He pitched 100 VC and spent 3 years building— then grew to $7B AUM. | Doug Scott, Founder of Ethic

When I help you know work with other founders and friends and whatnot It's like make sure you're timing your capital aid through a moment where you can get operational leverage Like when you're actually growing you start to see things happening And then we also started to figure out distribution partnerships and that was really important as well And so that helped us get from you know the first two customers to multiples of that from a founder or CEO perspective That's when you want to raise when you can see it when you're like I can see the next whatever two years of this and like and if we don't close Money by this like it's going to be very hard to service these clients effectively so we need to get ahead of this That's product market fit product market fit product market fit. I called it the product market fit question product market fit product market fit product market fit I mean the name on the show is product market fit. Do you think the product market fit show has product market fit? See if you do then there's something you just have to do you have to cut your phone You have to leave the show five stars. It lets us reach more founders, and it lets us get better guests. Thank you By the way if you're a fan of this show you should definitely check out the GTM now podcast It's hosted by Sophie of GTM Fund and they tell the stories and tactics of at the top 1% of operators founders and investors build scale and invest It's one of the best podcasts for founders and revenue leaders that are trying to figure out how to grow just search GTM now podcast or check the show now Well Doug welcome to the show man. Why should be here? Dude see you've built a pretty impressive business I mean you have what seven billion AUM you were telling me raised over a hundred fifty million in funding I mean it's been a long road right when you start like ten years ago. Yeah ten years ago decade man a decade I mean, that's what you know, it's funny. You go into it and you think it's gonna be quick You know, I mean I never is right overnight success is take a decade, you know, that's right That's right. Well, tell me a bit about ethic like what is ethic? What do you guys do? Yeah? So ethic is we ponder with advisors and institutional investors to deliver very customized investment portfolios based on the Issues or objectives that are very personal to that particular investor And so the simplest use case would be let's say you want to invest in a broad-based index like a large cap You know your S&P 500 type index and you want to customize based on your values your tax preferences and your financial preferences Our role is to then sort of effectively unwrap that exposure and then make those personalization choices and then deliver it In sort of an end-to-end user experience and then to manage that capital on an ongoing basis Is it mainly about ESG like values and things like that that you personalize on? Values is definitely a big component I mean the the areas that you really see clients personalizing around values is being a very strong use case for us because Personalization is what is personal what is personal is often values? This would be like climate friendly like things like that those kind of values. Yeah exactly So if a client wants to align sort of climate priorities or biodiversity issues or gender lens or a whole host of different issue And they want to embed that in a way that they're investing and they have a thesis around that particular issue or topic We are very very good at that aspect But it can also sort of broaden that to financial exposures factor exposures tax exposures There's a whole host of different sort of characteristics that make up a custom portfolio and our role is to help discover what those objectives are for clients And then to translate those into a portfolio that's actionable and then to do that in sort of a custodial friendly way So we are you know, we're US-based We sit on about 13 or 14 different custodial partners So essentially we are sort of integrating with those different custody partners and then we're able to deliver the The portfolio management solution on top of those focus on custodian businesses And then we deliver as I mentioned the personalization across the user experience as well So everything from the before the portfolio is a proposal generation All the way through the transition experience and then also like the integrated reporting So whatever the objectives of the clients are, how do we deliver something that demonstrates alignment with those particular objectives? So what's an example that like somebody goes in I mean you partner first of all you partner with with a financial institution Or do you sell directly to and clients? It's all with financial institutions So our customers are like an ideal sort of customer fit for us would be a registered investment advisor here in the year So a wealth advisor that's working with let's say 150 clients managing a few billion dollars Those clients want to embed some sense of whatever the objectives personal objectives of those clients And what we're trying to do then is then discover what those objectives are and help the Advisors through that experience because it's not always obvious And then to translate those into portfolios that are personalized at each individual client level And then we manage those as a what's called a sub advisor So essentially we're managing that on behalf of that advisory business And so yeah maybe maybe walk me through an example and then we'll get to how everything actually happened But like somebody will walk into a wealth manager And what's the sort of thing they might say that would then lead them to kind of use the ethic path from for it? Yeah, so the best use case would be let's say you have a A wealth advisor serving a multi-generational family That generational families trying to engage different parts of the family They're trying to understand what's important to the first generation Maybe they have a lot of the focus on the investment aspect and they're trying to engage with the second generation or the third generation There's different priorities, right? So maybe there's some clients that care a lot about values Maybe some of the other clients care a lot about tax issues within that family essentially And so what an advisor will do say okay, what does this client care about? And they'll work with ethic We have sort of an onboarding process where we'll help them discover what are the issues that are important to that particular client And then we'll deliver essentially like a proposal like a proposal for you say Okay, these are the financial exposures you're looking for Here's your tax objectives, here are your values objectives for the clients that have values objectives And then we're delivering that in a sort of a simple proposal on the ethic platform We are already onboarded with that advisor so it's a B2B to see motion Right? So we are serving advisors or intermediaries that are then serving clients And those clients could be families like the example I just provided Or it could be like an endowment or a foundation Would say a foundation wants to personalize on based on the issues that that foundation covers And where they're making gifting and those kind of things