Fintech Insider USA: Lowell Putnam, Plaid (S1E2)
Every wasn't fintech insider interviews. I'm Sam mall today. The pleasure is figuring bowl Putman right here in the Platte offices city. We are both extremely tired for good reasons, different reasons. I like your reasons much better than mine. Not gonna go into this whatsoever, one. Congratulations, they get. It's been a probably very interesting fun, and hard time all at once rolled up. It's definitely the, the newest experience I've had over the past couple of years. It's a little bit of growth, change new round, but it's all incremental and then all of a sudden man this thing happens. You know, you talk about it every time you raise money what your exit plan is. You don't really plan for right you, right? Make a slide for other books for an exit plan is books for acquisition everything. But for everything I don't read it. I. You could write it might be the ones should read it because every different ours, in particular, was really different than most out there, which I think is a great thing about is. There wasn't a playbook. So we had to write our own for this. So I think it's testament to quo- team in the plaid team that we've written the whole playbook ourselves and didn't go with a lot of ego because we're figuring out every day did the beard, come as part of that question, because you've been working so hard or just, hey, it looks good the beard. I don't know if it looks good as much as it highs parts of my face, which my wife likes, but I had it and then the acquisition started, and you can't shave it halfway through. Right. So you play up. And so now just too lazy to get rid of. So let's dial after listeners, you don't know, we do international audience. So one, the idea for over to come from 'cause you came out of the industry, I worked at leaving brothers were Barklays after that the original idea for quo was going to be to see. Company and it was. Yeah. To, to hook up people's brokerage accounts taking trading history in their investments, and then help people make the right decisions based on what's worked in the past for them in for others is sort of similar to the story where we thought we aggregate data and then give it tool back to consumers. And then in two thousand twelve right? When we were planning what the good market strategy. There was explosion of other companies not doing the exact same thing. But Jason thing so so five that are our wealth from, like, the, the whole version rent, whatever that wave of fintech is, and twenty twelve twenty seven that was all really taking off. And we realized that we were sitting on infrastructure company, not nap and we realize that we had customers coming us instead of us having to go acquire individual consumers. And so before we launched we realized that we were piping, we were fixing troubles. So we had one big really customer that hated their current agregation provider and did anybody like they're angry. Provider back in the day. Nobody likes prior to that. It is a thankless business because stuff breaks all the time, we're probably forty percent, maintenance tech company and sixty percent new features whatever else, which is never the graph you wanna show, you wanna show, maintenance tiny sliver of your Dev, resources, Elliott repacked ruled code. But when chase breaks for us, that's a lot of work. So we're made in, you know, company here, and so it's a thankless, job, things always break. But being honest about it was what got us early customers. Right. We said, hey, we've got eight connections will build another eight hundred we can't do without your help, and they're all gonna break at some point. And we found people that liked that honesty that they gave us credentials, and we, we built, mainly investment focused stuff, so compared to plan, which started very Bank, focused and very Bank payments focused, a C H focused. We were much more investment, focused shirts focused sort of the other end. And then over the years, both of our biz. Mrs kind of converged closer and closer together and then led to obvious outcome. So on the when you go through something like that. I mean again, we talked about it and make sense, right? With the plaid sitting in San Francisco Izak in the team and focus really on the consumer into checking and saving agregation, and you really focus on wealth management here in New York got the two coasts, got really the two major components of financial is bringing together, but still has challenging to go through something like that. And plan for it. It's really, really challenging, and Zach got together last fall. We realized that this was, this is the only time we can do and we'd met before we discussed the Sergi's the companies had. But honestly, we were both about sort of outgrow each other from an acquisition standpoint. But, you know that could access to capital and built such a large business and quota was about to raise it. Seriously? That this, this was the time to actually do it at a number with the structure that, you know, people could could work around. So. It was a big leap of faith. And we decided to do quickly that was the other thing we figured, okay, let's make this hard possible. Let's get let's get a company with two hundred people by company with one hundred people with overlapping clients, clients. Let one for the other and vice versa sales seems have been selling against show like crazy. So we said, let's just do it really quick, rip the band aid. And if we get it done, we get it done. So we said we can do this whole thing and forty five days in the lawyer said, absolutely not ended up taking like fifty five maybe six incredible. But we just we push through, we pre-negotiated law stuff. We just literally got together for breakfast and hammered out a lot of the points for the deal early on. We weren't going back to negotiating table, which I think, is what kills love acquisitions halfway through your negotiating the deal that you already started doing. And so we just got all that out of the way. And the best part was I get along great with the other founders, and my co founders gallon while senior people there, but really at the. The junior level the engineers on the plan side, and the of aside, just want to work together. And that's when you know it's going to work because the reality is, they're doing the lifting really doing in there if you have that. Yeah, you know, they're plaid work. Well, also