Pod Insights Summation with Auren Hoffman Lead Bank CEO Jackie Reses - fintech's regulatory reckoning: who survives, who thrives About this episode Jackie Reses is the co-founder and CEO of Lead Bank, fintech infrastructure bank with over $2.5 billion in assets under management. In this episode of World of DaaS, Jackie and Auren discuss: Fintech's regulatory reckoningThe future of community bankingState regulator competitionLessons from Square's payment revolutionLeadership insights from Jack Dorsey Looking for more tech, data and venture capital intel? Head to worldofdaas.com for our podcast, newsletter and events, and follow us on X @...
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:02 Auren Hoffman? Hello, fellow data nerds. Welcome to World of DAS. I'm your host, Orin Hoffman, CEO of Incubate and GP of Flex Capital. Discover more episodes, get weekly data as a service news, original content, articles on data and more at worldofdaas.com. That's world of das, D-A-A-S, dot com. Hello, fellow data nerds. My guest today is Jackie Reses. Jackie is the co-founder and CEO of Lead Bank, a leading commercial bank. Prior to Lead, she served as one of the top executives at Square, which is also called Block, where she built Square Capital from launch to a multi-billion dollar lending business. She's also the former chairman of the Federal Reserve Bank of San Francisco's Economic Development Council and the Kansas
0:45 Auren Hoffman? City Fed's Community Depository Advisory Committee.
0:49 Speaker 01 Yeah, a lot of words.
0:50 Auren Hoffman? Long words. Yeah. Jackie, welcome to World of DAS.
0:54 Speaker 01 Yeah, although I will tell you, one of the things I'm most proud of that doesn't come up there is that I wrote a book called Self-Made Boss, which helps really micro businesses start, run and grow, like the food truck.
1:06 Auren Hoffman? Oh, that's cool.
1:07 Speaker 01 The hair salon.
1:08 Auren Hoffman? All right. That should be required reading for many people.
1:11 Speaker 01 To me, that's the group of people that I really wanted to help. And so it wasn't a commercial endeavor. I made zero money off of it, but I think it's super cool to help this group of people who I am forever grateful for.
1:24 Auren Hoffman? Oh, I love that. Okay, I'll go and check out the book.
1:26 Speaker 01 It's good.
1:27 Auren Hoffman? We're seeing this fascinating shift right now where lots of fintech companies are becoming banks and tech companies are trying to become fintech and every bank is becoming a tech company. Which of those transformations are actually working?
1:40 Speaker 01 Yeah, what the heck is going on? Why does everyone have FOMO? I think the idea that you want to become a bank is a really nice thought because usually fintechs and tech companies believe that they could do anything. They can trounce through any prior history of what's been done before. No problem. That's at least the way I started when I was at Square and we started a bank there. Complete naivete. And what I had not quite appreciated was that you have to wake up every morning and say, I want to be the CEO of a bank in order to truly run a bank. And my bank is a financial infrastructure company. It's a little bit different than a typical consumer bank, but...
2:25 Speaker 01 I still understand who I'm beholden to with regulators is one of my most significant stakeholders in a way that is infinitely more extreme than when I ran a tech company.
2:37 Auren Hoffman? In some ways, almost like they're on your board, the regulators.
2:41 Speaker 01 Oh, they're like part of my company.
2:43 Auren Hoffman? Yeah.
2:44 Speaker 01 And so I think fintechs like the idea of control, controlling their own opportunity set, having to operate at the speed that they want. And before Lead, they never really had that option. Now that fintechs, consumer companies, embedded finance companies have the option to work with Lead, I'd say the appreciation for what we do and the infrastructure we provide and the fact that we can work with them in the same way they like to work has mitigated some of that frustration that you suffer at a fintech where you think you need to own the rail, but in reality, they could work with someone like us and have someone outsource
3:29 Speaker 01 the depth of regulatory controls that we need to do while they get to operate in the way they want to operate and build their products the way they want to build. And so I think as much as that's true, people like us have changed the dynamic of that market. And I think we're opening up people's eyes towards the opportunity that they can actually have a good partner who is a bank to build their infrastructure.
3:53 Auren Hoffman? You bought Lead in 2022. How does one even go buy a bank?
3:57 Speaker 01 Weird, right?
3:58 Auren Hoffman? Can I just buy a bank if I have enough capital? How does it work?
4:02 Speaker 01 So historically, banks have been the purview of very wealthy families in a community. Some of them get really big, but if you look across the country, it's always some wealthy family that owns all the local banks or many families. And they just stay in the family for generations. And I think that's worked for a long time, up until the technology that's involved has become more important for a bank. And we'll put a pause on that. But when I went to go buy Lead, I bought it having already started a bank. And so I already knew what I needed to build and what I needed to find in order to build a fintech infrastructure company.
4:43 Auren Hoffman? Yeah.
4:44 Speaker 01 And so I went on a path to find a very successful bank, incredibly A-plus charter, in a great state, great regulatory framework, right employee base, right forward-leaning group of people to start from. And so I had to buy something that was midsize. So I bought a bank that had about $700 million in assets. So it wasn't a tiny bank.
5:09 Auren Hoffman? It was a public company at the time?
5:11 Speaker 01 It was private. It was owned by a family.
5:13 Auren Hoffman? Okay. Why are so many of these banks public? It seems like there's so many small cap banks out there in the US.
5:19 Speaker 01 There are.
