Latest / Leaders In Payments / Sam Aarons, CTO & Co-Founder at Modern Treasury | Episode 262

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Sam Aarons, CTO & Co-Founder at Modern Treasury | Episode 262 · Leaders In Payments

• 0:01
  Speaker 1: Welcome to the Leaders in Payments podcast, where we talk to C-level leaders from across the payments landscape.
• 0:06
  Speaker 1: We'll be discussing the products and services that impact the payment space today, as well as trends and predictions for the future of payments.
• 0:14
  Speaker 1: We will also hear stories from our guests about their journeys to the top.
• 0:18
  Speaker 2: The Notchia Rulebook that governs ACH is 900 pages, and Modern Treasury essentially encodes all of those rules and regulations into software to make it easier for companies to interact with those systems, and so the crux of what Modern Treasury gets to in its payments product is being able to abstract away literally thousands of complexities into a very single, restful JSON API that any engineer or developer can understand and user interface that any finance person can understand, and we make the ability to automate payments much, much simpler.
• 0:59
  Speaker 3: That was Sam Arons, the CTO and co-founder of Modern Treasury, and he is my special guest on this week's episode, episode 262 of the Leaders in Payments podcast, and I'm your host, greg Meyers.
• 1:10
  Speaker 3: Modern Treasury helps companies move money at the speed of software.
• 1:14
  Speaker 3: During this episode, sam and I talk about what makes Modern Treasury unique and different Today's professional journey, the future of payments and much, much more.
• 1:23
  Speaker 3: We've got a great episode ahead, so let's get started.
• 1:25
  Speaker 3: Hi, sam, thank you for being here and welcome to the Leaders in Payments podcast.
• 1:35
  Speaker 2: Thanks for having me, Greg.
• 1:36
  Speaker 3: Absolutely.
• 1:37
  Speaker 3: So let's dive right in, If you don't mind.
• 1:39
  Speaker 3: Tell our audience a little bit about yourself, maybe where you grew up, where you went to school, where you currently live, a few things like that.
• 1:45
  Speaker 2: Yeah, originally I'm from Salinas, california, which is about two hours south of San Francisco.
• 1:50
  Speaker 2: Born and raised in Salinas, went to New York for school, went to Columbia University and then made my way to San Francisco where I actually had started a company before Modern Treasury.
• 2:01
  Speaker 2: That went nowhere after a year but was a really amazing experience and that gave me the bug of starting companies.
• 2:08
  Speaker 2: That's kind of where I started with my career, a little bit in tech.
• 2:12
  Speaker 3: Okay, so I'm sure we'll dive into that in a few minutes, but let's talk about Modern Treasury.
• 2:17
  Speaker 3: So for those out there that may not know what Modern Treasury does, could you please give us the 50,000-foot level, and then we'll dive into a few things after that.
• 2:27
  Speaker 2: Absolutely so.
• 2:28
  Speaker 2: Modern Treasury is a payment operations platform and what that means is we help businesses automate their payments, whatever that means for them.
• 2:36
  Speaker 2: So a lot of companies, when they need to send a lot of payments to their customers or to other businesses that they do business with, they need access to the bank-to-bank rails.
• 2:47
  Speaker 2: They need access to ACH or to wires or RTP or FedNow, which we'll talk about in a little bit and in order to access all of these payment systems, you need access to a provider that gives you that kind of access.
• 3:00
  Speaker 2: Historically, that has been accessed through banks, and a lot of companies use banks to initiate these payments.
• 3:07
  Speaker 2: But some of the problems or difficulties with that is that a lot of these banks have systems that were built in 1995.
• 3:13
  Speaker 2: They use fixed-width text files, they use technologies that maybe aren't the most up-to-date but are still rock solid, and so they need a payment operations platform, a translation layer, a middleware like Modern Treasury, that translates calls between the bank and between the customer and makes this interaction with those payment rails seamless.
• 3:33
  Speaker 2: On top of that, we also offer tools about reconciliation and compliance and ledgers.
• 3:39
  Speaker 2: We basically offer a full suite of tools that helps companies automate their entire payment lifecycle.
• 3:45
  Speaker 3: Okay, and just for those listening, your co-founder, matt Marcus, was on the show back in June of 2021.
• 3:53
  Speaker 3: So for those who want to find out even more, they can go back to.
• 3:57
  Speaker 3: That was episode 93.
• 3:59
  Speaker 3: So they can go back and listen to Matt, but Sam's with us today.
• 4:03
  Speaker 3: He's going to give us kind of an update.
• 4:05
  Speaker 3: Obviously, we know now what Modern Treasury does, so let's dive in a little bit.
• 4:09
  Speaker 3: So you mentioned you help businesses.
• 4:12
  Speaker 3: So are your end customers typically the businesses, or are they the banks?
• 4:16
  Speaker 3: Or are they?
• 4:16
  Speaker 2: both.
• 4:17
  Speaker 2: That's right.
