Audio transcription
00:00:33 (Alastair)
Really excited for this episode with Piotr from Uncapped, revenue-based finance provider. He's the CEO and founder and we get into some of the challenges they've had along the way, from seed to trying to raise a Series B and ultimately focusing on becoming much more efficient and effective as a business and moving into profitability. We cover loads in the episode, from getting an early stage MVP, to co founder disagreements, to pivoting and getting back to the core vision and values of the business. Loads in here. Hope you enjoy it.
Welcome to the pod. Today we've got Piotr Pisarz, founder and CEO, uncapped. I think I see Uncapped everywhere, all over social media. So great to have you on the pod, Piotr, and welcome.
00:01:19 (Piotr)
Thank you for having me. We're trying very, very hard to be everywhere. So, I'm glad it's working.
00:01:24 (Alastair)
Certainly works. Certainly, it does for me, anyway, Piotr, give us some sort of proxy for where you are today in terms of size, whether that's people, revenue? Love to know that. And then maybe take it back to the origins.
00:01:37 (Piotr)
Sure. We are about 70 people today. We do, let's say something between 10 and 50 million revenue per year. I don't want to disclose too much, but this is the ballpark of the revenue we are at this moment at.
00:01:55 (Alastair)
Okay, amazing. And can you give me the elevator pitch of what… for those that don't know on Uncapped, give me the elevator pitch of what Uncapped does and who you are.
00:02:02 (Piotr)
The easiest way to fund growth, liquidity, working capital for your tech company. If you're e-commerce, SaaS, tech company and you need the capital not for R&D, but for the more repeatable parts of a business, you shouldn't be using equity, you should be using debt. And we are the best provider of debt for these type of businesses.
00:02:26 (Alastair)
Yeah, cool. And just explain, or maybe expand on why you shouldn't be using equity and you should be using debt. And actually, the comparison of the cost of the two, that would be quite interesting to go into it. So, in other words, why would people go down this route when actually, well, maybe the markets aren't the greatest to be raising venture capital at the moment, but why would a company go down the debt route, which is much riskier, rather than the VC route?
00:02:50 (Piotr)
I think, as you rightly pointed out now it's even impossible to raise V equity, right? So, if you're a profitable growing business, or if you're about to be profitable, you should never give up ownership of a business just to grow a little bit, right? And I think the companies were a bit spoiled over the last few years when the equity was so cheap, and everything was getting funded in the zero-interest rate environment. And I think the situation got a bit not normal, but typically when you're a good business and you need money for growth, debt is always cheaper because equity investors, they invest long term and they expect very high growth rate because they lock in their money for a long duration. And that's why VCs are getting so rich. And debt is just cheaper, more efficient, shorter, more flexible, you don't give up control of a business. So I think there's plenty of benefits, in the past that was not available to these type of companies. And that's the history behind Uncapped. I actually was a VC myself and I met these thousands of entrepreneurs, literally thousands. And many of them I was thinking, why are you raising equity? You should be getting debt. But they're like, well, we can't get debt. No one wants to give us the debt. And then I went to the VCs to meet them, hey, I want to start giving debt to these founders, and they were like, you're crazy. It's impossible to lend to them. I was like, I think differently. And here we are.
00:04:29 (Alastair)
Yeah, cool. Well, we're kind of getting into the backstory a little bit there in terms of your background. I think it's quite interesting because we will get into this product-market-founder-fit kind of venn diagram, so I'd love to dive into that a little bit more, but let's take it back. So, that's where we are now with 60 or so 70 or so people, 10 to 50 million revenue, really focused on this kind of the e-commerce market or the SaaS market, where you've got either come through an EPOS system or a Shopify system or consistent MRR every month, it's quite stable. You can lend on the back of that with a debt instrument, short-term borrowing, not giving up equity to fund the business, fund the growth. But let's take it back to when you started, which was what? 2016, 2017?
00:05:12 (Piotr)
2019.
00:05:14 (Alastair)
Oh, sorry. 2019. So let's take back 2019. So, you talked a little bit about your background kind of talking to these companies, but when did the spark happen and how did you then jump ship from what a lot of people would really want to get into the venture capital side of things, into starting your own business?
