Immad Akhund of Mercury joins Nate to discuss Behind the Scenes at Mercury During the SVB Crisis, Tactical Fundraising Advice for Founders, Lessons from 300+ Angel Investments. In this episode we cover:
The Importance of Understanding the Market.
Banking for Startups and Entrepreneurs.
The Collapse of SVB
Lessons Learned from the SVB Crisis.
Advice for Founders on How to Navigate a Startup Death Spiral.
The hosts of The Full Ratchet are
Nick Moran and Nate Pierotti of New Stack Ventures, a venture capital firm committed to investing in founders outside of the Bay Area.
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Transcribed with AI: 0:03 Today’s guest is Immad Akhund. Immad is the co founder and CEO of Mercury, a unicorn FinTech that provides banking services to startups and was obviously significantly impacted by the SVB crisis, a topic that we’ll be covering in detail prior to Mercury and Immad founded three separate businesses including haze up which was acquired by fiber in 2016. In addition to finding startups and Immad is an extremely active angel investor with over 300 startups in his portfolio 14:16 Immad, welcome to the show. 14:24 Thank you for having me. 14:26 This is going to be a very packed episode. Mercury has gone through a period of hyper growth as catalysts catalyzed by the SVB prices crisis, which we’re obviously going to get into. But there’s so many pieces of wisdom that you’ve learned from both starting companies and investing in them. So prior to getting into any of these topics, though, I want you to take us back to the UK share a bit about your upbringing, as well as what initially drove you to be an entrepreneur to begin with. 14:54 Yeah, so I was born in pucks thumb. At the age of nine my family moved to the UK And that’s where I kind of studied and had my formative years, I kind of accidentally ended up in computer science. Like, I knew I was good at programming, I’d been kind of playing with it since the, I guess, the age of 13, with computers and making things, but I wasn’t passionate about the programming, like only, I always used it in the age of making something. But I knew I was good at it. And I was like, okay, you know, you might as well just do do do a university degree that you’re good at. So I ended up doing that. And then, you know, none of the invents investment banking and consultancy jobs would take me, which is like the cool thing to apply for back then. So I ended up working as a programmer at Bloomberg. That was my, that was my first job out of uni. And I just found it really boring. Like, it’s hard to describe how boring I felt, like I was just like, it just didn’t feel like I wasn’t making something. But I really like someone would give me this spec, and I would go build it. And I had no idea who would use it, I would never speak to the customers, it just felt like I was very much a cog in this kind of machine. And I found that really disenchanting. And then at the same time, you know, this was 2006, and like this TechCrunch, and there was all this exciting stuff happening, and I would read it every day. And it was, you know, those a couple of us. The Bloomberg would do these kind of university classes. So there was a bunch of us in the university class, and a couple of us were really into kinda like reading TechCrunch every day and and you know, we were both programmers, we were just like, oh, it looks easy. It looks easy. Why don’t we just do it ourselves? Obviously, like the, you know, the making of it, it was easy or not easy, but doable. Since we were both programmers? Well, obviously, it takes a lot more than that to make than making a business. So so we eventually just quit. And, you know, I didn’t think that much of it really, I was just like, I’m not enjoying this job. You know, I have a friend who wants to do something, let’s try it out, probably won’t work. You know, I’ll just live with my parents or whatever. And if it doesn’t work, I’ll just go get a job afterwards. And I, you know, I had by that point, I felt pretty sure I could get another job if the if push came to shove. So I started this startup, it was called Rev map, which is kind of like a Yelp for London. Yeah, it just, it was the worst startup like it didn’t go anywhere. The idea was bad. We had no funding, we launched it. And when used it, there wasn’t really a reason for people to use it. I had like this, like a, it was a it had both like the issues with social networks and the issues with hyperlocal. And but you would think in that kind of atmosphere that I would have hated it. But I still loved the process. Like I love baking some things. I loved just working really hard, right? And feeling passionate about that, like I woke up at 9am. And I would work at 9pm. And then I would go to a networking event, like I just would do this nonstop, because it was just like really fun. So I decided I wanted to be an entrepreneur from that point onwards, even though it wasn’t like the most kind of solid, initial experience. And I also decided that to do it while I should move to San Francisco. So I moved to San Francisco in 2007. 