September 5, 2024 • 37 mins
Steve McLaughlin, CEO at Financial Technology Partners sits down with David Weisburd to discuss the hidden values and success of top fintech companies, insider perspective on the work-life balance myth, and the powerful face-to-face strategies that elite companies swear by.
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(00:00):
They ultimately got a $150,000,000 valuationcompany we came in, did all of our work.
We found rebuyers that they never contacted andgot him a 550,000,000 evaluation.
Right?
We, of course, had a big fee trigger above 150or 200,000,000 So we made three times the
amount of money that we would have made if wegotten a regular outcome.
So we started getting addicted to this thingwhere if you dedicate 510 x, the level of
effort, and you've got 3 x, the level ofexpertise, you're gonna wind up getting a
better outcome for the client.
(00:27):
We worked on Revolute, which is kind of acompany that was getting a lot of bad press at
the time.
And, you know, the prior valuation that wasachieved by JP Morgan is $5,000,000,000.
Right?
So we came in a year later, and we're like, theguys are, okay.
Can you get us 10 or or whatever.
And so we came in and we got 33,000,000,000 forthe company.
We sort of uncorked a lot of things about thecompany that, you know, the bankers didn't.
You know, we had built a 20 year model.
(00:48):
We got under an actual belief that this couldbe a $1,000,000,000,000 company, and it could
be one of the biggest winners in 3 years later,here we are today.
They're doing a deal at 45,000,000,000.
I asked you when we last chatted whether PayPalwas sold at the right price.
And you said you would have sold it for 5 or$10,000,000,000, not the 1,000,000,000 that
I've sold for.
Tell me about how you would have gone aboutselling PayPal.
You look at PayPal.
(01:09):
And, again, the joke is like, you have topaypal mop.
You know, these people that were rememberedfrom the great things they did to PayPal, Elon
Musk, and so on and so forth.
Right?
Steve, I've been really looking forward totalking, for now close to a decade.
I've been hearing about you.
And, thank you to Avi Dorfman for theintroduction.
(01:31):
Welcome to the Tennox
Capital LockDown.
Year, and
thanks for having me, David.
It's my pleasure.
So you run really the number one fintechbanking platform in the world.
How did you go about star FT partners?
I
guess the background is I was at Goldman Sachsfor a bunch of years from 95 to 02 and their
fig group eventually ran or co ran the fintechdepartment there and then, moved out to the
west coast.
And so in 2, at the, ripe age of thirty two, Ibolted and started FT Partners kind of thinking
(01:56):
and believing that, you know, the world offintech would actually be big.
Right?
And so but that was not something peoplethought that much of.
And, you know, too, you know, that was 22 yearsago.
So I've been doing it for quite a while.
When you started at 32, were you running awayfrom the corporate banking route, or were you
going towards building something new?
I think it was a combination.
You get your training grounds at the biggerfirms.
A lot of times, and you just kinda wanna dosomething smaller, Rush, where you can
(02:19):
see the impact of what you're doing moredirectly.
You know, I mean, you're part of such a biggiant machine like a Goldman Sachs.
It's hard to really see the impact of whatyou're doing sometimes.
And I think, look, from a very young age, I wasdoing entrepreneurial things.
I didn't even know it at the time, but I was,like, painted rocks put people's addresses on
them and sold them to the old lady and madefive bucks.
And I I did my time at GE and then GoldmanSachs, and I think I'd had enough of the big
(02:42):
firms and wanted to go do it on my own.
So, yeah, it's never looked back.
It's one thing leaving Goldman Sachs to go toJP Morgan or Morgan Stanley, but you left
Goldman Sachs to start a new firm.
Did people think you were crazy?
I literally thought I was crazy.
Like, literally, they're like, what are youdoing?
Like, it makes literally no sense.
And that's it too.
Yeah.
Anyone's torn on my end.
They're like, No one's ever really done thatbefore.
You know?
Like, it was, like, unheard of.
(03:03):
You know, like, you'd have to be, like, a very
Especially after that.
Yeah.
I mean, maybe if you're, like, running agigantic apartment and you're, like, running in
your 55, you know, that's when, like, Corella,Washington from Pirrella, Washington and the
big banks, he went on started his own thing,and Ken Mollis left, you know, UBS when he was,
like, 55 or, you know, whatever.
And and they they've already got their bigcareer going.
So this was, way
(03:23):
more humble beginnings.
I think I remember incorporating the
business for $99 using an online service calledcompany corporation.com, and I went to what was
then Kinko's to get my business cards, and Iworked out of my tiny kitchen table and my 2
bedroom apartment in San Francisco for thebetter part of the year with
interns in the early days.
It wasn't until a couple of
years that we knew it was gonna really work.
(03:45):
You made a key decision at inception to focusexclusively on fintech.
Walk me through that decision making to focuson such a niche at the time.
I mean, not only was it a niche.
It was a niche.
I don't wanna seem to care that much about, andthe market was completely decimated It was
right after the dot bomb right after 9:11.
It was an environment where there's no deals atall, let alone in tech or fintech.
So it was quite a contrarian thing to do.
(04:06):
And I'd like to say it was like a geniusdecision or whatever, but it was it was it
kinda what I knew.
And I think life is a little bit ofserendipity.
I mean, had I been energy and utility group atColvin.
You know, maybe I wouldn't have done it ormaybe I've done it and failed in the dotcom
world.
It became famous later when there was PayPaland a few other ones.
Right?
But, largely, they all failed.
So, actually, it seemed them all failed andsay, look, and it's a little bit of the story
(04:26):
today 20 years later where I've seen a lot offintech companies fail, but the TAMs that the
market sizes that they're disrupting are stilljust
as big.
The problems are just as big.
They just didn't have the right solution.
I make the simple analogy to, like,
the old, you know, Web Band back in 99.
It completely blew up even though Goldman Sachsput a hundred money bucks instead of everyone
else.
It's like, because their idea was let's delivergroceries to your house, but in order to do
(04:49):
that, let's get refrigerated trucks, giantwarehouses, and all this kind of stuff.
And it just didn't work economically.
Some things just take time to get the modelright.
I think FinTech is one of the things where theTAMs and the broken parts of the world are
still broken.
It just someone needs to come along and hackaway at the one thing that's gonna make that
work.
So but it was at a moment in time where I sawall these failures, but I I realized the
problem was still there.
So I knew the companies hadn't created.
(05:11):
Sometimes having a big pain isn't enough.
You need to have the right solution with theright market and the right time in the market.
Yep.
You regularly go into pitches.
It's Morgan Stanley and the Goldman Sachs andFeet partners.
How do you get in
these rooms?
And what is your differentiation against thelarger banks?
I could go on for a long time on this one.
The number 1, I mean, we're entrepreneurialpeople working with entrepreneurs.
(05:31):
So we generally work with private companiesthat are
on a growth journey.
Right?
So the same ones that Sequoia and Teresa or,you know,
co 2 or whoever are going after.
They're the ones we're going after.
You know, it's not the older school.
More boring.
Public companies are growing 6% and trading ateight times, you know, EBITDA.
And they're fine too, but we tend to go withthe smaller.
So they like the entrepreneurial side of whatwe do, and it matches up with what they do.
(05:54):
I think that's one sliver of it.
I think the biggest liver is look.
When I was at Goldman, I was shocked at thelevel of quasi mediocrity that I saw across the
deals.
Right?
And everything was based upon high levelanalysis.
Everything was based upon.
Let's get the deal done.
The debt understanding that the bankers out ofof the client itself were pretty thin.
(06:16):
And so when I started FT
Partners, the one thing I looked at actuallywas Goldman's IPO.
When Goldman IPO was going on, they had, like,fifty people working on it.
Right?
And they were going super deep on their ownIPO.
And I was like, oh, so that's what clientservice looks like.
I've never seen it before.
You know?
But when I saw them doing it on their owncompany, I was pretty blown away.
And so I said there's a next level of bankingthat can be done.
(06:38):
And I think it can only be done in a niche byniche basis by people that really understand
the niche and really commit themselvespermanently to that niche so you can accumulate
lots of knowledge.
Some of our first assignments, we didn't haveother assignments to work on.
Right?
So we were able to go super deep with theclients.
It's something I've always wanted to do.
Never at the time to do a Coleman.
So we would learn the tech stack.
We'd learn the customer service center.
(06:58):
We'd learn their market.
We'd study their competitors.
We'd look at the pricing trends.
We'd look at the valuations through a wholedifferent lens that other people would tend to
look.
Right?
And we end up getting hired by a company calledLink Systems in Oak Ray and up selling at No
Four.
And this is a company that had been previouslybeen banked by another very large bank,
remained nameless.
And they ultimately got, like, a $150,000,000valuation with the company.
(07:20):
We came in, did all of our work.
We found rebuyers that they never contacted.
Got him a 550
my evaluation.
Right?
We, of course, had a big fee trigger above a150 or 200,000,000.
So we made three times the amount of money thatwe would have made if we gotten a regular
outcome.
So we started getting addicted to this thingwhere if you dedicate 510, the level of
effort, and you've got 3x level expertise,you're gonna wind up getting a better outcome
(07:44):
for the client.
You say you're only as good as your your lastdeals.
A number of years ago, we worked on revolut,which is kind of a company that was getting a
lot of bad press at the time.
And, you know, the prior evaluation that wasachieved by JP Morgan is $5,000,000,000.
Right?
So we came in a year later and we're like, theguy's like, hey.
Can you get us 10 or 12 or whatever?
And so we came in, and we got 33,000,000,000for the company And we sort of uncorked a lot
(08:07):
of things about the company that the otherbankers didn't.
You know, we built a 20 year model.
We got under an actual belief that this couldbe a $1,000,000,000,000 company, and it could
be one of the biggest winners in fintech.
You go 3 years later, here we are today.
They're doing a deal at 45,000,000,000.
I personally think it's worth double that, andthey're gonna be bigger than Stripe and many
other companies.
So we get in.
We see these companies who may help them getthe value they deserve by going deep,
(08:29):
partnering with them, and helping them achievegreat things.
So It's just a level of depth and actuallycaring a lot about the outcome and caring about
the founders, caring about the founders,employees, and their shareholders, and try to
get people the best outcome.
It isn't always about getting the bestvaluation at all.
I mean, a lot of it's what's the right fit,what's the right culture, and there's many more
important things in evaluation.
And we wanna make sure investors get greatreturns too.
(08:50):
So we're not gonna represent a company and popup the value.