• 4:18
  Speaker 2: Our end customers are the businesses.
• 4:20
  Speaker 2: So Modern Treasury sells its software products to businesses and in turn, those businesses either are B2B businesses that work with other businesses or they deal with consumers and they're a B2C business.
• 4:32
  Speaker 2: But ultimately, the customers of Modern Treasury are platforms, marketplaces, real estate companies, healthcare companies basically any company that moves money as a part of its business needs something like Modern Treasury, and so we sell directly to customers.
• 4:49
  Speaker 2: We partner, however, heavily with banks.
• 4:52
  Speaker 2: We work a lot with banks, we help, we co-market, we kind of go to market together.
• 4:58
  Speaker 2: We co-sell a lot of times.
• 5:00
  Speaker 2: Banks are a very strategic partner for us, but they're not our customers.
• 5:05
  Speaker 2: At the end of the day, it's the customers who pay us for the software, and that's one way to think about Modern Treasury is we're just a pure software company.
• 5:11
  Speaker 2: Salesforce is a pure software company, github is a pure software company.
• 5:16
  Speaker 2: Modern Treasury is a pure software company.
• 5:18
  Speaker 2: We're not really a payments company.
• 5:20
  Speaker 2: We're more of a payments infrastructure company, and so we don't maintain money for our customers.
• 5:26
  Speaker 2: We don't have bank accounts that hold customer cash.
• 5:28
  Speaker 2: We just provide pure software, and so banks are a great partner, but ultimately we're just selling software to companies.
• 5:34
  Speaker 2: Okay.
• 5:36
  Speaker 3: And you mentioned some examples there the real estate, healthcare.
• 5:39
  Speaker 3: Are there specific verticals that the software is better for, or is it really sort of agnostic when it comes to the kind of company?
• 5:48
  Speaker 2: Yeah, that's a really interesting question because it's something we've asked ourselves a lot over the past few years.
• 5:54
  Speaker 2: What is the vertical that Modern Treasury excels at, and it's not a specific vertical?
• 5:58
  Speaker 2: I mentioned all of those verticals and there's plenty more verticals that Modern Treasury serves today.
• 6:03
  Speaker 2: The common unifying factor across all of our customers is that they move money as a part of their business.
• 6:11
  Speaker 2: Their business involves taking money from point A and moving it to point B, and that sounds very vague, but when you focus in on those types of companies, you realize a lot of companies fall in that category of they move money from point A to point B, or they take money in on the left hand, take a cut and give it out on the right hand.
• 6:29
  Speaker 2: There's a lot of businesses like that.
• 6:31
  Speaker 2: So Modern Treasury actually is very cross vertical, but we're also cross size.
• 6:37
  Speaker 2: We have companies that are typical startups three people in a garage and we have companies that are publicly listed on the stock exchange and we have every size in between.
• 6:47
  Speaker 2: And so, across vertical and size, there is no other unifying characteristic other than our product moves money or our business moves money.
• 6:57
  Speaker 3: Okay, okay.
• 6:58
  Speaker 3: And when Matt was on the show, I believe you were pretty much US centric.
• 7:05
  Speaker 3: So have you grown outside of the US.
• 7:08
  Speaker 2: Most vast majority of our customers are still based in the US, but we actually have a growing number of companies that are based in Canada and even more than that, we have companies that are multinational but headquartered in the US.
• 7:22
  Speaker 2: So when we focus on US-based businesses, those US-based businesses tend to take us to other geographies.
• 7:29
  Speaker 2: So we've implemented and partnered with banks in other countries because we have to build integrations into those banks.
• 7:35
  Speaker 2: But the businesses themselves that we're selling to they're still primarily headquartered here in the US, but they might have foreign branches or foreign subsidiaries or they've decided to test out another market themselves.
• 7:49
  Speaker 2: So modern treasury is getting pulled into other geographies, but we're still focused here on selling in the US and a handful of customers in Canada as well.
• 7:59
  Speaker 3: Okay, okay, and you mentioned FedNow.
• 8:02
  Speaker 3: We're going to talk a little bit about that, so let's jump into that now.
• 8:05
  Speaker 3: So can you talk about your relationship there and what you're doing?
• 8:09
  Speaker 3: What makes that different?
• 8:10
  Speaker 3: How are customers taking that on anything new and different around FedNow that you want to talk about?
• 8:16
  Speaker 2: Yeah, I almost want to say Greg, it's a loaded question, there's a lot to talk about FedNow, but yeah, let's start at the beginning.
• 8:23
  Speaker 2: So I first became acquainted with FedNow when I saw that the Federal Reserve was looking for well, I very first heard about FedNow when the Federal Reserve announced, hey, we're going to start looking at potentially starting a real-time payment network, and so there was a lot of fact-finding, community building.
• 8:44
  Speaker 2: The Federal Reserve was essentially trying to decide what to do, and after they made that decision, that's when I started to get acquainted more with FedNow.
