Transcript 0:00 Fintech is way more complicated than a software startup. So I really wanted to do something really meaty that I could do for like ten, twenty years. 0:08 And I came to this realization that banking, apart from being a big problem that is unsolved, it's also kind of a platform that you can build other things on top of. So Mercury is really about brand and trust. 0:22 Let's make it so every single experience people have with their finances, they can do it through Mercury, and that'll be kind of like a cool place to get to. 0:28 [ on-hold music] Welcome to Fintech Brainfood Interviews with Imad Akhund. 0:44 Unlike Ramp or Brex, which started with expenses, Mercury started with the account and built the ultimate dashboard for founders and growth companies. 0:54 Imad is the founder's founder, a serial entrepreneur, angel investor with over three hundred investments to his name, including companies you might have heard of like Airtable, Substack and Rappi. 1:07 If anybody gets the challenges growth companies have trying to operate a business while relying on traditional solutions, Imad is that founder. Before Mercury, the founder's choice wasn't ideal. 1:18 Have a specialist bank with a poor digital experience like Silicon Valley Bank or First Republic, or go for that bigger bank that might be more secure but is generic and doesn't get you and regardless of choice, that user experience was kind of horrendous. 1:33 Mercury flips that model and pioneered an entirely different go-to market, taking the best of Silicon Valley Bank and First Republic, things like access to debt capital markets and getting close to the founder's needs and VCs and the ecosystem. 1:49 But balancing that with more FDIC coverage and a single dashboard to manage and automate, well, everything. Today, Mercury is a beast. 1:59 Imad on his LinkedIn recently posted that they've had eight quarters of profitability with more money on the balance sheet than they've ever raised, two hundred thousand customers and six hundred and forty staff. 2:11 Yes, there's been a banking crisis and now the banking-as-a-service crisis, but despite all of that, Mercury continues shipping new products like financial workflows powered by the bank account and personal accounts for founders. 2:24 So what makes Mercury different from their peers? What's under the hood? Find out in this interview. [ on-hold music] Imad, welcome to the show. Thank you for joining. How are you, sir? I'm great. 2:38 Thanks for the great introduction. You know, it's, I write from the heart. It's the only way I know how to do it. 2:43 But, um, tell me how we got here today and tell me the insight that leads to you going, "You know, I should build the dashboard for founders and how they manage money." So I've been doing startups for a long time. 2:55 I did my first in two thousand and six in London. Uh, sounds like you have a British accent, so from there as well. And I moved to the US in two thousand and seven. 3:05 And one thing I noticed as an entrepreneur, especially in two thousand and six, is everything sucked, [chuckles] right? 3:11 As an entrepreneur, I felt like a, l- you know, second-class citizen, uh, getting like payroll set up was so painful. Incorporating was painful. Yeah, there was no really good services. 3:22 And then over time, I always had like ideas. So I had a list of things. I was like, these are all the things that every single business uses that are not good. So it was like payroll, right? 3:32 Uh, there was no Stripe, so card processing, the communication. Like, you know, my first company, we'd run it on Skype, uh, [chuckles] in terms of like talking to employees and all that stuff. 3:42 So I had this list, and by two thousand and thirteen, all of these things had improved apart from banking. You know, this was kind of an abstract idea because I, I was-- I'd never done a fintech company. 3:51 It didn't feel like something I could like actually go do. Uh, but in two thousand and thirteen, you know, I met a couple of Y Combinator founders, uh, that were doing kind of a debit card and bank account for seniors. 4:03 You know, they had to deal with a sponsor bank. And I was, at that point I was like, wow, you know, if they can do it, maybe like I could do it at some point. 4:11 So that was just kinda the, the seed of the idea and then, you know, sold my previous company in two thousand and sixteen and, and two thousand and seventeen. 4:19 I was like, okay, you know, let's go back into kinda thinking about ideas and had my list and, you know, banking for entrepreneurs was near the top of the list. 4:29 And then one realization I came to that actually got me really excited about it, so, you know, I'd been doing startups already from two thousand and six to two, so eleven years at that point. 4:37 So I really wanted to do something really meaty that I could do for like ten, twenty years. 4:42 And I came to this realization that banking, you know, apart from being a big problem that is unsolved, it's also kind of a platform that you can build other things on top of. 4:53 So when you have a bank account, that's got all your money, uh, it's got all your kind of normally the founders and the finance team using it, and it's a very natural place to kinda extend and add, you know, other workflows, which we've started to do. 5:07 So maybe we could talk about that in a minute. 5:09 But it felt like something that I could do for like ten, twenty years, and it would be like a meaty problem that actually became more interesting as you hit some scale and, uh, you know, did the first thing right. 5:19 Tell me more about it as a platform. So by that you mean it's the center of my universe. To do anything, I need to pay for things, I need to move some sort of value. If I get that bit right, I can do everything else. 5:31 Have I understood that? Yeah, I mean, without being too reductionist, a business, unlike a consumer, kinda lives and dies by its revenues and costs, right? 5:40 As a consumer, you know, banking and finances, those are like kind of a sideshow, like you don't wanna think about it too much. 5:47 Whereas, you know, I don't think any business is successful unless there's at least one person, uh, and some often multiple that are obsessing about like what's happening with their finances. 5:55 Uh, so in that sense, it's like very core to what a business does. If you think about it, the bank account is also then core to what the business does. The reason it hasn't been core, right? 6:07 Like, uh, I would say in the last like ten, twenty years, a bank account has been a sideshow to a business because there hasn't been any kind of product or UX innovation in the banking. 6:17 So lots of people have ended up building these kinda one-off tools that basically sit on top of your finances, like bill pay and invoicing, but I think inherently they should be part of your bank account. 6:28 So that was kind of the-- my thinking to go, "Hey, like, you know, what is-- If we just remove everything that exists, and we just imagine a bank account that has all of the features that you would expect a tech or product company to build, what would that be?" 6:42 And that's kinda how I saw it as a platform. It's like, yes, it's got your money, and obviously you've got your core kind of payments that go on top of the banking, but what else can we build on top of that? 6:51 If you were to reverse engineer every spreadsheet in every finance team, actually there's a thousand features inside all of them, no doubt, and that's actually a lot of people scrambling to try and keep up with things. 