Speaker 1We're definitely in a hype cycle. If you're doing something because you think it'll be better for the world, I think that's like a motivation that can outlast. Whereas if the motivation is like, how do I make the most money? Then when you hit a hard patch, it's hard to like fight through it. Such like a crazy mindset to think that's possible, right? To go from idea in your head, go write some code, go sell this thing, go hire the people and like get to a billion dollars in revenue. It is unrealistic, but you have to go out there and like believe it yourself. Firstly, project that belief to investors. We have to project that belief to customers and then employees, right? Yeah, I think the startup world specifically requires like a really extreme level of optimism to win in.
Speaker 2Welcome to Grit. I'm Juven, partner at Kleiner Perkins, a show where we go beyond the highlight reel and explore the personal and professional challenges of building history-making companies. Today on Grit, I'm talking with Imad Akunt, co-founder and CEO of Mercury, the financial platform behind one in three US startups. Imad grew up in a family on welfare, spent 10 years as a founder before his first real exit, and then decided to take on banking itself. We get into all sorts of things about Imad, including his hot takes on company building, the intersection of what that means between his personal and professional life, and everything in between. Enjoy. Can I tell you one of the specific reasons why I want to talk about Grit? I wanted to do this with you. Yeah. The way you talk publicly in like your LinkedIn posts and your tweets very much aligns to how I think, which is like the intersection of the personal and professional of company building. Yeah. And there are tweets that you have about Mercury as your product. By the way, Roadrunner is now switching to Mercury. Nice. You made a mistake of starting on SVB. Oh, no. It was a mistake. Yeah. We're rectifying it now. Good, good. So you were about to be a proud customer. Apparently, like I couldn't, the APIs in SVB, like I couldn't get a dashboard to work to like see how- I don't think they have APIs. I was like, is this a joke? So anyway, that's why you're valued at seven plus billion dollars, I guess. Sadly, only 5.2. 5.2? Yeah. That was the last race? Yeah. When was this, when? In March. In March. You could say seven now probably, but- In March. In March. And anyway, I just like the way that you think about the world. Like I think it's interesting, like you do talk about Mercury stuff, but then you talk a lot about like the company culture, like CEOing. Like you have some, I think, pretty unique takes on like having kids while you're running the company. And these are things that I think a lot about. I've always talked about the intersection of the personal and professional on the show because I think that stuff's like not that much talked about. Yeah. Weirdly. Like I don't-
Speaker 1I think it ties to grit as well. Why is that? I think about, like I talk to people and they're not running their company in a way that like is going to lead to more grit. Like if you're burning out, you're not going to be like the highest grit person. You know what I mean? Like you have to really have your personal, you have to have your personality, your personal life and your business life kind of in sync to make, to maximize your grit. Because like, like grit is- Grit is about like how long you can last through like adverse situations. Right? So like, I don't know, if you're, if you're like super burned out, like when you get hit by something, like a customer says no or whatever, you can't raise money. Like, are you going to have the perseverance to kind of go through that? And that's how you, that's how you frame grit. That's one framing. I mean, like grit is probably like a complex word, but, but yeah, to me it's like, I think one element of grit is how long can you go through adverse situations? Right? So, uh, like, and I think you don't get there without having all your ducks kind of lined up, uh, and yeah, I think there's different ways to frame it.
Speaker 2I was just listening to an interview this morning with, um, Ben Horowitz. I think what he was saying was like where most companies fail in his view is when the founder comes into adversity and like, can't deal with it. Yeah. And that's usually where these things kind of start and stop. Mm-hmm. And he, basically his point was like, the founder is the thing that matters. It's always the thing that matters. Like the, the idea can't suck, but the founder is the thing that matters. The problem is in today's day and age with like venture capitalists and founders and how, like the compression of time to get to know each other, you don't know how they're going to respond in moments of extreme pressure. And he, you know, his point was like, this is why Elon's maybe the greatest entrepreneur of our generation, because like in moments of pressure, he's like, rises up. And then I thought that was like kind of an interesting framing that was like pretty succinctly phrased towards the moment in time of the companies where when you perform, when all of the cards are kind of, all the chips are on the table is like what defines.
Speaker 1I think one thing that's tricky, and I was actually talking to a founder about this just yesterday is like, how do you respond to those situations? And, you know, I have like two things that I do, which I don't think most people do. Number one, I think adversity is fun. Like I, I, if I have like a normal week and like, you know, nothing too tricky is happening. And like, you know, we're all, it's all up and to the right or whatever. Like, it's just kind of boring. Like I kind of have fun when like, you know, I don't want things to go wrong. But like, I want to be challenged. Like I want to do hard things, right? Like I think sports is really good with that. Like, you know, the mentality for like people who play sports is like, you want to do hard things, like you want to lose, you don't want to lose, but you want to do things that might make you lose, right? Like it's boring. Just like if you play, I play tennis quite a bit, like it's boring if you're just playing tennis and you're always winning, right? That wouldn't be actually a game. So I think like, I think of that in the startup context, I actually often think about like startups as like a game, and it makes, you know, I think it's a good way to think about startups. So like you kind of want hard things and actually like every time Mercury solves something hard, like if we do something difficult, like we're going through this bank charter process, which, you know, I think is quite difficult and normal, you know, my previous software companies don't have to deal with all of this kind of stuff. But because we're doing that, I know, assuming it's the right difficult thing to do, like at the end of it, we've created value to some extent, right? Like we've done something that is hard, but like is valuable to our customers, because, you know, we can build like the most kind of AI-pilled bank or whatever it is we're accomplishing. But like, doing hard things has like value, I think, and you have to like actually be, put yourself in the mindset of like, wanting to do hard things. And like, I mean, Elon's like this, he's like, yeah, he just seems like he's like CEO in five companies or something like that, right? Like he's doing, he's willing to do insanely hard things. But I think you have to enjoy doing those kind of things. So, yeah. I don't think it's like a normal, I don't think most people think like, wow, I need to make my life like a little harder. Do you think that's trained? Like, is that nature or nurture? I really don't know. Like, I have three kids and a lot of their personality seems like it's genetic. Like they, you know, I raised them relatively similarly, and they're all three so different. So there's definitely an element that you just get. But I do think like, you know, things like sports, things like, you know, being an immigrant, because, you know, you don't take anything for granted as an immigrant. I'm like a double immigrant. I moved, my family moved from Pakistan to England, and then I moved from England to here. Like that kind of trains you because you just like have to kind of, you know, you maybe it's like self justification. Like I face so many hard things that like, you have to try to like enjoy them. So, yeah, so I was gonna say, I think wanting and enjoying hard things is important. And I think the other one that is quite a tricky one also is like, how, like, what is your emotional kind of response to the events? Which I think is, I don't again, I don't know if you can train it. But like, you know, if, if, if when good things happen, you like spike up, and you're like, Oh, my God, it's amazing, blah, blah, blah. And if like, you know, something bad happens, and you spike all the way down to say, like, I give up, like, my life's too hard, you know, like, why am I here? All this stuff, right? I think it's really hard if your emotional responses to events are like, too positive or too negative. So I think you have to like, try to be like a fairly steady hand. I think that's good for yourself. Like, I think, you know, my wife is actually doing a startup right now. And, you know, I see her like, you know, something great happens. And she's like, Oh, my God, we made so many sales, etc. And then I'm like, you know, don't enjoy this. Like something bad's gonna happen. And then, you know, the next week, she's like, and I think like, when you're like, very volatile, in your emotional response to the situation, I think it's actually just hard to manage life. And like, I think you have to, like startups are just like a roller coaster. It's very, especially if you're doing hard things, it's very, you know, sometimes you'll feel great. And the next like, literally, the next hour, you might feel really shitty. And if you're just continuously like being volatile emotionally, it's I think it's like really hard to have that kind of long term grit.
