Dave CEO, Jason Wilk: The Best Performing Fund Would Only Back YC Founders on Their Second Time

From a $4 billion to a $50 million market cap. Today, I have the founder of Dave, one of the U.S.’s leading neobanks, on the show. In 2022, they SPACed and went public at $4 billion. Excitement soon waned, though, and their market cap dropped to just $50 million.

All of our PIPE investors from our IPO bailed before our lockup expired. Fintech became a bad word. SPAC became a bad word.

They lost an incredible 98% of their value.

I had no support in my stock.

But the turnaround has been one of the best on Wall Street. They’ve increased their market cap by over 900%.

The investments we made in AI are really what led to a lot of the profitability.

Is there anything you would have done differently about the process?

Honestly, I don’t regret going out via SPAC. I think we just went public too late.

You went public too late.

I think the company realistically was ready to go public probably 6 to 12 months earlier and was ready to go.

Jason, dude, it is such a pleasure to have you on the show. I’ve heard so many great things from Imran and from Ash, so thank you for joining me, man.

Yeah, thanks, Harry. Great to be here.

I would love to start here. You sold your first business for $85 million, reportedly. I’m always oscillating on the fact that, bluntly, do richer founders make better founders? I think about this a lot with investors. When you think about it, do richer founders make better founders?

I’d say yes. I don’t think it’s the case every single time, but I think about this quite often. If you had a blank-check VC fund and just wrote a check—blank, not looking at the idea—an uncapped convertible note into every successful, exited YC founder for their second company, you’d have probably one of the best VC funds on the planet.

I look at some of the guys in my own YC class. That company I sold wasn’t my home run. My second company was Dave. The founder of Opendoor had a small real estate company that he sold to, I think, Trulia at the time. Stripe was in my class. They had sold a previous company for around $6 million, some eBay tools business.

It’s just amazing, the swing for the fences that some second-time founders go for once they have a little bit of money in their pocket, when otherwise they were a little bit more conservative the first time around. I remember meeting Eric Glyman from Paribus at the time, just after he’d sold it to Capital One, and he was like, “I’m about to start something in the fintech space. Anyway, I’ll tell you more soon.” He then founded Ramp a month later.

Another great example. Can I ask what that is, though? Is that the financial safety that comes from having a first exit? Is it having seen mistakes that you’ve made before? What is it you think gives you that unfair advantage the second or third time?

At least for me—and probably the same thing for guys like Eric from Paribus and a lot of people in my YC class—we weren’t willing to swing for the fences, given how little capital we were raising back then.

The company I started was in 2009. It was the YC batch of 2009 or 2010, and we had to fight tooth and nail to raise a $300,000 seed round. Now, you raise $300,000 in a minute when you’re presenting at the YC batch demo day, but it was so difficult back then. Mark Cuban was our first check into that company, and that wasn’t even a result of Y Combinator. I had to try to convince him for a year to invest this small amount of money.

Back then, Mark actually capped my salary at $30,000 a year until we could get the company profitable. That’s how different it was to raise capital back then.

Was that a good move, do you think? Now, that would be considered vulture VC. I love Mark and you love Mark, so I don’t mean that badly about him, but that would be considered really bad form. Was it actually helpful?

There’s no way that would happen again today, but honestly, it was an amazing forcing function to try and build a profitable business and not raise too much capital. We never actually raised any capital beyond the seed round as a result of that.

It taught us a lot about persistence and perseverance—to try and come up with a scalable business model without burning a lot of capital and without hiring a lot of people. Interestingly enough, the $30,000 salary cap led to me overdrafting my checking account a lot, which pissed me off enough to start Dave as my next company after that one. In a funny way, it sort of led us to Dave.

Mark ended up leading the seed round for Dave as well, so it was a really interesting story.

Why didn’t you do YC for Dave? You did it the first time. Why not the second time?

We actually would have liked to do it the second go-round because it was so different. Back when I did YC in 2010, it was still Paul Graham and Jessica. Paul was still cooking us dinner in a crockpot and serving us vegetarian chili on Tuesdays. It was a much smaller group.

Mark Zuckerberg would come in and talk to 20 of us. You’d get the Google founders coming in. It was this really intimate experience. But it was also a different time, when angel investing was starting to gain momentum.

Again, going back to how hard it was to raise the seed round, our demo day was very unsuccessful from a YC standard perspective. To go back in and get a bigger check—the check size was only $17,000 back then for 6%, not whatever it is today; I think it’s a couple hundred thousand.

So $17,000 bought them 6% of Stripe, which is pretty impressive.

It is the most incredible deal when you reflect on it.

It’s the most masterful play from Y Combinator. Can I ask, when you reflect on the thing you did very deliberately and strategically differently the second time with Dave—the thing where you really thought, “I learned my mistake or the lesson from last time, and I applied it with Dave”—what would you say those 1 or 2 things were?

The difference this time around was really swinging for the fences on a bigger problem. I think the first time around I was going for a niche business, something that I knew we could get profitable quickly. From that sense, it was a little shortsighted. We never could build a really massive business, and we didn’t want to raise a lot of additional capital either.

One, because it was hard, and 2, I didn’t like the idea of sitting behind a bunch of preferred equity, given that this was sort of my nest egg. I knew that every dollar of cash the company generated was 40% mine, and I really wanted to protect that.

The second time around, I had some money in my pocket. I had a real bone to pick with a major industry. I looked at every major industry to try to figure out what I should disrupt. Banking was the one I had the most personal pain with.

I think the second time around was really just having a lot more confidence in myself, confidence in my ability to fail, and going for a much bigger idea. Going against the banks was a perfect opportunity, with all this new technology coming out, like Plaid, that we were partnering with.

