How We Got Fred Wilson, Benchmark and Index to Invest $94M | Why Robinhood's Strategy is Wrong

We gave nonfounders a percentage of the company that usually founders get. For the first 8 months of building, no one on our team took any pay.

Today, we have Paul Erlanger, a co-founder and CEO of fomo, on the show. fomo is a wild story. Despite the company being a wild success today, they only have 17 team members, no internal hierarchy, and no one-on-one meetings.

One thing that I discovered: if you're trying to raise another round, wait to announce your last round. I love non-obvious stories, and when you unpack this one, there are so many gems to uncover.

Everything is about momentum.

Ready to go. Paul, I am so excited for this, dude. I want to start with one that I'm always fascinated by: are you more motivated by the thrill of winning or the fear of losing?

This is going to be a hot take, but I don't think I'm driven by either too much. I think it's more about doing the thing for the pleasure of actually doing the thing. My co-founder and I talk about this all the time. I think the biggest fear is losing what we have now.

1. What Is fomo

Every day, waking up, going to the office, getting to work with an incredible team, and building what we're building—I think that's what actually motivates us. Specifically because of what we're building, but also just getting to work on something really cool, an interesting problem with amazing people.

I think it's important to set context for those that don't know what fomo is. How would you describe fomo in 30 seconds?

Yeah, fomo is a mobile trading app. Right now, it's mostly on-chain assets, meaning on-chain-native assets—Bitcoin, Ethereum, attention-based assets, et cetera. But we're soon going to launch global access to equities and perpetuals—non-U.S., obviously. We'll work with the government there as that comes, but the goal is to give global access to markets to individuals that don't have that access.

It's also social, so you can see what your friends are holding in real time and follow them. I know everyone's wanted a real-time Nancy Pelosi stock tracker, so maybe if she trades on fomo, we could finally get one.

2. Why Paul Did an Angel-Only Round With 140 Investors

I think that'd be an interesting addition to the app. Speaking of interesting additions to the angel round, when we think about early rounds, you did an all-angel round. In the early days, there were no institutions, and you had 140 angels. Why did you decide to do this, and how would that inform how you advise founders?

It was pretty intuitive to us. If you're running a B2B business, you hire a big sales team. It's not an easy job, but it's a lot of outbound, repetitive work.

When you're starting a consumer product, it's a very different problem space because there are a lot of great products that just never get off the ground. So we knew we needed to solve this cold-start problem—to get people on the app.

When we raised the initial round, the goal was to create distribution. We think that our best users should have some ownership in the product. Early on, what we were able to do was get people motivated by allowing them to invest in the product and create as large of a distribution channel as possible.

Not all those people are traders. There are definitely builders in the industry, and we've been able to leverage tons of them as we continue to build. But I think that initial round was really core to the success of fomo.

Who is the single best angel?

There's this angel investor named Aaron Harris. He is ex-YC. You know Aaron?

Yeah, I had him on the show years and years ago.

Aaron is an incredible angel investor. He is an incredible partner. He understands financing really well, and I think that when you're financing a business, it is one of the most important decisions you make. A small change in a term sheet could completely change the trajectory of your company.

Having him there in our court to really help us work through some of that as first-time founders was really helpful.

That's so funny. He was one of the first 15 guests I ever had on the show. He was a YC partner at the time.

3. How to Scale to Your First 1,000 Users

Can I ask you, when you reflect back on that journey, if you were to advise a consumer founder on how to scale to their first 1,000 users—I love Kevin Kelly's essay “1,000 True Fans”—what would your biggest advice be?

Talk to them. You need to keep iterating until you have 10 people, 100 people, 1,000 people using it. When you have 10 people using it, get the feedback from them, iterate on that feedback, and then get to 100 people.

This is actually one of the biggest competitive advantages for our company. In the on-chain and crypto industry specifically, users are very passionate about using the products. We have Telegram channels with a lot of the top traders on fomo.

When we put out our web app, for example, we did it a week prior and gave early access. The web app probably became twice as good just in that week because we were able to get early feedback from people who were actually passionate.

These people are just users of the product. We didn't pay them. There were no other strings attached, but they just loved it. So I think that the most important thing is just getting user feedback and iterating on it.

I have a product too, which is the show itself. My challenge is that user feedback varies. Some people love some things, and some people hate the same thing.

How do you determine when a user is right and you should ingest their feedback and make changes, versus when you should stick to your core product roadmap or thesis and ignore their feedback?

I think you just have to be super epistemically modest, because sometimes a user doesn't even know what's actually best for them. When you get feedback from a user, you really need to listen to your instinct on what the fundamental product experience is and your intuition, and then see if that fits in your larger vision.

4. Why the Financial Super App Theory Is Wrong

Honestly, I think that certain product decisions could potentially kill the product, like that one. So decisions like that, which actually have this large potential outcome, you need to be very thoughtful in implementing.

Why do you not agree with the financial super-app theory, then? If you have a Revolut, a Robinhood, a Nubank, or any of these big providers, where it's like the bundled provider is the one that wins—and I trade on Revolut today—why is that the wrong approach, and why do you actually need a trading app?

Because an everything app means not being intentional. It means, “Let's just throw everything in there for the user to access.” What is the glue between these things?

At fomo, we think it's the social graph. We think that you can express a thesis: “I think the Strait of Hormuz is going to close.” Well, I can buy oil on Hyperliquid. I can short U.S. equities that are relying on oil. I can buy the prediction market that the strait's going to close, and I can express my opinion in all these different things.

