a year and a day?

Just like, I mean, it was literally like my year was up on a Friday and I quit on Monday.

Yeah, just like Bloomberg.

Yeah, that's the story of my working life.

Right, right. Okay. And so, just a little bit more of that experience while you were there. What was it like being an acquired company CEO?

It was weird. I mean, there was the, like, there's this one aspect to it that, that was pretty strange for me, you know, where I went from like being the CEO responsible for the kind of the sales, the engineering, the product, all of this stuff to Basically, it shifted to just being responsible for like the 6 engineers that we'd brought over, or 7 or 8 maybe. And none of those other responsibilities existed anymore. And I was just like, and these 6, I think it was 7 engineers. Yeah, they were all like fairly like independent people that didn't need much management. And like, that was the whole way we'd constructed the company. So I was just like, I just don't have that much to do here. It was really strange. And then I tried to apply myself, but it was just like, you know, it's hard. Like, I'm not someone who just likes sitting around and like not doing something just because I can not do something. But it was hard to get the company to do things in the right way. And this, yeah, they weren't that big a company. I think they had like 400 people, but it was definitely challenging to, you know, like do things. And there was, yeah, so it was tricky. I mean, it didn't turn out to be a great experience and like it's really put me off ever starting a company again. I think often when you sell, if you do have a better option, like either raise money or ideally IPO or something, or just be profitable, I think it's better, right? Like from my view, at least I want to do startups. Like I want to make companies and if I'm going to do that, And if you sell, then yeah, you're often like back to zero. Whereas if you just keep doing it, you can like make it bigger.

And what was the— so that was 8 years into Heyzap when you sold?

Yeah.

After you sold, were you— what was your emotional arc like? What was the creative arc like? Were you— did you feel like, okay, 2 months in, 3 months in, I'm ready to start my next thing and I just need to make it a year through? Walk me through your thoughts on creating your next company and the timelines of that to when you had the idea for Mercury.

Yeah, so I wasn't sure whether I wanted to be an investor or build a company, and I spent a lot of that time after the acquisition kind of investing. I invested in something like 30 companies in the first year. And obviously, as you know, from being an investor to invest in 30, you have to speak to like 100 or something. So that was kind of where I put most of my energy. And then it wasn't until basically the acquisition was done where I really went like, okay, is this something I actually want to do? And in the end, I decided no, I did want to kind of pursue a company instead. And the idea for Mercury I've had for a really long time. So I think since like 2013 or so, maybe '14. Yeah, something like that. I've had the idea for Mercury. So it's nice when you've had an idea for a long time because it kind of ferments in your mind and you think about like, here's all the angles and like, you know, here's how to approach the market. And I had this idea a really long time ago. And then there's this company called Seed, which is a YC company that came along, I think maybe a year or two later. And like, this often happens with ideas, right? Like you have an idea and then you're busy doing something else and then a company comes along and does it and you're like, okay, you know, never mind. It was a good idea, but I'll move on and do something else kind of thing. But that company didn't work out. So, you know, again, in 2017, I was like, okay, yeah, I've had this idea for a really long time. And I'm from the UK and, you know, I could see in the UK, this whole challenger bank was becoming a huge thing, right? There was Monzo, there was another bank called N26, there was another one called Tide, another one called Qonto. All of these are kind of European challenger banks. And in early 2017, there was a couple of US ones, but they were not successful, whereas these UK and European ones were like successful. I don't know what their valuations were, but, you know, it was obvious that they'd hit some kind of, some sort of resonance. So I was very lucky in some ways that I had this idea that I was very passionate about. And I thought about it for a long time and it was in a big market and I could like, and it was also in a market that I was really interested in serving because, you know, I've been doing startups for a long time. So like making something that entrepreneurs would like is is something I enjoy doing. So, all of these things came together. I mean, otherwise, I don't know, maybe I would've come up with another idea or become an investor or something. But yeah, these kind of fortunate things are rare.

