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Speaker 2 00:08 come to the breakout growth podcast where Sean Ellis interviews leaders from the world's fastest growing companies to get to the heart of what's really driving their growth. And now here's your host, Sean Ellis.
Speaker 3 00:23 So in this interview we'll look at transfer wise, which is a money transfer service that makes sending money overseas much more affordable for the interview. I'm actually running a bit of an experiment myself. So I invited my friend Matt Lerner to help me co interview Neil on Paris, who's the vice president of growth at TransferWise. So Matt and I, we just completed a workshop that, uh, Matt helped me organize in London. And uh, but more importantly, Matt is the former marketing director at PayPal. So he's really the perfect partner for this interview. In the interview, Neil explains to us his major challenge, which is that TransferWise solves a problem that very few, uh, prospects realize that they have. So they don't realize that they're overpaying on international money transfers. And Neolane explains how he's really leveraged customer passion from their existing passionate customers to drive referral and really build a referral loop in the business that that's been powerful for driving the company from less than 50 employees when Nielsen started to over a thousand employees today. So let's get started.
Speaker 3 01:38 Okay. Welcome to the breakout growth podcast and Elan. Hi, great to be here. Yeah, it's um, it's, this is going to be a really interesting experiment in the, in the spirit of experimentation by having Matt Lerner join us as well. So welcome as well, Matt. Thanks Sean. It's great to be iterating fast and these things. Yeah. And um, as, as with all things that this turns into a disaster, I'm sorry that you were the Guinea pig for a dual interview. It's all about learning from failure. Absolutely. So, um, before we jump into how your growing transfer wise, it would be great if you could just give us a quick introduction to what TransferWise is all about. So a transfer is the leader, market leader and cross-border money movement. Uh, we're moving well over 3 billion pounds every month and where we're started to make, uh, the problems are moving, money disappear. So it's really expensive to move money internationally. It's pretty slow and it's a pain in the ass and we're pretty confident we can make almost those problems almost completely disappear. So we reckon we can get the price down to pretty close to zero and the next few years, wow. We've already got speed to instance wanting five transfers, like settle instantly that cross border in the United States.
Speaker 3 02:57 And then, uh, convenience. We hope to go there to like a touch of a button and we're still a way off that one. But that's kinda how we think about the, the problem we're solving and uh, our, uh, our aspirations. Ask them. And then how, um, you've been with the company pretty long now, right? Yeah, too long. Uh, so I think about six, seven years, much like you, I kind of, so I've been working with startups I think for too long, for well over a decade and I am sure like you guys, they kind of get introduced to founders never getting introduced to these guys eight years ago. These guys, they got a great product, but they have no customers. Right. And you're both thinking. Yeah, we both had similar, similar kind of intros and I met them and I honestly thought they're going nowhere cause they just saw so much of the other basics.
Speaker 3 03:45 We just weren't there. And uh, I joined them part time, just really like hacking with them, uh, launching all the basics. Lloyd's in the first ad words, ads for them, helping them start thinking about product in more of a growth, growth centered way. Uh, and then after a couple of years of a part time helping out, uh, they offered me a role full time and I joined, I've been here for six years since then. So from, it was about 40 odd people then and we're about thousand 700 now. Wow. Yeah. I gotta imagine that it's a completely different place compared to when you started at then. Yeah, to some extent. But as you know with these things, the import import and stuff still the same, I hope. Yeah. I mean that's, it's so hard to retain the essence of what makes it fun as it gets bigger. But we can get into, I'm sure we're get into all of that.
Speaker 3 04:35 And one of the questions you talked about, uh, that you're working to potentially get that cost of a transfer down to zero. Um, how do you guys make money then? Yeah, it's a really good question. So, uh, when you look at the, there's about seven problems we kind of figured out that you need to solve in order to achieve what we call that mission. So if you want to weight the world's money move for almost nothing instantly, it's about seven problems you need to solve. So we need to be, we need to have a license in every country in the world. The pains need to be pretty cheap and fast. The payouts need to be cheap and fast. That conversions need to happen pretty instantly. Um, the onboarding needs to be super slick. And then also the other parts of the growth funnel, like the drivers recommendation need to be understood and invested in and the drivers of detraction, um, so people tend to worry when they're transferring money, you need to really understand what would drive that.
Speaker 3 05:34 So what we do every quarter is we have a simplified the, the org structure massively there, but you can imagine we have teams working on software that's trying to move, solve all those problems, right? And as they do that, they drive those costs down and every quarter those costs, uh, down a little bit lower than they were before. And all we do is we add up our costs up on single route, we add our margin. So we're pretty transparent. It's a 15% cash margin on top and we pass that back to our customers. And every quarter, as long as the costs keep going, now the price keeps going down. Some quarters, the cost will go up because I know a bank would have put up his fees or something would have happened along the way and unfortunately only to put the price up to cover it. Uh, but generally that's the model and we've be fair.