00:06:28 (Piotr)
Yeah, I was a VC. I think I was my third VC job. I moved from fund to fund to fund and I had this very big realisation that first of all, VC is not as sexy as it looks from outside. I think there are a few great VC funds who I admire. But if you are not working for a top VC fund, it's very, very difficult to compete with them and get to the best venture deals. Because at the end of the day, I think founders always prefer the top of brand, like, I don't know, Index, Sequoia, Accel. And either you work there or like, you have to work extremely, extremely, extremely hard to be allowed to get into these deals. And if you're not the founder of a VC fund or a partner, you will not even be allowed to do these deals.
00:07:27 (Alastair)
So that's quite, if I just pause there, it's quite interesting. A lot of people listening will probably go, hang on a second, whilst they want VC fit at the table and kind of alignment, actually, there's a lot of people out there or founders out there that just want capital. So, a lot of people will be going, actually, I'd love to have that capital. I don't necessarily need the Index, the Accels of this world. Actually, I just need some cash.
00:07:52 (Piotr)
This is the funny thing about I think, VC is the only industry where for the top companies, it's a company which picks investor, not the other way around. If you want to invest in the public company, like if I want to buy Tesla, I can just buy Tesla any minute, I can just pay the highest price and I can get into Tesla, I can get to any other business. The VC is opposite, right? Like the top founders have offers from every single VC fund. And then it's about the question, you know, how do you choose the founder to pick you as an investor? And there are crazy stories I've heard about VCs using other portfolio companies, like I cannot name, but I've heard that one of the funds wanted to invest in a business and the business said no. So, they asked Mark Zuckerberg to call the founder and recommend them - hey, they invested in me. It's a, it's a crazy industry, right? And then if you don't have a backing from a platform like this, it's very, very difficult to get into these deals. On top of that, I thought that VC at this time was getting crowded, now everyone knows it was way too overcrowded, but I felt there is too much money on the market and it will be very, very hard to make good returns. While on the other hand, no one was thinking of debt. And I always think that I like to be contrarian a bit in my thinking. So, I thought, hey, if everyone is trying to do the VC route, can I do something opposite and can I start offering the debt and be the best debt provider for all these businesses? And if you think about it, the space should be much bigger. And there is probably 100 billion invested in start-ups every year through VCs. Probably the market for debt is way bigger.
00:10:00 (Alastair)
So you're in a VC and you're on the train, right? Everyone else is going forward in this direction and lending, or, sorry, not lending, investing venture capital. And you kind of deviate when everyone's going in that one direction. How did you have that spark to go? Actually, no, let's go for debt. What was that spark? How were you so contrarian?
00:10:23 (Piotr)
I think I saw my past biggest competitor called Clearco raise the first round. I think it was mid 2019, and they raised the first round and they said, we're going to lend to all these e-commerce/SaaS companies around the world. And I thought, this is brilliant. And honestly, I was thinking, first of all, maybe I can invest in some European competitor at that time. They were only in the US. So, I wanted to invest in a competitor. I was researching the space. No one was building this. And honestly, I was going to bed every night for a month or two and I was like, I couldn't sleep. I was like, this is going to be big. Someone will build a huge business in this space, and no one is doing this. If there is ever a moment to start a company of my own, this is now.
00:11:12 (Alastair)
So you got the entrepreneur's itch at that point and saw that opportunity, but I guess kind of you were keeping your ear to the market regardless of where that was. And you saw that opportunity in Europe which was already happening in the US.
00:11:28 (Piotr)
Correct. And what I did then is, I didn't immediately quit the job. Right. I prepared the deck.
00:11:36 (Alastair)
Because it’s very different going from one side of the table literally to the opposite side of the table.
00:11:40 (Piotr)
Yes and no, right. If you think about it, the big part of a job is still there. You still have to meet all the founders, make the right decisions. So, there’s a lot of repeatability. And I still end up talking to, I actually now talk to way more founders than I did in the past.
00:11:57 (Alastair)
Interesting.
00:11:58 (Piotr)
Yeah. Because if you're a VC, you say yes to maybe two out of 1,000 companies you meet every year. I get to say yes to about 30% of the companies I meet all the time, right. So, this part of a job which I enjoy meeting founders, I actually get to do much more. But what happened is I met my friend who of course was a VC, and I pitched him the idea. I asked him for feedback on the deck and he said, well Piotr…
00:12:33 (Alastair)
Feedback in inverted commas, plus some money.
00:12:35 (Piotr)
…well, actually I really wanted just some feedback. And then he said, well, before we proceed any further, I'm in as a fund for 150,000. I want to raise one and a half million. He said like 150 to 200 we are doing as a fund, I want this reserved for us. Now let's proceed to strategise. How do we make that deck better? Who do talk to, etc. As you can imagine, if you have a yes on the first meeting, it really boosts your confidence.