• 8:52
  Speaker 2: At some point a few years ago, the Federal Reserve put out a request for members to join working groups, and so they established working groups for ISO 2022 and they established a working group for reconciliation, and that was the one.
• 9:07
  Speaker 2: Because of what modern treasury does with reconciliation, that was the working group.
• 9:11
  Speaker 2: I said, hey, I'd actually like to join this, I'd like to do a few sessions with the working group, the FedNow working group on reconciliation, and I'd like to understand more about FedNow, and so that was my first kind of entry point into the world of FedNow.
• 9:24
  Speaker 2: So the FedNow working group on reconciliation, I think, met about four or five times.
• 9:31
  Speaker 2: The timeline is a little fuzzy as I recall it right now, but I think it was about two years ago I'd have to check my notes just to make sure but we had several sessions with the Federal Reserve where they presented this is what FedNow is, this is what we're thinking in terms of its use cases, this is what we're thinking in terms of specifications, in terms of usability, and they were very open to receiving feedback about that.
• 9:53
  Speaker 2: And so, because modern treasury deals so much with reconciliation, deals so much with payment operations, we were actually able to have a constructive dialogue along with the other participants in the working group and actually give the Federal Reserve feedback about how best FedNow can be positioned to help reconciliation.
• 10:12
  Speaker 2: And I could dive into those details.
• 10:14
  Speaker 2: I think a lot of them are fairly technical for this audience, but suffice it to say the Federal Reserve was very keen on getting input from the community, and I think that really shows in the system that they've launched, and so that's sort of how I got started with that.
• 10:31
  Speaker 2: We've kept tabs on it throughout the years because it's taken some time to get live, but finally this summer they launched it and now FedNow is live, and now we're in the process of seeing banks implement FedNow into their systems, oftentimes alongside RTP, which is a Paymoral that's existed for a few years now, and so we're starting to see the banks, now that FedNow has launched, bring it into their systems, and so that's sort of the phase that we're in right now.
• 11:00
  Speaker 3: That's good.
• 11:00
  Speaker 3: I think a follow on is so.
• 11:03
  Speaker 3: Are you seeing it being driven more by banks adopting it, or are you hearing businesses are interested in learning more and that's helping to push it along?
• 11:14
  Speaker 2: I think it's a little bit of everything.
• 11:15
  Speaker 2: Primarily, I think, the adoption comes from the Federal Reserve pushing it.
• 11:21
  Speaker 2: So if I were going to maybe stack rank these let's call them gravities that cause FedNow to come into existence, I think the first one to document is the Federal Reserve itself.
• 11:32
  Speaker 2: I can't speak to this too much but, based on what I can tell, I think the Federal Reserve looked at the state of faster payments in the US.
• 11:41
  Speaker 2: It looked at the RTP system, it looked at other systems and it saw adoption somewhat lagging or someone not coming up to the speed that they would expect.
• 11:52
  Speaker 2: And I think the Federal Reserve took a look at other countries around the world and said, hey, all these countries have faster payment systems.
• 12:00
  Speaker 2: This is how they rolled them out, this is what the adoption looks like after X years, and I think we weren't seeing that here in the United States.
• 12:09
  Speaker 2: And the Federal Reserve has a very interesting strategy where internally, I call this the rule of two.
• 12:15
  Speaker 2: There always seems to be two payment systems for every payment rail.
• 12:21
  Speaker 2: And I'm going to go on a little tangent to explain this because I think it's relevant to where FedNow comes from.
• 12:25
  Speaker 2: If you look at the ACH rail in the US.
• 12:28
  Speaker 2: The ACH system is actually two systems working together, a private system and a public system.
• 12:34
  Speaker 2: There's Fed ACH, run by the Federal Reserve, and there's EPN, run by the Clearing House, and both of these systems work together to create ACH, essentially.
• 12:45
  Speaker 2: And then when we talk about wires, we actually do have two systems.
• 12:49
  Speaker 2: They don't interoperate but they are complementary to each other.
• 12:52
  Speaker 2: We have Fedwire, which is how we clear 99% of domestic wires in the United States, run by the Federal Reserve, but we also have the CHIPS system run by the Clearing House, and the CHIPS system primarily we clear international dollar wires through that.
• 13:07
  Speaker 2: And so again, there's a public option and a private option.
• 13:10
  Speaker 2: When it came to faster payments, the Clearing House released RTP, which has been around for a few years and has been increasing amongst the larger banks, but I think adoption amongst the smaller banks wasn't getting quite to the level that the Federal Reserve would have wanted.
• 13:27
  Speaker 2: Some of that is unique to the United States.
• 13:29
  Speaker 2: We have a huge number of banks.
• 13:31
  Speaker 2: That is just entirely different from any other country Like.
• 13:34
  Speaker 2: We really have a tremendous number of banks and they're very small.
• 13:39
  Speaker 2: We have a lot of small regional and community banks, and so I think, seeing that there was only a private option from the Clearing House.
