Brian Barnes of M1 Finance joins Nick to discuss Building the Finance SuperApp, Modernizing Risk Underwriting, Revolutionizing Wealth Management, and Rocketing from Seed to Unicorn in 5 Years. In this episode we cover:
Building a Finance Super App
Achieving Product Market Fit in Fintech
Modernizing Risk Management
Going Through Rapid Hiring and Finding Talents
Raising Capital During Economic Downturn
AI and Generative AI Impact on Fintech
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Transcribed with AI: 0:17 Brian Barnes joins us today from Chicago. Brian is the founder and CEO of M one finance a personal finance platform that empowers people to manage and grow their money. And one most recently raised a Series E from Softbank, and has raised over 320 million in total from investors including Cotu, left lane and jump capital. He started in one in 2015, after being dissatisfied with the tools available to manage his own money. He also owns and chairs B to bank and is a board member of p 33. Chicago, a nonprofit organization that means to help Chicago become a tech leader. Ryan, welcome to the show. 0:59 Thanks for having me. 1:00 A pleasure. As always, sir, can you tell us a bit about your background and your path to m one? 1:05 Yeah, so a lot of the M one story starts with just personal upbringing of being introduced to finance at quite a young age. And so parents were in business, we had a school project on the stock market when I was 1011 years old. And at the same time, parents said, Hey, if you guys are doing this in school, you should do it in real life. And they gave me access to a brokerage account said you can do this under the purview of our decision making. You can’t do anything rogue, but you know, you have the login credentials you can do suggests ideas to invest in. And from the get go, I was immediately captivated and hooked the notion of investing of trying to figure out what a company is worth making an actual bet against it. And either making or losing money as a result was was super captivating to me. So I just turned into a personal finance nerd at quite a young age, did that middle school, high school into college was out in Stanford for undergrad and you’re in the belly of the beast of Silicon Valley and seeing everything go from idea to something large in a short amount of time. So that that gave me the bug for entrepreneurship. And it was really after a couple of years in the work environment just realized I didn’t want to do the corporate ladder climb. So I wanted to take a bigger swing of things either fail massively or you know, hopefully succeed massively, and started at one which was that personal finance account I wish existed that I didn’t see being created. And so that was the the the Genesis and the background of personal finance a lot of the business background, I was in doing research at a equity hedge fund and management consulting. And then just more and more fascinated with the power of software to automate more and more things that led to the the genesis of Babylon. 2:39 Amazing how old were you when you started investing in stocks? 2:42 So it was either 10 or 11? I guess I could probably try to hunt down the exact age. But it was a fifth grade project that led to that. And that’s I can’t remember whether it was early in the year or late in the year that we started it 2:56 amazing. Did you have a favorite stock when you’re sort of when you’re younger years? 3:01 I wish I could say yes to that, you know, there was a little bit more in the younger years, I was spraying and praying, I think I developed a discipline over time that my dad was in the finance world and sort of introduced me to the value investing style of Graham and Dodd back in the day that Warren Buffett sort of took on to the next level. And so those were my gurus, and it took me a little bit of time to figure out this sort of that value investing of what I was doing, rather than just betting behind us, you know, ticker symbol moving up or down. 3:31 amazing to think it, it took me until 28 to read. We’re consuming it at 11 or 12. But Wonderful. So Brian, you know, M one is, has experienced on quite a ramp, right? You’ve raised a lot of capital, and you’ve grown the business to great heights. I want to talk a bit about the backstory of M one and the initial inspiration. I think today most of us know m one is this finance Super App, you know, and includes investing in borrowing and spending banking, even have credit and debit cards. But most businesses don’t start as a Super App proper. So So walk us through like the initial problem that you were trying to solve when you launched back in 2015. 4:15 Yeah, for sure. So funnily enough, we always did want to become a comprehensive financial institution. And so we had sort of this aspiration for the Super App that we can address every single one of your financial needs. We did start in the investing landscape. I think that’s where we I had the most differentiated perspective of what I think should exist in the marketplace versus what actually existed. And from a holistic perspective, what we really wanted to do is have people be able to tell software, here’s how I want my money, manage and then software be able to take over and automate all of that. So that’s sort of the genesis or the principle behind and one and on the investing landscape. We took took this perspective that there are some people out there who Want to choose what to invest in. And they’re typically using a self directed brokerage like AmeriTrade, ETrade, Fidelity, Schwab, were the big ones at the time, Robin Hood had just come on the scene, there are people who are doing that to trade. And so they’re, you know, entering at 10am and leaving at 2pm, and just trying to play the price movements. And then there are others who are trying to build an investment portfolio where they actually want to own the underlying security for long periods of time. And if you take that perspective, you are using a trading platform to implement an investment portfolio. And what’s really tough in that mindset is, you know, at that time, people were trading charging 10 bucks a trade, so it was very expensive to do. The other thing is you have incremental capital come with your paycheck every two weeks. And, you know, you might have a slug of money invested. But every two weeks, you may have $500 $1,000, that you want to put to work. And it’s just very manual, very time intensive, very costly to systematically invest. And so the whole notion for anyone is, you could tell the software platform, this is what I want my portfolio to look like, we did it all via pie charts. And so we call them pies. And so it was a graphical way