Speaker 2This like foreshadowing that like something bad is going to happen. Like, why is that? Like, something bad always gonna happen?
Speaker 1Like, like, why is it because you're doing hard things, part of doing hard things is like some percentage of them don't work out, right? Like, actually, one of the funny things in Mercury is we've never really had like a super easy fundraise uh is that true i mean okay i should i should caveat this we've always had a term sheet within three weeks so maybe you would consider that not not that bad but it's always been like it's never been like 10 term sheets within three weeks always been like two or something like that uh and partly it's because i always push for like the best firms and the highest valuations like some combo of like all the best terms uh but either way like you know at any one round i could make it very easy for myself by just saying like i don't care about the vc or i don't care about the terms and it would be easy but because i deliberately make it like you know the right way to do a fundraise is to get most people to say no in my opinion otherwise you haven't priced it right to some extent right um i'm sure there's some exceptions in the ai world uh but i think this is like my general view on things is like if you're pushing the envelope like if you're launching products that might fail if you're you know i don't know trying to hire someone that's like kind of a reach for you to hire like you're going to get no's uh so there's going to be things that like get you you know and most of these things like you're putting so much heart into it right like when you're launching a new product or when you're like fundraising or when you're like hiring all of these things like you need to put a lot of energy into it as an entrepreneur um so there's always going to be hard hard things like i don't i don't think there's a i mean maybe there's a way to do startups without having hard things but but at least if you're like going for it right like i yeah if you're going try to be like 10x next year and all of this kind of you know pushing forward all the time which i think you kind of have to have that energy to really succeed in the startup world uh you're going to get a lot of like disappointment along the way in your experience
Speaker 2does the disappointment harder hardship get harder or easier as time goes on i i definitely
Speaker 1think there's a switch between like uh how existential uh the startup is sorry let me you are not profitable and like your hard things can kill you as a startup uh i think it's much harder like we've been profitable for four four years now uh it's rare these days and i think and in my previous company we were not profitable for six years in the last two years we were profitable uh i think it's a very different mindset between the two like when you're waking up every morning and like you know you're like what's my runway like the numbers like shrinking right every day yeah and you feel like even when you're doing well i've it's there's just this kind of level of existential dread that you get from like a pancake i'm going to zero uh that you don't don't feel afterwards so i think that's definitely a turning point in my experience um but it never goes away i mean i think even if you're profitable you're you're trying to push harder you're trying to grow faster uh so yeah i think it's always there but it definitely gets less work i think the main way i've changed has got better at
Speaker 2handling it for sure earlier um when we started talking um and you're asking me about roadrunner and i said you know we've grown out of two offices now and yeah so it must be working you know it um that's like one of the things that scares me right now and not just my company but like generally in companies is that we are using yardsticks like people growth sure it's not a good thing to do it's not a good thing to do it's not a good thing to do it's not a good thing to do it's not a good thing to do it's not a good thing to do it's not a good thing to do it's if you don't want to share like revenue yeah but it's like kind of the i don't know maybe like it feels like the fake game on the field it's like all it's like a little bit better than like how much have you raised but uh but not as satisfying as like how much money have you made you know like it's so i'm curious what you think
Speaker 1of that um honestly it used to be worse uh it used to be all about number of employees now i think it's actually changed a little bit where like you know teams are much more nimble um you don't necessarily learn as much as you used to from number of employees um i mean i think it's i don't think it's all negative i think at least when i'm talking to an entrepreneur like i kind of want to be helpful yeah like it's just a you know if you're just starting out with two people it's just like a different conversation like i don't have enough context so i don't think it's bad to like try to like gauge the person yeah honestly i feel like people are a lot more honest they used to than they used to be like people obviously we're in a podcast you know but outside these situations people share revenue numbers quite a lot yeah and i i find that like the whole startup ecosystem has become a lot more open with metrics and things like that in a way and maybe it's like the conversations i have or something but you know i feel like 10 years ago no one used to ever talk about revenue it was almost like a not safe thing to talk about now you know we see people talking about revenue on online all the time it's like become a lot more common thing uh and i think there's like maybe a separate element to this is like you know there there is this kind of one side of the silicon valley ecosystem that's about like hey we're like doing big things that change the world and improve the world etc and then this other side of it it's just like i'm trying to build a big company and go sell it and make you know become like a millionaire whatever it is so uh i think there is like some tension there and it swings and you know just i don't know if you're at the top of the bubble or whatever but we're we're definitely in the hype cycle uh and the swing in the hype cycle is much more towards like money and people who care about money and like uh those elements and then you know when it when it will change and it will change probably at some point uh it will be once again a little bit more about like what are we doing to like improve lives i i personally like the other cycle a little bit more than this cycle like i i like it when we're you know doing a it kind of goes back to great as well it's like if you're doing something something because like you really wanted to succeed because you think it'll be better for the world uh i think that's like a motivation that can outlast whereas if the motivation is like how do i make the most money then when you hit like a you know a hard patch it's hard to like kind
Speaker 2of fight through it you immigrated from where to england pakistan and how old are you when you um that was my parents i immigrated i was nine you were nine how old were you when you left england 23 uh and i'm 42 wow yeah and
Speaker 1you came straight to the bay yeah i did one startup in london uh and i decided i need to be in southern kumali to do startup so then i did my second third and now fourth is this it is this the last one i mean as long as i have energy i will probably still be doing startups uh yeah i'm really enjoying mercury i mean one of the things about mercury and why i started mercury is i feel like some companies get interesting at scale and you can do more at scale uh whereas other companies kind of converge if that makes sense yeah it's like like most companies tend to do one thing and then you know they improve that for the rest of their life whereas i think banking is this like really interesting uh thing where it's like it's got all your money it's the first thing you set up it's a universal product there's not that many universal products for businesses it's like every single business needs to be a bank account uh so it's just this platform where you can build a lot like we just launched mercury books uh three weeks ago uh but you know it's like it just fits so well into banking it's like you know the bank account you already sign up for a bank account before you sign up for an accounting system the bank account has most of your data uh it's like such an easy expansion and it's such a natural expansion for our customers as well uh but there's so many of those in banking that it's just kind of a fun thing that you can like keep doing and it's like it's building and building i think if it was if mercury got to a stage where there was like not that much new stuff and it was mostly like kind of incremental optimization uh i would be kind of a bit more bored i'm probably not the best uh leader for that but i think mercury has like almost infinite like you know we just launched in mercury personal which is like our personal product so there's just so much like forms of expansion uh that it just makes it like a really fun uh startup to work on
