Latest / Success Story with Scott Clary / Gilad Uziely - Serial Entrepreneur & Startup Advisor | The Brutal Truth About Why 90% of Startups Fail

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Gilad Uziely - Serial Entrepreneur & Startup Advisor | The Brutal Truth About Why 90% of Startups Fail · Success Story with Scott Clary

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I just don't have the motivation working for someone else. I can't find the drive to do it and to do it well.
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And if I don't do it well, I prefer not to do it. When you have an ideal, and then you start building, you slowly, slowly,
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sometimes quickly, falling in love with what you are building, instead of falling in love with the
0:13
object. You're moving away from the tooth, which is the only important thing that you need to chase
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as a founder, and this is the most dangerous thing that can happen.
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Elad Uzieli, he left Jerusalem with a suitcase full of ideas, built a travel startup in Italy,
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ran the innovation lab for one of the world's fastest growing tech hubs, and then he went broke,
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burned through years of savings, all to chase one problem. Why does solo entrepreneur struggle
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to control their own money? That obsession led to sequence of financial operating system for
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creators, freelancers, and anyone with more than one bank account. It sounds simple, but what they're
0:42
building, it could rewrite the rules of money management, and what he shares in this episode might
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just change how you manage your money forever. If you're focused on the right matrix, opinions
0:51
doesn't play part anymore. You need to know what you're tracking, you need to know how success
0:55
looks like, you don't have to know it from day zero. Sometimes it takes time. I have all my life
0:59
tried to build communities, and my take is that community product fit is much harder than
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product market fit. And if you have a community, and you see like your early signs of community being
1:08
created, you have to do whatever you can in order to cultivate. And that's what we've done,
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very successful. The most important resource that we have obviously is our time. You have a limited
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time here. Make sure that you're putting your efforts and your energy in a place that makes sense.
1:31
Good lad. I'm very excited to chat. This is going to be a really honest and brutal startup
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story, and I just want to frame it for the listeners. So we're going to be mostly speaking about
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sequence today, but your last company lands. So you raised eight million. You grew to 30,000
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users. You realized you were essentially lighting money on fire with every customer due to fraud.
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And instead of sugarcoating it, you spoke to your investors, and there's a story that are
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really important story for entrepreneurs. So explain to me the good and the bad of entrepreneurship,
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because I think we speak about the good too often, but you've experienced some not so great experiences.
2:14
Yeah, I mean, everybody celebrates, you know, the huge success, the massive acts, it's the IPOs,
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and somebody like, you know, just watching from the sidelines, it seems like everything is smooth.
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But the truth is that it's a mess. For all people that I know, and I assume most
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entrepreneurs, there's a lot of pain involving all along the journey.
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Sometimes as founders, we sometimes founders are very lonely, and shit hits the fan, you know.
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And when the shit hits the fan, you know, you are left many times alone and just trying to figure
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stuff out. You have employees, you have partners and co-founders, you have investors, you have
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clients, people are actually using something that maybe you've built. So it's a very hard place to be.
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I think that we over glorify entrepreneurship, and we make it seem like it's all fun and all good,
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and it's hard work, but I don't think we really dive into what happens if it goes wrong. And also
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to your point, it's very lonely. So if it does go wrong, which everybody who I know who's built
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something significant, there's been a point where it's gone very wrong, how do you deal with it,
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because a lot of people don't understand what you're going through. So let's even back up,
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because I want to understand why you chose to be an entrepreneur. What kind of delusion made you
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want to go build something? Because that's also interesting, and I don't believe that 99% of people on
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this planet should be entrepreneurs, because it does take a certain way of thinking, and it takes
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somebody who maybe is a little bit delusional. But back me way up, was Lance your first company ever?
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No, no, no, I'm almost 45 now, and I had like a W2 for maybe two years of my life. I've always
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built stuff, and not necessarily startups. I've started actually my first steps as an entrepreneur,
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as an adult, as an adult, where we've built a two operator, we've dealt with tourism, we've done
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a few cool stuff there. But I just, to be honest, I don't have the motivation working for someone
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else. I can't find the drive to do it and to do it well, and if I don't do it well, I prefer
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not to do it. So this startup story with Lance, so Lance wasn't your first company, it wasn't your
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last excuse me, I mean like now you're building sequence. But with Lance, what was the thing that
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went wrong? I think this is like a great lesson for people. Well a few things went wrong, but I
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think that the core problem with Lance was the fact that we've made a few core assumptions that
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were just wrong. So the basis of the business were not built for success. And in our specific case,
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what we've done with we've tried to build a finance company or a financial company using embedded
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finance tools. And what happens is when I say embedded finance tools, so banking is a service,
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so you're not actually the bank, but you're acting as a bank. And so if you started really early
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or have a lot of resources, so companies like China, they did obviously very well. But for
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somebody who came in the second, third or even fourth round of near banking, the unit economy
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just never ended up. Because you can't operate like a bank, you can't land against your balance sheet
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and you can't really make money like banks. And on the other side, you get all the downside of
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fraud, chargebacks, disputes, and by far the biggest problem for us was fraud. So at a certain point
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in time, we've just looked at the numbers and we've understood that with every customer that you
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bring on, you're basically shortening the life of your company. Because what happened is you
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would get like a cohort, like a past cohort, and you thought that your personal acquisition cost was
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like $100 or whatever. And then as time goes by, you start to understand that 20, 30, 40 percent
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of those customers are accounts that you actually have to close. So the crack is not 100 anymore,
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it goes up. And sometimes for certain costs, it even doubled itself. So you're sitting here,
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crack is growing up, the baby period or the TRY keeps getting longer and longer. And you basically
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understand the trajectory that you're diving to off a cliff, basically. So this is something that
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makes sense to me. But for somebody who's first starting out, this is a little bit scary. Because
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I think the lesson here is that it doesn't matter how many times you do this. It's not like the
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next time is guaranteed success. And I think that sometimes, I think that sometimes investors even
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think that we can talk about that as well. That's sort of the other side of entrepreneurship. They
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always bet on people that have had past successes or serial entrepreneurs as opposed to the first
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time entrepreneur. Because they think, well, if they've done it before, then they can do it again.