Given that we had so many companies raise so much in 2021 and 2022, do you think we have a group of founders who are generally pretty fucked, given the size of the preference stacks they have to claw back to?

Yes, I do. The amount of capital that some of these companies have raised is incredible. A lot of them are copycat companies, too, that never should have been getting capital.

People should never go out and try to build a company as a copycat when they have no real skin in the game or no real bone to pick with the industry, because these companies take a long time to build. They take everything. It’s weird to try to raise a bunch of money to emulate something else when you have no passion for it, just because it’s a spur-of-the-moment, hot thing of the time.

You have a lot of unpassionate founders. The second issue is that, because of the preference stack, it really kills their optionality. There are a lot of companies that we probably would have bought by now that are very small but have raised a couple hundred million dollars of preferred capital. It just makes their inevitable outcome impossible.

There must be a time, though, when that realization comes home to roost and you say, “I know you’ve raised $200 million, but I’ll give you $20 million and you’ll be grateful.” Does that time come?

It will come. It just hasn’t come yet. I still think there needs to be more time for the capital to burn. People need to actually run out of money for that to happen.

Because of the amount of money people raised, they’ve been able to make it last much longer than they otherwise would have in previous years.

Who’s the one saying no there, out of interest? As a venture investor, I know how we operate. If you’re not in my home-run basket, largely, you’re not interesting. Those companies that are struggling to get to their preference stack, honestly, for venture investors—especially U.S.-minded, upside-maximization investors—they’re just like, “Who gives a fuck? Mistake, move on.”

Yeah, I guess we don’t find a lot of VCs going around trying to get their money back, because your industry is such a home-run, hits-driven business that it’s not that interesting for them to try to break even on something.

They’re putting much more of their focus on the 10 to 20x investments that are actually going to return the fund.

So it’s the founders, then, who are saying, “No, we need to, bluntly, get back to the preference stack,” and they’re the ones turning down the offers?

Yeah, that’s right.

You’ve had so many interesting elements to the journey. The one I really wanted to dig into, and the one I’m thinking a lot about, is why anyone goes public today in a world of extended private markets, where we have such large capital supplies willing to come in and extend that window. Why does any private company want to go public today? How do you think about that?

Well, one, there’s the dynamic that there’s too much preferred capital going out there, which I would argue is not great for founders.

The benefit of being public is you erase all the pref. I mean, Dave, we have no preferred equity on our cap table. We have no debt in our business. We trade $100 million a day of volume, which means we have great liquidity to have employees get liquid on their equity.

It’s a real rich person’s sort of not-problem, but it’s rare air for companies like Stripe to be in, where they have a true public comp in Adyen. There’s really no point in them going public because they have such vast access to capital for secondary markets, but that’s only a select few companies. If you can be one of those businesses and not have to be public because you have such a clear comp, you don’t need to have the distraction you live with as a public company, then sure.

But I think that also works well if you’re an enterprise business. If you’re a direct-to-consumer company like Dave, I think you leave a lot on the table for the potential retail swing that investors can drive—people who are really passionate about your brand. Tesla, I’d argue, would not be a trillion-dollar private company, but because of the cult following they’ve developed, the Tesla owners that buy the stock are the ones that have pushed it above and beyond any reasonable EBITDA multiple that they would be trading at as a private company.

I think it depends on whether you’re enterprise or consumer, and whether you have great public comps or not. It also depends on whether you have that access to the capital markets, which I’d argue very few companies have the luxury of.

I completely understand that. It’s a game of the 1% who have the luxury to do that. I think there’s actually an argument to be said that even a Stripe of the world would benefit from having the pref stack removed.

Something that’s always questioned is the ability to make long-term bets if public, given the short-term nature of a lot of Wall Street. Do you feel, as a public company CEO, that you’re able to make long-term investments that are best for the business in the long term but might have material costs that aren’t obvious in the short term?

I would say that, because of the downturn that we had to weather, our focus on longer-term bets certainly pivoted toward doubling down on our focus on our core product offering, making that best-in-class, and improving the margins. A lot of our long-term focus on new products was definitely overshadowed.

We’re now finally getting out of that, now that the company is at a unicorn valuation again. We have real volume in our stock. We’ve gone through one of the most difficult times of my life to get us back here, and so we have some exciting bets that will ship later this year and into 2026 that we’re excited about. But had that not happened, those product bets would probably already be here in market today.

Going a little bit back from the turnaround, which we’re going to cover, it’s just such a wild story. You must look at it now and just go, “Oh my God, thank God I’m through that.”

Not enough time has passed. So I’d say I’m not feeling like we’re through the woods yet.

You look fresh. Your face and skin look fantastic.

It’s fine.

You chose to SPAC. Why did you choose a SPAC versus a traditional IPO? Help me understand that.

I still think that the concept and the structure of a SPAC make a lot of sense. You get to raise a guaranteed amount of capital, at least through the PIPE, at a valuation that is set, versus an IPO process. You don’t really know how much capital you’re going to raise. You don’t even know the valuation until you reach the market-making process at the very end.

That’s an arduous process, right? It’s 9 to 12 months of work to build the S-1, not to mention all the stuff you have to do to build out the finance, compliance, and accounting functions to get there. If you’re a younger company going public on the earlier side, the SPAC is an amazing vehicle to give you a lot of confidence. I know I’m going to raise this much capital. I know it’s this much dilution.

In our situation, we had a top-tier investor that was leading the PIPE, and we felt very comfortable. If not for the lower quality of companies that went public via that vehicle, I think you would have seen this be a much more pervasive way for good companies to go out.

So if SPACs are actually a more functional and efficient mechanism than people give them credit for, why have they been so ridiculed? Today, obviously, we’re both operating in this ecosystem, and the word “SPAC” is almost poisonous. Why is it so badly tarnished?