both have been growing so quickly that half of the company had been at the company for less than a year. So now we're about a quarter into the acquisition and half of plaid has had half of its time with quotas part of it. So the acquisition is already a huge piece of people's time, here, which is something that we forgot because Zack William and Nico, and we've all been living this business for so long, but we've got people who've been here for six months, and that's half their time supposed acquisition. And we've already hired thirty people this quarter and they only know one company, and so that speed is actually help smooth out all the culture differences. So I haven't even asked this question to start of it. Now, again, a large part of audiences over in Europe. I love how many of actually said, so played like plays. I liked it. We were competing with them. But now that we are them now we have to remind everyone those peed. What is like? Stewart played. Can you give thirty second? If you're going to Bank on when your clients explaining what it is y'all do so plaid and quavo are tools that provide customers the ability to link their financial accounts to an app or another financial institution simplest, it is your -bility as a consumer small business to share your banking information, or Fanshawe account data with a third party. So if you've Lincoln account to Ben MO or you have tach to your Bank account to betterment to fund or your wealth management account wealth front to do a holistic national plan. You've had to use a service like ours. You've used or plan. And so, you know, back in the day, we had the aggregate, or I'm doing nicely because I mean, everything evolves, we had the screen scrape do anything that new our, our business has been around for twenty years, the first version of it came out in the late nineties, there was a first attempt attempted open banking with the affects network that into. Microsoft money, tried to create got really good adoption back in the day, those pipes kind of died, because it's been twenty years, and everyone that worked on those pipes that institution is working there anymore, or as working something else. And so, then there was this big gap, where you're right. The there were a couple GRA Gators that were doing scraping web crawling in a pre API world and the number of apps that existed to even use those services are pretty small. So there was this real supply, demand, symmetry there that even if the tools worked. Okay. And I think the only worked okay, no one really cared to use them. And now finally, we have a better tools with more of an API economy, and then be a lot more demand because we've got more startup someone side and then more financial institutions on the other side. The see the value of this IRA gated data. So in Europe, ESP to open one of the co founders of our company founded monzo and Starling. So this whole concept of while starlings gates marketplace, right? With monzo. It is how we connected do that. I can't tell you how many times I get asked every. And conference. So the US threatened banking are we're gonna PSD to what are we going to have some curious to hear from you at European is? And then, of course, I'm gonna tell you mine as our podcast. So what do you think so? I don't think it's gonna happen here. I agree. I think this is not a top down country for this kind of stuff driven. Don't you think exactly? And the biggest banks got ahead of the curve that if they had locked down their own data and badly way. Then the regulators would have gotten involved, but a couple years ago, the biggest banks got smart, and they realize they're not gonna put walls around customers data regardless of who technically owns it. You think you under data? And if chase disagrees with you're going to go to Wells Fargo if they see the world differently. So it's become an industry. First approach, they've made great strides building API's that allow for much, safer distribution of data than traditional screen scraping. So the industry is solving some problems that said, all right. Let's say we got the top ten banks have budget to do this the next. Ninety banks are struggling. And then there's nine thousand other ones that can't even take that first step. They've got someone's brother-in-law managing their entire IT system. They are now building open banking API, dammit, Carl. So I don't know what happens nine thousand Bank. We keep doing what we're doing, which isn't ideal to take credentials. I would love to never see another credential or pass for the rest of my life. But I don't know how that's gonna work for, you know, bang danvers Massachusetts, where my Desmond is. Yeah, it's a it'll evolve and we'll we'll get there. But right now, agree with you. I mean, the reality, the US, I said, this at a conference yesterday, really time the difference in the UK, for example, in the US, and the banking system of forty seven hundred banks think, and another six thousand credit unions, and that's the lowest point since nineteen thirty six so it's still fricken enormous, you know, and the scale of all those different players all over the place. I mean, you know, y'all have great customers. And I think that's the thing that really encouraged me. And I knew that Zach and y'all we're gonna hit it out of the park, was, my saw the Bank names, starting to come in, you know, like, okay, look, you know, it's chase pure talking with city if you have these players coming in. You pretty much set the bar. You've won the game. It's we get some credit for it, but honestly, the banks have changed their mind. I mean I can only sell so well into the innovation team because the innovation team at city is going to adopt cool, new stuff is getting the non innovation team that innovation team, the people who are running cards and autos, and the real traditional lines of business to say. Wait a second outside data makes me better at my job. And giving my customers the ability to take their data elsewhere means trust me more as their primary relationship, and they're willing to take that risk. Yeah. The middle. Right. Of the camera and say this. If I recall city had about global that believe the numbers thirty thousand compliance officers thirty thousand compliance officers. And yet, if you're able to get in there and do this. You're proven the model you know, you're proven that the walls have come down, but the data security still there