Speaker 3 06:20 This is 15% of zero. Okay. I said, well, I said, I said, I said, no, no, no, no, let's say so really good question. So I say almost zero and that's only because we haven't figured out how to make the cost completely disappear, right? So there's a, unfortunately, there are still some costs associated with moving money that I can't see getting down to zero and obviously 50% of a very, like when it gets down to like a, a dollar a transfer and, but you're doing so much volume, it's essentially shift all of the world. It should be a pretty valuable business. So it's kind of like the way exactly as you said that I do believe, like whoever builds this platform, uh, that gets the lowest marginal cost as quickly as possible. We'll get to massive, massive scale. I love it. Milan. I worked in payments for 10 years and it's devilishly complex and you're explaining it so simply that a third grader could understand it.
Speaker 3 07:20 You have a gift for that. And I really liked that comment. Five-year-old can understand it, but I'm so who's your typical target customer profile? It's good question. So from a breaking down our, uh, our volume into segments broadly, we have, um, 80% B to C and 20% B2B. Unpack B to B in a second cause that's quite complex. Inside B to C, it is everyone moving money internationally. There isn't one specific target group that sticks out. So written remittances, people sending money home to a family is like less than 20%, but I can tell you like over a hundred people bought a house last that costs like a North close to a million abroad on TransferWise last month, which is pretty, pretty astonishing. Um, we have a lot of students using our platform. We have a load of uh, like freelancers receiving money from overseas. Um, we have people paying for their second home mortgages.
Speaker 3 08:23 Uh, just any kind of use case, people buying stuff from overseas. When you're talking fees. I had a a, I bought a house in Budapest. I was living there. And it's just massive fees when you're moving, you want to take a percentage of, I mean it was, it was 500, that's $600,000 and taking a cut of that as you've got it. I mean like in Europe, uh, banks charge between four and 7%, right? So you're sending 1000 bucks, it's about $50. Let's make that 1 million bucks. Right? And let's make that a, that's $50,000, right? Yeah. Okay. That's like your, your entire realtor fee just in the money tree. Yeah. So that's the value add. Those are the segments of switch to us. They switch based on the amount of value they get, which is really the amount of savings that we're giving to them that will get them over the inertia of switching away from their bank.
Speaker 3 09:19 But if someone's going to trust you to, if someone's going to let you spend that much money, there has to be a high degree of trust. That's not an impulse buy decision. So really a good question. So, I'm sorry I didn't get into the B2B side. Why don't we come back to that and let's go into the consumer segment then. And too, we have all these use cases, like how do we acquire them? Why do they trust us, right? In the early days, like, um, I think my startup before this one grew really big off the back of Google spend and you get very good at spending money with Google. And so obviously once you become a, a marketing dude or a growth dude and uh, you get like, once you've got this hammer that's called Google in your toolbox, the first thing you go for is the hammer.
Speaker 3 09:59 You try to think, uh, yeah, we're going to take out the Google hammer and we're going to get really good at, uh, scalably writing a bunch of ads, algorithmically figuring out the right bids, sporting out a hundred million pages, doing all of that. And that kind of works. The reason Google didn't work is people don't know they're being ripped off. So, uh, I know this, that now it's 70% of people in Europe when they go to their bank. And they see the exchange rate, they think that is the rate on Reuters and Google. They don't know that rate as me mocked up by 5% I'm always laughing when it says no commission and then you know, so the thing is like you like when it's like a, I think I can say names like Western union, MoneyGram and <inaudible> and the buy and sell rates. You kind of don't trust them.
Speaker 3 10:48 But when you go to, I think I'll say the name, did you go to HSBC or you go to Citibank and you reputable companies, you log onto a website and they say that's the rate. And they say the fees, $2 you think the fees, $2 you don't know there's another $50 hidden, then the exchange rate fee. So the search demand for our products pretty low cause people don't, people don't think I'm paying $50 zero lies the problem. So a problem number one with a, like a strong intent channels, uh, is that there isn't a strong intent for the product because people aren't aware of it. So then you're into that, the mass broadcasting, try and make people aware by marketing that you guys are all nodding and that's super expensive. That's very expensive. And to get over the trust problem with that. So just think about it like, uh, I'm gonna run an ad.
Speaker 3 11:36 I'm going to put it on TV. I'm going to put it on the side of a bus. I'm going to put it on Facebook. After seeing the ad, you've got to trust this company. You've never heard of enough to transfer your life savings through to buy a house, right? Compared to your bank. You can walk into your bank, you can touch your back, you can shake your bank, the hand you bank there, your dad bank there. You need to spend so much money to get to any equivalent place of trust. But even to tell you the truth, I talked about that, that transfer it to Hungary to buy a house in Hungary. I was terrified. The bank that seemed trustworthy had a much worse rate than this sort of bang that it was like, I gotta get my money out of there fast. Once it gets in, it was just like don't, don't hit an a window where they, and we definitely did.
