Edu: Scaling Up - Insights From A Unicorn Founder w/ Immad Akhund

I think every single role can make your company better, can help you build product, can help you get customers, can like be this engine for you. And if you start thinking about every part of your org like that, it stops being like, ooh, where do I put in compliance? It's a reason to put the greatest people you can find in that role, and then give them a lot of responsibility and get them to really be a cohesive unit.

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You're listening to The Startup Podcast. This is an educational episode, in-depth masterclasses about the concepts essential to building, running, and investing in Silicon Valley style startups. Whether you're a founder, investor, or operator in a startup, you'll gain insights into the principles that power high growth disruption the same way Facebook, Google, and Uber do it. The conversation starts now. Hey, I'm Chris.

And I'm Yaniv.

And I'm Immad.

And in today's episode of The Startup Podcast, we're going to talk about the challenges of leading a hypergrowth company at significant scale. If you're listening to this podcast, chances are you hope to be at the helm of a rocket ship one day. But what is the day-to-day reality of it? And what can you do to prepare yourself and your startup for rapid scaling? To discuss this with us, we have the perfect guest, somebody who is living it right now. Immad Akhund is a startup guy. He founded and exited a number of companies, including Haysapp, which was acquired for $45 million. He is a prolific angel investor and a part-time partner at Y Combinator. For the past 6 years, Immad has been founder and CEO of Mercury, a provider of banking services tailored to startups. Mercury is growing incredibly fast, and at the time of recording is a unicorn. The company was last valued at $1.6 billion in a recent raise led by Coatue with participation from a16z and a host of other top-tier funds. So, Imad, thanks so much for joining us. Welcome to The Startup Podcast.

Yeah, thanks for having me. Excited to be here.

Just to set the scene, it would be great if you could spend a couple of minutes telling us about the Mercury story and where you're at right now.

So I had this idea actually back in 2013. I was annoyed by the banks we had to use in the US, especially banking for entrepreneurs. Well, before Mercury, just very tricky. Products are kind of bad and you have to pay lots of money and customer service is impossible. So I was like, someone's going to fix this, but I was doing my previous startup and I thought someone else would do it. And then in 2017, no one had fixed it. And I was like, okay, let me just see if I can do it. So I kind of kicked off investigating whether I could do this idea, decided that I could, raised a kind of seed round, $6 million at the end of 2017. Took us about a year and a half to build it. And we launched in April 2019. I don't love saying this because I know for a lot of entrepreneurs it's such a struggle, but for us it was kind of an instant hit when we launched it. And we kind of dealt with scaling headaches and all of that for the first year. We raised $20 million from CRV, which was our Series A, pretty close after our launch. So we launched, we only had 9 people at Mercury. I'll try to give you an estimate of like our scaling as we went. And then by the time COVID hit, March 2020, we were about 30 people. I had been trying to scale actually like relatively slowly because I wasn't sure we really had product market fit because you never know at the start. And I think one of the more dangerous things to do is to scale too quickly. And then COVID hit and I was like, aha, I'm so glad I didn't scale too much. But then we grew really fast after COVID because COVID was this big boon to e-commerce companies and startups. So we scaled from like 30 to 70 in 2020, 70 to 200 in 2021, and then 200 to 400, 2022. And now we have 560-ish at Mercury. We raised another round in 2021, which was our Series B. Today we're profitable. We serve more than 100,000 companies going to use Mercury. And yeah, that's kind of like rough scale.

So, Imad, you say that it was an instant hit and every entrepreneur dreams of such a thing. What would you attribute that to? Was it just the right idea? Was it set up correctly? Was it framed correctly? What do you think that you did that made that possible at the very beginning?

Yeah, that's a good question. I often ask myself that question. I think number one, I had a very, very good idea of like what was the minimum lovable product. Which is what I like to say, like a minimal viable product, but people would actually fall in love with it. Just because I'd been an entrepreneur for so long already. So this was my 4th company I started in 2017. So I was already 11 years into building companies. So I was like, I can't use this until it has all of these features. And my take on it was there was no point in launching until we had all those features. So we had wires, for example, and up until that point, no neobank, which is what people call these kind of digital banks, had ever launched in the US with wire support, but I was— Like no one's going to use this unless it has wires. We had all sorts of user management. Like you could have multiple users, you could have a bookkeeper. So it was a pretty complete product and it took us a year and a half to build it. So that was one aspect. And number 2, we actually ended up doing 2 partner banks. I won't bore you with it, but it's quite a complicated process to integrate a partner bank. And the fact that we had to do 2 meant that it just took us a lot longer. But because of that, like a lot of our backend engineers were just kind of stuck doing this like second implementation. And it took a lot of kind of business work. But the design and front end had a lot of extra time. So we ended up polishing the onboarding to a very exceptional level, right? Like we redid all of onboarding and I didn't even realize this before, but like the onboarding is such a first impression. Like imagine signing up to a bank, everyone assumes it'll be like very painful, right? So we were such a contradiction to people's expectation when it came to onboarding that everyone was like, wow, this onboarding is so good. The rest of the product must be amazing. So that was number 2. And number 3, I tried to position ourselves to have like a pretty good marketing launch. So not in the sense of press, actually, like we ended up delaying our launch because we couldn't get TechCrunch to cover this. So it's kind of funny, like we literally did not have a TechCrunch cover. And that was like the main thing I was aiming for. We ended up doing it with someone else. But we did have 60 kind of angel investors and I deliberately picked A lot of angel investors that had a lot of kind of tech clout as it was. They had a good following online and people respected them and they would promote Mercury when the time came. And that was a deliberate strategy. And that really actually was surprisingly helpful. Like we had Justin Kan and Elad Gil and Andreessen Horowitz kind of promote us after we launched. And that really kickstarted the flywheel.

