How to bet on yourself (without venture capital)

Usually, I don't start with a description of the company that someone is building. But in your case, I don't think a lot of people are yet familiar with Column, and I want to fix that. It's such an interesting beast in and of itself that it'll be our excuse to talk about many fascinating things in the world. Can you just start by explaining what the business is and does?

At a high level, we are a software company that also owns a bank. We say, “Okay, we have this interesting regulatory moat with a bank that most other people don't have, and we're going to build this incredible software behind it that nobody else can build because they're not a bank.”

We started out by surveying a lot of software companies that wanted to get into financial services in the US. We're the back-end infrastructure that powers the payments, deposits, and credit of amazing companies like Built, Wise, Ramp, Brex, and Mercury—these types of companies. They run on our software and on our regulatory rails.

We also expand that to anybody wanting to do things with the global dollar. That could be international fintechs, global banks, or banks in emerging markets that need to transact in or hold dollars.

In the US, you have vertical software—people building business software. This is an area that's probably going to get changed as AI rolls through. People need to go deeper down into the business. Just building software for software's sake is no longer the case.

Now people actually need to control the underlying finances of a business. The Brex and Ramps of the world have proven that you can build enterprise software that also touches the money. But in order to do that, you actually have to control the dollar. You have to control the money, whether that's lending money, holding deposits, or whatever it may be.

We just expose a set of primitives and APIs to allow anybody to do that super easily.

Could you maybe pick a customer that people might recognize and describe literally what services or products they use, and then how they pay you for those products or services? Just to really nail it home.

Maybe I'll use a company out here that recently relaunched, a company called Built, which a lot of New Yorkers have, and a lot of people in cities have. If you look at the card, on the back it says, “Issued by Column.” We're the ones actually connecting with the networks, managing the networks, and serving as the regulated entity behind that.

When you need to pay your rent, or your landlord is going to deduct money from your Built account, if you look at the account and routing number there, that's actually a Column account and routing number. They build the application, the website, and the consumer marketing. We're going to handle everything behind the scenes that has to deal with the Federal Reserve, The Clearing House, the card networks, or SWIFT. We're the ones who actually build the software for that and handle all the complexity.

We are technically a bank, but unlike banks, we make 90-plus percent of our money off software. Similar to any kind of SaaS company, it's a per-API-call business. It's a pure-play tech business. Then we pass most of the economics in the actual bank side of the business down to all of our customers.

One of the things I love whenever we talk is that you've always been somewhere strange and interesting. Kinshasa, I think, was the last time we were together. I don't know a lot of founders who go to Kinshasa very often. Why are you so often in interesting, kind of bizarre locales around the world?

This is my second company. I started Plaid back in 2012. It's very easy to stay in Silicon Valley. The quality of life is amazing. There's a lot of money to be had, and there are a lot of super-smart people. But you can start to get quite isolated, and you can start to get very consensus-focused.

Quite a lot of your listeners read Dan Wang's last letter on China. He has this great—and I think accurate, but somewhat harsh—criticism where he says the 2 most consensus-driven societies he's ever been to are San Francisco and Beijing. I think that's quite accurate, actually. San Francisco is probably the most consensus-focused place I've ever been to.

I think that's both a huge crutch for us, but it's also probably our most valuable asset. As a founder, if you're building in, I don't know, AI or stablecoins—something that San Francisco believes is very much consensus, but the world does not believe in yet—that's actually a great operating environment. You can have these outlandish ideas that other people are going to believe in, that nobody across the world will believe in, and you can build this in a very safe way.

That's why Silicon Valley and San Francisco are so dynamic, and why we're so ahead of the curve. But we've also completely lost touch with how the rest of the world operates, or even how the everyday American operates. You've probably seen this smack us in the face over the past decade or two.

I think it's very important to go to places that don't have that same bias. If you think about emerging markets specifically, the founders who build there and the everyday people live in a constrained society. They're constrained in a way that San Francisco and New York aren't. That breeds a different type of creativity and a different type of innovation that you really can't get anywhere else.

If you go to talk to people in London, Vienna, Mexico City, or San Francisco, people are living, to an extent, in a world of abundance. That causes a very specific creation cycle. Whereas if you go to Kinshasa, which is the capital of the Democratic Republic of the Congo, it's going to be the largest city in the world in probably 50 to 100 years. I think it's already larger than most of the megacities.

Probably 95% of people in Silicon Valley couldn't tell you what country Kinshasa is the capital of. But there are tens of millions of people living in a highly, highly constrained society. That breeds a sense of creativity, ideas, and things that you can't really get anywhere else outside of emerging markets.

For my business, the dollar is fundamentally global. The dollar tends to be strongest in places that we would imagine are relatively dollarized. Places that are dollarized tend to be emerging markets where they're using the dollar as their main currency, either unofficially or officially.

Maybe they can't trust their central bank, or they have a history of super-bad inflation and the country got implicitly dollarized. Those places tend to need US financial services more than, I don't know, the UK, where the GBP is pretty strong, or France. Those places don't need American financial services as much as some parts of the emerging world do.

Sticking with Kinshasa as the example, you go there—what are you doing there? What are you discovering? Say more about the constraints you encounter there. Teach us a bit about it. I've never been to Kinshasa.

They operate in a world where there's actually a relatively large market. The DRC, I think, is one of the largest exporters, if not the largest exporter, of some critical minerals in the world. There is a lot of money flowing through there. It's a massive exporter, and it's a place where there's a lot of Chinese investment.

Africa broadly has had more Chinese investment than anywhere else in the world outside of Pakistan. There is money, there are a lot of people doing things, and the population growth is absolutely bananas. The population growth in Africa is probably larger than Western Europe, North America, and parts of Asia combined.

While they may have GDP per capita that's quite small, there's still a lot going on. Where there is a lot going on, there are founders building super-cool things. The large companies actually tend to be quite innovative, and I can talk about that in a second.

I just talk to them. I meet a ton of people. I'm meeting CEOs of the largest multinational companies there, and I'm meeting founders on the ground. I'm talking with them: “What are you building? What is your perception of America? What is your perception of American financial services? How can we be helpful?”

Honestly, I spend a lot of my time just walking around, ideating, and taking in the scenes.

Sometimes, a quarter of the time, I'll come up with a really interesting idea that ends up building us a cool product or just a good market. That's an example of that. I probably have 90% of my ideas either in the shower, walking around, or in a random emerging-markets country. It kind of expands your senses a little bit.

1. Emerging Markets

If I'm walking down the Marina Green or through the Mission in San Francisco, the only thing I'm thinking about is, "Oh my gosh, how is AI going to change things?" You can't walk around San Francisco and not get completely hit with AI FOMO 24/7. But there's other stuff we need to do in order to get people up to mobile penetration. Take the DRC: mobile phone penetration is still less than 25%, and banking penetration is still less than 5%. That's crazy.

There's stuff we need to do before we think about embedding an LLM in everybody's brain. If that penetration is that low, will you and your business naturally benefit from that going up based on the products you're building? Is that how you think about some of these opportunities where it's much lower-hanging fruit and no one's paying attention?