If it's not something we feel really strongabout on the positive side.
So, you know, for me, it's still to create anecosystem where everybody can win, but or the
company shouldn't be a losers in the equationeither.
You mentioned that you were able to get a$550,000,000 valuation for a $150,000,000
company, and you got triple the fees.
Presumably, the large banks also like to makefees.
(09:10):
What keeps them from being able to offer thesame level of service and get the same level of
economics?
What keeps the army from being like the navyseals.
Right?
You know,
you can't train everyone.
You can't have that elite force in that widerspectrum.
But we're more super proactive, very founderfriendly, very much an advocate for the seller,
we're not trying to get these from the big buyside of the world or the big buyers.
(09:33):
We've never once been hired by Visa,Mastercard, Discover, Capital 1.
We're always on the side of the sellers.
We can be very loyal and uncomflicted in thatregard.
We're not trying to win business from Heroprice or fidelity where Goldman's trying to get
them to buy every single IPO on the street andgetting commissions spend on trading and all
sorts of other stuff.
So the strictly independent device matters.
And when I was at Goldman, I was trying to dowhat I'm talking about when we're doing an
empty partners I was, like, slapped on thewrist.
(10:00):
You know, Steve, you're you're being too muchof a zealot.
You're working.
You're trying too hard.
You need to spread yourself thin or you need towork on bigger deals.
Why are you spending so much time trying to getsuch a great outcome for this particular
company?
And these things were said to me, it was, like,just get the effing deal done.
Was, you know, the mantra that I heard asopposed to get it done right, and we're sort of
measured twice, cut once, get it done right.
And we become, you know, as well known forgenerally clients not to do deals than to do
(10:24):
them because it don't feel like it's a fairdeal.
Like having negotiating leverage.
We like having clients that don't have to dodeals.
Right?
If we have a client that absolutely has to do adeal, then we'll find a way to get the deal
done well.
But if they don't have to do a deal, you know,then you've got the ultimate leverage.
Right?
That's why companies that are profitable thatare growing, they can always say no.
And a lot of times, the bankers put pressure onyou to get a deal done.
A lot of bankers are compensated annually basedupon how much revenue they bring in that year.
(10:48):
So it was a huge conflict in the compensationmodel where they're very much motivated a lot
of times to bring a deal in sooner rather thanlater, close deal sooner rather than later.
Fees lower.
So we're not motivated that way.
We're more used to term out of Goldman'splaybook, you know,
long term greedy, but you have to really belong term thinkers.
And we've got clients that we won in 2008 or2009 that are still clients
today where we've done 10 transactions whobought the way could have sold 10 years ago for
(11:14):
a $100,000,000 are now worth 1,000,000,000 ofdollars.
So, you know, they're running around the worldsaying, hey.
They've got companies called Avid Exchange.
You know, I'm talking about was written up inthe Wall Street Journal article that came out
on us where the the CEO said, look.
Know, Steve's the one that told us, and FTE isthe one that told us not to sell.
Steve was always a zell it for keeping thecompany private, keeping the company going,
take it public someday and become a$10,000,000,000 company down the road.
So telling someone and advice that people notto do certain deals, you know, can add a lot of
(11:37):
value and you get paid on it later.
We're still making peace off of out of exchange10, 12 years later.
And I get why you as the founder at F.
D.
Partners would be incentivized to push businessdown the road to do the right decision to
company gross, how do you incentivize youremployees to to have the same way of operating?
Easy.
I mean, I think the the one measure we have,and I talk about this all the time at the firm
(11:57):
is client happiness.
And that's a basic premise, right, but weliterally have a thing where every single
person on every single team can click a buttononce a week about what the perception is the
client happiness.
If it's not, like, 10 out of 10, know, we'redoing something about it.
Right?
And so that's how you measure people in a weirdway.
Right?
The revenues will come.
Right?
And when we've made big profits, we've paid bigbonuses.
Right?
And so people have
to have a trust in the founder of the company,the person that's
actually deciding on all the bonuses, that ifit's not short term thinking that that's being
(12:26):
a reward, it's long term thinking that's beingrewarded, but you gotta reward people for those
activities.
Right?
So when we do have a big outcome in 5 yearsfrom now, I gotta reward that people live there
along the way.
Right?
So that's that's something that we've done overand over again.
So most of our senior people have been here 10,some 20 years because of the way we, you know,
think.
But a lot of times, yeah, we'll work on deals.
(12:46):
And sometimes people say, why are you guysworking on a $25,000,000 capital raise for this
young AI company.
It's like, well, we think it's gonna be a 5 or$10,000,000,000 deal in the future.
Right?
And sometimes you'll have a good junior banker,maybe a a director, younger MD, that will
really bond with that MD and kind of work withthem over 10 years, and those companies are
super loyal down the road.
So for us, it's been, important to get theculture or where everyone's addicted to the
(13:11):
long term thinking.
It's very hard, though.
Think about it.
I make this analogy sometimes.
A lot of companies are doing a licensedsoftware where they get all the fees upfront.
And then they were trying to transition to moresubscription where it's like
lower fees, lower subscription revenues, butmore recurring.
Right?
And so a little bit like the banking thingwhere
if I'm a bank where I've always paid for shortterm profits, I can never really shift to long
(13:33):
term, obviously, then there's a period of timewhere I have no profits, right, versus if we've
been long term since 2003, then the decisionswe made to be a long term back in 2003, we're
paying off in 2 1011,112,014.
So we've now got whole ecosystem going on wherehalf our revenues that are coming in this year
for deals we did.
It started relationships 5 or 6 or 7 years ago.
(13:54):
We have a one of our biggest fees of all timesis coming in right now and the company we're,
hopefully, signing a deal out in the next weekor 2 where It's like pretty phenomenal outcome
client, but, like, we could have sold thatcompany for a $100,000,000 3 years ago.
Now it's gonna be, you know, 100 of 1,000,000of dollars a couple of years later, and we're
gonna make a lot of money.
And you have to be doing that for a long timefor everyone to kinda get in the culture and
have it pay off.
So that's long term thinking is super critical.
(14:16):
You mentioned when we were talking last that ittook you 10 years to really start compounding
returns for your business another 12 years ofharvesting.
Tell me about that.
Yeah.
Well, the 1st 10 years, you know, we were verysmall, right, and it was kinda where we were
figuring out how to build a business.
You know, we're getting 1 or 2 deals on a year.
It was great in the early, early days, and wewanted to keep the quality very high.
So we stayed small.
(14:38):
And what I realized over the course of time wasand, really, I was the only real MD for the
first 7, 8, 9, 10 years, and we had a lot ofjunior people.
And it was mostly, kind of a cottage kind of athing.
And then I started seeing the the resultsgetting better and better.
The depth that we were going was gettingdeeper, but as I was able to hire more people,
and the results were getting better in and outof the financial crisis, you know, global
(14:59):
financial crisis are started seeing that, youknow,
our phone was starting to ring off the hook.
And despite we never made any outbound callsabout winning business with people would hear
about
the work that we were doing, and we were kindagoing from sector to sector to sector to sector
with record breaking
transactions and happy clients referring us allover the place.
And that also jumped over into London, UK, and,you know, sort of parts of of Western Europe.
And so
it was really kind of in that 2000 12 to 2022decade where the 2nd
(15:28):
decade, if you will, where we really startedinstitutionalizing things.
We built out our HR function.
We built our finance and accounting.
We built
the back office.
We used to use Salesforce, and now we built ourown proprietary deal flow platform, which we're
now applying AI to other things with our owndevelopers.
We decided to hire a team of data scientists todo a deeper level of work on the data
analytics.
We decided to build out a mini McKinseyinternally for strategy and the
long term thinking and TAM development andmarket mapping and things like that.
And have a million plus or minus people thatare reading our our work every month, and that
(15:57):
doesn't count who they forward it to becauseit's all free at f tpartners.com or Twitter at
f tpartners.
But we we build out all these other functions.
Now we have operating executives, you know,with the founder of merchantee solutions,
helping us out.
We have the founder of Op Edge who ran a bigpart in Northern Trust as an operating
executive.
We've now built out, you know, 5 or 6 differentfunctions of the company that don't even exist
at other big banks.
(16:18):
I've kinda realized it's it can be impossibleto do this like, a Goldman or lazard scale,
even lazards and molysis.
It's really just a bunch of silos of individualbankers doing their own thing.
And god bless them.
It works just fine until a person x retires.
You know, we used to compete with Evercore andthe stock had changed.
Technology business when when Jane Wheelerretired from there, that they pretty much
(16:39):
vanished off the face of planet and that bigsliver of fintech.
We build out the institutional side of ourbusiness.
We built all the verticals.
We built all the geographies.
So we're not covering 10 distinct verticalswithin fintech.
That was really the 2nd decade building allthat stuff out, and the business flowed in, and
we were able to turn down a lot of business andreally take on the things that we thought made
sense that we could do a high quality job on,and and it's still happening to this day.
(17:03):
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There are a lot of entrepreneurs struggle fromthat transition of this rock star salesperson
to building an organization.
So
(17:30):
How did you scale your organization startingfrom year 6, 7, onwards?
And tell me
about preserving the culture.
And how are you able to scale FT partners andnot lose your edge in the marketplace?
It was this mindset of we're we're not going togrow
at all unless we can get
better.
Right?
I would way rather be a fifty person firmoffering amazing light service and
making good money than a two 150 person firmthat's mediocre.
And so it was all those groups that we builtout.
So when I was younger and, you know, kindalording over every single element of every
(17:59):
single deal in the early days.
This is kind of in the 2003,456.
I was doing a lot of things that I realized Icouldn't personally do
at scale, and it was
actually a part to get even
individual bankers to do at scale.
That's why we build out these, like, centers ofexcellence.
Like, for example, you know, we built up awhole financial forensics and data science and
due diligence team that is typically seen asbeing used by the elite private equity firms to
due diligence when they are buying multi likeour company.
(18:26):
So we ended up hiring the very people that wereworking for them and with them on our side of
the equation.
What we used to do is have junior analystassociates from, you know, Harvard and Stanford
that really cranking out the best models thatthey could, and they were infinitely better
than what the bigger banks were doing.
But then we said, you know what?
The buyers are getting more sophisticated.
The investors and buyers in saying they I wantthe whole data cube, and they want, like, 1000
(18:47):
and 1000 of lines of data or millions of linesof data and thousands of rows and columns and
cube.