5:20 Auren Hoffman? Every time I look up my local bank and drive by, which I've never even heard of, it's actually a public company, which floors me.
5:27 Speaker 01 Well, that's because earnings are steady. The business doesn't turn over. The employees don't turn over. They generate strong ROI quarter after quarter.
5:37 Auren Hoffman? But their market caps are 25 million, 30 million. They're these tiny, they shouldn't really be public. Why are there so many of these public companies?
5:46 Speaker 01 I agree. They shouldn't really be public companies. They probably wanted the capital because balance sheets in banking matter. And so you have to have a strong capital base in order to actually pursue your business. And so unlike tech, for example, where the income statement and your operating metrics matter, in a bank, having a handle on how you manage your balance sheet really matters. And so they might have gone public for the sole purpose of increasing their capital base. Having said that, we've taken our bank from being a tiny private company to being one of the largest banks in Kansas City, one of the largest fintech banks in the US. We hit a high watermark of about $2.5 billion in assets a month ago.
6:33 Speaker 01 And so we're rocking and rolling from having started with $700 million in assets when we bought the company in August of 2022. We've added a lot of clients and we've totally changed the nature of how we do business.
6:46 Auren Hoffman? But how does my-
6:47 Speaker 01 If you wanted to go buy a bank, you could go do it.
6:50 Auren Hoffman? If there's a local bank, there's a public company, it's 50 million market cap. If I want to bid 70 million for the bank or something like that, I have the money in my bank account. I want to buy it. Can I even do that? Or do I need to have some sort of weird regulatory thing?
7:04 Speaker 01 No, no, no. So if you're keeping their business plan and you're keeping things as is, you could go buy a bank.
7:11 Auren Hoffman? Okay. Oh, but if you want to change things, if I want to make it more tech-enabled in a way-
7:16 Speaker 01 If you want to change things, so you have to write a business plan and submit the business plan. Because you always have to remember with a bank that the American taxpayers are your liquidity stack. Meaning they're your liquidity preference. If something happens-
7:34 Auren Hoffman? They are the last resort. Yep.
7:36 Speaker 01 Yeah, they're gonna basically take your bank over.
7:39 Auren Hoffman? And it's the FDIC? Is that the organization?
7:42 Speaker 01 Yeah.
7:42 Auren Hoffman? That's my, okay.
7:43 Speaker 01 And so I am beholden to American taxpayers. So I can't write a business plan that says I'm putting it all on red. And I'm investing all in Bitcoin. Sorry, American taxpayers, if I screw this up and bet wrong. That doesn't fly.
8:00 Auren Hoffman? So there's a conservatism that you have to run as a bank, which kind of makes sense.
8:04 Speaker 01 It makes tons of sense. Because as a taxpayer, I don't want to be on the hook for a bunch of tech wackadoos who decide that they're putting all their chips on red. And now all of a sudden I'm beholden. And so the regulators actually control who buys it and what they're going to do with it. Now, who buys it? It's not like a country club membership where if they don't like me, they're deciding they're not going to take me. There is a sound business logic to how they look at who a proper buyer of a bank is. And it's more aligned around financial acumen, financial plan, expertise.
8:46 Speaker 01 They just want to make sure that they're putting a bank charter in good hands. But it's not like they're vetting me for my personality and my good looks to say, I'm not letting you have a bank. That's not what's happening. But when we went and bought LEAD, we didn't change the business plan. They were doing banking as a service. And we took over the capital base from the current family and just switched out the capital base. And so, and I had already started a bank before and I had spent 20 years running regulated businesses. And I was involved with the Fed for 10 years. And so, when you looked at my resume, my co-founder was the Chief Credit Officer of Square Financial Services.
9:28 Speaker 01 My other co-founder was the General Counsel of Square Financial Services. I had been involved with the Fed for 10 years. And so, that's a resume that's impressive.
9:40 Auren Hoffman? Why are there so many small banks in the US? The number of banks per capita in the US is-
9:45 Speaker 01 5,000.
9:46 Auren Hoffman? Yes, 5,000 banks. In a lot of countries, even in fairly large countries, there's 20 banks or something. Like in Canada or something, there's not that many banks in Canada. Why are there 5,000 banks in the US?
9:58 Speaker 01 I think it's a history of who owns them.
10:01 Auren Hoffman? Because this is these little families who have some sort of-
10:03 Speaker 01 Little families.
10:03 Auren Hoffman? Political connections in that little town or something.
10:06 Speaker 01 But by the way, don't forget, United States is big, it's diverse. I'm on the Kansas City Federal Reserve's Community Depository Advisory Committee, CDAC. When I was first asked to do this, I thought the Fed was crazy. And I was like, you know, I don't know that I know anything about micro lending in small communities across the rural plains of the United States. But it has been so eye-opening for me because on this committee are banks from Wyoming and the Dakota. Amazing places where I have learned about ag banking and how ag banking works in the United States. And most of the banks in my region do some combination of ag banking and commercial lending.
10:51 Speaker 01 I had never been exposed to that in my entire life. These banks serve a purpose.
10:55 Auren Hoffman? A real purpose.
10:56 Speaker 01 And so, there is no fintech that is financing steer in advance of the cattle season in the same way that these tiny $400 million asset-based banks are doing in Wichita. And so, if ever you want to have your arrogance smashed out of you because you come from the world of tech and you think you've solved all the world's problems, show up in these local communities and understand the impact that these little banks have on those communities. And some of these industries that we're less familiar with, and it is quite an eye opening life learning about how these banks are part of a local community and how they lend to a local community.