Speaker 2i am so impressed that this is the fourth like uh just i don't know like i'm obviously just far behind you but and i'm maybe like let's just say a little over a year in but i've never and i would consider myself like a uniquely energetic person like i have a lot of energy sure i have to work out every day to like release energy because it's like too much pent up you know and i've never i've never given anything this much energy yeah in my life like every day just like a consistent application of force every single day and i was just talking to my co-founders about this like man can you imagine like doing it again from zero to one like because that that's when it takes the most energy it's like get off the ground yeah all to say like i'm really impressed yeah that you have that in you like that is unbelievably yeah um determined
Speaker 1so my third startup actually had like four full pivots like literally starting from zero pivots uh so even though it's my fourth startup it's almost like my seventh or eighth like in a major idea uh i think you have to like and i mean this kind of ties to grid as well it's like you have to enjoy it a lot like you have to enjoy the journey like so i i think about this quite a bit it's just like And like I just said, ties to like why you shouldn't celebrate the ups and downs too much like you just have to enjoy the day-to-day so like i mean a lot of that time period like that's like 20 years of like being an entrepreneur i've been programming and like i've been like doing the code or whatever right like you know my last startup was still like 24 when it was acquired and i was still doing some coding uh i just enjoy it like it's fun to code like you know i guess if i in another world if i hadn't been a ceo i'd be i'd be a software engineer and like it's fun yeah i i think you have to do things that are fun like it's fun for me to do product or talk to customers or think about like what's a new thing we can do and all that kind of stuff so uh i think if you're enjoying your day-to-day it gives you energy uh and it kind of goes like yeah if you don't get too attached to like i have to you know every negative thing is going to like take me down i have to like get really stressed about it and things like that uh then you can really just enjoy that journey as much as possible uh i guess that's that would be my response because i'm going to be doing something right like i have to live life so if i'm really enjoying doing a startup i'll just keep doing it uh so that gives you like this kind of sticking power how many of the same people have you been doing these startups with any so actually five people five of the eight original people at mercury uh were people i'd worked with for five years at my previous company and they all still work at mercury uh so i guess they them specifically i've worked with for 14 years now it's crazy yeah it's cool uh but yeah we all enjoy working together and they also have like a similar mindset and the company's remote yes so uh we have an office in sf in new york and toronto uh and portland uh but it's remote first so people can be anywhere why do you live here uh i love san francisco i mean the weather's great people great uh i'm a very like all my friends are entrepreneurs or vcs like i'm a very one-track kind of person i i'm also an active investor invest in like 300 companies so i love it i don't like i mean the only major downside here is it's very expensive uh but if you can get over that i think it's a great place
Speaker 2to live can i read you some um of my favorite tweets and posts sure let's go and uh have you expand on them is that all right yeah we'll start with this founders should take the weekends plus vacations off uh and then you outline three reasons the first is time to think high level outside the daily grind the second is the last 10 of time is the least productive and the third is avoiding burnout yeah always been this way so when
Speaker 1i first started you know i didn't have any kids you know i had i was very much like wake up get on computer you know work all the way till midnight go to sleep wake up get on computer etc um and then i had this you know i got married um and i was 25 uh and then even then i had this kind of mindset and it wasn't until i had my first kid but which was relatively early i had my first when i was 27 where i was like oh actually i do have to uh prioritize kind of outside my work life uh and then i had this kind of mindset where i was like so i i guess i had like this realization where i was like you know i'm at work all the time but i'm actually that productive and then you realize like when you don't have like a split between like work and life which is i think a lot of like early entrepreneurs are like that uh you're not like really sitting there working all the time right it's just it's not possible to like i mean at least a lot of that time i was coding as i said yeah i'm i have like a lot of energy and and stamina but like you know i'm not like i'm not like a lot of energy and stamina but like you know you just can't sit in front of the computer and code straight for 12 hours like you can do it as like one sprint but consistently every freaking day for 12 hours like i just don't think i can personally not do it and i and i realized i was kind of pretending to myself like i'm there you know i'm on hacker news i'm on twitter i'm on you know i'm dming people and yeah i'm also coding but like i'm just like switching between things and i'm not really as focused as like you know this is the actual productive hours i get it's not that much and then anyway so eventually i you know and ended up reducing my hours to like something reasonable and i realized like i actually i was just as productive and maybe even more productive because i was like all the time i was in front of a computer i was doing one thing and i was like working and focused rather than kind of splitting attention between a bunch of things um so so that's one realization that like i think you can do sprints but like in general if you're committed for multi-year kind of time period you just don't get that much extra hours out of like working evenings and weekends and being like super extreme about it uh i definitely think this is kind of i guess the first point i had is that you're doing the right thing matters so much more than doing the thing if that makes sense like if you're like even on like micro decisions like if you're building the right features in the right way that matters a lot more than like building 100 features uh uh so like doing the right thing i think does require like you you know i have my best ideas when i'm not in front of a computer and i'm talking to people and uh or not even doing work related things like it's kind of like processing in the back of your mind so so yeah i think that's like another element of it but but yeah i just feel like sometimes people are kind of pretending to themselves like you know i talk to some people i'm like yeah are you really that engaged and i think like actually it's like a it's a form of stress like this feeling that you have to work all the time to be like succeed and i think that like like that kind of like stressful work where you're like really anxious and you're like you know i'm like trying to get things done and blah blah blah like i actually think you're not making the best decisions when you're like kind of stressing you know what i mean like is is it like like are your best decisions when you're like fairly calm and you're relaxed and you're like approaching things with a fresh mind or are they when you're like kind of like haven't slept properly and you're like stressed do you feel