Just the sheer amount of low-quality companies that went public via that. When you went into this zero-interest-rate environment, access to capital was easy and anyone could raise it. You were having companies with barely any revenue and barely any business model going public via this structure, and it really overshadowed the great companies that went public that could have also done a traditional IPO.

I think we were one of those companies that could have easily done a traditional IPO. SoFi could have done a traditional IPO. There are great businesses out there that went public via SPAC that didn’t have to, and I think we need to separate that out.

Do you think we’ll see a return to SPACs as a mechanism to go public, given their efficiency and, as you said, predictability of price?

If we can get a high-quality company to go out and sort of reset the stigma, I think you could possibly see that being a real, realistic way to go public. Honestly, it’s too bad that it’s gone away because, again, I think it is a real way to go out.

Is there anything you would have done differently about the process when you review it now?

Honestly, I don’t regret going out via SPAC. I think we just went public too late, to be honest.

Too late. Too late.

I think the company realistically was ready to go public probably 6 to 12 months earlier, and we were waiting. We wanted to find the right sponsor. We were trying to ensure a few things were right within how we were forecasting our business, and so we decided to wait a little bit longer.

We went public in January 2022. The market completely fell apart in April 2022, before our lockup even expired. All of our PIPE investors from our IPO bailed before our lockup expired. Fintech became a bad word. SPAC became a bad word. Unprofitable growth company became a bad word. We were sitting in the worst possible place of all time.

Had I gone public 9 months earlier, we would have had the chance to raise potentially more capital. We would have been able to turn over our earlier shareholders and bring more long-term capital in. We never would have gone from a $5 billion valuation to a $50 million market cap overnight; it wouldn’t have happened. We would have had actual, institutional support with analyst coverage.

We had nothing. We were just a sitting duck. Some call it a fallen angel, where you have no pathway back, even if you build a good business. It was tough times.

I have to ask: You said the PIPE investors weren’t there. Does that not piss you off? And I mean that nicely, but investors not being there to support you in the hard times is a frustrating thing when you have relationships and you kind of feel like you’ve earned it.

Yeah, it does piss you off. I actually called some of these investors before going out, and I said, “Hey, the market looks choppy. Why don’t we do this as a private round?” Their response was, “Don’t worry. The stock goes down, we’re going to buy more. We’re here to support you.”

Within a matter of weeks, they were out. I had no support in my stock. We were [__]. And they had a decent amount to do with that.

I like you so much. You’re almost a Brit with the [__].

Okay, so we have this moment where we’re like, “Okay, we’re at the center of a load of challenging headwinds,” and the stock goes from $4 billion on IPO to $50 million. Jason, that is unlike almost any other experience that a CEO will go through. What did your mindset tell itself, and how did you actually get through that? Just personally—forget the rally-the-troops [__]—how did you cope every day?

You couldn’t look. It was so depressing to see all this value that you had accrued erased overnight. I had a buddy of mine text me about the situation, and he said, “Look, it was never real because you guys never even got to the lockup. You never actually were able to sell.”

By the time our lockup had expired, only 6 months after going public, the stock was already down 90%, with no fault of our own, right? We had a ton of capital in the bank. We had a great business. His response was, “It was never real, so there’s nothing you can really worry about. All you can think about is the path forward.”

As a founder, that’s all I could do: talk to the team. We had this statement that we delivered to the company around patience and performance. Let’s just keep our heads down. The best companies ultimately go public if we perform and we’re persistent. We’re going to eventually see people turn around and start to buy the stock. Thankfully, it did.

For me, I never started the company to make a lot of money. I started the company because I believed in this mission to level the financial playing field for everyday Americans paying all these overdraft fees in their accounts. I would advise any founder to really double down on having a very clear mission for the company, because it’s a really important way to recruit people and bring them into the company.

Even when our market cap went down 98%, the number of people who left the company during that time was so small because people weren't here to make millions of dollars. That’s a byproduct of the mission being successful.

What we did, though, to incentivize people was issue a bunch of performance stock units that were way out of the money. We said, “Look, the market cap’s $50 million. If we get the stock price from $1 to $5 to $20 to $80 to $100, you’re going to hit all these new targets.” I think we probably minted more millionaires at the company as a result of the performance stock units than we did in the actual IPO process. The people who did leave actually left a lot of money on the table because those performance units were quite valuable at the end of the day.

Does it make it mentally easier for you knowing that you couldn’t sell? I had an IPO of one of our companies and, similar to you, it was a SPAC, and it went from $8 billion to zero. It actually went to nothing, dude. But it was in the lockup, and there was nothing I could do. So it does actually make it a little bit easier for me because it wasn’t an option, right? Does it make it easier in your head?

That, I think, is the only thing that got me through it. It was never like there was a moment in time where I had the ability to just go get $100 million. It wasn’t a realistic opportunity. I never had that because the stock dropped so quickly that there was never a chance.

I’m so sorry to be personal, but I think these things matter. Does a marriage suffer in those times? We hear about work-life balance and all of the bullshit that we hear today, but that is the most intensely stressful time. Do you see that wear and tear on a marriage?

I’ve got a fantastic wife. She was incredibly supportive through the entire process, and she always believed. She was actually a seed investor in the company. A $50,000 check into the seed round was her only seed investment, so I think she’s up about 100x on that particular deal.

Obviously, it got to be a lot lower than that, but she was a believer and stuck by my side. I think the one benefit of being in LA is that it’s not a very tech-heavy hub. My golf club by Playad has no tech founders, so I was able to escape and not be surrounded by it at all times. I think also being a virtual company helped as well.

You said something about solving the problem for everyday Americans. One thing I often think when I see a lot of funding rounds is, “Wow, this is developers solving problems for developers in Silicon Valley.” I’m not belittling that; that can be a very big company. But do you think Silicon Valley adequately innovates for a population that’s much broader than purely them, or do you think not?