And so, ultimately, that's
impossible for a junior person isn't an expertin data manipulation, and Excel just put blow
up and break down.
So, you know, we end up building a whole entiregroup out of this using 3rd party
sophisticated third party data analyticsplatforms that can visualize things and use
(19:08):
machine learning and AI to kinda get insightsout of the data that really tell the true story
of a business.
Right?
And then we can even help companies change theway they run their business, change the way
they run their marketing.
We do this every day.
So we're actually operationally helpingcompanies change how they run their business,
how they do marketing, how they do sales, howthey measure their salespeople, because we're
seeing insights into the data.
I met with the company the other day, and wewere analyzing their data.
(19:31):
And we actually I'm up in Napa.
I know we have this company up in Napa.
I'll give him a bit of a plug.
It's a company called LaVanta.
Who, is growing like a weed.
And, yeah, we were showing them their data inevery chart.
They're like, holy shit.
Like, that's amazing.
Like, we didn't we knew we were crushing it,but we didn't know we were crushing it that
much.
And then we show them another chart aboutretention, another chart about net revenue
retention, another chart about churn, anotherchart about cross sell and and even these guys
(19:54):
who we'd love, and they were just getting a lotof value out of the data that we were showing
them for their own business that they'rerunning every day.
That kind of stuff, we couldn't even do thatwhen we were trying to be RTs, I don't know
what I mean.
Like, so but at scale, you can do that if youhave a centered excellence, right,
you amortize that across
the house.
We don't charge any money from that.
Right.
Let's go.
So people often say, and, you know, hey.
You guys are we do probably charge a premiumprice and get premium outcomes.
(20:16):
But because you have very expensive peopledoing a lot of hard work, that adds up to
getting greater insights on a business.
We do that, and no one else does that.
Right?
There's not a single investment bank on theplanet that's gonna sit
here and talk
about their data science team that works forclients.
It doesn't exist.
How much of your unlocking of a company's valuehas to do with framing the story and painting a
(20:37):
bigger picture.
And how much of it is it seems like you have alot of granularity when it comes to numbers and
not painting a bigger picture per se, butpainting a much more accurate picture of the
future.
I mean, you're you're hitting on something thatcrucial.
You heard me talk about we have a miniMcKinsey, right, that's quite visionary in
terms of telling stories and things like that.
And, yeah, I'll give away a little bit of ourit's not secret sauce, but the way that we
think about the world is we have a pitch pagethat we described and very simple concept of
(21:01):
investors look at a business and should look ata
business with a microscope, binoculars, and atelescope, but you need different lenses and
different tools and different types of people
that are gonna engineer the microscopic lookthe binocular luck or the telescopic look at a
business.
What a lot of people do is they try to theyactually don't do a good job of any of those
things, quite frankly.
You know, they they're giving my LTV to CactusX.
(21:23):
Okay.
But what does that mean?
How do you calculate l and lifetime value?
There's 87 ways to doing that?
How do you do tackle?
What about by channel?
What about by cohort?
What about by region?
What about by product?
How does the funnel work?
How much of that's organic?
You can drive an investor crazy by making themask a 1000 questions to get essentially the
truth about a company.
Right?
What's the truth about the economics, the uniteconomics?
(21:44):
How's it working today?
And then you look out the binoculars, which islike, you know, call it, like, the 2, 3, 4, 5
year view, and the the telescope is at 5 to 10to 20 year view, depending on the business in
what time frames make the most sense.
So we try to do all that work and bring thatall into crystal clear focus.
You know, you wanna see what we are today.
Here's the micro v or the micro slide orwhatever it is, and and you can see the DNA of
(22:06):
the company.
Right?
That's fine.
But that's actually super helpful in trying tosee what's in the binoculars, right, out in the
future because that you're kind ofextrapolating a little bit.
And then if the company's projecting somethingthat is gonna off the, obviously,
extrapolatable information, then they better begood at explaining it.
Right?
And then, of course, the vision, it's a littlebit like impressionism, you know, like, you
know, the Monet of the world where it's like, Ican kinda see what's going on there.
(22:28):
I don't need to know with Ultra, exactly knifeprecision, what that looks like.
But, oh, okay.
Take a revolute or a cloud walk where theystart in a niche product or a niche set of
geographies, but they're really going to 90geographies with with 20 products.
And someone has to tell that story.
Right?
And that's kind of what we help people do whenwe did the revolute deal in the $33,000,000,000
valuation, which by the way is now proven to becheap, not expensive like everyone thought, you
(22:52):
know, we build out the 20 year model, all thedifferent lines of business from personal lines
to kind of consumer banking to businessbanking, to payments, to payroll, pet
insurance, you know, throughout, you know, allthese different geographies that we're able to
sort of say, here's why we think this companycould be a $1,000,000,000 company.
These guys didn't really get to be50,000,000,000 in EBITDA.
Right?
And at that time, you know, that's a$1,000,000,000,000,000 company.
(23:13):
And so people got excited about it and wrote a1,250,000,002,50 check when they were only
really looking to raise 250,000,000.
So when you raise a 1,250,000,000,250 at33,000,000,000 versus, say, 250 at 10, that's
an extra $1,000,000,000, and you're only taking3 percent dilution You know, so that gonna
change the whole entire trajectory of thebusiness.
Now they've got gums of money to invest inadvertising and product that they wouldn't have
(23:36):
had otherwise in a lot lower dilution.
You know, that we were helping.
We're really deep out on the microscopic side.
And they had never built a 20 year productvision or they had it in their head.
I mean, these guys know it inherently, right,but investors don't.
And that's just to understand.
Like, entrepreneurs think investors can veryquickly pick up on everything that they're
they're thinking over the 5 years of history ofthe company, but they can't.
You know, I I always joke around and saythere's no magic, you know, Star Trek Vulcan
(24:00):
thing where I can put my hand on your head andmy hand on the all the guys had to just
transfer all that information.
Like, it's gotta be done carefully.
And and we think in writing, so we didn't writeit all down and give people the data.
A lot of times people think what we do is,like, some sort of, like, people joke around,
like, you guys have some magical pills orwhatever, and you guys are creating magic.
And we hear that all the time, but it's, like,Man, if people knew how much hard work it was,
(24:20):
nobody would wanna do it.
The way that I look at it is to use an analogya company is like a plot of land on the beach,
and there's gold underneath.
And you could either do the hard work and usethe shovels to dig it up and show it to the
investors.
Or a very smart investor will come in, do abunch of work and figure out that that gold is
there.
And that's kind of where the alpha goes.
It either goes to the investor to the companyor somewhere in between, like, a lot of great
(24:41):
investors, great bankers are good at, coveringthat and presenting it that people don't have
to be geniuses to discover.
And look,
I mean, you're hitting on something thatreminds me of this myth out there that we hear
a lot of CEOs will say, well, hey.
Why do I need a banker?
I can do it myself.
Or my VCs tell me that if I have a banker, itmeans I can't raise money.
Is that true at any stage?
Do you see that?
Like, certainly there's there's negativesignals, series a or seed, or tell me about
(25:04):
that, or is it different from fintech?
I think it's it's a longer discussion.
You can do a whole podcast on this.
Right?
And I think it'd be something that should bekind of exposed a little bit where there's some
truth to everything, right, but there's also alot of, I think, falseness to those kind of
statements.
And I'll I'll give I'll give you my littlespeech on this.
I'd say there's a lot of companies there reallydo have a lot of hard time raising money, and
(25:25):
they talk to 50, 75 investors.
They can't raise it.
And then they need help.
They need to find a banker that needs to go tohelp them raise the capital.
And those are not our clients, but there's alot out there like that.
And so if the banker takes on that business andthen goes in shops at the Sequoia
and Cliner and a 16z and TCV and, you know,whoever else, there's a
pattern recognition there that they're seeing alot of deals from
bankers that aren't that good.
Right?
(25:49):
So there there's that element of it.
Right?
And and and that could be true.
But it doesn't mean that when I show up on yourdoorstep with Revolute, that Revolute isn't a
super high quality company because they have abanker.
Right?
Yeah.
Revolute's the best company in the world, andthey chose who, FTE partners.
Right?
You look at OpenAI's founder, Sam Altman.
He has another company called World Coin.
Well, Sam Altman, the person involved in hiring
us on World Coin.
Right?
We raised money for Worldcoin.
It's not like
Sam Altman's a guy that needs help raisingcapital, but sometimes having someone there
(26:18):
that helps you is not a bad thing.
Right?
And one of our clients in Brazil, sidewalk, Imean, everyone wants their best in that
company, but, you know, we've been their bankerfor years.
They keep
us around.
We've done a great job for those guys, andthey're growing like a weed.
So I think there's some of the most elitecompanies have bankers, and that's a great
thing as well.
But I think a lot of investors are scared ofbankers on good companies.
And so they try to scare the CEO by saying, youdon't wanna be like one of these bad companies
with these dumb bankers.
You just do it on your own.
(26:44):
Well, what CEO who was maybe never a banker,never raised any money spends all their time
running their company is just so perfectlynaturally acclimated to knowing every VC in the
valley and knowing exactly how to value theircompany and probably 0, honestly.
Right?
Everyone could use a banker, whether you're aokay company, a good company, great company, or
an amazing company.
We've proven it.
Chef partners has such a good filtering
and screening that if you got FD partners asyour banker, then you
(27:09):
must be a good company.
So it's the opposite signal.
Right?
And that's kind of what we try to create.
That's why we have a huge filter, and we'reactually turning down lots of deals.
I asked you when we last chatted whether PayPalwas sold at the right price.
And you said you would have sold it for 5 or$10,000,000,000,000, not the
one billion that was sold for
Tell me about how you would have gone aboutselling PayPal.
Yeah.
You kinda could look at the future and say,well, what should have happened in the past?
(27:31):
Right?
So if you look at PayPal and and PayPal's beenkind of up and down, all that kind of stuff,
but, like, at the end of the day, let's justsay it was sold for 1,000,000,000.
It was generally worth a100,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000
long term, even though it was at 1 point worth200,000,000,000, maybe it's worth 75 now,
whatever, but it went from 1 to a100,000,000,000 in a 3, you know, 20 year
period of time.
Right?
And you take another company, which wasmassively undersold, which was Mastercard.
Right?
People forget At the IPO of Mastercard, you canGoogle it right now, folks.
(27:57):
What was Mastercard's IPO value?
It was, like, 5, 6, or $7,000,000,000 less than20 years later.