00:13:04 (Alastair)
That's a good 100% scoring rate, isn't it? One from one. It can only go downhill from there really can't it?
00:13:13 (Piotr)
Exactly. And it was painful. Like, listen, I think I met 80 VCs when I was doing my pre seed investment and probably 75 said no.
00:13:25 (Alastair)
So what were the learnings from the 75 that said no? Obviously, I'm assuming your friend, that was the VC, he invested in you as a person and helped you kind of develop and craft what the concept of Uncapped is today, or kind of the precursor to it. But what did you learn through the other 74, 75 no's at that time? Did you pivot the business model at all? Did you change the way in which you presented it? Did you change the pitch deck? Or was it just a question of you had to kiss enough frogs? Terrible British phrase, by the way.
00:14:02 (Piotr)
I think you get better with pitching. So, whenever you fundraise, there is a whole playbook and strategy how to fundraise. And I had to learn it hard way. First you meet the investors you don't want to invest. This is purely to practice and test the messaging. I think I of course did the opposite, I went first to the ones I really wanted and they said, no.
00:14:29 (Alastair)
Going to want to put more energy into the ones you do want and the ones you don't. So, if you do the ones you don't want at the beginning, you're potentially not going to prep as well anyway.
00:14:40 (Piotr)
Yes. Basically, whenever you fundraise, the first investors you meet, you have to discard. And what you do is you practice, you practice messaging, you see what kind of questions they ask because a lot of the questions will be the same. So, when you meet the ones you really want to invest, you will have a perfectly nailed answer with a good messaging, you test it. What works, what doesn't work. This fundraising advice doesn't apply for the super-hot start-ups. Like if you're super-hot in the past, you could have done the round in one week, right? I don't think it's happening anymore. Maybe if you're a Generative AI company, probably you still can. But normally you practice, practice, practice. What was good after, you learn what are the concerns of people. And frankly, these concerns were valid and to some extent, still are, I think some not. But some people were asking, is the market big enough? Of course it is. Right? But if people don't believe in it, there's not much you can do. People are asking, can you make money on this? Can you have a good credit score? Yes, you can, but you can't prove it. Either someone believes in you or not, this is very difficult to prove without. And there were some other concerns they had, I don't remember anymore. But at the end of the day, we had a few term sheets, we managed to do the round.
00:16:11(Alastair)
Yeah. So effectively, lessons there were, listen, to the feedback, iterative process. Learn from all the Q&A and ultimately people will believe in you. But you can refine your message, refine your pitch, and refine your answers to the questions they ask.
00:16:25 (Alastair)
How many investors did you have in that first round?
00:16:28 (Piotr)
I think I had like three funds who led the round and then I had maybe ten angel investors. The first round was amazing. I think we ended up with really great bunch of people. So, we had a Seedcamp, we had White Star, GFC at the round and some really outstanding angels like Will Neil, Carlos Gonzalez, very famous London-based super angels.
00:16:52 (Alastair)
And how long did that process take from kind of start to close?
00:16:58 (Piotr)
I had a first meeting in March, April with his friend.
00:17:02 (Alastair)
2019?
00:17:02 (Piotr)
Yeah, I signed the term sheet in May. So, two months process, and then it was three more months to close the round. So, we closed the round on the 22nd August of 2019. So, five months you know.
00:17:18 (Alastair)
Okay, good. Nice. And money in the bank. What did you do then? Because you do have a developer background, but you're effectively non-technical founder.
00:17:26 (Piotr)
I studied computer science, so I can code a bit, but I'm a terrible developer and I never seen a single line of code in my company. So, yeah, the first thing, I hired a technical team. Actually, the first hire was non-technical was a friend of mine. She was looking for some kind of job and I just needed someone to help do small things, like help me research that, book this, reach out to that person. But after her, it was all about hiring developers.
00:17:58 (Alastair)
Yeah. And at what point did you get your first customers?
00:18:01 (Piotr)
We started to look for them very, very, very early. So, when the round closed end of August, I think the first developers joined us full time beginning of September or October, and the first customer was in November. So, we literally had no technology at the time.
00:18:21 (Alastair)
So that's pretty fast. I think this is really interesting because a lot of people think, get a nice, polished product, get some customers and run them through it. But actually, complete opposite to that, you got some customers, tech wasn't there, but actually you ran them through the process nonetheless. And did they know the tech wasn't there and it was semi manual or?