Certainly, when we started the company, no. It was so hard to raise capital for Dave. Even though we had these amazing results, going back to the concept I mentioned earlier, investors had never heard of an overdraft fee. That was a real issue for us in raising our Series A. Even though our CAC was $5, we had this amazing growth going on at the company. I had, I think, 120 meetings for our Series A. That was back in 2017 or 2018, so before things really got crazy in venture. It was hard.

People did not understand 120 meetings for your Series A.

Yeah, that’s right. We ended up raising the Series A entirely from one investor. It was actually more of a healthcare-focused fund. It was really just the result of one of our board members saying, “Trust me, this is a good idea. It’s going to work,” and he wrote us the check. It was pretty interesting times.

What was the check, and what was the price?

It was $10 million on roughly $40 million—that was the price. We took that all the way to a $1 billion valuation in our next round, our Series B. Actually, we only raised $60 million in primary capital prior to going public. We were just incredibly capital-efficient. We were always a small team. I kept that profitability mindset from my last business. We had this good balance between profitability and growth, and, yeah, $60 million to get to public.

It’s the thing I really can’t get my head around as an investor. I try to analyze patterns, and I interview many, many great founders. So many of the great founders—from your UiPaths to your Clios to your ServiceTitans of the world—honestly had exactly the same experience as you: they couldn’t raise, with hundreds of meetings. Then there’s the flip side, where the hottest companies continue to be the hot companies, and they go on this soaring trajectory that is unstoppable. I always try to think: which is the more common path to success?

One thing that was critiqued was the move into crypto. How do you reflect on and think about that in the pathway?

We never really get asked about that. I still believe in the foundation of blockchain and the ability for things like stablecoins to move money. I still think there’s inherent value in what Bitcoin is doing to show stored value within digital currency.

At the time, though, I think the move was actually heralded. We had this big partnership with FTX. That’s when our market cap reached its all-time high—when we announced that partnership. They wrote us a $100 million convertible check into the company, and it was boom time for crypto. It was boom time for neobanks.

Thankfully, we never actually went live with that partnership, but we wouldn’t have launched it anyway because of the path to profitability. It was a distraction, and ultimately we had to sideline a lot of our initiatives to just double down on AI. That’s what we ended up moving more of our focus to.

I’m in deals with FTX now, and they’ve been an absolute [__] nightmare, to be blunt. They’re demanding cash back and really being very difficult. Were they difficult with you in terms of needing cash back post-SBF?

Our situation was a little unique because it was a convertible note, so we owed the money back no matter what. It wasn’t an equity investment that they made into the company. We did benefit quite greatly from paying them back early.

That note was not due until 2026, and I think it was January of last year when we paid them back $71 million. At the time of repayment, it probably would have been $109 million or $110 million. It was a pretty accretive transaction, and I think that also sent a really strong signal to the market last year because we hadn’t yet announced our first profitable quarter. When we were willing to part ways with $70 million of cash, I think people realized that we were about to start showing some pretty explosive numbers in that period before we moved to the turnaround, which is just incredible.

When we look at the turnaround—from $50 million to now $1.13 billion as of today—I’m forgetting the date, but this is recorded when it’s $1.13 billion. There are kind of two ways to turn it around: reduce costs and increase revenue. Business can be more simple than people think.

When we look at the first one, reducing costs, what worked that you did strategically to reduce costs so effectively?

There was the cleanup of some contracts. We had some legacy agreements with our networks and our processors, which we improved. We could improve all of our infrastructure costs. Fortunately, we never had to do any RIF. The result of profitability was never because we had to lay people off. We were 300 people at the IPO, and Dave is still 300 people today.

The investments in AI are really what led to a lot of the profitability, reducing our support costs considerably. But it was really the AI innovation within underwriting that unlocked a ton of leverage in the business.

When we think about AI in underwriting and customer support, how has it changed the margin structure of customer support for you? We always hear, “Oh, AI changes customer support,” and I’m always like, “Great, cool. What’s the actual impact?”

Well, one, it’s actually a better NPS score around the experience. If you want to talk to someone, typically this would be the same for most banks, and especially neobanks in the country, most call-center support is going to be offshore, and that’s going to take some time to get to. You can interact via chat, but mostly that support is looking at an FAQ list to derive the response.

AI is able to quickly ingest all that and get you the answer you’re looking for within a matter of seconds.

And so we actually get better scores for a fraction of the cost. I think it probably costs us $2 to $3 per contact if someone wants to talk to an actual agent, at least. When you think about the cost reduction of someone interacting with an AI agent, that costs literally nothing. That alone is going to be pretty impactful.

We don't have an insignificant number of people contacting support each month just to understand what their approval limit is or how to access this part of the app. It's very impactful.

Can I ask: have you then removed people from customer support, or just not hired new people and supplemented existing staff? What does that kind of resource allocation look like?

We've always had an escalation team that sits domestically. That team's been the same size, but we've also scaled our customer base 2x since then, so we've kept the same-size team. We've had less reliance on outsourcing because more has gone into AI support. There's been no staff reduction on the core team in the US, but there is less reliance on these offshore companies.

Got you. Fantastic. So, you have better service provided by the same number of people, essentially.

That's right.

On the underwriting side, I actually met an underwriting AI company the other day, and they were selling to one of the biggest providers in Germany. They were like, “Hey, you've got 180 underwriters. They're one of the biggest. Basically, we can get rid of them all in 6 months.”

They looked at it and were like, “Fuck, no way are we rolling this out. That's a recession in Germany because of this whole program. Sure, no way.” When you think about how AI changes underwriting and what that actually means, how do you think about that?