The leapfrogging that happened in Asia is obviously quite well known, right? Trying to skip the laptop and go straight to the mobile phone, most famously. We skipped online e-commerce and went straight to social commerce in China. There's going to be leapfrogging as well. You're going to see the same thing in financial services.

Financial services tend to be most innovative and most progressive in the worst countries. You can see this in Argentina, you can see this in Iran, and you can see this in other places. The Iranian financial system—say what you will, it's complicated. They have to deal with a lot of incredible constraints, and thus they have built a lot of bespoke stuff just for themselves because they do not have access to global financial markets.

When you get to design things from scratch, you end up building things a little bit differently. That's actually quite interesting. If you look at these emerging markets, take Africa, for example: they were the first ones to do mobile payments in M-Pesa, decades ago, well before Venmo. If you talk to them, they're actually quite a bit more open, and they're used to their category being so disrupted.

They also have an interesting thing: they have a bit of access to differentiated capital, which is differentiated talent. If you're in the US—pardon the banks I'll kind of shit on here—but you do not have access to the top talent. The top talent's going to Anthropic, they're going to Google, et cetera.

But if you believe that brains are distributed equally, you go to the Congo, and there's going to be some proportion of equally smart people as there are in France. There's no Anthropic to go to. They don't have the ability to move to London and go to DeepMind, but there's still a pretty decent talent pool there. They're going to go where there is job safety and where there is money.

That tends to be in a lot of emerging markets: the brewers and the banks. That's where the money is. So the talent at the middle level and top can actually be quite a bit higher than people think. If you take an emerging-markets bank executive team, they're hands down way better than what you see in the Western world.

They also have the ability to verticalize much better than they do in the US because we already have amazing software and amazing retail experiences down the entire stack. In most emerging markets or developing countries, a lot of people have a phone and a bank account. They can actually cross-sell there effectively.

You and I talked about this before, but I think one of the most interesting companies out there is Kaspi in Kazakhstan. Fascinating. Can you explain it?

They started out by buying a bank, and then they just built everything.

Did everything.

They're the largest e-commerce company, the largest bank—you pay your taxes on Kaspi, and you renew your driver's license on Kaspi. What they realized is that where people start—maybe people start in social media, but they also start in financial services. If we acquire financial services, we can cross-sell and distribute products there.

The largest bank in Congo is a bank called Rawbank. It's highly sophisticated. Download the mobile app; it's way better than anything we have here in the US. You can upgrade your TV subscription on it. Imagine JP Morgan doing that, or Bank of America, or Wells Fargo—or, candidly, US fintechs doing that.

Even if they could build that, there's no market for it. Their ability to land and expand is fundamentally different. The good thing for us is that in these countries, the main currency is the dollar, and so our ability to innovate with them is much more akin to what a fintech looks like in the US than maybe a large traditional bank.

Do you end up earning similar amounts of revenue from outside the US as you do inside because of these potential relationships?

The US market is so good, and fintech is so developed. I do think one of our theses is that fintech is probably going to be the last area that's somewhat disrupted by AI. I think what you'll see is a collapse into domestic fintech and enterprise software. You're already seeing this with Ramp and the like as they go deeper into the workflow-management side.

The good thing for us is that some of our customers are growing so quickly, but the rest of the world is also a big part of our revenue. It's something that we're super excited about as well. It could be both Western Europe and emerging markets.

2. Silicon Valley's Elite Consensus Problem

Can you say more about this comment that Silicon Valley, along with Beijing, is the most consensus place? As you traipse around California, what strikes you as the strangest? You're building something so different, and you spend so much more of your time away from there. You're able to get an outside perspective despite being from that place originally. What would you say stands out as the strangest element of its culture today?

I'm a product of Silicon Valley, right? I've been there since I was 21. I've started some of the top companies in Silicon Valley. I am a product of that, but I think as you get older and as you travel more, you have the ability to look back and be more retrospective on the society you grew up in.

San Francisco and Silicon Valley are an elite-dominated society, whether we like it or not. It's probably more akin to Wall Street of the 1990s than it is to what we want it to be, which is a research lab in Cambridge in the 1950s. Maybe that was Silicon Valley in the '90s, but it's not anymore.

What happens is that elites end up building software for elites. I think that has somewhat made sense because if you look at consumer buying patterns, people buy something that's aspirational, and then it moves downmarket. But when you do that, you can start to drink your own Kool-Aid a little bit too much, and I think that has probably happened in Silicon Valley because we talk to each other, we build for each other, and we think that the market is each other, but we don't actually look broader than that.

The companies that figure that out do really well. You look at AI: our research labs are doing fantastic because that's a consensus-oriented problem. You take a bunch of people who are super smart, pretty much block off everything from the outside, and they can all talk and share ideas. That's a fantastic research place, and we are going to win on that alone.

But as you think about the applicability to people's everyday lives, people in Silicon Valley don't live everybody else's lives. They don't live the lives of Americans. They don't live the lives of people outside the world. Our ability to actually build software, or have ideas or perspectives that really resonate, is probably at the low point in the entire time I've been here.

3. Rejecting the VC Hamster Wheel

Silicon Valley is not a popular place, and I think we tend to forget that. We think we're on top of the world, but I don't know what our approval ratings are—I think they're probably pretty dang low. I think that's for good reason, and it's something that I at least try to focus on a lot because I have to build software. I have to build products that are applicable outside the walls of San Francisco and New York. But that's probably less and less the case.

One of the things that you’ve done that’s so unique is not raising money.

Yeah.

But you’ve built at a pace and a scale that looks as though you raised a ton of money. It’s why I say it’s huge. Talk about that decision. What does building a company where you and the employees basically own the whole thing feel like, relative to having built a marquee company that was venture-backed?

I want to go into all the various lessons that you’ve learned. We’ll spend a lot of time on this section, but at a high level, why did you choose to do it this way in the first place?

I started Plaid, and I did the standard Silicon Valley playbook. You have to ideate, you have to build stuff, and then you put a deck together, and you go to 80 venture capital firms, and hopefully one of them gives you money. Then every year, you move up the alphabet. I think that worked, and Plaid is a very successful company. I’m very lucky to have started it.

But the thing that Silicon Valley sometimes gets confused by is that they say, “Okay, you’re either a venture-funded company, and if that’s the case, you’re ambitious, and you’re going to build amazing software and amazing products. Or you’re a bootstrapper, and you’re going to write a lot of thought pieces on Twitter, but you’re going to hire subscale people, and you’re going to grow at a modest rate, and it’s going to be a cute lifestyle business.”

I think you can actually be highly ambitious, hire the world’s best talent, and build a massive, enduring company without being addicted to venture money. What we do is say, “We’re going to grow by our earnings. We’re going to make sure that 100% of the company is owned by the employees and me for the foreseeable future.”

It makes it a lot harder. It definitely puts some constraints on your business. But it’s not only about my net worth and the employees’ net worth; culturally, it’s actually quite a bit more effective because being long-termist is probably a little bit of a trait, but I think it does actually help us do that.

I think Silicon Valley companies are probably more long-term-oriented than your average business in the U.S., but I think the hamster wheel of VC doesn’t actually allow us to be long-term. If you’re having to spend a lot of money on employees and you’re burning at a rate that means you have to raise every year or year and a half, you end up optimizing for that next fundraise.