Well, to interweave the investing, building our friendship, this conversation a little bit further, I remember when you first— we got lunch at Airbnb and I think maybe we were like, Maybe 6 months on the other side of the acquisition, I was still in— for a year and a half, I was like, I'm never starting anything ever again. I am just going to invest. And good God, was that painful. And yeah, probably 6 months into Airbnb, we're having lunch. I remember the table, I remember the conversation, everything. And you were like, what do you think about an idea for a bank for startups, a purely online bank? And to give you the below-the-line version of what went through my mind—

I don't think you liked the idea.

I didn't. I didn't. And to give you the below-the-line version of that is I was like, I thought it was— and it was a huge miss on my part. I wrote a small check, but I looked back and I was like, damn, dude, you're an idiot. Because it was— and this is what a lot of quote-unquote challenger banks were doing in 2016, '17 here in the US, was they were doing these tricky things. Like, we're going to do this niche thing over here, or we're going to be the API for other people to build banks on top of. And it wasn't just simple, in-your-face, obvious. No, it's just bank online, purely online, and it's built for startups. So when you told me the idea, I was like, I remember thinking it was almost just too big and simple that it's going to have just too many competitors over the next few years.

Wrong.

Completely wrong. Big, simple, massively ambitious ideas rarely have too many competitors. So that's the first thing. It was just stupidly wrong. Second, it's because of my experience in fintech and building Tilt and investing a little bit, but really just building it. I was so personally burned by the space and the insane regulation And just all that goes with building in financial technology. It's like building a house with components that are 200 years old instead of everyone around you building startups with all of just the prefab, super modern tools. And it's like building an Amish 20-level skyscraper is what it feels like at times with financial technology. And I was so burned by it that I was like, no, don't do it, man.

Don't do it.

And so those 2 things. And then 3, I think I was probably influenced just by my own experience of just, God, this is just a minefield and I don't want to start anything soon. Even though I was investing more, For this area code of an idea, I think I was just so burned and so burned out. I was like, don't do it. I just don't think that that's the right area. So stupid and so wrong. So I ended up— when he asked, okay, do you— I'm gonna do it, do you want to invest? I, I, I, I think I wrote a $5,000 check, small check, and it's like, okay, this is because it's Imad and it's you, but man, I don't know where this is gonna go. And if it's a good idea. It was this strange, irrational thought of, it's going to be so painful, it's not going to work, and it's so obvious that everyone's going to do it, which makes no sense to have an intersection of both of those things.

I think you weren't the only one. I actually had a really hard time with fintech investors in general.

How come?

I think it's Andreessen Horowitz, who did become our fintech lead in our seed, they were pretty much the only fintech-specific investor. I mean, there was some fintech entrepreneurs, quite a few of them that did invest, including you. But in terms of people who did fintech investing all the time, I just find it really hard to convince them. And I think it's you need a certain level of naivety sometimes to do things. And like, to be honest, I was like naive when it came to like fintech things, right? I wasn't naive when it came to like the product and like the market and the go-to-market. But when it comes to like very specific things around like regulations and all that stuff, I was kind of figuring it out, right? And I think when you don't have that, like it's hard to, like you see all the problems and things, right? Like you're like, oh, it's really hard to make money on deposits, hard to, acquire business customers, like the CAC is too high. Like I can tell you, I mean, now that I'm in it especially, I can tell you like the 20, 30 reasons not to do Mercury, right? And it actually kind of comes down to this like asymmetric upside position a little bit, right? Like it's very, when you know something really well, it's very easy to focus on those kind of what is somewhat like a symmetric downside, right? Like it's like, here's all the money I'm going to put in and here's all the ways it can fail. But like, You also have to kind of go like, what if I'm wrong, right? Like, what if this like really resonates with people? What if this becomes like a business bank for the future? Like, how big can that be? And like, how would that happen? And this is like a common thing that people say when it comes to investing, to try to like look at that upside thing. But when you really understand the downsides, it is hard to invest. I find it hard as well. I haven't invested in many fintech companies. I haven't invested in any social networks. I haven't invested in any ad tech companies. Like all the things I know really well, I have a very hard time investing in.