7:03 Could you, could you actually go do something like along those lines? So how did you get your first handful of customers, and how do you get them today? So there was a short-ish time period where we were in alpha. 7:14 So we started kinda end of two thousand and seventeen, and then start of two thousand and nineteen, we kinda had one bank partner live, and, you know, lots of things didn't work, and, uh, so there was about thirty customers that used us before we actually launched. 7:28 And most of those customers actually were companies that I invested in, happened to be the exact right stage, right early stage founders, and obviously they kinda trusted me. 7:36 But, yeah, I don't think many of them were using it as their primary bank account at that point. They were just kinda testing it out, and there was lots of things that didn't work. 7:43 And then, you know, my normal approach is to try to launch things as quick as [chuckles] they're ready. 7:49 Uh, so, uh, April two, two thousand and nineteen is when we launched, and that was when we really started growing, and really we grew very fast just from day zero of launch. Uh, initially, it was kinda driven by Twitter. 8:04 Uh, I would say it was the main channel. I had a little bit of a following. 8:07 It was, it was still small back then, but we also had Andreessen Horowitz as a investor, and they tweeted about it, and we had, like, Justin Kan and, like, a few other kinda high-profile tech influencers, VC types, and that really got the ball rolling. 8:21 Uh, and yeah, normally I w- I've been launching things for, like, years and years and, you know, there's like a launch moment, and then it dies down, which is kinda what I expected. 8:29 But really for us, it just kinda snowballed and continued, uh, from that, like, first launch moment. And then you kind of had the initial dashboard and banking product in, in that early iteration. 8:42 But what does the platform look like today underneath it? Like how would-- how do you describe it, and how has it differed from the beginning days? You know, banking is hard. 8:52 Uh, so it took us years of, like, complete focus, right? From like, I'd say from two thousand and nineteen when we launched till twenty twenty-two, we didn't really have, like, any significant products. 9:06 So, you know, when we think about the core banking piece, there's obviously the bank account with extended FDIC insurance, and now we have five million. 9:13 We also have a product called Mercury Treasury, where you can get access to kinda US government T-bill mutual funds, and those give a yield. Then there's, you know, tons of payment types, right? 9:23 Cheque, international wires, FX, and, and then there's all the kinda user management features on top of that. 9:29 So, you know, for a long time, we really focused on that core, and I would say, like, we would still spend at least eighty or seventy to eighty percent of our kinda EPD resources really, like, making sure that works and incrementally improving it and, uh, you know, both in terms of user experience and the kinda payment excellence piece and all that kinda stuff. 9:47 And then in late twenty twenty-two, we launched our, you know, first, I would call, new product. That was our corporate credit card with kinda spend management and control features. 9:57 So we had some of those features already because we had a debit card, but obviously as companies scaled, there was an expectation of getting a corporate credit card, and there's kinda more features that come alongside that that we've kinda built over time. 10:09 Like you can collect receipts, uh, automatically and categorize transactions, that kinda thing. And there's still a pretty rich roadmap around kinda the corporate credit card, and that's been growing really nicely. 10:19 So I guess we're almost two years into that launch. And then this year we launched Bill Pay, so that went live in May, and we're gonna launch later this summer, hopefully in August. 10:31 I guess I shouldn't give the timeline since [chuckles] the team might not make it, but that's the plan. Uh, we're launching invoicing, uh, and then a month after that we're gonna launch kinda employee reimbursements. 10:40 And the real thinking around all these features is a bunch of these things kinda start in the bank account. 10:47 So when there's, you know, when you're all by yourself and you don't have any employees, like you're paying your bills from your bank account, you, you know, receiving money from your customers into the bank account, you're probably just using a debit card. 10:58 And then over time, if we don't provide these features, you know, people go from the debit card to a corporate credit card once they raise their w- first round or they get some revenues going. 11:06 They'll end up using a bill pay solution when they get their first finance person. So that's kinda how we think about these things. 11:12 We're not going out there and saying, "Oh, what, you know, what are all the features we can kinda copy?" 11:16 We're thinking much more, "Okay, what are the core functionality that our customer is already using Mercury for that they're then forced to go hunt for a third-party solution if we don't provide the product feature set alongside it?" 11:28 It's kinda concentric circles around that call, but it's also following the founder's journey, which is an interesting narrative arc. 11:35 I, I think about the hero's journey, the founder's journey, and there's something really poetic about that driving your roadmap as a, as a way to, to anchor it. 11:44 And, and again, I had the fortune of speaking to the Ramp and the Brex folks, and they had very different approaches, and it feels to me like yours is really rooted in that customer-founder mentality in some way. 11:55 How do you think about your go-to market? How do you think about your relationship with that founder today? How do you maintain connectivity to them as a business on a day-to-day basis? 12:06 Yeah, I think it's really getting go-to-market right is really important for fintech just because, you know, people say, "Oh, these ideas don't work." 12:14 And main reason things don't work in fintech sometimes is the CAC is too expensive and then you're just, like, having a hard time kinda making it back. 12:21 For us, the core has always been kinda word of mouth and organic distribution. So when we first started, it was a hundred percent organic. 12:31 Uh, I'd say for the first kinda six to twelve months, we were almost a hundred percent organic and that was really just-- it was surprising, right? Like I, d- I've obviously I hoped for it, but I didn't expect to... 12:42 Like, we had so much organic growth, there was literally no reason to even think about go-to-market. 12:45 Like, we were just focused on, like, making sure customer support could scale, [chuckles] making sure ops could scale, like doing all the-- and like building out all the missing features. 12:53 And I think the reason that happened is the bar for banking product was, like, kind of low, right? 13:00 Like there wasn't-- no one had really built something compelling there and everyone was, like, really frustrated about it. 13:06 Everyone's just so used to going to a bank account and having this kinda awful experience where they would be frustrated. It would take days to send a wire. You know, it was just such a jarring thing. 