Speaker 2that way about everybody inside your company or for you meaning like yeah can i take the counter can i take the counter position and just get your reaction to it like you have a 21 year old engineer dropped out of school joined your joined your startup maybe you're a smaller company yeah they have no experience so they're gonna make up for it through like horsepower yeah like do you feel that way
Speaker 1for them too you know i i try to not like tell people how to live their life like if someone wants to do it and they feel like they're most productive there and they you know they want to do the extra and they're getting something out of it go for it like i i mostly say these things from like this is my lived experience and i uh i would still say even for that person right like you know if they worked whatever if they didn't work on a sunday let's just say they're working saturday and sunday like would they be much less productive or would they even be more productive i would i would suppose that they'd be more productive yeah than working seven days a week so then you can kind of work it to the limit okay you know maybe they have more stamina than i do because i'm like 40 something so yeah maybe they're working work you know like there's five hours on saturday and like it's just as productive so so yeah you can definitely like say this doesn't this model doesn't fit everyone but i i guess i would also go back to say you know like i want to do this my whole life like i want to i basically like after i did my first startup i was like this is so much better than working for anyone i will do this for the rest of my life so like what is the most life-sustaining way of doing the startup and or you know whatever this 21 year old is doing and like yeah maybe you're at the age of 21 they should go date someone and like go do things in the evenings and weekends and like that's probably fine and and i don't know if that startup will get hurt that much by like that extra 10 percent of time that they're losing
Speaker 2yeah and you said you've like modulated it down to a reasonable amount of hours from what is reasonable in your mind
Speaker 1for me yeah uh yeah i normally work like nine to six five days a week yeah uh i mean like i'm still on slack i'm still outside that but but those are my coal working hours a friend of mine is
Speaker 2the uh is the ceo of zoom info henry shock have you met henry no he's great he's a great great guy i think he's a great ceo and one of the things that he was telling me recently was that he's basically taken all of his work dinners because you could be at a work dinner with a vc or customer or candidate all the time yeah and he's like i just don't do them anymore he's like i just there are coffees they could be four or five o'clock coffees that have like decaf or whatever they'd be lunches they'd be breakfasts but he's like i just don't do the dinners anymore yeah and and he's like that and that's what he and that's he changed yep and he has dinner with his daughter and his wife most nights and i've started to try and do more of that and i love it i'm like this is so nice like i don't have to do any of these dinners yeah yeah like i can just move the meeting yeah to whenever i think i should have yeah this is kind of where
Speaker 1i was touching on earlier i really feel like people should just do what they want to do like they should just stop listening to other people and just do what you want to do like if you want to work seven days a week whatever do that but like yeah i feel like a lot of startup world is like there's like people who say things on on twitter on podcasts uh and then other people like oh i don't know how to run a startup like i'm gonna go copy what this person is saying i should do um and yeah yeah if you're not enjoying the like i and actually like one thing that i think it is a low counter duty of us to is do things not that you just want to do but you enjoy doing like yeah if you enjoy having those dinners like i think some people probably like networking and they like like meeting those people and having those dinners then go do those dinners but if you don't like them just go go to a coffee you know like you just have to like make these decisions and like i don't think there's that many wrong decisions uh at least when it comes to like how you live your life uh i mean there's obviously like wrong localized i
Speaker 2think the probably the like larping of it is just like you're feel like you're being judged by people whether it's employees or vcs i mean
Speaker 1who's judging people i mean who cares yeah i guess uh yeah i don't like yeah no one's i i think i think this judgment is like probably self-judgment more than other people i don't think there's that many vcs like you think it's your own internal model yeah yeah exactly i think it all is it's like what you think you should be doing but yeah uh yeah at least my experience isn't like i mean vcs are like living a pretty relaxed life that's my experience of it so like well who are these people to judge you when they're like going on like a life of like you know like you know like six week vacations all the year or something like that uh yeah i don't i mean there are hard working vcs but hey i i think you should just do what you want to do and i mean there's like obviously like sometimes you'll have to work your ass off and that's just like part of being an entrepreneur uh but i think that
Speaker 2shouldn't be your default can i go to the next one yeah and we touched on this a bit but some non-obvious traits you need to be an entrepreneur unrealistically calm resilient and decisive under crisis conviction in your ideas regardless of popular opinion i think we covered the second one but i'd be curious on the unrealistically optimistic and the conviction in your ideas regardless
Speaker 1of popular opinion yeah um i think a lot of entrepreneurs are like unrealistically optimistic actually like if you think about this idea and actually i think about this quite a lot it's like you know you have this thing that's nothing right like it's an idea in your head and you have to like go all the way to like let's just say i guess it used to be called to be 100 million in revenue but whatever the like let's just say the promised land is now it's like a billion dollars in revenue or something right uh like it takes such like a crazy mindset to think that's possible right to go from like idea in your head that i'm gonna like go write some code go sell this thing go hire the people and like get to a billion dollars in revenue and actually it's like it is unrealistic like the percentage of startups that achieve it is like less than zero point one percent right but but you have to go out there and like believe it yourself firstly and you have to like project that belief to investors you have to project that belief to customers and then employees right like it's and you can't like not believe it like it's very hard i think i think it's a relatively unconvincing pitch when like the person doesn't really believe this is possible uh so that requires like an unrealistic optimism right it's to go like wow i'm gonna like no matter and then i think it's like you know you're gonna get a lot of no's you're gonna like a lot of like yeah you're gonna have to wake up every day and keep keep having that kind of optimism uh and yeah i think it i think it is not a given uh but i think it's a good way to live life personally like i like i like being optimistic i'm just like most of the time i'm like oh yeah it'll be good uh and it kind of simplifies things but yeah i think the startup world in specifically requires like a really extreme level of optimism to like win in on the third
Speaker 2point the conviction in your ideas regardless of popular opinion ali godzi was um talking about how this data i think it's called the data lake does that sound right i don't know whatever they call it it's like from the data warehouse to the lake house or something something like that he was like talking about how for three years everyone inside of the company at databricks was like this isn't gonna work it sounds like a ski like a like a like a boathouse you know like people are familiar with the conventional phrasing and he was like for three years i was like i forced people no matter what marketing whoever call it data lake yes and then he made it happen and then he made it happen and this point kind of reminded me of that that like struck me i was just like oh man like three years that's so long to like persist with the category creation yeah nomenclature i was like so like that's just so hardcore