00:18:42 (Piotr)
Yes and no. Listen, you practice. They didn't care. I think there's a very famous advice that the product should be so bad that you're embarrassed. And it was like we were giving loans to the customers, and for the first two, three months, there was no ability to repay the loan even, right. Literally, we're just not collecting money back because we're like, this is not a priority.
00:19:11 (Alastair)
I'd always go, rule number one in the business, just try and get paid. Have a way to get paid.
00:19:15 (Piotr)
Yeah, but listen, if you're building a business actually, whether this is next investment round or for yourself, it's all about discovering and answering the big questions, right? And first question we had was, will someone even want to take this product, right? So, the question was not, will they repay the money like this is for later. The first question is, does anyone actually want this product and at this price? And this is the hypothesis we were testing. So, basically we're figuring out how to reach out to people, how to get in front of them. The first customer we won was the London based company called L'Estrange, they do…
00:20:00 (Alastair)
the clothing, the hoodies…
00:20:03 (Piotr)
Yeah and the pants. To get them on board, I literally went to their store, I think I knew the founders will be there. I went to the store, I bought a pair of pants and started to chat up the founders and tried to convince them to get on a call with me and sign up as a customer. So, which is completely not scalable.
00:20:30 (Alastair)
But, you have face to face conversations and hear the objections from a customer or a potential customer then and there.
00:20:37 (Piotr)
Exactly.
00:20:37 (Alastair)
Then and there. So, it's still something to be had for, we call it shoe leather, wearing out the shoes to go from customer to customer, door to door, to understand what the pain points are, what their objections are, which is, I think it's great. And how long did that last before actually you had a more seamless way of customer acquisition? Did they sign up, first of all?
00:20:58 (Piotr)
They did. They became our first customer. My second customer was a company I was friends with, the founders were my friends also an e-commerce company. I think they still are a customer. And only after two months later we started to think we hired a first salesperson and we started to think about the channels and how do we go after them. We started to test ads, VC channel, calling, etc. But this came later. The first customers were all mine, and I was on a phone with them. I was doing everything.
00:21:37 (Alastair)
Yeah, cool. And at this point, how many people were in the team at this point when you got your first few customers?
00:21:42 (Piotr)
Seven.
00:21:43 (Alastair)
Seven people, OK. And so, at what point did the technology not take over, but technology start to come to fruition, if you like?
00:21:51 (Piotr)
I would say the first months were very, very rapid development because we basically were building that technology based on whatever the customer we were talking to, we're building integrations we needed to onboard them. So, okay, these guys use WooCommerce. Let's build WooCommerce. These guys are on Shopify. Let's build shopify, let's build this, let's build that. And it was very customer driven product development. At the same time, we had a tiny team. We had three developers on the business side, way too small team, but didn't have that much money, to be honest. So we were, you know, at the same time we were building the back end and like, the loan management system. In the hindsight, I wish we had more people and build it faster. I think it cost us a lot of money.
00:22:43 (Alastair)
So the one and a half million, how long did that last you, and what did you do with it? Because some of it was for deploying and some of it was for you as a business.
00:22:52 (Piotr)
So, I think we split it more or less half and half. So, we said, okay, we'll use half of the money to give loans to the first customers, half of the money to build the product and do the development, do the legal stuff. So, we got money in August, so in March, which was what, eight months later? We are slowly running out of money, right? We are like, the runway is shorter and shorter. We finally had a debt, so it was good. And the problem was Covid started, and there was this famous beginning of a Covid, I don't know if you remember, were very tough. I think everyone thought it was going to be disaster, right?
00:23:35 (Alastair)
A lot of tightening all around the board and every cost.
00:23:40 (Piotr)
Exactly. And I think my investors were panicking. They were like, hey, you need to cut the cost. Fire almost everyone. You need to have 18 months of runway. I was like, guys, I have made…
00:23:49 (Alastair)
At this point, you got two months of runway.
00:23:50 (Piotr)
Maybe four, right? We really have to fundraise. And it was tough. I really thought, this is going to be the end. Luckily, there was one… everyone said no, all the investors were shut down. They were not talking. And when they picked up the phone, they were like, well, we have a global crisis and you want to give loans to start-ups? Are you crazy? Then luckily what happened is clients started to overperform because, and we saw what.
00:24:25 (Alastair)
So the moment you're predominantly e-com, are you, are you into SaaS business?