13:16 And then Mercury came along and you could actually, like, enjoy that experience. So you could go from like, "I hate this" to "I love this." 13:22 The spread between, like, your feelings was so extreme that people became like real kinda advocates for Mercury in a really strong way and that's really been like the core of our distribution. 13:33 And I like that because it, like, aligns with, you know, a lot of other distribution channels don't align with kinda customers and product. 13:40 Uh, like we just need to like continue focus on customers, make them like super happy, build products that they love and, and then we will just get distribution from that. 13:47 Uh, whereas like if you're sales driven, you know, you can end up doing like check boxes or features just to like satisfy a sales process or if you're ad driven you, you know, you kind of focus on conversion and it doesn't matter as much about like how good the product is. 14:00 But being like customer organic driven really like product becomes the main focus. And even to this day, so organic is like our core kinda channel still. It's more than fifty percent of our users. 14:11 The other channels that worked well for us is partnerships. So, uh, the biggest ones are kinda around incorporators. So you know, Stripe Atlas has been a kind of a important partner to us since basically twenty twenty. 14:23 But even the partnerships actually, I think the fact that we grow really well organically and word of mouth actually drives the partnerships as well because a lot of these customers are using these things and they expect Mercury to be an option there. 14:35 Like if you go use Stripe Atlas at this stage, you'd be kind of disappointed if Mercury wasn't an option for a bank account at the end of the flow. 14:43 And yeah, on the partnership side, we also work with kinda accountants, uh, and a few other kinda channels where entrepreneurs might turn to get like expert advice. 14:52 And the other thing that actually has worked pretty well from near the start is Google Ads. 14:56 Well, I didn't expect that to work, but you know, apparently there's people who search for startup business bank account and then go sign up to Mercury. 15:03 [laughs] And it's like it's a significant kinda percentage of our users. Take it if it works. 15:09 One of the things I observed in your social is that it feels like you're speaking to founders constantly and that you get really strong engagement on it. 15:17 And as I think about the connectivity around dinners and events that you talk about on your social, you are out there meeting with these folks on a regular basis and it's, it's kind of reminds me of what always made Silicon Valley Bank great is that they would try and connect you with more than a bank account. 15:33 They would try and connect you with other things you need as a founder. How important is that to you versus Mercury versus everything else? Is that just Ahmad being Ahmad and you don't think about it? 15:43 Like how do you categorize that one? Yeah, it's tricky to measure the effectiveness of those kinds of things. Uh, it's like, you know, how much time should I be spending talking to at events? 15:55 Or we have a program called Mercury Raise where we help founders kinda connect with investors and each other. I guess I think about it in two ways. Uh, number one, you know, Mercury is really about brand and trust. 16:07 Uh, right? I think that's always been the case. 16:10 You know, when we started in two thousand and nineteen, like I was speaking to a founder and they were like, "Hey, we have ten million dollars in the bank account," I think probably at SVB, "and I love the idea of Mercury, but there's just like, this is more money than I've ever seen. 16:23 There's just no way I'm gonna put it in Mercury," right? I was like, "Well, fair enough." 16:27 You know, we were only six months old [laughs] and I g- I had a hard time coming up with like a counterargument and at, at that point we didn't have kinda extended FDIC insurance. 16:35 But I think being out there and like showing that like, hey, we're here to help founders and I, you know, I'm not some anonymous kinda CEO for fintech. 16:44 I'm like really a founder and I want to really be there for other founders, uh, I think gives people a feeling that like we are on their side and we're kinda authentically there to help them. So that's one part of it. 16:58 And then s- the second part of it is like, you know, I just like doing it. [chuckles] Like I think it's good to do things that are like true to yourself. 17:06 Yeah, even if these things don't turn out to be like the biggest reason Mercury succeeds, if we, if I can help some entrepreneurs along the way and I feel good about that, like I think I'm fine with doing that. 17:15 That's interesting. 17:16 Yeah, I mean, my external observation was that like it's probably not hurting in terms of customer connectivity and your organization's innate understanding of customer, which is, which is a big theme. 17:29 But getting to the, the raw metrics side of it, so what are your core revenue drivers? How do you think about, uh, unit economic profitability? What's, what's your dashboard look like as you look at your business? 17:41 I think unlike some fintechs during twenty twenty-one, we've always been like focused on unit economics. 17:46 You know, I've had so many problems fundraising from my previous companies or building a real business, uh, that I've like kinda at the end of the day, like if you don't focus on these things, you know, those are what will kill you. 17:58 So we've always, uh, you know, whatever the environment is focused on like making sure our CAC is low, our customer service costs are like reasonable and that we're making like You know, money from our customers. 18:09 And I think one of the things a lot-- mistakes a lot of fintechs make is try to compete on price. 18:14 You know, they give everything away for free, they have really high rewards, and, like, they're not making any money, and that's, like, a pretty hard business to build. 18:20 So our core kind of revenue streams, number one, uh, we get float revenue on our deposits. 18:26 So, you know, we're a pretty deposit-rich institution just because startups tend to raise a reasonable amount of money, and we get a kind of a percentage of that from our partner banks. 18:36 And then the second-biggest, uh, revenue stream for us is interchange. So we, you know, we provide debit cards and credit cards, uh, we make money on the interchange. 18:45 And then we have kinda three or four other streams that are smaller, but they kinda all add up. So FX, we have lending, and we make kinda money on the interest rates we charge on lending. 18:57 And then we also have Treasury for our Mercury Treasury product, where you have AUM fees. I should also add, we, we just launched subscription [chuckles]. 19:05 So, uh, that's a, that's a tiny one, but both our personal banking product has subscription revenue attached to it and so do the kinda bill pay and invoicing features. We have a subscription bundle. 19:15 The thing that always struck me about Treasury AUM is it would be the kind of thing that a financial institution would probably never do because from a deposit standpoint, if they were building a balance sheet in order to lend, that would seem like, "Actually, I'm moving deposits away." 19:30 But actually, you guys looking at it from a founder's perspective are just trying to maximize yield, and I can repackage those products in a bunch of different ways. 19:39 As you think about what drives your roadmap, what metrics are you looking at day to day? Uh, what's on your dashboard? What's your product philosophy for, for that sort of thing? 