Speaker 1yeah i think it actually also this kind of idea ties to like doing hard things and like if it's too obvious then either everyone would be doing it uh and it'll be like competed away um or it probably doesn't have value like it won't work so like you kind of have to start with like you know at least a somewhat contrarian thing like that most people have to believe this isn't gonna work which is also like ties to like you have to be unrealistically optimistic in this like thing that most people think will not work uh like that's just the and most of the time they're right as well right like most things don't work so uh so so you but you really have to have like a belief that like you know your vision for it can like uh but yeah i also you know i do uh empathize with him kind of you know even when your company gets a little bigger like there is like a yeah the default mechanism for most people is in opposition to change uh like i think entrepreneurs are like at least maybe not all of us but i'm a little weird like i quite like change like i like things changing uh i think that's kind of fun to have like change and dealing with change but i don't think most people like change and then once you have an organization around it uh that kind of coalesces to not wanting change in general um so actually we launched mercury personal in february uh and it's kind of like a mission to like get everyone on board with it because you know we're we're a business b2b company uh and it's generally b2b and there's so much to do on the b2b side right like uh but the problem with what i didn't want for mercury which i think most companies end up doing is like it's very hard to do new things uh because like like if you have a big thing that's at scale right like and i forget like one percent better doing mercury for business we're gonna make millions and millions of dollars and like it's relatively easy to come up with one percent improvements to mercury business right it gets like you know we we improve our go-to-market a little bit and like it's one percent better yeah one percent's not hard to get out of a machine um but you know to get a new product out from like zero to even one million in revenue to like it takes so much work right and and like and each of those bets is like kind of low probability uh so you have to like a ton of work to get a million dollars out of something or you get a one percent improvement out of your like your core thing uh but the yeah the problem with the one percent improvement of your core thing is like you kind of get to like a local maximum right like where you keep doing this one percent and then like eventually you get like extractive or whatever whereas like the new thing can potentially be that like next 10x thing right like you can get into a new exponential uh so you're part of like a you have to and i had to have like persistence to say like hey i really think mercury personal will work in spite of what in spite of people saying like hey why we like you know all my teams are like you know overburdened and we could be doing x and y like why are we doing like you know why we're hiring for mercury personal right like uh and and they're very logical like their their their their arguments are very reasonable uh so you know how i position internally and like i think we've built a good muscle around this is to say like hey it's a new bet and like i'm going to like we're actually going to think about it as an internal startup so we're willing to put four million dollars for a seed funding for this new bet internally and it's you know it's a separate team they're not going to distract from everything and we have four million dollars already kind of earmarked for it for the next whatever year and a half or something like that and if it proves that then you know it'll hopefully become a series a bet and we'll give it 20 million dollars and so on so i try to do that internally and that way it's not like you know no one else is like trying to steal engineers from them because i'm like hey you know we're going to do this and we're going to do this and we're going to do this and we're they've raised four million dollars like we're not touching their resources uh that's a good framing yeah uh but this is also what makes mercury fun for me because i'm like okay i have like these five you know it's not like i have a portfolio of startup bets within mercury uh that i had various stages like we you know we launched our credit card in 2022 and it took like you know now it's like a really scalable thing like we kind of think about it as part of our core core mandate but you know for the first two years it was kind of like struggling and like we had to kind of going like oh should we still be investing in that and like it's a competitive kind of space and all that uh but now it's like a core bet so you know the the vision with like all of these bets is like eventually they become like a core part of what we do uh but yeah so uh i guess coming back to the original thing like you do have to have to do anything new in any way even at even in your own company you have to have like a lot of kind of conviction that like you know regardless of what other people say that can work
Speaker 2every founder i have met will raise at market valuations and in frothy markets raise too much yeah i thought that was particularly timely yeah so i think
Speaker 1it's kind of funny because like vcs especially love saying this like they're like you know don't raise too high like and it's like i think it comes from a reasonable place but it's also obviously self-serving right like you want to you know if someone is on like two million revenue in their like a 200 million valuation like and you know if you're vc you're like actually you should raise at my 100 million valuation term sheet uh and here's like a set of reasons why you should etc uh i think that's all reasonable but the reality is you know when a founder goes out they go to the market right and like you go pitch like 10 people and two of them and like normally it's a good vc it's like good vcs give you like high term sheet high prices right like i don't at least my experience has been like actually good vcs tend to have like more conviction uh so you've got good vc with good good terms and then maybe also good vc with like worse terms you're just not going to take those worst terms like at least i haven't never seen a founder like go do that uh like maybe they take slightly worse term but they're not going to take 2x worse terms so so then it comes down to like in this market same thing in 2021 you know we had a i was making 12 million in revenue and we raised at a 1.6 billion valuation uh from koto uh which honestly was a little crazy uh but that was the market right it was 120 x uh and that's what everyone was doing so i think the i think instead of like going you know all these other people on excel was like oh raise less money blah blah blah like lower valuations i think it's better to say okay you know if you're gonna if you're gonna do it no matter what how should you handle it my mental model and like i would say we raised too much for our series a too much for our series b and then we were profitable so like actually we also raised too much for our seed so we raised six million for our seed uh 20 million for our a and 120 for our b and then we were profitable so like actually we also raised too much for our seed so 20 for the b uh so i i've tried to hold this mental model and think we've stuck to it it's just like just assume you raised how much you would raise in a down market so to me that was like my seed round was like a 3 million raise my series a was a 10 million raise and my series b was more like a 30 million raise so that's my mental model uh and i'm like wait sorry explain that again you but you didn't end up raising those amount no i raised the full amount yeah i'm just saying i in my mental model i was like