That could be another area that a client wants to customize around So we have a variety of different use cases but the motion is essentially B2B to see And then we're essentially both at investment partner and the technology partner for the investment advisor Got it And so take me back to that, you know, 2015 or even 2014, 2013 area I mean where does this idea come from, right? This idea of personalizing portfolios I mean people have been slicing and dicing, you know, as you know, equities and portfolios And a million of ways for a very very long time But this sounds like maybe the origin has to do more with the ESG, the value stuff Like in any case, yeah, I'm welcoming through how that all happened Yeah, for sure, I mean, if I go back 10 years or a bit over 10 years, I was in Australia So my experience growing up, my father's Irish, my mother's American, I was born in Sweden, I raised in Australia Very international background I spent the early part of my life I grew up in a very working class area in Melbourne in the south of Australia And when I went to university, I studied engineering, I studied commerce And I said I wanted to build something Australia does not have a very entrepreneurial sort of community It's not really known for that now, it's different 10 years on But when 15 years ago or more, it really was not like that That was not an option that I was sort of thinking about And so I went down the path of investment banking As the like vortex of talent that gets sucked out of universities This is the case in like, it was not exactly where I ended it wanted to end up But it's funny because as my parents were kind of like environmentalists And definitely had like a social sort of focus as people And so then when I went into investment banking The ironic part about it was that a lot of the clients that we serve were natural resource clients Because Australia, that's what Australia's economy is really built on And so suddenly I ended up in this area where I'm working in sort of oil and gas investment banking Which is not exactly where I intended to be when I sort of set out on this journey But I really enjoyed a lot of the work we were doing It was like complex problems, smart people But I sort of felt like after doing it for several years This is not exactly where I wanted to end up long-term And so around that 2014 mark, I was like okay, I want to do something different And I remember very clearly the moment I went back And I'd be working very late as you know This sort of path of the course or whatever And I ripped out like a piece of paper in this notebook that I had And I was like okay, what am I going to do for the next 10 years And I had this one line that was like keep going down the banking private equity path You know, it's sort of that usual, that usual flywheel So that was one path and I thought yeah okay, but that's not that exciting to me The second path was like oh maybe I can go study more, business school, something like that That would allow me to go move to a new country I had a passport, US passport because of my mother's American so far Maybe I could do that And then the third option was like I could build a company Hmm, as you said like the background here is like it's not a very risk-taking culture So this is like a very abnormal move How did that even make it on your list? Was that something you'd always thought about in the back of your mind? It's a good question. I've been chatting with this One of the guys who became my co-founder actually worked at the same company And we met many years before actually And we'd sort of been chatting about the idea of starting a company And he was based out here in the US So I had a bit more of that influence I think the American Pioneer Experience, which I think is awesome And so I sort of planted a seed and then my dad was brand sort of small businesses Like he was a small business consultant so he ran his own business So he had a little bit of the entrepreneurial one and then I thought Yeah, maybe I just want to build something and I'm going to go Well, the biggest risk I think in life is not doing what you really want to do And I was at that point where I like didn't have dependence I didn't have the sort of those things that kind of You have to be a little bit more careful about later in life And so I thought, is it my late 20s? I'm like, why don't I go and take a swing and go build something And then I thought, well, you know, there's that old adage Like if you want to be an actor, even if it's a Hollywood You want to build a company You know, the US is a pretty good place to do that Culturally and because the capital markets and everything else And so I moved out to the Bay area Like within three weeks, that piece of paper Like the circling this going, I want to start coming up Within three weeks, I'd like sold everything, got rid of stuff, donated stuff And I was like, all right, I'm going to move to the US Is that typical for you to just go all in Because the normal thing would have been Do it on the side, try it out, find somebody who wants to do it And then maybe at some point, you know, if things are going Move to the Bay area, right? Is that normal for me? No Like I think this is like the ironies Like most important decisions you make are like sometimes the ones Like it was definitely an abnormal decision Well pulled you then so like strongly towards just taking an all-in kind of brim the boat's decision You know, the feeling, it was like the most quintessential like gut decision Where I'm like, the biggest risk, as I said, is doing something you don't want to do The Jeff Bezos like regret minimization framework always sticks in the back of my mind, right? Exactly And it's like, you know, go regret minimization framework Like take a swing and like to use the Bezos code It's like you take a swing in sports, the most you can hit is four runs In business, you can hit four thousand, you know, whatever it is, right? So I looked at that and said there's great potential here And then I also had this in the back of my mind Because I both left the job to start a company and left the country Right, I went to a place that I didn't almost know anybody Some of my mother's family lived in the Bay area, but that was kind of it So anyway, so I moved to London in the Bay area And like the first few months were like definitely very uncomfortable Because like you're used to having this like structured environment You have like tons of stuff going on I like that metaphor as like when you're in a big company, it's like you got this like buy a hose at you And you're like trying to work out what to do When you start a company, you don't even know where the water supply is Like you don't even have a map, you know, you're like, you don't forget a hose It's hard to realize that unless you do it, just how many things That you want to do, depend on another thing, that depend on another thing That then you have to do this random thing, you're like, oh my god, this is so annoying So I had that feeling I got there, I was like, what do I do? Yeah, you didn't have an idea, did you? You're just like, I want to start a company at Bay Area I also think there's a little bit of that sort of bias you have When in the sort of the entrepreneurial journey where you're like, oh, there's one aha moment I think it was just like you pull the thread