Yeah, you mentioned onboarding and I just recently posted on Facebook, like stop building features, ship your bloody product. And polish what you have. You know, onboarding is so, so important and so underinvested by so many founders. Just got off the phone with a founder I'm advising and, you know, I was saying to them, it's kind of like the yellow brick road, right? You've just landed in Oz and you're asking the user to go on a big, long journey. And if the beginning of that journey is paved with yellow bricks, they might at some point land in some dirt where the road runs out. But at that point, they're doing a bit of sunk cost analysis of like, well, I'm already this far and I can see the Emerald City. And so the first few steps need to be really fantastic. And it seems like that played out really, really well for you.

Yeah, 100%. I think it depends on what kind of product, right? We were all about building a self-service product that like, I think if it's self-service, consumer, SMB, it's really important. I think for more B2B enterprise things, I think you still need an amazing experience, but maybe some of that's in the demo and the sales process and things like that rather than the product.

Perhaps the generalization of that is you want to make it easy for your customers to to get started, right? And so when it's self-service, it is about the onboarding, the new user experience. If it's enterprise, we had April Dunford on the show a few months ago. And, you know, one of the things she talks about is make it easy for people to decide, right? So it's like, make sure that in your sales process, the default is going to be no. So how do you make it easy for them to get to yes? But either way, it is really about getting that initial buy-in, overcoming that activation hump.

Yeah, 100%.

So you said it was an instant hit, but you also mentioned that you'd founded 3 or 4 startups before, and I know you're an angel investor and a bunch of other stuff. And so I I think one of the points I'd want to make to our audience is even an overnight success or even an instant hit doesn't usually come instantly, right? And you certainly had some other very substantial successes before that, but you built Mercury on top of well over a decade of experience, as I understand it, in the startup space. And so even then, in that sense, to get to the starting line was not the work of a single day.

Oh yeah, 100%. I mean, even this startup took a year and a half to launch, right? It was a big investment to get there. In my previous company, it took us, I would say, like a good 6 years to get product market fit. We did like 4 full pivots before we got there. And even though the final thing did get to product market fit, we launched it and no one cared. And we had to iterate for another 9 months before I would say we truly hit product market fit. So I felt both variations of this and everyone's journey to it will be different.

Well, actually, that's a perfect segue to the second question that I wanted to ask you about, which is about product market fit. Because when I speak to founders, I hear a lot of anxiety about product market fit, that it's this mysterious thing. You don't know when you have it. And that if you scale too early before you have product market fit, you're in trouble and so on. And you mentioned earlier on, it was an instant hit. You were scaling straight away, but you weren't even sure whether you should do that because you said, I wasn't sure if we had product market fit yet.

Yeah.

So how do you establish that you've got product market fit? And I guess, what does it feel like?

It's a good question. There's lots of aspects to like, what is true product market fit? Like it is a bundle of different things. That's why I think it's hard for people to explain it very well. I'd say 2 aspects that are important is number one, you have scalable Distribution built in that continues to scale, and for us that was word of mouth. 90% of our users for the first year was just people telling their friends about it and being one of the recommended solutions for startups in the space. And then number two is retention. It doesn't matter how good your distribution is; if people don't stick around, you're not building something long term. And I think retention is actually like probably the key, right? Like if you look at a lot of things that fizzle out, even if they have good strong distribution up front, it's because they just didn't have a sticky enough product. And it also takes. a while to understand retention, right? You can build something, get that distribution, and sometimes it takes 3 months to really go like, okay, you know, is that retention curve flattening out so that, you know, after 1 month you have 30% of people, after 2 months you still have that 30% of people and you can feel good about pushing that distribution more. So I think, I mean, there's other factors to it probably as well, but like if you have a scalable distribution, ideally the product, the users are coming and you don't even know where the hell they're coming from, right? That's such a good feeling at a startup. When you first do sales or whatever, you have to fight for every user. But one day you wake up and like, there's just a big company or a bunch of consumers or whatever it is. And you have no idea what brought them there. Like it wasn't your work. It was like the product's so good. People are telling other people about it or they're discovering it. I think that's what you feel in distribution. People come from nowhere. And with retention, you can look at those graphs and like, you want to go like, wow, like people are really sticking around even like 3, 4 months later. The only third thing I would say is there are some people that have 1 and 2, but don't have a good unit economics. And if you're in that box where your unit economics still don't make sense, even if your distribution is cheap and your retention is good, then like potentially you need to do some pretty hard thinking about whether that startup makes sense.

Yeah, it's build something that people love and that they stick around and use, right? I think that's well summarized. Those 2 key things are really important. And so the core of this episode is really going to be about, okay, you've hit on something. You've got that tingly feeling known as product market fit. You've got clear signals and metrics that demonstrate it's real. Now is the hard part of building a scale-up, right? Which is the challenges you bump into, organizational infrastructure, culture, continuing to fundraise and so on. And so maybe let's start with what surprised you most about that scaling inflection point and what were some of the key considerations that you had to think about as you were scaling up?