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But explain to me, how does a serial entrepreneur who's done this many times, how do you get some
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of these core business assumptions wrong? Like what was the blinder that stopped you from seeing this
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when you started last? Well, I think that, you know, when you when you have an idea and you start
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building, you slowly, slowly, sometimes quickly falling in love with what you are building. Instead of
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falling in love with the problem, right? You've been something, you, and you start telling yourself
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stories, you start, you start basically lying to yourself, right? You say, if only we've built this,
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and this is the only thing that is missing and something maybe one parameter looks really good
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because we go fast. We've opened a lot of accounts, like we are like tens of thousands of accounts.
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And so you say, this is working and then you start to ignore the bad stuff and you start lying
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to yourself. And I mean, like it's like your baby, right? And everyone sees that he's baby,
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it's like the most beautiful and perfect thing in the world. But there are babies that are
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not perfect, right? And then you start lying to yourself, you're moving away from the truth,
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which is the only important thing that you need to chase as a as a as a founder. And it's
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something very natural, right? It's like it's a difference mechanism that we all have. And this
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is the most dangerous thing that can happen. It can happen to anyone. We'll talk about how you're
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navigated because this, I mean, this is something that you have to deal with. You raise investors,
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but how do you how do you remove yourself and remove your emotion and ego and attachment to the
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company so that you can make objectively good decisions? And it's what's what's difficult about
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Lance is because you had like unit economics and economic issues and fraud. It's not about like a
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pivot sometimes. I think it's a Kevin O'Leary line, right? Where you have to take it out behind
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the barn and shoot it. And I think that that's a very difficult thing for entrepreneurs to do,
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especially when they've raised money. So how do you how did you in Lance sort of say, okay,
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this is really not working. I need to find a way to have really hard conversations and kill this
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business. What was the thing that woke you up? Just the numbers, just the numbers. If you're
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focused on the right metrics, it doesn't it that opinions doesn't play play part anymore.
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All right, you need to know what you are tracking. You need to know what you're measuring.
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You need to know how success looks like and sometimes it will take a little bit longer and sometimes
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you and you just need to see that you are you don't have to you don't have to net from day zero,
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right? It's sometimes it takes time. Usually it takes time, but you need to see that you are tracking
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towards what the important things. And with with Lance the problem that we should we should have
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killed it a year before we before we have that's the truth. Was there, I mean, just curious,
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I mean, like hindsight's 2020, but technically, do you think that if you would found a way to
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mitigate the fraud and explain to me like what fraud is in like the banking sense for people that
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are listening like what fraud is not, fraud is not like somebody on your team committing fraud,
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fraud is like the customers are committing fraud. But was there, if you didn't found a way to
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mitigate that, what would it have been a successful business model or is that just a hypothetical,
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there's no point in even figuring that piece out. So that's first of all figuring that out would
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have been huge and could have created a huge company that has nothing to do with with a neo bank
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because fraud is a problem across the board. So to your first question, the fraud came from customers
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not from employees at all. And it was anything you can imagine anything from money laundering
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to people, you know, copying up the account that we spent going to Vegas for a crazy weekend
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and calling on Monday saying that the car was stolen, my wallet was stolen, it wasn't me.
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So even if you can prove that it was them, you still have to pay like heavy fees to resign
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and the other providers. People that are just using your platform to get like a like like
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referral fees and stuff like that, which is not actually fraud, but that's not why you've built
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the product and they'll just be customers like you can't make money off those kinds of
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customers. So it was a costable, we were called to the sheriff's office in New York and like
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all anything from like crazy money laundering chains to just like people like to, you know,
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to steal 5K or something. Okay, so it's not working. You raised the money for this company. So you
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raised, did you raise 8 million or how much would you raise for this? The standard rate median,
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yeah. You raise 8 million. Okay, so then what happens when you realize that the company's not working?
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So to be honest, it's very stressful. Like we remember me, my co-founder was going into a room and
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saying like we don't know, we don't know how to save this. We have obviously fiduciary
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responsibility to our investors and we understood that with every new client, we are basically,
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you know, like it's, you know, it's like we had to stop and it wasn't, it wasn't responsible
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of our side to continue. And we said, okay, first let's stop bringing on new customers. We still
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had thousands of people using the product. So it's like, you know, it's a banking app. You can't,
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you can't just close at one day, right? And so we continued supporting them. We off-boarded them
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and sold the customers that were, you know, that other companies were interested in and went back
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and then we said, okay, what are we doing now? Like we either give money back to other investors
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or we think of a pivot. At this point, I'm not, I'm still not talking to my, to my investors,
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it was like, you know, it was, it was a few days later. You're just having a conversation with
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your co-founder thinking like, what the hell are we doing? Yes, yes. We understood that we had to
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stop and so to not to stop onboarding new customers and we did that. And then we went into a room
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and said, okay, what can we do here? We either close or we pivot. And we decided to try and pivot
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to save the company. That was the, that's what we wanted to do. And when we started, you know,
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like flying ideas around, but then after like a few days we said, okay, guys, we've just proved
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that our ideas are not that great. That's what it was just proven. And so we said instead of
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thinking about ideas, let's think about core principles that will guide our pivot. And it came
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down to two things really. One, we were all over 40 and we want to make sure that we are investing
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the next 10, 15, even 20 years of our life in something meaningful with chances of succeeding.
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And for that, we wanted to get to conviction. So the first important thing was get to high,
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high, high conviction. That was the first thing. And the second thing was that after trying to build a
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bank and competing with Bank of America, Chase, you know, all those like huge players, we said no
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more red oceans. We are looking for a place for a blue ocean, low, low competition. Because for,
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like, and that's, and that's very, very important. And that's when we started working with a
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framework that I actually really like because it's very simple. And it's like, you need to look for
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stuff that are non-consensus and right. And basically, it's very simple. Like consensus,
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non-consensus, right and wrong. If you are wrong, you are wrong. Nothing you can do about it.