19:50 You know, I think Mercury is at a l-level that it's, like, quite complicated. So if you go, like... 19:55 I think it's a little dangerous when you be too focused on the top level and go, "Okay, what are the things that really matter across everything?" 20:02 I think it's actually you end up coming up with, you know, weird metrics that don't drive, like, actual product innovation. So we actually have our whole team split into product teams. 20:12 So we have, well, we have product groups, and then each product group has, like, product teams. 20:16 And the idea with the product teams is that each team is, you know, has a very specific mandate, and they're kinda self-sufficient within that mandate, and they'll have their own kinda metrics, uh, and, you know, plan, roadmap and everything within that. 20:30 And ideally, that team can do everything it takes without speaking to other product teams. Uh, like, they can make a lot of progress without that. 20:37 Obviously, sometimes we need multiple product teams to kind of collaborate or on bigger launches. 20:42 But I'm a big fan of, like, I know people who don't like this analogy, and I don't know if I love it either, but, like, having these kinda, like, startup-like units within Mercury, right? 20:53 There's, like, a eight-ish person team, and they've got their objective, and nothing's gonna get in the way to hit that. So to give you a concrete example, uh, you know, we have a team- Well, we just launched Bill Pay. 21:03 So we have a product team that's focused on Bill Pay. You know, their objective is really, like, they've launched Bill Pay, now they need to, like, make sure that has product market fit. 21:11 So, you know, focus on retention, make sure that, like, bugs and, like, you know, customer requests are, like, under control, and they have, like, some metrics around that. 21:20 At the end of the day, focus on attach, so, like, how many of our existing customers are then being attached to the new Bill Pay product. 21:26 And, you know, if you try to, like, do that at company level, like, you know, what would you say? It's like attach across all products or whatever, but then that wouldn't matter for, like, lots of other teams. 21:35 So I'm a big fan of these. Like, every, every product team has their own kinda dashboard, and they're, like, really given a lot of freedom to go at it, uh, and figure that out. 21:43 At a company level, I'm a big fan of, I know people don't love this, but I think at the end of the day, your, your main metric should be, like, kinda gross profit or net revenue. 21:53 I've had lots of points in my entrepreneurial career where I've had some metric that sounds great, like, you know, kind of a vanity metric. 22:01 Like, in my previous company, for a while, we were, like, a mobile gaming social network, and I had check-ins as my metric because you'd have to check into games. 22:09 And you know, we could, like, as a overachieving [chuckles] entrepreneur, I could, like, really nail that metric, right? I was like, "Check-ins are growing exponentially." And I was like, "Yeah." 22:19 But you know, at the end of the day, we didn't build a business [chuckles]. It didn't make any money. Uh, and sure, we had lots of check-ins, but, like, that didn't translate. 22:26 So, uh, I think that, I think any entrepreneur that's, like, too focused on, like, not just, like, at the top line, just, like, driving a business that makes sense ends up, like, optimizing a metric that doesn't make sense. 22:39 Actually, it's also very hard to game gross profit, right? Like, if you're truly removing your true costs from it, then, you know, you have to, like, actually build a business that's working. You can't game it. 22:49 I was gonna ask the question, yeah, how do you make those autonomous product teams coherent at y-your CEO level and manage conflict across them? I guess one answer to that is, well, are they driving profit? 23:02 But have you experienced yet that there is open conflict between that model? 'Cause, you know, Jeff Bezos famously didn't mind that too much, you know, kids sometimes having that happen. 23:12 Where do you stand on that, especially when it's like there's one customer and it's their money at the end of it? There's a few ways we look at it. I mean, number one, uh, like, these teams are around concepts. 23:21 They're not around code or pages. So it's not like if your team needs to do something and it touches someone else's code, it's not, like, off limits, right? It's like you're all in this, like, we have one code base. 23:33 Everyone's in the same code base, and all the pages are, like, open as it was. We're big believers in transparency and, like, making sure everyone has a lot of context. 23:42 So we've set up some processes that, like, enable that even with these teams working in their own kinda autonomous route. 23:48 So we have a channel called Pre-Shipped on Slack, where a team, when they're either when it's, uh, depends on the scope of the product, sometimes at kinda spec PRD level, they will post it and say, "Hey, we're gonna work on this. 24:00 Is there any kinda thoughts, ideas people have?" If not there, like for sign-ups, that's generally for, like, bigger projects. 24:06 For smaller projects, they'll, they'll put it in the Pre-Ship channel when the design is kinda close to being ready. And that's a really good Point to like for everyone to say, "Oh, this is interesting. 24:16 Like it's related to my project in this way. Like have you thought about this?" Et cetera. So that's one step we have, and then we have a ship channel when things do actually ship. 24:25 We have a process, we call them cycles, uh, different companies do it differently, but every four weeks there's a cycle. 24:31 Ev- all the product teams, even though they're working independently, are synced up on the same cycles, so there's 13 in a year. 24:37 You know, at the start of the cycle, there's like a planning week, and in that week all the teams will say, "Hey, this is our plan for this cycle. This is what we did last cycle." 24:46 And, you know, a lot of this is all about like making sure everyone's aware of what everyone else is working on, and they can like figure out how to kinda work with them and give them feedback and things like that. 24:55 Uh, and then the last thing we do to try to keep everything kinda cohesive because, right, I think the user experience is what we really care about, and it's quite easy if there's lots of different teams that are doing their own thing, that you end up with like designs and workflows and ideas that don't work together. 25:12 So we have like a design crit process. A lot of our kinda product and UX and everything is really driven by designers at Mercury. 25:18 So in this design crit process, like a lot of the designers, especially the senior ones, are on there, and it runs every week. 25:25 So, you know, when you're working on your designs, like this isn't like when it's finished, like even when you're thinking about concepts, uh, you will talk to a bunch of the other designers. 25:33 So that's a place where the designers can say, "Hey, like actually this doesn't work with this," or like, "Have you thought about this?" Et cetera. So it tries to keep things cohesive. 