• 13:46
  Speaker 2: I think the Federal Reserve wanted to say, hey, let's do what we've done with the other payment systems, let's create what I call the public option, which would be FedNow, and then let's get the smaller banks to adopt it, just as the Federal Reserve is so good at getting smaller banks to adopt FedWire and FedACH.
• 14:04
  Speaker 2: So I think they looked at the playbook that they already had and said, hey, let's follow this for faster payments, let's spur the adoption there.
• 14:12
  Speaker 2: And so I think that's where the first push is coming from.
• 14:15
  Speaker 2: Is the Federal Reserve pushing it?
• 14:17
  Speaker 2: I think a second order concern of that is the banks themselves.
• 14:21
  Speaker 2: I think those smaller regional and community banks wanted an answer for faster payments.
• 14:26
  Speaker 2: That and I can't speak to this at all maybe they weren't getting out of RTP, or they saw RTP and for some reason weren't going to implement it, or maybe they saw that the fees were going to be too high not the RTP fees itself, but the fees from changing out the core or adding another module to the core.
• 14:45
  Speaker 2: Maybe those were too high.
• 14:47
  Speaker 2: It's really hard to tell.
• 14:49
  Speaker 2: This is all speculation, but I think the banks did want to see an answer for faster payments from the Federal Reserve and then, because you asked about it, greg from the business perspective and then, going even further, from a consumer perspective.
• 15:01
  Speaker 2: The polls are there.
• 15:03
  Speaker 2: I think a large part of the work now that FedNow has to do and in some part, modern treasury is we have to evangelize hey, fednow exists, rtp exists, let's get businesses on board, let's get consumers on board, let's get everyone excited about this idea of faster payments.
• 15:19
  Speaker 2: But I think so far the pull for its existence FedNow has come from the banks and from the Federal Reserve itself.
• 15:27
  Speaker 3: In the payments and fintech industry.
• 15:29
  Speaker 3: Before a transaction takes place or money is ever moved, there's a plethora of activity that takes place.
• 15:35
  Speaker 3: So, in collaboration with NMI, the fully integrated payment solution built to scale, we've launched the Be Solid campaign where, in this series, we're exploring everything that happens before the transaction With guests from leading companies like Count, mastercard, trustly and more.
• 15:50
  Speaker 3: To listen to the latest episodes, visit leadersandpaymentscom or nmicom.
• 15:56
  Speaker 3: Slash resources, slash podcasts.
• 15:58
  Speaker 3: In a world full of squares and stripes, be Solid.
• 16:01
  Speaker 3: So, when we talk about modern treasury, what is sort of the main pain point that a business has when they reach out to you?
• 16:11
  Speaker 3: What's causing them so much pain that they look for a modern treasury?
• 16:15
  Speaker 2: Yeah, great question.
• 16:16
  Speaker 2: So let's say, greg, let's say you're going to start a company and you're going to call it Uber 2, because you think you can do a ride share company and you want it to be like Uber but better.
• 16:29
  Speaker 2: And so let's say, greg, you start a company called Uber 2.
• 16:31
  Speaker 2: And let's just assume, for argument's sake, that in your first week of operation you're paying five drivers by hand.
• 16:39
  Speaker 2: You could probably figure out how to pay five drivers a week, right, you could mail them a check, you could log into a bank portal, you could send a Venmo five times a week.
• 16:48
  Speaker 2: You could probably figure that out, greg, yourself.
• 16:51
  Speaker 2: It's very easy to pay five people every week.
• 16:53
  Speaker 2: But let's ramp that up a bit.
• 16:55
  Speaker 2: Let's say you're paying 500 drivers a week, 1,000 drivers a week, 10,000 drivers a week.
• 17:01
  Speaker 2: That becomes a little bit harder to do without automation.
• 17:04
  Speaker 2: You're not going to fill in a web form 10,000 times.
• 17:07
  Speaker 2: You're not going to write and cut 10,000 checks.
• 17:10
  Speaker 2: The answer really becomes you want your systems to talk to the bank systems.
• 17:15
  Speaker 2: So in order to do that, you need to essentially speak the language that the banks speak, and that language for most banks is a SFTP system set up in 1995 and a fixed with text file from 1970.
• 17:31
  Speaker 2: And a lot of companies have.
• 17:33
  Speaker 2: You know there's a huge activation energy there.
• 17:36
  Speaker 2: They have to invest a lot into getting all of these technologies situated.
• 17:41
  Speaker 2: They have to learn the rules.
• 17:42
  Speaker 2: The Notchia rulebook that governs ACH is 900 pages, and Modern Treasury essentially encodes all of those rules and regulations into software to make it easier for companies to interact with those systems.
• 17:55
  Speaker 2: And so the crux of what Modern Treasury gets to in its payments product is being able to abstract away literally thousands of complexities into a very single, restful JSON API that any engineer or developer can understand and user interface that any finance person can understand, and we make the ability to automate payments much, much simpler Okay.