of curiosity and see what comes And that's kind of be my experience and I do love just problem solving I'm just a very curious person naturally So when I moved to the Bay Area, that's kind of what I did I started to build community and my co-founder we sort of spent time going And meeting people and connecting and like finding problems we want to solve And we knew it was in the FinTech ecosystem because that's what we knew One of the people that I met pretty early is a guy that runs a think tank at Stanford This guy named Ashby Mark who fast forward now I'm actually part of the organization Called the Stanford Long-term Investing Initiative which is really cool But in 2015, me wrote this paper called Organic Finance It was basically the metaphor was looking at food and saying There's this big push to have better transparency in what people are consuming in food That is a really important thing people are like really aware of what's going into their bodies And what's going into their children's bodies That same thing is going to happen and is happening in financial services Where the sort of increasing commoditization and products and products You've lost connection with what you're actually investing in Or whether those things are actually aligned with your priorities And your objectives as an investor and as a person And that became the metaphor and it was like okay that That is something that is really both aligned with my experience personally But also I think there's a great opportunity to build something very different And so that really became and at the time then we were looking at accelerator programs And like how are we going to fund this thing up to that point We're pretty bootstrapped Did you even know what this thing was because that's a very high-level thing this idea Do you have a sense of what you're going to do within that? No, I mean at that point it was an idea and it was a direction And then you start to go then that curiosity thread And it was really like okay where are the biggest problems statements here If you're trying to connect with where people are investing What we first thought is like okay well index investing In 2000 was you know 1% of assets under management You fast forward to 2015 it's approaching 50% right So it's almost half of all assets are invested in sort of passive or index-like products Which have a really important diversification benefit But have this trade off to say well it's not customized to what is important to you It gets you to exposure And so we thought well maybe that's an error we can start And we started building some of our first products Where get insights into how you're investing Is it aligned with your values? Can you see what's inside it? Is it aligned how much you paying for these products Like all of this sort of insight into what people are doing And then pretty quickly we said okay that is important But then what do we do about it? Right so we thought oh could we help people understand what other options are out there And so you know that doesn't really make sense So very quickly you end up in this concept of like can you create like an operating system To personalize the way you invest And that metaphor of like organic finance Into this concept of helping people customize or personalize how they're investing Really stuck And that became then okay well what we've got to do is we've got to build Products that help you then understand what's in your portfolio But then we still got to start to build these frameworks But how do you invest then how do you align it with all of these different objectives And then how do we do all the trading and management of those portfolios on an ongoing basis And that's where a lot of the complexity lies Like from a fintech perspective is like actually the workflows and risks associated with managing Individual portfolios that are personalized at scale is very complex And you're alone at this point or you're with your co-founder like how does that happen With co-founders he moved with you as well or you met him there He was based here so he was coming out from New York and we were in the Bay Area And we had those three of us and so we were like bouncing between New York and San Francisco And it was actually one of the other people we met pretty early along I don't know if you know she'll know not from better tomorrow ventures fintech fund He's a great investor early stage investor and the fintech ecosystem And he and Jake Gibson who founded Nerdwallet They now run better tomorrow ventures But back then 10 years ago it was 500 fintech And so we got into the 500 program which was really valuable This is part of 500 startups 500 startups yes Which batch I was in 500 startup was 2014 I think I don't know when you went through it but This is January 2016 Okay we're close man we always met there That's crazy Well yeah maybe some of my closest friends Yeah it came from that It was fun man it was fun back then yeah for sure I know it was early it was like batches were a bit smaller imagine Yes for just right 30 or so companies all in the office right and just being it out Yeah it was like 30 or 40 companies and there was less than 10 of those were fintech So we had this little like cohort within the cohort if you like And the fintech track was covering all kinds of things payments and all different other things It's a forcing function to build And so we really focused our efforts we raised our first few hundred thousand through the program Like going into it and then the program itself and then a couple of investors throughout the program And that allowed us to get to these positions where we started to build some of our early experiences And started to build that what became the ethic platform basically But it was still small and we had this challenge because we served this institution And we said okay our customer profile is going to be focused on this advisory audience Because one had aligned more closely with our experience as founders But also because we felt it was this underserved market Where the jobs to be done or the problems essentially that these folks are facing The way we saw it from an advisory perspective is They're trying to connect better with their client to understand what is important to them They're trying to personalize the way that they're investing And they're trying to create this in a very seamless environment Because you'd have this issue and we'd like to think of it as this customization get Like if you do something different for every customer and you're not set up from a technology standpoint It doesn't scale the business doesn't scale and most advisory businesses are like you know medium-sized companies They're not you know, there's some big large ones of course as well We serve several of those but in general it's it's relatively small and medium-sized companies Did you do a bunch of like validation or talking to these customers in that stage Or did you just kind of know from from your experience? No, we did It was a mix of like the experience we've had as founders But then actually going and doing the customer discovery customer develop the work In that getting to the problem statement if you like It's sort of you go wide you start to speak with all different flavors and it's one of those elements where Advisory firms are very different and you really get underneath