You say, “Okay, stablecoins are cool this year. Let’s do a stablecoin strategy. Okay, AI is cool this year because I need an AI strategy.” Your business may be going in the general direction, but it’s definitely taking a pretty windy way to get there because you need capital. I think what you are doing is very rational, but that’s not going to be the straightest line to your goal.

I sometimes make this joke—maybe it’s not appropriate—but VC money is kind of like heroin. It feels good. It’s amazing, but you’ve got to keep shooting up. It’s very challenging to get off. I know very few people that have—

Tried heroin once.

Yeah. You’ll try heroin once and say, “Wow, that was awesome. I’m off, right?” How many people do you know that raised $100 million in a Series A and then said, “I’m done”? It just doesn’t happen.

I kind of think that, man, if you raise $100 million, you should be able to build a couple-billion-dollar business after that. Why do you need to keep raising it? There are a lot of structural reasons for that. San Francisco is a bit like a factory by design, and I think that can be quite effective, but for the ambitious founder, I actually don’t think it’s the right thing.

For us, I can invest in things that I think are going to have a 10-year payback, and I’m totally fine with it. If we grow 80% versus 110%, it doesn’t really matter that much. As long as we’re profitable, as long as we’re building the software we want, and as long as we’re growing at the rate we want, I just don’t have the same constraints. I think that’s freeing in a way that most companies can’t operate.

4. Equity and Liquidity

What’s an example of something that you’ve done or made a long-term investment in that you think you wouldn’t have done if you had been venture-backed?

I mean, here, we bought a regulated bank when we were early. I think that’s probably a little bit cooler now in this new administration, but we bought a regulated bank during the first Biden administration. That required us not to grow or focus on revenue for 2–3 years and to do a bunch of stuff that inherently doesn’t scale.

Buying a bank is not a software-defined problem. That’s not a great use of venture capital dollars that you expect to grow. It was a relatively non-consensus bet at the time. There’s just no way that could have happened.

There’s no way somebody would have said, “Oh, we want to buy a software company, right? We want you to do stablecoins. We want you to do AI.” That’s just not a fundable thing. I think we were able to invest behind that for a multiyear period before we actually took on clients. People think they’re long-term-focused, but it’s just not true.

Like what?

We’re able to do weird stuff with employees that doesn’t scale. We pay employees $2,000 a month toward their rent or mortgage if they live within 2 miles of the office. That doesn’t inherently scale, but it’s massive because now I can get people who live close to the office. They feel great because they’re getting a huge part of their housing in San Francisco subsidized.

Is that going to be a good use of venture capital money? Probably not. So we can do all this stuff from an employee perspective and from a retention perspective.

What we do every single year is take 25% of our earnings and buy back our shares from employees. We just run our own tender every single year. It’s been great for retention, and it allows us to provide liquidity to employees when they need it. It allows people to say, “Hey, I believe that we’re in this very high-growth business.”

But if you’re in a VC-backed business, you’re saying, “Hey, you should be using 100% of that money for growth.” We say, “Well, actually, we don’t necessarily think that. We’re quite profitable, so we can afford it. We can invest in growth, but we can also invest in employees.” That’s a really good example.

So, maybe just to pull it apart a bit more: are you granting equity to people in a similar way that a normal startup would, vesting over some period of time, and then just every year saying, “We’ll buy back some portion of that” to provide liquidity? That’s how it works, literally?

Structurally, we look exactly the same as a high-growth startup, right? We go after the same people. We have all the same perks, if not more. So we operate very much like a high-growth Silicon Valley startup. We happen to also be quite profitable.

When I tell people, “Look at our profits every year,” it’s like, “Imagine that’s our funding round.” Each year, on January 1st, we raise a massive round. That’s how I view it. Part of it is going to be used for a tender, where we buy back company shares, and the rest of it we’re going to put toward growth.

Oh, by the way, you also haven’t been diluted at all. By the way, you also don’t have any preference stack. By the way, we get to make our own decisions. That’s super compelling.

So I can hire someone and say, “Over a 10-year period, you’re not going to be diluted.” I think what people sometimes forget is that if you’re an early-stage founder, you’re going to lose probably 50%–75% of your equity value due to dilution alone.

You may lose 10 to 80% of your upside to the preference stack. These are weird economic things that people don't really understand until they've been doing this for 5, 6, 7, 8, 9, or 10 years or have seen an exit.

With us, we say, “Hey, just don't worry about that stuff. What I give you is what you're going to have. And by the way, you have liquidity on a yearly basis going forward.” That's super compelling to people.

How have you honed the communication of that idea to a new employee so that they get it? Because I think so often people just say, “Oh, I got this many shares, and this is the valuation. If it goes to this valuation, I can just do the math.” But that's not actually the math of what they'll take home. How do you frame it to people?

We're far from perfect. I think one of the things we do is target people for whom this is their second company. We're probably not the best place for a new grad to land. If you're a new grad, you're going to go through this calculation of, “Where are all of my friends going? What is the number-one company on Hacker News? I read it all the time. What are all the thought leaders talking about on Twitter?” It's actually not a bad strategy. If you're a new grad, that's probably relatively fair.

5. Funding a Bank

But you aren't really going to be thinking about some of this nuance. It's honestly not as hard as you think. It's actually quite refreshing. We go to people and we're like, “Hey, we're super fast-growing, but we provide you yearly liquidity. Oh, by the way, here's some very basic math on preference and dilution, and here's why you can actually make way more money for the same equity value.”

It's a hard story for a 21-year-old. It's actually a pretty easy story for a 25-year-old who's been through 6 rounds and 4 pivots at their previous company and doesn't have anything to show for it.

Does this empirically show up in employee-retention numbers versus Silicon Valley norms?

We have almost no regretted attrition, which means the people we'd like to stay end up staying. I think there are probably a couple of reasons for that. Second time around, it's a lot easier. I learned from a lot of mistakes at Blend, and I know where to spend time and where not to.

Generally, we're a more mature company than your average Silicon Valley startup. So, A, I think that's helpful. We're probably better at picking talent. But also, I think we know what matters to people.

Sometimes, as founders or VCs, we think that people join companies because they want to become billionaires. Maybe that's true up to a point, but the majority of people join companies because they hit their late 20s or early 30s and ask, “What are they optimizing for?” They're like, “Okay, I want to send my kids to a good school, a private school. I want to maybe not live with roommates in a one-bedroom apartment up until I'm 35. How's their education?” That's super important. You can't fund that with illiquid stock.

So how do you think about optimizing for that? Think about basic things like team, culture, and all that stuff. People want to work for somebody who makes them feel like they're taken care of, not just over a 20-year period of, “Here's your path to being a decamillionaire.”

They'll say, “Do people understand my short-term needs? Can you take care of me in the short, medium, and long term?” I think sometimes we're maybe too long-term-oriented. Sometimes they say, “Hey, yes, of course, come with me. We'll work on this for 20 years, and you're going to be a decamillionaire after that.”