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If you are right and consensus, that lands, right? Everyone that I talk to told me, yes, of course,
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freelancers and the self-employed needs a better banking experience. But there you meet the banks
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of America, right? There also, there's a bank, right? And when you find something that is
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non-consensus right, that's when you have like a vision into the future, right? That's where you can
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build something that is truly unique. And it's very hard because then when you go to talk to people,
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many will tell you, dude, I don't understand what you're even talking about. Why would anyone use
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that? It's, you are stupid, basically. Explain to me because you spoke about sort of first
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principles thinking, but you also spoke about non-consensus, but correct. So how can you figure out
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which first principles apply to a non-consensus, but correct idea? Because this is what you've really
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done with sequence. So we've used that framework to hit what was important for us and that's a blue
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ocean. That's how we looked at it. And then to find the non-consensus and right idea,
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my best suggestion is be lucky. That's the most important thing.
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If you think about the most important narrative or principle that you had to change when you
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started Lance, I mean, there's probably many, but what was the main one that allowed sequence
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to be successful when Lance wasn't? And you've danced around it with, again, non-consensus,
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but still correct, but there was one main idea that you would have had to have changed.
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I think that a few things. I think that first and maybe the most important one is that
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we've really shifted from talking to our customers or our potential customers to listening to them.
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And there's a huge difference there, right? So before actually starting Lance, if we were not
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just talking to customers, but also listening to them, we maybe have built sequence four years ago.
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Because before Lance, we've built a bunch of tools for freelancers and self-employed to just see
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all the money and the tax status and everything. And they told us, wow, this is great. I love this
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dashboard. And that was like a kind of like a mint experience or monochrome experience. And they said,
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I really like it. I want to touch the screen and move money around. And then if we were smart
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back then, or we were just actually like digging in and understanding what those people want,
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maybe we would have built sequence again and not Lance. But then we said, okay, they want to move
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the money. We need to be a bank. And there's a very famous saying by Bill Gates who said,
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the world doesn't need more banks. It needs better banking. So listen to Bill Gates,
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that's another tip. He knows what he's talking about. So dealing with investors is not easy.
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I know that you had how many investors total? Because you raised 8 million, but it wasn't from
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just a small group. There was 83 total investors. Yeah, we had to collect 83 signatures from anyone
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employees, accelerate those in programs we went through. And then everyone who ever wrote a check
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into sequence. And we've raised a bunch of money for my friends and families of small checks.
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Those guys were never the problem. So it sounds like it kind of sounds like to be honest,
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like start up hell, like going through because this is so now, okay, so just to frame it for people,
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if Lance isn't working, you have hard conversation with your co-founder. Okay, we got to go in a
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different direction. You got to get 83 signatures. It took you eight months to get 83 signatures.
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I know that there was some people that were problems or at least they gave you a hard time.
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So during that time, I mean, you're stressed out. I don't think that you're really,
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you're not making a ton of money yourself personally. And life still goes on as well. So you
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have to figure out what you're going to do in terms of like, you know, I don't know your whole
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financial situation. But when this is happening, you're not drawing massive salaries while you're
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telling your investors that there's a chance that they've lost their money and you have to renegotiate
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exactly what you're going to build. So talk to me about this restructure because dealing with investors,
19:05
I even sometimes recommend that if founders, there's reasons for raising money and there's reasons
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for not raising money. Obviously, if you want to grow fast, you can raise equity. You can also
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raise debt doesn't have to be equity in different ways to raise money. But what you went through
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is probably one of the most difficult things somebody would ever have to go through if they are raising
19:24
money outside of literally just telling your investors, I'm sorry, we've, you know, we've lit your
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money on fire. You're not getting it back. So you have this, but so tell the story. You've had
19:33
this conversation with your co-founder. What's the next step? We went into it. If I didn't know what
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I was working into, I didn't know how painful it's going to be. And what we did was we were in
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the room and said, okay, let's save the company. Like we still think that we have something that we
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can do. Let's let's try. And with the two, the core principles of pivoting, we went and started
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talking to lenses good users. And we asked them, guys, what are you doing here? And it was very,
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like, I don't want to say unanimous, but it was very common for them to tell us, I really love this
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mini-zappier experience for my money. I wish I could connect my, and then everybody like my husband
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account, my wife account, my business partner, my 401k, my student loan, my credit cards, my mortgage.
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So they wanted like a bunch of stuff. And then all my co-founder and the CEO came back and said like
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yeah, I think that what these guys are actually looking for is actually a router for their money.
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They need a better way to route their money between all those different accounts. And then we start
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with okay, that's interesting. But again, we just took a massive beating. So we wanted to optimize
20:42
for conviction. And so then we went and started talking to people who never heard about lens,
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not necessarily freelancers, anyone who was willing to talk to us. And we carried them and said,
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hey, we're going to build this router for money. It's an example for money. And then out of every 10
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people that we talked to, six, seven would go like you guys are idiots. I don't understand what
21:02
you're even talking about. And three four would go where have you been all my life? Look at what I've
21:06
built. Check out my excel sheet. You know, so it was this is this is non-consensus right or
21:11
wrong. We don't know yet. But it was definitely non-consensus and very confusing, right? And you don't
21:17
know what to think. And then we said, okay, optimizing for conviction. Let's be brave. Let's build a
21:22
landing page and let's charge and let's charge a relatively high amount for just for the concept.
21:28
And we've built a bunch of landing pages. And we've built actually one landing page and a bunch of
21:33
ads. And just describing the product, we call it money route money, which is like a shitty name.
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And we told people, if you want to get a lifetime access for this product, pay $200 today.
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And I told my co funders, you guys are crazy. Nobody's going to give you that that amount of money.
21:51
So, but we launched that. And I was extremely happy to be wrong because in five days,
22:00
100 people paid the $200 for the lifetime access. For you know, we didn't have the product,
22:05
obviously. And started talking about it all over the internet. So they opened the Discord server
22:09
for us. They started talking about it on Reddit. And people came knocking on the door. And then we
22:15
said, OK, like the $200 is off the table. This offer is off the table. But if I still remember exactly
22:22
the wording, we told them, if you want, you can lock in a discounted subscription for life. And we
22:28
actually had people paying subscription for a product that not only wasn't ready, we haven't even
22:33
started building. And that's conviction, right? And then with that, we've only started creating
22:40
like a waiting list. So it like, we had like a very, very initial traction. And we've actually like
22:45
already like, you know, got like around 20 K or even more before even writing one line of code.