18:23 How long was it from the time that you founded that business until it failed? 18:27 Like seven months, eight months? Very quick. 18:30 Yes. Fail fast, right? 18:32 Yeah, I went back then. It felt like a long time. You know, that was like my second year out of university. I was like, Wow, I did this for so long. And it did work. But yeah, now it’s like a 18:40 quick sort of months. I also feel like dog years too, especially. Yeah, that’s right. Yeah. 100% in mercury wasn’t even your second business. Yeah, so we can talk about some of the others. But I’m also specifically curious, how did your approach to founding the startups change from being a first time founder to there are a couple in between which I’d love to hear about but eventually the thundering Mercury how did that process of ideating and deciding Yes, I’m going to start this business evolve. 19:13 Yeah, even though I’ve done for companies it’s been over such a long time period. So did that one to 2006 Another one 2007 Another at the end of 2008. And then I didn’t do my degree. So 2008 company we sold in 2016 I started making 2017 So the first three were really bunched together and I made like very quick mistakes and learn from them and and then this ADA kind of time period of my previous startup I made a lot of mistakes and learn from them which have applied to my degree. You know, it’s I kind of think of it as like, like the initial mistakes are often related to like, Who do you start the company with and like, things just got to fail very close to Inception just because the founding Chemistry is no good at all. Yeah, my first startup like my co founder wanted to go, go get married and get get a job and which is fine. But, and to be fair to him, I wasn’t working. So like kind of a reasonable decision. But, you know, like, those are the kinds of things that like, slow you doubt or stop you at in your initial kind of startups. Once you’ve got to solve that problem, then most of the problem comes down to like having a good idea that has like good product market fit. And we really struggled with that at my previous startup, we ended up pivoting four times, like we would try something, we would have some initial success, you know, and it wasn’t, it didn’t do bad. It was, it was a YC company, we were funded by Union Square Ventures, and we had some success, but it was just very hard to like crack the full kind of product market fit, not like we would have some success, but then there’d be no retention, or we wouldn’t monetize that, or it took a long time to eventually we did and we sold it very quickly afterwards. But took a long time kind of figuring out that machine. Whereas mercury, kind of you know, we had this idea for my green 2013. And we didn’t get to work until 2017. And then, you know, as soon as we launched in 2019, I had product market fit pretty much. So like in those ways that like different journeys, right, like I think it’s getting to product market fit is like quite a quite a challenge. And there’s a element of kinda persistence and luck involved, as well as timing. And yeah, it’s only just like having enough experience to have a good idea. 21:37 Yeah, what would you chalk finding product market fit up to so quickly with mercury versus, versus your prior business? And so like, was there any different approach that you took in the first year or two out of the gates of founding the company? Or was it you attributed to? 21:57 You know, I was the customer. I think that’s like a really big difference. Like, my previous company, he’s up. You know, we were kind of doing it for various people. Like, originally, it was a flash game. And then we were serving kind of dev tools for developers, but I was never the customer was never, you know, I play games, but I’m not like a massive game. And I was never a game developer. So I didn’t think I really understood all the nuances of it. And I think being a customer for mercury, just like meant I had a very good idea. I was like, Okay, this is what I would need mercury to be able to do for me to you have used it in my previous company. And it wasn’t like question mark. I was like, I need to be able to sign up online, I need to be able to send Why is, you know, I need good customer service, right. Like it was it was a series of things that, in my opinion, it was just a given that those were required, and they were like a basic set of things. So it wasn’t complicated to get that product market fit. I mean, it was, it was still surprising how successful it was right? Like, you know, just because you think you want something doesn’t mean, like it’s hard to know whether everyone else wants it. And I talked to a lot of founders I, you know, the tickets ears, air and after launch. So I interviewed like 100 startups. And I remember after doing all these interviews only, like I wrote down like, oh, how excited was this person, and only two or three of the 100 were like really that excited? Everyone else was like, Oh, sure, I would try it. But like, only two were like, Oh, this sounds amazing. I like you. And you know, at that point, because it took a year and a half, I was like a little bit worried about