So that was in 2007.
In 2024, their market cap's, like, 5 or$600,000,000,000.
So why was it only worth 5,000,000,000 thenwhen it's processing half the transactions
on the planet including Mastercard and Visa?
Well, it was a private company.
It was thought while it was run as an
association of banks.
People didn't really know exactly how to priceit.
(28:20):
So they priced it 5, 6, 7,000,000,000, whateverit was.
The IPO, they sold half the company.
Right?
So a bunch of T.
Rowe prices and fatalities and everybody elsewho all made $250,000,000,000 on their
investment and
was one of the worst transactions in history.
That being said, every banker on the streetsays I
worked on a Mastercard transaction.
I'm super proud of myself.
Right?
Oh, yeah.
You worked on, like, the one of the worst pricetransaction
in the history.
PayPal's another one.
Right?
I mean, again, it's hindsight.
It's 2020.
So you gotta take this all with a grain ofsalt.
Right?
But you
look at PayPal.
And, again, the joke is like, You have topaypal mafia.
(28:52):
There's people that were remembered from thegreat things they
did to PayPal, Elon Musk, and so on and soforth.
Right?
But they raised 100 of 1,000,000,000
of dollars, raised money in an IPO, and theyreally only sold the company for, like, a
1,200,000,000 or something like that.
Right?
So it's like, it
wasn't like that much economic value created.
I mean, it was enough to get a Elon on ahundred million bucks to go start these
companies.
It wasn't like this thing was, like, recs orStripe or something.
It wasn't really recognized for
what it was.
Right?
You could also argue that it was actually agreat company, but it wasn't a great process.
Of course.
(29:19):
Perhaps you could have come in and sold her for5,000,000,000, which in today's dollars,
today's tech M and A dollars would be, like,50,000,000,000.
So it goes to show the inflection point of asale, how much that could affect the financial
outcome.
Yeah.
I mean, also, even think about PayPal was oneof the primary ways to pay on eBay.
And eBay, remember, eBay is the one that boughtit.
EBay bought PayPal.
They since spun it off and all that kind ofstuff.
But, like, and at that moment in time, eBay wasthe primary marketplace for SMBs and for people
to sell things online.
Right?
(29:46):
S and Bs or or human beings or, you know,individuals, consumers, whatever.
And because
it was a primary place, like, everyone in 1999that was on the internet had an eBay account,
right, so you had, like, every single consumerhas an
account, and every single seller has anaccount.
And so if you were to find and own the paymentmethod to
connect all those people, you've gotta closethat work, a closed loop.
And you'd have millions of sellers and millions
of buyers, then it wouldn't be that hard todeduce that that could become ubiquitous around
the world, which is kinda Right?
(30:14):
Well, that story wasn't clearly told because apublic company probably covered by 10 twelve
research analysts at the time.
So all estimates for what they were gonna makenext year.
And at that time, they probably weren't gonnamake that much money the next year, they ended
up selling it for $1,000,000,000.
So Could I have sold it for 2, 3, 4, 5, 10?
Who knows?
Right?
An article going back to 2021 that you say thatsaid that you still work nights weekends at
(30:36):
your age, and I I know you're also very proudto be a father, and that's been a big war in
your life talk to me about work life balance.
Does it even exist?
How do you make that trade off personallyversus professionally?
It's it's become work, kid balance.
There's no life really.
I'm kidding because the kids stuff is is life.
And so, you know, look, I I went a long timewithout a wiper kids, and I was able to work
247, and that was great.
I always knew I'd get married and hope to havekids, and I've got 2 amazing kids and and
(31:00):
actually one on the way.
So, I'll be, three under three and a half, endof the year, hopefully.
And I'm the most happiest proudest dad in theworld.
But that whole question you asked about withthe 2nd decade of building up the firm, We
build up an amazing company with amazingpeople.
And in order to scale the business, I now sortof co run a lot of the transactions, like co
lead, a lot of the teams that we have, and Idon't have to do every little thing, every
(31:23):
little task, kind of, reveal, And, you know,we, we build a district great teams.
I think it's really, really important for allmy employees that have lives outside of the
officer partners and husbands and wives andkids to to spend time with them, and and we
really do encourage that.
We have won MDs on months of out.
But right now, spending time with his family,you have all the associates, a month off to
spend time with their families and friends.
(31:44):
So that's it's really, really important.
And it's one of the reason we scale the firm upso much because we wanna have some flex time
for people, including myself, and I reallythink it'll be a a sin to really be a work on
it.
Do you have issues taking time?
No.
I
mean, you know, I I would have more of an issuegoing golfing every weekend for 8 hours with
the guys.
You know what I mean?
Like, I don't do that.
When I wake up on Saturday at 6 o'clock in themorning, I run, like, a child running to a
(32:06):
Christmas tree to wake up my kids, you know,just super dedicated and super excited about
them every day.
And so I cherish all the moments I have withthem and but, also, they need to see dad
working.
So dad works his ass off.
And my three year old knows what work is Heknows what Zoom is.
He knows what a business is.
He knows what money is, and he knows what toysare and birds and and things too.
But, you know, he knows, you know, every day wewake up and first thing out of his mouth is the
(32:30):
seas today.
So I'm gonna try to raise him and my daughteris, like, hardworking individuals and not
entitled kids and all this kind of stuff.
So I think that work and home life can be mixedreally, really well.
And but I think you really gotta raise yourkids and be there for them.
Even a client centered business, How importantare in persons?
What's your cadence?
Tell me about zoom versus in person.
It's gotta be a strong mix of both.
(32:51):
I mean, we don't kick off a project, you know,without trying to do something face to face.
And some of that's work stuff face to face.
Some some some spot I mentioned that companyearlier Lavanta that we invited out to Napa.
We had a big work day, and then we had somewine tasting and yucked it up a little bit and
got to know them.
And so I think for us, it's just great to beable to mix a lot of fun and FaceTime just
(33:12):
getting together face to face.
And one of the things that I do is try to getin front of the clients all the time because,
you know, that's also a great time to spendtime with your employees.
Right?
You know, I mean, you know, the office andeveryone's running around.
That's one thing.
But when you're on location in Austin with aclient for a day, Well, maybe we might take 3
or 4 hours as the team and go grab dinner ordrink sweaters sometime with the team too.
So it's not just Zoom with your clients andZoom team too.
(33:33):
You've mentioned that you've really evolvedyour business.
What do you focus on doing now yourself SteveMcLaughlin versus what do you farm out to other
people with different competencies?
A lot of its teamwork as opposed to justfarming this out or farming that out, certainly
accounting, finance, taxes, ops, engineering.
I mean, we have all
those functions of the
company, but we have an amazing CFO legalpeople, C OL type people, like, running all
(33:57):
those kind of things.
I'm very, very client centric, right, and teamcentric.
So it's my job is to make sure we bring in theright people that we treat the clients right
and that we give the clients the rightattention.
And so I think that is my best and highest use.
And I think where I spent a little bit of timeis thinking strategically about the firm where
are we going?
All these groups that we developed.
It's funny.
I just had a conversation with one of ourJunior guys today, Axel, I talked to him this
(34:21):
morning.
As I kind of talked about him and motivatinghim and saying, look, look, and all jobs are
99% 1st regional, 1% inspiration.
So, like, a lot of it's grinding, grinding,grinding, but your brain has to be working
about what should I be doing differently?
How should I grow the business?
You know, how should I shoot my people,actually, run the company.
And so I spend a little bit of time every daythinking about that kind of something, but then
we have good people that can go execute.
Now we don't have, like, mid level kids writingour data science team.
(34:43):
We have a guy that's been running financialforensics and data science stuff for 20 years.
She has a way of adults.
You know, running all of our key parts of thefirm.
We've got a master engineer engineering teambuilding up our our tech platform.
So you just have to really, really good people.
So I can spend my time on the things thatmatter, which is the people and the clients.
You mentioned the people and the clients.
What percentage of time do you get to on that?
(35:04):
Is that 20%?
Is that 60%?
And what percentage of time does it take uptoday?
I it's it takes up the large, large, largemajority of my time, you know, and most of
that's on it.
All the operational stuff is all been farmedout.
And that's been the most amazing thing.
It's like when I farm something out to theright people, they blossom.
I mean, I'm learning things all the time thatour teams are doing.
And I'm like, we're doing that.
(35:24):
We're doing that.
Like, collection applied our whole financedepartment.
You know, it's all paperless and perfect and ofthe data science tools that the team is buying
and building and designing and integrating intoour FT base API into our client systems.
I mean, stuff I never even thought.
I would never think of that.
I think it was jobs or somebody said, you know,let's not hire smart people to tell them what
to do.
Let's hire smart people to tell us what to do.
And that is an important mentality to have.
(35:46):
So I'm really smart, hardworking driven, peoplethat are driving the company forward again.
And I just like working with
clients and building the team, so that's whereI spend almost all my time.
That's great.
I could learn a lot from that.
Thanks for jumping on the podcast.
When it comes to FD Partners and
yourself, What would you like to shine a lighton for our listeners?
I'd say number 1, like, you heard me talk a lotabout the team today.
(36:08):
We've got an amazing incredible team of peoplethat have been here a long time who work very
hard.
The families they're sacrificing for.
And and we're here to build something for us,but also to do great work for our clients.
So we're here to do amazing, amazing work withthe clients.
And thank you all for the work you do, andthank our clients for for hiring us and
trusting us with your, you know, $1,000,000,000babies.
(36:28):
The world of FinTech is something that's neardear to all of us.
I think FinTech is doing good for the world.
And, you know, we only wanna work for thecompanies that are doing good for the world in
of FinTech and Financial Services.
So, you know, there's a real mission behindeverything that we're doing, which is try to
really help entrepreneurs succeed with theirdreams and make things better.
It actually makes me feel good that NickStronsky's killing it at revolut because he's
(36:48):
actually on a complete and utter mission tojust bring down price and increase quality of
products for the world and financial services,and I think he can do yeah, the stuff that the
world going guys are doing under Sam Altman.
And so we try to find these companies that aredoing good, and that that makes us, I think,
perform better and do better.
And so it's a little warm and fuzzy way to end,but, we're very lucky to be in the position
we're in in the geographies and the countriesand the state of the economy that we're in
(37:11):
thankful for everything that's gone on well forus and look forward to another 20, 30, 40 years
ahead.
Absolutely.
Well, I'm looking forward to finally sittingdown in person as well and, special shout out
to WorldCOIN, one of our portfolio companies aswell.