That resonates with a certain type of person, but it doesn't resonate with everybody. Building a company and a culture that actually optimizes for every single point of an employee's journey and an employee's life is quite unique, and that can lead to really good numbers.

How much of this was just possible because you were already rich at the start and had money to fund something like this? Is this portable advice? Could someone else who hadn't had the experience you had with Plaid do something like this without taking outside money?

I think it's hard. I think it was definitely successful first, but what I would say is, without going into much detail, yes, I started a very large company. I think I was probably less liquid and less rich than probably everybody thought at the time.

When I started this, Plaid's a funny story. We attempted to sell it to Visa for $5 billion, and that's kind of the point where I left to go start something. It didn't go through. We got blocked by the DOJ, and I did not sell my company. Thus, I did not have any money.

He's rich. This guy's a billionaire. Yeah, he's a—

Without going into too much detail, I pretty much funded the entire company with debt. I went to a bunch of banks and said, “Here's a bunch of Block shares. Please give me money.” The best I got was a SOFR-plus-10% loan at 5% LTV.

I pledged over $1 billion of stock to get $70 million. I bought the bank for $70 million. I haven't had a lot of money in my bank account for a long period of time. The business became profitable, and I got to pay off that loan over a period of time. But in the process, I probably got margin-called 3 times and almost went bankrupt multiple times.

Talk about that stress. You have to let us in the room on that.

6. The Necessity of Extreme Founder Risk

The first few years were definitely the most stressful of my life because I had a fundamental thesis that we could pull this off and build a business that 100% of the employees and I owned. But to do that in a world where you need to invest and not make money for multiple years is very, very challenging.

The regulatory climate at the time and the building of the company—it was intense. I had this loan I had to pay off. It was probably the most intense period of my life.

As a founder, you have to shelter that from everybody. You need to be transparent and bring people in, but you also need to not bring people all the way in. I had pretty extreme conviction myself, and I thought that over a multidecade period, I could pull this off.

There's that quasi-quote: “Markets can stay irrational longer than you can stay solvent.” It's kind of true. I look at that quote and I'm like, “Which side of the equation am I on today?”

We ended up making it through, but I think the idea of, “Oh, a billionaire buys a thing and self-funds it,” is probably a little farther from the truth than people thought.

What's it like getting margin-called? What is the literal thing happening? How do you manage through that?

Suffice to say, you owe a bank $1 million, you owe them. You owe a bank $1 billion, they owe you. I think that's a little bit—

That's true. I mean, there's a reason that margin lending in private companies is not a great business, because when you want to take collateral that's stock, that's usually the exact time when you do not want to hold that private stock.

I have immense appreciation for the people who did it for me. I'm not quite sure they got a great deal out of it, and I'm not quite sure I would want to be in that business.

The reason I feel the story is important to tell is that these are the things where so much of the value gets created: the extreme entrepreneurial risks, the act itself, but also the psychology behind it. I'd love you to riff a bit more on what the psychology was like and how your mind is different after that 3-year experience than it was before, even though I know you'd already been through the entrepreneurial ringer with Plaid. What changed about your mind and your perspective on the world? How did that experience affect you?

I think the good founders bet on themselves and take an extreme amount of risk to do that. I think the extreme-risk part is something that we no longer have. But when there's literally only 1 door in front of you, you don't have a choice. You have to go in.

That fear, that innate desire, creates another part of you. It creates creativity; it creates inspiration. It's an extremely valuable part of the founder journey. In many ways, I think in Silicon Valley, we've actually removed that.

If you think about most founders these days, I talk all the time like, “Hey, you talk to a 23-year-old.” I'm like, “You know what? I'm thinking about going to be the 12th employee at this or this, or starting a company for myself, and I don't know. I'm kind of mixed.”

We've created this incredible environment in Silicon Valley where it's really safe to start a company. There's a playbook, and you go through Y Combinator. Assuming you're moderately competent and went to the right high school and college, you're going to get a $3 million seed round.

And in the worst-case scenario, you can go work at a great company as an engineer, and you'll have “founder” on your résumé, and life is good. But I'm not quite sure that created a lot of great founders and a lot of great companies, because there is no risk in that proposition.

If you go back to even pre-2008 or something like that, you're on the edge of the knife. I think that creates so much intensity, creativity, and fear that is such a critical part of the founder journey, and I don't know why we don't talk about it more. We don't create environments where a founder has to bet themselves. I think if we did that, we'd actually be in a slightly different place.

I always am somewhat perplexed by this. I'm a second-time founder, but I'm not alone. There are a lot of great founders—I shall not name names—that have made a bunch of money. You go digging, and they're like, “Oh, here's my second company, third company.” And you dig into that, and of the $100 million they've made, they're putting like $1 million of the capital at risk, and they've raised like $500 million.

I'm always like, “Why? If you believe in this so much, if you're going to dedicate your life to it, why the fuck aren't you going all in?” If I'm an employee, I look at them and I'm like, “You're asking me to go all in, but you can't go all in.” Because the weird thing is, an early-stage employee takes way more risk than an early-stage founder.

Explain that.

Kind of messed up, yeah. So let's talk through an example here. I'm a 24-year-old, and I'm making, from a total compensation perspective, $400,000 or $500,000 at Google and Meta or something like that. And I'm going to go to an early-stage company, and I'm going to get 1% of this company, and I'm going to make like $90,000.

Well, I've now changed the trajectory of my life. I can no longer buy a house. I can no longer go on the vacations I want. I'm making a 4- to 5-year trade-off where I'm saying, “I'm going to make pretty much no money over the next 4 or 5 years, but maybe in 5 or 6 years I'm going to make millions of dollars I couldn't make at Google or Meta.”

That's actually a lot of risk. I'm now saying I'm going to live with my friends instead of living by myself. I'm making massive, massive changes to my life. But as a founder, you're not. There's a much higher likelihood that, regardless of your company, at the next round you'll be able to sell some secondary. You know that you'll be able to—if it shuts down—go be an employee at a great company with a CEO on your résumé.

That first employee at a failing company, that's actually not a great résumé line item. So we've de-risked the founder, but we haven't de-risked the early-stage employee. And I don't think we should actually de-risk the early-stage employee, for what it's worth. I just think we need to increase the risk for founders.

I think we need to make failure much more expensive. I think we need to say, “Hey, you're a second-time founder, you have liquidity—put all of your money into that.” If you're going to be asking this of employees, you should ask it of yourself. I don't think we're having that conversation enough.

I think starting companies is just too fucking safe. Yeah, and that's caused a lot of companies to be super-safe companies. “Hey, we're going to pivot to AI and wrap an AI wrapper around Anthropic, whatever.” That's not bold. That's not ambitious. It's because we're attracting founders that maybe just want to be employees. They don't actually think about the long term. They don't say, “Hey, if I don't pull this off, I'm going to become bankrupt. My life is over.”

I think that's pretty healthy. That's when you bring out the rawness of humanity, and I don't see that very much anymore.

How have you felt that in yourself? How has your behavior changed, or your perspective changed, or just the ways that you show up that are different now than prior to this pretty extreme three-year period?

I'm not the most diversified person on the planet. I own 2 things. I own Column and Plaid. That's it. Those are the only 2 things. I don't even own a majority of my house. That's motivating to me.