The reason these different market types exist is for you to express conviction on a belief, whereas all these other apps are just everything super-apps. There's no intentionality behind why all those things have to exist in the same place.

Do you compete with Kalshi, then?

Yeah, we haven't integrated prediction markets yet, and I'm not sure exactly where it fits in our roadmap. I think it's very interesting. I think our first version of the product would be built on something like Polymarket and Kalshi.

Those are great businesses, and I think there's a lot in flux around the regulation of these businesses. So we want to watch and see what happens and then move from there.

But I think it's really important because, listen, public markets have been how retail gets access to capital. We talked about this when we were talking about Shopify and how amazing that was—that retail investors got private-scale returns in the public markets when it launched at, what, $2 billion, and where it is now.

I think this is becoming earlier and earlier, right? If you have perps that are pre-IPO, and then you have prediction markets that, from a year ago—

Sorry, just so people understand: what is a perp that is pre-IPO?

Yeah. Taking a step back, what a perp is, is that you're basing a bet. You're placing a bet on a price. Basically, SpaceX will go up; you think it will go down.

Exactly.

Instead of me selling you SpaceX stock, I just bet you that SpaceX will go down. You're betting me it's going to go up, and then we trade money.

What you can do is have a price on the exchange that people just agree on. You're like, “I think SpaceX should be this much. I think I'm willing to sell this much at that price.” So I will sell you that much at that price, and then we're betting on it going up and down as a side bet.

You actually don't need the transfer of the underlying asset because it's synthetic. What's beautiful about that is you can trade these things without necessarily having that underlying asset.

What we saw with [likely Cerebras] is that when the IPO happened, the Hyperliquid price started to converge to that price at IPO, right? There were pictures of people on the New York Stock Exchange with the Hyperliquid UI up and people looking at those markets.

I think that's really cool and interesting. But with pre-IPO markets and prediction markets, retail gets access to these markets earlier and earlier.

When you look at Robinhood today, which provides, or wants to provide, a lot in terms of trading capabilities, do you think they were wrong to go so broad so quickly?

I think a lot of people who are on Robinhood would never have been on a brokerage otherwise.

5. Are Public Markets Just a Casino Now?

I see some criticism of, “Do I want to have my retirement account in the same place where I can trade prediction markets and sports bets?” I think they can do better tooling for users to self-guard against some of those products, but I understand why they horizontally scaled. They grew their business and were able to saturate the U.S. market, but they weren't able to go global. I think this is why they're focused on on-chain assets, because on-chain is global from day 1. If they could tokenize equities and a lot of the stocks that already exist on Robinhood, then they could give global access to these assets. I think that as they go global, they could be less focused on horizontally scaling all these products and really capturing a larger market.

Do you worry about the casinoization of public markets? What I mean by that is just a detachment from reality because of social media and retail exuberance, when businesses were based on core fundamentals. GameStop is a good example, but social media and movements can drive such price swings that it just becomes the Wild West in a casino. Do you worry that now the public markets are just the Wild West in a casino?

Yeah, I think “casino” is kind of a derogatory way to view it. I think it's somewhat empowering, right? Hedge funds have determined the value of stocks for the longest time, and this group, WallStreetBets, saw a bunch of shorts on this stock and was like, “Screw the hedge funds. We're going to have them cover all the shorts, and the price is going to skyrocket.” It was kind of cool to see a group of retail investors coalesce and be able to fight back against the institutions.

I think this is a really cool corollary to fomo, because fomo is a public network, whereas you had to be on WallStreetBets on Reddit. In fomo, everything happens in real time, so people in retail can coordinate there. I do think attention drives a lot of things. Whether it's sports cards or anything else, everything is speculative to a degree, right? Why are you buying diamond rings? It's because we've kind of agreed as a society that this is worth this value. Why are you buying gold? Most financial assets are speculative.

I understand the view on fundamentals, and when you're buying a business, you're buying the cash flows in that business, but most people, when they buy a stock, aren't looking to get dividends. They're looking to just sell at a higher price. So, in that framing, everything becomes speculative, and I'm not going to take a normative view of whether that's good or bad.

6. Ship Fast vs Ship Perfect

Going back to the story, when you had the angel round and we got to the 1,000 true fans, what's your biggest advice to founders on product-market fit?

I think you have to stay humble because at any moment you could lose it. Everything is about momentum. So, when you have momentum, instead of taking the gas off the pedal and being like, “Okay, this is working,” it's like, no, you need to double down 10 times harder.

Every day we come in and we're like, “Listen, we need to ship these features today, or else we're going to lose everything we have now.” I guess it's somewhat of a fear mindset, but it's really just trying to continue to keep pressure on so we continue moving forward, because once you lose momentum, the boulder just starts rolling down the hill. You need to keep pushing it up.

One of the biggest mistakes I think I see with founders is that they're terrified of launching and not having any adoption. So, they make it a more diluted message for more and more people. It doesn't mean anything to anyone. Then they launch, and it's the most mid product ever because they tried to make it so bland for everyone.

100%.

Actually, Chetan had a really good point here, because there's this balance I've always tried to find between shipping fast and doing things perfectly. I've been a perfectionist, and I'm like, “This detail, everything needs to look perfect.” Now I'm like, “We have 50,000 to 60,000 daily active users. We need this to be perfect from day 1, or else we're going to lose that user base.”