this is how much we would have raised if the market was not so yes right so not like completely maybe we're but like if it wasn't like a frothy market like or like if i wasn't like good at raising i would raise less and then i i try to allocate my costs against that versus how much i actually raised uh so i will you know i will try to do and mostly like for us at least it's hiring you know for token companies probably slightly different but you know for us it's mostly like what does the hiring plan mean if i had raised you know half as much or whatever it was um and then i'll only unlock the rest of the money if i think i'm doing like you know if i have grown enough to justify like spending more money like if it's like you know i'm like so sure that like i've gone way beyond like what the next round would look like that i'm like okay you know now i can unlock the rest of the money uh so basically like i think it's fine to raise a lot of money just don't spend it but it does require discipline but i at least my observation has me like vcs are telling me to spend it really i think this is probably like separate point i don't know if you have in one of my tweets but like i don't my experience at least with mercury has been like you want vcs to be your partner if you're ever in a situation where vcs are telling you to do things you've kind of screwed up that relationship already uh and like it's you know i am telling vcs like hey what do you think like i'm thinking of doing this etc and i've you know they have opinions but i've never had any of that and i've never had any of that and i've never had any of that any of our vcs say like hey you know do this instead and i think you should go do this kind of thing it's been much more like okay that's reasonable like what have you thought about this etc like it's it's very collaborative and i think that's how vcs like to operate with the entrepreneurs i think this whole model of like vcs are telling me to spend money or like vcs are telling me to do x is like kind of a a flawed model that i don't think entrepreneurs should like
Speaker 2fall into and so i guess the counter argument let's take the vc point aside because obviously i agree it's self-serving yeah but the argument that they would make yeah which in some ways maybe hold some water in my mind is like you limit your paths for example okay let's just say like okay if you raise at 1.6 and the business didn't do as well as it has like obviously now that decision in hindsight looks great because you took less dilution and you've raised 3x that valuation yeah but if that wasn't true ma'am and you let's just say you raised it i don't know 800 million instead and you got acquired for a billion because it was you know it still made sense for an acquisition that'd be like one argument argument two is um the raising at an extremely high price puts in some ways especially in b2b like enterprise like in an ordinate amount of pressure where there is especially on go-to-market like headcount equals revenue and if you've signed up for this giant valuation you're probably signing up for a bigger number than you otherwise would have which maybe the market may or may not be able to sustain and now you start doing unnatural things i think it goes back
Speaker 1to my previous point that the founder's always going to take it so you so you just have to like manage around it right uh so to me the mna point i don't think it matters too much i mean like for most vcs whether they get 1.2 x or 1x which is like the preference stack is like basically the same so you know it's like you're basically in like some sort of failure scenario i'm not worried about the vc i'm saying more from the founder perspective even the founder it doesn't matter like it's yeah yeah like again if you're not spending the money then like actually you know generally speaking mna is like sets a price and then they add the money on top so if you've got more money in the bank you've got a higher valuation really um so i don't think mna is an issue i think down rounds are more of an issue and it is like quite hard to do down rounds in really frothy markets when the markets turn people actually i don't think at least my experience hasn't been their mind doing down rounds there was a bunch of down rounds for like actually pretty good companies in 23 uh and 24 and everyone was like okay you know everyone acknowledged 21 was crazy and that like it wasn't really a down round this was just like the right size round so i think it's manageable again if you're not spending all the money if you're spending all the money and you've like overspent money uh and you didn't come up with like any productive outcome from it like that's always going to be a problem um and that ties into my last thing like i think you need really good discipline on spending money so but nobody has that do you see like do you
Speaker 2like like don't you think you're you should i just feel like most founders you know
Speaker 1there's this statement increase
Speaker 2their burn
Speaker 1proportionally i there's a statement that like vc's like saying uh that like founders or ceos have to be good capital allocators and like this is just like a core part of that like how do you spend money and like let's just take sales and marketing or let's just take sales i think it's easier to do that right you just have to understand if if you hire five sales people how quickly will they pay back their salary right i think it's that's the math equation in my opinion and like you pick the right target and to me you know if you're if you have product market fit and it's a good target it should be around one year so if you are spending money and you're growing the sales team and they're keeping to that kind of one year and you're spending money and you're target you're like pretty good like it basically means you you know if you spend 10 million on sales you have 10 million more in revenue if you spend 50 million sales you have 50 million in arl whatever uh which i think is a pretty good math equation and like you'll have i would be shocked if you can't raise a future around if you if that's your math equation now what happens in these frothy markets is people like go way too have in sales and marketing their payback ends up being three years or five years and no one's going to fund something with like a three to five on on spend uh or like you know whatever some some negative thing happens there but like you just have to have like some discipline about it it's not like you know if you have like zero sales people you don't hire 50 sales people you hire two people and then you hire five and then you like make sure you're managing against that payback um but yeah it's not and again if you went to any investor and any board meeting and you're like hey this is how we're thinking about sales this is the payback we're targeting this is how we're going to ramp up and we're going to measure the payback every month and we're going to report that to you you know one's going to be like are you crazy why aren't you spending all this money like yeah i just don't understand the situation where like someone's just like i raise more therefore i burn more like i don't know like what are they doing like that's not the job like the job is like going like every dollar you spend you should be getting roi from it uh and if you can't justify all right don't spend the money uh yeah i just i think like whether you raise more or less you're gonna have to have a math equation that makes sense like like you know whether it's sales performance marketing partnerships whatever on the gtm side you're gonna have to have a math equation that makes sense uh and then on the engineering side i think we've proven over time that more engineers does not mean more productivity right like i think that's ai helps even more with that but but yeah it's i don't think it's ever been the case that like you know 10x more engineers means 10x more productivity
Speaker 2what was your maybe can you do a year by year roughly headcount from founding to year one