I've only been thinking about it in 1 way: what's the consumer benefit to this? The benefit is that more credit approvals and higher credit limits get approved because of AI.

When you think of how we do it at Dave, if you want to access credit within minutes of joining our app, that's our key go-to-market for the company. Our ad, if you see an ad for Dave, is, “Get up to $500 in 5 minutes or less.”

We can do that because a customer comes in, we have them link their existing bank account via Plaid, and Plaid gives us access to 6 months of a customer's past transaction history. We have roughly 12 million connected accounts on the platform at this point. So, 12 million accounts times 6 months of account history, and then we get a connection on an ongoing basis. We have access to nearly 1 billion transactions.

When we launched the business, it was just a rules-based model: when do you get paid, our confidence in your ability to keep a positive balance over a certain amount of time, and our loss rates. When we started the company, our loss rates were north of 10%, and at that time, we were only offering people $75 of credit, with the average being around $50.

Fast-forward to 2024: at the end of the year, we reported that the average amount we're giving out was $180, and our loss rates were 1.2%.

And you think about the power of AI analyzing that cash flow data. It can look for commonalities in what makes up a good-credit-quality customer or a bad-credit-quality customer based on where you work, where you shop, and even the types of ATMs. Are there clusters of fraud around certain types of areas? You can start to suss out areas of risk that a rules-based engine would never be able to get to, but AI can quickly analyze.

Because Dave is an overdraft product, or an overdraft killer, the duration you're actually borrowing money from us is very short. You're going to utilize our product for 5 to 10 days on average.

We're getting to maturity on the entire loan portfolio so fast that the AI is constantly able to teach itself what it did well and what it did badly, versus a long-term installment loan company that may use AI but isn't going to know the efficacy of that model until 6 to 12 months in. Our model actually learns every couple of weeks.

The power of that has resulted in more credit per user at lower loss rates. You generally see the opposite: to drive better loss rates, you usually have to pull down your credit limits. We've actually seen a divergence of that, and it's really powerful.

I'm fascinated you said that. It started at 10% loss rates and moved down to 1.8%, I think you said?

1.2%.

What's the industry average, out of interest?

I think north of 5%.

Okay, north of 5%. Great.

And it's huge. Going back to the levers for profitability, when you are originating—I think we did $1.6 billion of originations in Q4—every 10 basis points of loss rate is going to result in a significant amount more margin in the business.

We've been able to improve our gross margins on Dave from, I think, at the low point in 2022, when we were in the mid-40s, to 72% in Q4.

Do you think JPMorgan, Goldman, and PNC—your biggest providers—are able to incorporate AI efficiently and fast enough in a way that they will need to?

It's just very different. How they would integrate AI is very different from the way it works for us. Our whole business revolves around having a very lean and digital-first cost structure.

When I think about how the incumbents are operating their businesses, they have a legacy problem. You've heard the JPMorgan consumer CEO, Marianne Lake, talk about this: it costs them $300 per year just to break even on a basic checking account.

So, if you're not a consumer who's using a Chase Sapphire card, has a mortgage, or uses Chase Private Client, the only way they can make money off younger consumers or lower-income consumers is by charging heavy minimum-balance fees and heavy $35 overdraft fees. It's the only way to recoup their costs.

When I think about a company like Dave, we have no bank branches. It's a full digital-first tech stack that we built. My annual cost to serve is nearly $40.

So, I can offer a vastly superior product at a fraction of the cost and still generate 72% gross margins. Our checking account is free. We have no overdraft fees on the checking account. The cost to access credit is only $5 if you want to borrow $100 at Dave.

That experience, compared to paying $35 to buy a cup of coffee on overdraft at a major bank, is so vastly superior. That ultimately drives the low cost and a low CAC because people tell their friends about it, and 30% of our acquisition is word of mouth.

So, it drives this flywheel that I don't think the big banks will ever be able to catch up to. I think they will ultimately cede the lower-income, younger consumer, and instead you're seeing the bigger banks doubling down on more of the private wealth, higher-end clientele, where I would say the banking system is actually quite good in this country.

It's really the 50% of Americans who are earning less than $100,000 a year, living paycheck to paycheck, and overdrafting their account a lot. They're the ones who should not be banking with the incumbents because it's just too expensive.

Listen, I'm a VC. I'm paid to summarize very grandiose statements from little data and project them with a lot of confidence. When I think about that, the common statement is, “Listen, it's simple: banking for poor people is a bad business.” Is that wrong?

People had that stigma early on when the company was burning capital. But we developed a really crisp message to the street. This is part of the turnaround, so I don't want to jump the gun on the story here.

The message was—and I would advise any founder to figure this out for themselves—you're building a highly scalable technology platform. At what point, whether it's a user metric or a revenue metric, does your platform actually become profitable?

What's so great about technology companies is that you should have a lot of operating leverage built into your business. It doesn't need infinitely more people to support infinitely more customers, right?

We had this message to investors and to the company as well: once Dave reached 2.1 million monthly paying members, the platform would reach profitability. Every member we added thereafter would generate significant profitability because we didn't need to add more headcount to service the next 2.1 million monthly paying members.

When we hit that number in Q4 of 2023, we had our first $10 million of EBITDA in a profitable quarter. We've since compounded user growth through 2024. We had 2.5 million monthly paying members in Q4 of 2024, and we generated $33 million of profitability.

Fast-forward to 2025: we've guided for the year to achieve $110 million to $120 million of profitability. You really start to see the teeth of the operating leverage built into these businesses.

And so, banking for—I wouldn't call it poor people. I'd say banking for people poorly served by incumbent banks is an amazing opportunity because you can bank them with a highly scalable, highly efficient platform that is inexpensive to operate and, because of that, drives very efficient CAC.