Chetan was pushing us, like, “Well, what if you shipped faster? Just think through this. Let's steelman that side.” I was like, “Well, look at Apple. Everyone envies that company. They always ship perfect products.” Then we were talking about how lithium-ion batteries exploded, how the first iPhone was glitching out all the time. I think, looking back, you look through hindsight with rose-colored glasses, but actually most companies don't ship perfect products.

You have to find this balance between shipping something—and I think a good framing is the one you're using—that a specific user base might want to adopt and it could grow from there, rather than just building something for everyone and something that you think meets this bar of perfection.

And I think now you have to ship faster than ever.

Exactly, because you can. Yeah.

And everyone else is.

7. How Chase Supported fomo at the Inflection Point

Okay, and so then tell me: We have these product-market-fit moments, and we see these strategic inflection points. How does Benchmark come into the fray?

Yeah, so we did this angel round. We were making some money. Most of our team was not taking any pay. For the first 8 months of building, no one on our team took any pay, and it was mostly because most of us are senior engineers and we were taking a bet on the company. That was really important to us.

Most of your team was not taking any pay. Everyone will be going, “What? Slaves? Slaves?” You have a very generous ownership program. Can you just talk to me about that and how you think about giving employees a lot more equity?

Yeah, we capitalized the founding team extremely well. I think this is going to become more and more true.

When you say “extremely well”—I'm so sorry to be a dick—but what does that actually mean? So many founders listen. Should I give everyone 1% each?

Yeah, I think—well, it's hard. It depends who, but yes, top performers, 100%. In fact, more than that, right? I think we gave nonfounders a percentage of the company that usually founders get, and it was mostly this core group of original people that didn't take any pay.

What's really important here is that all those people feel like owners of the business, because if those 5 to 7 to 10 people build this business for the next 10 years, there's literally nothing stopping us. We talked about this and work-life balance, and how do you push your team to work harder? Our team is senior enough and also has enough ownership where they feel like fomo is theirs.

So, if you basically give 5 to 7 people 2% to 3% each, then they're so bought in that you get kind of an extended founder team.

Exactly.

Okay, got you. Totally. So, you haven't been paid for 8 months. Cool. Sorry, please go.

Yeah, and it wasn't necessarily just the pay. I think that was fine. But we saw Robinhood and Coinbase, and those are both very volatile businesses. You've seen their stock price movement. It's because financial markets are volatile, right? You have the short- and long-term debt cycle, and we were taking a big risk in starting a company. We were starting to feel like we had found product-market fit, but why were we going to take the risk of a sudden market turn just wiping us out?

We were focused on 5- to 10-year time horizons. At first we were like, “Let's not take any venture capital. We'll do this angel round. We'll just build and find product-market fit.” Then, when Benchmark kind of came around, we were more open to the idea of taking money to protect the downside.

How did they come around? Did they slide into your DMs?

No. For the Series B, that was all inbound, but for the Series A, we actually did run a process because we were like, “We should have raised money here.” The Benchmark intro came from Aaron, so going back to the most helpful angel, one thing that we discussed earlier that is kind of funny is Sean and I didn't really know the venture game, and we're just builders, right?

We didn't really know who Benchmark was. I'd heard some stuff about how they invested in Uber, but I didn't understand the tiers of VCs or anything like that. So, when we met with [likely Chetan], it was just a very natural conversation. Out of all the conversations we had, he got it instantly. He had this deep intuition about what we were building, and we had very high conviction on what we were building.

To find someone else who has the same vision and conviction off the bat as us, who doesn't historically do deals in our industry, it was just an amazing conversation.

How was the partnership meeting?

The story is, we met with [likely Chetan] on Friday. We ended up talking with the whole partnership that following Monday, and a funny story from that is we were talking with the entire partnership and going through the pitch deck. I remember Peter Fenton was actually on his phone for most of it, and I was kind of bummed out because I was like, “Damn, he's not interested. He's focusing on other things. He's doing emails.”

I remember, as soon as we finished the pitch, the first thing he said to us—he goes, “Guys, I love the app. I've been on it the entire time.” That was kind of this deep-breath moment where we're like, “Okay, he sees the vision like we do. They love it, and it just really felt like a natural fit.”

Did Benchmark offer the highest price?

I think it was close, but not exactly the highest.

Do you think VCs can kingmake? What I mean by that is, when you have Benchmark behind you, do you see a needle-moving trajectory change?

Yeah, I definitely think Benchmark being on our side helped us in that sense, but that's not the reason we did it.

Mostly because we were naive to that, right? Which is kind of a funny set of circumstances, but, yeah, definitely, I think that there are some venture funds whose strategy is just to follow on companies like Benchmark, et cetera. We had a lot of inbound, and the partners we ended up working with were not those partners. I think there were very intrinsic reasons why we worked with the partners we did for our Series B.

I think a lot of people just follow-on investment. This is a little bit of a separate topic, but one thing that I discovered was, if you're trying to raise another round, wait to announce your last round. Because as soon as you announce a round, you get tons of inbound from other investors, and it takes up time to tell them, "No, we're not raising right now." In the future, that's kind of a note to self: if you really want to raise capital in the near future, you can just wait to announce your round until you're ready.

I completely agree. I also think it's really important for founders to know that just because a VC wants to meet you, it doesn't mean they want to do your round. A VC's job is to meet companies. I always say this to our companies: don't get distracted to a point. Focus on what you need to do, because a VC's job is to meet with people. Never forget that.