At some point in my life, I have a 6-month-old son, and I do need to probably diversify, so that's a goal for me at some point. As a 36-year-old, you should probably not be this concentrated. But that's also what makes building companies unique.

There are probably a lot of people that look at me and they're like, “Oh, man, billionaire, amazing.” Maybe California will look at me and be like, “Oh, yeah, billionaire, amazing.”

But it's probably a little—give me some of that liquid equity.

7. Finding Leverage

But I think that's what makes it special. I think that's what drives me every day, which is, if you don't have something you're driving toward—such as, for me, solvency—it's really hard to be motivated every day.

The other thing, though, too, is that very often the thing you own and control and are building might be your best investment. Getting money out of something is costly from a tax standpoint and other things, so in some ways you're just continuing to be all in on what you're building. I mean, it's like, “Bet on yourself.” I'm sure every fancy executive has probably told you that, but I think it is somewhat true.

Compounding on yourself is probably the best investment to make. I'm not a generalist. I'm a specialist. I'm probably the best in the world at a couple of small, boring things.

I'm really good at creating really confusing, boring-sounding companies that are really hard to explain on podcasts. I think that's my expertise. That's my niche. I feel pretty confident in my business because I do not think you want to compete with me in my business. I'm mean, I'm hungry, and I know my little niche space better than anybody in the entire world.

If I'm investing or doing something else, I'm like, “There's a me on the other side of that trade. I don't want to do that.” I'm a builder. I think sometimes there's a trap where builders aren't investors, and investors aren't builders. There are cases when you can do both.

But in a world where it's increasingly competitive, I do think the world for builders is going to be the world of specialists. You have to go extremely, extremely deep into your area, and that's where you find value.

I've probably read more about just the history of my space, the history of financial services. I studied banks in Japan in the 1800s. I read a very boring 2,000-page book on the history of banking in China in the 19th century. And there's stuff I got out of that.

What's something—sorry, that book—but what's something you get out of that degree of extreme study?

The hard part about this is you probably get one small thing in a 2,000-page book, so it's probably not efficient unless you own a thing that happens to be in that space. And that one little thing can create millions of dollars of value. In the next case, it can create hundreds of millions of dollars of value.

Without going too much into detail on it, that's where you find your leverage. And, you know, I'm pretty good at it.

This notion of being the best in the world at the thing you do is really interesting to me. It seems the environment today makes that harder than ever because there's so much distraction. And there's such a high rate and ease of comparison, which is certainly the thief of joy.

It's really hard to ignore people doing other stuff, spending a third of your day reading about Anthropic or whatever. It's exciting. So what have you learned about how to become, apart from reading obscure 19th-century Chinese banking books, the best in the world at what you do? Assuming that there's lots of people interested in that mission or that idea.

I think one of the best determinants of success for founders is whether they can find the most boring thing humanly possible interesting. And can they find that interesting over a multidecade period?

Who doesn't find AI interesting? Geopolitics is fantastically interesting. There are all these general topics that are quite broad and very mass-market interesting. That's what makes Twitter so fascinating. That's why podcasts are fascinating: people like to feel that they're really smart across a broad swath of categories.

But that doesn't really align with company building. So many people right now are thinking about, and have a lot of knowledge around, how AI is going to disrupt software, how AI is going to disrupt vertical software, and how AI is going to be the next CRM. These are generalist topics where I can probably find 1,000 people who have interesting, compelling ideas and can go pretty deep on them.

But you can't create value there. You can create value if you're the number 1 person in the entire world at this little niche thing, and you think this niche thing can generate billions of dollars in revenue over time.

But the problem is those places are really boring. The fun ones, like food and surfing in Thailand or whatever, are solved categories. Yes, I would also love to be an expert on hospitality in Thailand and Southeast Asia. I could imagine going niche on that for a multidecade period, but those are solved problems.

I think finding the extremely boring thing that requires you to read hundreds of thousands of pages that you cannot Gemini Deep Research your way through—that's where value is. But it's fucking boring for a lot of people. You have to suffer in silence for a huge amount of time.

If you can find that super fascinating and love to learn it, then I think you'll be successful. But I think it's a minority of people. My partner gives me shit all the time: “How on earth do you find that book interesting? What is wrong with you?” And I say, “Well, if I don't, you and I are going to be super poor.”

You said earlier that building a company for the second time is a lot easier than the first time.

Yeah.

What are the most extreme ways that that's true? What are the things that you've done the most differently this time than the first time? Your experience is valuable.

I started Plaid right out of college, and I think Zach, who is my absolutely incredible co-founder, and I both said, “Man, if we had just worked at a company for 9 months, we would have learned a lot. We would have saved 3 years.”

The amazing thing about working at a company, especially an early-stage company, is you just fail forward all the time. That's an incredible lesson. But when you fail forward as a founder, that's a lot of dilution, a lot of time, and a lot of wasted resources. If you could do that on somebody else's dime, amazing.

Now I think it's a little bit easier because everybody's YouTube videos are, you know, YC Startup School, and there's a playbook and a PDF for everything. You can probably Gemini your way through the early-stage part of a company. But experiences matter a lot.

What about picking talent? What things do you optimize for now that have been honed because of your prior experience?

People always think about employees through the missionary-mercenary framework, right? You have to look at an employee and ask, “What do you want to do?”

There's the mercenary type, which is super smart, probably super pedigreed, and really what they're doing is using your company as a launchpad for something else. They're using your company to collect a bunch of 2-year-vested options from the top 5 companies and hoping one of them goes up.

That can be a valuable employee, but you have to have a very specific type of company that's used to that churn and burn in order to take advantage of them. Then you have the missionaries, right? This person is very mission-focused. The inspiration is super important to them, and if you get that right, they will go to the ends of the earth for you, regardless of their short-term benefits.

Missionaries also have some downsides. The moment maybe you want to be a little bit more commercially oriented, and the moment you have to make trade-offs on your mission or something like that, that can cause a lot of societal unrest inside your company.

8. Longevity and Profitability in Banking

Then there's the third category of employees, which are generally what I think are probably the best. It's a combination of everything, but really what they care about is, “Yeah, we want a ton of upside, but we also want some stability. We want people who say, ‘Hey, I like to be friends with my coworkers. I like to be in an environment that's warm and welcoming, but also gives me near-term and long-term financial value, and I'm willing to work really hard to get there.’”

Everybody has personality types, and everybody has different styles. You have to figure out what is right for your business. But I think it's very challenging to tell that on LinkedIn. Everybody's like, “Okay, cool. You went to the right New York prep school. Thus, you went to the right Ivy school that happens to have this good engineering program. Then you have these couple of LinkedIn things that are good for me, and boom, done.”

That can be super successful, but that's also not right for everything. I think developing that kind of nose for talent is super important.

How much do you care about mission? It's an interesting part of the equation. You need a mission, right? Otherwise people just go work at hedge funds. You need to say, “Hey, we are building something bigger.”

I think we absolutely are. But I think mission can actually be a little bit distracting. A lot of times people focus a ton on, “Hey, what are the values of my company? What good are we doing?” I think that's an important part of the equation, but on a list of the 5 most important things, I think it's probably on the bottom end of that list.