to construct and organize your portfolio. And we said, that is the target. Anytime I give you money, and one, try to put it to work so that you would act that target. And so that was that was really the genesis is you want to maintain a customizable investment portfolio, have as much selection as you feel comfortable having, if you have no comfort, pick an off the shelf portfolio that adheres to sort of sound investing principles. If you had a lot of perspective, customize it to your heart’s content and add any stock or ETF you want. allocate it on a percentage basis, because you’re thinking about portfolio management rather than stock trading. And then you can allocate money to the portfolio as a whole. And we will do all the automated buying and selling in the background use fractional shares will direct the money towards where can be best used. So we’re doing a lot of creative things in the background to implement that. But it really allows people to say, you know, this is my portfolio, I’m just adding to the portfolio as a whole. And I can set up recurring contributions to it. So that was really the the Genesis it was personalized, automated finance. And we started with the investing lamps, you know, the investing lens of how to implement that. 7:10 Would you talk to consumers about dollar cost averaging? Or was it more of the emphasis just automation and kind of making things easy for them to achieve their desired strategy? 7:23 Yeah, it was much more, I would say the two big old call it three big attributes that we really focus on price reduction was was a big one of, versus placing a trade and, you know, hitting 510 bucks at the time, we were doing this for free. And so that was a big innovation that has since become the norm in online investing. Automation was huge, that we actually tried to find people who were doing this already that had a fidelity account. And every two weeks, they would take out their spreadsheet and say, you know, I’m trying to save this much, here’s where I should put it, let me go, you know, click on each trade, and it would be a 30 minute activity. And we were trying to say, we’ll do that for the in the background of your life. And then I would say user experience of most finance apps, then I guess there was eight years ago, and truthfully now are not on the same Echelon as just broader consumer applications that your Netflix, your Ubers. Your you know, Spotify is what whatever you think is like your premier digital experience. Finance apps are not as good as that. And I think Robin Hood was probably the first one to say like, we are going to create an application as good as the best consumer application. And we feel like we have done the same of this just feels like it was created in 2015 or beyond now 2023, it doesn’t feel like it was created in the 1990s, early 2000s. And just continued to get iterated upon. And so I would say it was the combination of lower price, more automation, which allowed for easier use, and then just a more delightful user experience, which just denotes a an aspect of quality of people want to use platforms that they enjoy, rather than feels like a chore to use. 9:04 I’m sure that you really stood out at first, right, you launched in 2015 and significant counter positioning, you know, with that philosophy, but but other players have emerged over time, you know, why do you think you’ll win against some of the other fintechs? 9:21 So I think there’s, we look at the world a little bit differently than some of the other fintechs I think, most fintechs out there have sort of taken the consumer internet approach of more users is always better. And so they sort of created relatively commoditized features. They, you know, they designed it well, they brand it well and then they just tried to go acquire more and more users behind sort of similar functionality and the demographic that they’re going for if you’re trying to just get more users. The the unfortunate scenario is in America, there are more people with fewer dollars than you know small Have people with more dollars. And so you truthfully go after the 60 70% of America that is living a little bit more paycheck to paycheck doesn’t have much in savings doesn’t have much in investment. I think we have selectively said, we’re actually not going to go after an underserved market, we’re gonna go after or take that back. It’s an underserved market, but underserved in a different way. It’s not that they don’t have access to tools, they have outdated tools, they have outdated and overpriced tools. And so I’d say we went headfirst against Schwab fidelity AmeriTrade e trade on the brokerage side. And then as we’ve expanded over time gone head to head against the large banks. And in some sense, it’s a better mousetrap. It’s people have their personal financial needs, they need to invest, they need to borrow, they need to save, they need to spend, we’re going to take each one of those and try to deliver a best in class experience across each one of those financial needs. And then we’re going to have those financial needs or products, you know, more verticals, whatever you want to think about work together synergistically so that the platform is better than the the sum of its parts. And we look at it as it’s a migration from very transactional financial services to relationship based financial services. And that relationship is typically what the ultra affluent get with a team of people in suits, optimizing their finances behind the scenes, we take that and say, How can we digitize that and provide that to the general affluent user base. And so I’d say how we win is better product, better pricing over incredibly long periods of time, get people to sign up in actually manage their money on the platform, a lot of people collect email addresses, or you know, are an online piggy bank, where they’ll have $5 in the FinTech platform, but $10,000 in the traditional financial landscape, or with the incumbents, we want people to move from the incumbents to anyone. And so I think for us, it’s we want to create the 2020 version of Schwab, where Schwab was the innovative player in the 70s. And 80s. Looked at Morgan Stanley and Merrill Lynch and said, better product better pricing, I think we look at the same option is available if you were to create a complete, holistic digital financial institution and 2020 would look very differently. We get to start with a blank slate create that and you know, we want to be that next generation, financial institution, and we look at it as it’s a multi decade journey. It’s not a couple year journey to build that. Awesome. 