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Randy, the co-founder of Power, shares his experience of being acquired by Marketa. He discusses the challenges of innovating in the financial services industry and the inspiration behind Power, a platform that enables companies to launch their own branded embedded credit card. Randy explains how the acquisition by Marketa allows him to continue building on his vision and the synergy between Power and Marketa. He also emphasizes the importance of cultural fit, team dynamics, trust, and alignment of strategies in successful acquisitions. The conversation highlights the significance of the intangible aspects of M&A, such as culture and trust, in addition to the quantifiable benefits. Welcome to the Money Pot. I am Micky Tesfaye and I am your host today. We are live at Money 2020 here in Las Vegas and I'm very excited to bring you this episode on FinTech Exits and when those exits necessarily an ending to talk through this fantastic and interesting subject. I'm joined by my wonderful colleague and co-host Cheryl Chen, head of content for Money 2020 Asia. Hello Cheryl. Hi Micky. How are you doing? I'm good, how are you? Excited as you know because I'm a big FinTech nerd and I've got one of the most interesting folks in the FinTech game joining us here for this conversation. Welcome Randy from Marketa. How are you doing Randy? Doing great, thanks for having me. No worries, it's our pleasure. How has it been so far for you, Money 2020? It's been a marathon but it's been fun with a lot of great people sharing the story about Marketa Credit. It's been fun so far. How are your feet? Swollen, sore. I feel like the way you've had a good time at Money 2020 is how much your body is falling apart. The more you're hurting the better your time but I guess the reason you would have been so busy here is because you've got a fantastic and fascinating story. You are the co-founder of a company called Power which you subsequently sold to Marketa in January of this year. It was reported $275 million and if I am correct and remembering it was actually Marketa's first ever acquisition in the space. Maybe to start us off and to learn a bit about you and your background, do you want to give us a bit of background and context into Power and what you folks were doing with that? Absolutely. The last 15 years of my life has really been dedicated to building in FinTech and financial services. Over the years I've started companies. I've also had the opportunity to work at some really successful direct-to-consumer FinTechs as well. I led products at a company called Acorns, another company called Aslow and then I actually had a consumer FinTech previously as well called Vault. During that time we had a lot of success but also felt the pain that comes with innovating in financial services and that was really the inspiration behind Power. I believe in this shift towards embedded finance and non-traditional finance companies leveraging the power of FinTech as a part of their product experiences and as great as that sounds it's really difficult to pull off and so you know I thought okay if I believe in this shift that's occurring how can I help kind of facilitate that shift and so Power was effectively a platform that would enable any company the ability to launch their own branded embedded credit card directly within their existing apps and ecosystems and that was the inspiration behind it. I actually had the opportunity to work on a credit card at a previous startup and it was painful and when I looked at the landscape and the different partners we could leverage and vendors there wasn't really a clear option for us as to who we could go with and that's when the idea for Power was born. We thought wouldn't it be great if we could you know bring to market a platform that could be or serve as an all-in-one. I mean so that's what we did. You've got such an interesting story. I feel like around you or like in my head now you are the archetype of a serial founder. When I hear the term I just think of you know this is Power is what your third or also exit. Can't even keep count now. On that subject right today we're talking about this broad idea that an exit from a startup it doesn't necessarily mean that founder's journey with that startup is over and given your current position as someone in Marketa now you can really speak to that quite a bit I feel like. So maybe I want to start by asking you when you think about an exit and when it's not an ending how do you think about that? What makes you think about continuing with your company that you've built such as Power but within this bigger institution you've joined now as opposed to letting it go completely? Yeah it's a good question. I think of it as a new chapter. I kind of highlighted my journey to this point and it's been a series of steps to get to this point and the way that I look at this new opportunity at Marketa is one in which we get to continue building against that vision that we created years ago at Power and really the beauty of Marketa is the fact that we get to accelerate that vision overnight. Working with one of the most well-known and reputable brands in the fintech market, a company that is global and responsible for driving disruptive innovation across card issuance for over a decade. The idea that we can have that brand that respected name and that foundation to help us write yet another successful story in credit that's what makes me really excited about this next chapter and the fact that there's just so much synergy behind what we