22:52
And this is very rare. Many people can say that that's what they want to do. But they actually do
22:57
it. It's much harder. And you know, it's like, it's like a lean startup 101. But it's much easier said
23:03
than done. And in this stage, I went back to to to lenses investors. We had like around I think
23:10
two million dollars in the in the bank. And I told them there's something here. There's something here.
23:17
Let's give us some more money. At this stage, we've done one price round and two saves one on top
23:25
of the other, which is also a huge mistake. We can, we can, you know, talk about it if you want.
23:30
And and it was just, it was like 2022 when nobody was doing anything. It was just after Covid. It was
23:36
the shitiest market. And all my investors told me we are not investing. And so I went and started
23:44
pitching to everyone who was willing to talk to me. Anyone from this is to angels to who, like,
23:50
anyone. And I've pitched an account that I think it's around 160 investors, which is crazy.
23:56
It's not it's not a small thing to do, but I was like, you know, I had nothing, nothing else to do.
24:02
Most of them told me now, some of them took the time to explain to me why what I'm building doesn't
24:08
make sense. A few looked at it seriously, but then saw the cap table and like, well, I'm not
24:15
touching this. It's too much. And when I got two term sheets. And when you're building something
24:22
that is non-consensus site or non-consensus list, it's very, it's how to find investors. Because
24:28
all of them, like, most investors with, like, we are, we are investing in the outliers. We are
24:32
looking for something different, but actually very few do that. And I was lucky to get term sheets
24:38
from Alev, which is one of the top Israeli vices and emerged, which is another, like, awesome,
24:42
great VC. And they, they eventually, Alev led around and emerged, participated and they did
24:50
around. But before the round happened, there was seven to eight months of restructuring. Because the
24:55
term sheet, the term sheet, which was, you know, at the end, a good thing. But again, I was, I had no
25:00
idea what I was walking into. And they required us to collect 95% of the signatures in order to
25:08
start a new company, to buy assets from the old company for equity in the new company.
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terms and conditions apply if you're hiring. Indeed is all you need. What would be the advice
27:19
that you tell a founder who's going through something similar right now? Like, how did you?
27:25
Okay, so this is obviously on the on the on the very opposite end of the spectrum. But I know
27:31
founders that go through really bad business situations and something like, I mean, there's
27:34
been stories of founders like committing suicide and like just very, very depressed or
27:40
you know, getting sick or destroying the relationships or like a variety of different things because
27:46
of business stress. So what's the advice on how to navigate something like this and keep your
27:51
head and keep your relationships and keep your health? So now I'm going to do as I say not as I do
27:59
because I did a pretty like lousy job in managing my own mental health at that point.
28:08
When I think that if I had someone that I could talk to, either professional or maybe like
28:14
sometimes the people understand you the most are founders that are like two or three steps ahead
28:18
of you in the journey. So I have this net and so now I'm even like building it even further and
28:26
deeper. But my personal feeling, I'm not sure how really it was right, but that was my feeling.
28:34
I felt alone and you know, I have an amazing wife and a lot of friends and I have great team and
28:41
co-founders. But I think that they put myself in a situation in which I could have done a better
28:48
job. I didn't take care of myself and I'm still and I'm still still paying the price even though
28:54
it finished like 18 months ago. And by the way, if somebody is going through this kind of pay-to-play
29:04
restructuring, I'm happy to talk to people who are going through that. And this is the kind of
29:10
difficulty that I felt. I'm happy to share my experience. So if somebody like people can feel
29:16
free to, you know, we can leave my email. Yeah, I appreciate it because I think that these are
29:21
so tough conversations, you know, it's so cliche, but it's very true. Like everything you want is
29:26
on the other side of a tough conversation. And these are all, these are all pretty standard
29:31
motivational ideas. And if you listen to enough podcasts or read enough books, you're going to hear
29:36
these. But when you're actually going through it, it doesn't matter what you know or what you've read
29:41
or what you've heard or even what you've been advised to do by your friend or your peer or your mentor.
29:46
It's just very difficult. Like sometimes it's just and you have to you have to build the courage
29:51
to have difficult conversations. Now you were somewhat forced to, but I think that you know,
29:58
even to your point, you probably could have had these conversations earlier. And it probably would
30:02
have made things a little bit easier. You probably could have had a tough conversation with your
30:06
co-founder. And I'm just making assumptions. But you probably could have tough conversations with
30:09
the co-founder, which would have led to tough conversations with your investors. Even earlier,
30:14
which would have ironically made it a little bit easier. But the longer you
30:17
dried out, the more difficult it's going to get. Yeah, I think this is a good advice for almost
30:23
anything. Don't sit on things. And for me, the conversation with my co-founder wasn't tough.
30:30
The situation was tough for us. And I mean, our first reaction was like, let's save the company.
30:38
So the lenses investors were not willing to continue to do their own adventure building,
30:43
which is to invest. And so that lead to a lot of friction and a lot of pain for everybody.
30:50
Now, I also understand how they felt. Going through this experience,
30:56
what would be the advice that you give when it comes to how to raise money
31:01
that maybe you would have done differently knowing that, say, this is a potential, not
31:06
ideal, but potential outcome. So this is again a place where you know that it's much easier said
31:12
than done. And people tell you, find the right investor for you. It's like finding a wife or
31:16
husband or whatever. You need to see the world in the same way. But when things aren't
31:22
amazing and you still believe in what you're doing and you have this conviction,
31:28
you'll take money from whoever is willing to give it to you. And I think that going back,
31:36
we've raised money from all kinds of people. Some of them turn out to be amazing, like the best.