A lot of times we can be distracted by that. I think that's because when you're pitching investors, investors want to feel like they are part of something. They want to feel, “Man, I'm not just recycling pension fund money into other capitalists.” Even though that's what we do, we want to feel like it's bigger than that.

I think we've taught people that, “Man, you need to focus on the millennia journey. You need to focus on the impact that we're having.” Yes, the numbers go up, but numbers going up is only one part of the equation. I think that's important for employees, but sometimes it's not the most important thing.

In the end, what do you want to do? You want to convince somebody to buy your product, and you deliver them enough of an experience that they can't build it themselves and they're going to pay a lot of their hard-earned money to you. That's the goal. That person doesn't give a flying fuck about what your mission is. They just care about whether this product creates value for them and whether they're willing to pay for it. That's it.

If you start to drink your own Kool-Aid too much, you kind of forget that.

It makes me smile to think about your earnings and cash flows. It's such a novelty that a company like yours would have a bunch of this so young in its life and at this scale.

How do you pick your margins? How do you think about how profitable to be and why? You mentioned earlier that it's like having a funding round every year. Does that imply that you're actually spending it so you're not paying taxes? You spend it on growth? How do you think about earnings in a high-growth technology business?

Our customers pay us for safety, and our companies pay us for longevity. It's a unique thing about financial services, where I'm going to look at you as a customer and say, “I'm going to be your best partner over a 10- to 15-year period.”

Switching costs are really high, and they are putting a lot of their customer trust at risk with you. So I am playing a longevity and a risk game just as much for me as for my customers. I take that extraordinarily seriously.

I think earnings and being profitable and sustainable, and not relying on somebody else's decision-making framework, are extremely critical for our customers. That's extremely important to me as well. I tell people, “The risk falls on me. I can't pass my risk to some other venture fund or their LPs or something like that. I want you to be successful, but if you're not, I'm the one who takes the pain here.”

9. Matching Your Capital Structure to Your Business

That's quite unique in Silicon Valley. At some point, your critical vendor could get acquired, or maybe the founder could get a $20 million offer from Anthropic, and it's the rational decision for them to do that.

In many ways, we aren't competing with other Silicon Valley companies. We're competing against maybe them doing it themselves, or maybe competing with them trying to build a patchwork of software vendors on top of a legacy bank or something like that. So I have to show that I am more sustainable than you. I think earnings are a critical part of that.

People are like, “Oh, well, your margins may be opportunistic, then.” My argument would be, if you run this business at a lot lower margins, you're going to be dependent on somebody else that you probably don't want to be dependent on.

You also have to be introspective about your business. Is my business the type of business that, if I raise a bunch of money or I have a ton of earnings, I can throw all of that back into growth? I think a lot of times in our space, software companies cannot ingest a huge amount of capital.

If you give me $1 billion right now, I don't know if I can grow it 1,000 times faster than I'm growing right now. And I don't necessarily think I should. What we do is say, “Okay, of these earnings, what goes to employees, what's going to growth, and what's going to capital?” Capital is pretty much in case something goes wrong, or we have a couple of bad years—NBD, we're good, let's keep moving.

Now we're at the point where we're like, “Hey, if something goes wrong for 10 years, how do we make sure we're good?” There's a lot of societal change going on. There's a lot of crazy stuff going on in the environment. I can totally paint you a picture where the markets get insane for the next 10 years. How do I make sure I can survive that, even if a lot of our companies go up, or the economies change? That kind of goes back to that war chest.

Markets go like this. Sometimes, yes, the line through it goes like this.

It works when you're one of the good ones.

Yes, that's exactly right. We look at slope, but a lot of times we have down years, and you need to be able to weather through those down years. There are so many incredible companies that just couldn't survive through a couple of bad periods, and you really want to make sure you're not one of those.

If you were in a classroom setting with a bunch of founders or would-be founders, and it was a Chatham House Rules, off-the-record session teaching them about working with investors—what investors care about, how they behave—

Yeah.

Things to look out for. What would you tell them?

I actually feel pretty lucky. In the early days, we had a pretty hard time finding and raising capital. In the first round, I think we probably chatted with 80 to 90 investors, and we got rejected. Sometimes I think I have a reputation for being like, “Oh, Will's somebody who's anti-VC.” It's actually not the truth. Plaid would not exist without VCs, straight up.

I just don't necessarily think the VC model is perfect for every single type of company. Maybe a VC owns 10% or 20% of your company, and maybe the employees and yourself own 80%. There are different cuts of this you can make. But for me, I think picking investors is important. I don't think there's a lot of transparency in the environment about which investors have 7-year timelines, which ones have 10-year timelines, and which ones are actually truly super long-term oriented. I think figuring that out is important.

But I think the most important thing you should do is say, “Okay, realistically, what does my margin profile look like? What is my revenue growth over time? How should I find a capital structure that matches that? Am I actually going to grow at a consistent enough rate? Do I want liquidity in 10 years for the venture model to make sense for me?”

The thing that people forget is, yes, growing 100% on a $10 million, $20 million, or $30 million base is not that hard. I see people showing these graphs on LinkedIn saying, “What are the fastest companies to get to $100 million of all time?” That's awesome. But you know what's much harder? Going above 30% a year off of a $1 billion revenue base. That is 99 times harder than going from $0 to $100 million in 3 years.

However, the venture model only works if you can grow above 30% off of a $1 billion or $2 billion base. You have to really look inside yourself and ask, “Does my model make sense for that? Can I do that in a way that I can ingest hundreds of millions, if not billions, of dollars of capital along the way and put it to really good use?”

Sometimes businesses grow at the rate of the market, or businesses grow differently than just dollar in and dollar out. The venture model is built off the fact that you can make a company like an ATM: You put in a dollar, and you get $1.30 back. That's not the case with most markets. You have to look really intensely at yourself and your business to make sure that works.

There are so many amazing tech companies that it works for, and that's why venture is a really good asset class in Silicon Valley. It's probably the best place to accumulate wealth anywhere in the entire world, probably throughout all history. But that's not every single business, and you have to look really intensely at yourself to figure that out.

Given your unique perch, what have you learned about how the world works through the lens of this dollar focus—this demand for dollars being the operating system for the global dollar system? Through the lens of the dollar, what are your takes on the ways the world works or the things that interest you that might surprise people?

The dollar connects countries in very interesting ways. In the U.S., when you can pretty much just build an incredible company for the U.S. alone, you lose that perspective. If you look at the official stats, most economies spend less than 10% of their GDP trading with their neighbors, and that's been a big focus of the OECD over time.

But when you actually dig into it, the unofficial trade that's going on outside of government rails is actually closer to 90%. It shows how trade, money, and all that stuff really connect these cultures and societies. I find that super fascinating.

We can talk about how that's impactful in a lot of ways, but that's something we don't really get in the U.S. The U.S. has this very unique luxury where we can somewhat sustain ourselves. You can sustain businesses by only building for yourself. The U.S. market is just so fantastic. I am so long the U.S., as I'm sure anybody building here is.