There you go.
There you
go.
Alright, David.
Thank you.
For more ideas on how to raise venture capitalin this market, make sure to subscribe below.
They ultimately got a $150,000,000 valuationcompany we came in, did all of our work.
We found rebuyers that they never contacted andgot him a 550,000,000 evaluation.
Right?
We, of course, had a big fee trigger above 150or 200,000,000 So we made three times the
amount of money that we would have made if wegotten a regular outcome.
So we started getting addicted to this thingwhere if you dedicate 510 x, the level of
effort, and you've got 3 x, the level ofexpertise, you're gonna wind up getting a
better outcome for the client.
(00:27):
We worked on Revolute, which is kind of acompany that was getting a lot of bad press at
the time.
And, you know, the prior valuation that wasachieved by JP Morgan is $5,000,000,000.
Right?
So we came in a year later, and we're like, theguys are, okay.
Can you get us 10 or or whatever.
And so we came in and we got 33,000,000,000 forthe company.
We sort of uncorked a lot of things about thecompany that, you know, the bankers didn't.
You know, we had built a 20 year model.
(00:48):
We got under an actual belief that this couldbe a $1,000,000,000,000 company, and it could
be one of the biggest winners in 3 years later,here we are today.
They're doing a deal at 45,000,000,000.
I asked you when we last chatted whether PayPalwas sold at the right price.
And you said you would have sold it for 5 or$10,000,000,000, not the 1,000,000,000 that
I've sold for.
Tell me about how you would have gone aboutselling PayPal.
You look at PayPal.
(01:09):
And, again, the joke is like, you have topaypal mop.
You know, these people that were rememberedfrom the great things they did to PayPal, Elon
Musk, and so on and so forth.
Right?
Steve, I've been really looking forward totalking, for now close to a decade.
I've been hearing about you.
And, thank you to Avi Dorfman for theintroduction.
(01:31):
Welcome to the Tennox
Capital LockDown.
Year, and
thanks for having me, David.
It's my pleasure.
So you run really the number one fintechbanking platform in the world.
How did you go about star FT partners?
I
guess the background is I was at Goldman Sachsfor a bunch of years from 95 to 02 and their
fig group eventually ran or co ran the fintechdepartment there and then, moved out to the
west coast.
And so in 2, at the, ripe age of thirty two, Ibolted and started FT Partners kind of thinking
(01:56):
and believing that, you know, the world offintech would actually be big.
Right?
And so but that was not something peoplethought that much of.
And, you know, too, you know, that was 22 yearsago.
So I've been doing it for quite a while.
When you started at 32, were you running awayfrom the corporate banking route, or were you
going towards building something new?
I think it was a combination.
You get your training grounds at the biggerfirms.
A lot of times, and you just kinda wanna dosomething smaller, Rush, where you can
(02:19):
see the impact of what you're doing moredirectly.
You know, I mean, you're part of such a biggiant machine like a Goldman Sachs.
It's hard to really see the impact of whatyou're doing sometimes.
And I think, look, from a very young age, I wasdoing entrepreneurial things.
I didn't even know it at the time, but I was,like, painted rocks put people's addresses on
them and sold them to the old lady and madefive bucks.
And I I did my time at GE and then GoldmanSachs, and I think I'd had enough of the big
(02:42):
firms and wanted to go do it on my own.
So, yeah, it's never looked back.
It's one thing leaving Goldman Sachs to go toJP Morgan or Morgan Stanley, but you left
Goldman Sachs to start a new firm.
Did people think you were crazy?
I literally thought I was crazy.
Like, literally, they're like, what are youdoing?
Like, it makes literally no sense.
And that's it too.
Yeah.
Anyone's torn on my end.
They're like, No one's ever really done thatbefore.
You know?
Like, it was, like, unheard of.
(03:03):
You know, like, you'd have to be, like, a very
Especially after that.
Yeah.
I mean, maybe if you're, like, running agigantic apartment and you're, like, running in
your 55, you know, that's when, like, Corella,Washington from Pirrella, Washington and the
big banks, he went on started his own thing,and Ken Mollis left, you know, UBS when he was,
like, 55 or, you know, whatever.
And and they they've already got their bigcareer going.
So this was, way
(03:23):
more humble beginnings.
I think I remember incorporating the
business for $99 using an online service calledcompany corporation.com, and I went to what was
then Kinko's to get my business cards, and Iworked out of my tiny kitchen table and my 2
bedroom apartment in San Francisco for thebetter part of the year with
interns in the early days.
It wasn't until a couple of
years that we knew it was gonna really work.
(03:45):
You made a key decision at inception to focusexclusively on fintech.
Walk me through that decision making to focuson such a niche at the time.
I mean, not only was it a niche.
It was a niche.
I don't wanna seem to care that much about, andthe market was completely decimated It was
right after the dot bomb right after 9:11.
It was an environment where there's no deals atall, let alone in tech or fintech.
So it was quite a contrarian thing to do.
(04:06):
And I'd like to say it was like a geniusdecision or whatever, but it was it was it
kinda what I knew.
And I think life is a little bit ofserendipity.
I mean, had I been energy and utility group atColvin.
You know, maybe I wouldn't have done it ormaybe I've done it and failed in the dotcom
world.
It became famous later when there was PayPaland a few other ones.
Right?
But, largely, they all failed.
So, actually, it seemed them all failed andsay, look, and it's a little bit of the story
(04:26):
today 20 years later where I've seen a lot offintech companies fail, but the TAMs that the
market sizes that they're disrupting are stilljust
as big.
The problems are just as big.
They just didn't have the right solution.
I make the simple analogy to, like,
the old, you know, Web Band back in 99.
It completely blew up even though Goldman Sachsput a hundred money bucks instead of everyone
else.
It's like, because their idea was let's delivergroceries to your house, but in order to do
(04:49):
that, let's get refrigerated trucks, giantwarehouses, and all this kind of stuff.
And it just didn't work economically.
Some things just take time to get the modelright.
I think FinTech is one of the things where theTAMs and the broken parts of the world are
still broken.
It just someone needs to come along and hackaway at the one thing that's gonna make that
work.
So but it was at a moment in time where I sawall these failures, but I I realized the
problem was still there.
So I knew the companies hadn't created.
(05:11):
Sometimes having a big pain isn't enough.
You need to have the right solution with theright market and the right time in the market.
Yep.
You regularly go into pitches.
It's Morgan Stanley and the Goldman Sachs andFeet partners.
How do you get in
these rooms?
And what is your differentiation against thelarger banks?
I could go on for a long time on this one.
The number 1, I mean, we're entrepreneurialpeople working with entrepreneurs.
(05:31):
So we generally work with private companiesthat are
on a growth journey.
Right?
So the same ones that Sequoia and Teresa or,you know,
co 2 or whoever are going after.
They're the ones we're going after.
You know, it's not the older school.
More boring.
Public companies are growing 6% and trading ateight times, you know, EBITDA.
And they're fine too, but we tend to go withthe smaller.
So they like the entrepreneurial side of whatwe do, and it matches up with what they do.
(05:54):
I think that's one sliver of it.
I think the biggest liver is look.
When I was at Goldman, I was shocked at thelevel of quasi mediocrity that I saw across the
deals.
Right?
And everything was based upon high levelanalysis.
Everything was based upon.
Let's get the deal done.
The debt understanding that the bankers out ofof the client itself were pretty thin.
(06:16):
And so when I started FT
Partners, the one thing I looked at actuallywas Goldman's IPO.
When Goldman IPO was going on, they had, like,fifty people working on it.
Right?
And they were going super deep on their ownIPO.
And I was like, oh, so that's what clientservice looks like.
I've never seen it before.
You know?
But when I saw them doing it on their owncompany, I was pretty blown away.
And so I said there's a next level of bankingthat can be done.
(06:38):
And I think it can only be done in a niche byniche basis by people that really understand
the niche and really commit themselvespermanently to that niche so you can accumulate
lots of knowledge.
Some of our first assignments, we didn't haveother assignments to work on.
Right?
So we were able to go super deep with theclients.
It's something I've always wanted to do.
Never at the time to do a Coleman.
So we would learn the tech stack.
We'd learn the customer service center.
(06:58):
We'd learn their market.
We'd study their competitors.
We'd look at the pricing trends.
We'd look at the valuations through a wholedifferent lens that other people would tend to
look.
Right?
And we end up getting hired by a company calledLink Systems in Oak Ray and up selling at No
Four.
And this is a company that had been previouslybeen banked by another very large bank,
remained nameless.
And they ultimately got, like, a $150,000,000valuation with the company.
(07:20):
We came in, did all of our work.
We found rebuyers that they never contacted.
Got him a 550
my evaluation.
Right?
We, of course, had a big fee trigger above a150 or 200,000,000.
So we made three times the amount of money thatwe would have made if we gotten a regular
outcome.
So we started getting addicted to this thingwhere if you dedicate 510, the level of
effort, and you've got 3x level expertise,you're gonna wind up getting a better outcome
(07:44):
for the client.
You say you're only as good as your your lastdeals.
A number of years ago, we worked on revolut,which is kind of a company that was getting a
lot of bad press at the time.
And, you know, the prior evaluation that wasachieved by JP Morgan is $5,000,000,000.
Right?
So we came in a year later and we're like, theguy's like, hey.
Can you get us 10 or 12 or whatever?
And so we came in, and we got 33,000,000,000for the company And we sort of uncorked a lot
(08:07):
of things about the company that the otherbankers didn't.
You know, we built a 20 year model.
We got under an actual belief that this couldbe a $1,000,000,000,000 company, and it could
be one of the biggest winners in fintech.
You go 3 years later, here we are today.
They're doing a deal at 45,000,000,000.
I personally think it's worth double that, andthey're gonna be bigger than Stripe and many
other companies.
So we get in.
We see these companies who may help them getthe value they deserve by going deep,
(08:29):
partnering with them, and helping them achievegreat things.
So It's just a level of depth and actuallycaring a lot about the outcome and caring about
the founders, caring about the founders,employees, and their shareholders, and try to
get people the best outcome.
It isn't always about getting the bestvaluation at all.
I mean, a lot of it's what's the right fit,what's the right culture, and there's many more
important things in evaluation.
And we wanna make sure investors get greatreturns too.
(08:50):
So we're not gonna represent a company and popup the value.
If it's not something we feel really strongabout on the positive side.