31:40
And sometimes we'll be not that amazing. But if you take me back, if I wouldn't take that money,
31:45
I wouldn't be able to find the opportunity and to learn about the amazing opportunity that we
31:52
now have with sequence. So if you can take the best investors, you know, but you can't, you know,
32:00
it's like, so my real advice here is to talk to people who raised money from those people,
32:09
and the companies didn't succeed. And then maybe you will be able to learn. Would you take a
32:13
different decision? I had to be honest, I don't know, because you said, okay, I just need this 500K
32:17
and then I can start building more forwards. So it's really easy to say and very hard to do.
32:22
I was more curious to take a step deeper, even more technically, because you mentioned you raised
32:26
two safes. Why was that a bad idea? Like from a raising perspective? Because when you have to do
32:34
a down-round or when you have to do, when there's like a pay-to-play or when you have to do
32:38
restructuring, the people with the safes have much better terms than all other investors.
32:42
That's create inequality between the investors and also towards the founders, because basically
32:47
with the safe or with the convertible note, they are there. You owe them, right? They are like
32:52
debtors of the company. And so I'm not saying don't do safes at all, but try to avoid them as much
32:59
as you can, especially if you've already done one price round. Because then you're basically
33:06
you're basically putting in the new investors in a much better conditions or a much more favorable
33:12
down-round. In position when a down-round comes and you really need a great experienced
33:22
patient and smart lawyer. Yeah, of course. They've been through a couple of those. Don't use your
33:32
friend's cousin or your neighbor's daughter. Find somebody, find somebody who's done that and
33:41
be ready to pay, but it's worth it because without our lawyer, I don't think that we could have done
33:46
that. Those people that made that were making your life miserable because they didn't want to
33:51
accept the new terms. What was the final strategy? You mentioned you're not a good negotiator,
33:57
but you got the deal done. So what eventually moved them over the finish line?
34:03
I think that they got to a point in which they understood that this is the best outcome.
34:08
There is no better outcome here. They almost killed the deal. They made the
34:14
delete investor very anxious and nervous and even I talked about it before in previous
34:21
podcasts, but he pulled the township. I woke up one day and the investor who's like super smart
34:30
and an amazing investor, I wake up, I say like, I'm sorry, but I see that your current investors
34:36
are not the best interest of the company and I'm putting the township. And I was like,
34:42
that's it, we're fucked. The point investor, nobody's doing anything, but he actually did it
34:48
because he wanted to help me. Unfortunately, he didn't tell me. Oh, I understand. So he was saying that
34:52
if he pulls the term sheet, then that means that those investors are shit out of luck,
34:57
they have nothing going forward and they're going to lose their money. But he didn't tell you this,
35:01
but he knew in his head this was like a psychological negotiating strategy.
35:06
He said, I'm pulling the township, the township is pulled. And then I went, and obviously,
35:11
I like, you know, I just remember like waking up in the morning, seeing the the email and
35:16
then I said, fuck, what I'm going to tell my co-founder. That was the first thing that I was like,
35:23
but then we went back to the, I just took a screenshot sent to investors and told them,
35:27
I think that they can still save this, but you have to play along. Or else we are all getting zero.
35:34
That's smart. It's smart on his part.
35:42
So things move forward. You have this non-consensus, but correct idea with sequence.
35:47
So talk to me about just frame the problem, but how did you validate? How did you, how did you get,
35:55
what was the word like radical conviction that sequence was a correct non-consensus problem
36:02
that actually could turn into a business? I mean, we try to come to this,
36:10
and it's something that is sometimes very hard for men to do, but we try to come as a humble
36:15
as possible. We came with like one of the important things that we told ourselves, we know nothing.
36:20
Let's see how people are, how people are actually reacting to what we are building.
36:25
So it started with the landing page and the ads and ended up with the
36:29
100 or 100 and the few more that were with the page. Only once we got to that point,
36:38
we started building because we've had a lot of experience with lands. We started building
36:46
fairly quickly. We knew exactly what we were doing in terms of the infrastructure.
36:49
And I think very quickly, we've launched, you can't really call it an MVP,
36:55
because like in Fintech, when you move money around, you can't have something not working
37:01
and you also need to get a put on the bank. So you have to have the FDIC in place,
37:06
you know, so everybody needs to give you like the stamp. So you can call it an MVP, but it was our
37:09
first product to the market, and it was closed just for the people who paid $200. And that was
37:16
maybe Q3, Q4 of 2023, when we launched the very first version.
37:24
Then we said, okay, we know nothing. So once we felt ready, the product was stable enough,
37:32
we said, let's open to anyone who was willing to pay and then we moved from optimizing to
37:36
conviction, to optimizing to learning, and also optimizing for learning means that you need to
37:41
increase friction. So we said, no free tier, no free trial, no free nothing. You want to use
37:48
sequence, you pay. And it's still the case today. Taking a few steps back in LANS,
37:55
when we asked people to pay for what we were doing, nobody was willing to pay,
38:02
we said, okay, let's drop, let's give it for free. And that's because I died, you know,
38:07
it's like a bank, nobody is willing to pay for banks. So let's give it for free, which is
38:12
always the wrong thing to do, because basically what they told us is we don't see value in what
38:17
you've built, so we are not willing to pay. So we've learned the lesson, and for sequence, we said
38:22
you have to pay. And we opened as wide as we could. We got anyone from pure W2s,
38:27
all the way to like small, but like medium sized businesses, and anything in between.
38:32
Startups, micro businesses, freelancers, gig workers, side hustlers, anyone that was willing
38:39
to pay. We've spent Q1 and Q2 just like, you know, getting people on boarded. And once we
38:45
did like around five, four, six hundred paying customers, which was, yeah, exactly mid 2024,
38:53
we started looking at the data, and it was very, very clear that the by far best users are
38:59
small business owners. And when I say small, I mean like one to ten employees.
39:04
We still didn't really understand why, but we saw we saw the data. And then we shifted our
39:10
marketing and really zoomed in on those people. And then we went from like two hundred thousand
39:17
dollars in a yard, or we've seven hexed in like eight or nine months. In the market,
39:23
mint, is that the, is that the main competitor? Or I guess like sort of like a comparable, because
39:28
mint, they have millions of users, but they've never figured out how to really make money move
39:34
automatically. And that's what sequence is doing. So it's interesting. What is the actual problem
39:40
that people have that you're solving that, for example, mint doesn't solve, because mint again,
39:44
like millions and millions. So that would be like the incumbent that you're trying to
39:48
displace to a degree. Well, well, no, there are a bunch of like PFM's, right, personal finance
39:56
management tools, like rocket money, wine, nap, till now, mint is obviously the biggest and most
40:02
famous one, which does like I mean, they close that. But we actually start where they finish.