I mean, I would say it was relatively smooth for the first 160 people, probably. I feel like most people say it breaks at like 60 or something for them. I think we invested We invested pretty well in culture before we got to product-market fit. I would say once you have product-market fit, especially at the start of product-market fit, where you haven't built up a company and an organization to support it, it's really hard to change things, right? If you didn't have a good culture before then, it's hard to install a good culture afterwards. I think that's true for product as well. Like the shape of the product is like, it takes a while, but like 4 and a half years later, we did a major change to the first page you see after you're logged in, which you would think has seen like all these iterations. And now we have 160 engineers or something like that, but it took 4 and a half years to change that page. I mean, obviously it wasn't that broken, but it does kind of go to show you, I mean, you do change the important stuff, but a lot of things are kind of fixed in place after that first launch, after you first get that product market fit. So getting a really strong culture in place and making sure that that first version of the product is pretty good is quite an important 2 things to do. In terms of surprising things, not too much. Broke initially, at least. I would say, I don't know if it's surprising because everyone says this, but like when you experience it, it's different. The job as a CEO really does change every 6 months or maybe really near the start, maybe it changes every 3 months. But even today, I think that at least how I see the CEO role is you're the chief kind of problem solver. Whatever's the biggest problem at the company is your main focus. And hopefully you find other people who can take on those problems so you can do the next set of problems. Or you solve the problem and it changes, but it is a very changing role and you have to be like pretty happy about learning new things and not having a very fixed role every few months.

I want to just stress for our audience, because sometimes solving problems can sound like getting involved in the details rather than delegating, right? And what you're describing, and I don't want to put words in your mouth, I'd love to hear it from you, but it's like you're describing solving problems about the thing that builds the thing. Right. So you're not in there solving necessarily what pixel to put where, but rather how does a system of a company work? Right.

I mean, I would say as a CEO, like there is no problem that you shouldn't be solving if that's the problem that needs solving. So if you need to, hopefully it's not pixels, but if you need to go in there and be like a chief product critic because like you need to improve product quality or you need to ship something important, then you should do that. But I would say the main 2 ways you solve a problem once you're scaling is either you hire someone. A lot of the time it's just like, I'm like going like, what the hell does a finance person do? And it's like, oh, like what does a blah do? And then you have to learn what they do, figure out who is good at that thing, and then figure out to like test for that and hire someone. So hiring is a big one. Then it's culture, right? You have to kind of be continuously both promoting the culture you have and tweaking it. And by that, I don't mean like wishy-washy things. Like it might be practical things like, oh, we need to build this interview cycle in order to test for this attribute for people. Oh, you have to be really thoughtful. about culture. So hiring and culture, and there's a little bit of like kind of org planning. What does the org chart look like? Where are the gaps? How do you kind of change it so it like it helps promote the thing that you want to promote?

I mean, I'd really love to dig more into culture because honestly, Imad, the thing that I see, and in a sense, one of the key inspirations for starting this podcast is this tragedy that I see, which is that companies, startups that finally reached that product market fit, finally are able to scale. They've raised their Series A, they're scaling, and then they kind of snatch defeat from the jaws of victory. Because they're not able to operate effectively at scale. And I often attribute that to the culture is not scalable, and therefore the organization is not scalable, and therefore the business is not scalable. But I think one of the challenges that a lot of founders experience is, well, damn, you know, before you find product-market fit, you're just trying to stay alive. You have limited runway, you're not sure what's working, you're operating the business, and culture can feel like a luxury that you cannot afford.

Yeah.

afford to invest in early on. And so I think, first of all, to hear again, someone who's the founder of a unicorn and who, by the way, has time to come on a podcast, to be able to create a culture that allows you to have a sustainable business, that is part of the work of an early stage. And Immad, I'd love to hear particularly how you found the time to invest in culture and also how you resisted that sort of sense that urgency of the business can trump cultural considerations. So for example, We're looking to hire someone. They don't really meet all of our hiring criteria, but they have a skillset that we need. So let's just turn a blind eye. How do you have that discipline?

I think it really helps to have made all the mistakes. So like, I just know how important it is because, you know, in my previous company, we really, like, honestly, I did not know what the hell people were talking about when they said culture. And so I never cared about it. And then I was like, wow, this is not a culture that I even want to work at. And that's like a sad place to be after you like work so hard to build a company, right? So I'll simplify a little bit. I think culture is the personalities that you work with and the personality traits that you encourage. And then what you do from like a top-down management perspective. I think that's, I mean, there's probably other aspects to it, but like those two are the main ones. So personality-wise, like we look for like humble, curious, product-minded, helpful people. We have a couple more attributes, but roughly that. And on a company level, we try to be like transparent and open and we give people a lot of responsibilities and things like that. So I would say like firstly, At least spending time defining it. It's not like a crazy long process. I think you, your co-founders, and like we did it when there was 4 people at Mercury. Just think about what are the types of people you want to work with? What do you think are your best attributes? And just write it down. And it's not always going to be the same. Like our culture is not super competitive, winner takes all kind of culture, which is like, I feel like kind of what the Uber culture was like, a lot more like aggressive and all that kind of stuff, which, yeah, which can work too. But like you should define what's true to you and what attributes you can look for. I think the hard bit of culture, and you kind of touched on this, is like you're trying to make a hire and they pass your engineering challenge and they do all this stuff, but like maybe for us, like they have too much ego or something like that. And you're like, hey, that's not in my culture. And you feel like it's a very core attribute to them. That's like anti-culture to you. You really, if you don't make that decision and you don't hold the bar, then you don't have a culture. So I do think you have to make some sacrifices for it. But I think it's so crucial. I mean, even when there's 5 people in a room, do you want that person in there that's like incompatible? Right. I know you're saying like, oh, like you just have to hit product market fit, but who's going to product market fit. It's a team. And if that team can't work well together, then it's much less likely to happen because shit's going to go wrong on the way to hitting product market fit. So I don't think it's too complicated. I think like this part of not hiring someone and hiring is so hard as a startup, like that part is the hardest part of it. And that is a real sacrifice, but like writing it down, being thoughtful about it. You're a startup. Like you're not going to spend like multiple weeks doing this. Like this is like a few hour process and you should just do that.