it. I was like, oh, you know, maybe this is a bad idea. Like no one seems to love it that much. Which kind of goes to show you that. You know, they sometimes have to just do things that you believe in and not listen to people too much. 23:47 Where do you think the disconnect was for that? Do you think it goes back to like the Henry Ford saying ask people what they want, they’re gonna say a faster horse, or the customer doesn’t know what they want. So you put it in front of them, because it just strikes me is interesting, that it resonated with so few startup founders, especially in the ICP. 24:07 Yeah, there’s two elements. Number one, if you are in a big enough market, you know, two out of 102% Like if 2% of all startups switch to like my agree when we launch, that’s actually enough to have like, strong product market fit, right? Like that’s, that’s like 1000s of people. That’s one element. Like, you know, your your early adopters set does not have to as long as the market is big enough for early adopters. That doesn’t have to be a huge percentage of it. I think the second element, which is always tricky with with mercury in itself, it’s even tricky. Now. How we describe Mercury is like, there isn’t one. Often when people invent new startups or new ideas, they have like one like silver bullet feature or silver bullet idea, right? They’re like, you know, for Robin Hood, it was like, Oh, you get free trades, right? I was the thing for a long time, it was like free trade, free trade free trade. I think that’s true for a lot of FinTech startups especially, but a lot of startups in general, where they have like one very strong value proposition. With Mercury, that was never the case, like, I was just like, these products suck. And we will make a better banking experience. But it wasn’t like a very specific thing. I mean, I could pick a few specific things, but they would never the totality of the of the point of it like it was no show, you could sign up online, but I never thought like that was the reason people will use my agree. It was like, Hey, this is just a better product across all of these dimensions, because we really will be thoughtful, and we will craft a product. And weirdly, startups don’t do it. But if you think about a lot of the most successful products out there, that’s often how they’re successful. They’re not like, if you take an iPhone, it’s not like any one feature on an iPhone kind of existed. Another thing that was the package and like the the experience that’s compelling. And also why it keeps, you know, continues to beat Android. But it’s true for a lot of things like zoom. Gmail, right? Like there’s a lot of things that people use, and it’s just because the products just way better than everything else out there. But it is harder to kind of explain that to people at the start. 26:19 Yeah. And then once they experience it, then you can’t unsee it. Yeah, exactly. It’s it’s like air tables. Another example that comes to mind, similar to zoom, etc. I also was listening to an interview with you, where you were talking about the process of ID eating on Mercury, and it was the only idea that fermented in your mind relative to your other three businesses. I’m curious how critical you think that element is to your success. And I know you invest in a lot of startups as well. And I don’t want to bloat this question. But I’m curious if that’s a prereq prerequisite to investing in founders as well, that obsession with the problem. 27:03 I mean, when I invest, I do like it as the, if the founder is knows a lot about that space, can really talk to her very deeply, has been thinking about it for years. Like it’s I think that is nice. But there’s also lots of examples of, of people who are not like that, and then end up being successful companies, especially young founders, right. Like, I did not invest in deals seed round. And they’ve, I did get a chance to invest in a much later on at a much higher valuation. And they always make fun of me for that. And, like, really, it was just like, I was like, okay, you know, they, they didn’t have like a deep sense set of experiences in payroll. And at that point, I was like, I don’t know if these, these founders are the right people to do this. And I was obviously very wrong about that. So I think people can hit success in in many ways. You know, for me, it did help that I understood this space for actually like, frankly, actually didn’t understand banking at all right? Oftentimes, I’d never done. All I understood was like the customer pain points and what I thought the product needed to do. So you could say I wasn’t actually an expert in it either. 