40:09
I am not into financial planning. I'm into execution. We see people take those tools, bring them
40:15
to sequence and execute, right. And so I'm actually not competing with them, because
40:22
budgeting is again, I don't know how to 10X anything down. We've built something that is
40:28
different and sits in a different place. We are an execution tool. And I like to think of
40:34
sequences like a fitness app that goes to the gym for you. Right. You set it up. And we do
40:41
the execution. We always put you in control. You know what's going on. You know where the money is
40:49
going. You see how you build, whatever it is that you want to build. Either you know how to
40:54
repaint that, start saving, start investing. Yeah. So explain, I guess explain, just explain
40:59
the super layman's terms, like how the automations actually work, because I was I was listening to some
41:04
of your past content. And you said that the average American has 15 different financial accounts.
41:09
So like super fragmented. So what is the actual problem? Like what is the workflow that I mean,
41:15
obviously different customers, different workflows. But when somebody, the average, pick the average,
41:20
pick the most common customer, what are they actually doing with this?
41:24
So maybe, maybe just the opportunity is a great question. I mean, what we came to understand
41:31
through working with our audience is that our financial stack, both as consumers and smaller
41:36
micro business owners went through a massive unbundling. Right. The average American holds 15 different
41:42
holds money in 15 different places. And if you're a small business owner, it's even more than that.
41:46
And it's very hard to follow where all that money is. It's even harder to manage. And it's almost
41:52
impossible to make smart financial decisions in context. And the and it's getting worse. The gap
41:59
between the consumers and small business owners and all the different places in which their money
42:03
keeps going. Because of open banking, banking, the service, embedded finance, all of that,
42:08
there are more and more services, more and more products, more and more apps, which are all great.
42:13
And what we do, our strategy is to lean into the fragmentation. And we don't bundle,
42:19
we don't unbundle. We just make sense of at all. We bring everything into one place. We help
42:24
our users harness all those amazing offerings. I mean, you can really build wealth through that.
42:30
But we also bring everything to one place and we put them in control. And the combination of
42:37
just a little bit of intent, some guidance and a lot of automation can change the trajectory of
42:42
your life seriously. We are seeing that. I think that I think this is very useful because I even
42:47
noticed like sometimes I'll find and I don't know this is like the perfect example, but I'll find
42:52
like a PayPal account over here that has a couple thousand dollars that I forgot even existed.
42:58
Or as other, I mean, you know, like maybe I'm also Canadian too. So I have Canadian accounts
43:05
and I have American accounts and I have investment accounts in Canada and I'm investment accounts
43:09
in the US and I have a Canadian crypto account in the US crypto account and I have two Canadian banks
43:15
to America. It's like it's all over the place. It's actually chaotic. It's absolutely chaotic.
43:19
So this is this is the solution for all of this. Absolutely. It's not only the solution to not
43:26
lose 2K on PayPal, but it's actually a way for you to make sure that every dollar that you have
43:33
is put to the best use, right? And it helps you achieve your goals on autopilot.
43:40
I mean, we are seeing people that are I mean, one of the things that I'm really passionate about
43:44
is helping people get out of that and something that many many of our users do. That doesn't mean
43:50
that you are you know that you are I don't know that you don't have money at all. Some people that
43:54
are high earners will still have student loans and a bunch of things like that. And so credit card
43:59
or stuff like that, we we help them to automate and optimize the debt repayment, which means that
44:05
very quickly they're moving from repaying debt into saving towards important for them or investing
44:11
and making sure that they're making sure that they are you know that they are taking care of their
44:14
kids future of whatever whatever whatever is important for them. They're they're older parents
44:21
you know or just living a life the the life that they want to live. And that is very our
44:26
our company is very mission driven something that we really really really like believe that we can
44:30
as I said before, we are changing the trajectory of people's lives.
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register to get your ticket today. Walk me through. Give me tell me a story about a customer and
46:37
what sequence or automation they've set as a people and start to realize like how this could
46:42
actually impact somebody's life. So I think a good example would be we have a I think that
46:48
maybe the best example to start with is describing our high CP or our ideal customer. So our ideal
46:54
customer is a small business owner, right? And I say small business owners are not a small business
46:59
because those people manage they were many hats, right? They manage both their business finances
47:04
and their personal finances on sequence. And we have a guy that has an amazing business of short-term
47:12
rentals. And he has a family of three kids and that's and that is business that's that's you know
47:19
that's that's he's family like family business his wife is working with him as well. And they
47:24
manage between 30 and 40 apartments and they register their apartments on all platforms from
47:30
booking Airbnb. Those apartments are not theirs, right? Most apartments belong to other people.
47:35
And they're the ones who just fill in. Yeah. Yeah. There's a lot of money movement is coming from
47:40
different platforms for different apartments for different owners. There's the cleaners,
47:44
the security deposits. They need to make sure that they are saving enough money and putting
47:48
stuff into marketing and paying themselves and taking care of their kids' future and saving
47:53
towards the vacation. So it's not rocket science, right? But there's a lot of money moving and you
48:00
need to be you can't you know you can't not pay an owner, right? So before sequence they used
48:08
Excel sheets and I think that the guy told us that he was spending between three to five days
48:15
a month just making sure that all the money is moving into the right place. The right owner was
48:18
coming from the right from from the right platforms putting aside for security deposits paying back
48:25
the security deposits. You know that so it's a mess, right? And with sequence we bought it down to
48:31
like an hour. And which which is which is which is amazing because it gives him all time to take
48:38
on more apartments, gross business is taking care of you know all of these like you know it takes
48:43
like the 529 for his kids. He started investing and we're actually now working on a series of
48:51
of case studies that we're going to that we're going to share soon. But it's pretty amazing to
48:57
hear the stories and what people are actually achieving. Yeah, no, it gives your life back and as a
49:01
as an entrepreneur myself, finance is one of the most annoying parts of a business. It's it's just
49:07
I mean I'm not like a everybody's a numbers person to some extent but not most people don't enjoy it.