11:41 Speaker 01 And without them, these communities and these businesses would die because they are the lifeblood of farming and other industries across the United States that when you step up in the 50 state world of tech where you're trying to aggregate your products to operate across the United States, you're certainly smoothing over these populations in the United States.
12:04 Auren Hoffman? The Fed is these new long term debt requirements and those have challenged some of the regional bank M and A market and stuff. What happens to all these subscale banks if they can't afford to modernize, but they also can't sell? Walk us through the next five years.
12:19 Speaker 01 I do worry about it, to be honest with you, I worry about it for a few things. One, while I am a big proponent of stable coins and we've backed and wanted to support the growth of the stablecoin industry, I also worry about what it does to local community banking across the United States.
12:35 Auren Hoffman? Sorry, walk us through, what does the stablecoin have to do with the local community banking?
12:38 Speaker 01 More this concept of when assets come out of the banking system.
12:44 Auren Hoffman? Ah, okay, got it. So because you're just going to flow it into a stablecoin instead of just having it flow through banks?
12:49 Speaker 01 Yeah, I worry about a destabilization of local banking across communities. People might not feel it year one through year 10.
12:58 Auren Hoffman? Yep, but at some point it just makes sense.
13:00 Speaker 01 But just like money markets over time, I do worry about that for communities. I'm about as crypto forward, really involved in some of the legislations being written. We have a lot of crypto clients as customers, but I also worry about the reality of our communities and feel, as I started this ironically with my self made boss book, trying to help micro businesses. I don't want to destabilize local communities because I think it's good for America to have these communities be strong. And so. I that's something that's near and dear to my heart. And so I do worry about that. But I think the reality is at some point, because of technology, and there is a way for
13:44 Speaker 01 that to happen. There is a way. It's not hopeless. But if they're not able to keep up on tech, I think a lot of them will shutter. And so maybe we'll lose the smallest thousand banks in America over the next 10 to 15 years.
14:00 Auren Hoffman? Is that bad? Is that necessarily bad to go from 5,000 to 4,000 or?
14:05 Speaker 01 No, but I do think it will have disparate impact across different communities. And so maybe it hurts rural communities a little bit more, because who's going to be doing ag banking and stuff? It really matters. And so I do think it'll have unexpected consequences in ways that you and I sitting here can't predict, but it will have consequences.
14:27 Auren Hoffman? Would you agree with me that fintech has not been super disruptive to traditional finance to date?
14:34 Speaker 01 So it's interesting. I think there's $24 trillion of assets that sits in the banking system, not a dollar of it has moved out of the banking system. But for money markets, I think fintech, which I also believe is hard to define at this point, because it's hard to define what JP Morgan's products are doing and why things like ACH and FedNow aren't also financial technology products. The amount of money that moves over digital rails today is the significant proportion of money that moves versus actually cash, despite cash actually continuing to grow year over year, about 6%, which I still find
15:17 Speaker 01 confounding. But digital banking is the preponderance of the way money moves. And so fintech, I think, changed the user interface, and it rewired some of the plumbing of how money moves and created some interesting new rails around how money moves and disrupted some of the old rails like ACH and even SWIFT in a multinational setting. But there's still a lot of fintech that uses traditional rails and it's just created this beautiful veneer on top of it. Robinhood is so beautiful and easy to use versus some of the older trading apps.
15:55 Auren Hoffman? Great UI.
15:56 Speaker 01 Chime or Cash App for peer-to-peer or Affirm for buy now, pay later. It's just so much better. Like Ramp, if you've ever used Ramp for expense management.
16:05 Auren Hoffman? Yeah.
16:06 Speaker 01 Beautiful.
16:06 Auren Hoffman? Yeah.
16:07 Speaker 01 And it shames old school tech companies.
16:11 Auren Hoffman? Sure.
16:12 Speaker 01 But the definition of what a fintech is, I'm really challenged to truly believe that distinction still exists today, given how much of the money moves digitally, even in some of the most old school rails that exist in the world.
16:27 Auren Hoffman? It's interesting because even great companies like JP Morgan, if you log into your Chase account, it is a terrible experience.
16:36 Speaker 01 I know. They need to hire designers.
16:38 Auren Hoffman? It's so bad. Nothing works. It breaks. It's just the worst system. You end up having like call customer success. It's kind of like if you went to a bank branch and there's mud everywhere and there was rats.
16:53 Speaker 01 Yeah.
16:53 Auren Hoffman? Running around. You would just run out of there. That's kind of what it's like when you go online to a Chase system. I would be so ashamed of that. If I was Jamie Dimon, I would literally be ashamed of what they do.
17:05 Speaker 01 I more find the financial products like go get a debit card from a traditional bank and try to onboard to it. And it's such a bad experience versus an Atlas card.
17:17 Auren Hoffman? Yeah.
17:18 Speaker 01 But having said that, they have their advantages, which is.
17:21 Auren Hoffman? They have scale.
17:22 Speaker 01 When stuff hits the fan and you know you can find a human.
17:26 Auren Hoffman? That's right. That's why they use them. There's other things. Yeah.
17:30 Speaker 01 And so I think they have their pluses and minuses because I find like customer support in some fintechs abominable. And so the fact that you can't get a person is equally as challenging in my mind as how bad the user interface is in traditional banking. But I still bias towards more modern technology products.