So, you know, for me, it's still to create anecosystem where everybody can win, but or the
company shouldn't be a losers in the equationeither.
You mentioned that you were able to get a$550,000,000 valuation for a $150,000,000
company, and you got triple the fees.
Presumably, the large banks also like to makefees.
(09:10):
What keeps them from being able to offer thesame level of service and get the same level of
economics?
What keeps the army from being like the navyseals.
Right?
You know,
you can't train everyone.
You can't have that elite force in that widerspectrum.
But we're more super proactive, very founderfriendly, very much an advocate for the seller,
we're not trying to get these from the big buyside of the world or the big buyers.
(09:33):
We've never once been hired by Visa,Mastercard, Discover, Capital 1.
We're always on the side of the sellers.
We can be very loyal and uncomflicted in thatregard.
We're not trying to win business from Heroprice or fidelity where Goldman's trying to get
them to buy every single IPO on the street andgetting commissions spend on trading and all
sorts of other stuff.
So the strictly independent device matters.
And when I was at Goldman, I was trying to dowhat I'm talking about when we're doing an
empty partners I was, like, slapped on thewrist.
(10:00):
You know, Steve, you're you're being too muchof a zealot.
You're working.
You're trying too hard.
You need to spread yourself thin or you need towork on bigger deals.
Why are you spending so much time trying to getsuch a great outcome for this particular
company?
And these things were said to me, it was, like,just get the effing deal done.
Was, you know, the mantra that I heard asopposed to get it done right, and we're sort of
measured twice, cut once, get it done right.
And we become, you know, as well known forgenerally clients not to do deals than to do
(10:24):
them because it don't feel like it's a fairdeal.
Like having negotiating leverage.
We like having clients that don't have to dodeals.
Right?
If we have a client that absolutely has to do adeal, then we'll find a way to get the deal
done well.
But if they don't have to do a deal, you know,then you've got the ultimate leverage.
Right?
That's why companies that are profitable thatare growing, they can always say no.
And a lot of times, the bankers put pressure onyou to get a deal done.
A lot of bankers are compensated annually basedupon how much revenue they bring in that year.
(10:48):
So it was a huge conflict in the compensationmodel where they're very much motivated a lot
of times to bring a deal in sooner rather thanlater, close deal sooner rather than later.
Fees lower.
So we're not motivated that way.
We're more used to term out of Goldman'splaybook, you know,
long term greedy, but you have to really belong term thinkers.
And we've got clients that we won in 2008 or2009 that are still clients
today where we've done 10 transactions whobought the way could have sold 10 years ago for
(11:14):
a $100,000,000 are now worth 1,000,000,000 ofdollars.
So, you know, they're running around the worldsaying, hey.
They've got companies called Avid Exchange.
You know, I'm talking about was written up inthe Wall Street Journal article that came out
on us where the the CEO said, look.
Know, Steve's the one that told us, and FTE isthe one that told us not to sell.
Steve was always a zell it for keeping thecompany private, keeping the company going,
take it public someday and become a$10,000,000,000 company down the road.
So telling someone and advice that people notto do certain deals, you know, can add a lot of
(11:37):
value and you get paid on it later.
We're still making peace off of out of exchange10, 12 years later.
And I get why you as the founder at F.
D.
Partners would be incentivized to push businessdown the road to do the right decision to
company gross, how do you incentivize youremployees to to have the same way of operating?
Easy.
I mean, I think the the one measure we have,and I talk about this all the time at the firm
(11:57):
is client happiness.
And that's a basic premise, right, but weliterally have a thing where every single
person on every single team can click a buttononce a week about what the perception is the
client happiness.
If it's not, like, 10 out of 10, know, we'redoing something about it.
Right?
And so that's how you measure people in a weirdway.
Right?
The revenues will come.
Right?
And when we've made big profits, we've paid bigbonuses.
Right?
And so people have
to have a trust in the founder of the company,the person that's
actually deciding on all the bonuses, that ifit's not short term thinking that that's being
(12:26):
a reward, it's long term thinking that's beingrewarded, but you gotta reward people for those
activities.
Right?
So when we do have a big outcome in 5 yearsfrom now, I gotta reward that people live there
along the way.
Right?
So that's that's something that we've done overand over again.
So most of our senior people have been here 10,some 20 years because of the way we, you know,
think.
But a lot of times, yeah, we'll work on deals.
(12:46):
And sometimes people say, why are you guysworking on a $25,000,000 capital raise for this
young AI company.
It's like, well, we think it's gonna be a 5 or$10,000,000,000 deal in the future.
Right?
And sometimes you'll have a good junior banker,maybe a a director, younger MD, that will
really bond with that MD and kind of work withthem over 10 years, and those companies are
super loyal down the road.
So for us, it's been, important to get theculture or where everyone's addicted to the
(13:11):
long term thinking.
It's very hard, though.
Think about it.
I make this analogy sometimes.
A lot of companies are doing a licensedsoftware where they get all the fees upfront.
And then they were trying to transition to moresubscription where it's like
lower fees, lower subscription revenues, butmore recurring.
Right?
And so a little bit like the banking thingwhere
if I'm a bank where I've always paid for shortterm profits, I can never really shift to long
(13:33):
term, obviously, then there's a period of timewhere I have no profits, right, versus if we've
been long term since 2003, then the decisionswe made to be a long term back in 2003, we're
paying off in 2 1011,112,014.
So we've now got whole ecosystem going on wherehalf our revenues that are coming in this year
for deals we did.
It started relationships 5 or 6 or 7 years ago.
(13:54):
We have a one of our biggest fees of all timesis coming in right now and the company we're,
hopefully, signing a deal out in the next weekor 2 where It's like pretty phenomenal outcome
client, but, like, we could have sold thatcompany for a $100,000,000 3 years ago.
Now it's gonna be, you know, 100 of 1,000,000of dollars a couple of years later, and we're
gonna make a lot of money.
And you have to be doing that for a long timefor everyone to kinda get in the culture and
have it pay off.
So that's long term thinking is super critical.
(14:16):
You mentioned when we were talking last that ittook you 10 years to really start compounding
returns for your business another 12 years ofharvesting.
Tell me about that.
Yeah.
Well, the 1st 10 years, you know, we were verysmall, right, and it was kinda where we were
figuring out how to build a business.
You know, we're getting 1 or 2 deals on a year.
It was great in the early, early days, and wewanted to keep the quality very high.
So we stayed small.
(14:38):
And what I realized over the course of time wasand, really, I was the only real MD for the
first 7, 8, 9, 10 years, and we had a lot ofjunior people.
And it was mostly, kind of a cottage kind of athing.
And then I started seeing the the resultsgetting better and better.
The depth that we were going was gettingdeeper, but as I was able to hire more people,
and the results were getting better in and outof the financial crisis, you know, global
(14:59):
financial crisis are started seeing that, youknow,
our phone was starting to ring off the hook.
And despite we never made any outbound callsabout winning business with people would hear
about
the work that we were doing, and we were kindagoing from sector to sector to sector to sector
with record breaking
transactions and happy clients referring us allover the place.
And that also jumped over into London, UK, and,you know, sort of parts of of Western Europe.
And so
it was really kind of in that 2000 12 to 2022decade where the 2nd
(15:28):
decade, if you will, where we really startedinstitutionalizing things.
We built out our HR function.
We built our finance and accounting.
We built
the back office.
We used to use Salesforce, and now we built ourown proprietary deal flow platform, which we're
now applying AI to other things with our owndevelopers.
We decided to hire a team of data scientists todo a deeper level of work on the data
analytics.
We decided to build out a mini McKinseyinternally for strategy and the
long term thinking and TAM development andmarket mapping and things like that.
And have a million plus or minus people thatare reading our our work every month, and that
(15:57):
doesn't count who they forward it to becauseit's all free at f tpartners.com or Twitter at
f tpartners.
But we we build out all these other functions.
Now we have operating executives, you know,with the founder of merchantee solutions,
helping us out.
We have the founder of Op Edge who ran a bigpart in Northern Trust as an operating
executive.
We've now built out, you know, 5 or 6 differentfunctions of the company that don't even exist
at other big banks.
(16:18):
I've kinda realized it's it can be impossibleto do this like, a Goldman or lazard scale,
even lazards and molysis.
It's really just a bunch of silos of individualbankers doing their own thing.
And god bless them.
It works just fine until a person x retires.
You know, we used to compete with Evercore andthe stock had changed.
Technology business when when Jane Wheelerretired from there, that they pretty much
(16:39):
vanished off the face of planet and that bigsliver of fintech.
We build out the institutional side of ourbusiness.
We built all the verticals.
We built all the geographies.
So we're not covering 10 distinct verticalswithin fintech.
That was really the 2nd decade building allthat stuff out, and the business flowed in, and
we were able to turn down a lot of business andreally take on the things that we thought made
sense that we could do a high quality job on,and and it's still happening to this day.
(17:03):
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There are a lot of entrepreneurs struggle fromthat transition of this rock star salesperson
to building an organization.
So
(17:30):
How did you scale your organization startingfrom year 6, 7, onwards?
And tell me
about preserving the culture.
And how are you able to scale FT partners andnot lose your edge in the marketplace?
It was this mindset of we're we're not going togrow
at all unless we can get
better.
Right?
I would way rather be a fifty person firmoffering amazing light service and
making good money than a two 150 person firmthat's mediocre.
And so it was all those groups that we builtout.
So when I was younger and, you know, kindalording over every single element of every
(17:59):
single deal in the early days.
This is kind of in the 2003,456.
I was doing a lot of things that I realized Icouldn't personally do
at scale, and it was
actually a part to get even
individual bankers to do at scale.
That's why we build out these, like, centers ofexcellence.
Like, for example, you know, we built up awhole financial forensics and data science and
due diligence team that is typically seen asbeing used by the elite private equity firms to
due diligence when they are buying multi likeour company.
(18:26):
So we ended up hiring the very people that wereworking for them and with them on our side of
the equation.
What we used to do is have junior analystassociates from, you know, Harvard and Stanford
that really cranking out the best models thatthey could, and they were infinitely better
than what the bigger banks were doing.
But then we said, you know what?
The buyers are getting more sophisticated.
The investors and buyers in saying they I wantthe whole data cube, and they want, like, 1000
(18:47):
and 1000 of lines of data or millions of linesof data and thousands of rows and columns and
cube.
And so, ultimately, that's
impossible for a junior person isn't an expertin data manipulation, and Excel just put blow
up and break down.