12:22 So you talked about your journey, Brian, does the customer journey most often start on the investing side, then, you know, are you getting that payroll integration, and then from there, taking on you know, more of their financial needs when it comes to banking and lending and some other features and services? 12:39 Historically, yes, and it is something that no one has been public facing for about eight years. And for two of those years, we were only investing. So that’s the only thing that you could come on to the platform and use. Since investing, we added borrowing, first borrowing against your portfolio at very low rates. And now we have borrowing on an unsecured basis as you know, unsecured personal loans, we then added checking accounts, we added debit cards, we then added credit cards, and now we are having a high yield savings account that pays 5% interest and has 5 million of FDIC insurance. And so I would say the platform suite has become a lot more robust over time. And so we have different doors that people can come into the interest rate environment has changed pretty dramatically of you know, when when we started interest rates were at zero, so savings accounts earn zero. Now, interest rates are at 5%. So a savings account can earn 5%. And so that becomes an interesting value prop for people to come in as their entry into m one. But then it’s their entry. And the hopeful scenario is it’s less about consuming products under the same brand umbrella and more about m one becoming their primary financial institution that the products really do work better together than they do independently. And so it’s easy to analogize yourself against the most valuable company in the world. But it’s sort of that apple ecosystem of the iPhone is great, the air pods are great, the MacBook is great in isolation, but it’s sort of when you dive into that Apple ecosystem, everything just sort of seamlessly works together. That is what we are trying to do in your financial life is best in class products across each one of those financial needs. But a real ecosystem that works better together so that you can sort of optimize your entire financial picture, I suppose to one component of it. 14:21 Love it, love it. Yeah. And you mentioned mentioned here the interest rate environment and I don’t want to bury the lead. It’s pretty impactful for most fintech. So, talk to us, you talked about about some of the tailwinds there, and, you know, what are some of the headwinds that are presented to a business like yours? And do you think your net net beneficiary of the environment or you know, is this going to create challenges for em one, 14:46 it’s always a mixed bag. I would say if m one were a mono line product, you’re at the whims of whether that mono line product is people are super optimistic behind it, whether it’s the hot new thing or whether it’s The cold thing, and you are sort of just a boat in the ocean bouncing up and down with the overall waves, I would say because we have broadened out, we now offer a whole suite of different things. And truthfully, like financial services needs are evergreen, people will always need a place to save their money, they will always need a mechanism to spend. Investing can be in more demand or less demands, but most people will have savings, they’ll have investments, they will be saving for retirement, they will be contributing, you may contribute a little less, but you know that the investments aren’t going anywhere. You know, the stock market, even if it goes down 30%. Like, it’s still 10s of trillions of dollars, it’s still out there. And so like it’s an absolute need. Same thing with borrowing. When interest rates are low borrowing is in more demand when interest rates aren’t high, there’s less demand. But it’s not like it goes from nothing to something huge. It’s always incredibly large. It’s whether it’s sort of on the margins of the doesn’t go up or down. And so I’d say for our product suite in high interest rates make cash a much more attractive asset. And so our savings account becomes much more interesting. We have a credit card that always pays extremely high cashback returns and rewards that is always in demand that’s sort of an evergreen sort of goes with just general consumer spending, borrowing becomes less attractive. And so our rates on our brokerage margin went from 2% to now close to 7%, just with the rates increasing, so much less attractive product at 7% than it is at 2%. And then investing is sort of this middle ground of I would say 2020 2021. Man, there was some stock market media meme stock galore. Taking place which got some people interested in investing for the first time and so that have some tailwinds associated with it, I would say asset prices going down, people are less eager to invest probably wrongly, you know, it’s always better to buy things cheaper than it is more expensive, but human psychology takes over. And so you know, I would say it’s a pro and con scenario across our product suite. On the whole, I actually do think it’s probably a net positive just because where all the money is right now is with the incumbents. It’s with your giant banks, your giant brokerage firms are giant asset managers. And a little bit of people are thrilled, but they’re semi content using those platforms. And we do want gyrations to let them know that something better is out there, that anytime there’s like sort of market disturbance, they can sort of like reevaluate the world and say, what is the best platform out there. And I think people we want people to realize that a lot of advancement has taken place in the personal financial landscape. And M one is one of the premier players in that space. And so we would rather have sort of disruptions so that people seek out a new platform rather than just being, you know, sort of contents but not satisfied with their existing provider, 17:44 especially when those existing legacy providers are on shaky ground. More so than they once were. random question. But I would imagine your ability to assess credit default risk has got to be really high, when you have such a robust data set for your customers specifically, have you like thought about your ability to better assess a credit score than maybe some of the biggest agencies? 