28:20 Yeah, yeah, very fair. Well, I want to revisit your experience, investing in other founders, perhaps later in the episode. But I do want to talk about Mercury. And I, I’m sure almost everyone listening is familiar with mercury. But for those that aren’t, what is mercury in its most simple form? 28:41 Yeah, we do banking for startups and ecommerce companies. Prime, we act as your primary bank account. So you can get a checking account, debit card, a credit card, if you raise extra money, and you want to get yield on it, or put it somewhere safe, we also have a product called Mercury treasury, which gives you access to US government T bills and money market funds. And then all of that is packaged in just a really nice experience. So you know, you can, you can send wires super easily, you can set up auto transfers between new accounts. And you can invite your users you can have virtual cards. So yeah, we tried to make like the sole experience, like very seamless and make make entrepreneurs lives like really easy. 29:28 Yeah. You also make it very clear that you provide a banking account and services, but you’re not a bank itself. What’s the difference between providing banking services in your business model and being an actual bank? 29:42 Yeah. So from a regulatory perspective, and a money flow perspective, like the money can’t and doesn’t touch us. So you get a bank account at one of our bottom banks. We have to evolve in choice. And, yeah, we do So normal bank, like if you put money at it, they will, they will take the deposits, they will lend against the deposits on all of that the way Mercury works is we actually sweep your money between minimum of 20 banks, if you have 5 million, so we’ll get you 5 million in FDIC insurance because it’s swept across lots of banks. And it’s a very different model from like a SVB, kind of traditional kind of banking model where a bank is normally this kind of fractional fractional banking model, which obviously has like some risk against the deposits, whereas Yeah, we, we don’t learn to lend against the deposits. And our and our partner banks kind of sweep them between a bunch of banks. 30:46 Yeah, makes sense. Is there an inflection point on the roadmap here, where you’re going to become a bank? Or how do you think about that transition, if it ever makes sense for mercury? 30:58 When I started this thing, in 2017, I always thought, like, oh, we will, we will do a bank. And actually, I did not think we’d be able to do the features we have now or the scale we have now without being a bank. But what I’ve found has been a the partner bank model has has become a lot more kind of developed since then. And be as we’ve hit some scale, we can work with our, with our banks, and they build features for our customers. And we’ve been able to do a lot more than I expected. Like we have one feature called rubbers drawdowns, which is a very, very niche payment type that like bigger businesses need. If you want to do more than $400,000 a month in payroll. And yeah, when I started Merck, I was like, I have no idea whether we will be able to do this without becoming a bank. But you know, we’ve been able to kind of deliver that feature to customers. So, overall, it’s definitely something that I think about, like, once a year, we we do some investigation on it, but every time we conclude that we’re not going to do it, so I’m not gonna say never. But it’s not the kind of short term horizon. 32:10 Yeah, in have you guys captured the full product suite that you initially envisioned? Or where do you see the product heading from where you’re at today? 32:22 There’s a lot to do, right. One of the reasons that I was excited about Mercury is, as a startup, like, I wanted to do something that could do for, like decades. And most startups always seem like very small features to me. But Mercury has this interesting element where, you know, once you have someone’s primary kind of banking account, there’s just a ton you can build, right? Like, you’re all the money’s on Mercury, all the finance teams using mercury. So I think it lends itself to building a lot of kind of financial software, and financial services. And we’ve built some of that, but there’s a ton still to build. So, you know, we launched last year, we launched about yourself, we launched credit card, we launched into that. And we launched kind of our first kind of billpay solution. But there’s a ton more we’re doing. So there’s lots of ways to expand. There’s also more, more industries to go after, like we’re really, I would say, our biggest kind of product market fit is with early stage startups in E commerce companies. But obviously, there’s lots of other types of businesses that could use Magri, too. 33:27 Yeah, I do want to talk about SVP a bit here. Because you guys have been incredible beneficiaries of that. I and I’m sure you’re sick about talking, or you’re sick of talking about it now. But it was a significant catalyst for the business. And you posted some of the statistics on Twitter recently, which was very interesting. You said that mercury gained 26,000 customers since March in quadrupled monthly net revenue from May of 22. To May of 23, which is incredible growth. Can you take us back to the day that SBB collapsed and what was initially running through your mind as you initially saw the crisis unfold? 