25:41 But that is always like the, I think the biggest risk with these kinda autonomous, uh, subteams, that you end up with silos, so you have to like... 25:47 I still think it's the best model because the alternative is everything is top-down and like it's slow and people are unmotivated, et cetera. 25:54 But you do have to do a lot of like processes to try to like make sure these silos don't lead to like bad user experience or like repeated wasted work or whatever. Yeah, that makes a ton of sense. It, it's interesting. 26:05 So, um, again, having spoken to Ramp, who really prioritize for velocity, they would probably take that to an extreme. Brex on the other side, you know, Pedro just decides. 26:15 It's-- he's, he's the roadmap and there's quarterly releases. You feel sort of like halfway between the two on that, but with customer as the north star rather than any particular metric, which is kind of interesting. 26:26 Are there any other metrics that stand out to you, and how do you think about measuring success of a new feature launch? 26:33 You mentioned attach rate, you mentioned a couple of other things, but is there a, is there a customer feedback loop that you've kinda built as well? 26:40 Yeah, I mean, at a high level on the metrics side, uh, it's, yeah, attach rate, retention, and also, you know, once someone is attached, uh, I guess depends on what the product is, but, you know, what's the, what's the kinda growth of that user? 26:54 Like on the credit card side, it's, you know, not just if they attach and spend, but if they grow, they spend every month. Uh, I think that's like really kinda positive signs on the product side. 27:04 On the customer side, you know, we have a, one of these kinda autonomous product teams is a customer support product team, and what they do is they look at kinda what are the classes of tickets and try to solve the, kinda the top tickets. 27:18 We also have like lots of ways where, uh, kinda the product teams are involved with customer support and they can, you know, we have a voice of a customer and also we encourage kinda customer support to like talk directly to product teams to like fix products issues. 27:31 So I think it's really important to reduce customer support volume. I think that's for two reasons. Number one, every single time a customer kinda messages you, it means your product has failed in some way. 27:43 Like, no one wants to be talking to customer support. And for every one person that messages, there's 10 people that never even did it, right? They just kinda got frustrated. 27:50 And I think if you incrementally actually fix every single issue there, you can build, yeah, after doing that for five years [chuckles] you can build a very superior experience just because you've been, been kinda obsessively listening to customers. 28:03 Uh, and then the second part is customer support costs can be like one of the things that kills like fintech companies in terms of unit economics. 28:10 I think if your product does most of the work, it's just such a better way to do it, and then when you, you know, when you're 10X bigger, you don't need a 10X bigger support team. 28:19 It's such a powerful pro tip to have customer support product teams dealing with the speed bumps. And we had that relatively early on, actually. 28:27 Like we-- I mean, now we're about 200 engineers, but I think we had it basically when we were like 60 engineers or something. And it's quite common in a founder-led startup business to have that. 28:37 But I, I point it out more than anything for financial institutions who have like some process somewhere where all of these things get logged and then never get prioritized over the annual budget fight. 28:47 So it's meaningfully different to the way a, a financial institution would kinda do it. And then from a tech standpoint, you know, where are you philosophically on the spectrum of like buy, build, partner? 28:59 Where are you at on terms of, uh, in-house engineering skills? What's your philosophy on all of that? I think if it's something user-facing, our answer is to build it. 29:09 Mercury is a very cohesive user-facing product, and I actually think, you know, when I thought about like what is wrong with incumbent banks, one of the things that's like very frustrating is you use their product and you click on one tab and it looks completely different and works completely different from the other tab. 29:24 And because, like you can tell it's some other third party that's like fulfilling that function, and we never want that feeling at Mercury. 29:31 So anything user-facing, so the only real exception is Plaid, like we do use Plaid for like the bank account linking and the user interface, but apart from that, almost everything user-facing we will build ourself. 29:42 When it comes to the back end, I think for most things, we'll try to find a best in class kinda partner that can get us to market quickly and like we feel like will be a reliable partner in the future. 29:53 So, uh, nowadays we use Lithic for card processing, and I'm a fan of Beau and his team there. For the KYC, KYB, sanction screening, et cetera, we have a, like a ton of different tools, uh, to do all of that. 30:07 Like we use Middesk for KYB, Alloy, uh, and LexisNexis for a lot of the kinda KYC and getting all the data sources. You know, our tendency is to use all the kinda best products out there. 30:19 We don't need to build our own kinda sanction screening on KYC tool. Like, I don't think that's necessary. But what we do do and we do think is important is we build our own kinda admin pages for our internal ops teams. 30:31 So our onboarding team, we have a pretty complicated [chuckles] and rich, uh, admin page that, like, pulls in all of these data sources, pulls in all the customer information, sets up workflows so that, you know, we can onboard people as quick as possible. 30:46 And we actually have a product team that's literally focused on internal onboarding, user experience, and kinda integrating all these sources. 30:54 And we also have-- Actually, we have a whole product group, so there's, like, three product teams focused on kinda risk. 31:00 And on the risk side, it's, again, it's like these workflows, uh, around case management, alerts, all of these things. We built most of those in-house. 31:09 And our thinking there is really, you know, we have all the data sources. We can kinda merge them all together and give people a really cohesive internal view. You know, these teams are pretty big. 31:20 Like our, our risk ops team is more than 100 people. 31:24 Uh, so if we can use our own internal product teams to, like, give them, you know, drive continuous efficiency and automation, we can actually get, like, a lot of leverage out of that team. 31:34 We're a big fan of building those in-house, and I would also say, frankly, we did try some external vendors there. 31:39 And, you know, the vendors that build kinda compliance, uh, UX sadly are not, like, the best [chuckles] right now. Maybe they'll improve and, uh, we could, we could use some third party there. 31:50 I'd say that's probably the scope of it. Like, you know, customer user foot-facing, build it ourselves, internal ops team user facing, build it ourselves. 31:58 Everything else, normally partner with most people and have great solutions there. 