You can sustain yourself. You can become a billionaire by never truly leaving America or interacting with anybody outside of America. That's what makes America so fucking unique. I don't think we get how much of a luxury that is. But outside of the U.S., it is not. That comes down to trade and financial connectivity, which is so impactful and so important.

I think you also forget how reliant the world is on the U.S. financial system. Let's take 2 insanely developed countries: Qatar and Switzerland. You're shipping gas from Qatar to Switzerland. I would argue that right now, neither one of these countries probably loves America a ton. That trade is denominated in dollars. The money moving from Switzerland to Qatar—from Glencore to Qatargas—crosses through U.S. financial institutions. It's crazy to think about.

Let's think about who might be our 2 quote-unquote enemies: China and Russia. China is a big importer of Russian gas and oil. It's kind of crazy to think about, but that trade is still denominated, for the vast majority, in U.S. dollars. That's mind-boggling. That's a luxury and such an insane national security strategy that nobody else has.

Russia doesn't want Chinese currency. China definitely doesn't want the ruble. They barely have access to it. They almost hate each other as much as they hate us. The fact that they eventually use the dollar is still so critical.

You could argue that maybe the dollar is eroding over time and stuff like that, but still, the vast majority—around 75%—of global trade is in dollars. That's crazy, and we don't recognize that. The soft power America has, or even the hard power America has with that, is so fundamental to our lives. The fact that we have such a strong economy is also important.

Do you talk to your team as though this is part of the mission—that almost like national security is part of the mission because of the importance of the dollar?

100%. One of the best shifts I think Silicon Valley has made is that we now say, “Hey, Silicon Valley takes an active role in the national security of the country.” We didn't take that role 6 or 7 years ago.

Even though American society—American GDP growth—is more than ever completely indexed on the success of Silicon Valley, probably too much and way too levered in that regard, Silicon Valley is now starting to recognize its role in the world, whether it be social media, defense, software, or whatever. Financial services is probably the most important component of that. You can ask any general—and I have—and they’ll tell you they want to use a sanction before they use a missile.

The great thing about a sanction, the great thing about the dollar, is that you can enforce American dominance without putting in boots on the ground, without putting anybody at risk. And sometimes, you see in Venezuela, it’s like, “Hey, you kind of need both.” The reason we were able to go to Venezuela is because we had fundamentally destroyed the economy before. How? Sanctions, right? We had completely collapsed their ability to export oil. We completely collapsed their ability to actually trade with other people.

That friction is real. So when we went in there, Venezuelan people were probably like, “Yeah, okay. We’re good. We’re maybe not going to try to shoot these helicopters from the sky. We’re pretty happy here.” That is fundamentally so amazing. If France wants to shut down another country in order to enforce its will, it has an option. Well, it has 2 options, which are, I don’t know, “Don’t drink our wine,” and, “Here are some missiles.”

The missiles can enforce their will. They have a strong military, they have strong special forces, and they can go do that. But the lives of the special forces on the ground are going to have a much harder time because they haven’t, in many ways, controlled that economy before. That is so unique to the U.S. I think China is obviously developing this with trade and exports. One of the things China can do is start to enforce its will by shutting down a country’s exports, right? That is real.

I think China definitely has this increasing might, but the strength of the dollar and the nature of that are so fundamental for national security. In many ways, we don’t talk about it because it’s a little bit of an uncomfortable truth, right? I don’t think anybody wants to sit up there and say, “A global bank is part of the national security strategy,” because if the government tells us to, we’re going to collapse this economy, right? That’s not a fun narrative that people want.

But I think there’s a way to tell that narrative that says, “Hey, we are a weapon that can be used. When our citizens come to harm, when we need to do something that is super important for U.S. interests, we are part of that strategy, just in the same way that Palantir is part of that strategy, Lockheed Martin is part of that strategy, and Boeing is part of that strategy.” Financial services is a key pillar. You can argue that financial services is the first in to wage war against a country, right? We start with sanctions. We start by cutting them off from the U.S., from U.S. trade. We start with that before we put boots on the ground.

What do you then hope is the future of global financial services? Obviously, you’re actively building the technology backbone for it, but if you think big picture, how do you hope the system changes? What would be best for it?

I still hope it’s U.S.-bound. There are a lot of people in Silicon Valley that I fundamentally disagree with who want to put the power of financial services outside of the U.S. The U.S. has a lot of problems that we can spend hours talking about. I still think we’re the greatest country in the world. We have a change of power every 4 years. We change our mind on things. Yes, there are some problems, but we are still the best place to be.

10. How AI Will Transform Legacy Banks

I think we are the ones that should still have the nuclear weapons of financial services, which is that we control the world’s trade. I hope that continues to exist. If it doesn’t, if it just hands the power to other people, I think that’s a scary place. I don’t think people have really thought through the ramifications of that.

If you look at most countries, financial services still holds power, but it ends up just accumulating with government officials. It ends up just accumulating the power of a very small elite. Say what you will about the U.S.—there’s probably way too much concentration of power in certain industries—but financial services is actually quite fragmented. JPMorgan is the largest financial services company in the U.S., but it’s not that dominant. It’s still pretty diversified.

Take Canada

95% of Canadians have 4 banks. Take Australia; it’s even more concentrated. Most countries are even more concentrated than that. We do have a relatively decentralized financial services system today. It should keep fragmenting, right? We should still disperse the financial power throughout multiple U.S. corporations and multiple U.S. people. We need to do a better job there, but we’re actually starting from a pretty good baseline.

The other thing I tell people is that there’s this narrative that financial services is fundamentally broken. Our institutions are actually pretty damn good. There’s a narrative people sometimes talk about: “U.S. financial services is built on Cobalt and stuff like this.” It’s just not. It’s not true. It’s a fun talking point, but I rack my brain hard with the Federal Reserve and all of these places: there’s no Cobalt in all of these places. It’s actually pretty good.

I’ll go on the record talking about this: the Fed has a pretty good tech team. Their systems are actually pretty good. If you think about it, the U.S., right now through the Fed, has the capability to move money and clear money through all of these institutions 24/7—faster than stablecoins, faster than crypto—right now, as we speak. We’ve had that for decades. The systems are very good, extremely reliable, and fantastic. I think it’s very challenging for Silicon Valley to build something better.

The problem isn’t in the fundamental infrastructure. It’s in our implementation of it. The reason why community banks can’t send money 24/7 isn’t because the technology doesn’t exist at the Fed; it’s because there are constraints in those business models that make it very challenging for them to do.

For example, if you can send money out of your community bank 24/7, that bank could run on a weekend. I don’t know if you guys have ever been to a rural community bank with 50 people. You can’t get people to work on the weekends. Who’s going to go there? Sure, if you’re JPMorgan or Stripe, you can manage 24/7 liquidity. But if you’re a small community bank, you can’t have that.

I think people conflate “we don’t have something” or “we don’t have access to something” with “we don’t have the fundamental ability to do that.” Actually, the reason is implementation, not the underlying infrastructure.

I feel like, because of your unique setup as a business and your unique focus on the boring problems you described, you have such an interesting perspective on so many things. Is there anything that we haven’t covered, either about company building or the way that the world works, that you think is interesting and that we’ve missed?