18:09 Absolutely. And that is our hope over long periods of time, that m one, it has been built 100% In the digital and cloud realm. And so everything that we have on the consumer is digitized, it’s organized, it’s accessible. And that allows us to do a lot of analytics on it. And just the leaps bear like, I’m not the first person to say that, like, what’s happened in the data analytics realm, especially recently has just been absolutely amazing. And so whether that’s machine learning AI, just different statistical analysis that you can do across this, the capabilities has increased at a pretty rapid clip. The issue with legacy incumbents is they were probably built via acquisition. And so they are trying to integrate 15 different sources of truth on their user. And they’re trying to do it using technology that probably started in the 1970s 80s 90s, you know, mainframe technology that was not built for this interoperability. And so I do think we have an advantage of developing a robust profile on the individual user so that we can optimize all of their financial life, including the ways that they borrow. And, you know, in the ideal scenario we are, if you sign up for the M one platform, we say, here’s how much you have to borrow against your liquid assets. That’s the lowest cost the most flexible terms, here’s how much you can borrow against your hard assets of your home or your car. And then here’s how much you can borrow on an unsecured basis or your just ability to repay and we are using all the analytics and insights that we have on you to optimize that and just making it so that you can borrow at the cheapest rate most affordable terms and offer something that you really couldn’t get with piecemeal solutions out on the marketplace today. Awesome. 19:50 So getting into some of the specifics on the business right and your your growth trajectory here, Brian, you know, when did you know that you had achieved product market fit? 19:59 So I think you develop early signs of it over time. And I don’t think that there was sort of like a eureka moment where yesterday, we didn’t have it. And today we do, I do think we got the signal, when people started polling there, we started getting what was called a cat transfers. And that’s just the way that you transfer from brokerage account a brokerage account, and we would get people with half million dollar Charles Schwab accounts to transfer it over to m one. And we looked at that as, man, this person has a lot of money, they’ve probably been using Charles Schwab, for the last 1015 years, any financial service provider would happily accept this account, it’s a large account, the person can choose anything that they want, and they were choosing one. And so I would say like, that was our indication that we were providing real substantive value that sort of given unlimited choice, this person says they want to use manage their money with M one versus an alternative financial institution, I would say, that was the product value side of the equation. We still weren’t in the nobody knew who the hell we were, this was sort of, you know, the the intrepid few fine figuring out who we were on the internet, maybe a friend used it. And so I would say it took a long time for us to actually build notoriety. And, you know, sort of just get our brand out there to see who we were. And that that was, I don’t think a flip of the switch moment that was an incremental build over long periods of time. And so I would say we had sort of value product market fit early on due to sort of customer signals. And then over time, we developed more of the, like, actual traction in the life that prefer to showcase the results where people actually started to believe us that we had product market fit, and people were, you know, the assets and user base went up at a considerable clip. 21:42 Imagine that a business like yours, it’s not just about revenue, retention, or churn. It’s also about your ability to sort of build rapport or credibility with your customers, and get them to trust you for more, call them modules for lack of a better term, but parts of their financial life, right, they start with one, let’s say it’s investing and they start to add, you know, I need lending and they go to M one, I need a better banking solution with checking accounts or savings accounts that have better yields, and they go to M one. So the ability to kind of carve out more and more of their financial basket over time has got to be a very strong signal of product market fit for you guys. Yeah, absolutely. 22:27 We broadly categorize that as wallet share of you, every single person out there has, has their own wallet, whether it’s like the actual physical wallet perspective, but just how they manage their money. And the most people are using many different tools and offerings. You know, even if they’re using digital tools, they’ll have a finance folder on their phone with seven different apps that are, you know, sort of meeting each one of these needs. We look at it as every single person has their balance sheet their assets and liabilities. And then they have their cash flow, how they spend and receive money. And if no one is doing a good job, we are the best tool for each one of those aspects or needs. And if people think we’re doing a good job, they will use us for more and more of their wallet over time. So they will have all of their assets to their name, the more that is on M one means that the more they trust anyone versus a alternative provider for Asset Management. Same thing with borrowing, if we can offer better rates and more flexible terms, utilizing the whole totality of the their relationship with us, they will borrow more from us than they do from alternative providers. Same thing with sort of every financial need of you sort of have to earn the trust and deserve the usage. And you’re competing with a bunch of well funded, well established financial institutions, I would say that we have unique insights, but then it’s also unique insights that have led to us developing our product differently than some of the other financial service providers out there. But then it is also just hammering away at it over incredibly long periods of time. And trying to be you know, this is where we say it’s a multi decade journey. We’re trying to capture someone when they’re 34 years old, and have $50,000 to their name $150,000 Surname, and we want to be their primary financial institution for the next four decades of their life, as they you know, get up to the many millions. And that’s really how we view the both maturation of the client and maturation of the company over over decades. 