were building at Power and how Marketa thought about embracing credit in their future. Yeah so if I can just jump in Randy before we were on air you talked about your long history of Money 2020 and then can you tell us a bit more about how this Marketa deal came to be at Money 2020? Absolutely so we talked about Money 2020 being a marathon right. I'm someone that typically doesn't go to a ton of events or go on tour with speaking engagements so I'm pretty selective with where I spend my time. As you know Power was around for a couple years before we were acquired. Money 2020 was the only event that we actively attended. You heard it here first folks. You heard it here. He's selective like he told us. I'm going to be looking for a sponsorship after this but in our first year we went to Money 2020 and we actually met the lead investor that led our last round of capital. Wow. That was year one. In year two on Wednesday just before I was about to head to the airport my last meeting of the day was with Simon who became CEO of Marketa and as they say the rest is history. We met here and we talked about the future of embedded finance and the role that credit will play and ultimately a few months later we're now a part of Marketa. Well folks that's a wrap then. This podcast is over. You've heard it but actually you know that's as much as we're joking around the kind of just how wonderful it is you can say that Money 2020 you had that experience. I want to ask you more concretely around the piece that you talked about with the culture, the synergy when you're talking and thinking about your company and thinking about positioning it for an exit. Are there mental modes, ways of thinking that you leverage to help you think about the kind of folks you want to work with, the kind of expectations you want to set for folks you are going to collaborate with whether that's through partnerships, acquisitions or something along those lines. What are the things that you look for to let you know this is the kind of company that shares my values and my goals over a long period of time? Yeah it's a pretty profound paradigm shift right. As a founder one day you're founder and CEO and then the next day you're an employee of a much larger org and that shift mentally is not easy right but I think you focus on some of the things that I mentioned earlier the longer term strategy and the opportunity to continue working on that journey with the support of a much larger org. I think that ultimately comes down to a few things right. I think culturally you got to make sure that it's a good fit between the startup and the acquirer. I think being really mindful of team right. The team that got you here and then the team that's going to continue building as a part of this new entity. The team that is at the acquirer ultimately in my mind having been through this a couple of times. There's a number of reasons why startup acquisitions are successful or not successful. I think one of the most important components is team right. Is the startup that's being acquired are they open to this new world that they're going to be entering into and then the company that existed previously you know how welcoming are they to this new this new you know company that's joining them to continue building. I think the second thing is trust right. So you learn a lot about the acquirer through the negotiation through the diligence process trying to articulate on both sides what's really important. I think the last thing that I'll call out is the plan or the strategy for what this new world is going to look like. It's really important to align on those kind of milestones or major points going into an acquisition and then as you continue to build having that that trust again to reflect on the strategy and where you might need to adjust. It's a new partnership it's a new relationship and so trust needs to be at the core of any healthy relationship including an M&A. Yeah I mean I think why I find what you're saying that's so interesting to me is because across the past 18 months right lots of the conversation has been around the idea that we'd see a big wave of M&A coming to be and you know we have seen some but we've also actually have seen some big divorces we've seen some M&As or collaborations have not come to fruition and often my mind I think has been thinking often about this subject and I think what you're saying makes sense to me because too often it seems like the focus is on the quantifiable right the synergies around operational efficiencies or the scale that you might get by joining these two parties together but sounds to me like actually the most fundamental piece is the unquantifiable right the culture the trust just alignment in terms of just folks being able to be on the same page and same wavelength. Yeah. Is that how you would view some of this? Absolutely I mean you think about the type of persona that decides hey you know what I'm going to be a founder right there's certain qualities that founders possess that are unique maybe and typically successful founders that have a few different qualities that I'm happy to kind of chime on but as you think about outside of that founding group you also have the founding team and these team members can work at large corporates or stable companies but they decide to take this risk and in this leap of faith into joining you on this journey and so as you move through an M&A and they now enter this new world with a much larger organization you know things change and so it's important to try to keep things as consistent as possible