So, it's actually an amazing business, and most people missed it, except people like Imran, who put money in at the low.

Yeah. People often say to me, Harry, are you sure you're not Israeli? Because you have the directness of an Israeli in an English voice. I'm sorry for the directness there on that one.

Are there economies of scale that make the business better? I think about 7 Powers. It's the best book that anyone can ever read on business, and it basically states 7 powers that create sustaining defensibility in a business. One of them is economies of scale: essentially, the more that is used, the better it gets, so to speak.

There are economies of scale where, at 10 million, you're able to offer better X, more Y because of scale. I would point again back to the underwriting. Because of the high velocity of this ExtraCash product, where people are borrowing money for a very short period of time with Dave, we've actually issued that product 130 million times at this point. People have used it 130 million times.

As the system sees more of that positive repayment behavior, you're ultimately going to start to see better loss rates, and that results again in higher credit limits per user. So it drives this flywheel of success. There's absolutely an economy of scale. With all of our service providers and our networks, the more customers we get on the platform, the cheaper our cost to serve gets, and so it enables longer-term profitability there too.

I have to think, as an investor, about the distribution of gains and outcomes in any given market. I had Nick from Revolut on the show, and he said that the next generation would see a real consolidation of banking providers, with 5 global banking providers absolutely dominating and becoming trillion-dollar companies. You'd see the removal of localized banking, and these global players would dominate. Do you agree with that statement on the consolidation of banking providers, with 5 or 6 taking the majority of market share?

I don't know about 5 or 6 players. I do think, though, that there's an interesting opportunity for someone to build a global neobank. I think Revolut is doing a really nice job. I think Nubank is trying to do something similar, because you have these digital-first tech stacks and banking-as-a-service built into more and more countries.

Plaid is now in 14 countries. You can start to build these global banks, and then with things like Bridge and Stripe, with this innovation around stablecoins, you can start to get rid of this cross-border currency friction that exists. You could finally build a global bank. I just don't see a major incumbent like Chase or Bank of America doing that, but I could see a digital bank taking that on and being quite successful.

The thing I don't understand is that the US shits on Europe, really, in everything. Let's be honest—in terms of size: size of companies, size of market caps, size of the population. My question to you is, now in banking: Revolut is $60 billion now. I don't know exactly what Chime is worth, but it's, what, $15 to $20 billion? Help me understand. Genuinely, I never get this: why is the US smaller when it comes to neobanks than Europe?

It really is the different markets that we're serving. I said earlier in the call, the banking market for people making over $100,000 a year—if you keep enough money in your checking account and have a pretty good credit score—banking is not so bad. You have access to pretty good products, pretty inexpensive products, a mobile application to manage your money, and a financial manager. It's not bad.

It's the poorly served customer who's not making $100,000 a year and isn't able to maintain that minimum balance. That's the market to disrupt in the US, and it's a massive one. I can't say what Chime is worth at this point, but Revolut is going after a different market. You look at some of the countries where they're super successful: they're going for markets where the main banks don't even have a mobile app yet. They're actually becoming the first digital-first mobile application for a broad swath of consumers there.

If you go talk to Nubank, they're not actually banking the lower-income consumer in the country. Banking is actually screwed up for everybody. If you were to talk to David, the Nubank CEO, he's going to tell you that his customer base in Brazil and Mexico is actually a middle- to higher-income consumer. So it's just a very different opportunity that Dave and Chime are disrupting in the market, where there is this systemic legacy issue of how the banks are not built to serve the lower-income population well here in the US. That's still a massive opportunity, and could one of us be a $60 billion company? Certainly.

That's interesting because it's somewhat contrarian to the way that most people think. Most people think legacy banking providers, globally but in the US as well, don't provide that good a service. It takes a long time for them to respond, customer service is not great, and the quality of ancillary products isn't great. When you look at a lot of what Revolut does—from stock trading to crypto trading to insurance to eSIMs to travel insurance—these are financial super apps versus a Chase or Bank of America. You're saying that, actually, no, they're pretty good? They're actually pretty good?

When I think about the go-to-markets that Revolut is solving for, it's sort of the cross-border currency friction. That isn't really a thing in the US. The need to open an account very quickly on a mobile app—we have that here in the US. That doesn't exist in a lot of the countries that a place like Revolut is disrupting.

You've seen a lot of European companies try to be successful here in the US, and they haven't. They've consistently tried to come here and retreated because their product offering is just not a fit for the US, at least in the way they go to market in these other countries.

Just to show you how different the 2 companies are, Revolut is going for the banking license in the US as we speak and going full-on to get into the US. Do you think they'll be able to?

It depends on how they're going to try to attack the market, but we have not seen this super-app mentality be successful here the way it's been successful in other countries, where there's just less competition.

I would say, if you were advising Nick—say, “I'm Nick,” and I said, “You know, Jason, I'm not going to put on his accent because he'll kill me and I sound like a Bond villain. I'm entering the US market in 3 to 6 months. What should I know and do?”—what would you advise me, having seen all you've seen?

I would just look at all the different types of customer segments and pick the one that is most poorly served by the existing competition. I think companies like Dave and Chime have done a great job building significant penetration in the market. We're at 12 million customers. Chime, I think, is at a similar level of penetration.

Cash App has done a good job; they've got 50 million people using their product. He would have to think about this population as something that he needs to build an attractive product for, because I think it's going to be an uphill battle. Unless he wants to spend $500 on customer acquisition, then maybe he could go after the incumbents.

I specialize in asking basic questions. You mentioned that you're having the same customer base as Chime in terms of volume, or number. Why is Chime more valuable, then?

I can't say for certain, right? They're not public yet. I don't know what their most recent valuation is. We've just taken a very different approach to building our businesses. Our focus for Dave has been building a credit-first neobank.