So, you know, we end up building a whole entiregroup out of this using 3rd party
sophisticated third party data analyticsplatforms that can visualize things and use
(19:08):
machine learning and AI to kinda get insightsout of the data that really tell the true story
of a business.
Right?
And then we can even help companies change theway they run their business, change the way
they run their marketing.
We do this every day.
So we're actually operationally helpingcompanies change how they run their business,
how they do marketing, how they do sales, howthey measure their salespeople, because we're
seeing insights into the data.
I met with the company the other day, and wewere analyzing their data.
(19:31):
And we actually I'm up in Napa.
I know we have this company up in Napa.
I'll give him a bit of a plug.
It's a company called LaVanta.
Who, is growing like a weed.
And, yeah, we were showing them their data inevery chart.
They're like, holy shit.
Like, that's amazing.
Like, we didn't we knew we were crushing it,but we didn't know we were crushing it that
much.
And then we show them another chart aboutretention, another chart about net revenue
retention, another chart about churn, anotherchart about cross sell and and even these guys
(19:54):
who we'd love, and they were just getting a lotof value out of the data that we were showing
them for their own business that they'rerunning every day.
That kind of stuff, we couldn't even do thatwhen we were trying to be RTs, I don't know
what I mean.
Like, so but at scale, you can do that if youhave a centered excellence, right,
you amortize that across
the house.
We don't charge any money from that.
Right.
Let's go.
So people often say, and, you know, hey.
You guys are we do probably charge a premiumprice and get premium outcomes.
(20:16):
But because you have very expensive peopledoing a lot of hard work, that adds up to
getting greater insights on a business.
We do that, and no one else does that.
Right?
There's not a single investment bank on theplanet that's gonna sit
here and talk
about their data science team that works forclients.
It doesn't exist.
How much of your unlocking of a company's valuehas to do with framing the story and painting a
(20:37):
bigger picture.
And how much of it is it seems like you have alot of granularity when it comes to numbers and
not painting a bigger picture per se, butpainting a much more accurate picture of the
future.
I mean, you're you're hitting on something thatcrucial.
You heard me talk about we have a miniMcKinsey, right, that's quite visionary in
terms of telling stories and things like that.
And, yeah, I'll give away a little bit of ourit's not secret sauce, but the way that we
think about the world is we have a pitch pagethat we described and very simple concept of
(21:01):
investors look at a business and should look ata
business with a microscope, binoculars, and atelescope, but you need different lenses and
different tools and different types of people
that are gonna engineer the microscopic lookthe binocular luck or the telescopic look at a
business.
What a lot of people do is they try to theyactually don't do a good job of any of those
things, quite frankly.
You know, they they're giving my LTV to CactusX.
(21:23):
Okay.
But what does that mean?
How do you calculate l and lifetime value?
There's 87 ways to doing that?
How do you do tackle?
What about by channel?
What about by cohort?
What about by region?
What about by product?
How does the funnel work?
How much of that's organic?
You can drive an investor crazy by making themask a 1000 questions to get essentially the
truth about a company.
Right?
What's the truth about the economics, the uniteconomics?
(21:44):
How's it working today?
And then you look out the binoculars, which islike, you know, call it, like, the 2, 3, 4, 5
year view, and the the telescope is at 5 to 10to 20 year view, depending on the business in
what time frames make the most sense.
So we try to do all that work and bring thatall into crystal clear focus.
You know, you wanna see what we are today.
Here's the micro v or the micro slide orwhatever it is, and and you can see the DNA of
(22:06):
the company.
Right?
That's fine.
But that's actually super helpful in trying tosee what's in the binoculars, right, out in the
future because that you're kind ofextrapolating a little bit.
And then if the company's projecting somethingthat is gonna off the, obviously,
extrapolatable information, then they better begood at explaining it.
Right?
And then, of course, the vision, it's a littlebit like impressionism, you know, like, you
know, the Monet of the world where it's like, Ican kinda see what's going on there.
(22:28):
I don't need to know with Ultra, exactly knifeprecision, what that looks like.
But, oh, okay.
Take a revolute or a cloud walk where theystart in a niche product or a niche set of
geographies, but they're really going to 90geographies with with 20 products.
And someone has to tell that story.
Right?
And that's kind of what we help people do whenwe did the revolute deal in the $33,000,000,000
valuation, which by the way is now proven to becheap, not expensive like everyone thought, you
(22:52):
know, we build out the 20 year model, all thedifferent lines of business from personal lines
to kind of consumer banking to businessbanking, to payments, to payroll, pet
insurance, you know, throughout, you know, allthese different geographies that we're able to
sort of say, here's why we think this companycould be a $1,000,000,000 company.
These guys didn't really get to be50,000,000,000 in EBITDA.
Right?
And at that time, you know, that's a$1,000,000,000,000,000 company.
(23:13):
And so people got excited about it and wrote a1,250,000,002,50 check when they were only
really looking to raise 250,000,000.
So when you raise a 1,250,000,000,250 at33,000,000,000 versus, say, 250 at 10, that's
an extra $1,000,000,000, and you're only taking3 percent dilution You know, so that gonna
change the whole entire trajectory of thebusiness.
Now they've got gums of money to invest inadvertising and product that they wouldn't have
(23:36):
had otherwise in a lot lower dilution.
You know, that we were helping.
We're really deep out on the microscopic side.
And they had never built a 20 year productvision or they had it in their head.
I mean, these guys know it inherently, right,but investors don't.
And that's just to understand.
Like, entrepreneurs think investors can veryquickly pick up on everything that they're
they're thinking over the 5 years of history ofthe company, but they can't.
You know, I I always joke around and saythere's no magic, you know, Star Trek Vulcan
(24:00):
thing where I can put my hand on your head andmy hand on the all the guys had to just
transfer all that information.
Like, it's gotta be done carefully.
And and we think in writing, so we didn't writeit all down and give people the data.
A lot of times people think what we do is,like, some sort of, like, people joke around,
like, you guys have some magical pills orwhatever, and you guys are creating magic.
And we hear that all the time, but it's, like,Man, if people knew how much hard work it was,
(24:20):
nobody would wanna do it.
The way that I look at it is to use an analogya company is like a plot of land on the beach,
and there's gold underneath.
And you could either do the hard work and usethe shovels to dig it up and show it to the
investors.
Or a very smart investor will come in, do abunch of work and figure out that that gold is
there.
And that's kind of where the alpha goes.
It either goes to the investor to the companyor somewhere in between, like, a lot of great
(24:41):
investors, great bankers are good at, coveringthat and presenting it that people don't have
to be geniuses to discover.
And look,
I mean, you're hitting on something thatreminds me of this myth out there that we hear
a lot of CEOs will say, well, hey.
Why do I need a banker?
I can do it myself.
Or my VCs tell me that if I have a banker, itmeans I can't raise money.
Is that true at any stage?
Do you see that?
Like, certainly there's there's negativesignals, series a or seed, or tell me about
(25:04):
that, or is it different from fintech?
I think it's it's a longer discussion.
You can do a whole podcast on this.
Right?
And I think it'd be something that should bekind of exposed a little bit where there's some
truth to everything, right, but there's also alot of, I think, falseness to those kind of
statements.
And I'll I'll give I'll give you my littlespeech on this.
I'd say there's a lot of companies there reallydo have a lot of hard time raising money, and
(25:25):
they talk to 50, 75 investors.
They can't raise it.
And then they need help.
They need to find a banker that needs to go tohelp them raise the capital.
And those are not our clients, but there's alot out there like that.
And so if the banker takes on that business andthen goes in shops at the Sequoia
and Cliner and a 16z and TCV and, you know,whoever else, there's a
pattern recognition there that they're seeing alot of deals from
bankers that aren't that good.
Right?
(25:49):
So there there's that element of it.
Right?
And and and that could be true.
But it doesn't mean that when I show up on yourdoorstep with Revolute, that Revolute isn't a
super high quality company because they have abanker.
Right?
Yeah.
Revolute's the best company in the world, andthey chose who, FTE partners.
Right?
You look at OpenAI's founder, Sam Altman.
He has another company called World Coin.
Well, Sam Altman, the person involved in hiring
us on World Coin.
Right?
We raised money for Worldcoin.
It's not like
Sam Altman's a guy that needs help raisingcapital, but sometimes having someone there
(26:18):
that helps you is not a bad thing.
Right?
And one of our clients in Brazil, sidewalk, Imean, everyone wants their best in that
company, but, you know, we've been their bankerfor years.
They keep
us around.
We've done a great job for those guys, andthey're growing like a weed.
So I think there's some of the most elitecompanies have bankers, and that's a great
thing as well.
But I think a lot of investors are scared ofbankers on good companies.
And so they try to scare the CEO by saying, youdon't wanna be like one of these bad companies
with these dumb bankers.
You just do it on your own.
(26:44):
Well, what CEO who was maybe never a banker,never raised any money spends all their time
running their company is just so perfectlynaturally acclimated to knowing every VC in the
valley and knowing exactly how to value theircompany and probably 0, honestly.
Right?
Everyone could use a banker, whether you're aokay company, a good company, great company, or
an amazing company.
We've proven it.
Chef partners has such a good filtering
and screening that if you got FD partners asyour banker, then you
(27:09):
must be a good company.
So it's the opposite signal.
Right?
And that's kind of what we try to create.
That's why we have a huge filter, and we'reactually turning down lots of deals.
I asked you when we last chatted whether PayPalwas sold at the right price.
And you said you would have sold it for 5 or$10,000,000,000,000, not the
one billion that was sold for
Tell me about how you would have gone aboutselling PayPal.
Yeah.
You kinda could look at the future and say,well, what should have happened in the past?
(27:31):
Right?
So if you look at PayPal and and PayPal's beenkind of up and down, all that kind of stuff,
but, like, at the end of the day, let's justsay it was sold for 1,000,000,000.
It was generally worth a100,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000
long term, even though it was at 1 point worth200,000,000,000, maybe it's worth 75 now,
whatever, but it went from 1 to a100,000,000,000 in a 3, you know, 20 year
period of time.
Right?
And you take another company, which wasmassively undersold, which was Mastercard.
Right?
People forget At the IPO of Mastercard, you canGoogle it right now, folks.
(27:57):
What was Mastercard's IPO value?
It was, like, 5, 6, or $7,000,000,000 less than20 years later.
So that was in 2007.
In 2024, their market cap's, like, 5 or$600,000,000,000.