Okay, so we have Benchmark leading the round. Do you think that founders should take a discount for tier-one investors?

This is the person you're going to call every week for every decision you make. You have to like them, and they have to be someone that you trust. If you trust them more than the other person, I don't think the decision should be, "Pick the highest-tier VC." I think it's, "Pick the person that you trust will help you scale your business the best."

It's not going to be someone who's giving you product advice, right? The founders have to build a company, but someone who might know how to build a company because you don't have experience doing that, or someone that just trusts you and your intuition.

It's one of my biggest concerns, actually. It's always when founders say, "Oh, I'd love help on product."

Exactly.

I'm like, "Or hiring engineers." In all honesty, if you're not the one hiring engineers, we've got a problem.

That's the founder and CEO's main job. It's like sales: selling to future employees, selling your product and vision.

I can help you get some employees.

Sure, I'll jump on final calls, but I shouldn't be doing pipeline for you there. The best people you're going to hire are not going to come from a recruiter, and they're not going to come from a one-time intro. They're people that you spend months building a relationship with. Those have been all our best hires.

So, we raised this round from Benchmark, right? Suddenly, we have $20 million or so in the bank. It changes when you're scaling from 0 to 1 to 1 to 10. In that scale phase, before this latest round, which we'll get to, but in that 1-to-10 phase, what are your biggest lessons and reflections on that?

Hiring too fast is something we're very, very vigilant of. Some of the biggest mistakes I've seen in other people scaling from 1 to 10 is they start to acquire businesses. When you acquire businesses, you're not interviewing all the people that you're bringing over. So you end up just adding tons of bloat all of a sudden to your business, right? I think that can be a huge issue.

It's so funny. I think we're in the biggest paradox moment ever where we're replacing everyone with tokens. We don't need engineers anymore. We're replacing everyone with tokens. Then you speak to every single founder and ask, "What's your biggest problem?" And they're like, "Oh, hiring."

Yeah.

I'm like, "Which one is it?"

Well, I think how you reconcile it is that the best people are just so much more valuable now. You can use ChatGPT to make art, but you need to have the creative direction behind it. Your software engineers are your architects, and they're doing amazing things, but now they use AI to do the lower-level things maybe a B-tier or a lower-level engineer would do.

So, do we just have dramatically smaller teams?

Yeah, I think so. Which is why it's okay to give more equity early. That's kind of how we saw things.

How do we think about structuring the teams of the future, then?

Yeah. Currently, FOMO is extremely horizontal. We don't have meetings or one-on-ones. We don't really have any hierarchy. Everyone is kind of self-reporting. I think as we scale to a certain number, that will have to change.

What number are you at today?

We're at 17 total.

Easy. What will you be in a year's time?

Hopefully below 25.

Wow. Okay, we are really not scaling headcount.

Listen, maybe things change, but currently we really don't see a need. We did have a bottleneck on our engineering side. We just hired 2 or 3 incredible engineers.

Uber and Microsoft have both put question marks around the productivity gains that come from AI tooling in engineering, saying they are questioning it. Do you think that's moronic and you unwaveringly see it, or do you actually say, "Yeah, we get a load more code, but we're not faster"?

I think it's definitely faster. It's not just a lot more code, but it's a lot faster to thoroughly review code than even to write it. For example, Tina is a staff-level front-end engineer of ours. She built our feed, and she is building sliders for our new product.

There are all these small things on the front end that probably would take a while to implement and learn. You have to go watch YouTube videos or search to find libraries. She has experience with a lot of this, but some of the small components are new. If you could ask AI to do it, it'll give you an overview of how to build the thing. It'll even write the code for you. Then Tina will go back through and restructure and rewrite most of the code. Having the framework for understanding how to write it, I think, just speeds up the learning process significantly, even for the best engineers.

The product velocity—as I told you, we just dropped everything to ship this new product we're shipping next week—we built this product in 3 weeks. This product is basically what entire other apps have as their entire product. We built our web app in 1 month.

It's so funny. Paul Graham said last night that the new question he asks all YC batch members is, "How do we AI-proof your product? How do we put in non-AI features that build defensibility?" And I think the social graph for you is unwaveringly one of those.

Exactly.

Can I ask, when we go back to the enabling powers of AI that come from some of the tooling we've mentioned there, what are the team using today? Is this all Claude Code? Is this Cursor? Is this Codex? I'm just fascinated by the distribution of tooling.

Yeah. We have an internal AI policy to make sure that we're only using enterprise accounts and that there aren't sensitive things being uploaded, et cetera. I think that's really important. Within those guidelines, most of our engineers are using [likely Claude Code] and [likely Codex].

Has that changed over time?

I don't think so for us. I think we have seen some friction, like these models degrade, and then the Claude Code credits got really expensive recently. So there's definitely some friction there.

How price-sensitive are you?

Not at all. We don't have enough engineers for it to really be hurting our bottom line yet. Once it starts to, maybe we'll have some kind of quota there, but no.

Do you think there is a time when it will?

8. Will 20% of Dev Salaries Go to Tokens?

Yeah, I think depending on how big we get and how much we use it, maybe. Currently, the trade-off is enormous; it just makes no sense to limit it. For me, the core question on AI, bluntly, as an industry, is determined by 1 question: What percentage of developer salaries will we see spent on tokens?