49:14
I think there's a certain kind of crazy person who enjoys numbers and they all become
49:17
accountants but the rest of the world hates it. It's boring, it's tedious, it's not fun, right?
49:22
And there's a lot of people feel nervous about it you know. It makes you nervous and yeah
49:29
I just the other day spoke with the guy who has like a franchise business and he has like a few
49:34
like smoothies stalls like you know like six or seven and he said like like you guys have
49:41
been so much time and and giving me so much peace of mind because I know that I'm always
49:45
back my employees on time that I have enough money in each sub account and it's just for me
49:52
as as some as one of the people who build this product it just makes you happy you know you wake
49:57
up in the morning and you're you're saying I'm building something that has a positive impact
50:01
on the world and that's and that's that's what I always wanted to build on my life.
50:06
Now the very obvious question I think that if somebody's listening to this it's important that
50:10
you answer this because you're you're moving people's money around based on an algorithm.
50:14
So what's the safeguard so that something doesn't go off or something doesn't get transferred
50:19
because then if it's all automatic if if somebody is using this properly that means that they're
50:25
trusting sort of their financial management completely and that's stressful I mean I'm sure you
50:31
have these conversations all the time. Yes so first of all the for many years people talked about
50:38
the self-driving money and and I can tell you that people like with 100% confidence people don't
50:45
want self-driving money and they want help they want some automation but they really are not
50:52
they're not ready to hand you everything and say I'm not I'm not going to look at it and there's
50:56
a famous saying that the three most important things for for people is the health their family
51:01
and their money but it's not necessarily in that order. I mean we are saying that people even when
51:08
everything moves 100% without them having to do anything they come back two three times a week
51:14
to see what's going on right and so you can you can you can configure the system in a way that
51:21
some things you have to do manually so it won't go like automatically just need to press a button
51:25
and until you get more and more confident. Besides that again we are we have a custodial bank that
51:31
is FDAC insured and regulated and we are regulated by proxy right so everything is like 100% legit
51:41
the way that it works is that we as a sequence we are not a bank so we can't touch the money the
51:48
money is in in in in thread bank our our partner our custodial bank that they have they are you
51:54
know heavily regulated like like any other bank and so money can't get lost and then when when
52:03
people are building the rules there are a lot of ways to make sure that that stuff like one like
52:08
that you did nothing that you don't want will happen so you can build the guardrails in the in the
52:12
softwares you can say I want to always pay the full outstanding credit card balance but never
52:20
pay more than a thousand dollars or ten thousand dollars so you can always build those those guardrails
52:25
and we have if somebody is interested in seeing how sequence works so obviously YouTube but
52:32
we have a crazy active community of amazing people on discord and any question some some
52:40
people in the community knows the product better than I do to be honest some of them are extremely
52:45
smart and like just great people and that we feel lucky to build with and for that's a smart play
52:52
as a founder to building a community that's very smart that's such an underrated that's such an
52:56
underrated asset that you've built I think the more founders should try to do that and I mean like
53:00
we always talk about audience we talk about audience build audience not build community I can go on
53:05
and on and on about it it's one of the things that I'm most passionate about I have all my life
53:09
tried to build communities around things I was like I had some few like minor successes
53:15
here with sequence and that was the very first thing that I that I immediately understood that
53:22
can be like can become like a mob can become like a mob around the business and my take is that
53:30
community product fit is much harder than product market fit and if and if you have a community
53:37
and you see like an early signs of community being created you have to do whatever you can in
53:41
order to cultivate it and that's what we've done very successfully if we look at if we look at
53:48
sequence and already what it's enabling but we look at the future of bookkeeping and finance
53:52
I'm assuming that you're already understanding how AI is going to impact this and how AI is going to
53:57
so like realistically how far are we away from bookkeepers not being relevant anymore CFOs
54:08
I mean CFOs to a certain degree I mean CFOs can play a bigger role if you're like going public
54:13
or at that later stage maybe people want the experience but say like a very tactical CFO or
54:19
very tactical bookkeeper or an accountant with sequence plus I'm assuming AI that you will eventually
54:26
roll out what is the future of finance bookkeeping small business finance look like so bookkeeping I
54:32
think is I mean the more like hand like you know like tedious work that you need to do the easier it
54:42
is to to replace you right and so bookkeepers would definitely be worried and I think that it's
54:49
the matter of like it's it's we are not far from there and CPAs and accountants and CFOs can
54:57
become strategic right so that's a different story and depends what kind of of an accountant or
55:02
or CFO you are and because those those people can become very strategic and that's far from
55:07
replacing them but they will be able to do way more with much smaller teams right because all the
55:13
like you know like putting numbers in and making sure that you that you reconcile stuff that's
55:18
going to that's going to be solved very soon you've already you've actually already almost solved it
55:24
even without AI to a degree yes yes the the problem there is with the with the long
55:30
day right so you need AI and you need good AI to understand what was that payment where that
55:37
money went where how to categorize it so we are no it's it's get it's very close but it's not
55:42
one it's not bulletproof yet but again if I don't 10 years ago you needed a 10 a team of 10
55:47
people now one person can do it right and yeah so so so that's that and I think that I'm
55:58
our place in the world or sequence is placing the world is to become the connective tissue
56:02
of of all those things we don't want to replace
56:05
no player and we don't want we don't want to give loans we don't want to give credit cards we don't
56:13
want to compete on interest rates we we are the connective tissue we are connecting our users
56:19
to the best offer for them and we are using AI already now to analyze the customers to be able
56:26
to give them the best offer specifically for them I can tell you high score I see that you have
56:32
this AMX card if you move to discover you can you will be able to pay less of vice-versa
56:38
y'all and so really always on our mission to improve people's life through their financial well
56:44
being and there's a lot to be done there and there's also a lot of money that you can make of course
56:50
well because okay so I was going to say like so we have open banking and better finance banking
56:54
as a service there's all this unbundling you're doing the rebundling you're doing you're