that each firm is a little bit different They've got their own priorities they've got the way that they run the business They've got different customer sets they focus on and so from the sort of standing back They all look similar issue about different flavors of the way that they serve their business But when you get into it they're extremely different and so we would spend so much time obsessing about the customer probably Understanding what they're going through what are their workflows what are the challenges they're facing How are they connected with their customers? Do you have any stories from that part because I find You know when it comes to building companies you know obviously your early moves Matters so much in terms of the direction you ultimately go and a lot of what you decide to do comes from Those early conversations, you know, how many you have who you have them with how deep they are curious when you're Remember from back then if you're serving this product on especially investment management It's very difficult to convince someone to invest millions of dollars with you when you don't have millions of dollars on the Management right like this is just a chicken egg zero one classic zero one problem And so one of the insights we had in this through a lot of the discovery we spent was well Okay, it's gonna be difficult because these assets are generally quite sticky wherever they're being invested It's gonna be difficult to get people to move existing dollars But if we can help them win business if we can help them win a client convert a prospect Then we can win assets that way and that was such an unlock because at the time we were saying Okay, you can switch from whatever sort of asset manager or platform using it today and switch towards ethic But it was so difficult to do that Well, we weren't at any scale in the very earliest days But then we said if we can go in with some very unique differentiated solution that we felt was materially better than what was available we could help you win business And that was really some of the early wins that we had in the first assets really came through that outside of like some sort of Close connection beta customers if you like the first big wins that set us on the trajectory towards like a product market Fit real product market fit would definitely those kind of wins where we could help that advisor win a new client essentially How did you manage to do that like what was it about it? We're changing making the product that actually helped them win clients I mean a lot of it was the way we mapped so and so a lot of our earliest clients very back to my original element It's like personalization is what is personal what is personal is often values like we did a lot of work And sort of the values discovery piece and so one of our earliest wins was a foundation client Where we were helping do a lot of deep work in mapping the priorities of this foundation for a large foundation Back to the advisor to give this sort of holistic map of what was important for this client and how the allocations were today And then translated that to this great sort of proposal We built this sort of proposal feature within the platform that allowed us to like some strategy backtests and do all these different things And so to give like a look into that portfolio given these unique and very Customized requests and so we started to go down that element in the mapping of the data We did all of these different elements that we felt like was just very different from the alternative And the alternative was largely let's say a pool vehicle like an ETF or a mutual fund or something like that Where essentially you have just a single strategy that goes across the entire allocation or some portion of it And so we felt that this was very different and then we basically joined the advisor and helped support them through that journey And sort of pitching this client effectively and this advisor wanted and it was like a very pivotal moment for that advisor Like we helped him win this big business and that was real important for his career And so suddenly we then built trust because we are ultimately in the trust business and that helped us get that first point We go, okay, if we can repeat this if we can create essentially a mechanism to help our advisors win more business That's going to be really powerful for both our growth But also the success of our customers and so that became some of our earliest journeys And like there was another very similar version we had about what we were doing It was essentially a consultant but similar type of process to an advisor working with a live single family office Same process, help them win assets, suddenly one trust about consultant that became really powerful So it's these sort of like insights that you only get what you actually are in there and doing And when was this by the way like you started 2015 when did you get into 500 startups for example? So we raised the first few hundred and twenty like going into the program and through the program I'll have some beta customers through 26 days But we spent years building technology to help the liver that customization You know by the end of 2018 we probably well actually so in 2017 we had about five million on a management That gives you like you know we're very small And to 2018 we started to get our first recustomers We had about 50 million at the end of 2018 And going from 18 into 19 is where we really started to hit that inflection point We got up about 250 million or so at the end of 2019 and then started on the trajectory and And that like idea that the helping advisors win business when is that That's at that early that basically sub 50 million right like getting from our first few and you know Early customers are often like immediate community people that we've worked with sometimes like Investors or client investors partners and that helps you just go out and test and understand and it's mainly for feedback But then getting to that point where we're actually winning business That's our first let's call it like customers three through ten back kind of window there Where it really you start to see it work and you start to see the flywheel work and we going there and showing how we can help win business And case studies of these concepts and like bips off the email primarily Which is what sub 1% or so what oh yeah, so when you talk about 50 million AUM right like we're talking less than I don't know half a million error sort of thing 250k. Oh yeah It's definitely you know, and this is always the challenge around AUM business models It's it's very different to software subscription models like yeah Completely different and that's often the challenge and and frankly going to the fundraising site That was one of the the tricky part about capital raising for the company was that there are some investors who really get the AUM model And and really like it and there are a lot of investors that really don't and there's definitely more of the latter category The follow This is really hard to get to to scale it's really challenging and it takes a long time and like you know All that is true that it is tough. It is hard to get to scale It is difficult is convincing institutional and professional investors to invest millions 10 to millions of dollars is challenging And that's where