Yeah, I think there's a few things to say on culture in terms of just making it really real and concrete for listeners. The first is culture tends to be set from the top, tends to be implicitly inherited from the superpowers and failings of the founder and especially the founder CEO. So any neuroses or any toxicity or any issues you need to look into in your own psychology, you need to look into them because they will seep into the culture. And so I really do think culture speaks volumes about the founder and CEO especially. Culture is another way of saying what behaviors you value and reward and reinforce and the way everybody acts and behaves and values across the company. And another thing that's important to note is culture needs to be operationalized, right? It's not enough to just list out your cultural values, for example, although you do need to do that, but it's the vocabulary people use day to day with each other in Slack or in meetings. It's the hiring process and what you're looking for. It's the performance review process and what you reward. And it's the product decision-making process and how you choose to approach the customer. And it needs to be part of the DNA of everything, right?

Yeah, exactly. Again, it's not too complicated to operationalize it. Like you do it a little bit at a time. Like you make sure your interview tests for your cultural attributes. You make sure you have Slack channels for whatever makes sense for your culture. And then over time you build more process.

I think you're very humble about this. Like there's a lot of companies and CEOs who really struggle with this. So it's a real, really hard thing for a lot of people to do.

Yeah, I was going to say, I think you're right in a sense that creating the artifacts of a culture is the work of a few hours. But living that culture is the work of every hour of every day. And I think that's actually where it gets hard, right? I used just one example of hiring the person who's not a culture fit, but as a CEO, as a founder, you are confronted every day with opportunities to either strengthen the culture, reinforce the culture, or weaken the culture. And often there is temptation to weaken or undermine the culture because you can just see a shortcut to an outcome that you want today. Again, hiring the person who's not a good fit. Or making that product decision, overruling somebody without consulting them, not being transparent, hiding information because it's just easier not to share it. You don't have time to communicate it. All of these things erode the culture that you've written down. And then in the end, what you have is a poster on the wall that everyone walks past and ignores. And then, yes, you don't have a culture.

It's worse than eroding the culture, Ionev. Sometimes it's strengthening a bad culture. I've worked with companies where they say, this department is too strong. Let's say sales or engineering or marketing or some part is out of whack in the culture. They seem trapped by that reality. They don't know how to rotate over to a more balanced or more product-led culture. And so they've kind of stumbled into a bad culture and then all of the decision-making and what have you is reinforcing it. And it feels really hard to rotate the culture over.

Yeah, I do think one of the harder attributes is to be humble and low ego. And I think that's actually one of the worst things that happens in terms of like bad culture. It's like you end up with people with a lot of ego, and that's especially bad if it's like a leader with a lot of ego and like whatever that sales situation is. Like, I'm guessing there's a bunch of egos in the sales team and they feel like they know what's happening and what's right and all this stuff. I think that's generally speaking an attribute of most bad cultures.

There's a few things to sort of unpack there. I think one that Chris touched on is I do not believe there's such a thing as no culture, right? There is always a culture, but you either have a culture that you have designed intentionally and reinforced, or the culture that simply emerges. And the odds that a culture that simply emerges without any thought or leadership is likely to be a bad one, or at least have a lot of bad attributes. And then the other thing about culture, why is it so powerful? I really want to emphasize this, is that culture has infinite scalability or near infinite scalability, and it has its own built-in immune system, which means that the culture generally sticks as the company grows. If you have a good culture, the culture will grow with the company. If you have a bad culture, the culture will grow with the company and it will be very, very hard to change. I know you touched on that, Imad.

Yeah.

Really important.

Yeah, 100%.

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I think we've unpacked this question of culture. And what role it plays in scaling a company well. And I think that's really important. The other thing that you touched on is organization. You kind of seem to again suggest that that was a relatively straightforward thing for you to do after having done it for 11 years. But I want to unpack what do you think you did well in the early days and in the inflection point to organize the company well so that these roles, these functions, these people related to each other and did good work well?