00:24:28 (Piotr)
Predominantly e-com. Mainly e-com. We had the term sheet on the table, one investor, we had one term sheet on the table, and at a very bad valuation. And we were like negotiating super hard. Like, the deal was almost fall apart many, many times, but we managed to get to something which was fairly okay for everyone. And so, we closed this deal and the numbers at the same time started to pick up. Like, the e-commerce was really doing well, overperforming. And we had the real-time data, right.
00:25:06 (Alastair)
You had daily data, I'm assuming, right. So, you can see it real time, what's going on with your clients.
00:25:12 (Piotr)
So we see things are going really well for our customers, and our numbers are picking up. So, we closed the round in August. So, one year after the first one. Right. And two months later, I'm coming to my investors and telling them, listen, the things are going gangbusters. Like, I need, I need more money, because we're growing super fast. They were like, this is crazy. You just closed the round. I was like, look at this. And, yeah, one month later, we went to the market again and raised our, you know, big round.
00:25:41 (Alastair)
With the same investor? Different investor. And can you talk about how much those rounds were?
00:25:49 (Piotr)
I think… I'm not sure what we announced.
00:25:53 (Alastair)
Okay, yeah, no worries.
00:25:54 (Piotr)
Large, tens of millions.
00:25:56 (Alastair)
Okay, amazing. Incredible. Especially during that period. But then e-commerce, nobody could go out. Nobody could go to a retail store and e-commerce.
00:26:04 (Piotr)
Exactly.
00:26:04 (Alastair)
Massively, huge, huge tailwind in the e-commerce world.
00:26:06 (Piotr)
Exactly.
00:26:09 (Alastair)
And so where does that take you then? So, you see this booming channel or this booming customer base that you're 100% or near 100% focused on, where does it go then?
00:26:18 (Piotr)
The problem was that space we were in became very, very hot.
00:26:23 (Alastair)
There were a bunch of competitors coming into the market.
00:26:25 (Piotr)
Every day in every market around the world. Like my investors... When you're a founder, people will tell you, when there's a competitor coming up, you probably know it. And every day would get message, oh, there's a competitor in France, competitor in Spain, in Brazil, in Middle East. And everyone.
00:26:43 (Alastair)
Gets annoying eventually doesn’t it?
00:26:25 (Piotr)
It is, it is. And everyone was getting huge investments, but the space was growing very fast, and everyone was asking, what's your moat? And I think this was the most valid question everyone had. What's your moat? How are you different than all the other competitors around the world? And our view at the time was our idea. Let's go all in. Let's build a bank for everyone. Let's not only do the loans, but let's become almost like a real bank. And let's give everyone the account, credit cards, you name it, right?
00:27:22 (Alastair)
But at this time, there's a lot of Fintechs doing that as well, aren't there?
00:27:25 (Piotr)
Yeah.
00:27:25 (Alastair)
Everyone wants to be a bank.
00:27:27 (Piotr)
Everyone to be the bank. So we got the money, right? We got a lot of money. And this is new investor really loved the vision, so we decided to go all in on this.
00:27:40 (Alastair)
And I'm assuming you ramped up your team accordingly.
00:27:43 (Piotr)
Yeah, of course. So, we hired a guy from Revolut who was running Revolt business. We thought, hey, what is the best banking product in Europe? Revolut Business. So, we hired the guy from Revolut running Revolut Business, and the team got huge. Like within a year, from twelve people, we became 120 people.
00:28:05 (Alastair)
In how long? Twelve months. Less than twelve months.
00:28:07 (Piotr)
12, 13, 14 months.
00:28:10 (Alastair)
Who was involved in hiring those? Another 100 or so people. Were you involved in those hires? Because at that point, that acceleration, which is a problem for a lot of fast-growth businesses that get eight figure investments, is that that speed of growth in people, you just dilute the values, dilute the message, dilute the vision, and that can create a bit of havoc and chaos as well.
00:28:35 (Piotr)
That's what happened. That's what happened. The problem was my co-founder was responsible for a product and commercial strategy, and then we hired this product guy from Revolut. The product engineering, commercial team, they just grew and grew and grew. And frankly, we didn't keep the bar high enough. So, we grew very large and people were lost. People had no idea. Are we a lending business? Are we a banking business? We wanted to launch a banking product in the US first, because this was the biggest market.
00:29:15 (Alastair)
So this time, were you in the US already for the revenue-based financing?
00:29:19 (Piotr)
Yeah, and the team just got confused, like doing too many things at once. The burn increased rapidly, it became a huge, huge mess.