32:03 There's a generation of fintech infrastructure companies who are API-first departments of a traditional bank, um, that do that bit of tech infrastructure really, really well. 32:16 But yeah, to your point, the user experience might not be cohesive for your ops staff, so you've kinda customized and tailored that a little bit. That was really helpful. 32:25 Thank you for, for kind of driving through all of that. So as you zoom out from that now, bring us back up a level. How do you think about, like, the CFO stack, as some people call it, the entrepreneur's dashboard? 32:40 How do you think about, like, where's that all headed? Where does that inevitably lead to? Looking to do more into the founder space, some workflow stuff. Like, what's next here? 32:51 There's two pieces to this that we think about. You know, number one, uh, as I touched on earlier, like, what are the natural things that fit within banking? 33:00 And I don't think, like, we need to own every single workflow or whatever. Uh, I think about it as like, okay, is that a core workflow that involves money leaving your bank account or money entering your bank account? 33:11 And if, if that's yes, you know, is it very natural for us to build that out? Is it something that people kinda expect us to do and would, would use? 33:18 And I do think, and we've talked, and I talk to customers a lot, like it's, it's frustrating when you have to s- go sign up for another fintech service as a business 'cause, like, you don't know what the experience will be. 33:28 You know, it doesn't integrate to everything else. And if you think about it, right, there's like these core kind of features that every single fintech service has to keep building, right? 33:37 There's, uh, obviously the bank account and the payment rails, so money has to move in and out. 33:42 And then there's the user permissions piece, and that bit's like, you know, I never expected it actually when we started Mercury, but user permissions is, like, very complicated. [chuckles] Right? 33:51 Like, you wanna be-- And we keep building more and more comp-- Like, we actually have a user permissions product team as well. 33:57 And the complexity is because there's, especially as you add new features, there's many types of users and there's many types of controls that come with it. 34:04 So, you know, we have a user that's like an employee user where you just want them to have cards with limits and, like, be able to do reimbursement requests. 34:13 Uh, we have another user that's like a bookkeeper user, and they wanna be able to access statements and be able to kinda close the books, but they don't need to be able to move money around necessarily. 34:21 And it goes on and on, right? 34:22 Types of users, especially as companies get kinda more sophisticated and they have a finance team, and they might have a AP user that just wants to be able to cr-create a bill but can't do anything else. 34:31 So that's like layer number two. So there's a kinda payment rails, there's a user permissions rail, and then third part is kinda accounting integrations and workflows around those. 34:40 So yeah, every transaction you have needs to be categorized, needs to be pushed, uh, to the accounting system, and needs to have, uh, kinda like a record of like, you know, what were the controls around that? 34:52 What's ordered? What's the PDF receipt and all of that kind of stuff attached to it. 34:56 If you go use a third party for, let's just pick Bill Pay since we've launched that, that third party now has to do all of those things, like has to have a sick user permission system, has to be able to integrate accounting, et cetera. 35:08 But then often there's an extra kind of payment because they don't have the money, so [chuckles] they have to then pull the money from your bank account. 35:15 So then you have to reconcile like this transaction with those transactions. 35:18 Anyway, my point being that like once you've got those kind of core features, the, you know, up and kind of platform features, then you can kinda think about like, okay, what are the apps that make sense on top of these platform features? 35:29 And at least so far, we think Bill Pay, invoicing, employee reimbursements make a ton of sense, and they're all kind of very integrated, and they benefit a lot from all of those kind of platform features and corporate credit card, which we already have. 35:41 And yeah, that's kinda how I see the vision playing out for us, that like banking is kind of this core base where we have these kind of core features, and then we build things out. And partly we wanna... 35:54 And this bit is actually, I think, unusual for Mercury and actually most kinda B2B businesses don't do this but, you know, we think about them both in the sense of broadness. 36:04 Uh, like if you take invoicing, you know, it's one of the things that almost every business needs to be able to invoice customers, and it's like something that a two-person business might be doing. 36:13 But as a business scales, they also need to invoice people. 36:16 And we, you know, a lot of the features we think about are like kinda these core features that are small Like really tiny SMB could be using, but also that scale with our customers as they scale, and we wanna be able to scale with them to like a thousand-person company still using us for bill pay and invoicing and corporate credit cards. 36:35 And that's actually kind of a hard challenge, like making these features that work and they're simple for small companies, but, you know, have enough power user functionality as like a company scales. Yeah. 36:45 Where do you layer in the complexity, and how do you make sure it has the power user functionality that many to many you described of lots of different users, lots of different permissions? 36:55 Uh, having built user hierarchies, uh, in a previous life for an old payments company, Imad is not joking here. This is, this is a very difficult task to do, I firsthand experience. 37:07 I'm interested as you look back over this journey, um, what are the key lessons you've learned as you've gone through it? 37:13 Like, one of the things I find founders, um, most interesting is, you know, what's their cycle time for learning? 37:19 What, what are the things that you've picked up, and what are the non-obvious insights that have come out of it? This is a lesson from my previous company, but, like, getting culture right is really important. 37:29 When we were four people at Mercury, we kinda wrote down our cultural attributes, and we were like, you know, we care about having kinda active thinkers that, like, care a lot about product, that are, uh, humble and really helpful. 37:41 Uh, and you know, we wrote down these kinda six attributes. 37:45 And doing that really early has really been helpful because we then hired a bunch of people that cared about these things as well and, you know, they kinda self-selected into it. 37:52 And then we've got a bunch of kinda cultural artifacts and processes that, like, kind of reinforce these things. 37:58 So now that we are, you know, six hundred plus people, these things have become, like, such a core part of how we operate Mercury, that as we've scaled, they've actually become even stronger over time, which I, I was always worried that, like, culture kinda degrades over time, and maybe it will, but, like, it's kinda up to us to, like, actually, like, think about that actively. 38:15 Because, you know, at the end of the day, I would be very disappointed if Mercury's successful, but it's a bad place to work, [chuckles] right? 