• 18:19
  Speaker 3: So do you think I should start Uber too?
• 18:22
  Speaker 2: I really think you should.
• 18:23
  Speaker 2: I mean, I think you have a really amazing payment operations platform that pays your drivers over RTP or FedNow.
• 18:30
  Speaker 2: I think you have a leg up and this sort of this sort of dovetails into how Modern Treasury thinks about FedNow and RTP, which is, hey, if you're paying your customers or other businesses over ACH right now, you might get a huge leg up by paying with FedNow or RTP, and that might not be a non-negligible improvement, like that might actually be something people pay for or switched you for.
• 18:55
  Speaker 2: So, greg, I think it's a perfect time to start Uber, too, if you want to do it over FedNow.
• 19:00
  Speaker 3: Okay, all right.
• 19:01
  Speaker 3: No, I love the example.
• 19:03
  Speaker 3: I think it really makes it very clear on what modern treasury does and the value you bring.
• 19:08
  Speaker 3: So what would you say, differentiates modern treasury from some of the other software companies out there that might be doing similar things?
• 19:17
  Speaker 2: Yeah, I think there are a lot of companies out there doing similar things and I have nothing but like admiration for those other types of companies.
• 19:24
  Speaker 2: I think where modern treasury is different is, like I said in the beginning, we're pure software.
• 19:30
  Speaker 2: We're just a software company.
• 19:31
  Speaker 2: A lot of other companies like Stripe and Ajin who are great, amazing businesses, who have like parts and features like modern treasury, but not exactly.
• 19:41
  Speaker 2: There's also other bass providers as well that are like modern treasury.
• 19:45
  Speaker 2: The thing that separates modern treasury is that we're pure software.
• 19:50
  Speaker 2: A lot of these companies hold and maintain money in their own bank accounts on behalf of their customers and for a lot of modern treasury's customers that's a no go.
• 20:01
  Speaker 2: For a lot of our existing customers today.
• 20:03
  Speaker 2: They have a banking relationship they like.
• 20:06
  Speaker 2: They have a bank account that they like.
• 20:08
  Speaker 2: They have hundreds of bank accounts.
• 20:10
  Speaker 2: They earn interest on those deposits, whatever it is.
• 20:13
  Speaker 2: When we come to a company we say you don't have to change out anything about how your current banking relationship works, let us just be the pure software interface between us, your systems and your bank and a lot of companies like that, because we're not trying to be a one stop shop give us all your money and we'll act as a bank for you.
• 20:33
  Speaker 2: No, we really believe in the power of banks and we're really saying hey, you choose whatever bank you want.
• 20:39
  Speaker 2: If you already bank at JP Morgan or Wells Fargo or Silicon Valley bank, great, our system works well with all of those.
• 20:47
  Speaker 2: Let us be the interface and then we can abstract away all the complexity and you can continue to use the bank that you love, pay the bank fees and change nothing about that relationship.
• 20:59
  Speaker 2: We're very complimentary to that, and I think other companies not to say that they're not complimentary or antagonistic to the banks, but they definitely want to own your entire financial stack and that's not something we want to do.
• 21:13
  Speaker 2: I have no desire to become a bank, I have no desire to hold money.
• 21:17
  Speaker 2: I want to build a pure software company, and that's the path that we've been going on for the past five years.
• 21:23
  Speaker 1: Okay.
• 21:24
  Speaker 3: All right.
• 21:24
  Speaker 3: When you think about this segment of the payments industry that you play in, where do you see it headed in the next, say, three to five years?
• 21:33
  Speaker 2: With the adoption of FedNow or just in general, what do I see?
• 21:36
  Speaker 2: The horizon, I think, just in general.
• 21:38
  Speaker 2: In general, yeah, I really think it.
• 21:41
  Speaker 2: The only reason I've been up FedNow and, by extension, rtp is because I think that is going to, that is really going to be the thing that I think changes over the next three to five years.
• 21:50
  Speaker 2: If you look at something like Apple Pay, which took maybe a decade to break into kind of the mainstream usage after its introduction, I think we're on a similar path for things like RTP and FedNow.
• 22:05
  Speaker 2: I think a lot of consumers are waking up to the idea that faster payments exists, it is working, it is available and, although it's not 100% coverage, it's growing more and more each year, and so I think what we're seeing is we're going to see a lot of companies utilize faster payments as a selling point and as a differentiator against slower payment systems, and so I think things that are going to change is we're going to be able to get money faster, which I know sounds like a reduction, but imagine payroll changing in a world of faster payments.
• 22:41
  Speaker 2: Like imagine you could work a shift and cash out at the end of the day and get paid right then and there as soon as you cash out.
• 22:49
  Speaker 2: Those are the kinds of things we're looking at with the world, like faster payments, and those are the kind of things that could get us further along in our faster payments development.
• 22:59
  Speaker 2: I also see consumers just wanting quicker and faster experiences for paying for things.