Speaker 3 12:21 Um, so you can imagine we've got a load of good advice saying you need to invest in brand to build a trust. And we did all of that. But it doesn't take long to figure out. I mean, I've, I've run TV campaigns in Australia, in the U S in Europe. Every time you run it, you're like, the economy economics are going to be different this time. It's going to work. And it never, it's never worked. Right. So we've, um, we tried to get marketing to work to build trust. We couldn't. And the thing we fell back on pretty early, so this was after about a year of me being here was um,
Speaker 5 12:51 yeah,
Speaker 3 12:53 getting our customers to trust us was hard. Getting our customers to trust their friends was easier. So if we just double down the effort, I'm just giving her a great experience to our existing customers and understand the drivers of recommendation. Then, uh, the truck, we just saw that when you ask people, why do you use TransferWise, how do you feel comfortable using it? This person told me and they told me it was safe. And I start realizing that's the, that's the bit where needs to pop way faster. And it's not even just like natural word of mouth. There is a network effect there. I know when I've heard of TransferWise in the past, it's someone is struggling sending me money and they're, you know, especially like some government regulations on the business, the business side of how to extend it out of the country. Hey, are you okay if we use TransferWise?
Speaker 3 13:44 The person on the other end said to me, and so, um, I, I do feel like that there's some network effect. Let's jump into that. So, um, it's a really hard network effect. So I uh, uh, uh, Taba here, uh, used to work at Skype and um, I met the, some of the founders of Skype and Skype had a like really strong viral coefficients, but you work through the, uh, you're probably not going to say the right words for this, but the, uh, the viral funnel, what'd you call it? Viral loop. Yep. And it kind of makes sense, right? Because I need to call you, you need to download Skype in order to get it and like, and then you work through like what is the likelihood you need to call somebody else in the next, how long the things that drive this rate of growth, Roche, when you worked with those drivers to Skype, it makes sense for us.
Speaker 3 14:36 Um, there are lots of one way money transfers and the recipient might not necessarily have a need to do a money transfer. The second point is, uh, uh, there are some segments that are high frequency but are pretty low frequency use case. Right? Okay. So the viral viral loops there, it's a slow, slow loop and you kind of find, you get this penetration in the segments that have a high frequency use cases. And then the other bit you find is so like students who use, trying to wait to know students. So they all tell we're all connected with each other. And then people who buy houses in Spain from the UK know other people who got housing spanked was it, this is great on one side and the other side is they don't recommend outside the use case. So you find people use it for certain use cases and recommend on that and uh, which is cool.
Speaker 3 15:28 So then, uh, growth drivers, figuring out how to get them to use us for more. But that was kind of same thing we saw at Dropbox as well. Like if you, if it's primarily a file sharing tool and you're kind of thinking of it that way, that's what it is for people on another group of people that are like, what are you talking about? It's all about keeping my data in sync between my devices and, but if you can get people to understand it on the 360 degree level, then they're much more likely to really value it. Absolutely. Cool. So, um, what do you, what do you think's been the key to the success?
Speaker 3 16:02 Is that growth really coming from? So I think we kind of have covered it already, but a step through in a little bit more detailed, kind of narrow it down to one. So the overall, one thing I'd say is the a C I narrowing focus on the customer and making sure we're driving a lot of value back to them. But I think it's to make it a bit more tangible rather than that kind of wishy washy line that you read in the Harvard business review. And that kind of doesn't mean anything. So what I learnt when we enter a market, and if we're not at least 10 X better than the alternative on price, mainly no one notices. So we've launched many times where there weather generally when we take someone else's product and rebudget for it at the beginning just to get in the market fast, uh, we kind of see it like it was quick to launch and then the growth rates really slow when we figure out how to move money.
Speaker 3 16:56 So Brazil's a really good example. Brazil, a viral coefficient, uh, is pretty near one, right? It's the only market where we've got that right. Where the market, by the way, where somebody had said, let's use transfer wise. Oh wow, that's amazing. Makes sense. And the reason why is it costs 10% to move money out of Brazil, which is also, there's a lot of bureaucratic crap you need to go slowly. And the tax is a pretty nuts as well. And so the product there had to, we had to solve the tax problem we had to solve, how to explain the tax problem clearly. And we had to figure out how to move money out of Brazil for 1% which is where we launched that. And that was a dramatic, the difference we made to Brazilian lives. And hence to our growth. So that's a really big economy that a lot of people forget about. Huge. Yeah. And uh, it's been one of our fastest markets. But just to go a little bit deeper, like money transfer has been going on since the cross borders is the medic cheese, right? This is like a medieval, uh, Florence. Um, how can, like a couple of guys in Europe go, you know what, like,
Speaker 6 18:05 you can do this much, much cheaper. They were like, Hey, how does it, how does this opportunity like exist in plain sight that ever thousand years figure this out. Yeah, exactly. And uh, I try and share a little around yeah.
Speaker 3 18:18 And, um, how and why. So I think a lot of it is as you know, a hustle drive, I narrowing focus on the customer and I just give two stories that kind of bring it to life. And so, uh, I share these stories cause this kind of brings to life, what is it we invest in? What is it we do that drives the cost down? Uh, that then gets, uh, that creates value for customers that then gets them to recommend that then create shareholder value growth. Exactly. Yeah. So what is the thing we actually do? Uh, so I talked through what happened in Singapore for us and what happens in the UK, what happened in the UK. So we went to MAs, the regulator in Singapore four years ago and we said, Hey, we'd love a license cause we have 2000 people in Singapore who said, can you launch TransferWise in Singapore?