while navigating a transition like that. So if I can just jump in here so you talked about how you managed to pivot from a CEO to an employee right but I just wanted to take a quick step back because you know how VCs they always say that their value add is priming the startup for success grooming priming the startup for an exit or potential M&A right so as much as I love the the fairy tale story of how you came to money 2020 you were right place right time you saw Mariketa but how did you as a founder set yourself up for success for a potential M&A I'm sure there were like certain steps that you took along the way right? Yes but if I'm being truthful with both of my companies I was not building or planning for an acquisition I actually think that's really important we were building for the long term and you know with two successful exits I think that's important to call out I think that you know in terms of how we prepared ourselves though we were a small team and we were early on early on in our journey we tried to operate with as much maturity as we possibly could whether that be our team structure how we thought about hiring operationally kind of like how we handled compliance how we handled our any kind of legal issues how we handled our finances really kind of top to bottom we tried to be as mature as possible again me and my co-founder we come we had come from larger companies and so we had that muscle and we tried to leverage all the good from those experiences and implemented those learnings into into the foundation of what became power I learned a lot through my first startup the hard way and it's just those lessons and those tribulations that ultimately I think really contributed to our success at power so what is one of the toughest challenge that you face as a founder so when I started my first company I had never worked for a startup never worked in you know never written a line of code and so I was figuring things out along the way and fundraising was incredibly difficult that first time and I think you have this idea when you go out to start your first company to be a founder that is a bit naive it's not glamorous it's far from glamorous I remember one instance where my first company I started back home in Portland I'm from Portland Oregon originally and you know the LPs or the investors there's not a vibrant venture community necessarily in Portland relative to New York or Miami or the bay and I decided to try my hand in San Francisco Sand Hill Road and because we were operating on a shoestring budget we were bootstrapping you know I didn't have a ton of money to rent an apartment Airbnb hotels and so I knew someone that was living in San Francisco I had met him like once or twice and I had mentioned to him over beers that I was planning to go down to San Francisco to go fundraise and he said hey I've got an apartment if you want you can you know you can crash on my place no problem and I said sure and if you know anything about me that I would never do this I'm a very private guy you know I like to have my space but I didn't have another option I knew I had to go down to San Francisco and and do this I showed up and it was a studio apartment that he lived in and so they're you know it was a bit odd and the only place for me to crash for the night was in the walk-in closet and so he had just enough room to put an air mattress in the walk-in closet and that's where I would sleep every night I'd basically go out to cafes Copa cafe the creamery in San Francisco I'd go meet with investors all day I'd come back home roll into the closet and I'd rinse and repeat the next day uh Netflix your next series is they are ready from the closet to a 275 million dollar exit I mean it writes itself doesn't it um I love that story actually so hilarious and I think it's actually a really powerful story that because often being a founder is idolized isn't it it's like this idea that the challenges and the trials and the tribulations always wonderful they're not and often I guess it's challenging and lonely journey as well um and I guess my question to you is how does that experience of being a founder and having gone through that and then going into becoming a CE an employee within a company right how does that influence the way you think about culture within a company and the way that you think about the teams you manage and how you relate to them and they relate to you you know you have that unique position of having both being the most responsible person for the entire company and your your whole folks and now you're you've got you know you are senior person within still an even bigger organization so you've got that kind of how does that influence some of your thinking about leadership and the way you operate now in my mind being a founder it teaches you it humbles you right you need to be flexible I think you never get too high or get too low because no two days are ever the same I think another thing that you try to do is you focus on problem solving right and prioritizing and I think those frameworks kind of carry over once you go through a transition like this again like there's there's new battles to face as a part of a larger company you know I'm not worried about you know fundraising again in the next six months and making payroll there's a new set of challenges but ultimately it's about having a plan the strategy prioritizing your time making sure that you take care of your team you're staying focused and again you don't get too high you don't get too low and you try to keep your eyes on the prize ultimately we