Right now, if you look at [likely Marc Benioff], he said they spend $300 million on Anthropic. That's about 3.8% of developer salaries spent on tokens. If it stays there, paying $1 trillion for OpenAI and Anthropic is grossly overvalued. If it goes to 20%, which is what many think it is—20% of developer salaries goes to tokens—they're $5 trillion companies.

Can you feasibly see yourself spending 20% of developer salaries on tokens?

Yeah, definitely. It depends on the price of the tokens. I hope there's a race to the bottom and these major models are commoditized and get cheaper. I hope there's not, I don't know, price collusion.

Hopefully, they get cheaper with time, energy gets cheaper, compute gets cheaper, and then these things get cheaper. But in the current state, absolutely. I think 20% is definitely within reason.

Going back to what we said there about having the really great people in terms of designer-to-engineer ratios, does that change in this new world?

Right now, we only have 1 designer, but, yeah, I do think that design becomes more and more important, especially for some of these bigger businesses that do have a lot more mid-level engineers doing tasks that AI can kind of take over pretty easily.

If design becomes more and more important, do we double down on Figma, and is that the stage where art and creativity is fundamentally performed? Or, to your point earlier, do we move to a world of speed and iterations where we just prototype it and use other tooling—Replit and Lovable, and you name it—to get a fast product out the door?

I think it's somewhere in between, but mostly the latter, actually. I think Figma has a huge advantage here because humans want some control. For example, on FOMO, we could just have an LLM execute trades. Maybe in the future we have an interface that allows you to do that, but I still want to go to Harry's profile, see in this beautiful view everywhere you've traded, and be able to track that through a graphical user interface.

Someone on Figma will be like, “I want this design.” It generates the graphic, the vector file, and then you could still manipulate it and do whatever you want. I think that's really important, to have the hybrid, because humans still want to feel like they're in control. With Lovable, it's much harder because they haven't built the human-centric software. I think it's much easier to add the LLM on top, especially as it becomes commoditized by all these major models.

Why have we not had a big social company since Snap?

9. Why There's Been No Big Social Company Since Snap

It's really hard. Consumer is so difficult. Small mistakes could be pretty existential. For example, Clubhouse started to take off and was doing really well. Everyone was using it during COVID, and they had a very core user base that loved them. But then they started bringing on all these celebrities, and it overshadowed the core user base that actually would love the product with people that don't really care about the product.

I remember when it was Marc Andreessen just sharing wisdom on a Sunday evening.

Exactly.

It was the most amazing behind-the-scenes, fascinating lesson from the B, and it was so spontaneous and cool. What do you learn from that?

It's very important to find native creators to your platform. Instead of going out and bringing on all these creators from other platforms, you want creators who are already established, like Logan Paul, who got big on Vine for the first time. I think when there is a new social platform, there is an outside strategic advantage for creators to build an audience on that platform early because they'll be known as the creator of that platform. I'm not trying to get LeBron James to trade on FOMO. I want these native creators.

It's so interesting to hear. It's like Charlie D'Amelio, I think, obviously, on TikTok, where the lesson there is you have to make internal champions. You can't bring an Instagram star to TikTok and say, “Hey, bring your audience.”

Exactly.

BeReal was another one that I was in. Is there any lesson for you from BeReal? That, too, had the Clubhouse hype cycle that didn't sustain.

I think BeReal didn't have the feedback loop. It required people to do something every day, and people don't want to have to do something every single day. As soon as you lose that, you lose momentum very quickly.

10. How to Build Momentum & Viral Loops Into a Product

Is there a way to synthetically create momentum within a user journey?

Absolutely. For example, one of the most important things on FOMO is the share cards. If I go to Harry's positions, I can see all of your positions and share any of your positions using these beautiful share cards on any other social media platform, or your Fumbles. Let's say you sold too early and then the price rockets; then I can see how much you missed out on.

What this does is create this feedback loop where I can publicly share your things on other platforms, and then people want to see that in real time. Then they come to FOMO, and you're building this growth feedback mechanism within the app. Every time there's a top person having a top trade, whether it be this guy Iceman, who turned $10K into $2.5 million overnight on FOMO, or another guy, Remis, who turned, I think it was, $300 into $1.5 million in a month, these are being publicly shared on other social media platforms, and then it's driving attention to our platform.

Why aren't you also a media company? The reason I say that is because if you were to do amazing shorts—maybe they don't want it and want to stay anonymized—but if you were to do amazing shorts on turning $300 into $1 million, I mean, that is the most viral crap content for TikTok.

11. Why fomo Is Becoming a Media Company

You have a great intuition. I think we're building a huge media arm for FOMO right now. It's external to the product. We're doubling down on content creators. We're doing tons of partnerships with streamers. We're trying to do a lot of clipping content, and we want to become one of the largest media businesses for a tech company in the world.

You mentioned clippers there when we're talking about media. It is a new form of media. It is a dominant form of media. How have you approached that first?

It's kind of a game you have to play because of how attention works on these social media platforms now.

How do you budget for it? How do you work with UGC? What does that actually look like?

We actually have this all in-house. We have these creator managers. They're fully in-house, and we manage a group of 30 to 40 creators. We're constantly getting rid of the bad ones, adding new ones, and doubling down.

What makes a bad creator? What makes a good creator?

It's honestly a numbers game. It's just based on their impressions. When you're building a product, it's a lot about intuition—what your users will like. When it comes to growth, especially on these platforms, it's just based on metrics: how many impressions they're driving, how many conversions they're driving, and so on.