Speaker 3 19:09 And they said, sure thing, here's a license. But you need to physically meet face to face every single one of these people before you allow, before you're allowed to send their money out of Singapore. I like guys, we're familiar with fat, fatter, like global man, antimony laundering regulations and how that's an accident, a law in the U S and Australia, UK. And you don't need to do that there. And they said it's true, but it's Singapore, you're going to do that if you want a license. So we took the license, we sent a team out to Singapore in a we work office and they started, uh, verifying these customers and uh, customers came in, but customers absolutely hated it. But the muscle we built, uh, once we got those customers to complain, not to us, but to the regulator. And it took a year of lobbying and a year of doing something that fundamentally didn't scale, uh, and all kinds of hustle and soft power lobbying, like, uh, uh, with the Singaporean government before we got the world's first license to do, take a selfie, take a picture of ID, and then we can send your money out of Singapore.
Speaker 3 20:17 And today, now you just log onto the government portal, authenticate your ID that way, and then we send the money out.
Speaker 6 20:23 Yeah. But that sounds very like Uber ask in some of the challenges that it's regulatory. But unlike Uber, we, we, we always comply with a log. Yeah. Meaning you will need more the fact that when governments block Uber from a market, and especially if they've been there already and there's just an uproar from the local population that helps totally age policy and we definitely got that muscle. But, um,
Speaker 3 20:49 because, uh, I guess, uh, brides and taxis are as regulated now, but money transfer is incredibly tightly regulated as you can imagine. And it's super, uh, and regulators are risk averse and we need to work through them, um, through doing that. Yeah, well that's a really good example of, um, 10 X better products. So when you're, what I'm fond of telling the team is if you're building a 10 X better product, you're building something that doesn't exist. You're not even sure if it's ever going to exist. And if you're not in that space space of existential crisis, you know, trying hard enough to really move the top line materially, you gotta be doing the Singapore type stuff. One more quick story I'll cover is what happened in the U K so after operating for about two or three years, we understood, we looked at our costs of sending money into and out of the U K and we realized, uh, a bunch of it was going in fees to our bank and rather than find a cheaper bank, we thought what is the lowest marginal cost of doing a pain or pay out of the UK?
Speaker 3 21:56 And that's, you get that if you have a bank account at the bank of England. So we were tiny, we were a hundred people and we started trying to figure out how to hustle to get a bank account at the bank of England. And that took five years and we had to literally change the law, create a new regulatory framework for it. But we were the first non clearing bank to get a bank account at the bank of England. And now we have literally the world's best in class payment rails for payments into and out of the UK. And you can imagine our product teams are doing that all over the world, in other markets today as well. So, you know what my big takeaway is from those two stories is that the amount of grit and hustle that's required there, you gotta really believe in the mission.
Speaker 3 22:37 You gotta, you gotta have people who are just, it's not about that instant gratification. It's just like, we're going to figure out how to do this. You totally got it. And that's more or less my role. So I, you guys, uh, both founders and you kind of have been there, so you kind of know at the beginning, and I still find that swear, but you have, uh, yeah, fuck yeah. Fuck all right. You have nothing and you just have a vision and you have to persuade people that, and we're gonna go, we're gonna go there, we're gonna get there. And uh, they need, some people join for the mission. They kind of see that. Then after a while you build a product, you just, they can see the product and they kind of see where it's going. And some people joined for the product after a while you get the numbers and they can, some people join for the numbers and then after a while they kind of get an awesome team and then some people joined.
Speaker 3 23:26 Cause I want to join that team to try to help to uh, to achieve that success. Exactly right. And as you guys know, you guys have all of work that at different stages all the way down. The interesting bit for me is like the starting point is a team needs to believe that we're going there. If they believe, if they don't think we're going to build a platform that's going to move all the world's money and they just think we're going to make it slightly better, they build something slightly better. And a lot of the hacks tried to do internally is try to think through how to raise all of their collective ambitions all the way out there. How do I take the one story of Singapore and make sure everyone here knows that to know that people out there have made that kind of shit happen.
Speaker 3 24:06 So like inspires them to look for those areas of what do we need to unlock next to really move forward on the mission. Do you actually have a metric that helps you know kind of beyond the individual stories and the overall mission, but something that says, man, we have, we've made so much progress work. We've done this much versus this much a year ago. No star KPI. Yeah. I took you through our notes and how it's always fun question, how it's evolved over time. So obviously like every early stage startup, the last hour was first new users and actually news are accelerations, so monthly new users. So we have very low churn and they kind of first stay on board with pretty steady active rates, but every, every month we'd look to grow the number of new users joining now for a long time. That's what I drove. After awhile it became sustainable new users.
Speaker 3 25:04 As you can imagine, a user that pays back pays vapor itself. Within 12 months you start to define all these things. We've been profitable three years so that you can understand how you work through that. Then we launched business and we really started investing in business three years ago and that, and obviously like a business volume is very different than consumer volume. And I was also keen not to try to say this is strategically important and like arbitrarily prioritize. So we moved to cross border volume okay. As our North star KPI and we'll probably run with that now. So it's pretty easy to rationalize it back to the mission. Uh, how many people's, uh, how much volume, uh, has gone through transfers. How much savings cause that falls straight off the back of volume. Have we contributed back to our customers whether consumers or businesses, what's the next biggest volume opportunity we have?