17:53 Speaker 01 And I would use them all day long versus old school stuff. But I'm living in a more optimistic view and it's only when you don't know who to call in a crisis that you're like, oh damn, why didn't I keep that old school bank account?
18:09 Auren Hoffman? Yeah. In a crisis, you want to be okay with JP Morgan or Wells Fargo or something like that, or whatever it might be. Would banking as a service for consumer fintechs even exist if the regulatory environment was less challenging?
18:24 Speaker 01 So that's a complicated question for people who don't even know what banking as a service is. All banking as a service means is there's an underlying bank that provides a service to another company who has its bank rails embedded in its product. That could be Uber or Lyft. For example, you have your credit cards stored in their app. And when you get out, you don't pay, it magically just works. The payment rail is charged. And then on the other end of that, their drivers are paid out also via a digital product. And they get paid out probably daily or by the ride.
19:05 Speaker 01 And so those kinds of products typically ride on the rails of a bank like mine. And you would never know we exist. The way you know we exist is you find us in the disclosures of the financial products that you use. Or a credit card will say issued by, issued by lead bank or a debit card. That's the only way you know my company operates. We're like hidden infrastructure. And I think today, banking as a service is needed because companies, and there are all kinds of companies. It could be Apple, it could be Amazon, it could be Deere, it could be Lyft, it could be Uber. Those companies don't want to deal with the regulatory environment of owning a bank. I understand that.
19:50 Speaker 01 Having started one and bought one, it's kind of hard. Yeah, I can't even tell you how hard it is. But I think some companies can do some of these things themselves. They can go out and get licenses in every state and go do money transmission if they want to. Some people just don't want the burden. So it really depends on the product that they want to have.
20:12 Auren Hoffman? But they can't buy a bank to go do it.
20:15 Speaker 01 Well, there's this idea of separation of commercial activity and banking activity. And again, it's because if some company does stuff that's stupid and they run their company for growth, as American taxpayers, you don't want to be on the hook for that. You don't want to be on the hook for that. And so I think you have to understand both sides of that equation to have empathy for why banks are so controlled.
20:40 Auren Hoffman? And when you think of a company like Mercury, they're very, very interesting model. They don't do lending. So they basically take deposits and they pay out, let's say, a 4% interest and they make 4.1% interest. And then that's the vig and they can often make tens of thousands of dollars in an account.
20:59 Speaker 01 By not paying the interest out.
21:00 Auren Hoffman? Exactly. You're paying $10,000 a year for a bank account, which is often what you're paying if you're a startup and you've raised some money.
21:07 Speaker 01 Yeah, Ramp, Rex, Mercury, I think they all operate in that context.
21:12 Auren Hoffman? It's an interesting model because traditionally you would take some deposits and then you would lend it out and that's the spread that you would make by lending. But in this case, they're not exactly lending, they're just putting it in the money market somewhere else.
21:24 Speaker 01 Yeah, that's exactly right. I think there are a lot of companies who are trying to create a really attractive user interface and underneath in the plumbing, they're using the advantage of their scale in order to get good deals with banks like us or others who are there supporting infrastructure. And they are trying to make up the difference in the spread. I think you see that in so many different products, even non fintech products where products are being aggregated in order to sell it to consumers at a higher price.
21:57 Auren Hoffman? And sometimes the spread is just they're holding the money for a day or two days and they get the interest on that day or two days. And so it's like a hidden spread.
22:05 Speaker 01 Yeah, that's exactly, trading is a great example of that. Do you know what the trading fees are between the bid and ask? Nope, or money markets are the same way. You pay different fees on those money markets. And I think that's really the way financial services works. And I think traditional fintechs have just created a more beautiful product for people and tried to abstract away some of that pain in order to make it easier.
22:33 Auren Hoffman? I do think for the average consumer, they have a good sense of how Walmart makes money. Walmart buys goods for X, they sell them, or Costco is usually 1.13X. They sell it to you and then that's how they make their money. And then they've got all the expenses and they know that, okay, they gotta pay their employees and gotta pay their rent. I don't think most consumers understand how Robinhood makes money, how their bank makes money, how any of those types of things make money.
23:00 Speaker 01 Well, even Coinbase, as an example, the spread and the custodial costs of holding assets somewhere, I'm not sure people really know. All those companies, it doesn't matter whether it's Coinbase or any bank or any fintech. I think there is some abstraction about how the value chain in those financial products works. I think the only thing I could say is that financial products are usually so highly regulated that there is clarity of what the fee is you're being charged. And so at least there is pretty significant rules around that. I think trading probably has the most opaque sets of fees around spreads.
23:42 Speaker 01 But for the most part, if you're using a firm, you know what the fee is. If you're using Ramp, you know what the fee is. It's pretty crystal clear and they come right out upfront and talk about it.
23:55 Auren Hoffman? If the fees are specific, if there's an interest rate or fee, but often there are these hidden things that you don't know.
24:01 Speaker 01 Yeah, yeah, yeah.
24:02 Auren Hoffman? Most people don't know how Mercury makes money.
24:05 Speaker 01 There's a cool company called Flex that we work with that does rent payments, which rent is one of those weird things where you have a big security deposit that most people can't pay for. It's usually a few months worth of rent. Then you get your paycheck every two weeks, but you have a big rent check upfront. And so the dynamic of how that money spreads, I think is super cool. But that's an example where right up front and center, when you go to the website, it couldn't be more clear about what's happening.