Well, that helps me feel a little bit better. But one of the things that changed my mind on it was Justin, probably 6 months later, a year later, I remember Justin telling me, he was like, man, I'm investing in like all fintech. And I was like, what do you mean? He was like, it's just obvious. The plumbing and infrastructure is 20 years behind, and it won't be for very long. And it's only going to go up in the world. So it's such a massive space, and to your point of the asymmetric upside, it's such a massive space that it's worth making bets all around the world. And he mentioned some Indian Stripe kind of clone and something else I don't remember. But I left that conversation, I was like, that's actually totally— True. It is an inevitable obviousness that this will change. And it is so obvious and so inevitable that it's worth making these bets over and over again because you're wrong 7 times and you're right 8. Well, if that 8th time you make 50x, then it obviously is a net positive on all previous 7. So that also changed my mind.

I'll give you a funny story about you investing in Mercury, actually. So I was raising the seed round, right? And it's hard, like we were, we had an ambitious goal of raising $5 million and it's hard to get $5 million together with like lots of small checks, right? So, and I wasn't planning to do a VC round, but yeah, I'd known Alex at Andreessen Horowitz for, you know, basically earlier in that year, just when I was exploring this, he'd been helpful. So I really had no kind of expectations, but I went to meet him on like the Thursday and he was like, oh, this is great. Like, you know, I'm into this. Like, let's bring you in for a partners meeting on Tuesday. Right. So Thursday, Tuesday, and I had literally had no other VC meetings planned. I was talking to lots of angel investors and some like seed VC funds, but like no real VCs. And I'm like, yeah. And like, this is as like experienced entrepreneur. I'm like, wow, this is like so dumb. Like you never want to be talking to one VC, you should be talking to 20 of them, right? So, I mean, that's one story, but I was like, okay, you know, I want to maximize the chances of like getting this done. So I was like, okay, who do I know that Andreessen Horowitz has backed previously? Because I think one of the best ways to get VCs to be into you is like if you can get support from like their founders that they like, that they previously backed, especially in the space. I was like, oh, look, James Vachara was backed by, uh, and, you know, Andreessen Horowitz, like Tilt was your, uh, I think they did maybe 2 rounds in Tilt.

Yeah, our A and B. Yeah.

Yeah. So, so then I, I don't know if I emailed you then or like maybe I was already talking to you, but then we talked on the phone. I believe it was a Saturday or Sunday and you just got off a flight or something. Uh, and then this was like my ulterior motive for trying to get you Uh, in because I wanted to show them between the Thursday that they'd said come into the partners meeting and the Tuesday when I came into the partners meeting, I wanted to have a few names on there that they recognized really well. And so you were very useful in closing that deal.

All right. Well, that's, uh, I will, I'm sure that my commission on that is kind of lost in, in email. I'll, I'll read, I'll look in my spam folder. Uh, it's, and, and they are phenomenal investors, case in point that they were one of the the larger institutional funds looking for this. I, I, it's very hard to state why this is an irrational negative in people's minds, but for me it was almost like this is so obvious and had been tried. But again, people get— Paul Graham talks about this pretty often, that startup founders get a little too tricky, a little too cute in how they enter a market because they're so afraid of competition. So they choose some small niche area. Instead of— I think one of the brilliant things that you did with Mercury was, it was kind of niche-ified with startups, but it was just the bank. It wasn't, here's this small, little, narrow banking service that we're going to enable for you. It was just the bank for startups and is easily on its way to becoming the business bank. But it was this big, huge, Simple, massive idea that I think many listeners might listen and be like, that's obvious. It should be real big ideas like that. But the bank for startups is just— that's like being in Westeros from Game of Thrones and being like, all right, we're going to build the bank for Westeros. It's like, no, that's already taken. People have already done that. It's so obvious. Don't do that. And it was like, we're going to build the bank for startups. And it turns out that— and Peter Thiel talks about this pretty often, and it's similar to what PG has said— the bigger you go, the rarer you actually find competitors. The more ambitious you go, the rarer you find competitors, and the more things end up working out for you because of power laws. Because Andreessen Horowitz says, Well, shit, that's such a big idea. If it works, that'll be massive. So let's put $5 million in versus the tiny little strategic tactical entry into a market that, um, you know, you end up don't getting a power law of attention and awareness because it's such a small niche kind of opportunity.