Speaker 3 25:56 Cool things is incredibly aligned with obviously our shareholders and our valuation. When you work that backwards through and as long as those costs, economics and margin economics I talked through at the beginning holds true, you end up with a building an incredibly valuable business as well. Absolutely. And I think the challenge and you just connected it there is that a lot of times because CEOs are constantly being asked about revenue and profitability that they, that they want to talk to the team in those terms. But when you can talk about volume of transfers and something that's, that's kind of a little more connected with the mission, it's so much, it feeds that passion that you've been referring to. That's so important. So let's riff off that a little bit because I'm really curious on your, both your perspectives on that. The how like people in our role handle the revenue conversation with the board or with a CEO.
Speaker 3 26:50 I think he's critical to the success of a company. And there's a two places I've seen that happen, right? Um, one is around how you set targets and manage expectations. Talk about that a bit. And two is around where their revenue is an output or an outcome, which is kind of what you were touching on there. Yep. Yep. Let's do the target one first. Cause that's the more interesting one. So I'm going to generalize terribly here, but uh, like boards at the end of the day it's like fear at points in time or grease. Absolutely. And at the end of the day they just won't you to give them confidence that it's going to get really fucking big and they're going to get payback on their, on their investment. And then the question is like how you, how you fill that gap. So obviously the idea is they want a number and you're going to hit that number and you're going to build a team and you know like you're going to fire people if they don't hit that number and people are going to be accountable and feel it for hitting that number.
Speaker 3 27:58 But the reality that we know is that number is a guess as in a high growth startup and it's a guess on two dimensions. It's dependent on shipping stuff as we know, shipping stuff, right as I hate high degree of variability. If you want to like build an organization that ships on time, like you're doing it wrong, that's not kind of what we're talking about. We're talking about fast learn, build, iterate cycles. The second part is estimating the impact of something, again, is a problem that is not worth spending too much time on. You just want to know and you also want to just want to know is like, is it potentially going to be massive or is it not worth doing at all? And that's kind of like the most estimation anyone should do on anything him, which means you need to be able to manage that conversation back.
Speaker 3 28:44 So we, I've done it and we managed to do it here is to talk through a momentum view or we built up these cohorts of customers, this is how they're behaving. This is what the momentum is looking like. Yup. We're investing in all these cool things. None of that is banked, right? So we can put speculative numbers now, but cashflow is not dependent on like that thing, you know, we're not, the business isn't gonna go bust if the, if the, if the bet doesn't pay off, right? Just a bit of prudence around that and that's how we've, uh, how we managed it today. But managing that conversation assertively is being key. I mean, I'd love to hear your perspectives on that. I think just exactly as you said, I know Matt itching to ask some questions here, but let me just give you my thought real quick here that, um, I, yeah, I, I really break it down to this is what we know and here's our process for innovating. You don't get acceleration enough of what you know and you get acceleration off of learning new stuff and adding new additional drivers of our way of
Speaker 6 29:41 putting it. And so here's, here's our list of bets on the unknown. Here's our confidence against those bets. We're going to need to get this much out of the unknown on top of the known to hit that number and we're being very aggressive. But here's, here's our process there. And I think to me being just saying, yeah, we'll find a way to do it isn't enough. And, but, but also saying, you know, like saying it's a complete guess or it's completely known is, is not true either. There are trendlines that are going to give you some level of predictability and everything above those trend lines is going to come off of new stuff you learn. And the cool thing about these trend lines is we know who's they tapered off off. Exactly. Especially if I think contributing channel you're going to get decay. And so it's not just about building on top of those trend lines, but it's about replacing the ones that are decaying and that's, that can also be challenging.
Speaker 6 30:34 But what I really like about what you touched on earlier is that when you're focused on feeding referral and using the base to grow, that's something that actually is fairly sustainable over time. And so that was one of my big learnings when it came off of log me in. We were very dependent on a Google ad spend. That's great. But when you get big you have to figure out how to continue to drive so much more out of that channel to maintain growth rates. It's not just driving the same, but you have to keep figuring out ways to get more out of that. And so when you have external dependencies, you almost always flatten out. But Dropbox I joined six months later and it was all about, gosh, if we can have this growth be driven from our base so that the bigger we get, the more powerful our marketing engine becomes.
Speaker 6 31:22 That's something you can sustainably grow over time. And I think that's a lot of what the team was focused on. The first fastest a SAS business to a billion dollar valuation or a billion to $1 billion in revenue. I think that's, that's the reason is because it was, you could have lines that went up into the right a lot longer when it's being driven off of a machine that's self-feeding. So Matt, you had a thought or a question there? Yeah, I mean I guess as an investor I always talk to him cause I see startups that are much earlier stage than you and that one year, two year, three year revenue forecasts when you're marketing plans. And I'm like, how on earth do you know this stuff? This is unbelievable. And it's, it's good that you've managed your relationship with the board in such a way that you can go in and be transparent about the knowns and the unknowns. But I think you've earned that through a track record of actually, you know, over-delivering and
Speaker 3 32:12 to some extent, um, I guess dangerous being too specific on this stuff, but, um, as you all know, we've definitely been through the periods of nine months being flat on, near to flat and then like the questions and the challenges will inevitably come on doing stuff that you know, won't make a difference. So it's also how you manage those conversations. There are, there are as important so that their credibility doesn't come, uh, comes with like off the back of a bunch of wounds as well.