All right. So there's a few parts to this. Number one, this is more of an abstract point. I think it's always useful to have a few entrepreneurs that are in your orbit. They don't have to be mentors, but like people you can talk to that have seen more scale than you. Ideally, if you're an 8-person company, they've built a 50-person company and they seem to be doing it well. And not one, like you want like 4 of them ideally, which isn't always easy to do, but you know, one of the powers of living in Silicon Valley is it is accessible. Because there are like things that you won't know until you're there. And it's nice if someone's already done it. So a concrete example of this, I was talking to, I won't name drop, but I was talking to someone who had a unicorn company when we'd just raised $20 million. And he was saying like, hey, all you need to do is go hire an EA and they'll like help you. And I was like, oh my God, I'm just so busy. Like, how am I going to hire an EA? He was like, oh, of course you're not going to do it. A recruiter is going to do it. And I was like, You think we should get a recruiter? We had an 18-person company at that point. It hadn't even occurred to me that we should get a recruiter. And he was like, yeah, of course you should get a recruiter. And I was like, okay. So at that point I was like, okay, I'm going to go get a recruiter. And that recruiter ended up being such a crucial hire because she actually is still at Mercury and she's our VP of People. So often recruiters do want to go into like an HR people role. So you get 2 things in getting a recruiter. You get someone who can go hire, which is very crucial when you're trying to scale up and knows how to do that. And someone who is not always, but hopefully you get someone who has some aspirations to understand HR and people. And that's like a pretty useful skill to get early on because that person tends to like tap into like the culture and like what's important. And like, if that's part of your recruiting, then you end up recruiting better people with like better culture fits and things like that. So that's a concrete example, but abstract being like, if you talk to people who are like further along, you can learn what you don't know. And especially these crucial roles. Just to talk about a few other ones. Like we ended up hiring our finance lead, our VP of finance a little late. hired it at 400 people. I wish we'd hired it at 200 people because it's been like such a good way of getting more leverage for me. And I think we would have made better decisions if we had it earlier on. So I think the tricky part is like, what do these people even do and when to get them? And I think having like help with that, and actually VCs can be quite good at that as well. I think the second part of it is how I approached every role. I feel like other entrepreneurs don't do this, but I was like, if we're going to get a recruiter, I want them to be the best possible recruiter I could get. And I want them to level everything up at Mercury. Sometimes people go like, oh, this is a cost center. David Rusenko from Weebly once said to me, like, his customer service was not a cost center. It was a marketing engine for him. And I was like, oh, that's a really cool way to think about customer service. But like, I'm extending it further. I think every single role can make your company better, can help you build product, can help you get customers, can like be this engine for you. And if you start thinking about every part of your org like that, it just stops being like, oh, where do I put in compliance? And these people suck or whatever. It starts being a reason to put the greatest people you can find in that role and then give them a lot of responsibility and get them to really be a cohesive unit. So I think that's something else that really helps you build the org. I think the last part is eventually you want to have execs. So when it's like a small team, 20 people, it's basically the co-founders are mostly doing the management. And then you scale from that to like 80-ish people and like, yeah, you have a few managers, but still it's a fairly flat organization. Once you're going above that, if you have some team that has like 30 people in it, you as a founder, and maybe you're a good manager, but like, I'm not that great a manager. Like Mercury is by far the biggest company I've worked at. My previous company was like 26 people. But there's people who are amazing at their space, right? Our first was a VP of marketing. They can really take a smallish team of like 3 or 4 people and scale that up to like 50 people and know what to hire and how to build an amazing marketing org or whatever it is. So getting good at exec hiring becomes a really important part of building your org. And at that point, once you have a good exec team, which took us, I guess, 2 years to really hire, then you're not relying on yourself to build the org. Like you're building an org as a team. And they've normally seen much more scale than you have, and they can really contribute to that. And that's a whole process of like getting good at exec hiring. I think the first hire took us like a good 1 year to actually hire. So I went through a lot of learning there, which I'm happy to dive into.

Yeah, I really want to summarize what you just said, Immad, because a lot of what you said is counterintuitive and not widely seen in the broader startup ecosystem globally. Okay, so you talked about having great advisors, mentors, friends who have succeeded at doing what you're intending to do, what you're trying to do. As people who help companies around the world, I can't tell you how many founders are getting advice from their successful real estate agent friend or their successful business friend or their successful legacy company operator, right? And they just have the wrong people around them who've never scaled or disrupted anything before. So I think that's the first thing that you said that is so, so powerful. The other thing you said is about talking about hiring great people, like really, really great people. And it makes me sad how many founders I've worked with who say to me some version of, Chris, my team just isn't good enough to do what you're describing. They're not very good. And I'm like, well, hire better people. It's on you that the team is not very good. It's not on the team. Either you're not giving them the right context, not setting them up for success, or you're not hiring the right people. Couldn't agree more. It's just like you need to find the very best people you can possibly find and put them in your team. And I love what you said about this engine for growth. Everything is an engine for growth and for marketing, and it's not a cost center. So many founders have such a bad relationship to investing in their growth, investing in their team, investing in the right things. They just see it all as cost. They even talk about like giving away equity rather than selling equity to an investor. They have a wrong relationship between what is an investment versus what is a waste versus what is giving away. And then the last thing you said is about incredible managers. Again, you meet a lot of founders outside, especially outside of Silicon Silicon Valley, where the managers, they see their role as kind of like bossing people around. They're not helping to scale their org. They're not helping to provide service leadership. They're not helping to set the culture. They have just a very limited view of what management is. And, you know, hiring great people who themselves know how to hire great people, which seems so obvious, but it really isn't. I've worked with a lot of scale-ups who are struggling with this, where it's like, Chris, we have a bottleneck in hiring. I'm like, are your managers helping?

Oh, no, no.

It's like the recruiter is doing it and someone else is doing it, but the manager is not helping to build their own org. These are things that might seem, they're subtle. You said them in this sort of a matter-of-fact way, but I wanted to connect it to many of the mistakes that founders make without really thinking too much about it. So thank you for teasing those things out. I think they're really valuable.

One of my favorite Steve Jobs quotes, which I've used on this podcast before, is he said, I don't hire smart people so I can tell them what to do. I hire smart people so they can tell me what to do. And, you know, Steve Jobs is somewhat famous, rightly or wrongly, for being very opinionated. And yet that is his view. And I think, Imad, it comes through in how you're talking. You say, oh, you know, you hire these people because they have skills that you don't have, or they have knowledge that you don't have, and you put that to work. You make that sound easy, but when I look at organizations, when I talk to founders, I kind of get the feeling that genuine delegation, which means hiring those smart people, but then giving them the space and the leadership to be what they can be and to do it better than you yourself could do it, that requires a level of humility and I guess healthy ego in a sense to say that, you know, I am comfortable enough in myself to let go of this thing, to allow these people to grow the organization. And to me, it comes down to delegation, which sometimes I think sounds boring, but is a bit of a superpower. And I read your blog series on your website and I noticed that you mentioned delegation too. So, I'd love your thoughts on how does one delegate effectively, especially as you start bringing on people who have skills or experience that you lack?