• 23:06
  Speaker 2: I think this is very interesting.
• 23:08
  Speaker 2: Before the pandemic, I saw nobody ever use a QR code and now it's a very widespread thing where every consumer knows how to use a QR code.
• 23:17
  Speaker 2: We see it especially at restaurants.
• 23:20
  Speaker 2: If you look at other countries, we see a lot of QR code based payments and I think over the next three to five years we're not obviously going to see a huge amount come to the US, but I think we're going to start getting more comfortable with alternative payment means that aren't necessarily credit card based.
• 23:37
  Speaker 2: That could potentially be QR code based, could be NFC based, but I think we're going to see more instant, seamless payments coming to existence.
• 23:46
  Speaker 2: And I think where it's really going to take off in the next three to five years is businesses paying each other.
• 23:51
  Speaker 2: I think there's going to be a lot of businesses that just decide to send a RTP or FedNow credit and be done with the whole thing and not have to deal with the complexities of ACH reversals and returns.
• 24:03
  Speaker 2: It's going to be maybe a little bit higher costs, but the operational I guess benefits are going to outweigh any of the costs, and so I think we're going to see a lot of B2B uptake and faster payments over the next three to five years.
• 24:15
  Speaker 2: And in consumers, I think we could see a lot of people potentially looking at credit cards and looking at other payment means and starting to maybe diversify away from credit cards a little bit.
• 24:26
  Speaker 3: Yeah, and you know you mentioned the consumer and I think I heard this recently is people are seeing a trend of consumers have that expectation of faster payments and especially younger generation and they're moving into more management and leadership roles in the finance side of things for companies and they're questioning why can't we have that speed here that we do as a consumer?
• 24:50
  Speaker 3: So I think we're starting to see even people questioning why things can't be faster and Kind of pushing that in companies that they work for.
• 25:00
  Speaker 2: Yes, absolutely, and really I think the crystallization of that, like, hats off to Venmo.
• 25:05
  Speaker 2: I think Venmo showed us a world in which all of this is possible.
• 25:10
  Speaker 2: Sure, they did it within a closed loop, so there's not a huge amount of advantages outside of the Venmo kind of closed loop ecosystem, but within Venmo we have all of this we have instant credits, we have requests for payment, we have this kind of microcosm of a world that we want to see, and I think you're absolutely right, greg, like we're seeing people who grew up on Venmo essentially be put into leadership positions and say, hey, I think things could be different.
• 25:37
  Speaker 2: This system from 12 years ago Did it.
• 25:40
  Speaker 2: Why can't we do it at a wider scale?
• 25:43
  Speaker 3: Right, right, all right.
• 25:45
  Speaker 3: Well, let's switch gears a little bit and talk about you.
• 25:47
  Speaker 3: So you mentioned a little bit earlier about having a start-up early, earlier before modern Treasury, but maybe walk us through after college kind of your positions and jobs and and lead us up to today.
• 26:00
  Speaker 2: Yeah, actually I think the story begins in high school.
• 26:03
  Speaker 2: So when I was Living in Salinas and then going to high school down there, I got my first internship in 2008 in high school, working for a company up in San Francisco, and it was my first job and I actually don't think I was old enough or I needed a work permit and I didn't get one, like whatever it is like.
• 26:25
  Speaker 2: I was at a very young age where I it was.
• 26:29
  Speaker 2: My first job was an internship at a tech company and, without kind of giving the name away, I'll kind of just describe the experience.
• 26:36
  Speaker 2: But here I am, a rising junior in high school and I get my first internship and I show up for my first day and it's in a apartment tower in San Francisco and it's in a two-bedroom apartment where one the founder of the startup he had one of the bedrooms and then he had a roommate who was Unaffiliated with the company.
• 27:00
  Speaker 2: He just tolerated the fact that there was a business in his apartment because he got cheaper rent and it was a very small apartment.
• 27:08
  Speaker 2: It was eight of us packed into this living room and it had a beautiful view of Alcatraz and I remember stepping in For the first day, I think I'm 16 and I I step into this living room where I'm going to be working for the next three months.
• 27:21
  Speaker 2: I can see Alcatraz, I can see everyone coding having a good time, and I thought to myself I want to do nothing else with my life except startups, and I've continued that all the way to today.
• 27:33
  Speaker 2: And so, yeah, I started working tech internships in high school.
• 27:37
  Speaker 2: Every Summer, I would come up from Salinas and and live in Berkeley and commute to San Francisco Every summer, and when I was in college in New York, I would do the same thing every summer.
• 27:47
  Speaker 2: I would come to San Francisco, get an internship, and I kind of worked my way into this network of people.
• 27:54
  Speaker 2: I really enjoyed working with people I really liked, and it was through that network that I was able to find my co-founder for my first company, and we basically both graduated college at the same time in 2014, and we said, hey, let's start a company together.