One of the things I think about is, okay, AI is here. We’re probably much closer to AGI than people think, and it’s going to be a tidal wave through the economy. You have to think about, okay, what are the implications for your business? I think my perspective is: if you’re not a researcher, if you’re not a lab, how do you play?

I actually don’t think “AI companies” are very set up for success. That’s probably not where value is going to accrue. The value is going to accrue in 2 areas, and the most important area, I think, is: do you have massive distribution? If you have massive distribution, if you have massive costs, AI is going to be a massive benefit to you.

The thing I think a lot about is how you think about, not just from a software perspective, but from a distribution perspective and a brand perspective, how you would best capture and utilize AI. People talk a lot about the railroads. The value didn’t just accrue to the railroads. Yes, the value accrued to the railroads. Yes, the value accrued to the ISPs. Yes, the value accrued to the people building the mobile phones. But the value actually accrued to the people that could harness that the best.

The value in railroads accrued to the oil companies. That’s a little bit hard to fundamentally understand. Standard Oil was the biggest beneficiary of railroads by an order of magnitude. What is the equivalent area for AI? I sometimes don’t think we’re focused on that enough. Hot take here: I think the biggest, fattest, most inefficient brands are going to be the best beneficiaries of AI, because brands have a massive moat, and there’s a lot of cost to cut there.

How do you think AI will most affect financial services specifically? Maybe even just your own products and services?

Financial services, especially large banks, suffer from the fact that the business model is too good. Banks are pretty profitable. If you're a bank and you need to be more profitable, that's a problem; you've clearly done something wrong. The business model is fundamentally really good, and so that's made them laggards in a lot of ways.

But that also, I think, makes for a massive opportunity, where I think financial services and legacy banks tend to be the largest inefficiencies out there. They also are very hard to take over. There's not a lot of private-equity activity in financial services because it's highly regulated. And so I think the large banks that can effectively harness that are going to be some of the largest beneficiaries.

Banks don't have a lot of physical assets. Places that have massive CAPEX and physical assets, it's hard to tell a good AI story there. How's AI going to make railroads more efficient if 99% of your money is spent on fuel, track maintenance, and people? The human cost in railroads is de minimis. Cool, you take conductors down from 1,000 to 500; it doesn't change the equation at all.

If you think about a traditional bank, it's pretty headcount-focused and pretty technology-focused. That's where the majority of the money goes. The actual physical branch infrastructure is such a minority of your balance sheet. And so I do think they'll either be the most disrupted or probably actually the largest beneficiaries. The banks that are the most effectively run, have the largest distribution, and have the largest cost structure are going to be the largest beneficiaries.

11. The Kindest Thing

I think the UX of financial services will change a lot. People think, “Oh my gosh, my bank is hard to use. My bank is hard to move money. It's slow to move money.” That's actually a feature, not a bug. What fintechs sometimes start with is, “Hey, we're going to make it super easy, super free to move money all over the place.” It actually starts to slow down. The reason it slows down is because fraud is super expensive.

And if you make it really easy for your grandma to send money to somebody in Nigeria, yes, that's great for remittances, but that's really bad for romance scams. It's really bad for fraud. But I do think with AI we can actually build those detection models a lot better. So it's probably less likely your grandma is going to fall prey to elder abuse.

And if the banks don't have to optimize so much for that, and it comes a little bit for free, we can actually make the UX better for everybody else. We have the technology right now to make financial services almost entirely instant and entirely friction-free. All the friction is actually built to protect the 5 to 10% of consumers that can get hurt, and people kind of forget that. But I think if we can build models that are just as good as humans at detecting that stuff, and that can happen instantly, we can actually take that tail away, and it actually is massively beneficial for everybody else.

Do you think it's a good time to be an entrepreneur, a new entrepreneur in financial services?

Anybody who tells you that it's a bad time to be an entrepreneur, that probably means it's a good time to be an entrepreneur. If you look at that, there are all these stats on Twitter that I'm sure people have seen, where the best companies are created in the worst environments. And I think that's generally true.

It is cheaper than ever to be an entrepreneur. And so, as we talked about, it's probably—I think probably—the least risky time to be an entrepreneur. It's also pretty crowded. I know you probably look at the last YC batch. I'm sure 90-plus percent of them were AI-related.

So, yeah, I think it's actually probably a pretty good time to be a founder in a non-AI-related place right now because there's probably less competition, less smart people. If you want to be successful, you can go look at every single industry and say, “Okay, who are the dumbest people, and what makes them the most money?” If you go attack that area, it's probably a pretty good space.

The problem is, sometimes you look at the Valley, or at the founders you're looking at, and say, “Hey, we're all the smartest people.” Okay, that's maybe a cool space, but it's probably the most crowded with the smartest people, and so your competition is pretty intense. You know, YC puts out this quest for startups. My recommendation is that that should be a list of startups you should not start.

Because by the time it's consensus that this is a good area or super interesting, the amount of capital and the amount of smart people is like moths to a light. I would almost go the opposite way. “Hey, YC, I love you guys. Please continue to fund our customers. You guys are amazing. But as a founder, I would maybe be a little bit skeptical.”

I think your perspective is so unique and interesting. I always love talking to you. I always find it very inspirational on the dimensions of just really going your own way, but also the willingness to fall in love with some part of the world and get devoted to it, and just outlearn everybody and stick with it.

I love your diversification strategy of a liquid Plaid and an illiquid Column. I think you know my traditional closing question. What is the kindest thing that anyone's ever done for you?

I've had a lot of kind people in my life, but I think it's challenging not to look back and be like, “Oh, your mom and dad were the kindest people.” My mom and dad did not have the most straightforward or easiest life. And my childhood could have been a lot more difficult than it was because I think they insulated me from a lot of things that were going on. I had a lovely childhood, and I feel super lucky for that.

And I think we were talking about it a little bit: as a founder, you have to be willing to take on risk. If you grew up in an environment of fear, if you grew up in an environment where you were constantly de-risking when you're a little kid, it's very challenging to feel comfortable going up the risk spectrum as you grow into an adult. And I feel very lucky that my mom and dad did that. They also taught us that it's okay to fall. It's okay to get punched in the face.

See these? They're all fake. And that time I got punched in the face and lost teeth—it's honestly kind of crazy. It's kind of embarrassing, but I'm pretty good at getting punched in the face. And that you can only teach as a little kid. You can only have that childhood that makes that comfortable in a very specific environment.

And I think I have a 6-month-old, and as I look at my peers and everybody else, we are quite obsessed with creating this perfect environment for our children. We send them to the best schools. They have the nicest people in their lives. And that is valuable, but we may be creating children that can do linear algebra at 7.

I guess it's going to be great. They're going to be great AI researchers. But is that what we're going to need 20 years from now? Or do you want kids that are going to be pretty good at taking risks, that are going to be pretty good at being punched in the face? And I think my parents did a really good job at that. I feel very lucky for that.

If I copy all of my peers, I don't know if that's the path we're going to go down. And I think the fact that I am pretty damn resilient is a complete product of my parents. I think that's a huge gift, and I feel super lucky for them every day.

A beautiful place to close. Thank you very much, William.

Thank you.