24:36 Auren Hoffman? Oh, that's good.
24:37 Speaker 01 I kind of like that, actually. But it's an example of A sector that hadn't been innovated before, even though everyone knows the chunkiness of inbound paychecks to outbound expenses is really often a mismatch for consumers and businesses. And that's probably the biggest mismatch that impacts us. You get paid every two weeks, but your expenses could be chunky at the end of any given month. You can't always pay it, or you need a few days of spread. And those spreads, I think, have finally been innovated with kinds of companies like this, or companies that are looking at mortgages. I think that's kind of cool.
25:17 Auren Hoffman? We're starting to see state regulators almost compete, whether it's your regulator, or Wyoming, Utah, Nevada. They're all taking different approaches. It's cool because there's different experiments that are happening. How do you see that evolving?
25:32 Speaker 01 To me, New York is the best example of someone who's done it well, even though I think in some cases they've been overreaching in what I consider to be enforcement actions that are trying to create law and guidelines, where you should have the guidelines first and then just enforce thereafter. Having said that, I think they have the best, most high-quality team of all the states who do novel technologies. So the Bit license is a great example of that.
26:01 Auren Hoffman? What's a Bit license? I'm not familiar with it.
26:03 Speaker 01 It's a license for crypto companies
26:06 Auren Hoffman? Okay.
26:07 Speaker 01 to have special licensing in the state of New York. And so they created this thing, I think in 2015, called a Bit license.
26:13 Auren Hoffman? Hmm, yeah, cool.
26:14 Speaker 01 People have gotten licensed. It's a pretty rigorous regime to go through in order to both get one and then comply to monitor it. I think they're exemplary in how they operate. Exemplary with a little asterisk. I don't think having financial products built at a state level, though, is optimized.
26:34 Auren Hoffman? Yeah, of course not.
26:35 Speaker 01 I think the FDIC and the OCC are better regulators because they manage across 50 states. And so there's things like money transfer licenses that are state by state.
26:46 Auren Hoffman? You're in Kansas City. There's literally a road in Kansas City where one side is Kansas and the other side is Missouri. So it's like, oh, wow, I'm on one side of the road. I have like a different thing I have to do. It's crazy.
26:57 Speaker 01 So that's why I think I like the OCC and the FDIC as a more primary regulator to manage the complexity of 50 states. I think they're very easy to deal with. And if you want to be a bank, go be a bank. Otherwise, let the people who I dream every day of running my business. I think it's the greatest thing I've ever done in my entire life. I love it. I love working with my stakeholders. And so let me deal with all that burden and manage my bank and let others go deal with dreaming up new products and being really creative on the creation of things that are pushing the boundary of products that we haven't seen before.
27:37 Auren Hoffman? Now, we have a new administration and so we should expect to see a lot of changes in this world over the next four years or so. Where do you think things are? Not necessarily where you want them to go, but where do you think things will be going in this world?
27:52 Speaker 01 I'd say, though, let me put a caveat on the impact of administrations in financial services, which is I think regulators in financial services have been some of the steadier hands across all of the functions in administrations. And so whether it be Obama or Trump's first administration or today, I actually think they're usually lawyers who come out of a deeply knowledgeable background and have been exemplary backgrounds.
28:26 Auren Hoffman? Right, they're probably more the same than they are different, which isn't probably true in many of the other agencies.
28:32 Speaker 01 It's not true. They're a little bit more politicized. Having said that, one caveat that I've seen in recent years, which is the SEC recently was very polarized because of crypto. And I think Gary Gensler in particular was a controversial figure because of his positions on crypto. And so he uniquely, in my mind, made the SEC more political than it had been in the past. I always joke, the SEC is always run by a lawyer from Simpson Thatcher. I'm golden. Or a lawyer from Sullivan and Cromwell. We're good. We're good. As long as you've got one of those folks, we're golden. And you don't know their politics.
29:11 Auren Hoffman? Yeah, exactly. I mean, sometimes it was like Chris Cox was an ex congressman and stuff like that. So you have those types of people, too.
29:18 Speaker 01 They're great. They're very knowledgeable. And so the SEC, it was like a moment in time where I don't think that was the case. And then the CFPB, in my mind, since Dodd-Frank, when it was created, has always been politicized. And I think that's largely the case because the way it came into fruition and because of the way its advocates have championed for very unique causes, which I consider to be extremely left-leaning in their origins. And so, the creation of that entity, in my mind, was very politicized. Now, some of what the CFPB has done is fantastic. I'm a big fan.
30:02 Speaker 01 Some of it, I'd say, was a mismatch of how financial products truly work and unintended consequences coming out of things that they were passing and things I just thought were beyond the scope of their mandate. And so, I wasn't comfortable with some of the things they've done over time because I thought, even if something was a good idea, not a good idea, I believe if someone's got to stick to the scope of their mandate. And once they go beyond that, I feel like they've got to stop. I'm a true believer in the rule of law. Call me crazy. And so, that's where that institution has been a little bit politicized. And I think it'll be significantly curtailed, even beyond where it was in the first Trump
30:47 Speaker 01 administration. And I think you're seeing that with what was done on day one and then what was done with the recent appointment that was being talked about. And so, I do think you'll see significant changes there. The OCC, Treasury, FDIC, these branches, I think, benefit out of a steady hand. And if you look at one of Scott Bessent's strengths, I would say he is steeped in the history of financial markets. And even though he might have been appointed in a Republican administration, that is someone who has spent his career understanding the depth and breadth and the history of how markets move. And so I think he is a very steady hand, even with a political
31:32 Speaker 01 bias, but he is still a very steady hand across some of those branches.