You look at the cost—whatever the CPM or the CAC—based on the acquisition cost versus the lifetime value of the user, and if that ratio isn't right, then you'll just kind of turn that off.

How do you determine acquisition costs? Is it on a per-download basis or on a per-funds-deposited basis?

It's revenue to us, right? It's someone who has to deposit and trade. Depositing is free; if you trade, then we take the total amount that we earn in any given month, I guess, from people who trade through those directly attributed channels, and compare that with how much it costs us to get those users.

Do you see commonalities in talent that works and talent that doesn't?

Absolutely. This is the most important lesson that I've learned early on. You create a form of content, or you find a creator with a form of content, and it's working, and you're like, “Okay, now figure out the next thing that works.” That is completely wrong.

What you want to do is continue to iterate on that and make it better and better and better until it works better and better and better, and then replicate it and have that type of content being replicated. This is something that we're still building out the muscle for, but users are more likely to convert if this is the type of font, this is the color of the font, this is the placement of the font, or if it's this person talking versus this person talking. You figure out these things, and you just double down on what works.

Any reflections now from building this UGC clipper content management system that other founders should know if they're thinking about it?

I guess there are 2 things here. 1, you need to make sure that the lifetime value of the user is actually worth it. But 2, you don't always have to go for the lowest-hanging fruit. This is a journey that we're on now, where you have someone whose lifetime value might be, let's say, $30, and you're only spending $0.80 on them.

But then there's another user that you actually need to spend $3 on because they need to see it 10 times instead of 2 times to actually convert. You should actually start to increase your CAC even if the LTV stays the same, to capture a larger and larger audience, as long as the CAC is lower than the LTV.

Does CAC go up or down over time?

Up, definitely. Well, I guess there are opposing forces, right? The force that makes it go down is that you get better at the game and iterate. But the force that makes it go up is that, with each incremental user, usually you get the lowest-hanging fruit to convert, right? So each incremental user is harder to convert, and they cost more to convert.

And then it also goes down because of brand proliferation, which is when you just become the default provider or the number one.

Inherently, you just get people because you are the number one.

Yeah. And so brand marketing comes into play. Brand marketing is a very difficult one to understand.

Brand marketing is actually one of the hardest things because you don't see the direct benefit. It's so important, but you don't really even know what the CAC is.

You could spend infinite amounts of money and not even see conversion. You try attribution by looking at hyperlocal search results, by looking at conversions on a per-account basis, and whether that was in the vicinity of North London, where Arsenal played, at a certain time of the game.

But it's really freaking hard. The thing I say, actually, on brand marketing is: look for immortal assets. What I mean by immortal assets is, if you sponsor a podcast, make sure that the podcast has it in perpetuity. If you sponsored an episode that we did with Bill Gurley, it still gets thousands and thousands of plays per month, even though it was recorded 3 years ago. That's quite valuable. If it's a billboard and in 2 weeks it's gone, that's not that valuable.

What are some other examples?

A football shirt. There are kids all around the world wearing Man U shirts from 10 years ago with a Vodafone logo on them. That's pretty valuable: having people still wearing your massive logo in the thousands and thousands from 10 years ago.

Do you see what I mean?

Yeah, I think.

And there's a lot of assets like that which are immortal versus very transient. Every single big founder I've had, Nik at Revolut included, has said the single biggest mistake he made about our marketing was that he did not appreciate brand marketing enough, early enough.

Yeah.

At a certain point, building a product transfers from a game of intuition to a numbers game because you just have so many users. One of the early stories from Robinhood that I love is that the deposit amounts from people with iOS were twice those from people with Android. Their assumption was just, “People with iPhones have more money, so they're depositing more money.”

What they realized through data was that there was something on the loading screen where it took twice as long to load for Android. People were just turning it off and not using it. As soon as they fixed that, the deposit amounts converged. I think there are a lot of unintuitive things that data can explain, and at a certain point, when it becomes a numbers game, it really is data-driven. We haven't gotten there yet, but that's something we're aware of as we move forward.

12. How Index & USV Led the Series B

A very exciting announcement: Index Ventures and USV are doing the Series B, two of the best investors in the game. I have to ask, how did that come about?

We weren't in a position where we necessarily needed to raise capital, and we were pretty opportunistic about it. I think after the Series A, we got some inbound and took some time. We didn't really talk to investors; we were just building products.

We were talking with USV for a few months, actually. We really like Fred. We spent a lot of time with him. He's incredible. He talks about VCs not being focused on the product, but Fred actually has really good product intuition. I think it's very rare for a VC to have that kind of product intuition.

Well, this is the combination of two of his biggest passions: decentralized networks and their network effects.

Exactly. This is right in the mesh. I think it was actually one of the other times, besides the Shaan conversation, where there was this aha moment, but we didn't get to speak with Fred during the Series A.

I don't exactly know. I think Fred was traveling and the times just didn't match up.

But it worked out now, right?

No, this is what I fucking hate about my job, though: a holiday like that—I’m not saying it was Fred, but a holiday in general—can lead to hundreds of millions of dollars lost. It's all opportunity costs.

Yeah, that's all I know.

Okay. So you meet him for this round.

He comes to the office. We're building a relationship with him. He was actually super helpful on a few things even when he wasn't an investor, and we just really appreciated that.

Then we got inbound from some other investors. I remember the first time we talked with Index Ventures; they were just amazing partners. I think Benchmark doesn't really have as many resources as these multistage funds have. These funds have so many resources for founders.