00:29:31 (Alastair)
And what did the investors, I'm assuming at this point, you're still having quarterly or monthly board meetings with some investors being on the board, or at least giving them updates. What did maybe the original investors think around this change? This complete, not complete pivot, but this kind of, I guess, spreading yourselves thinner. What was their view on it? Or were they just rubbing their hands together?
00:29:53 (Piotr)
I think initially they had some concerns, but they were fine. I think the truth is, this is 2021. This was one of, I think, the craziest years in the history of start-ups, right? Everyone was doing insane rounds and the investors themselves were a bit, pushing the founders to grow fast at all costs, because this market was rewarding. Everyone wanted you.
00:30:20 (Alastair)
Very changed message from now, isn't it?
00:30:22 (Piotr)
Right, right? So the investors were kind of like, yeah, you should go fast. Like the burn, don't worry about this now, you will raise another round. I don't want to blame investors for anything, right? But I think everyone was feeling like you should be doing this. But, yeah, to be honest, I didn't like that very much. And this is where the things broke down in our company very soon because we tried to raise our Series B and we failed because we wanted to raise a massive amount of money. And I think justifiably investors didn't buy it because they were like, your banking product is not there yet, and your lending business is not big enough to justify this crazy valuation. So if we wanted to raise less, we would have done it. But I think we were going for a massive amount of money and we failed. And then this was kind of a wake up signal for everyone, and we started to have internal battles, like, what do we do next as a business? What do we want to do?
00:31:36 (Alastair)
And is that because there was so much, I guess, diversity and vision, or because you were burning a lot more than you wanted to, or because it was harder to raise what created or what came to the head? What was it that came to head?
00:31:53 (Piotr)
I think the bottom line was in the management team and between the founders, we had a different vision for the business. I think some people wanted to, you know… they thought that the only way forward for the business is to execute on the banking vision and grow super fast, burn the money and build the banking product. Well, my view was maybe we overextended ourselves, maybe we should come back to the core. Maybe we should cut all these side projects and this banking. Imagine we had half...
00:32:29 (Alastair)
Because, were you trying to go for a banking license at the time as well?
00:32:32 (Piotr)
No, we were using banking as a service. But imagine half of a company was building the banking business, which had no customers. And the rest of the company is asking, what are they doing? We are burning millions. And they brought in, I think, ten clients over a year. This is crazy, right? And it doesn't make sense. And at the end of the day, we ended up going to the board and talking to the board as a founder, as a management team, and we pitched different visions for the business. And the board agreed that the better way to proceed is to cut all the other products, scale down the business, and focus what we really were meant to be doing, which is lending. So we did a huge round of layoffs, we shut down all the other projects, and focused on the core business.
00:33:23 (Alastair)
So let me get this right, you and your co-founder both pitched effectively in competition with one another, different business visions, and made the dragons effectively choose which one to go exactly to go for.
00:33:38 (Piotr)
Exactly.
00:33:39 (Alastair)
Okay. Wow. And how was that? From a stress perspective.
00:33:45 (Piotr)
It's very very difficult, I don't recommend it to everyone. But at the same time, it's a very common story. I think founder breakup stories are so common. And now whenever my friends, other founders are going through this, I'm really trying to be of help to them, because you're basically going to meet investors and you're thinking, well, today I might lose my baby, but something I created, I founded two years ago, three years ago, I'll be fired from my own company. Steve Jobs was fired from his own company, right?
00:34:19 (Alastair)
Worked out okay for him in the end didn’t it?
00:34:21 (Piotr)
Happens to the best, I'd say. But, yeah, it's very difficult emotionally. I think from an ego perspective, you think, how rest of the world will perceive you as a founder? So much of your identity is tied to the business. So am I a failure? How do I feel about myself? Very tough time.
00:34:42 (Alastair)
How did you reconcile all of that as you were pulling together, I guess, your pitch or your re-pitch to the investor pool, how did you work through that? Like, the emotional, the mental side of it.
00:34:57 (Piotr)
A lot of therapy, I have to say, antidepressants. This is a very dark period for me personally, and I think I managed to do a lot of self-reflection and think how to treat myself. I realized I have to treat myself like an athlete. So invest in eating healthy, invest in sleeping, invest in exercising. So I got a personal trainer, like, I think two months after that and really start to work very hard on making sure I'm healthy and well rested, because that's the only way you can go through this level of anxiety, stress, sleepless nights. It's very difficult for every founder, and I think many of them are going through this right now.