34:08 Yeah, I mean, the first day, you know, the whole, especially when you look back back at it, everything kind of seems very surreal. Right? Like, yeah, SPB was the kind of 800 pound gorilla in this space. Like they were in the first ever see deck. I did. And the first day that this was unfolding, which is Thursday, I kind of expected this to be just a temporary blip like I wasn’t, I didn’t think anyone was really seeing like, oh SBB will fail, right? This is a 40 plus year old institution. Everyone in the Silicon Valley uses them and knows about them. So yeah, it was yeah, we initially would, you know, we didn’t want to kind of fuel any of the rumors. We were just like, okay, yeah, it’s a really good signup day. Right? Like we had 1000s of signups. Like it’s probably At 10x, also bigger than any other day we’d ever had. And we were, you know, it was it was mostly like a positive feeling from our side. But but at the same time we didn’t want you know, we, I felt bad for SBB and I didn’t I didn’t think, you know, I thought they would weather the storm kind of thing. You know, Friday, like, it kind of flipped completely right? Like FDIC came in, everything happened way quicker than expected. And at that point, you know, I think all of Silicon Valley was kind of holding the breath for like the Friday, Saturday and Sunday. You know, everyone was freaking out about, like, are they gonna be able to make payroll? It was like some people, you know, saying this is the end of Silicon Valley and Twitter, like, it was getting pretty crazy. So at that point, you know, we didn’t know what was gonna happen. And it was quite a, I would say, it was much more like a worrying kind of point for us. Like, obviously, if, if the VC in Silicon Valley ecosystem, and I’m saying Silicon Valley, in the, in the broad sense, they’re not actually the place. But if the tech ecosystem doesn’t do well, it’s obviously pretty bad for mycorrhizal. What kinda lifted our spirits a little bit was, you know, on, on Saturday, we had this idea to go build Mercury vault. And at least as an entrepreneur, when you’re like building something that you feel like myself, it’s just like, way more motivational than just like worrying about something. And, you know, the, the idea was, like, a lot of people were approaching me, and other people were mercury, and just saying, like, if SBB is not safe, why is mercury safe? Right? And that’s, that’s a pretty reasonable concern, right? Like we can and beyond me just like saying things. And like saying, Oh, we’re fine. All of this kind of stuff. It was, it was hard to, you know, answer someone with with a valid concern. So the idea behind Mercury volt was, you know, we would extend our FDIC insurance, and we went from 1 million pre SBB to 3 million that week, and then 5 million. And we would also give them, give our customers a really nice dashboard for them to understand like, how much FDIC insurance they’re getting versus the money and also give them access to Mercury Treasury so that they can get US government kind of T bill, mutual funds and feel like the money between FDIC insurance and US government T bills like that they have all of that money in like, in a safe, safe place. So we’re gonna Yeah, we started working on that on a Saturday morning. And like, the whole team really came together to build that. Obviously, at the same time, you know, I’m talking to the partner banks, like CEOs all day, I’m talking to customers and people freaking out on the internet all day. So it was still like a very intense Ghana weekend. But and we managed to get it kind of all together and launch on on the Monday morning. And overall, that was like a real turning point that Monday where, you know, the FDIC came in and said, They’ll backstop deposits, we launch Mercury vault, and I think it like really resonated with people that hey, Mercury’s not just all told, we’re willing to kind of build product and like, yeah, that’s what we’ve always been about, right? Like we can, it’s not just like most banking services can’t build anything, right. Like, that’s the, that is the true differentiation Omokri that we will build and rise to that occasion, so, so it was cool that we were able to kind of get something together. And like, I think when we launch on Monday, everyone was just like, really impressed that we, we built something that like kinda really spoke spoke to the moment. And I would say like, before this point, not for every segment, but for early stage startups, let’s say like, from inception to Series B. Mercury was the main competitor to SBB. And yeah, so like when we were able to react to the situation, I think it gave people a lot of confidence. And I think we ended up like winning a lot of kind of customers and deposits after that point. 