I felt like the other element we got right I think early was that sort of investor company fit You know some of our earliest investors. I think really helped. We had a you know, so about earliest checks So we did a seven million dollar siege But it was really over a couple of different tranches and essentially in aggregate Like we had a lot of individual investors who were folks that had a lot of value personally And I found actually some of them still to be the most valuable investors on the cap table We have tens of thousands of people who have followed the show. Are you one of those people? You want to be a part of the group you want to be a part of those tens of thousands of followers So hit the follow button. Did you run four more pitches or how did you like when you fundraise in fronches like how did that happen? Were you always fundraising? Yeah That's the early stage life, you know, you're always a little bit fundraising I mean, it does help win a lot of the kind of folks you're speaking with as customers are also allocators, right? So there's like a nice sort of double fix So some about early investors then also potentially became clients and had that we had that crossover opportunity as well You know single-family offices some angel checks some small venture funds The value for us in that early part where you are effectively always pitching You are essentially you know spending time with a potential partners that could become investors or could stay It's just clients, but you were taking money every time or would you do these like mini rounds like oh no We're doing half a million or whatever we kind of batch it and say hey We're going to raise a little bit more and essentially like the capitalization strategy was right because of the way that business Profile works and it takes time to ramp assets as a set we spent years building technology before we really started taking assets Because of that profile. You really had to raise enough to de-risk the business to get to the next milestone You know product milestone build milestone traction milestone and then we started to kind of do that and going into We rate a series a in 2019. I mean that was led by Nica Tons Morris and Nica is great But prior to that I would say is like we definitely did a lot of tranches in in that component And it was as I said, I think that was the right fit for us. It keeps you really scrappy though Yeah, how many like how many people were you through that time for example 2015 to 2018? So 2018 we were sub 20 people, you know, we're talking about like 15. Okay, so like that whole time you're five 10 15 sort of thing Yeah, exactly, you know the early days you're like a couple of people just a founding team and the first few employees and like by 2018 Wait, yeah, like sub 20 people basically We started to go and then post series A and then even to series B We started to like really burst the walls a little bit at this actually the old office today But it was definitely challenging at that time in terms of fitting everyone in But in that motion where we were like going from getting into that series A mindset That was actually a very that was a tough like going from C to A's one I think the one of the more challenging. I'm sure a lot of folks that you know well and work with like that is a very difficult drop off Right, it's a crazy drop off man. You know, it's funny actually too and that that data is is worse now than it was I think post COVID like if you look at the overall about 40 45% of seed companies make it a yeah Given an unlimited amount of time right but two years in it used to be like a few years ago It was about 30 to 35% of seed companies. I get to a after two years now. It's 15% in the last cohort So it's dropped like a lot. What do you see in the success stories in that conversion then I mean, I'm happy to talk about our journey in that but like what do you see as there's attributes to make the minority of that? There's just the timing has to do so much right so like you look at the COVID years and frankly It was very easy to raise an A relatively speaking these kind of last few years the bars just gone up a lot and the ones That have made it part of it again is timing in the sense that if you're doing things with AI It's just been so much easier now than if you're not, but that's only true as of the last couple of years I think in a series A the number one thing you can always count on is insane growth I mean the ones that are growing really fast regardless of everything else tend to raise an A But it's not true that the ones that aren't don't because there's so many other reasons why you'd want to back a company That early now the core I think principal in this you know hence the show right is is fundamentally proving product market fit And I think that's the key thing and I say that in both sense as like in a perfect world Only the companies that have maybe there's exceptions But in general only the companies that have product market fit would get funded and only the founders that have product market fit would want it Raise you know a 10 15 20 million dollars a because frankly if you don't have it It's a lot of money to have and unless you're just very like strong willed and able to just bank it And only use what you need in reality most founders that don't have probably bronch at fit but have 15 million are going to spend it And if you don't have it it's it's not gonna it's not gonna get you what you think you know It's gonna get you you know You know this well obviously like I find it a different variance of product market fit because you have the one where it's like the hair on fire A problem where it's like very competitive and everyone's kind of solving it and coming in I think we fit more into the category of that hard fact issue which is like you know You're trying to build the market for customization and how you can solve this and do it differently to how it's been done before Which had its own challenges and like you know my experience there is like the technical challenge was very real Because and then go to market challenge there's zero to one problem over how do you get scale to get assets Because people don't want to invest until you're at a certain scale and have history and all these kind of things And as I said that unique insight we had I think around helping Advisors win business and that being really the initial set of customers and using that to show The traction that we need to raise more capital whether that was another sort of seed round essentially or whether it was going into As you say that was like very much and then you know for our world is like distribution Right like distribution such a huge part of it is once you've got that technical mode once you have that From a product perspective is can you get distribution? You know what we found is we had to kind of reinvent a little bit to think about distribution because typically in Fertil services you have sort of a wholesaler model so people used to go out and sell each yet some mutual funds We have a very consultative model because we were going in there discovering what the clients care about We're setting them up from a technology perspective and then going these portfolios and and sort of workflows around it That was quite different. So we found like there was actually a talent challenge You know trying to