Yeah. You know, with Mercury, I had this principle from very early on, which was I don't want to be the bottleneck on anything and I don't want it to be on me. Obviously I can accelerate things. I mean, I think some exceptions, right? Like fundraising, I'm always the bottleneck. And even today, if we were to raise another round, that would be all on me. And some roles that we're hiring, if I'm the hiring manager, like I'm obviously a bottleneck there. Almost anything else, even when there was only 8 people, I was like, hey, I'm not the bottleneck on everything. I'll try to accelerate things. That's my role. I like to think of myself as an accelerator, not as a bottleneck. And if you have that kind of mindset, then like, obviously you have to delegate everything because if I'm not the bottleneck on anything, like there needs to be someone doing it. I think it actually comes back to hiring, right? Like if you're hiring high quality people that you trust, it should be very hard for you to be the bottleneck on things because Like when you are the bottleneck on things, you're basically saying no one else at the company could do this better than you. Whereas I would say even from early on, there was almost nothing apart from fundraising that like no one else at the company could do. Like in the day-to-day building of something, there was always someone better than me from day zero. And like maybe you're an exceptional engineer and you really can't find a better engineer than you, but even then you're a CEO. So you're going to be distracted by all sorts of things. Like there's probably someone who, if they're doing engineering 100% of the time, will be way better than your 90% or 60% or whatever you can give to it. So I do think it comes back to hiring. I think the third thing is it's okay for things to go wrong. I think sometimes people are like, oh my God, what if they do it wrong? Well, whatever. Like, I think generally speaking, if you give people a lot of responsibility, if they're good, they will surprise you at what they can do, even if they've never done it before. Right. And they will feel good about it. Like they will feel like owners of the company and they will feel they want to push to be able to rise to the occasion. If you take the approach that like, oh, no one can do this. Only I can do this. Then of course no one can do it. Like these things become self-fulfilling. So I think you'll be surprised, like, how often people do come up and deliver on, like, a difficult thing if you can empower them to do that.

So I'd actually like you to be a little bit more specific when you talk about not being a bottleneck. And the reason for that is I think it can easily sound like one of those motherhood and apple pie statements where every founder, every CEO says, of course, I don't want to be the bottleneck. But in practice, they are. And so again, I suspect that when you are talking about not being the bottleneck, because you're doing something quite specific there, and I'd love to learn more about that.

The reason I say it in a general way is because it just depends. Founders are bottlenecks on all sorts of things. So it just depends on where you're being a bottleneck. I think if you look at your role and go like, where does the buck stop? And like, is it stopping on you often? So maybe it's like, oh, someone makes a spec, but like, they can't go get a designer to work on it until you've reviewed the spec. Or like they make a design and you need to review the design before an engineer works on it. Or they're ready to ship, but you need to go look at this thing before they ship. The same thing might be true in sales. Maybe you are the one that sends all the first contact emails, or you're the one that has to get on a call to like close every sales. Just look at like, what is it you do every day? Are you doing it because you're accelerating things, or are you doing it because no one else at the company is allowed to do that thing? I think often people put themselves in that position where they're the only ones allowed to do that thing.

That can happen quite accidentally. We were talking about culture before. I feel like this is the same where in a sense you are being perhaps a bit too modest here. I think when you were talking about not being a bottleneck, You're actually putting a certain discipline around how the company operates. And I'm curious, for example, was going on vacation something that you did relatively early on? I think a lot of founders feel like they can never take a vacation because why? Because they are the bottleneck, right? Oh yeah. And so often having these sorts of forcing functions is important.

Yeah. At Mercury, I mean, apart from like a few high intensity times, I haven't worked weekends. I've always taken like 3 to 4 weeks a year. Vacations are great tests, by the way, of like where you are bottlenecking things. If you come back from vacation and When a bunch of things are waiting for you, then that means you're a bottleneck on them. So ideally you go on vacation and things just keep going in the same velocity that we're going at.

I think this is so important. I brought up vacations because like you said, they're a great test. And I think so many founders think they can't go on vacation. You know, you're running a $1.6 billion company and you can take vacations. You've been taking vacations from the beginning. And yet we've got folks who have like a 3-person startup who are like, there is no way I can take vacation. There's no way I can take a weekend off. And I think the point here, and it speaks to culture, but it also speaks to organizational scalability here, is it is both healthy personally, but also healthy organizationally. And the only way you can really make sure that you are not the bottleneck is to not always be available. I think a lot of founders deal with the guilt of not always being available, but actually it's a really important discipline organizationally.

Yeah, 100%. I mean, I would say like maybe the first 6 months, right? Like you're— You need to raise your first round. You have to work really intensely. I'm not saying there isn't a place for it, but it's not more than that, 6 to 9 months. Like if you're doing this for years, it's not sustainable.

Even your demeanor, Immad, it just feels like you're paying attention to the right things and you have this sense of it's doable and we're going to work on the right thing at the right time. And there's a lot of founders in these very early stages who are feeling a little panicked about just the sheer number of things they need to do. And many of those things Many of the times are not necessary. They're actually not necessary things. They're just a lot of busywork, a lot of panic, and a lot of angst. And there's just a few things you need to get right. Hiring great people, building a product people care about, putting it in front of people. The rest is a little bit of busywork. So we've talked about culture being essential scaffolding to a scale-up. We've talked about org design a little bit. We talked about delegation. What would you say is maybe the next piece of scaffolding, the next piece of infrastructure that makes a scale-up scale well that seems essential to you?