And there's also like this word of mouth element to doing something like a little crazy, right? Like people, People don't talk about like this niche thing that like attacks this vertical, but it's much easier for people to say, oh, these guys made a bank, right? Like it happens all the time, right? Like people are like, oh, you made a bank? People are surprised about it and they want to talk about it. And like, it seems unusual. I mean, now it's getting a little bit more normal maybe, but I think even now it's like, it's unusually hard to do. So people are more likely to talk about it, which actually makes it easier to do it.

It's like the Tesla effect or the SpaceX effect.

And actually, I think one of the reasons fintech investors didn't want to invest is they thought it was too broad as well, right? Like they were like, oh, you know, why aren't you going after this thing? And like, what about this thing? Like one of the, one of the things I talked about in the early Mercury pitch, and I still talk about, actually we haven't really done it, but it's an important aspect of what I want to do is like helping businesses understand their finances, enabling them to, you know, not just be a bank, but like, you know, all the money's flowing through the bank and we should really like help you understand and manage your business, right? And then tons of people like, hey, why don't you forget the bank thing and just do this? This sounds good. And I was like, you know, this is just what I think banks should do. It's not like what I want, what I think is the interesting business idea. It's just like what I think banks should do. Mommy!

That's awesome. Oh, I hear your children in the background. Which is awesome. And that is— we're keeping that in the episode. But the last question, and that's a good cue for the last question. The last question for you, Imad, is what's something you think a lot about that you rarely get a chance to discuss or talk about openly, whether it's personal, professional, just something that takes up a lot of mindshare for you but rarely comes up in conversation?

I think I will have to move this child away from us. Otherwise, it's going to be disruptive.

Okay.

All right. She's self-walking away, if that helps. Yeah, I think that, I mean, this relates to children actually, and it relates to startups. I think there's a, I think like one thing that's like really difficult is like, kind of like, what is the point of life, right? And I think I struggled with that growing up, right? Like, yeah, like the most obvious points, like, yeah, I was raised in like a religious household and like, You know, in like a religious household, like, you're like, heaven is the point of life, right? And like, if you think about heaven, at least portrayed in the simplistic sense, like you get everything you want and like, I guess you get to relax or something. And neither of those things seemed overly appealing to me. Like I never found like sitting around doing nothing that fun or enjoyable. And I also like, you know, like I felt like I had the food I needed. I wasn't like— It wasn't like ice cream was like something that would blow my mind. Maybe that's like because we live in like relative abundance, right? Like we have these like basic necessities met that like this kind of picture of heaven just never made sense to me. That's like a thing about the point of life. And then I think like both when it comes to like startups or having kids, I actually think like, I think these things that, you know, have this like asymmetric upside and asymmetric impact are kind of the point of life. There's a lot of struggle involved in a startup or having kids, right? It's not easy and it's a prolonged struggle as well, right? There's stressful moments. There's like, am I going to have a salary? Or with kids, it's like, why am I waking up at 3:00 AM? Right. There's no closure or—

Yeah.

And you're worrying about it all the time, right? I don't think there's a You know, if it's like 9:00 AM on a Saturday, I'm still thinking about like, you know, what's my like investor update gonna say? Or like, how am I gonna make the sale? Or like whatever it is. And like, same with kids, right? Like you're always like, am I doing the right thing? Like, are they getting educated in the right way? It's like, you know, have I done something to, you know, whatever it is, right? Like there's, it's actually like fairly similar. It's like this kind of continuous like thing you have. But the end of it, you get, with a startup, you get to make something and have this really outsized impact in life. And with kids, you get to make a human and have this outsized impact in life. There's a lot of similarities to it, which I find kind of interesting. So I find that there's probably 2 kind of points in life potentially, which are different and actually almost separate, but probably are fairly reasonable kind of opinions to end up with. I think for me, the point of life is to like do things that are kind of difficult, but have this like both like leverage me as an individual, but also like help as many people as possible. And like, I happen to just be good at startups. And like, I think that's the best way I can help as many people as possible, right? And have the biggest impact possible, whether it's like with the employees I have or with the customers that use it, et cetera.

Yeah.