• 28:10
  Speaker 2: And we moved out to San Francisco and we basically spent the next 12 months on 12 different ideas so an idea every month and we built nothing of value.
• 28:22
  Speaker 2: Great, I mean, like everything we built was just a complete dud.
• 28:26
  Speaker 2: We had a lot of fun doing it, but we were building things that nobody wanted, and I think a Key thing that I would tell your listeners is like we just didn't have any real-world experience and we didn't know what real problems were, and so we were building things that we perceived as problems, things that it varied from custom shampoo to low-flow toilet, rebates to a Site for factoring, invoices for developers and contractors just really random jumping from idea to idea, and After that year was done, basically one of our angel investors said hey, come work for me, I want this project, I'm building this project internally.
• 29:11
  Speaker 2: It was at a company called lending home, which is a mortgage company, and he basically said I want to build this project.
• 29:16
  Speaker 2: I think you'd be perfect for it.
• 29:18
  Speaker 2: Come work with me and I'll pair you with someone named Dimitri.
• 29:21
  Speaker 2: And so Dimitri, dadio Mav, is modern Treasury CEO and I met him at a company called lending home and Actually, funny enough, me, dimitri and Matt who, you know, we all started on the exact same day in 2015 at lending home Like the three of us started on the exact same day, and that's sort of where we all met, that's sort of where we all work together, and that's where me and Dimitri specifically started working on payments together and Getting a lot of real-world experience about, okay, what are real-world problems, what are things that are Concerns or like, what are the real problems?
• 29:57
  Speaker 2: And we kind of stumbled into this payment problem and we worked on this for three years and we you know that kind of gave us the confidence to eventually the three of us start modern Treasury.
• 30:06
  Speaker 2: But it really came from a place of like, yeah, we saw the problems firsthand, gained the knowledge about what Payments could be, about how companies were dealing with it, and we took that knowledge and said, hey, I think there's a opportunity here to start a SaaS software company.
• 30:22
  Speaker 2: You.
• 30:23
  Speaker 3: Okay, great Thanks for sharing that story.
• 30:25
  Speaker 3: It's a.
• 30:26
  Speaker 3: It's a great.
• 30:26
  Speaker 3: I love hearing startup stories.
• 30:28
  Speaker 3: So what are some things you're passionate about?
• 30:31
  Speaker 3: So maybe one work related passion and one personal passion.
• 30:35
  Speaker 2: Yeah, I am.
• 30:37
  Speaker 2: You know, it's funny like I think my passion is programming and so I think a lot of my Development has just been programming for myself.
• 30:45
  Speaker 2: I'm very passionate about payments.
• 30:47
  Speaker 2: I'm obviously super biased and you know, starting modern treasury but I think it starting the company really comes from a place of this is my passion.
• 30:56
  Speaker 2: Is I really enjoy Working with the minutiae payment systems, like I really think it's super fascinating.
• 31:02
  Speaker 2: I don't think there's a lot of public knowledge about it.
• 31:05
  Speaker 2: I think it's a system that is mostly invisible to people and, as an engineer at heart, that's very appealing to me and so this is really my passion is being able to work on payment systems and work with payment technology, because it feels sometimes like I'm on the frontier of figuring out something new, and so I think this is my, like my work passion.
• 31:27
  Speaker 2: My personal passion I think is and I always get laughs about this telecom.
• 31:31
  Speaker 2: I'm very interested in Telecommunications and networking.
• 31:35
  Speaker 2: I'm very interested in how how phone systems work, how SIM cards work, how Communication networks are built up, how ethernet networks are built up.
• 31:44
  Speaker 2: My personal project is I, or my personal passion is really like oh, I really am interested in networking and telecommunications and Everything about.
• 31:53
  Speaker 2: Modern treasury is about payments.
• 31:55
  Speaker 2: But you know, when I'm like personally looking stuff up or looking up things, such a program, personally I usually try to take something from from telecom.
• 32:04
  Speaker 2: But no, I'm a huge nerd, I like movies, I like TV shows, I like programming, I like learning a lot on the computer.
• 32:12
  Speaker 2: It's it's just a really big Passion of mine is constant learning and kind of constantly trying to push myself technically.
• 32:20
  Speaker 3: Okay.
• 32:20
  Speaker 3: So I think the the passion around payments is kind of a good segue into the next question, which is, if you, if you're talking to someone, maybe they're coming to work there, or maybe it's just an acquaintance and they've recently graduated from college and they say, sam, I want to, I want to get into payments, I want a career, I want to build a career in payments, what would you tell them they need to do to be successful?
• 32:42
  Speaker 2: read a lot.
• 32:44
  Speaker 2: We every engineer and even non-engineer that we hire at modern treasury I think one of the unifying things amongst the people we hire is they all have this for lack of a better phrase intellectual curiosity.
• 32:58
  Speaker 2: They want to learn about something and they're not satisfied until they learn everything about it, and then they move on to the next item that they don't know anything about and they learn everything about that.