find the right people as well. This is post series A you're talking about? Yeah, like basically post series A or around the series A time like kind of pre post that area like try It's basically when you do your first true sort of sale or business development higher Like that I think actually that right because you have to then productize or you have to create that the roadmap of like how Your product works and how someone can come in and sell it and we weren't your sort of sales person And use to that we definitely weren't your wholesaler model We were neither of those and so we had to kind of invent a little bit the playbook about how our customer discovery worked And how you as like a relationship manager a business development person would step in and be able to work with this kind of customer work with an investment advisors and institutional investors that have very bespoke needs And that was also an interesting like when I think we spent so much time obsessing about how to get that model right That we felt like it was that was and again at the time like a little bit like the fundraising Like you can see him at the time like oh my gosh we're spending so much time on this and it's really draining But the greediness that you get from that and I think there's this said before like building Transformation company is takes decades like I don't see that there's any short cut to that And I think a lot of these learnings you kind of have to take in some ways the hard way Like you can try to learn from peers and one hop but a lot of them is just by sometimes you got to do it yourself 100% curious to dive into like that 2016-20 team period when you're just mainly building From a few different angles and take it however you want to take it But it's interesting like with the PMF show I speak was obviously a lot of successful founders and there are many that had Effectively like some form of a long build period whether it was by design or not But me as a VC it's a tough period because everybody can build like frankly You know what I mean everybody can build products and everybody can and I say everybody and obviously like in air quotes But in general that's not the hard thing like showing progress and building a product The hard thing is finding product market fit and ultimately traction and all these sort of things And so it's kind of like on the one hand I know that there are companies that do need to do that and it takes time and ultimately leads to success But when you're actually going through that time and I'm curious your experience going through that time There's a lot of doubt like inherent doubt of man like am I what am I doing here? You know like first of all those companies that are growing really fast Second of all I'm sure when you were 2016 in 500 startups you thought it would be much faster than it was Like and so you've got to reconcile all these things Just curious if you could tell me more about that build period and what those like I can spend an hour just talking about that There's so much there's so much there because like your 100% right is like you're in this motion way You're building towards a vision and in our kind of world words How do you show traction really like in terms of assets on a management because of this sort of chicken egg issue Where it's like until we feel we are so much more advanced in what the alternatives are It's extremely difficult to go in at all We can't go and do this sort of move fast and break things type software men's mindset Because you can't do that in institutional capital management And so definitely like you know you can't go oh my gosh Is this the right thing are we on the right direction? Are we like are we gonna get to product market fit? Because you can do all the customer discovery calls in the world But until you actually transact Until you actually cross over that hurdle where you're actually managing capital and you're working with that client You can get oh yeah definitely we could definitely help we could be part of this And it's a very I think as a founder it's probably the most lonely time Because one of the elements is like you can't look at what other people are doing Because you don't know what sits behind that So you can go and see other companies that are outraising and go read tech crunch So I just tried to ignore all that because it just doesn't help you It doesn't advance our mission doesn't advance what we're doing So let's just focus like every day on execution Let's just be better every day We'll capitalize the companies we need it We'll bring in strategic investors that understand our space And can help us with things like distribution What we found also in getting up to that 2019 I know we're talking 2018 earlier But when we started to get to the 2019 Then we said okay what we need to do is bring strategic some of the cap table Because that can help us with this like scaling our product market fit issue So that was always one of the things we were thinking about all along But it's definitely a very challenging and like I can see from eventually lands It's like hard to like separate builders right Well like what kept you going through that like Were you confident that this is going to lead to the promised land Or was there a series doubt or some phases of ups and downs where you're kind of like Yeah, I don't know It's always the up and down mate like you know and hindsight you look back Oh yeah, we did this we did this and you like oh it was the good old times And you're like no no no no no no no There was so much so challenging where you like you've got you know Short on runway and you're having to like go on race fart funding and then go to build stuff And then you know you also like getting rejected a million times You know that's always a real Challenging how many investors did you pitch for example through those fundraisers? Ah well over a hundred and a very small portion those ended up investing So but that's just puff of the course right like that's what normal is I think anyway, I mean there are exceptions of course But I think normal is meeting with a lot of investors And I think actually the benefit of doing that is because you're you're also doing the reverse GD if you're like like you're looking at them is like is this investor who's going to be with us for the entirety? Are they going to help are they going to help us really unlock the value that we believe we in unlock? And so you get both of those sides you spend a lot of time with investors and you get to learn them You get the rejection of course But then you also get the other side of it which is you start to get a feel for like what are the investors that are really good for us? And and also the people who are a good fit for me as CEO or us as a founding team And you found the investor has really made a difference because sometimes that gets overhyped You know what I mean you're like oh these investors are going to add value and then they just you know said and you don't go invest in other things I hate to say but I think the venture investors that have to sell their value are often not the ones that are the value The ones that are the value are the people who have been builders before The people can empathize with the early stage experience The ones who be true that who understand so much of that zero to one especially when that zero to one