20VC: Has Price Discipline Disappeared? Is it Possible to Build Ownership Over Time? Why Venture Is Less Collaborative Now Than Ever? How fast Do Breakout Companies Become Obvious? How To Construct an Optimised and Repeatable Investment Decision-Making Pr

Frank Rotman is a founding partner of QED Investors, one of the leading fintech-focused venture firms investing today with a portfolio including the likes of Klarna, Kavak, Quinto Andar, Credit Karma and more. As for Frank, prior to QED, Frank was one of the earliest analysts hired into Capital One and spent almost 13 years there helping build many of the company’s business units and operational areas. Post Capital One, Frank went on to found a student lending company before joining up again with Nigel Morris to co-found QED. In Today’s Episode with Frank Rotman You Will Learn: 1.) How Frank made his way into the world of venture having spent 13 years scaling Capital One? What was the founding moment for Nigel and Frank with QED? How does Nigel compare to poker to venture capital? Where are they similar? Where are they different? 2.) Does Frank feel that price discipline has disappeared in the venture market today? What have been some of Frank's biggest lessons on price? Is Frank concerned by the compression in deployment timelines for funds? How does Frank feel on the rise of pre-emptive rounds? In what way does Frank advise his founders when they are offered pre-emptive rounds? 3.) How important does Frank believe sizing your initial position is, from an ownership perspective? Is it possible to build ownership in your winners? What have been some lessons for Frank with regards to the speed of which breakout companies are clear? How does Frank assess and analyse bridge rounds and whether to participate or not? 4.) Why does Frank believe that the VC world is less collaborative than ever today? What has caused this? What can VCs do to change this? How do we solve the structural problem of VCs needing ownership for their business and founders not wanting excessive dilution? What does Frank believe is the most dangerous trend in the VC market today? 5.) How does Frank think about what he can do to improve his investment decision-making process? What repeatable process has Frank landed on that works? Where do many make mistakes here? How does Frank view the relationship between process and outcome? Item’s Mentioned In Today’s Episode with Frank Rotman Frank’s Favourite Book: Tom Robbins Frank’s Most Recent Investment: Hello Alice

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  Okay, we are back. This is 20 VC and today we're joined by likely one of my favourite content creators on Twitter. His threads are absolutely legendary and if you haven't checked those out, you can on at FinTech Junkie. For those in the know, you know who this is already. And so with that, I'm so thrilled to welcome Frank Rotman, co-founder at QED Investors, one of the leading fintech-focused venture funds investing today, with a portfolio including the likes of Klarna, Kavak, Quinto Andar, Credit Karma and more. And as for Frank, prior to QED, Frank was one of the earliest analysts hired into Capital One and spent almost 13 years there, helping build many of the company's business units and operational areas. And post-Capital One, Frank then went on to found a student lending company, before joining up again with Nigel Morris to co-found QED.

• 0:43Harry Stebbings?

  I'd also want to say a huge thank you though to Nick Shalick at Ribbit, Nigel Morris and Matt Harris at Bain. Some amazing questions, suggestions today. I really am so grateful for that. But before we dive into the show today, did you know that more than 80% of US public stock is owned by just 10% of Americans? This divide is even greater in the private markets. Carter makes it as easy to issue equity to your employees as it is to issue payroll, and for employees, as easy to accept it too. More than 16,000 companies issue equity to their employees through Carter. Whether you're just getting started or getting ready to go public, the team at Carter can help. Check them out at Carter.com. And then another incredible product you have to introduce is SecureFrame.

• 1:22Harry Stebbings?

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• 2:06Harry Stebbings?

  So to learn more about the number one most active law firm representing VC-backed companies going public, head over to Cooley.com and also check out CooleyGo.com. But that is quite enough from me. So now I'm so excited to hand over to Frank Rotman, co-founder at QED Investors.

• 2:27Speaker 01

  You have now arrived at your destination.

• 2:30Harry Stebbings?

  Frank, this is such a joy to do. I mean, I'm probably one of your biggest Twitter fans. I literally save your Twitter threads. I don't think you know this, but I save them and then I thread them. They're that good. So thank you so much for joining me today.

• 2:41Speaker 02

  Well, appreciate the kind words and so happy to be here.

• 2:43Harry Stebbings?

  I would love to start there. I always love a little bit of context. So tell me, how did you go from Capital One to one of the leading fintech investors today with QED?

• 2:52Speaker 02

  Well, the story is really the story of Nigel Morris and myself. He's the only constant in my adult life. We've been together now 28 years as of August 9th, and I don't remember getting an anniversary present, so he's a little delinquent. But, you know, basically I was hired directly out of the University of Virginia. Graduate degree in artificial intelligence, systems engineering, applied math and statistics, like a whole bunch of really nerdy math type things. Was hired by Nigel into what was Signet Bank at the time. And Signet Bank had this little credit card division and I was hired with a small team of people to go figure out how to turn it into something much bigger. We eventually spun it off into Capital One and I played a variety of roles within Capital One over the 12 or so years that I spent there, mainly building businesses from scratch that the company needed.