31:37 Auren Hoffman? I met you 12 years ago. You're working for Marissa Mayer. Then you worked for Jack Dorsey. What did you learn from some of those people?
31:45 Speaker 01 I'd say Jack was pretty instrumental in some of the takeaways I use as a founder. One of the things he did that I consider extraordinary was his ability to listen. I've never met anyone who can listen.
32:00 Auren Hoffman? That's kind of his brand is that he's a little bit quieter and he jumps in and more of a stoic and stuff.
32:07 Speaker 01 Yeah. Well, the secret there is that he's more normal than I think a lot of media would like him to come across.
32:13 Auren Hoffman? I used to see him walking
32:15 Speaker 01 To work?
32:16 Auren Hoffman? Two miles every day to work. I literally just see him. I'd be like in Uber driving by.
32:21 Speaker 01 Yeah, of course.
32:22 Auren Hoffman? He wasn't listening to a podcast. He was just walking.
32:25 Speaker 01 He's probably enjoying the moment.
32:27 Auren Hoffman? And I'm like, what is he thinking about? He's got a whole hour. He's walking. What is he thinking about?
32:32 Speaker 01 Yeah, I think that's probably the time to synthesize everything he's heard and to think through where the world's going. And so, I don't know, I find that quiet time incredibly powerful. There's nothing I love more than getting someplace where I really don't have Wi-Fi, putting headphones on, putting a hoodie on and kind of just disappearing into my own space and silence.
32:57 Auren Hoffman? Are you listening to some deep techno music or something or you?
33:00 Speaker 01 Some combination of total girl pop like Harry Styles and Taylor Swift, although I do like Oasis and Pearl Jam, Prince, Nirvana.
33:11 Auren Hoffman? Oh yeah. Okay. More my speed.
33:12 Speaker 01 I'm putting myself right to strike in a certain age range.
33:15 Auren Hoffman? Yeah, totally. Nirvana, definitely.
33:17 Speaker 01 But Green Day, can't forget Green Day. But I listen to that. I listen to podcasts. I listen to books on tape, which I really like, Audible. And so I go into my zen moments in order to just give myself time to think.
33:32 Auren Hoffman? So you think you're a better listener because of that experience you had with Jack?
33:37 Speaker 01 He's amazing. And then one of the other things he did that I actually apply is that whenever there's friction.
33:46 Speaker 01 Between executives, you make everyone come to the same room. So you don't have one on ones with people. You try to hash it out openly.
33:54 Auren Hoffman? Yeah.
33:54 Speaker 01 In a room.
33:55 Auren Hoffman? Can it get awkward?
33:57 Speaker 01 Totally awkward, but if you're grownups, you need to hash this stuff out.
34:01 Auren Hoffman? Can't talk behind people's back. You gotta tell them to their face what they think.
34:04 Speaker 01 And I think there's a great lesson there. Don't do these one off conversations and come to a decision on your own without a rationale. If you can go through things and try to explain why you're biasing in one direction or another, I think that's incredibly powerful and is a good lesson for the next step in where you have the next set of friction. I think people learn from those principles and move forward into the next time. They're going to prevent a crisis next time because they've seen how you've worked through that with them. And I think that's incredibly powerful, too. I learned that Jack's incredibly normal. Like, so he's a normal dude, just like anyone else.
34:42 Auren Hoffman? Well, I mean, I don't know. Most of people aren't sure, not that normal. So I don't know.
34:47 Speaker 01 Yeah, I guess so. I guess so. We all have our spikes of weirdness.
34:50 Auren Hoffman? Exactly. Now Block, I thought, made a very fascinating choice to keep, you got Square and the Cash App as totally separate brands and products. You didn't combine them, even as Square was building out like a whole platform of financial products. What was the insight to keeping those separate?
35:07 Speaker 01 So Square is a company that had historically been uniquely inventive. There aren't that many companies that can create multiple, multi-billion dollar products organically.
35:22 Auren Hoffman? Pretty rare. Yeah.
35:23 Speaker 01 It's really rare. Most of it's done by M and A. And Block has an ability to do that because Jack will take an idea, he'll fund it, he won't let anyone touch it, he'll give it an independent team. That's the way my business around lending and financial services was built. The bank was built that way. You are completely given your own domain.
35:46 Auren Hoffman? He's almost like a venture capitalist, funding things.
35:49 Speaker 01 Yep. Which frankly, is what a CEO should be.
35:52 Auren Hoffman? And so some things fail and whatever, we just don't hear about the failures.
35:55 Speaker 01 You're an asset allocator.
35:57 Auren Hoffman? Yeah, you're an asset allocator. To talent.
35:59 Speaker 01 That's what a good CEO does.
36:01 Auren Hoffman? So you almost have a Series A and Series B internally. If you're hitting more metrics, you get more money in.