39:17 Yeah, you guys clearly reacted well, and I think building a FinTech product in 48 hours has to be some sort of a record. And so 39:25 we had a lot of the pieces in place, that that helped. But yeah, it was it was a real mission to get it done. And then we actually, you know, we continue to improve it like over the next few weeks. Like I wouldn’t say the first version was the best version. But over the next few weeks, we went a lot better as well. 39:43 Do you have any other lessons that you took away from the SBB crisis that are going to stick with you? 39:51 I think that one like building something and like so using product to solve things even if you on that Friday did and feel like there was anything we could have built. It was an obvious that like a business idea. So I think that’s like a really powerful lesson. The other one that, you know, I think I’ve been kind of building this thesis for, I guess for a while, but like it definitely came, came in handy during this time is like just being really open and available to customers, right? Like, I don’t think people expect that off. Actually old financial services, right? Like, I think FinTech companies, and banks are not good at actually like, talking to people like humans and, and being transparent and authentic. I think that for works really well for us. So maybe it would work well for other people as well. But I think that’s every time we have this kind of situation. And we do do that, where we are available and just talk to people and, and are like not like sugarcoating things. And you know, if we’re, yeah, if we think the way we talk about things where we’re like, hey, you know, like, this is how it works. But you know, we don’t say like, we don’t say like, oh, you’re safe, we like everything’s good. We’re like, this is how it actually works. Like you should get comfortable from that. So that’s, that’s another one. That’s a good question. Let me see if there was like a third lesson or something like that? 41:33 I mean, I would say it’s one of those situations where like, Yeah, I think for people hearing about Mercury for the first time, and obviously, a lot of people were exposed to it for the first time. It’s one of those situations where it feels like an overnight success. Right, like people like oh, yeah, Mercury is the answer. But like we’d been added since 2017. It’s definitely like one of those situations where you just have to kind of keep doing the right things, and eventually, like opportunities will kind of come along. 42:05 Yeah, I I’ve another question. As we’re going back and forth about this and put aside recency bias for this question. Where does where does the SVB situation fall in terms of most memorable experiences of the business? And if it’s number one, which I would be surprised if it’s not? What would the second most memorable experience be? 42:32 It’s hard to like, it’s hard to like rank memorable experiences. You know, definitely, like post launch was like a very intense and memorable experience. Like there was nine of us, we completely did not expect it to be as successful as it was. Like to have the two of the three back end engineers, like literally went on holiday the week after we launch, because we were like, oh, yeah, take a holiday. So that whole period was like, really, it was just like me and my co founder, were doing all the customer service. So that was a very intense and memorable period for us. You know, on the, on the slightly less positive side, like when COVID hit, we actually like, like, 60% of our revenue disappeared overnight, because we were making money on interest rates on deposits and interest rates went to zero. So it was a you know, everyone was feeling some COVID effects. But for us, it was like, we were only like a one year old company. 60% of our revenue disappeared overnight. And like, you know, that first month, no one knew what was going to happen, right? Like, there was a feeling that this is, you know, massive recession would kick in, I sold all my stocks, like everything was just like, pretty, pretty crazy. I mean, luckily, like we, you know, we had this kind of E commerce boom, at my group kind of kicked off, like the month after. So we were like, back to the same revenue level, like actually two months later, which is like, pretty funny kind of situation. But for that one month, it was like, Yeah, 44:09 did you think you’re gonna fail? 44:11 I didn’t think we’d fail because we had raised, you know, 20 million as a Series A and, like, in my previous companies, I’ve always come so close to failing, like, I had mercury, I’ve always, like, raised more money than necessary and spent way slower than necessary. So we had like, years and years of runway, but we reacted. I mean, like we we stopped all hiring we, you know, we were really not like we, you know, we needed people actually because we had because we’d grown really quickly before COVID and we hadn’t had that many people before COVID hit. So we reacted to it. But yeah, it was it was an existential that was definitely worrying. I mean, obviously eventually if you lose half your revenue and you stopped growing eventually, you’re gonna have to think about what you’re doing. And let’s see what else has been memorable. Like, I would say those three things like strike me as like probably the three most memorable kind of times at my career. 