• 3:36Speaker 02

  But I also fixed some of the big businesses when they were broken and I played some horizontal roles. I was the first credit officer for the company before there even was a chief credit officer. Helped Nigel with internationalization, eventually helped buy banks and then Nigel left in 2004. I left shortly thereafter to go build a student lending company and that whole story did not end well, but it was amazing to actually try my hand as an entrepreneur. But then joined back up with Nigel in late 2007 to really envision what became QED. The two of us just wanted to work together again and it turned into QED.

• 4:07Harry Stebbings?

  I mean, I love the 28 year story together. It's incredible to hear, but you were also a little bit modest and we're going to go into that Capital One journey, but you're a little bit modest and you forgot one part of your skill set, which is apparently you're a rock star poker player and according to Nigel, you actually knocked Annie Duke out of a poker competition. And so how do you think about the comparisons of Poker Adventure? Where are they similar? Where are they different?

• 4:32Speaker 02

  Well, first, Annie is the actual rock star. I just play a poker player at night on TV. So it's not exactly a superpower, but I did play a lot of high stakes cash games. You know, but poker, there are a lot of analogies and it teaches you a lot about decision making more than anything else. Poker taught me a lot about being process focused rather than results oriented. The clarity of thinking and the ability to understand why you're making the decisions that you're making and being able to see the outcomes, see how people react as a result of your actions over and over and over again. Recognize that the decision making process is more important because it's repeatable over time rather than being results focused. You know, the biggest difference, though, between poker and venture investing

• 5:17Speaker 02

  is that you get very few decisions that you end up making in the venture world and is very small. And in poker, N is very large. So you end up playing tens of thousands of hands. You can actually have a feedback loop that's very fast. You can study the result of your actions. You can try new things and learn new skills. In venture, one cycle of venture investing is 10 years. If you think about the number of companies that you invest in during that period of time, if you're an active investor, you might invest in two to four companies a year. You might see hundreds of companies a year that result in two to four decisions that you make about investing. But the feedback loops are very different, which means you have to concentrate a lot more on the process upfront.

• 5:56Harry Stebbings?

  So we will dive into Capital One. Do you find that feedback loop really fucking hard? Because I'm an operator too with the media company, you know, we have sales, we have targets. You were with Capital One. Did you find that transition to very long feedback loops insanely hard?

• 6:10Speaker 02

  What's infuriating, you know, when you're an operator, you get daily results. There's something that's just so pure about that. Every day you have targets, every day you see whether you're hitting your targets or not. You have goals that you can measure in, you know, hopefully days, weeks, months, quarters, years. It depends on how difficult the goals are. But these are short timeframes relative to venture investing. I mean, it's really interesting because we'll talk about this with Capital One. But there's a very, very big difference between a machine that's working and working at scale and, you know, the feedback loops. And the small timeframes that things are optimized around, you know, versus venture, where you have to get things right over extended periods of time in order to build any business of size. So the feedback loops are different.

• 6:54Speaker 02

  The conviction that you have to have around the decisions that you make are different. You have to be much more thoughtful about each and every decision that you make, because you make fewer of them and they have bigger consequences. I will say that there's a part of me that likes being an operator more than being a VC because of the feedback loop, but you do eventually get used to it and you figure out how to operate with very long cycle feedback loops.

• 7:15Harry Stebbings?

  Listen, we're going to break down each in turn. So if we start on the operator side, you know, the Capital One days were incredible. 12 year journey, what a ride with Nigel. But I heard that you were responsible for some of Capital One's successes that put them on the map, but also nearly got you fired. So it seems like a little bit of a dichotomy or paradox. Can you explain?

• 7:35Speaker 02

  Well, it's not actually a paradox. It's kind of funny because I literally was almost fired twice. Hauled into offices, I wasn't even sure if I was going to walk out of the office with or without my bed. So there were some big things that happened at Capital One where, you know, I executed something that was seminal and very important to the company, but executed in a way that it either put the company at risk or wasn't executed the way that the machine of Capital One wanted it executed. So yes, at some point, the way you actually get the work done matters. But the reason why it's not a paradox is because companies go through phases. And if you think about the difference between a very small company, a startup, and a very large company, let's just take a giant public company that reports earnings every three months.