phase That there's a category investors that are really valuable there I think the other category of investors that's really valuable are the people that understand your market really well Right they can help you either with bad initial sort of 10 customers or 20 customers Or can understand the product experience in a lot of intricate detail And you know we had some great FinTech investors early on I mentioned a couple earlier who understood the business Who understood what we're trying to build Who believed in what we're trying to do And could help us with those early kind of customers And like you know when I do these days fast forward You know help some of our venture investors And then speaking to portfolio companies and whatnot And I'm like you know everyone will pitch you the value add But the ones who really add value the ones who either are happy they either your first call when you got a real problem Or the ones that help you get customers But the ones who help you get customers are so valuable Because they're the ones who are like hey we'll go to a reference call And yep you're early but we'll help we'll say you know support you And we've got capital behind you and like and that mattered a lot And those are the ones that I think I have the most Yeah gratitude for if you like the investors that I think were the most The truly actually added value and especially in that early phase Because later on become very different you know the support you need the series B See you know what past the series D milestone at this point It's very different than what we did when we were like yeah You know 10 people in a room kind of thing In the 10 people phase like when you're building are you Do you kind of have a feature parity situation And you just know where you can get to or you kind of in this motion of Customers tell you need ABC so you build ABC and then they tell you actually Any D you have to you build the after you know what I mean Like which of the two models are you running? Definitely the latter Okay, you know I remember there was times where we were like literally would build stuff Like from one day to the next based on like a meeting going Oh this client's looking for this thing I think we could probably and like hack together something and go test that again And so it was very much like as agile as we could possible Any mistakes made in that like did you over-build? Did you find you build things and then ultimately you didn't get the sale that you thought you would get Like what were the learnings from there? Yeah some of the learnings were also things like Oh we integrated with a custodial partner that's not well adopted or things like that Because you don't know where the you know some of these areas where you're like Oh well they're spent time with this custodial partner and you realize actually the market You're solving for is on this other one and so you spent time over here and like Yes, you look behind side and go that was important But I also go that's kind of part of the you have to meander a little bit like I think It's never going to be this element where you like nail the customer journey out of the gate And like get all the feature requests right and like build the product exactly like You have to have these like mistakes along the way But oh we built this feature and functionality. You know remember some of the early ones where you know We thought oh well we could embed some of these workflows that are like off what we're doing into our customer journey And we built that way too early and then it ended up thing like you know what that's not people aren't using it That's not the good use case. It was focused on a narrow and deep what really good at I think one of the other things that we did very well is focus as a company Like we were very very focused on the customer segment on what we're trying to solve for on their problems Like that became very much part of the DNA of the company Because it's very tempting in that building phase like you were talking about to like go and start building an entirely different For an entirely different customer problem set because you're like oh we haven't seen the traction here Or we haven't been able to get to this point you're like okay Maybe we should change maybe we should go to retail and we should go and like we say very very focus Despite all of those elements and like to give you the context time five years or more before us Was like the robot advisor phase you know some of the early robot visors started to scale up So there's a big director consumer push and so that it like got traction That was like very well-funded and so then it was like oh well Is that a well we want to go in and there was some of our competitors started at a similar time that That went off into the director consumer route and then eventually made their way to advisory But we stayed very much focused on the advisory space and what then became institutional space over time And that really served as well because it meant that the journey the customer journey we were building around was was very consistent When when was the most insane growth like you grew you were at 15 2019 you're at 7 billion now six years later What was that kind of curve like so yeah between 2017 we're a handful a million on a match with the end of 17 50 million we're at the end of 2019 we're about 250 million so going from 18 and 19 That was a huge year in the early phases and what click what specifically happened in that year that you would say was the thing It was a mix of things so that insight we had in 18 really which was this how do we help Advisors wing business and how do we really show that works that was extremely helpful The other thing is we started to get distribution right like I was saying before the way our distribution work We really spent a lot of time iterating on how we actually do the entire sales process and how we work with clients to get them set up and all that So that started to click and then we also started to figure out distribution partnerships And that was really important as well for the industry we're in and so that helped us get from you know The first two customers to multiples of that tell me with this region like people talk about this high level of time You know, I mean like you got to get the go-to-market rate you got to get the distribution rate like what specifically would you say that you got right? So one of the big partners we had it was a big financial institution and like we've worked in for a long time And they came on the cap table and like what we had is like can we leverage that partnership to help us grow more Can we leverage some of the the way that they are already because because they're also in this mindset If you look at most financial services, they're wanting to innovate and it's always very challenging Same problem you see in in most industries It's like hard to innovate around because it's hard to build these things and they have a certain way of doing it And maybe doing that way for decades and so we started a partner with folks who we then you know shared some of the revenue with But we were essentially able to leverage and get much more sort of well-known in the industry And then also help us really convert customers much quickly because the array market Which is a lot of our customers today. It's quite the