Speaker 1year two we had like one year it was 3x but most of the time it's been about 40 more so it's like you know we started with eight we launched with nine employees actually in 2019 and then when covid happened we were about 30 ish so a year from 9 to 30 9 to 30 i want to say like maybe 60 and then 140 that was like a big year like 2021 we also grew more than 4x and then after that i think it was about 40 percent every year we're about 1 300 now we actually found And that year where we went like 3x or 4x was like, of the worst years in terms of like just like a very painful year in terms of scaling uh and actually like you know when you grow that fast you don't actually get much more productive because like you all your good people are like spending all the time on engineering hiring or or training and and you know obviously you make some mishires and that kind of stuff so uh but 40 is like what we've grown at fairly consistently i think for the last three four years um and that's a fairly sustainable pace of like headcount growth at least yeah that feels good to you yeah when founders come
Speaker 2to you like you said you've done 300 plus investments and all your friends are founders and you spend a lot of time with people in the in the trenches what are they generally worried about struggling with what are the things that you're like yeah that they want to pick your brain
Speaker 1on i mean right now i mean you know for founders it's often about money you know for founders it's often about money you know for founders it's often about money right like it's like you're running out of money and you're thinking about that uh there's definitely i would say there's this kind of really strong separation of haves and have-nots in the in the market for the last year or so uh where you know if you're if you fit in the ai thesis uh you know i guess anything to do with foundation lab or data company or uh like you know some of these kind of zero to five million in three months kind of uh uh ai companies it's like super easy and like it's much more this kind of conversation of like am i raising too much money and like who do i raise from and all that kind of stuff but then there's everyone else which is actually like a pretty large set of people and like it's just people you don't hear about yeah i mean they're not like hot companies but but many of them are like pretty reasonable i mean they're all like at this point like everything is like somewhat ai native but like that's just not by itself sufficient i think there's like there's thesis and like you know this ai wave is moving so quickly like you could be you know you could be like you could be like you could be like you could you could be on thesis like six months ago and like now you're not cool anymore and you know they still get it done but it's much harder to get brands done there like you have to you used to be you could get a series a done with one million in revenue if you're going three x a year that was like kind of the rough benchmark and most of the time it was doable uh now that's not good enough if you're not like if you're on yeah if you're on brand on thesis and hot yeah you could have zero revenue and get a series a done but i think like at least one what i'm seeing is like if you're not in one of those things you need like the same three x growth but probably three million a year in revenue uh to get like a reasonable series a done so so yeah often conversations like that um yeah there's definitely like there's a lot of like ai kind of anxiousness right now like almost at every level like there's like you know the companies that think they'll get disrupted by ai uh there's companies that are like even hot ai companies going like oh my god it's so competitive and like you know it's androgynous and it's like philanthropic and open ai gonna copy me like there's just like this insane kind of i've never felt like the level of like kind of almost everyone in the in the business is like really anxious have you noticed that it's like there's no one is calm and like going like okay you know i'm like having a normal day and i'm like having a good time or whatever so it's a it's a really interesting time like every like it should be like a really fun exciting time and like you know in silicon valley was like you know 2016 2019 was pretty boring i don't know if you were here but yeah everyone was doing kind of b2b sass and there was like these formulas and it was kind of you know there's just so only so many like b2b sales sass companies i could like hear pitches from uh but now it's like a really fun time like people are doing like really transformative things with like ai and defense tech and all this stuff but it's also like a really anxious time because it's like no one knows what the what the ground will be and what will be required in the future because i remember like even a year ago i was feeling like some of this like you know we were doing really well and we've been profitable but there was definitely like a like you know oh my god like what does all of this mean uh and actually this year and especially in the last few months i feel like much better about that and uh and part of it was like we you know we launched our own kind of ai product uh mercury command uh and but we came up with this like idea of like where do we fit in the in the future which like i don't you know i mean i don't know i don't know i don't i think banks will probably exist even in you know in any kind of uh future super ai built world but but i still wanted to have like a really good answer to like you know what does that mean for mercury like what would be what would make me feel like 10 years from now like we would be the best uh bank people should use um and you know for me the answer was like you know most entrepreneurs don't like dealing with kind of finance and operational in hr things and actually like one of the nice things about having a bigger company is i don't have to deal with it either right like we know you know when i interview someone i'm like yeah someone send them a job offer and like this is roughly what we should pay them etc but i don't i'd have to do the next part right like sending them a job offer getting them to sign it getting you know getting them set up on i on our payroll system and benefits and all this kind of stuff uh so yeah that's kind of what i've thought about is our ai vision to like really make it so anyone can have like finance ops and hr ops in their pocket uh and because mercury does a bunch of these things already and we're going to add more of those uh we have a kind of a nice path to that and uh but that's definitely made me feel like you know because i feel like we have a good path of how we fit in the future it's made me less like kind of worried about like where do we fit in the future uh i know if this is like a formula other
Speaker 2people can do though is there a job that you or role that you felt like you waited too long to hire i mean almost all of them well with if with 2020 hindsight
Speaker 1yeah if you knew you're gonna grow no i actually think it's i have a slightly funny answer i think it's good to wait too long for the following reasons number one i think you should try to do the job yourself even if it's like something you don't really understand very well uh just to know what you really need for it uh i think it's it's easy to like think you know what you need for something and then you go someone and you're like yeah how will you know if that person's doing a good job if you don't you haven't at least failed at doing their job so that's one thing and then number two to go back to this other point about like not spending too much money i think one of the good ways of spending too much money is to go hire for a bunch of things that you think you want uh and i can give you a little rant about hiring uh execs too early in a second but but i think generally speaking like try to do the job yourself and wait until it's painful to and then hire is like a good general methodology uh but places where we did this like you know we didn't hire our first finance team person like literally our first finance team person like no cfo no nothing like that until we're about 200 people and that was a little too long we probably should have hired around 80 because it was quite useful uh but you know i i could get my way around spreadsheets and things like that so i was like do we really need a finance person and we had an accountant and all that kind of stuff but no one internal um but yeah that was too long i mean what other roles have we waited too long for um one thing that we did really well