24:22 I suspect that once those hooks are in, it’s hard to get out. Brian, you know, many of the regional and venture banks got into trouble because of their long term held to maturity portfolio. Do you also offer mortgage lending? And if not, will you add it? 24:37 We don’t currently but yes, we will add it over time. And in some times we started on the investing side and that’s the brokerage realm. We have since added a lot of banking products and we use different partner banks for that. I went in as an individual and I went and I purchased a bank so that anyone could use that bank for any banking product that we would want to offer. And so that affords us the bill need to do any deposit product, any payment product, any loan product over time, we have started small with just a handful of those different things. But we will expand to offer the full gamut over time. And so it’s only a matter of time before you know within one, you can get either a mortgage or HELOC, anything like that. And so not at this point in time, but coming soon. 25:20 But you mentioned be to the bank that you purchased, you know, why? Why did you purchase the bank. 25:25 So, we live in a heavily regulated financial services ecosystem. And so you know, things broadly fall into the category of brokerage or banking, if it’s stocks and bonds or stocks and ETFs on one side, and deposits or loans on the other, we just found ourselves have you have to partner with a bank to offer these services. For every single product, we were partnering with a different bank, it costs a whole bunch of issues with everybody had their own process to onboard customers around the process for fraud reviews, own process for Transferring money between accounts, things that would get held up not due to our control, but due to the the partners that we were going with. And there are very strict rules around institutions owning banks, where they are regulated as a bank holding company. So I just I went and I found a small bank up in northern Minnesota and I said, Hey, if we consolidate it all onto this, and I buy it as an individual it can, we can provide a lot of the features and functionalities that we’re looking to provide and keep it outside the four walls of M one from a regulatory structure, you know, from a remote bank holding company structure. And so that was the thinking behind it. It was really so that we could continue offering best in class baking products to our end users and be doing it as an individual was just like straight, the fastest, most straightforward path to do it. And so that’s that’s what we we pursued. 26:46 I love it. I remember a similar example. It’s not the same, but it kind of rhymes with this. From Tony Shay’s book many years ago, Delivering Happiness. I don’t know if you read that. But when he was spinning up, Zappos, the online shoe store, he couldn’t get distribution agreements with any of the shoe providers, they just didn’t believe it, they didn’t think he could sell them online. So he bought a little shoe shop, outside of like Palo Alto. And they had all the distribution agreements in place, even though it was a tiny little brick and mortar. And it allowed them to order as many shoes as they wanted from, from all these pre existing relationships. 27:20 Yeah, I have not read that book I have followed Tony Shea. And yeah, I mean, men, starting a company, especially working on it, I’ve been at it eight years, and I’m sure Zappos was a 25 year journey to create it what it was, you just get new problems all the time. And so this idea that like, you know, ahead of time, exactly what how you’re going to chart your course, a new problem is going to come up in six months that I haven’t even contemplated or anticipated, and you just have to find creative ways to solve for it. And so it sounds like he was able to do this, this bank was a creative way to solve for one of our problems. And hopefully, we find a lot more creative ways to solve either business problems or customer problems over long periods of time. 28:03 So let’s double click on that, right, the challenges that present when you’re building a venture backed company, especially one that’s, that’s growing fast, many companies that listen to this show are, are going through rapid expansion, and not just their customer revenue, but also their team. Brian, how do you define your culture and your values at at m one, finance and and how do you communicate that to the team? 28:28 Yep. So early on, I think you can sort of just get by, by sort of communicating those by osmosis of every single person can have ongoing conversations with everybody within the company, the founder or CEO is talking to everyone, the senior leadership’s talking to everyone. There’s not even like a senior leadership and a Junior Leader, like everyone’s on the same, the same level, because your team is so tiny, and everybody knows what everyone else is doing. And so there, there’s sort of a just a implicit assumption of what your cultural norms and values and priorities are. And truthfully, every time you brings a new hire into the organization, it’s, it’s adding to the culture, it might be detracting from the culture for from various angles, depending on you know, the attributes that they bring, but there is no, it’s sort of the collection of people that you start up a company are sort of the the seed of the culture and norms and values that you develop over time. I do think as you get larger, you do need to be a lot more disciplined and how you communicate and articulate it, because it’s really just the game of telephone writ large of man, you say, you say one semi complex thing, and you have to have it be translated four times. At the other end of that journey, it’s coming out. So just becomes like to scaled communication has to be like quite simple and repeatable. And so we went through like, you know, if you would have asked me early in the journey, I would have said it’s a waste of time and now I think gets one of the most impactful things you can do as you scale is taking time to clearly write down and articulate. What is your mission? Why are you there? What is your vision? Like, if you are successful, what does your product and platform and company look like in three 510 20 years? What are the values that you hire on that you promote on that you retain on that you encourage? What are the values that you dislike that, you know, if someone were to do it, you they are, I don’t know, like not punished, but like you, you are not encouraging them or you want to push them away. And so I don’t know if I necessarily want to bore the audience with Edwin’s articulation of all those but we have spent a concerted amount of time defining and articulating the mission, the vision and the values, we go through it. So frequently, I feel like half of my job is just repeating the same 19 things over and over again, to everyone in the company. And we highlight it anywhere that we can, that we do a monthly all hands presentation, we give in that we call people out for exhibiting certain values that we prize, we have rewards that we do for it, we bring it into the review cycle of we score people against how they embody the values of the company. And so these are not things that