So why was it only worth 5,000,000,000 thenwhen it's processing half the transactions
on the planet including Mastercard and Visa?
Well, it was a private company.
It was thought while it was run as an
association of banks.
People didn't really know exactly how to priceit.
(28:20):
So they priced it 5, 6, 7,000,000,000, whateverit was.
The IPO, they sold half the company.
Right?
So a bunch of T.
Rowe prices and fatalities and everybody elsewho all made $250,000,000,000 on their
investment and
was one of the worst transactions in history.
That being said, every banker on the streetsays I
worked on a Mastercard transaction.
I'm super proud of myself.
Right?
Oh, yeah.
You worked on, like, the one of the worst pricetransaction
in the history.
PayPal's another one.
Right?
I mean, again, it's hindsight.
It's 2020.
So you gotta take this all with a grain ofsalt.
Right?
But you
look at PayPal.
And, again, the joke is like, You have topaypal mafia.
(28:52):
There's people that were remembered from thegreat things they
did to PayPal, Elon Musk, and so on and soforth.
Right?
But they raised 100 of 1,000,000,000
of dollars, raised money in an IPO, and theyreally only sold the company for, like, a
1,200,000,000 or something like that.
Right?
So it's like, it
wasn't like that much economic value created.
I mean, it was enough to get a Elon on ahundred million bucks to go start these
companies.
It wasn't like this thing was, like, recs orStripe or something.
It wasn't really recognized for
what it was.
Right?
You could also argue that it was actually agreat company, but it wasn't a great process.
Of course.
(29:19):
Perhaps you could have come in and sold her for5,000,000,000, which in today's dollars,
today's tech M and A dollars would be, like,50,000,000,000.
So it goes to show the inflection point of asale, how much that could affect the financial
outcome.
Yeah.
I mean, also, even think about PayPal was oneof the primary ways to pay on eBay.
And eBay, remember, eBay is the one that boughtit.
EBay bought PayPal.
They since spun it off and all that kind ofstuff.
But, like, and at that moment in time, eBay wasthe primary marketplace for SMBs and for people
to sell things online.
Right?
(29:46):
S and Bs or or human beings or, you know,individuals, consumers, whatever.
And because
it was a primary place, like, everyone in 1999that was on the internet had an eBay account,
right, so you had, like, every single consumerhas an
account, and every single seller has anaccount.
And so if you were to find and own the paymentmethod to
connect all those people, you've gotta closethat work, a closed loop.
And you'd have millions of sellers and millions
of buyers, then it wouldn't be that hard todeduce that that could become ubiquitous around
the world, which is kinda Right?
(30:14):
Well, that story wasn't clearly told because apublic company probably covered by 10 twelve
research analysts at the time.
So all estimates for what they were gonna makenext year.
And at that time, they probably weren't gonnamake that much money the next year, they ended
up selling it for $1,000,000,000.
So Could I have sold it for 2, 3, 4, 5, 10?
Who knows?
Right?
An article going back to 2021 that you say thatsaid that you still work nights weekends at
(30:36):
your age, and I I know you're also very proudto be a father, and that's been a big war in
your life talk to me about work life balance.
Does it even exist?
How do you make that trade off personallyversus professionally?
It's it's become work, kid balance.
There's no life really.
I'm kidding because the kids stuff is is life.
And so, you know, look, I I went a long timewithout a wiper kids, and I was able to work
247, and that was great.
I always knew I'd get married and hope to havekids, and I've got 2 amazing kids and and
(31:00):
actually one on the way.
So, I'll be, three under three and a half, endof the year, hopefully.
And I'm the most happiest proudest dad in theworld.
But that whole question you asked about withthe 2nd decade of building up the firm, We
build up an amazing company with amazingpeople.
And in order to scale the business, I now sortof co run a lot of the transactions, like co
lead, a lot of the teams that we have, and Idon't have to do every little thing, every
(31:23):
little task, kind of, reveal, And, you know,we, we build a district great teams.
I think it's really, really important for allmy employees that have lives outside of the
officer partners and husbands and wives andkids to to spend time with them, and and we
really do encourage that.
We have won MDs on months of out.
But right now, spending time with his family,you have all the associates, a month off to
spend time with their families and friends.
(31:44):
So that's it's really, really important.
And it's one of the reason we scale the firm upso much because we wanna have some flex time
for people, including myself, and I reallythink it'll be a a sin to really be a work on
it.
Do you have issues taking time?
No.
I
mean, you know, I I would have more of an issuegoing golfing every weekend for 8 hours with
the guys.
You know what I mean?
Like, I don't do that.
When I wake up on Saturday at 6 o'clock in themorning, I run, like, a child running to a
(32:06):
Christmas tree to wake up my kids, you know,just super dedicated and super excited about
them every day.
And so I cherish all the moments I have withthem and but, also, they need to see dad
working.
So dad works his ass off.
And my three year old knows what work is Heknows what Zoom is.
He knows what a business is.
He knows what money is, and he knows what toysare and birds and and things too.
But, you know, he knows, you know, every day wewake up and first thing out of his mouth is the
(32:30):
seas today.
So I'm gonna try to raise him and my daughteris, like, hardworking individuals and not
entitled kids and all this kind of stuff.
So I think that work and home life can be mixedreally, really well.
And but I think you really gotta raise yourkids and be there for them.
Even a client centered business, How importantare in persons?
What's your cadence?
Tell me about zoom versus in person.
It's gotta be a strong mix of both.
(32:51):
I mean, we don't kick off a project, you know,without trying to do something face to face.
And some of that's work stuff face to face.
Some some some spot I mentioned that companyearlier Lavanta that we invited out to Napa.
We had a big work day, and then we had somewine tasting and yucked it up a little bit and
got to know them.
And so I think for us, it's just great to beable to mix a lot of fun and FaceTime just
(33:12):
getting together face to face.
And one of the things that I do is try to getin front of the clients all the time because,
you know, that's also a great time to spendtime with your employees.
Right?
You know, I mean, you know, the office andeveryone's running around.
That's one thing.
But when you're on location in Austin with aclient for a day, Well, maybe we might take 3
or 4 hours as the team and go grab dinner ordrink sweaters sometime with the team too.
So it's not just Zoom with your clients andZoom team too.
(33:33):
You've mentioned that you've really evolvedyour business.
What do you focus on doing now yourself SteveMcLaughlin versus what do you farm out to other
people with different competencies?
A lot of its teamwork as opposed to justfarming this out or farming that out, certainly
accounting, finance, taxes, ops, engineering.
I mean, we have all
those functions of the
company, but we have an amazing CFO legalpeople, C OL type people, like, running all
(33:57):
those kind of things.
I'm very, very client centric, right, and teamcentric.
So it's my job is to make sure we bring in theright people that we treat the clients right
and that we give the clients the rightattention.
And so I think that is my best and highest use.
And I think where I spent a little bit of timeis thinking strategically about the firm where
are we going?
All these groups that we developed.
It's funny.
I just had a conversation with one of ourJunior guys today, Axel, I talked to him this
(34:21):
morning.
As I kind of talked about him and motivatinghim and saying, look, look, and all jobs are
99% 1st regional, 1% inspiration.
So, like, a lot of it's grinding, grinding,grinding, but your brain has to be working
about what should I be doing differently?
How should I grow the business?
You know, how should I shoot my people,actually, run the company.
And so I spend a little bit of time every daythinking about that kind of something, but then
we have good people that can go execute.
Now we don't have, like, mid level kids writingour data science team.
(34:43):
We have a guy that's been running financialforensics and data science stuff for 20 years.
She has a way of adults.
You know, running all of our key parts of thefirm.
We've got a master engineer engineering teambuilding up our our tech platform.
So you just have to really, really good people.
So I can spend my time on the things thatmatter, which is the people and the clients.
You mentioned the people and the clients.
What percentage of time do you get to on that?
(35:04):
Is that 20%?
Is that 60%?
And what percentage of time does it take uptoday?
I it's it takes up the large, large, largemajority of my time, you know, and most of
that's on it.
All the operational stuff is all been farmedout.
And that's been the most amazing thing.
It's like when I farm something out to theright people, they blossom.
I mean, I'm learning things all the time thatour teams are doing.
And I'm like, we're doing that.
(35:24):
We're doing that.
Like, collection applied our whole financedepartment.
You know, it's all paperless and perfect and ofthe data science tools that the team is buying
and building and designing and integrating intoour FT base API into our client systems.
I mean, stuff I never even thought.
I would never think of that.
I think it was jobs or somebody said, you know,let's not hire smart people to tell them what
to do.
Let's hire smart people to tell us what to do.
And that is an important mentality to have.
(35:46):
So I'm really smart, hardworking driven, peoplethat are driving the company forward again.
And I just like working with
clients and building the team, so that's whereI spend almost all my time.
That's great.
I could learn a lot from that.
Thanks for jumping on the podcast.
When it comes to FD Partners and
yourself, What would you like to shine a lighton for our listeners?
I'd say number 1, like, you heard me talk a lotabout the team today.
(36:08):
We've got an amazing incredible team of peoplethat have been here a long time who work very
hard.
The families they're sacrificing for.
And and we're here to build something for us,but also to do great work for our clients.
So we're here to do amazing, amazing work withthe clients.
And thank you all for the work you do, andthank our clients for for hiring us and
trusting us with your, you know, $1,000,000,000babies.
(36:28):
The world of FinTech is something that's neardear to all of us.
I think FinTech is doing good for the world.
And, you know, we only wanna work for thecompanies that are doing good for the world in
of FinTech and Financial Services.
So, you know, there's a real mission behindeverything that we're doing, which is try to
really help entrepreneurs succeed with theirdreams and make things better.
It actually makes me feel good that NickStronsky's killing it at revolut because he's
(36:48):
actually on a complete and utter mission tojust bring down price and increase quality of
products for the world and financial services,and I think he can do yeah, the stuff that the
world going guys are doing under Sam Altman.
And so we try to find these companies that aredoing good, and that that makes us, I think,
perform better and do better.
And so it's a little warm and fuzzy way to end,but, we're very lucky to be in the position
we're in in the geographies and the countriesand the state of the economy that we're in
(37:11):
thankful for everything that's gone on well forus and look forward to another 20, 30, 40 years
ahead.
Absolutely.
Well, I'm looking forward to finally sittingdown in person as well and, special shout out
to WorldCOIN, one of our portfolio companies aswell.
There you go.
There you
go.
Alright, David.
Thank you.
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