That to me is like, fun. Like, it's hard and it's not like individual moments aren't often that much fun, but the end result is like something I'm like, oh wow, like this was cool. So I think that's interesting. I think the other kind of asymmetric opposite of that in terms of point of life is kind of like this kind of Zen meditation side of it, which is like actually, you know, don't be too attached to things and be like very present and like in the moment. And I don't, I find those like kind of difficult to like how you, yeah, like there's one side of it is like be extremely attached and like be very, do difficult things and like just like try to succeed at them. And the other side is like be very like detached and present. Like I've definitely talked to like some entrepreneurs that are like very kind of into kind of meditation and et cetera. And yeah, I still personally like don't think those things are like—

Well, the easiest, easiest way to detach is to attach to something higher. So detaching from maybe the worries, concerns, or results in previous entrepreneurial lives, now maybe you're attaching to the present, which makes it a little bit easier, or attaching to the process like the meditation in the morning.

That's interesting. Is that— do you think that's wordplay or do you think that's like—

No, no, I think that's— so I love this philosophy that I talk about in the Yeah. First episode when I give my own kind of below-the-line story about Vedanta, which basically predates Hinduism and is kind of the source text, source philosophy from the Upanishads that then becomes Hinduism. And Hinduism, Buddhism, the adage is that Buddhism is Hinduism made for export, kind of a simplified version. And so you go from Zen to Chinese Buddhism, to Hinduism, to the source being Vedanta. And Vedanta is— it's all about detachment, but the route there is through the knowledge of the things to attach to. And you like work your way up by just hacking the human desire to attach to things until you get to the highest ideal that then you're able to detach from that. But it, it was a powerful concept that helped me realize, oh, the, you know, I was able to detach from my childhood toys very easily, even though I loved them at one point. I was able to detach from them easily because I attached to something a little bit more interesting. And, and I think that that's the premise of Vedanta, is through knowledge and reflection you realize, okay, there are higher things to attach to, and you just hack that biological desire.

That's also like a parenting technique, right? Like when your kids like Really want something, you give them something else. You're like, yeah, this ice cream is bad for you, but let's go, let's go build this puzzle.

Right, exactly. Exactly. That is exactly right. And it's, um, you know, we're, you and I are 30-something-year-old kids, uh, in our own right. So it's still, it's a helpful tactic. Well, where can people find, where can people find out about you and Mercury online, Imad?

Yeah. Uh, Mercury is just mercury.com. Check it out. And I'm on Twitter, it's just @Immad, and I sometimes say interesting things, but you can follow me and tweet at me or something.

And you all have a great conversation series that is a T-Series that I've been— thank you for inviting me on a few weeks ago, but it's really great conversations. I loved the one with Elad Gil. Man, what a track record Elad has as an investor.

Yeah, that guy is incredible.

Insane.

Yeah, you should also follow that. But if you follow me, I will retweet all of them anyway.

Awesome. Well, Imad, thank you so much for the generosity of time and the candor of everything we've chatted about from the earliest entrepreneurial moments to the acquisition process and what it's really like, to the idea maze and choosing Mercury and smartly going against a lot of the people that maybe thought they were being smart and saying that it wasn't. It wasn't the right idea. I think you're onto something that's going to be transformational in the next decade because you persevered through it. Thank you so much for the time, and I can't wait for having you back on the podcast sometime soon.

Yeah, appreciate you having me, James. I talked about a lot of things I wouldn't normally talk about, so hopefully it was interesting content.

It's very, very.

Hopefully we get to meet up again in person soon.

Hopefully. On the other side of this COVID stuff, it sounds like.

Yeah, exactly.

Thank you, Imad. Hey friends and listeners, I hope you enjoyed today's episode. If you want to hear more of these types of conversations, go over to your favorite podcast app and hit subscribe or leave us a review, good or bad. We love hearing from people that that appreciate this type of conversation and want more of it. You can also follow us on Twitter @GoBelowTheLine, as well as see in our Twitter bio our email address for you to shoot us a note on any suggestions of guests or topics that we should cover. We read every single one. So thank you for those that have already sent those in. That's it for us today. We will see you next time on Below the Line.

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