For the Series A announcement, we did all the PR in-house. We didn't have anyone helping us with anything. Having known the history of Index being very involved in Robinhood and USV being very involved in Coinbase, and even aside from that, Jan Hammer being such an amazing partner—and the same with Fred at USV—we were opportunistic and thought it was time to do the rounds.

It was really great timing for us. I think the capital is going to be high leverage for us.

How big is the round?

We're raising $75 million.

$75 million. How much did Index do?

Index did $55 million.

$55 million, and then USV did—

$15 million.

Okay. And the price?

The price is $550 million post-money.

Okay. Did you come to them with, “This is the round size and this is the price”? Did you come to it together?

There was an early conversation, far before the term sheet, where we discussed what price range would make sense for us. I think we weren't looking to do a round, right? So they were like, “What price would be interesting to you?”

We set a number, and I think that kind of helped anchor the conversation. When they were open to that, it anchored the conversation in a way where we had a great conversation from there.

When you have $75–80 million in the bank following a round like this, what can you do now that you couldn't do before?

There are a few things. One, it obviously helps us even more with the former point about market cycles. Our team is scaling. We're making money. We have much more money in the bank than we ever raised.

Is that difficult? Brian at Coinbase has said before—the challenge of his business is volatility and how it impacts culture and morale in some cases. It's just hard when it's a fucking depressed crypto period.

Exactly.

And you're like—

Exactly. That's why giving away so much ownership is important, but also having this capital really keeps motivation high during those periods, because we know that no matter what, we can build through it.

It's not like we're scraping by, right? We're building in a way where we're really able to take the risks that we need to, because we have the capital to back them. Our plan is to verticalize all of our infrastructure and own as much of it as we can in-house, because it just makes the product experience that much better for our users.

How do you determine what you buy versus build?

Anything that has to do with the core product, meaning the things the users face, you kind of have to build yourself. For example, some of our competitors just acquired trading terminals and then built that into their product.

But FOMO Web is a whole different experience. You have the same social graph. You could place a trade there under 1 identity, open it on your phone, and it's this social trading experience on the web that no one has ever done before. That's something where it was very obvious that we just had to build it.

Then something like data infrastructure—maybe someone who's already set up bare-metal servers, so we don't have to pay so much money to AWS or Google Cloud, or someone who does indexing for us. These things are behind the scenes and would take so long for us to build up the expertise for, so they are things that obviously make sense to acquire and bring in-house.

13. Why Europe Is Winning in Fintech While the US Falls Behind

America likes to shit on Europe, but when we look at the numbers right now, Europe is kind of shitting on America when it comes to fintech. It's our fintech provider, Revolut, which has stolen the show, and I think on the next round it will be considerably more valuable than Robinhood. Why has no one in the U.S. built something that Europe has?

I think it's true. Every country has different brokerage laws. Europe is a lot larger in terms of there being so many countries, and I think Revolut has been able to saturate all of Europe at once. It has also been able to grow globally a lot faster than Robinhood.

Robinhood has done a great job. I think they have a little over 20 million funded accounts in the United States, and we were discussing before how they've horizontally grown into other product categories. Their biggest move with on-chain tokenized equities is to be able to finally distribute these things globally.

I think it's really important. Look at Facebook; look at WhatsApp. All of these social businesses that really scaled are global from day 1, and I think that's really, really important.

I don't know if it necessarily answers your question of Europe versus the U.S., but I think the reason is your ability to saturate a larger group of people.

Are you a social company, or are you a financial company?

We're trading first. I think that's really important, because what the social features do—at least right now, in their current form—is allow you to become a better trader by having transparency into what the best people are doing.

You can instantly discover people, get notified, and follow people. But I do think over time you want to create momentum for people to use the app, maybe even if they're not trading. You don't want to obfuscate what the app is good at. We have to always be the best trading app in the world, because the top traders won't use us otherwise.

However, over time, if you build these other social products, maybe the people who aren't necessarily trading every day can interact on the platform more. I'd say we're much heavier on the trading side today, but we're heading in the direction of becoming more social.

14. Quick-Fire Round

Dude, I want to do a quick-fire round with you. I could talk to you all day, but I'll say a short statement and you give me your immediate thoughts. Does that sound okay?

Okay, let's do it.

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

How important social is on FOMO. I think we were doubling down on the trading product and assumed that people would come to trade, and then the social graph would grow from there. But you need to be very intentional about the social graph.

And I think that's something that's very momentum-based, and as soon as you start losing momentum there, people stop using the app, and then the whole thing could unravel.

Revolut versus Robinhood.

I'm a Robinhood user because I'm in the US, so I'm going to say Robinhood, but I do think Revolut is very well positioned. Honestly, it's really hard. Maybe Revolut. It's a close one.

That feels like your heart says Robinhood and your head is saying Revolut.

I think that's right. Can we cut that one? No, I'm kidding. [laughter]

What's your biggest advice to someone studying computer science at university today?

Use less AI.

I think you should use less AI because you're going to have AI at your disposal. All of the best engineers today had to learn not using AI to become really, really good. When you're in practice, in your job, you're going to use AI.

But this is, for me, a controversial take: I try to use AI for as little of my writing as possible because I think if I use AI for all my writing, I'm not going to be able to write anymore, and I'm not going to be able to remember what good writing is. I'm pretty scared of that, to be honest.