45:16 Yeah, I mean, COVID was definitely an existential crisis, I think for for many startups, or at least they felt that way in the moment. And 2023 very much feels that way too, right, with markets tightening up. Fundraising, especially at the later stages has been more dormant. And you recently wrote a Twitter thread, which I believe you refer to this as a startup death spiral. Route, specifically, regarding the ways some founders are reacting in the current environment, can you briefly describe what this death spiral is? 45:53 Yeah, I think there’s a lot of kind of noise and things like that about like, oh, you know, trade, you should grow slower, and try to be more like, have better unit economics and be more profitable. But the problem is actually, like, in the startup ecosystem, right, there’s a point where you just become unfindable. Right. And like, that point is actually even even higher than before, right? Maybe in 2021, if you were growing at 200%, you will probably still fundable. Whereas, like, in 2023, if you’re growing at 200%, assuming your base base is like quite small, you might not be fun to bottle, right, like it might be really hard to raise money. So what’s, there’s this kind of like, relatively ugly cycle that I’ve seen play out at a few companies where, you know, they, they kind of test out the funding markets, they still have, like, a good amount of runway, you know, they don’t hit a valuation that they like, or maybe they don’t, they just don’t feel good about, like being able to raise. So instead of like, then going back and saying, Okay, we need to grow faster. They’re like, Oh, you know, we need to, like, extend our runway. And the most obvious way to extend runway is to do, you know, like, stop spending on ads, or, like, stop growing the sales team or, or whatever, like sales, marketing, ads, all of that tends to be the biggest cost center outside like engineering, for a lot of startups, so it’s easy to think about contracting there. And now your growth is slower. And that’s where the cycle continues, like, you come back to the market in six months, you’re even less vulnerable. Like, maybe your baseline is a little higher, but your growth rate is, is worse. And yeah, there’s definitely companies that I’ve funded, where they’ve kind of done this cycle a couple of times, and now their growth rate is like so low that like, they can’t get funding, some of them, you know, successfully become profitable. And then you get a lot of options and breathing space, which is nice, it might be very hard for them to break out again, and become like high growth companies, but at least they’re not going to die. But a lot of them either do end up dying because of this spiral. Or they end up doing like these ugly recaps. And it can be quite messy, all around. So my main point, main point I was trying to make as they’re, you know, a startup is about growth. And, you know, even if we in this environment, like you really have to think about growth, first and foremost, and I mean, you should do with good unit economics and things like that, but you can’t like forsake growth. 48:30 Yeah. How do you how do you advise the founders that you work with, to navigate this situation, specifically did not fall in the startup death spiral, but maintain growth while being conscious of the runway position? 48:46 I mean, I would say like, firstly, you should understand, like, where, where your product is, like, does it have product market fit or not? Like, you know, growing, trying to grow something where your retention is low, it’s too hot to convert people. You’re paying a ton in AD costs tax or like, whatever in order to, like, let there’s no point in doing unsustainable things to grow. So if that’s how you’re growing, because you’re doing answers that have unsustainable things, like you should just go back to the drawing board and say, like, can I improve this product? Can I find a different customer, ideal customer whatever it is to try to like crack out of that, that box you’re in and actually have like sustainable growth. If you are in a position where you have sustainable growth, where like simplistic ish measure would be like, you know, your your time to pay back your your acquisition costs is like one year so you know, whether it’s ads or or what, or whatever, like you spend to acquire the customer and you can pay back within a year ish. And it’s like a retain customer and the LTV is much longer than that one. Yeah. So if you’re in that kind of box, then I would say like whatever it takes, like, make sure you continue growing. Ideally 300%. If you’re like a sub series, a startup, and maybe if you have like, more than 5 million in yearly revenue, you can grow slower than that. But like, you just have to hit that base. And it’s better to, like, runway for the sake of runway is not useful, like you should have runway so that you can hit like a certain kind of threshold to raise more money. This is all on the assumption, you can’t get profitable. Like it’s much better to have a shorter runway be going through 100% Have a good chance of hitting like your milestones and being raising money then having two year runway and have no chance of raising money. 50:46 Definitely. And I am curious to get your take on fundraising, because back in 2010, Paul Graham said you were one of the best fundraisers that he’s ever seen. What advice do you give your founders on how to be effective fundraisers? 