because the reality is we say the walls down securities. Everything I was actually looking at some of the signs you have all around here. Neff L goes on his back in the navy. Right. Who slips ships what computer you bringing her? So I mean that is everything. Yeah. Absolutely. The, the scary thing about our industry is that a breach, a plaid would be kinda straffic a breach at our competitors would be almost as bad, because the faith of the entire industry has a strong. This isn't saying that plaza within the competition is saying that aggression, as a whole is a safe way for you to interact with new apps new services. So we all take it really seriously. I know the banks, don't feel this way, but I think that aggregating not the normal sense, but aggregating the number of places where Loggins are actually happening reduces the surface area attack for Bank. So, I don't want my stepmother going to log in to her Bank account from six different coffeeshops I'd rather, she uses an app where that logging is happening from plovers, and so I'm able to take six to one, the number of points of attack from my stepmother's accounts just down to us, and I feel a lot, safer with us, too. In the log in, because we're white listed beg Americans who we are. And that's a really. Concepts visually. Right. The banks have in the walls. And it's not the walls are coming down yet. You don't want a million gates around that wall. Right. Exactly. You want each point. Good way. Good way. Every time you log in to your Bank account from wherever you are in the world. You're opening another tiny door and Bank America has to maintain that door, and they have to let you do it, but we've got a huge door and there's a ton of data passing through that door. But at least they can watch one place, and so for Infosec standpoint, I think we're huge assets banks. They don't necessarily agree with me. They also didn't agree that AWS cloud was going to be the way forward and that they were gonna love the head will agree. Yeah. We volved pass that. We're getting twenty fourteen. We just got a slap down by major insurance company. Twenty fourteen right after we launched to say they will never use us for that. And then in two thousand fifteen this leftist up and twenty sixteen and we got slapped a little bit less hard and this year, it's more likely love to have. I think that this is the year. We can actually get their amazing. It is five years, five years going back every year. And saying, yes, we are safer and then, you know you keep chipping away of. Yeah. That's the, the business mall, as you sign up for when you go into the space one question before jump into we have a series of questions, everybody. So be fascinating to see what you come out with your answers need to be kick ass. Because you're going to really good people. All right. No pressure, like odd. Dammit, really. But when I'm curious about because I just read about this. I didn't realize it. So do like t shirts say my great-grandfather disrupted the industry now I am. Or you just don't go that he could cause your wife's like hell no. Oh, you mean with my father? You think about it. That is kind of cool, the disrupt and industry. And then disrupted again, I funk, I no way I'm the first person at first person asked that I'd say it's definitely part of what's motivated me to do something totally different. Yeah. I'd say it definitely was was part of the, the accelerates, cool man. I mean, come sons, right. Yes. Kind of cool. Actually, my, my, my son is named after my grandfather maker. That's the legacy part of that. The whole the whole concept around legacy and disrupting legacy is cool. I, I hope that, that my son wants to do something different. Yeah. My son's doing something completely. I think it'd be all right. All right. So here's a three questions I had to go. There said, it's found that fascinating and realize that drive over here, by the way. I was like, that's kind of cool. All right. No pressure. Here we go. Go look back over your career. Thirty six. Six but you had a career. What's the one thing when you look back if you could give ice to the, the next person coming up that you go for the love of God, make sure you do this? Don't do this. Yeah, I, I, I know what it is say, I this is a little bit technical. But there's a playbook for your first pitch deck as entrepreneur and you hate using a playbook and you hate doing something by the rules when you're starting your own company, but there are rules. And I learned them by just like having the worst fundraising experience of my life. When we started this business nine realizing that there are ways you can sort of play the game and talk, the right talk, honestly, telling my younger self to throw up my own ego, and actually listened to the playbook for startups can get to the next thing would have saved me like a year while life. You know, that's actually really good advice, because I've done the side, weird vising, and you're telling pursues genius went to MIT and from the product side. It's fantastic. But the pitch side and taking advice you're like you really need to turn ego. No, you're brilliant. Yeah, but you're gonna run into it is okay. To do things the way they've been done before because you're doing lots of this new, every single piece, your business, not have reinvented from the ground up. All right. So the next one yeah, best by shoe. Got best advice. I ever got. My father has only give me one piece of advice might tire life. You're not you ish. As jewish. Good for you. Introduced my mom and, and it is free. Getting elevator just make sure that the elevator cars there after the doors open. Because every once in a while you hear about someone stepping in to open elevator shaft, and that's terrible way to go and actually applies to lot of and you know what? I don't think he actually meant it. Yeah. To say don't wanting to elevator shift deliver thing very New York pieces of ice. However, in my mind he meant it as a metaphor. We're gonna go with that. We're going to run with that. And it was a really good one. All right. Last one this one's easy and looking forward. Right. Acquisitions there in it's moving forward. Couple years from now where you're going to be, I think, I'll be plaid this thing feels like kind of rocket ship, and we're we're glad the world. Plaid be. Yeah. I think everyone in America will will no plan because that is how they interact with. Eventually.