You can download our app. We specialize in AI underwriting to get you approved for credit within 5 minutes of joining. Chime's taking a very different approach, being very methodical about wanting to be your primary bank. They want to make sure that, if you're going to get any value from their product, you need to be a direct-deposit member of their app.

We find that to be a very expensive value proposition to sell to consumers because, in my view, people don't wake up in the morning excited to open up a new checking account. It's very cumbersome to switch all your bills over, figure out who you need to pay, and establish a new, strange bank relationship. Whereas with Dave, we get to know you and try to get you to switch over time.

I'm going to get you approved for a couple hundred bucks when you join. We give you the Dave debit card to try us out. We're going to give you some benefits to help you earn some extra money if you take a few surveys here and there, and then we're going to ask you to direct deposit over time. But my CAC is $16 because I take this speed-to-value approach where I want to make you a happy customer immediately.

Chime's taking a very different approach where it's a no-fee account. They're very conscious that this is a bank account you're opening and that they want you to be a long-term user; this may not be for you.

It's so funny, though. You're more similar to Revolut than you think, because that's exactly the Revolut approach. We had Nick on, obviously, and he says, “No, I want it to be like a snack. I want you to use it for your holiday and go, ‘I like this.’ And on your second holiday, ‘I like this even more,’ and it's good.” And to your point, it's a lower CAC when the entry point is that. Over time, you have more and more snacks, and it becomes the meal; you actually move as a result of that. It's an entry wedge into the real win.

That's our approach. I think if you want to raise $2 billion and spend $2 billion on marketing, you can do this direct-deposit approach, and we think Chime has done a good job. They've raised the most capital and put the most capital to work. We've just, again, gotten to IPO with $60 million of primary capital because we've taken that snackable approach to building this relationship.

But I also think that, from the standpoint of long-term competitive advantage between us and the neobanks, the data set we're building around this AI underwriting is going to be such a leg up when we start to get into additional forms of credit. I think we're so early in our monetization as a business, given that we just offer basic checking and an overdraft product called ExtraCash.

But if we wanted to get into any other forms of lending, we have such an advantage by using this AI cash-flow data.

What form of lending do you not do today that you would like to do that would be most transformative?

We see a lot of overlap with things like buy now, pay later. We know our customers aspire to that. Our ExtraCash product is so short-duration that people tend to use it for gas, groceries, and rent. But if you wanted to buy an airplane ticket, books for school, or a T-shirt—these discretionary items—people are not using Dave for that, at least from a credit perspective.

We like to think that we can be there for you at every potential point in your credit journey as a customer. As we do that, we think more people will ultimately end up banking with us because we start to serve you for more needs than just gas and grocery money. You'll start to make us more of the meal, to take the words out of your mouth.

I don't like BNPL, and I worry when you said earlier, “The hard time for us is when governments give away free money.” It makes me think, is this just a race to the bottom? If I'm willing to give away a dollar cheaper than you're willing to give away a dollar, that doesn't feel like a very good business. Why is it wrong of me to think it's a race to the bottom over who can give dollars away for free?

I don't think about our interest in BNPL as giving away free credit and building merchant relationships. We would charge for it. Our customers are very willing to pay for access to credit.

When I say BNPL, I think my customer wants more duration to pay us back versus having to pay me back in 8 or 10 days. If I were to issue, I don't know, $500 of credit, you might use that credit differently if you have 6 paychecks to pay us back versus 1.

I'd like to think that we can build these various use cases to help you borrow money for longer amounts of time, using my cash-flow data—which we call CashAI—to underwrite you.

What's your boldest bet on the future of the neobanking ecosystem in the US when you look forward to the next 3 to 5 years? What do you think is very clear that many other people don't see?

I think the big thing people miss was, again, to go back to the earlier conversation, the inherent operating leverage built into these fintech platforms. They're so scalable, especially with AI. As these neobanks start to compound user growth beyond what it costs to pay back the cost to build their platform, these are great businesses, and I think people really miss that.

That's 1. The second is the ability for neobanks to get deeper into credit and use their expertise there to disrupt the legacy costs, because there's still such expensive credit for consumers out there.

Compounding-interest credit cards are terrible for consumers and are incredibly expensive. They're not great products if you use them to buy things for a long duration and you're just paying off a minimum balance. The fees you're paying are massive, and there are roughly $3 trillion of credit-card debt sitting out there that people are just revolving and paying too much money for.

I'd love to think that neobanks can leverage their low CAC and their cheap operational structure to start to eat into the fee structures that the bigger banks are also getting fat on.

Final one before we do a quick-fire. There's been some back and forth with the DOJ and FTC. I think you said it was government overreach. I'm intrigued: are you more excited, and is the business better, in a Trump administration than in a Biden administration?

Without mentioning this suit, we feel great about our facts. This definitely felt like government overreach to us. The case was filed on Election Day after a lot of good-faith negotiations, so if that says anything.

What I would say about Trump being in office is that, ultimately, my view—and all the stuff that's happened with the CFPB—is that there is enough competition in this space. If you're going to try and screw a consumer, they have so much choice in this industry at this point that competition alone is improving their product experience without the government needing to intervene in how you charge, what you charge, and how you onboard consumers, because of the vast amount of choice.

There are 14,000 banks in the country. There are 50 neobanks. You have choice. You can't take advantage of consumers without just churning away your entire customer base.

What I'm asking is, is Trump better for business owners than a Biden administration?

Yes.

Why?

His approach to less regulation in general. Again, this is less of an overhang for companies to focus on building truly innovative products without constantly feeling like they're going to trip some government wire.

I don't know that the government really understands this customer base. You see the things that they try to push forward, like a 10% cap on credit-card APR. Do you realize what that would do to credit-card approval rates? The reason why people charge what they do for risk is because there's risk. The second you take away someone's ability to monetize, it just means they shrink the funnel.