I mean, I guess like we're kind of missing the distribution and the business model aspect of it. I think if we think about distribution a little bit, I think at a startup you always want to go like, how do you go 3x more next year, right? Or 10x or whatever your target is. And the target has to be pretty aggressive. One of the things I was surprised by, it takes a lot to build a billion-dollar company, right? Like you're talking about like $100 million in revenue, especially in this kind of environment, right? And if you're like 1 million and then 2 million and then 3 million and then 5 million, like that's going to take like 50 years to get to 100 million, right? So you have to keep this pace and that pace is really hard. It means that to get 3x and then get another 3x, that means you're like every month you're getting 9x more in 2 years than you are today. So you have to plan ahead for that and you have to build a process around distribution that is also scalable. That won't necessarily be the same thing that's scaling in day zero. Like I think I think some people are lucky they hit one distribution thing and they just 10x that. But maybe you're going to have to be creative. Like you're going to have to go, okay, you know, maybe I have to sell to like bigger companies. Maybe you have to get partnerships, right? Whatever it is for your company, but you really have to plan that way ahead. If you want some scaling thing to work in 2 years' time so that it's working at 9x, you need to invest in that channel today so that like by in 2 years' time, it's actually like scaled up significantly. I'm not like necessarily great at marketing or sales or partnerships or whatever, but my view on it is you actually want to really think ahead, invest early and invest in quite broad set of things in the right logical order. But I don't think like distribution is just like, oh, this thing is working, let's go doing more of that. I think it's actually also thinking about what's the next thing and investing a little bit in that.

Can you give us some very concrete examples of even Mercury's distribution channels, its distribution strategies?

So for us, even today, actually, word of mouth is the biggest one. But, you know, I was like, oh, this word of mouth thing is working. What should I do to make it work more? So our first marketing hire was a brand marketing hire. Early on, we did podcasts, things like this, actually, podcasts. That's where I would be next to other entrepreneurs and VCs to like help with distribution and help with brand building. We worked with a lot of accelerators and we made these accelerator perks and things like that. So that's number one, the thing that was working, doubling down on that and going, how do we make brand bigger so that we get better word of mouth? And how do we make these kinds of magic moments for customers? And we invested a bunch in that. We would send them tea. We would do all these things that made customers feel really, really good. And then the second thing we invested in was partnerships. So we were like, okay, what comes before banking is incorporation, like you incorporate You incorporate your company, then you go to banking. And quite early on, we had a partnership with Stripe Atlas, and then we have a few other kind of incorporators that we partner with. So that's number 2. And then number 3 for us is kind of Google Ads. But yeah, actually Google Ads was an unintuitive one. I didn't think that many people search for online bank for my startup and then go sign up, but it turns out they do. So my approach was very much like, okay, this thing is working. Let's do more of that. And then, you know, when we had enough bandwidth, let's invest And thing number 2 that might work. And then there's a bunch of things we tried that didn't really work as well. But yeah, I think with distribution, you kind of have to do like a reasonable number of experiments as well.

Yeah. And so just to maybe put this in different language, this is really about go-to-market channels, right? Methods which you go to market that act as a sustainable growth engine that acts as a magnet for new users, new customers into your product and into your business. And when you're talking to less experienced founders, They tend to do things that are unsustainable and unscalable and not repeatable, right? They will do one-off deals, one-off relationships, one-off integrations, one-off webinars, or one-off things that aren't part of a program, that aren't part of a repeatable, sustainable, deterministic process. And the thing that we talk about in almost every episode, many of these one-offs turn into large enterprise custom deals where the product product is bespoke for the deal. And that's the kind of distribution or a kind of go-to-market that is not scalable, not sustainable, and not repeatable in a way that gets you to those $100 million of revenue. It gets you big checks early, but it's hard to repeat and scale over time.

The final thing on the scaling aspect that I'd love to get your thoughts on, Imad, because I think it's an internal challenge, is really around infrastructure. And by that, I mean both the software and systems, you know, your CRM, your ERP, whatever it is, right? The infrastructural debt, because you're always trading off between how quickly can we move, how quickly can we get this done, and how scalable is this piece of infrastructure before it becomes inadequate and we basically have to upgrade it. So I was wondering, you know, what's your experience been, especially scaling rapidly? What's been the rule of thumb to make sure that all of your backends and infrastructure are able to keep While not investing so heavily early on that you never actually get to market?

Firstly, I guess I'll touch on the technical stuff. I think it depends on what type of tool you're at. At least for Mercury, the technical scaling has never been that tricky because we've never had like millions of users, right? We're whatever, 4 and a half years in and now we have 100,000. So each of our users is quite big and it's never been like a massive server strain. Like it's not like people are refreshing their bank account over and over or something like that. So I would I would probably counter the infra thing a little bit and just say like, hey, understand who you are and don't overinvest in infra upfront either. You should know, is this something that's going to require hundreds of servers and you need to build like an auto-scaling solution? Or is it something actually it's going to scale at a reasonable pace and you can add servers as you go? So that's one thing. Everything often comes back to hiring, but if you have some really good engineers, backend especially, early on, they tend to just write better, more scalable code. It's just the way it is. And I think that's like probably the biggest difference between a very junior engineer and a more senior one is that they just know what's going to probably suck later and what's probably like good enough initially. Most things that are not technical, like no engineering, you can probably just use spreadsheets like pretty far, right? Like I don't think ERP, CRM, all that stuff you need to overinvest in. Like when you eventually you get to a stage where we hired a finance leader and we hired a great controller and they moved our servers to NetSuite and it happened and it was fine, but like we didn't need to go do that. that when it was like me and a few people, right? We did from day zero have outsourced bookkeeping, but I would say I'm more in the camp of like, don't overinvest early on in infrastructure and you can just do it when it becomes painful.