independence quite fragmented It's not like in in software land if you're selling to from within this startup ecosystem Where you sort of one investor has all these portfolio companies and they can you know A some subset of them can be customers like that. That's not ours at all right We're serving very different types of customers and so we need to work out these nodes of influence One of the things that I think the inside on the go-to-market that we had and we still use it very much today is you look at the stack Right, so if you think about a wealth business that is an executive team an investment team operations team The advisory team and then the end client these are all the different personas within the firm All the different sort of roles to be played in within the firm And then you have these different types of firms and they played away If you want to have real success you've actually got to act about each of these different levels Like you have to make sure it's connected at the executive level you have to make sure It's kind of your classic enterprise hails you know motion But I think that that is not as well adopted in some of the world that we're in It's much more adopted in a price software than it is in like you know Advisory in the well space. I think we did a very good job of that Right like I think early on especially we started to really say how do we influence all these different areas to get the full push behind the firm essentially You innovate in your product you also innovate in the way you distribute like how you think about it The channels you go down the types of partners you work with I'm whether you're going direct whether you're going through another partner like we've tested lots of these things And you run his experiments and say does this work does this not work? You know a lot of our businesses you know And that's true about a lot of folks it's to referral like if we do a great job Then hopefully that client will sort of refer that and we get well known for that and you build a reputation around that And that ends up being your go-to-market like flywheel It's not paid model at all. So that becomes really powerful if you can really nail that and was that how you got that Series A like that distribution really starting to work and kind of the numbers coming up Yeah, because in 19 we close our series A in like the middle I think we announced it in like the second half of 19 So it's like that was a window there where we were kind of going from you know Careful of assets. So like I've opened up to over 250 million like that really helped us propel us through and I think you know In the venture world like one of their things. It's very important. I hope people it is capillaries timing like it's not just important As like you said before timing so crucial in the macro environment But it's also crew in the micro level and when I help you know work with other founders and friends and whatnot It's like make sure you're timing your capitalise through a moment where you can get operational leverage like when you're actually growing You start to see things happening really well the momentum is is where drives the formal and and the formulas were closes deals It's just no doubt about it But then also having a real timeline that's tied to operational milestones, right? You like I need to close this round because we are employing these customers I need to ramp up out a team by this therefore And you can see it there right and that I think is very important because it shows this like a very real time And it's not this sort of artificial like oh, I want to close by x because it's sort of nice round number You're closing it based on a milestone that matters for your business And I think that's an important like timing And also it makes sense rather like if you're from a founder or a CEO perspective That's when you want to raise when you can see it when you're like I can see the next whatever two years of this And like and if we don't close money by this like it's going to be very hard to service these clients effectively So we need to get ahead of this it's a nice forcing function to to you know get these rounds to come together perfect Well listen, let me stop it there and I'll ask that the final three questions will always end up on first one being When was the moment for you where you felt like you had found true power market fit? It was the moment where we really saw that conversion of helping our advisors win business But that's that's what sticks in my mind when I think back to it And I would say in a conventional sense that's probably a little bit before seeing all the metrics come But as soon as you saw that early win I go we can replicate this I know how to do this we know how to do this That was definitely the moment and then it really played out the metrics in late 18 into 2019 And the second question is was there a moment where you thought maybe things just wouldn't work out The company might actually fail you always have doubts is a founder and early especially like you have these moments We're like wow this is really tough it's very hard to build companies It's why only a few people do this are crazy enough to do it So many of those and I'm a big believer in sort of start philosophy It's like control where you can control you know focus more you can control So like don't don't let your mind get caught up in thinking about well What if we don't do this or what if we don't do this like like I can't control that Let's just focus on the customer and we'll build and that'll be our single source of truth The last one then if you could go back 10 years ago and kind of give yourself a piece of advice But what might that be could I have like a laundry list like It's so much of the people we didn't talk a lot about the people It's not so much about the people you surround yourself with and that's like your team That's your investors that's your customers like that I think is the most important part of the journey is really focusing on the people And getting the people right and you know I think we have done a really good job of that over the years There's a certain Naviti as an entrepreneur that you kind of have to just keep convincing yourself To try and do these impossible things all the time and so if you knew all of those things I don't know if that's a good thing you know I think it might be better not to know them in some ways where you're like Oh I didn't realize how difficult it would be to do these things Because if you knew how difficult it was it maybe it was more challenging that you'd want to endeavor And something that would put you off wanting to do it entirely So there is some joy and an importance of just like that beginner's mindset that allows you to just go and experiment So anyway, I have a lot of lessons I've learned for sure But I think that element around people and then also just like that experiment mindset for sure Perfect, well Doug, thanks so much for sharing this story, man It's been great Ah pleasure, thanks, Pepe Wow, what an episode You're probably in all your absolute shock You're like that helped me so much So guess what, now it's your turn to help someone else Share the episode in the WhatsApp group you have with founders Share it on that Slack channel Send it to your founder friends and help them out Trust me, they will love you for it