Speaker 6 32:37 And that's it. That's the, is that that boards do tend to get manic in some senses. The more successful you are, the more that they start saying, okay, are we ready for the next level team? And I think that's one of the things that's impressive about how long you've stayed here is that a lot of times they get, they get greedy to the point where they feel like now we can afford the really good person and then afterwards they realize that
Speaker 3 33:01 maybe, maybe we made a mistake there and that, um, and some really good one. So I should talk about that flow. So I mean I have no good answer on that. Um, I definitely work with founders and boards who are like, I'm the Fraser I have here is like, I hope I've never been guilty of this myself. Maybe I have it is like, you know, this guy George, he's the guy that will get us from zero to a million Edwards spend, but we need to hire somebody else to go from a million to this or they'll talk about it in the, in the language of brand or there'll be some other way or someone who can build an organ, an engineering org of 300 to 600. And uh, the reality is some of that's true. I think so you do find a scaling. So like, I mean all my time now is dealt dealing with scaling challenges, which is parts of the business not growing fast enough to keep up with the scale, right?
Speaker 3 33:59 All that kind of like good problems to have kind of kind of category. And some of that is leadership, right? Where just like a person running a 30 person organization wakes up one day, he's running a 300 person organization, you know, and then, uh, they're like poor thing, completely struggling and you need to figure a way to support them and get through that. So there's definitely a need for, uh, uh, finding leaders that can help build and scale the organization at points in time, whether it's a marketing organization, a growth engineering org. I guess I just curious how have you guys think about what is it dangerous to do that and how do you, how do you know when you're, when you're, when you should be, um, helping your team? So wait, we talk about it is like you need to, you need to find a new boss to help you. Part of what I realized for myself was that I,
Speaker 6 34:53 I was able to navigate all the way up to IPO filings in growth and marketing leadership roles, but I didn't like it in the later days. What I realized is that I actually liked the earlier days. I think I was uniquely really talented in the early days. Later on, there were other people who could potentially be as good as me. And so
Speaker 3 35:13 I, it was more about me saying, get in, take it to a certain level and
Speaker 6 35:21 it's not an ego thing. It's just I'm going to, I'm going to focus where I can create the most value and, and kind of build a portfolio across companies. I think, um, if you're really passionate about the mission of the business, then I think you can evolve and you want to continue to stay a part of that mission of the business. But I, um, I, I think it's really, it's up to the individual and how, how you manage it. I actually had a really interesting interview with, with Alex from Rezi right before this. And one of the things that I was really excited about what she talked about, because it's, it's the way that I'd want to do things is that they are basically, they essentially have kind of the, the known and the unknown, like we were talking about, she manages the unknown. She's, she's the trailblazers of developing new markets and validating new features and products in those new markets.
Speaker 6 36:12 And once they're validated, they get plugged into the group that's just a metastases and manages the known. So it's more the operators keep, keep taking on these new known things and she's got this team who would normally have to be, come the operators and have to play that balance between push the envelope and manage the envelope and they've really broken it into manage the envelope. And then this kind of trailblazing entrepreneurial team is the one that's always pushing the envelope. And I, that was the first time I, I, I'd seen people doing that with channels, but they're literally doing it with new product offerings that round out to have a broader and better products. I thought that was really cool. Really smart muddle. Yeah. I wanted to, because I think we're starting to get into leadership here and that's great cause I think a lot of marketers struggle with the day today.
Speaker 6 37:02 You know, how do I do better marketing? But most people as the organization grows, the problem becomes how do I get the company to do better and better customer acquisition. And so you've grown from running outwards with these guys to running with now all the product and marketing and probably a huge team. So I'm curious how you spend your time day to day. What are the tiny number of things that you don't delegate? And you've talked about raising the collective level, event, fission and scaling challenges. Like what is the place where you uniquely can add value?
Speaker 3 37:31 I think you've got them already. So I get asked a lot where I spend my time and I've learned how to duck the question. And to answer them straight. Yeah. Internally. Yeah. So there's uh, otherwise that's what happens. So there's three, uh, three things I spend my time on. One is, uh, supporting my leads in growing their org. Two is managing my boss. Uh, and three is picking up whatever's on fire and uh, at any point in time like what the split is completely varies on the org side. Um, um, so I think the other two are quite self explanatory. I cover the org one a little bit. Uh, cause I, I have um, a mental model on this. I'm curious how you guys think about it as well. So, uh, we're doubling every nine months more or less. And I've been periods in time, we've doubled in three, right?
Speaker 3 38:23 You guys have been there. Now if you double the number of customers in say three months, you need to double the number of customer support agents. You need to double the operations team cause it never to, there's some manual stuff that needs to be taken care of. They'll, you need to now double the number of recruiters to recruit them. And, uh, you know what, you can't grow the team at that rate. Now remember the growth rate is not under my control. The growth rate, our customers out there recommending it, doing a lot of good things cause RMPs was like 86%, right? It's like sky high. So you've got recommendations just going out there happening and then you just got this word generator to keep up with it and you just can't keep up, right? So it doesn't like you can't keep doubling when the customer support team gets the 600 people, you're not going to find another 600 people, right?