• 33:08
  Speaker 2: And I think a lot of the Almost every employee that we've hired has this intellectual curiosity and we channel it towards payments.
• 33:17
  Speaker 2: And so when someone wants to break into payments, when someone comes like, hey, I want to break into this industry, what I tell them is like learn as much as you can and cough, cough, maybe work for us, but also, if you don't want to work for us or something else is available, I think, just be open to learning like self-teach.
• 33:34
  Speaker 2: Read a lot.
• 33:34
  Speaker 2: You know we all read Matt Levine's newsletter, money stuff, and we'll read the Financial Times and we'll share articles with each other and we'll find Obscure payment blogs and resources.
• 33:46
  Speaker 2: We're just constantly Finding information about payments and sharing it with each other because we're all interested in it, because we're all intellectually curious, but also because we just want to learn more.
• 33:55
  Speaker 2: We all have this desire to be experts, and so if someone wants to break into payments or any fields, I think I would encourage them.
• 34:03
  Speaker 2: Just learn as much as you can become an expert, like read a lot, like really try to envelop yourself in it and surround yourself with it.
• 34:11
  Speaker 2: I think modern treasury has done a good job of envelop, enveloping ourselves with payments knowledge around us, and we've also surrounded ourselves with really great advisors, partners and customers who are also steeped in payments super well.
• 34:23
  Speaker 1: Okay great.
• 34:25
  Speaker 3: So, sam, we've covered a lot of ground, obviously about you and a little of your background and, obviously, modern treasury.
• 34:31
  Speaker 3: We covered Fed now and some of the value there.
• 34:34
  Speaker 3: Is there anything else you'd like to add before we wrap up the show?
• 34:37
  Speaker 2: No, I think I'd like to add that.
• 34:39
  Speaker 2: I'd maybe like to add a little bit that I think Fed now and RTP are gonna be Tremendous drivers of, like faster payments growth in the US.
• 34:47
  Speaker 2: I think the one thing I want to add is that all All payment systems play into that.
• 34:52
  Speaker 2: We also have kind of a unique curiosity in the United States that payment systems Don't go away, and so just in this interview I've mentioned Venmo, I've mentioned cards and mentioned a CH wire.
• 35:05
  Speaker 2: All of these systems sort of work in concert together.
• 35:09
  Speaker 2: I think that's one of the things that maybe gets lost sometimes is that this is not me saying, oh, fed now and RTP are gonna completely take over and they're gonna be a hundred percent of how we do payments in the future.
• 35:20
  Speaker 2: Every payment system has a strength.
• 35:22
  Speaker 2: A CH has a tremendous strength, especially in its ability to debit.
• 35:26
  Speaker 2: Wires have a tremendous strength.
• 35:29
  Speaker 2: They all find roles that they're extraordinarily good at and they stay within that role, and I think one of the best examples of that is we all still use paper checks.
• 35:39
  Speaker 2: The usability of paper checks for some reason cannot be beat.
• 35:43
  Speaker 2: Sure, the volume of paper checks goes down every year, but if I hand you a paper check, greg, you know exactly what to do with it.
• 35:49
  Speaker 2: Like it's instinctual what you do with a check and that's the payment method, that the convenience isn't there for other ones.
• 35:56
  Speaker 2: Like if someone hands you a credit card, greg like unless you have a credit card machine to Tap to tap it, or you know a square reader, you don't know what to do with a credit card.
• 36:05
  Speaker 2: Or if someone gives you their account routing number, you may not know what to do, but every person, in the US at least, knows what to do with a check.
• 36:12
  Speaker 2: Every payment system works and it finds a niche that it's good at and it stays within that niche forever.
• 36:17
  Speaker 2: And so I think we're gonna see Fed now and RTP come up and find the niche that it's good at, but it's gonna coexist forever alongside a CH wire credit cards, and we're gonna have this like harmony Payment systems that will shift based on the needs of people at the time.
• 36:35
  Speaker 2: But generally, all of these things are gonna work well together and it's gonna be an interesting experience to see where the final ratios shake out.
• 36:43
  Speaker 3: Yeah, I think that's a great summary of our of our podcast, and I appreciate you sharing that.
• 36:47
  Speaker 3: I want to thank you for being on the show.
• 36:49
  Speaker 3: I know your time is very valuable, so I really appreciate you being here.
• 36:53
  Speaker 2: Thanks, Greg.
• 36:53
  Speaker 2: Thank you for having me.
• 36:54
  Speaker 3: This was really fun and to all you listeners out there.
• 36:57
  Speaker 3: I thank you for your time as well, and until the next story.
• 37:00
  Speaker 1: Thank you for joining us this week on the Leaders in Payments podcast.
• 37:04
  Speaker 1: Make sure you visit our website at leadersinpaymentscom, where you can subscribe to the show and where you'll find our show notes.
• 37:11
  Speaker 1: If you enjoyed listening, please share on your social channels as well.