are just on the wall that are sort of a check the box activity that you think a company needs to do. We are extremely maniacal about, these are the standards that that we expect and are adhered to by the the people that work at em wanton. And I do think it it forms a camaraderie amongst the team that there’s a common language, there’s a common way you phrase things, there’s a common things that are celebrated. And truthfully, I think it’s less about whether there’s an ideal or perfect culture or value or norms. And whether it’s more like, do you have one sort of like committing to anything and having sort of this sort of like, writ large, its art is one nationality better than the other because I have probably not, but it’s a you know, they feel like they’re part of the same group, because they do these things the same way. And so we have been pretty, pretty focused on defining and articulating those over over the company. And I just think it comes massively more important as the company grows, and more people join the organization. 32:15 Well, and if you’re not super clear about your identity as a business, then people will come up with their own right. And a lot of that is the telephone game. And then you have a lot of misaligned, folks, you know, Brian, you and I have kind of traded some notes about hiring and team construction. And, you know, when you’re going through Fast and Furious hiring ramps, you got to add a lot of folks versus, you know, taking it slow and being thoughtful. Talk to us a bit about hiring and talent selection, and how you approach that. Yeah, 32:42 so I do think it starts from what we were just talking about, of clearly articulating the core principles that you stand for your mission, your vision, your values, and I think it’s Warren Buffett has this great quote, Jeff Bezos has quoted him saying it, you can be successful launching a ballet you can be successful doing a rock concert, just don’t advertise a ballet as a rock concert. And so that, you know, it is one of these things like many different ways can work. But just be very clear about what you are offering what you believe in what you want to have people on board. And there is a self selection criteria associated with that. And so I think both articulating it allows for some filtering on the other side, as well as what what we filter on as people come on board. For startup, broadly, you are massively under resourced relative to the incumbents, you are starting from an idea of PowerPoint presentation. And truthfully, for a startup, especially FinTech landscape or venture funded, you’re expected to create a multi billion dollar company is generally what the end goal is. And you are doing that without a brand without legacy cash flows without a product, you have to create all of these things in the process. And so you do need to find people who can do things very quickly and are bought into the vision and can both strategize and execute and are disproportionately impactful relative to the average worker that, you know. M one now has about 300 employees. We are competing with organizations that have 30,000 300,000 like 3 million, JPMorgan Chase probably has many hundreds of 1000s. if not millions of employees, and it’s a that means we need to every single employee needs to do the job of 100. They need to have an impact. And so we look for people who can both strategize and do that aren’t hyper specialized, they have a little bit more of a generalist flavor and feel that changes a little bit as you scale up. We really want the person who feels like they are handcuffed in a larger corporation, larger bureaucracy, and we want to bring them over to m one and sort of like unlock and unleash their potential to be able to do a lot more move a lot faster, create a lot more in a shorter amount of time than they otherwise would in a more rigid static organization. 35:06 And Brian, how has your role changed over time? Right as CEO, the company has gotten bigger. I’m sure your focus has has changed and kind of your role, broadly speaking, has evolved, you know, talk about that, you know, where did it used to be back in, you know, the late teens versus what do you focus in on these days? 35:26 Yeah, so late teens, it was, I joke, when you’re in the early part of a company, you are both the most senior and most junior part Person of the company, that like, you get to make decisions, you get to set direction, but then there is an aspect of anytime you’re under resource, and this area needs more help. Man, you roll up your sleeves, and you’re the most junior associates are saying, don’t work on me, I’m happy to help out anywhere that I can. The other thing is you can know everything that’s happening at the company, you can know what everyone’s working on why they’re doing it, where they stand in it, like you can take the company and keep a mental construct in your head, I would say that breaks down as you scale, the company just becomes too complex very quickly, until you do have to start empowering people to have ownership and decision making authority and domain expertise over a specific area within the organization. And so you move from this senior person and Doer to you really do have to pull yourself out of the weeds even though like it’s a habit that is like very culturally ingrained. And I think probably most entrepreneurs myself, if I haven’t met him, do I struggle pulling myself out of the details, you really have to do that you have to articulate the simple propositions over long periods of time, you have to get everybody, it is much more about getting hundreds of people to all move in a very similar direction, so that, you know, people aren’t pulling against one another or causing issues across the organization. And so you become, it really is a scale issue where you associate your time issue a delegation issue, that it is insanely easy to get seven people to all move in the same direction. Like there’s, there’s no ambiguity, everybody’s hearing everything from the horse’s mouth. When you get larger, you’re trying to manage many 10s many hundreds, many 1000s of people all in the same direction. And man, do you need trusted lieutenants and deputies to to take that and run with it and make it happen. And so I’d say as the company scales, it really does become about very simple, clear articulation of the holistic company plan, delegation of ownership and responsibilities to various people and ensuring that they have that same mentality that cascades across their their domain or organization, long winded way of saying it just becomes a lot about abstraction of it’s one thing to optimize five people. It’s another thing to optimize 1000. 