A lot of this all comes back to hiring, as you kind of touched on a little bit there. There's this cliché that I think is background noise to most people of your people are your most important resource. And it just seems so trite or so polite Or so something else like some kind of HR slogan. It really is about hiring incredible people and then empowering them to do great work.

100%. I mean, I think it's very easy for entrepreneurs, especially early on to go like, oh, I don't like this about this person, but I'm just going to hire them because I have this burning problem that I need someone on this today kind of thing. And I would say at Mercury, we've never made that decision. We've always been like, it doesn't matter. We'll wait 3 months if that's what it takes to hire someone great for this position, but we've never compromised on that. I mean, maybe someone has compromised in my career, but I have never compromised on that. And that's our general, like, cultural belief. And then on the other side, sometimes you have to fire someone. You make a mistake. There's no perfect hiring process. And like, I've also heard lots of people say, oh, this person kind of sucks in these ways, but they're doing this one little bit. And like, I don't have time to hire someone. It's like, no, you just make that move and get someone better in there. Because these things really compound, especially if they're hiring other people, right? You have someone bad, they'll hire 10 bad people under them. them, it's not even bad, like culturally misaligned, unmotivated, whatever it is, then you're like 11 deep into this problem. So I think it's super important to just be very forceful with the hiring bar.

Yeah, I just don't think anybody talks about it enough. It just seems like this cliché that people say and it's not taken seriously enough. And the other one is hire slow, fire fast, right? It's the other axiom people keep repeating and it's so easy to forget about and dismiss. I think many of the biggest mistakes I've made as a founder have been in knowing that rule and not following it. And it's really, really hard.

So, Imad, just before we wrap up, one of the things that we hear a lot from founders is that this can be a very difficult journey for people from a mental health point of view. And so obviously you've done this thing a few times and you're on a very rapid trajectory with your current startup. So how do you manage your mental health while you're leading such a fast-paced organization?

Yeah, that's a good question. I'd say like 3 things that I would say are very helpful. Number one, I said this earlier, like, oh, have transparency, give people ownership. But you know what that's great for is you also give them ownership over your problems. So when there's something going wrong, it's not your problem. It's a team problem. A lot of the time I talk to entrepreneurs and they're like, oh, this is wrong. And they're like not sharing with the company. They're like, oh yeah, you know, I want to give a rosy picture to the company. I'm like, Like, it's your problem. You want everyone solving it. I think a shared problem where the whole team is trying to solve it, you know, that can be fun. I think if it's like your problem and you're like feeling depressed in a room because the whole world is on your shoulders, it seems much harder than when whoever's in the team, if there's 3 people, like you're doing it together, that's a lot more fun. Second thing is I do, actually, I only do like 5 minutes, but I do 5 minutes of meditation every morning. I know it sounds kind of simple and I was never into meditation, but I've found that that just gives me this like grounding that I can use all day. And it's definitely when I go through periods where I'm not doing it, I get a lot more stressed out. So I mean, that works for me. Maybe other people have something else that gives them kind of that grounding. So you should experiment with it. And then number 3, I have a very supportive wife. So I think things would be a lot harder if I couldn't kind of talk to her and she helps give me grounding and contextualize problem and like it gives me a lot of confidence. So surrounding yourself with people that give you that positive energy is useful as well.

Very wise advice.

Imad, thank you so much for that. And thank you for being so forthcoming and sharing the secrets of scaling an org and the way that Mercury's done it. I think we've touched on culture, org design, delegation, sustainable go-to-market, and ultimately how it's all about the people. It's about hiring great people. And even you mentioned your wife, having great people in your personal life.

Yeah, 100%.

People who get your back and act as a tailwind. Imad, if our audience is super curious about the startup bank, a bank that is optimized for startups, where are you guys available and how can they go and check it out and sign up?

Yeah, it's just mercury.com. Go over there. It's all self, self-sign up. It's an amazing onboarding process. So you'll love it.

I heard that somewhere. Is it available in all countries? Which countries?

You have to have a US corporation, but you can live in most places.

Okay, cool. Well, if you don't have one of those, maybe look at firstbase.io or something and create one. Immad, it's been a real pleasure to have you on the show and reconnect. Actually, it turned out we knew each other from the past. And yeah, I think founders Founders who are in the middle of scaling up or have ambitions of scaling up will take a hell of a lot from this. So thank you so much.

Thanks for having me.

Thank you, and thanks for being so generous with your time.

All right, and don't forget, if you have listened to a few episodes of the Startup Podcast and felt like you got value, then we ask you to please honor the Startup Podcast pact. Please rate us and review us in your favorite podcasting app and share us with your favorite social network. It helps grow the show and helps us help more. founders. And of course, don't forget, Yaniv, we just launched the new merch store, which is filled with limited edition merch. So go check it out at tsp.show. It's linked at the top, or go to shop.tsp.show to go straight to the merch store. All right, Yaniv, that was fun as always.

Absolutely. See you, Chris.

All right, we'll catch you in the next one. Bye-bye.

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