38:21 Like, I'd be like: Okay, what's, what did I-- you know, what did we do all this work for, and now it's, like, kinda slow and uninnovative, and we don't care about customers and, like, all these things, right? 38:29 That's kinda the default path for companies as they scale, and there's, like, a real entropy to, like, becoming kinda, like, a little crappy over time. 38:36 So being, like, very deliberate about it and, like, thinking about how do you kinda stay customer-centric and innovative as you scale is really important. 38:44 You know, one thing that I did that worked really well and I think is really important is, like, kinda to lean into your, not necessarily your weaknesses, but things that you don't understand as well. 38:55 So I've been an entrepreneur for a long time, so I felt like I understood product and customer, uh, kinda acquisition and all these things. 39:01 But, you know, risk, compliance, banking partnerships, like, that was something that was, I was new to. And really, actually, the thing I did for the first twelve months was just only focus on those things, right? 39:10 Uh, I spoke to, like-- Actually, lawyers are really good to speak to. [chuckles] Like, I found that, like, you could learn a lot just by, like, speaking to enough. 39:18 Like, there's a lot of fintech lawyers out there, and there's, you know, they specialize in all sorts of different things. 39:23 And you-- I spent a ton of time just speaking to lawyers about-- And yeah, it wasn't just like a generic, "Tell me about fintech." 39:28 It was like: Hey, if I wanna get a bank sponsorship, like, what are the things that I should really care about? 39:33 And, like, going, like, really deep into every single topic as, like, part of, like, getting Mercury up and running. 39:40 And, you know, some of those lawyers we ended up actually, like, hiring as external lawyers, but some of them, they just gave free advice, and a part of the process was, like, deciding who was, like, good and who's, uh, who knew what they were talking about. 39:51 So now we have, thankfully, like, in-house lawyers. But, like, going, like, really deep on, like, the things that you're weak at, I think are re- is really important. 39:59 And instead of, like, trying to run away from it, I try to make it so, like, all the things that I'm good at, I'm just like, I'm not even gonna think about those. 40:05 I'm just gonna pick the two, three things that I, like, I really need to figure out that are existential to the company and I might not be strong at. Sometimes the answer is you go hire someone, right? 40:14 Like it's, you don't always have to get amazing at those things either. Like, sometimes you do wanna just, like, find the right person to kinda lead those up as well. That makes complete sense. 40:22 Uh, it is surprising how helpful people are in fintech and lawyers are. 40:26 Like, they seem like this really prickly, distant finance thing in a suit, but actually there's this operator class that, that really wants to get into the weeds with you. So I think, uh, it's, it's a great observation. 40:37 And then sort of as you think about now having spent some time in fintech, what do you think are the reasons why somebody should wanna work in this sector? 40:46 What would, what would attract somebody to go work at a fintech company? Yes, Mercury, but also others as well. 40:53 This might sound like a reason not to work there, but I think it's, like, some people will be attracted to this. I would say fintech is way more complicated than a software startup, right? 41:03 Having done software startups, I think it's, like, at least three X more complicated to do a similar type of software startup. 41:10 So, you know, with a normal software startup, you just have to build kinda the user-facing side of it, right? Obviously, there's a back end to it, but there's the-- that's what you build. 41:18 With fintech, you have to build that, but then you have to build all of these kinda... 41:22 Yeah, there's almost every, any fintech product has like a, some sort of legacy payment rails hookup and, like, all of this legacy infrastructure that you have to integrate with, and that's quite painful. 41:33 [chuckles] Uh, and then thirdly, you have to build kinda this risk and compliance infrastructure and, you know, part of that risk thing is, is fraud. 41:40 Like, anything you do in fintech is gonna be attacked by people, and you need to think about that at day zero, otherwise you could get wiped out really quickly. 41:46 But then there's obviously the, you know, what's the regulations? What are the compliance kind of requirements? How do you collect everything in order? Hey, so it's much more complicated, right? So I think that's hard. 41:56 Like, if that's, you know, if you just wanna do software, that's great, but it's almost, it's not quite like a hard tech problem, but it's almost a hard tech problem in the sense that, like, there's way less people doing it because it's hard, right? 42:08 Like, if you look at, you know, some people look at, like, B2B fintech and they think they're busy. But like, I look at, like, what Mercury does. 42:14 We, you know, outside these kinda imp- incumbent banks, we don't really have that much competition And I think if it was like a build software problem, people would be like competing a lot more than what we see. 42:25 Yeah, if you're attracted to kinda like solving this complexity and kinda dealing with it, I think it's like kind of an exciting, interesting kinda place to be. 42:32 I think, you know how e-commerce went from like basically nothing to, uh, like is it like twenty percent of all commerce in the last like two, twenty, thirty years? 42:41 I kinda think there's like a similar secular trend in fintech, right? Like banking even today, ninety-nine percent of like all fintech revenues are like going through banking. 42:51 Well, not since financial services revenues are like owned by banking, right? Like it's like, but it's huge. It's like six hundred billion or something in, in annual revenue. 42:59 And it just seems obvious to me like especially the customer-facing experiences are gonna be driven by product and tech companies and the, you know, there'll be some incumbent banks that become product and tech companies, but I'm a little skeptical. 43:12 I think a lot of it is gonna be tech companies, whether it's like people like Apple attaching things or people like Mercury kinda building, uh, building things from scratch. So that's kinda exciting, right? 43:21 Like you're, you're basically like upgrading like every human's [chuckles] kinda experience when it comes to their finances. Uh, and that's gonna happen over the next ten, twenty years. 43:30 Like I think that's kinda inevitable. 43:32 And part of that is actually, you know, there's kinda two-- like A, you're just giving people like a better experience, so like they'll enjoy it more, they'll be less frustrated, et cetera, which is, I think, is important. 43:41 But B, we're also saving people a lot of money, right? Like these banking companies have had kinda regional monopolies. Uh, have you ever gone to a bank and seen what their SMB fee structure is? 43:54 It's like completely insane. Like if you're an SMB with like five hundred dollars, they will-- like some banks charge you per transaction. Like they'll charge you like fifty cents per transaction. 