00:35:48 (Alastair)
Yeah, because running a business and going through the stresses is, in many ways, is complete odds, the opposite end of the spectrum to leading a healthy life in terms of getting good sleep, eating healthy, having time for exercise, and there's obviously… anyone can say, oh, well, it's just about prioritization, but it is diametrically opposed to running a very stressful startup where you're accountable to investor stakeholders, where you're accountable to a team, where you've got these challenges of, hey, I've got to re-pitch for my baby that I've created. And how long was that process where it was kind of like, okay, I know I'm going to have to re-pitch for this, and this is the pitch date. What sort of period did you have where you had to collect your thoughts and present that vision or reconfirm that vision?
00:36:36 (Piotr)
I think we started to have big discussions internally in December, but they didn't get to the board level. But I think once they got to the board within a month. I think it was like one month process, because the last thing that the board wants to do is to fire a founder, to be honest. So initially, it was all about pitching. Hey, guys, maybe you can align yourself, align work together. Is there really no way you can start working together? But my relationship with my now ex co-founder was just so broken that we just didn't see eye to eye at all. I think our visions were so different that we both realised it has to be one or one or the other.
00:37:23 (Alastair)
And was it dysfunctional for the rest? So at this point, the team was 120 or so. Was it dysfunctional for the team below you as well? Did they have their favourite parent, if you like, want for a better phrase, or how does that work?
00:37:35 (Piotr)
Of course, of course. You have the team, which is… and I think this is why it gets very dysfunctional, because your management team and then people below, they don't know who to listen to. Like, hey, I have one founder and the other founder pulling in a different directions. Who do I listen to? Who's the real boss? You have a CEO, I was a CEO but you know…
00:37:55 - (Alastair)
What was your co-founder role, COO?
00:37:56 (Piotr)
COO, I think COO, but technically, like, 90% of a company is reporting to me. I had only risk and finance, and he had commercial product function. So on the one, he had majority of a team underneath him. But we are completely misaligned and it got very messy internally, right. So I think it was a very bad period for the company.
00:38:22 (Alastair)
How frustrating was that, personally, that maybe people wouldn't… maybe I'm putting words in here. People wouldn't do exactly what you - sorry, sounds very dictatorial, but people wouldn't be aligning themselves to what your vision was and kind of veering off that. How frustrating was that? How did you bring that back on track before that time?
00:38:43 (Piotr)
I think it was very frustrating and very unproductive for the team. I think we were spending countless meetings trying to align on a vision for the company. And I think both sides then are very unhappy because one side, I wanted to do the layoffs, and half of the management team is saying, no, we can't do the layoffs. So you can try to find the compromise. But in the period like this, when the company is going through a very, very difficult time, compromise is not the way forward. You have to do a very drastic measures, like what Steve Jobs did in Apple, right? When he took over after he was fired, he shut down the old products. He bet everything on, I think one or two products shut down, shrink the product, line, and that's what we had to do. But the rest of the management team was against this. They were really like, we can't quit banking. We can't quit these projects. So I was frustrated as well, because I was like, no, these measures are not enough. Like, to save a company, we really have to do the huge turnaround.
00:39:58 (Alastair)
If you go back a bit to the, there was an inflection point there. What was actually the catalyst? Because obviously you've gone a number of months, 10, 12 months or so on building out the banking tech, hiring a bunch of people. At what point did you kind of go, oh, shit, and stand up and go, actually, this isn't the right direction forward? What was the actual final catalyst for that? Because I guess you can go from day to day, week to week, month to month, and all of a sudden it's twelve months later. What was that day or catalyst that said, we've got to change this?
00:40:37 (Piotr)
I think it was a tiny, tiny thing. We had this employee, and I don't name them, but they had this role, which I thought is completely useless. And this person joined us and in my opinion, had nothing to show after three months. And I went to my co-founder and said, hey, we have to let this person fire this person. And he said, quote, ‘this is your opinion, Piotr’. And I think then this is the moment when I was like, okay, I can't be running this company if there is someone I think is completely adding zero value to the business, and I can't let this person go. This can't continue. And I think the things escalated from this moment very, very quickly.
00:41:26 (Alastair)
It's very difficult when you've got 120 in the workforce to be on top of everybody's output, input, process and output. It's very difficult to do that with 120 people in the organization.