36:07 Speaker 01 Yeah. And if someone has a good idea, even if it comes from a hack week, my product came from a hack week. And he basically said, team, go build it. And you start with a few people and go from there. And you build these things in the multi-billion dollar businesses. And I think that is also an insight from working at Block that is pretty rare to see. And I describe companies when they get bought in an M and A deal, that they get loved to death. Meaning a company is acquired, it's its own brand, it's its own business. You try to keep it independent so that it could continue to thrive.
36:48 Speaker 01 But unfortunately, everyone wants to love it and show it some love. And they want little bits of attention from lots of people everywhere across the company. And it gets smothered by love. And so first it starts with the finance team, the HR team, the legal team, these foundational functions that also need control. And then product people want to get connected and engineers want to get connected. And all of a sudden, you've lost the culture that you're trying to maintain with this gem of an independent company that is on fire and going and continuing to build its business because you've just smothered it with love. And so for some of these divisions at Block,
37:32 Speaker 01 we tried to not smother them with love and we swatted people away.
37:36 Auren Hoffman? That's so insightful. It's so interesting. I remember when my company got acquired and the CIO of the company, Chief Information Officer, so I'm like, great, we're now moving you all to our Microsoft suite. So you can interact with everyone else in the company. And I'm like, we're not doing that. And he was like, well, yes, you are. I'm telling you have to do it. I'm like, well, at least for the next 12 months, I can't be fired. So at least for the next 12 months, we are not doing that. And he was just like shocked that someone could tell him no.
38:06 Speaker 01 But stuff like that matters because even internal communication systems are part of a culture.
38:12 Auren Hoffman? Yeah, of course. And I could see it from his perspective, why it was so important. And it's a trade off that you have to figure out. There's no right answer sometimes.
38:20 Speaker 01 But that evolution could kill a company.
38:23 Auren Hoffman? Yeah, I'd have some of my best engineers would have just quit the next day if they were on the Microsoft stack. For no good reason, they would have just quit. So I didn't want to lose them.
38:31 Speaker 01 I know. Well, they don't like the tools. And if the tools aren't good for their business, it's just every day they come in and they're now annoyed and frustrated.
38:39 Auren Hoffman? Yeah, exactly.
38:40 Speaker 01 And no one wants that.
38:41 Auren Hoffman? Yeah, especially when they have lots of options.
38:44 Speaker 01 Yeah, no, agreed. And so I think it was pretty fun to do. We created multiple products from nothing. And as long as you're kept alone and funded, you really can grow these massive businesses. Cash App is the perfect example of that.
39:02 Auren Hoffman? A few personal questions. Your younger brother Jacob is the Chief of Staff to Vice President JD Vance. Was there something in the water when you two were raised? You're both super incredibly successful people. What did you guys learn from your father? How did that come about?
39:18 Speaker 01 So yeah, my brother has worked with JD Vance since before his Senate run. And I'll be honest, I didn't see this coming. My brother is really, really, really, really smart.
39:31 Auren Hoffman? Yeah, I've met him before. He's one of the smartest guys I've met.
39:34 Speaker 01 Yeah, he's much smarter than me. I'm scrappier. He's smarter.
39:37 Auren Hoffman? Okay. I mean, he definitely has a huge brain on him. When you meet him, you realize that immediately.
39:41 Speaker 01 Yeah, but we're from Atlantic City, New Jersey, which is not exactly the bastion of success. I think the poverty rate is double, the welfare rate is double. Our family owned local businesses, which I think is why small companies are near and dear to my heart. And I want to see the fabric of communities continue to thrive in little tiny communities.
40:10 Speaker 01 And by the way, I did grow up going to Tyson fights with Donald Trump when I was a kid, which is mind blowing in retrospect. That is in fact true. And my stepmother was his head of PR in Atlantic City. But I think the commonality for my family was intensity around hard work. And this scrappy work ethic of being a local entrepreneur. There was no such thing as nine to five, no such thing as five days a week. And so this idea and ethos around work ethic and not having anyone be able to advance you without you doing the work yourself. We didn't have
40:53 Speaker 01 someone to help us get us into college and we didn't have all the fancy trappings of wealth in the same way that a lot of families do. And so I had summer jobs every summer. He had summer jobs. And I think that makes all the difference in the world, to be honest. I tried to do it with my own kids. So my son was a busboy at a Mexican restaurant in Aspen, Colorado this summer. And he was 15, but I'll be damned if he wasn't going to have a summer job and not work for his entire summer.
41:27 Auren Hoffman? Yeah, you learn so much. I remember going in my first job I did when I was 14. I'm going in and I'm cleaning the machines. I worked at an ice cream place. You're cleaning the machines and you're dealing with annoying customers and you're in the back, someone threw up and you're in the back just like cleaning it up or the toilets. You have to show up on time and you're given a lot of responsibility for your age. I learned way more than I learned in probably most of my college classes or anything like that.
41:55 Speaker 01 It's amazing. So my son's first day of work and he's 15, he got paid $70 in tips.
42:02 Auren Hoffman? Whoa, okay, it's Aspen.
42:04 Speaker 01 It's Aspen. So he couldn't even buy dinner.
42:07 Auren Hoffman? Only an Aspen thing, yeah.
42:08 Speaker 01 He rode home on his bike from work. Said, I don't understand how am I supposed to buy anything? Said, yes, that's a good lesson now, isn't it? How are you supposed to buy anything? You better put your money away in the bank. And add it all up and see what you get at the end of the summer. Stuff's expensive, so work very hard. And you're going to learn every year. Hopefully you'll start to make more and more money as a summer job. But things are expensive. Have some appreciation. And so that was his learning over the summer.