actually i think about the right time was hiring a recruiter and i think people wait too long for this one generally we hired our first recruiter when we raised about 20 people and we'd raise 20 million dollars i think generally speaking if you're hiring if you're looking to hire more than three person three people per month you should have internal recruiter and like the quality and speed and like almost every element of our hiring process improved a ton after we hired our first recruiter uh but yeah that one we did well um what else has been good oh actually this is a generally funny one so i was really against hiring pms uh we didn't we didn't really really hire our first pm until we were like 120 people or something like that uh so i think generally speaking when you're really small sub let's say sub 30 people the founder should be the pms uh and the engineer should be like whoever else you have should be a pm i think like you want to keep everyone like really close to the product and and the founder should be like the primary product owner uh there's just a certain point where like you know you have enough teams and they need to coordinate with each other and like they need to like keep moving and the founder can't like touch all of them enough that like that's when you need a pm and we ended up like yeah we were like a little bit like religious about not wanting pms for for too long and then it took us a really long time to get a world-class like product team which i think we have now what's your rant on execs around on execs oh my god so all right you're not an exec if you're managing less than 30 people at a small company right like so i think all of the probably you should almost never have titles but that's kind of tricky but i think in general what you you don't want to hire someone who thinks of themselves as an exec and is really excited about being an exec at a company that's like a startup uh like at some point you need real execs like you know if you have a 50 plus person engineering team or whatever or sales team etc like you need execs at some point before that point you hire people that are like you can give them a head-off title if they and like don't go through exec recruiting like you know you want like early managers like early ic types to to be in those like small startup environments like you know they're used to doing zero to one like they're Execs at bigger companies have infrastructure that supports them. And it's just a very different thing like they're managing managers right like it's just a different mindset they're not you know most execs have never had to like do something from scratch and it's just like so different like uh like one of the earliest ones that most people hire is like a vp of sales right uh but like doing a sales system from zero to one it's just a completely different skill set than like i have you know i joined a big sales team and i like iterated their process and like they already had product market fit etc uh so yeah generally speaking i'm like you know i often talk to small startups they're like oh yeah i need i'm hiring an exec for x and i'm like well you know what's your actual problem like i'm like at the end of i'm like i don't think like exec is going to solve that problem
Speaker 2i agree with that i agree with that are things keeping you up right now like what are the things that keep you up uh i mean i'm a big
Speaker 1believer in like getting uh not too much um i think the thing that i i always worry about and it requires like a lot of like continuous effort is you know as a company scales uh like yeah there's a general kind of entropic force to becoming like kind of lame over time right like and on like almost every dimension it's like you know you're willing to hire worse people or like uh you are uh you're willing to be okay with worse customer experiences because you're optimizing for something else or uh yeah the culture kind of degrades over time uh or like you innovate less right like like almost everything about like what makes a startup like why do startups outcompete big companies it's because big companies have like these kind of natural things that kind of make them crappy over time um and i think that's especially hard of in like a regulated industry where you know we're getting a bank charter right now and like the you know the default path is definitely like you know you take a bunch of things that banks do and you copy paste them into like a fintech right uh whereas like you know how i think about it is like yes you know almost everything that like regulations and regulators and like all uh the guides and things like that they make sense right like it's like yes like we will we will be in a very entrusted position to like hold customer funds and you know like the set of rules make sense but you really have to go like okay you know how do you implement these in a way that you don't forsake your kind of culture uh and you still stay innovative and you still stay customer aligned and you still hire great people and all that stuff and i think it's very doable and like that's that's kind of like the hard challenge for us to do if we can you know figure it out and we actually uh yeah the the two parts that we don't figure out and we end up being a lame bank like every other bank or we figure out and we become like a really interesting company that's like innovative and a fintech and all those things and we're not going to be a lame bank like every other that has a bank charter um and i think the second is you know going to be better for the world and our customers and and people that work in mercury but it requires like a lot of effort it's not like a you know it's not like the default process isn't that if
Speaker 2you're growing about 40 percent a headcount a year what percentage are you churning
Speaker 1out oh that's like net uh like net uh attrition in general has been pretty low uh 10 ish percent and then what about that you're managing out of the business yourself so that's like total attrition is 10 ish percent i think i'm going like by rough last year numbers i want to say like six percent were managed out and four percent left okay that's very low attrition partly because we've like grown every year quite a bit so uh but also because we we try to hire people that think a little bit more long term like i i've yeah i have a hard time imagining how you build a company where like everyone's leaving after two years and then you're like three years which is like actually the default in silicon valley and with execs okay like a lot of my exec recruiting is around like making sure like you know obviously we make mistakes but like my default is to make sure like people are excited about sticking around for like five plus
Speaker 2years fascinating i appreciate you doing this yeah this was fun this is so fun yeah you kind
Speaker 1of fire straight into it i thought we were like still just sitting down no no no i just i just let
Speaker 2it rip yeah um are you hiring yeah i'm just i'm just like i'm just like i'm just like i'm just like yeah we're always hiring
Speaker 1uh any roles in specific yeah tons of roles let's see i'm i'm currently the acting cto so um yeah that's uh that's the role i'm hiring for so that's the thing yeah yeah if you've previously managed like a 400 plus engineering company and you're like you know excited about mercury uh definitely relevant uh we're hiring a ton of roles around kind of this ai agent that we're building um so yeah especially like founder type people who've kind of done it for uh and then yeah i know almost every every role in mercury we're hiring for so would be anyone listening uh check it out mercury.com for such
Speaker 2jobs and i i ask everybody the same question when you hear the word grit what do you think of i feel like you kind of answered that yeah i feel like
Speaker 1i answered it uh but yeah i like perseverance as a word i think it's like just just sticking with it no matter what kind of
Speaker 2thing man thank you for doing this yeah so fun thanks for having me that's it for now if you like the episode please leave us a review or go back into the archives where we've done more than 200 episodes with some fantastic folks this podcast is a client of perkins production and i'm juven thanks for listening
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