44:03 It's like I always look at like a small business and I'm like, "These are the people we should be helping the most." 44:08 [chuckles] Like, we should make it as like cheap and easy as possible to start up a business, not like gotta try to nickel and dime and make like a bit of money from every single like tiny SMB we can. 44:20 Mercury for boomers, we need that. Let's go build it. [chuckles] But I'm say- like the, the only way you do that is by having like a digital experience, right? 44:28 Like I think the, like the reason banks do it is it just costs them a lot, right? Like you-- every time you walk into a bank branch, just imagine like the total cost of that visit, right? 44:37 You've got like the person behind the till, you've got the real estate costs, you've got a whole infrastructure around them, like someone's cleaning that place and which d-digital experiences like you can get that kinda incremental cost down to zero on year zero. 44:51 The sunk costs are, are still there for many years as well. So as you look out then, what's your objective? Is Mercury staying domestic for a while? Are you gonna go global? 45:00 And what are the risks to your growth, if there are any? Our core feature's around banking. 45:06 It's hard to go global with those, especially since we kinda target kinda entrepreneurs like the US market for like especially startup entrepreneurs, but really all entrepreneurs is like huge. 45:17 And I think the most interesting kind of market we could go to for our banking product is probably the EU. Like you can get, uh, at least you can get the same payment and regulatory infrastructure in one go. 45:28 Obviously, then you have to figure out localization, go to market in every country, but it's, it's better than most other countries where you kinda only get like a smallish kinda economy. 45:38 I think the only other one would be maybe interesting would be kinda India. Uh, but I think that's quite hard for a US fintech to go after. Having said that, we do support a lot of kind of non-US resident founders. 45:51 So I'm an immigrant from the UK, and when I moved here, I had a US company, but I didn't have all the, all the kinda Social Security number and all of that initially. 46:01 And post-COVID, people are really setting up US companies with like, you know, often no intention of moving to the US. The people in the UK, they wanna sell to the US and they have US investors. 46:11 Uh, you know, maybe they'll have a sales team eventually in the US, but they never wanna move here. 46:15 So for those kind of entrepreneurs, Mercury has been kind of a really powerful tool because for most incumbent banks you have to like literally fly to the US to walk into a bank branch to set up a bank account, uh, which is what people used to do before Mercury. 46:29 So in that sense, we have like this international presence and, and I, you know, a lot of digital businesses don't necessarily think about borders in the same way, right? 46:36 Like you might be a US startup, but you have a UK engineering team, or you might be a US e-commerce company, but you're like, you know, all your goods are in China and that's where your factory is. 46:45 So you end up, uh, like Mercury's actually like does a lot of international kind of payments and activity because of this kinda international nature to the businesses we work with. 46:53 Yeah, I mean, I talked about this culture thing, and I think it almost sounds a little facetious, but like the biggest risk to me is like, hey, as we scale, we don't keep this kinda innovative culture and like keep going. 47:03 I think that's the-- at the end of the day, like I don't worry about external factors that much, right? I think if we stay kinda focused on product and customers, everything else will kinda wash away. 47:17 As an entrepreneur, uh, every year there's been like some existential risk that you could worry about, right? 47:24 Like whether it's a competitor raising a bunch of money or like Apple launching something, what-whatever it is. 47:30 But most of the time, yeah, if you're just focused on customers and you keep building your vision against that, everything else doesn't matter. Everything falls into place. 47:39 Um, so before we let you go, is there anything I didn't ask that you wish I had that you think the audience should be aware of? This was a thorough kinda conversation. 47:49 One thing we didn't talk much about is Mercury Personal and how we think about kinda going into the consumer space. 47:55 Again, it like comes back to kind of this customer obsession, like it was by far the biggest kinda feature request that people had. 48:02 And one thing that I think is really cool and exciting is, you know, we've built all of these kinda power user features for businesses, and a ton of them are kinda useful for personal banking as well. 48:11 So I've been using my personal bank account at Mercury since December, and I have my PA on it. 48:17 So now whenever I get a bill, I can just like take a picture of it, my PA does it, and, you know, she'll start to set up the payment and I can approve it. 48:25 So all of these kind of multi-user features that we're talking about and the controls are actually pretty useful for a personal kinda use case as well. 48:32 And the other one that's kinda cool is, like, with Bill Pay, when I receive an invoice, I'm an LP in some funds, so they'll send me, like, a capital call, and that's, like, a PDF, and I receive the PDF and I can drag it into Mercury, it'll OCR it, and I can make the payment and it's all attached. 48:48 So there's kind of, like, features that, like, funnily used to be the consumer banking was way better, but I think with Mercury and this kind of fintech push, uh, I think B2B banking actually got to a stage where it has, it has more features and is better, uh, especially at Mercury. 49:02 So being able to kind of then put those features on the consumer side and, you know, whenever you launch a new feature on the business side, it's, it's all the same platform, so it's, like, often where it makes sense. 49:11 It's, like, automatically kind of available on the personal side. Then vice versa, right? Sometimes we make an improvement, like personal consumers use the mobile app a lot more than our business consumers. 49:20 So, uh, when we make improvements to the mobile app, the business use case gets it as well, so. 49:25 And, you know, in general, we kinda think about this as, like, let's make it so every single experience people have with their finances they can do through Mercury, and that'd be kind of, like, a cool place to get to. 49:35 It's still the entrepreneur founder as the North Star, but the, there's a part of me that wants that as a joint account for my wife to have workflows and invoices we can manage. Yeah, it's fun. 49:44 I've been using it with my wife. Uh, we, we don't have official joint accounts yet, but you can kind of have a collaborative account. We're gonna have official j- joint accounts kind of coming up in a month or two. 49:53 Makes complete sense. Well, thank you, Imad, so much for joining me, and thank everybody for listening. If you like this show, please remember to tell your friends to leave a review. It helps others find the show. 50:06 Uh, you can find me @sytaylor on Twitter or on the blog at fintechbrainfood.com. Imad, where can people find out more about you and Mercury? I'm very active on Twitter, just @imad on Twitter. 50:18 Yeah, go to mercury.com if you're interested in a bank account. Thank you so much. Bye for now. 50:23 [outro music]
