20VC: Plaid and Column Co-Founder, William Hockey on Why the Brands that Win in Fintech Will Not Be Financial Services Brands, What US Banking Can Learn from China & Why Companies Can Be Built Slower than People Think?
Building within regulatory boundaries allows for a stronger foundation and the ability to offer secure and compliant financial products.
Long-term success in the startup world comes from focusing on the problems at hand and delivering meaningful solutions, rather than seeking external validation or fame.
Specialized niche financial brands are predicted to dominate the industry, offering tailored services to specific audiences and leveraging their understanding of the customer.
Deep dives
Building within the regulatory perimeter
The podcast episode discusses the importance of building within the regulatory perimeter in the financial industry. The guest, William Hockey, emphasizes that Silicon Valley is not well-equipped to handle regulated businesses. However, by embracing regulation and becoming a regulated bank, companies can create value and drive innovation within the system. Though it may require more resources and time, building within regulatory boundaries allows for a stronger foundation and the ability to offer secure and compliant financial products.
The balance between high performance and recognition
The episode delves into the idea of high performance and recognition in the startup world. According to Hockey, true high performance means being willing to grind and build in the shadows without seeking external validation or fame. While there is an initial desire for recognition and fame, long-term success comes from focusing on the problems at hand and delivering meaningful solutions. Balancing the need for recognition with the commitment to quietly and diligently pursue goals leads to greater resilience and the ability to tackle larger challenges.
The future of financial brands and niche markets
The podcast explores the future of financial brands and the trend towards niche markets. Hockey predicts that the traditional large banks will fade into the background, while specialized, niche financial brands will dominate the industry. These brands, already present in other sectors, understand their specific audiences and can provide tailored financial services. As technology and financial services become increasingly commoditized, knowing the customer and delivering superior products to niche markets will be the key to long-term success.
Simplifying Financial Services through Innovation
Column, a regulated bank, offers APIs to developers and enterprises, enabling them to move and manage money more efficiently. By bypassing the need for middlemen providers, Column streamlines the money supply chain, reducing fees, time, and complexity. This innovation lowers barriers to entry and empowers developers to create new financial services faster and at a lower cost. The goal is to provide a safe and regulated environment for innovation, enhancing the consumer experience and expanding options within the financial services industry.
The Future of Banking and the Role of Vertical Specialists
In the next 10 years, large vertical software companies are expected to become dominant players in financial services. Instead of traditional regulated banks, these specialized players specialize in specific sectors and cater to the needs of specific audiences. This trend may lead to less consolidation through mergers and acquisitions, as these companies focus on in-house development to maintain aligned incentives and offer services cheaper, better, and faster. By building within the regulatory perimeter, they provide consumers with more options and a relatively safe and regulated environment.
Will Hockey is the Co-Founder and Co-CEO @ Column, the only nationally chartered bank built to enable developers and builders to create new financial products. Before co-founding Column, Will was the Co-Founder, President, and CTO @ Plaid, a world-leading data network and payments platform. In 2020, Visa attempted to acquire Plaid for $5.3BN, however, this was blocked due to regulatory issues and the company went on to raise at a reported $13.4BN valuation just 9 months later. Additionally, Will is on the board of Scale.ai.
In Today's Episode with Will Hockey We Discuss:
1.) The Founding of $13.4BN Plaid:
How did Will make his way into the world of startups and come to found Plaid with Zach?
If we are all a function of our histories, what is Will running from? What is he running toward?
What does Will know now that he wishes he had known when he started Plaid?
2.) Will Hockey: The Makings of a Decacorn Founder:
What does the term "high performance" mean to Will? How has this changed over time?
Having had such a successful time building Plaid to $13.4BN, how does Will assess his own relationship to risk and his relationship to money?
How does Will approach his own personal portfolio planning? Equity, debt, real-estate? How does Will optimize his own personal wealth?
Column is his second time founding a company, what did Will decide to take from Plaid that worked well? What did he decide he would not do having seen it work badly at Plaid?
3.) The Building of Truly Great Teams:
Why does Will believe that companies can be built so much slower than people think?
How does Will determine the decisions that have to be made fast vs those with time?
How does Will ensure the same size of urgency and speed within his team without this time or funding pressure?
What have been Will's single biggest lessons when it comes to people acquisition and retention?
4.) Fintech: The Next 10 Years:
How will the next 10 years look different from the last in fintech? What changes will be better? What will be worse? What is Will worried about? What is he excited about?
What does Will mean when he says, "the US financial system can function like a protocol"? What does Will believe are some of the core myths of the US financial system?
Why does Will believe the current financial system can and will fix a lot of what crypto is trying to solve? What barriers will prevent this from happening?