42:40 Auren Hoffman? That's amazing. A couple more questions. What is a conspiracy theory that you believe?
42:45 Speaker 01 I'm not convinced that the video of the moonwalk from July 20th, 1969 is real video.
42:53 Auren Hoffman? Oh, okay. You're not necessarily saying they didn't go on the moon, but you're saying that at least the moonwalk itself may have been a doctor.
43:03 Speaker 01 The video. No, I believe they were there. I believe they planted the flag. I believe all that. But the video is a little bit too good.
43:13 Auren Hoffman? Yeah.
43:13 Speaker 01 For that era. And I don't understand that. I've had the UFO stuff disproven. So my questions about UFOs recently were disproven by a friend of mine.
43:25 Auren Hoffman? Hmm, okay.
43:26 Speaker 01 All right, that was good. But the moonwalk thing still sits with me. The video.
43:32 Auren Hoffman? Yeah, the video. Yeah. I gotta watch that again.
43:35 Speaker 01 Go research it and you'll see what I mean.
43:38 Auren Hoffman? Yeah.
43:38 Speaker 01 Totally weird. I'm not a conspiracy theory person. I'm so happy. I wake up every morning and after thinking about my kids, all I want to do is go to work. I have so much fun. I love my friends. I love my kids. I'm pretty happy and I think I'm kind of changing the banking industry. And so.
43:57 Auren Hoffman? Oh, I love it.
43:57 Speaker 01 I don't spend any time thinking about conspiracy theories, but I do find them funny when people talk about them. Sometimes they make me feel dumb, though.
44:06 Auren Hoffman? There's a lot of them in banking. There's a thousand conspiracy theories in banking.
44:10 Speaker 01 Maybe, but maybe I'm not a deep thinker. As I said, I don't think of myself as that smart. So I'm not a deep thinker enough to be insightful enough to find these things. I have to wait for someone to point them out to me. And then I'm like, oh, I got hit by the idiot stick. Why didn't I know that?
44:27 Auren Hoffman? All right, last question we ask all of our guests. What conventional wisdom or advice do you think is generally bad advice?
44:33 Speaker 01 Oh, wow. I love that. What's bad advice is probably advice that's given to women about how to think about managing their career for their own reality of life timeline if you want to have kids. And. I always advise people to just lean into the job at hand and what they're doing and what they love and stop worrying about that stuff. If you're in a great job and you put your head down and you're doing really well, you'll do just fine. Having kids is never convenient for any parent. You just kind of have kids, you figure out how to make that happen.
45:10 Auren Hoffman? So but what's the advice that's bad of not following?
45:13 Speaker 01 So the advice is, don't try to pre-plan your life around that timeline because you have to think, what career should I go into?
45:23 Auren Hoffman? Oh, so you're saying people are giving him advice the other way. Oh, you have to pre-plan. You have to think it through. And you're just saying,
45:28 Speaker 01 Yeah, stop it.
45:29 Auren Hoffman? Just do it. If you want to have kids, have kids. Don't think about the other stuff.
45:33 Speaker 01 Yeah, have kids. But don't take yourself out of the game before you should. Do your best work. Don't pre-think, oh, my God, if I'm not at this point in my career, should I go to business school? Because then I'll be 30 by the time I get out of business school? Just stop it.
45:50 Auren Hoffman? Oh, interesting.
45:51 Speaker 01 Just go for it, head down, get it done.
45:54 Auren Hoffman? That's really interesting. I don't think I'm having a lot of these conversations with people about that. But I have heard quite a bit of these types of things, yeah, where people start having angst about stuff.
46:04 Speaker 01 No, the timeline in their career. And I think at all moments, give it your all. And stop psyching yourself out of the best available opportunity right in front of you at that time. Just go get it done. And honestly, I believe that if you put your head down and do great work, and if you work at a company where you're not recognized, leave. Don't wait for them to change. You got to get out of Dodge.
46:28 Auren Hoffman? Yep. If you have a bad boss.
46:30 Speaker 01 Bad boss, leave, get out of there. You're never going to convince them that they're a moron.
46:34 Auren Hoffman? Yep.
46:34 Speaker 01 It's never going to work. Or move to a different team. But if you put your head down and just make stuff happen for yourself and maneuver yourself constantly, take the best available opportunity that's right in front of you. And magically, when you look back 10 years later, you're going to realize you made a lot of progress.
46:53 Auren Hoffman? Yeah, I love that. All right. Thank you, Jackie Reses, for joining us on World of Death. I follow you at Jackie Reses on X. I definitely encourage our listeners to engage with you there. This has been a ton of fun.
47:04 Speaker 01 Thank you. Thank you. See you later.
47:09 Auren Hoffman? Thanks for listening. If you haven't already done so, please subscribe to World of DAS wherever you consume your podcasts, YouTube, Apple, Spotify, and more. And please help us get discovered by leaving a review. And check out worldofdaas.com. That's worldofdas, D-A-A-S, dot com. And of course, connect with me on Twitter, at Auren. That's A-U-R-E-N. Would absolutely love to hear from you.
Previous Hello Patient CEO Alex Cohen - SaaS sprawl and meme culture Next Rob Henderson - Luxury Beliefs: How Elites Exploit the Poor Page updated November 3, 2026 · transcript and summary are machine-generated