It's like, great job—you capped rates. You just kicked a bunch of people out of the credit-card ecosystem, and now they've gone to take out payday loans or something. It's such a headline win for a regulator that doesn't actually take into account the end consumer.

The same thing goes for trying to cap overdraft fees. You heard what I said about the JPMorgan CEO and the cost-to-serve statement. That was directly related to this: if you get rid of overdraft fees, we're just going to jack up the cost to maintain a monthly account with us because we need to recoup our cost to serve somehow.

It's another one of those regulator wins where, great, no more overdraft fees. But guess what? The banks have now increased the cost of a monthly account fee, and now no one gets approved for overdraft, which is a lifeline for everyday people to go get gas and groceries. It would suck to get stuck at the gas station just because a government regulator wanted to get a headline win.

Well, I needed this money. Screw you. I saw the 10% APR, and I thought, “I don't know if they actually understand how this world works.” You're going to get loan sharks who are really dodgy having thriving businesses because of your regulation.

Exactly. I think Trump's going to help get rid of that. We just need to get rid of the grandstanding and really try to think about what is going to be the best thing for the end consumer.

That's where I go back to the fact that there's enough competition in this space where you can't screw the consumer because they have enough options.

I want to move into a quick-fire, Jason. I'll say a short statement, and you give me your immediate thoughts. Does that sound okay?

What do you believe that most around you disbelieve?

For a quick answer, the one thing that I probably regret as a founder in this business was the big push, with venture-capital dollars, to hire seasoned, pedigreed C-suite executives. It's not as easy as it sounds—it's very difficult.

I would really question every founder who's trying to overhire too fast in the C-suite. Be very careful who you bring into your circle.

That's so interesting. So would you not hire them at all and grow internally, or just wait until later?

There are scaling issues with having some of your junior team try to get into more senior positions over time. I would just be careful how you meet these people. Get to know them over time. Don't make rushed decisions, and be sure that they truly align with your culture and your vision.

They can be very disruptive to your culture, but they can also be very disruptive when they leave, because people don't like seeing C-suite executives leave. It's a very important decision. I don't think pedigree should be your necessary filter, because one company's success does not mean it's going to be successful for you.

Which competitor do you most respect, and what do you take from them?

I have a lot of respect for what Revolut's doing. I'd almost call it “regulatory as a service.” Their ability to go into these different countries and set up operations is pretty remarkable.

If I could snap my fingers and replicate that capability, I think our products are needed in more than just the US. But the superpower they have—the ability to go into all these countries and do that quickly—I think is pretty impressive.

You can buy and hold 1 stock for 10 years. What stock would you buy, other than Dave?

Other than Dave, I haven't looked at the most recent stats on overall retail penetration, but I think Amazon is still pretty small when it comes to owning the overall retail market. I still think that's a pretty good stock to own for 10 years.

What have you changed your mind on in the last 12 months?

I'd say more like 24 months, but the shift to profitability was probably the only thing I thought about for a solid 2 years.

How have you changed your mind?

It's a philosophy shift. When you're going from a growth-at-all-costs mentality, which everyone's pushing you toward, to profitability at all costs, it's such a major mind shift. It's a shift for the entire company.

That was probably the hardest thing and the most thoughtful thing we've had to do over the last couple of years.

Which consumer brand do you respect the most?

Apple.

Why?

Aside from maybe their delay on AI, they just build the most polished consumer product, and they have a great, well-respected brand. I think everyone aspires to reach the level of polish that Apple has been able to develop.

What was the biggest short in the public markets?

I don't feel comfortable answering that one. As a public company CEO, I do not like short sellers, so I don't want to give them any ammo.

That's interesting. Do you not think any functioning, efficient market has to have a short seller?

I think the ways in which they derive their profits are not always above board, and so maybe it helps drive an efficient market if there's the capability of shorting. But I think if you had a long-only stock market, it wouldn't look terribly different.

How do they derive profits badly? I'm naive.

Well, you'll see some companies get these short reports that people put out, where an analyst is out there, similar to a sell-side analyst. They're actually writing research on a company to get people to short it. Oftentimes, those facts are incorrect. They're assumptions, and they can be blown out of proportion for things that, again, are purely for profit.

That's it. Is that legal? Isn't that like misinformation to change economic activity?

I believe it is legal. I think, as long as you're not saying a blatant lie about the business that could be deemed defamation, which is hard to prove, you see big companies. I think the most interesting was Hindenburg being shut down. They've written short reports on companies like Square and Cash App, and they decided to exit the business, which I thought was kind of interesting.

Yeah, we just had Carvana's CEO on the show. I actually skirted that one. I was like, "I'll leave that for another day." I wanted to build the friendship. It's not the most friendly start, is it? What did you think of Hindenburg? Anyway, where is Dave in 10 years' time? You said you've got 12 million today.

We've got 12 million today. I'm not committing to some sort of a user target, but I think Dave is going to be much more prominent in your credit life than it is today. I think I alluded to this, but I really feel strongly that our company is very early on in its monetization journey today, given we have a 3-year-old checking account business. We have a 10-year-old ExtraCash short-term credit business.

Our ability to continue to grow those 2 parts of the business, plus add in new capabilities on credit to add to those opportunities, I think, are just massive, massive things for the company. So Dave, in 10 years, has multiple credit products. We are more of the primary bank for the vast majority of our consumers, and it's just going to be a much bigger business because of the operating leverage we talked a lot about today.

Jason, listen, I so appreciate you putting up with the direct questions. You've been fantastic. I'm such a fan of the incredible journey. Thank you so much for joining me today.

Thank you very much. Great to meet you.