I agree with you, especially on social posts. I completely agree with you. Some of my team were using ChatGPT for social posts, and I was just like, it's shit, and I can tell there's no humor, there's no personality, there's no texture to it. But with engineers and coding, if I'm advising CS students, use it as much as freaking possible—

I'm not an engineer, so don't take my advice on that one. [laughter]

That's very funny. What investor do you not have that you would most like to have?

Have you pitched them?

We spoke with them. I really like Micky and the team. They're great.

What sports team do you want?

Really?

Not even a question.

That's amazing.

I mean, it's topical right now.

If you could give one piece of advice to yourself starting FOMO again, what would you tell yourself if you knew everything you know now?

Have the hard conversations sooner. I think the hardest thing about being a CEO is having hard conversations, whether that's with employees, early investors, or friends who are helping you.

I think that people try to avoid confrontation and avoid having the hard conversations because it sucks. But have those conversations sooner, and just be completely transparent and honest. Come from the best place you can, and they'll understand.

Often, when you have a hard conversation, it's not as bad as you think. You feel a sense of accomplishment, and then you actually take on more hard things because you're like, it wasn't as hard as I thought. It leads to a domino effect of taking on hard things. Do you know what I mean?

That's exactly what I've realized too.

996. How do you feel about this grind, slot, hustle culture?

Yeah. At FOMO, we don't put numbers to it. There's no 996.

I think if you give—and this might be unique to our business—a lot of ownership to a team that takes a lot of ownership, these people are fully autonomous and really care about what they're doing. They all feel like they're owners of FOMO; they feel like they're owners of the business. So, I trust that they're going to do their best work.

There are times when people don't have to work on the weekends. And then there are times when we're building a new product, like this week, and we're working all weekend, but people love to do it. I think you can't beat a team that's having fun and just loving what we're doing.

I'm always on, in the sense that if something comes up, I have to work on it. But we love what we do.

What's your greatest strength, but also your greatest weakness?

I have strongly held but loosely held beliefs. The downside of that is sometimes you just need to make the decision, but I always listen. Whenever there's a decision at FOMO, we're asking every single person, especially the core team, what they think about it, and we're talking it out and coming to the right conclusion.

I think it's definitely more of a strength than a weakness because it's a forcing function for us to steelman the other side. We're always asking, "What if we did it this way?" or, "I have an opinion that's inverse to yours; let's talk it out." But I do think that sometimes you need to just make a decision, and we get hung up on things.

Has Trump made business better in the US?

I think there's been a lot of positive movement on regulatory clarity. But at the same time, I think that sentiment for crypto has also gone down significantly from the general public.

What has driven that crypto sentiment downgrade?

The goal for FOMO, as cheesy as it sounds, is to be a beacon of light. It seems like everyone else in crypto has always been so short-term-focused.

I think in any early industry you go to, the industry at first is kind of riddled with the short-term gains and the people who are taking advantage for themselves. Then someone's got to come with the broom and sweep up the mess.

Our goal is to create a product that's for our traders, something that they'll love, and something that's with them for the long term. I think what's given crypto such a bad reputation is there's no consumer protection here on a lot of these products.

People will buy—it's so hard to do in the first place—but then they get over the leap of actually doing the thing, and they just lose all their money. It's not because they didn't know that this coin might go down. It's because it was a scam coin, and there was actually a real one they were trying to buy, but they bought the wrong one. There was no warning signal, and I think people just got burned so many times in a row that it led to all this negative stigma.

That's called a triple-layer Anthropic SPV.

Yeah, there you go. And this, Harry, is why perps are so important: with a perp, you don't actually need to trade the underlying thing. We could have a perp on whether Anthropic will go up or down, but we don't need to actually transfer the underlying Anthropic asset.

So, if Anthropic goes up or down, all secondary asset transfers are null. It doesn't matter because we're just betting on the price of the thing. You're never actually exchanging the underlying thing with me.

Does that remove SPVs?

Yeah, you don't need an SPV for a perp.

How do you expect it to play out? Because you're going to now have Anthropic, OpenAI, and SpaceX, where you'll have perps on the platform, I guess.

It's going to be really interesting to see what happens. I think there's only so much demand in the retail markets, and I think SpaceX being first to market is going to be very interesting. I'm curious to see how much capital they'll raise from retail. I think 30% is devoted to retail.

Now, will there still be a ton of retail interest if people get burned on SpaceX, Anthropic, or OpenAI? I think if SpaceX performs well, the OpenAI and Anthropic IPOs will also go very well. I think if SpaceX performs poorly, then those are going to have a hard time.

Final one for you. What's the kindest thing that anyone's ever done for you?

I mean, the true answer is my parents giving me everything I have. I feel like maybe everyone has a similar thing there, but I really do owe them everything.

I think there were parts of my upbringing that were tough, but my dad, for example, didn't have much savings and worked his way to help pay for my college. That was one of the most incredible things anyone's ever done for me. My goal is to just continue to give back to them.

But, yeah, probably my parents giving me everything I've had today.

My mother is absolutely the same. My mother taught me it's not what you say, it's not what you do, it's how you make people feel that matters.

I always say, call your parents up and tell them how much you love them, because there's a time when they won't be there and you'll regret not making that call.

Absolutely.

Dude, this has been such a pleasure. Thank you so much for letting me be a part of the journey. Thank you so much for coming. It is so good to do this in person, and you've been fantastic.

Thanks for having me on. It was a pleasure.