51:03 I was I was a bad fundraiser. But in 2010, I’ve become much better now. What advice? I think there’s like two things that I like the advice I would give myself in 2010 is like, thing. Number one, it’s very easy, especially if you’re like an engineering kind of mindset, which I was to think about fundraising as this kind of, you know, I lay out a set of facts, you the investor, look at my set of facts and make a judgment, and then give me some money get nothing like, it’s very easy to have that mindset. But the reality is actually, like, it’s not about the facts. It’s like the story that you weave. So you have to kind of actually think a lot more about like, what is the story that I’m selling her because I think the fundamental weirdness about fundraising is that like, the proposition is really silly, right? Like, the proposition is this, like, I meet someone, they don’t have a product, they have no customers, and they’re like making this kind of claim that they’re gonna make a billion dollar company. I mean, that’s like, that’s kind of the claim, right? That’s, that’s the startup game that like, that’s like, that’s why these tiny companies with no products like get to Emily valuations, it’s because there’s like, there’s a chance it could be a billion dollar company. And because the only, I think the only way you can like, feasibly make that is like, because you have a story that like how it gets there. And the story is like, it’s kind of an emotional journey. It’s like, okay, this is why this problem matters so much. This is why the solution is so great. This is the oldest steps we’re going to get there. And this is why the market is so huge. And that’s always like, important over and over. Because it’s important for fundraising, it’s important hiring, it’s important for selling customers. You know, one of the reasons that I think Mercury successful is because it has a really interesting customer story, like customers don’t like their banks. They also, there’s also feeling that like building a banking startup must be like impossible, right? Like, especially in when we launched in 2019, there was a feeling that like, what my credit was, like, not possible. So when we did do it, people were like, really blown away. So that’s part of the story. So I think across all of these, like verticals, having a really powerful story that resonates is really important. So that’s one aspect. And I think the second aspect, which I never understood is, so much of like, the investment decision is about, like, how well the investor feels like they can get along with you. Because yeah, when I invest in something, and when a VC invest in something like they’re kind of making a pretty long commitment, they have a relatively short time period to make, like five to 10 year commitment to a founder to say like, they’ll return their goals, they will, they will support them through through various various times in the kind of startups lifecycle. And, you know, if someone’s just like, not likable, it’s not even not likable, if they if you don’t take the time to build that kind of human connection. Like if he sometimes like, perfectly good startup will just be like, hey, you know, great meeting you, I need this decision by tomorrow. I’m trying to close up like, it’s just like, makes it very, very transactional. I’m like, okay, you know, fine, like, go go get another investor, good luck and a thing like, I’m not, you know, I’m not here because I’m going to just FOMO into this thing. And maybe some, maybe some investors do that. But I think in general investors are looking for, like, a human connection and feel like they can be they can like help this person throughout their journey. 54:45 Yeah, yeah. It’s, it’s a lot about relationships, for sure. 1:03:25 About if we can feature anyone on the show, who should we interview on? What topic would you like to hear them speak about? 1:03:35 That’s a good one. You know, I feel like Jeff Bezos would be like a really fun person to get now that he’s no longer at Amazon, maybe he can talk a little bit more freely. I think Amazon built a really good and rare culture where they were able to, like, continuously innovate and build kind of world class new things even at scale. And outside, like the coal space, right, like if you look at kind of echo, or fulfillment or air, they just did it over and over where they built like something AWS obviously, don’t think that would be like interesting. There’s been a bunch of books written on it, but I haven’t heard Bezos kind of talk that much about it. I think it’d be interesting to get and dive deeper with him and 1:04:21 that would be that’d be a pretty incredible guest 1:04:24 Yeah, I don’t know if he was I don’t know if gettable was like part of the requirement. 1:04:30 No, no. That last what’s the best ways for listeners to connect with you and or mercury? Yeah, 1:04:39 I’m a big Twitter user so you can kind of follow me on M OD on Twitter or DM me on there. Obviously, go to my credo comm if you want to use it at all. It’s easy and self service. 1:04:51 Well, thanks again for doing this. This was a real pleasure and congrats on all the successes here. 1:04:56 Yeah, thanks for having me. Transcribed by https://otter.ai