Speaker 3 39:10 So these lines start deviating them the rate at which you should be hiring and the rate at which you are hiring and as lines DVA and the area between the lines gets wider. I say that the probability of fucking up kind of growth so high till the point at which you screw up and these screw ups, they're not like major, they're minor. So like the queue length in customer sports that's getting longer. The verification time takes a bit longer. The customer, you see C-SAT starting to drop. And then NPS drops and recommendation rate drops and I'm happy. All right. Because honestly the team are dead, right? They literally just burning out because they're turning up to work clear where everything come back the next day. There's more to do. There's even more than what they cleared the day before it. So it's just not sustainable, if that makes sense.
Speaker 3 39:57 Right. Um, so you end up with this like the underlying growth rate. So then it kind of drops down that the growth slows down to a point at which the organization could sustain it and then they, the recommendation takes off and it keeps it everything. Yeah. You got, you got it. Right. And so, uh, it got me to this massive realization, which is why I'm so heavy on the people say that the, uh, the underlying growth rates cause strain by the rate at which you can hire and inspire people to work on this thing and figure out how hard to push on it. Right. That is really what Packard's law. Have you heard that? No, no. You go for it. So at Packard, I think it's going to hackers law, but that's, that's it's actually a law that he says that your, your rate of growth is constrained by how quickly you can hire quality people.
Speaker 3 40:42 That's exactly, and then the second one I've figured out is you just can't add like a hundred engineers in a year unless you've hired 30 experienced tech leads that have worked on the code base for three years previously. So really your rates constrained by the rate of leaders that you've got in the team and the rate at which you're developing them and hiring them in as well. Um, and so when I look across the org, you can kind of see these teams that are growing at the rate they need to and the ones, some are actually shrinking, right? You have these ones that go into debt spirals kind of like where, uh, they're not going to keep up with demand. The workload is getting too much, the lead is burn out and then the team starts shrinking and then the customer experience really, and those kind of issues are the ones that really hurt. And figuring out how you kind of systemically cover that is more or less worse than my time. Operationally in a <inaudible>
Speaker 6 41:34 it happens. I think you're, you're talking about two places where you start to see the pain. One is that slow erosion of the customer experience hurts your NPS as you said, and that's the fuel of growth that you've talked about. But the other side is people start to be bummed out who work here. People start to see that and they lose some of that pride. And so as that pride and motivation goes away, morale goes down, commitment to mission starts to drop. We're, we're just talking about this. It's not really, you know, and then, and then kinda that's where I think the death spiral comes in and what part of why gross should be somewhat moderated, but you can't, you can't. Moderate powerful word of mouth referral growth. And so for, for what it's worth, part of the, part of the way that I'm identifying companies that I want to talk to is by the rate of growth of the team and so sometimes companies way over hire, but I think you can have hype driven companies that are especially private companies, but you actually don't know if they're growing or not if it's just all hype, but when you see a team that's doubling or tripling every year, there's probably something that's happening there because just as you said, you've got to keep adding additional people on the team to support that growth.
Speaker 6 42:45 Then every time that you aggressively add people, the chances that those people are less committed to the mission are less understand the machine. All of those things kind of fall apart and, and if growth starts to crash then then that's, that's when things get ugly and the trust with the board and the rest of us. So that that's where I think some of that communication with the board comes in is being able to have the more everyone understands what the true engine of growth in the business is, the more everyone can work together to make sure that you don't screw it up. And so that's before you run any experiments to try to improve it, you better at least understand it and then, and then you figure out where it's sub-optimized and you try to figure out ways to actually add even more improvement to those areas.
Speaker 6 43:31 Cause I think that's kind of some con, some of my key takeaways were coming up here toward, toward the end where obviously we could, especially with three of us, we could, we could probably go on for hours, but I want to be respectful of your time. But I think, um, it's a, it's amazing if you think about the challenges that you have today for the size of the team and the challenges you had in the beginning, as you said, of just how do I get those first paying customers? How do I get that initial traction? How do I build any kind of momentum in this business? It's such a different role, but it's, um, at the same time it's the same mission and it's a, if you can kind of keep, keep reminding yourself in the mission and stay enthusiastic, then, uh, then that's, that's, that's pretty awesome.
Speaker 3 44:12 Yeah. At one way I define my role, you kind of cover this already as, um, so you kind of covered like, you always think I thought through the same things as you should a man, early stage guy. Is there a point in which there's someone better? And I mean, honestly, I always look for someone better, uh, just because the doctor to right need to be getting rid of bits of it. Uh, see if you know anyone, anyone listening is interested in like taking half of what I'm doing away. Hit me up. I'm, I'm dead interested. Uh, but the biggest reason I'm still here is just to make, cause I think we have this like tiny chance of like actually achieving this mission. So if you can make the world's money move for almost nothing toppy pretty cool. And, uh, I'm not convinced it would happen without me here.