00:41:39 (Piotr)
Yeah, but at the end of the day, we didn't have numbers to justify 120 people. We didn't have enough to show. And I think the problem we did, we were launching this new product with a two big team. We had, like, 50 people working on a banking product when we had, like, ten customers. And this is complete opposite of lean startup and launching products effectively. We didn't listen to the clients and we mishired. We basically had people coming from big companies who didn't have a biz-founder mentality, and we had to change it.
00:42:17 (Alastair)
Yeah. And I guess in that pace of growth in people, you're ultimately hiring the wrong people that weren't aligned to the right values on capital, I guess. So how is the relationship with your co-founder, ex co-founder? After kind of the initial split?
00:42:34 (Piotr)
Listen, it's very hard to come back after something like this. I think it's okay now, it's productive. He's supporting the company, and I think he's doing amazing things right now. So I think time heals the wounds. And I think it's much better now. I think if I were to meet him, I think it would be okay. But to be honest…
00:42:53 (Alastair)
Not in a dark alley.
00:42:55 (Piotr)
No, I think it's all good. And I think he's proud of what we are doing now as a company.
00:43:01 (Alastair)
That’s awesome yeah, that's really good.
00:43:02 (Piotr)
He's very supportive, but I don't think we could work together again.
00:43:08 (Alastair)
Is there any kind of lesson from that? And as you rightly said, there's a lot of co-founders that split over time with different life events, different ideas for the vision of the business. What would be your kind of one nugget there? Or one thing you would share if somebody's going through a co-founder breakup?
00:43:29 (Piotr)
Wow. I would say, don't be shy to talk about this issue as early as possible and bring investors on board as early as possible. I think we're trying to hide it from the board investors. And I think we would have done a better job had we been more frank and open about it.
00:43:53 (Alastair)
With each other or with the board?
00:43:55 (Piotr)
With each other and the board. I think we're trying to hide these issues for too long from each other and from people outside.
00:44:04 (Alastair)
Yeah, cool okay. You're now the CEO and original founder, still founder. You raised Series A. We talked a little about the market, so tell me if we can dive into the kind of the process around Series B and ultimately where you are today.
00:44:25 (Piotr)
We wanted to raise Series B, and thank God we didn't. I think personally, it's a blessing in disguise, because we wanted to raise this, like, nine-digit megarounds. And had we done this, we would have never made changes to the business. And I think we would be worse business down the line. And frankly, not having this money and having much less money forced us to be efficient, effective, and we are profitable right now, growing every month for many, many months right now. Because we knew that there's only one thing that will save a company, treating customers the best we can. Treating them fair, and being efficient with what we do, how we do things. We could only afford to have best people. So the company, frankly, now is in the best shape as it ever was.
00:45:24 (Alastair)
That's awesome. It's a bit of an oxymoron isn't it, a fast growth business that's profitable? There's more and more of them. Typically it was a bit of oxymoron. Tell me what's the.. to close off Piotr if that’s okay. What's the one key metric that you look at in your business? Day to day, week to week, month to month. What's the most important thing for you as a founder and CEO of the business?
00:45:47 (Piotr)
To me, it's number of clients we talk to everyday.
00:45:51 (Alastair)
Talk to, not convert? But number of clients you talk to.
00:45:54 (Piotr)
I think bottom line is I think we will convert them. I believe in our process, I believe in our risk. And sometimes the clients take longer to convert. But at the end of the day, I believe if we talk to enough of the right customers and we offer them the right product, sooner or later they will convert. Sometimes it takes one year to convert the customer because it's the wrong time. But I want to make sure that every founder around the world knows that we are there for them and we are the best option available.
00:46:27 (Alastair)
Amazing. And any lasting bits of advice for other founders going through any of that journey that you've just described.
00:46:36 (Piotr)
I think what really helped, when I launched the business, I was working 24/7. I think I was first one in the office, last one to leave. And I think this is what you probably have to do in a very early stages of a company. But now I realised that this is a marathon not a sprint. I'll probably be in this company for many more years to come, and I have to enjoy the ride. So to do that, you really need to treat yourself in a way that you can last this marathon. And this means eat well, train, sleep, have a good personal life. You cannot do this on your own. So you have to make sure you have an ecosystem around you and be healthy to make sure you can deliver value for shareholders, employees, clients, but also look after yourself.
00:47:31 (Alastair)
So enjoy the process, not just the destination.
00:47:33 (Piotr)
Exactly.
00:47:34 (Alastair)
I love it. Piotr, thanks very much for doing this.
00:47:36 (Piotr)
Thank you for having me.