came here to continue on our mission to build a best-in-class credit card issuer and we're excited to be a part of this much larger group of extremely talented professionals that are helping us kind of bring this thing to life I think there was a piece that you touched on I want to kind of go back and press you a bit more on it sure so I think going back to being a lot of the conversation we've had is the experience of being a founder right your team I want to talk a little bit about your team and how you view your responsibility to them and how that happens right so you had a team of folks at power now when you go into your post acquisition right how do you make sure that those folks you've done such a great job of getting power to this place it gets to feel like they're part coming along with you on this next part of the journey right what are the things you're doing to make sure that you don't lose that piece because I guess the challenge maybe when you're leading to some challenges I feel like maybe that was something you're perhaps pressing on and over if you ask founders quality they think they have that has led to their success I think many would say hard work like working harder than everyone else working harder than the competition and I think that's accurate but I'd actually take that a step further I think if you can also put together a team of people that share that mindset and that drive and that work ethic I think that's when exceptional things can happen right ultimately at the end of the day you're one person but if you can put together a group you know we used to say I want to put I said I want to put together a group of lunatics that are just so driven to turn this vision and make it into reality it's a beautiful thing and so ultimately when you go through something like this you got to make sure that you continue investing in that team because this is a new challenge for them as well I think it ultimately goes back to trust like I mentioned earlier right they're trusting you when you're building a startup they're trusting you to make this decision to to exit the company and then they continue to to kind of leverage that trust as we write the next chapter I think that the other thing that I'll call out is that you got to make sure that you're listening to your team as well right whether you're you're building a company from zero to one whether you're building a company from zero to one or you're part of a large kind of fintech public company listening to your team is extremely important and continuing to empower them to do their best work ultimately the the pitch to the early team members at power were to come turn this vision into a reality and and foster a place where you could do your best work I think you could do that here as well and so you know it's been nine months now as a part of our marketa but I'm pretty optimistic about you know what we've done and where we're going love it yeah so actually I just wanted to double click on the team building aspect right because previously when we were talking about how you were setting yourself up for success during this acquisition you talked about culture first culture and the team so in an ideal world the culture will be exactly the same right but we all know that that's not always the case so marketa comes with their own culture you at power finance came with your own culture with the way you built your team and run your team so how did you fix that culture match or like you know do navigate the cultural shift or any gaps culture values right you try to assess as much as possible through the mna but you only can get a sense going through that process I think what I noticed going through the process with marketa was I genuinely enjoyed getting to know the various team members that we had access to respected them I think number two I found that some of our values are very similar at power we always talked about being kind of customer obsessed and you know making sure that the customer is at the center of everything that we do I can confidently say that that is true at marketa as well right we really want to make sure that the level of service that we provide them with and the the platform and the product experience that they have is exceptional and then also something that I noticed early on was that marketa would talk a lot about team right and talk about empowering folks and giving folks a path and I thought that was important right because ultimately folks that join startups are really ambitious right and so you got to make sure that if you are going to go down a path like this that they can continue to grow and both personally and professionally yeah I think I mean after all vcs have forced all the founders to be ambitious haven't you with that big addressable market but I want to talk a bit about your experience because uh so I think what your earliest exit was vault right when you exited to acorns so how is the dharandi that exited vault different to dharandi that sold to marketa right like those conversations you were having how were you feeling were you feeling the same as you were then were you feeling calmer now were you looking for different things now compared to your first experience so how much time do we have uh you know my first acquisition when we sold acorns I didn't know what to expect it was almost like a culture shock overnight and that was with a lot of synergy as well the values the culture being fairly consistent from vault acorns but your mindset shift occurs overnight right you go from again being responsible for everything to