Speaker 3 44:58 Yeah. So that's we just slightly big headed, but people in say internally tell me the same thing. So I, um, and definitely not if Publix, I think I need to hang around to make sure we manage the transition to being public and don't get lost in that, on that journey. Uh, and still managed to figure out how to take a public markets with us on that journey. Uh, but that's kinda how I think about my role and how I'm here. One story I'll share, which is kind of really brought it home to me, so I obviously, I'm sure like you guys do, I do exits with everyone that leaves from my team cause there are always a hundred times more honest when the time when they were in the company and I lost the dude is for listening to this. Uh, he was a security product manager, pretty smart dude, and he went to Facebook, uh, to run security for messenger.
Speaker 3 45:46 It was pretty awesome role. And I listened to him and he talks with a role and I said, uh, you know, I like working for security for messenger and securing all the world's messages and like billions of billions of messages and making people feel comfortable that their, their messages are safe, is pretty awesome. And then, but here I believe we're going to be moving almost all there was money and you're going to be securing all the world's money and that's, no one's done that before. So that's really awesome. And he's like, that's the thing that LAN, uh, Facebook is big and transformers could theoretically be big. And in that sentence I realized what my job was right to bridge that gap. Right. So when you talked about being there, figuring out how to inspire, it's like him believing that we are going to be there. It's not just having a meaningful mission.
Speaker 3 46:39 You actually have a son. I actually boil it down to these three things. One is the team needs to believe the mission is worth doing. They need to believe it's possible and they need to believe that we're actually making progress. So we actually, what would the team to, how do you buy it as a product internally and how do you know if that's working or not? So that's one of the, one of the fun things I spend my time on trying to, and you are your signals are the people leaving to go work for Facebook or people not going to work for Facebook or people joining from Facebook, which which happens as well. It kind of tells you whether you're actually all those cases that someone who is no longer inspired by the mission or it doesn't feel like it's on track or whatever it is, that if you're really inspired by the mission you stay but just, yeah, and understanding where you're failing at like just and getting good data on that just helps you understand where you need to innovate. If fault myself
Speaker 6 47:30 on anything as a CEO, it's like, God, I wish I spent more time talking about mission and just just reminding everyone of what the heck are we doing here and why are we doing it and getting that lock in. So I do want to, I have one more question for you, but I wanted to real quick before I jump into that question. Matt, any key takeaway that I didn't cover that that's jumping out at you? Um, I mean, I think overall Milan's perspective of leadership is great and then he sees all the leverage through his team at this point. I think he have to at this size. Right. So yeah. The last question, what do you feel like you understand about growth today that you may not have understood a couple of years ago?
Speaker 3 48:10 So this is something we didn't spend time on, but uh, it's definitely true, which is, uh, again, curious what you guys think on this. Um, execution is all that matters. Yeah. So a fun thing to do. Like you guys probably had slacker growth hackers. Yep. And like sometimes I scroll all the way back through Slack in the team channel through to the very beginning and you look and see what people are talking about and you're talking some completely random shit about stuff that just doesn't matter. Right, right, right. And you realize like looking back, like when you look back, you know, like that get like literally executing like writing coach, if he code moving, this is what matters. Figuring out how to get that bank deal is what mattered. Figuring out how to move that regulation is what mattered and all the other talk doesn't matter.
Speaker 3 49:00 And now, um, you know, worked really closely with Christo, uh, found out and he's, he's there even stronger than I am on this. So this is like an awesome way as well to cut through all the meta stuff that starts appearing like, should we do X or Y? It's just like we should just do correct. So what should we do next week and how do we start doing of like, let's sit down together and start figuring out what we're going to build first and how do we ship that and that thing. Uh, if I, the biggest regret is not spending enough time doing it personally and driving it personally in a kind of like not getting fobbed off by the team kind of way. So, yeah, I'm an oil for, I'm being an empower manager, but sometimes you need to sit with them and help them get it done right.
Speaker 3 49:48 And the more you do that, the more the thing moves, the more inspired they are, the more the whole thing works as well. Right. Uh, and at the end of the day that is so yeah, summarize back, my biggest learning is that is the biggest thing that matters sometimes. Me personally, I lose sight of that. Uh, and keeping that clear in the org, especially as you're growing fast and that is the currency of the org and what the organization rewards is, uh, is probably the most, uh, important thing. Back to, you know, the beginning of this year you were chatting with me like how mission is important. Execution is important. Like 100% agree with you on that front.
Speaker 6 50:24 Yeah. Oh, absolutely. Well. Um, Neelan thank you so much for opening up and sharing the challenges and, uh, and everything that, uh, has gotten you to this point and hopefully the, the good things that are, can continue to drive toward that big mission that everyone will hopefully on the team keep believing in as you, especially as you make more progress. And Matt, thank you so much for, uh, especially bringing your payment's perspective to ask a couple of the questions that I probably wouldn't have thought to ask as much and uh, excited to, uh, excited to keep learning from both of you. All right, thanks for having us.
Speaker 1 50:57 <inaudible>
Speaker 2 51:03 thanks for listening to the breakout growth podcast. Please take a moment to leave us a review on your favorite podcast platform and while you're at it, subscribe. So you never miss a show until next week.