57:00
being the connective network of all of these so I but I'm not bundling right sorry connecting
57:05
you're connecting different yes correct there's the famous like you can either bundle or hand bundle
57:10
and we disagree we think that there's now or at least where we play and we are leaning
57:16
into the fermentation we are leaning into the hand bundling but we make sense of at all I don't
57:22
want bundling means that I will give you the cards I will give you the the loan I will give you
57:25
the insurance I don't want to give you anything I want to make sure that you are getting the best
57:30
offer out there because for me to compete against I don't know again with like chase
57:38
as far as it doesn't make sense you said that Starbucks is one of the biggest banks in America
57:43
because of stored value cards so what does this really tell us about where the future of banking is
57:49
and I think that bank accounts as as an infrastructure is already a commodity and we are building
57:57
on top of that that's where all the phintics come in so I think that it will I mean again like
58:05
people have their money in Starbucks right it's a bank by definition and and that's just one
58:11
example I mean there are like so many more and Uber is giving loans and like you know so
58:15
we are starting to see more and more and more companies that their core offering isn't
58:21
financial services offering financial services and it's something that we don't not only that we
58:29
that we can't stop we don't want to stop right it's great people have way more opportunities
58:35
more options competition is good right but there needs to be this connective tissue and that's
58:42
what you're building if you look 10 years out what do you think what do you think the future holds
58:47
for finance and banking traditional banks all these other sort of unbundled products where you are
58:53
and all of this I think that the big banks are not going anywhere and they they have they have a
59:01
brand and brand is that you know like one of the strongest things that you can have and I think
59:06
that we'll need to find ways to to make to to give better service I think that the small
59:13
and medium banks should be more worried and they will think of like strategies in order to stay
59:18
relevant and into the future and yeah and I think that the problem of this massive
59:31
implementation is going to grow and it's again it's an opportunity but also it also it also it
59:36
also has its challenges and so so that that's why I think that the huge opportunity here we are
59:44
very well positioned to to take advantage of it but maybe you know there will be other players that
59:48
will come in if people want to connect with you if they want to learn more about sequence where should
59:54
they go so my most active on LinkedIn your LinkedIn profile is fairly active and get
1:00:01
sequence.io perfect that's our website you can see everything there I'm happy also to share
1:00:07
our link to our discord community which is again very active you want to ask questions
1:00:12
about sequence talk to people that are using it your more than welcome so we can share the link
1:00:18
to that too so just a couple questions because again serial entrepreneur you failed publicly
1:00:24
and then you succeeded but what is your framework or how do you think through extracting
1:00:31
the maximum amount of learning from your failure so really thinking about what went wrong
1:00:36
without letting it paralyze you that's that that's actually a great question for me the more
1:00:43
pressure the more fear and the more anxiety makes me do stuff and I feel best when I have a plan
1:00:52
and I know what I'm going to do and so for me being paralyzed was never an option and I think that
1:01:00
just get out there and do stuff try stuff build stuff and even if you even if you think that
1:01:06
you know if you believe in if you're really stressed and in a bad place with yourself just get out
1:01:11
and do stuff do stuff that's the that's the best thing that you can do a lot of startup culture
1:01:18
it celebrates a lot of optimism which I don't hate but you really advocate for brutal honesty and truth
1:01:26
and almost like we're moving a lot of the delusion about how successful you really are because
1:01:29
that's what led to all the stressful times you had with Lance so how do you maintain even your
1:01:34
teams morale when this world of brutal honesty and truth and not optimism well I don't think
1:01:41
that you can it's one or the other right I mean you need to be you need to you need to get close to
1:01:46
the truth as much as possible sometimes the truth that you're doing good and sometimes that things
1:01:50
of you know are going like you know like down the drain right and the the important thing the
1:01:57
the most important resource that we have obviously is our time and if you are lying to yourself
1:02:02
or faking stuff and then you know you're lying to yourself you're wasting your most important
1:02:08
resource so try to think about it not like a sugarcoating another just like you have a
1:02:14
limited time here make sure that you're putting your efforts and your energy in a place that makes
1:02:20
sense and fake it till you make it is one of the things that I hate the most why do you hate it so
1:02:26
much why is that wrong because it takes people into a journey in which they are 90% of the time
1:02:33
faking it there's a mental toll that they are paying and when I say faking it I don't mean like
1:02:40
it's if a customer asks you do you have that feature and then you say yes and you go and build it
1:02:45
and ship it next week that's not faking it that's making it that's true and but yes all things are
1:02:50
going and very we are caching it it's amazing when you are when you're obviously not
1:02:56
and or when you are and when you're just like you say I have 5,000 customers but you actually have
1:03:00
five and that's very dangerous and that's where things can become it so don't don't fake it
1:03:07
right and I think that also for an entrepreneur I hate I also don't like fake it till you make it
1:03:14
but for some reason that seems to be a prevalent idea in entrepreneurship and
1:03:20
and I think that having that lack of alignment between where you are what you publicly state you are
1:03:28
like how well you're doing publicly versus how well you know you're doing in your head I think
1:03:34
that just destroys people especially if you do it for a long time I agree agree agree agree that's
1:03:39
why I don't like it and and also like I mean if you're gonna tell bullshit at the end people
1:03:45
will know it all right you can't hide everything all the time right if you think about some of the
1:03:50
best advice because I'm sure you've had many mentors and just friends over the course of your career
1:03:56
and many of your companies what would be some of the best advice that you've ever received take
1:04:01
money charge if now if now is paying you're not building something valuable I think this is this
1:04:08
is key and then I would say that the last thing that I love to ask because you have two daughters
1:04:13
and obviously you want to leave them with the best possible advice and set them up for success in
1:04:17
the future so if you could take all the life lessons and wisdom that you've experienced over your
1:04:22
life and you could only pass on one lesson to them what would that lesson be don't be afraid don't
1:04:28
be afraid and even even even even if you think that something happened it's the end of the world it's
1:04:34
not it's not it's it's it's it's gonna be lay way less worse than you can you can take an
1:04:42
imagine so don't be afraid go for it