being responsible or over a very specific area and so that's a shift for any founder so going through this acquisition kind of knew what that you know that journey was going to look like the first few months the first year and ultimately for me that informed how I navigated the conversations pre close so I tried to be as open and direct as possible with my expectations my desires you know I knew on behalf of the team I thought was what was going to be really important to them and so I tried to be I tried to articulate as much of that as possible through the process just to set the right expectations and again start to build that trust in the relationship so I would say there hasn't been as much of a shock for for this chapter for me I think for me you know it's exciting because I feel like we're on the brink of doing something really special at marketa in the credit space but marketa has been around for 13 years right we've dominated the debit and prepaid issuance space uh in the us for a long time I mean we work in 40 countries and so the idea that overnight I'd have the opportunity to work with this team with the customers that marketa has on a global scale I mean sounds picture perfect to me I mean I thought that's the other side of ambition to you right you talked about ambition from founders sometimes ambition doesn't necessarily mean because you've exited that journey is over right is big companies like marketa bigger reach bigger opportunity to increase and leverage the impact you had wanted to make so ultimately it's about impact right you want to make an impact and we believe that marketa gives us an opportunity to make an even bigger impact in a shorter timeline and that's that's special um it's not just about me or my co-founder it's about our team at power and now the greater team at marketa and working together to rewrite you know the future credit issuance like it's pretty exciting you had it hey guys uh before I show just what I wanted to ask you one other thing because um one of the joys of working at money 2020 is you get to meet so many fantastic folks who are building just so much amazing innovative solutions and products right so many young founders what advice would you give to young founders not just about acquisitions and end goals right as an acquisition and just as a founder what advice would you give to founders who are trying to either raise more money to to build great companies to find amazing partners whatever it may be what are the things that you'd say hey this is what I really think would help you get to what you want to go to how much time do we have I'll ask you again so I say a few things for one know what you're really good at I know your strengths but also know your weaknesses I try to you know when I meet with founders I try to also highlight the importance of staying focused as a founder it's really easy to get distracted it's really easy to you know have a customer maybe inform your strategy or your roadmap right one-off customer conversation I think it's really important to take the time up front to think about your vision your strategy your roadmap your plan and then really invest in bringing that to reality and getting data points to inform your thesis right knowing your strengths being focused working hard right not being relentless in the pursuit of this vision that you've created and then being true to yourself ultimately at the end of the day you know you're doing this yes because you believe that you're well equipped to be a successful founder but you also got a team of people both internally the team members as well as investors and other advisors and stakeholders that are vested in the in the interest of the company and I think you've got to make sure that you continuously operate with the team first type of approach and I think if you do that you build trust and again goes back to I could have never gotten to this point without my team I mean whether it's vault power I've had the privilege and honor of working with some of the most intelligent driven and talented minds in the industry and that's why I'm here. Startups are a little bit like children right the parents might have them but the village raises them. Absolutely so I think I feel like that would have been the best question to end on and I feel very bad for ending this on a heavy note but hindsight is 20-20 so is there anything you would have done differently during the negotiation or transition phase of any of your startups? I think I broke Randy. I didn't say you did no honestly I don't think I would have done anything differently you know nine months in I feel really good about the decision that we made to join Marquetta I think that we're just getting started you know ask me this again maybe in a year but I think ultimately this is a unique situation where it seems like everyone is is pleasantly satisfied with the outcome right our team members our investors and hopefully Marquetta as well you know again we're just getting started and there's a lot more work to be done but as of today I'm pretty happy with how things worked out. That's good. Mickey do you have any last questions? I have so many questions I have no more time we're gonna have to do another one happy to do it this has been a pleasure. Thank you and also thank you all so much for joining me thank you to all our listeners both here at the show and our podcast audience if you have any ideas for the show write us at podcast at money2020.com if you like the show leave us a review on iTunes or Spotify we love authentic nerds thank you for joining us