37:50 So Brian, I want to talk a bit about the current startup financing market, you know, we’re in a down cycle for the first time in a long time. And you’ve also gone through, you know, a series of fundraises some up some down, I’m sure the market at the time that you raised it. And you’ve seen what it’s like to raise capital outside the valley. You know, you may have attended Stanford, but you built this company in Chicago, and many founders that have come on this show, unicorn founders have cited you know, challenges there in, talk to us a bit about your experience, and then how you think founders in this down cycle should approach fundraising. Yeah, so 38:29 m one has had incredibly tough times were we weren’t able to raise capital and then times where money was thrown at us, potentially on deservedly so, you know, we’ve seen both ends of the hype cycle of man, we were undervalued and overlooked for a period of time. And then we were getting, you know, we were a FinTech company when FinTech was going through a mania and you know, had, we would close around three months later, a bigger fish would come offering us more money. I think, you look at that. And you realize that the market cycle changes a lot faster than the company cycle does. That a startup is a combination of skill and luck that you are building something of value. And if you don’t do that, you have no chance of success. But there is a there’s a component of there’s something go your way, just the ball bounce or direction do you get a wave of customers do is the fundraising environment beneficial for you? And I think the the job of the founder or entrepreneur is like at the end of the day, at some point, you’re almost certainly going to be valued on what your company generates from a cash perspective. So whether that’s an earnings, sort of going back to the the value investing, I think companies worth the discounted value of their cash flow for long periods of time, I think in 15 years and one will be valued on cash flow. And so there is an aspect by If that is what you need to build towards over the long period of time, a very valuable company that offers your customers value and offers your employees value and offers your shareholders value. And you know, each one of those has different domains. But from a shareholder perspective, you need to generate a financially sound business that generates meaningful cash flow, I would say the it’s harder to do on different time cycles. And so if that’s 15 years from now, you can’t do nothing for 15 years, and then you jump up to success, you do have to have proof points along the way. And I think it’s a founder is better served by making sure that they are systematically building value, delivering tried and true value things that lasts over long periods of time, and then seizing sort of like pricing opportunities when they come up, of, if you’re building a long company, or like long lasting company, you’re probably going to need a lot of capital to do it. Raise the capital when it’s there, when it’s available. And then when it’s less available, put your head down. And Bill and I think we have taken that mentality there have been like, men when COVID hit like, we didn’t have nearly as much cash as I would like on the balance sheet. And you know, there was a man we were flying high thought we were gonna go we were about to raise our series B name or terms and then there was a man, is this company even fundable? Are we gonna go bankrupt in six months at a call me, Brian? Yeah, for sure. I was frantically calling everyone that quickly switched six months later, two people throwing us money, very large amounts of money. And so I do think it’s like you have to, you have to both build this long term value be opinionated on the long term vision, but then deliver value deliver provable value along the way, and then take advantage of any opportunity as it comes up. 41:41 The market can be fickle, right? I’m seeing a lot of social posts about what how founders should respond to this market and stuff. But I think your point is well taken like you, you’ve got to buckle down and you got to survive. And in some cases, you just have to let the market return to valuing a DCF. Or just, you know, the potential of a technology and a customer set at a better multiple than it is now because the multiples are quite compressed. And until that rebound rebounds, you know. 42:13 I do think people, if you are building an enduring company, you’re building something that’s going to be around for decades. In decades, you will have Manias, and you’ll have recessions bordering on depressions. And so there is an aspect like, it’s just in the nature of business, like you have to build and survive through great times and bad times. And you have to be very flexible and adaptive, in what environment you’re in. Sometimes timing lines up, sometimes it doesn’t. But there is an aspect of, you know, I people can complain about it, man, like I’m not shy about complaining about when the ball doesn’t bounce our way. But there’s a little bit of like, there’s nothing you can do about it, you’re you’re you’re in the environment that you’re in, and you have to make the best of what you have, it’s maybe a broader way of saying like, don’t focus on things you can’t control, you can only control so many things, and you get to dictate some inputs into your company, focus 100% of your energy on that. And then the macro cycle, macro cycle is going to be the macro cycle, you just have to exist in what is whatever is happening. 43:18 You know, speaking of that, how how are you guys thinking about AI broadly, and then generative AI, the impact on M one, maybe how you’ll leverage that technology. And then more broadly speaking, the impact of this technology on fintech. 43:34 So m one, we holistically, we talked about ourselves a lot as trying to digitize the private bank experience. And a lot of this is what what is the best finance has to offer. And that is typically what someone with hundreds of millions or billions of dollar goes to have a banking team that optimizes every aspect of their life. They can like, throw suggestions over the wall, and it gets implemented behind the scenes. And we think AI has the potential to do that for a lot of different people. And so you know, there is an aspect of you can replicate a or whether you can now or will be able to do in some periods of time, replicate what used to be a team of eight optimizing someone’s finances for $15 running on the cloud. And so you do talk about every single person should have their own sort of like CFO in their pocket, their own financial advisor in their pocket that can look at every single aspect of their finance, how every single dollar that they make their salaries, their you know, dividends, where they spend money, where they invest money, and just optimize according to their their individual wants and needs of what’s their risk tolerance, what’s their time horizon, what’s their investment objectives? And so, and then you can leverage data of if you’re a 36 year old with this education and this job with this much experience, can a financial service firm will catch Your salary and say, Hey, according to all the salaries that, you know, we see across writ large across the country, we think you’re underpaid by 20%, go ask for a raise. But there’s a lot of like really interesting things you can do. If you just sort of say, Man, I’m pointing the power of computer analysis at someone’s financials, which are all just digital transactions, in terms of how so like, you know, man, I would love in 10 years for everyone to feel like, no one satisfies every financial need. And it has a AI financial assistant that you can interact with, however you see fit, and it’s optimizing your finances in the background. In terms of the manifestation of that, I think we’re probably somewhat far away that man every week, there seems to be a new development. And so we’re reacting in real time like everyone else is. And so we, we have not done as much. I think we’ve had that fairy tale objective for a long period of time, it didn’t seem doable, until recently. And you know, on what time Is that doable is still up in the air, I think we will continue to incorporate it more and more people talk about it in other domains of, you’ll feel like you’ll have your individual researcher working for you. We think everybody should have their own individual financial advisor, we just think it will be driven via digital software, rather than a human in a suit sitting next to you taking you out to dinners four times a year. 46:20 Thank you, right. Brian, if we could feature anyone here on the show? Who do you think we should interview and what topic would you like to hear them speak about? 46:29 This might be cliche, given the the advancements, but I do think Sam Altman is one of the more interesting people nowadays with his history with startup land and seeing massive numbers of overall successes, and there’s some commonalities that led to that success. Truthfully, they still have, like YC failures don’t get talked about, but they have them. And so you know, things that lead to their non success and whether there’s any, any discernible attributes or commonalities that you can find that give you a better than even odds chance at succeeding or failing. And then just the work that’s happening with open AI, I think is utterly fascinating that I’m not the first person to say it, but this was definitely my iPhone moment of, like, man, the world world changed pretty dramatically when I first saw Chet GPT. And, you know, the even when, then like, a couple months later, when it advanced pretty considerably. That was a shocking tech moment for me. 47:27 Shocking, wild, Brian, what book article or video, would you recommend to listeners, you know, something in recent memory that you found informative or inspiring, 47:38 I like believe less than the sort of eureka moments. And I do think people need to just be information, sponges and consume everything in every anything that they possibly can, and from every different perspective that they can to sort of create mental maps in your mind. And so I’m a I love consuming, incredibly long form content and books. And man, there are so many lists of top 10 books you should ever read top 100 books, you know, of all time, YouTube videos, I watch them at one and a half to 2x speed to be able to consume more, I think tweets are still you know, there’s some negative aspects of Twitter. But you know, in terms of just a firehose of information, and smart people interacting, I even think that same thing on Reddit like, Man, there are some depths of Reddit that are bad, but there’s also just utter brilliance and the things bubbled to the top that’s like interesting or different perspectives. And so it’s way less about one. One thing that sort of changed my perspective, and it’s more consuming via a lot of different avenues. I’m also I don’t know who gave me this tip, but I’ve actually thoroughly enjoyed it and thought I benefit is trying to read a lot of like, Intro to various sections. And so like, whether it’s Intro to Psychology, Introduction to Western hitter, or, and just being able to be inch deep, many miles wide on a bunch of different topics, you can start pulling in concepts from a lot of different domains that make sense in domains that are not related, are all that similar. And so I think it’s more about breadth of information consumption, then than any specific one thing. 49:21 Well, you may have just answered this. But do you have any habits, tactics or techniques that are a secret weapon? 49:27 Did sort of just answer that of reading broadly and consuming as much information as you can? I think sleep is if sleep. Again, I’m not the person to create this analogy, but if it was packaged in a pill, it would be the craziest drug of all time of it would you know, there’d be a performance enhancing drug cognitively, physically, mentally, emotionally, like every single aspect of your life is improved by getting the right amount of sleep and it just makes the waking hours a lot more enjoyable. So I spend a lot of time prioritizing sleep because It makes me think and behave better in waking moments. Perfect. 50:04 And what finally here, what’s the best way for listeners to connect with you and follow along with em one. 50:09 So m one is m one.com. And then we have social media profiles across all the major ones and you can search M one or M one finance, emails. Probably the best way to connect with me email is b dot Barnes var. email@example.com. Perfect. Brian, 50:23 thank you so much. Congrats on all the success to date and best wishes with the continued ramp in the next 25 years at one. 50:30 Amazing. Thank you so much. 50:31 All right. Thank you, sir. All right, that’ll wrap up today’s interview. If you enjoyed the episode or a previous one, let the guests know about it. Share your thoughts on social or shoot them an email, let them know what particularly resonated with you. I can’t tell you how much I appreciate that. Some of the smartest folks in venture are willing to take the time and share their insights with us. If you feel the same accomplishment goes a long way. Okay, that’s a wrap for today. Until next time, remember to over prepare, choose carefully and invest confidently thanks so much for listening Transcribed by https://otter.ai