• 8:18Speaker 02

  The difference is at a big company, you earn your bonus one year at a time. You know, the powers that be tell you what's important. You know, it's decided within a smoky room. All of the goals are actually handed down, cascaded through the organization, broken into small pieces. And again, there's something that's pure about being an operator and, you know, figuring out how to make those small goals actually work every single day, every single quarter, every single year. But you can actually earn 80 to 90% of your bonus saying no to everything that's new, right? If you literally say no to everything, you have the power to optimize what's in your control. So that you could hit eighty or ninety percent of your bonus saying no to everything new. In a smaller company or a startup, it's the exact opposite. You have to string together seven years' worth of yes decisions

• 9:03Speaker 02

  in order to build any company that has any value. So you have to figure out how to get to yes every day instead of getting to no. You might as well shut the door if you get to no. But you have to get to yes and you have to string together these decisions over seven years, ten years, in order to build any company of size. So it is a huge difference where, back in the early stage of any company that you're building, where you have to get to yes every day, it's about creative problem solving. And there is no machine, there is no specific way that the organization has figured out how to get work done. It's about getting to the answer. And when I was at Capital One, I have to admit, I felt like I reported to the answer, not to the machine. Figuring out how to get to yes was basically who I was. It was my identity.

• 9:46Speaker 02

  When I was given very difficult challenges by the organization, the only answer was to solve the problem.

• 9:51Harry Stebbings?

  Do you not think a company loses its fundamental power, though, when it moves away from the process to yes, to like accepting the machine? Do you know what I mean? Is that not the power that startups have, which is like, we just race to yes, not, you know, making the machine happy?

• 10:07Speaker 02

  Yeah, I mean, a startup's power, superpower, is figuring out every day how to get to yes. It's about unity of focus. It's about a team that, again, reports to the answer and figures out how to break down barriers and get things done. And the superpower of a large organization is that they have resources, they have policies, they have procedures. They've created a methodology for getting good results and being able to produce whatever it is that they produce with certainty, with regularity, ultimately stamp out whatever the product is that they're creating in a very uniform way. So big companies have scale advantages. Big companies have consistency advantages. Big companies avoid mistakes.

• 10:52Speaker 02

  Big companies have fewer fire drills. Like, there are a lot of characteristics of big companies that are actually very valuable. But small companies can make things happen because, again, they report to the answer. They report to getting to yes rather than reporting to the machine and how work is done.

• 11:06Harry Stebbings?

  When you look at these kind of execution lessons that you have from Capital One, I'm too interested. How do you think that experience impacted kind of one of two things? First is like the type of investor you are today, and second is the type of business you like to back.

• 11:20Speaker 02

  Yeah, I mean, at Capital One, everything was about test and learn. It was about the scientific methodology. It was about figuring out how to prove things before you would end up putting a lot of money behind it and rolling out any new product or any new strategy. You know, that's really where the Q E D name came from. We used to use Q E D as a verb, as an adjective, as a noun. Like, we used it around Capital One as if it were just this all encompassing goal in mind, which was about proving everything. And it's affected the type of investments that we make and how we think about investments. I personally like investments where you can systemically de-risk, you can turn over cards, you can figure out how to break down a big problem into smaller pieces and theses that you can actually prove.

• 12:03Speaker 02

  You can figure out by putting things out in the market in small volumes or with tests, whether it's working or not working. The market either agrees with you or it slaps you in the face and tells you that you're absolutely wrong. You know, if you can systemically turn over cards and figure out where you're right and then put money behind the places where you're right in order to grow whatever it is that's working and then put new initiatives out into the marketplace, test new ideas and continue to grow on top of your successes. Those are the type of businesses that I really like. It's not every type of venture backable business, you know, that is really our sweet spot. But when we approach a business, it really is about breaking things down into learning agendas and figuring out what you're going to learn. Because again, I think about the venture asset class is very simple.

• 12:48Speaker 02

  It's about asking and answering the question, how much can you learn for how much money, how quickly? And when you can put a learning agenda in place and figure out what you're going to learn for how much money, then it becomes much more comfortable.

• 12:59Harry Stebbings?

  Do you worry, though, that today with the capital proliferation that we have, that desire to de-risk on the entrepreneur's behalf is reduced? You know, often we would say, hey, can you acquire a sufficient amount of customers at scale in a capital efficient manner? Now, it's like, I didn't really need to. I've got seventy five million dollars from Tiger and I'm burning five hundred K a month. So like, de-risking that in a capital efficient manner doesn't matter. And so like with the capital proliferation, the requirement to de-risk in a step function manner reduces. Does that worry you?

• 13:27Speaker 02

  It worries me a lot. It puts a premium on under. Understanding how a founder thinks, how good of a steward of capital they actually are. You know, I've talked about this before, but I affectionately think of myself as the cheap bastard around the table. You know, where regardless of how much money you would give me to build a business, the plans are probably going to be relatively the same, right? Because it's about breaking down the problem into smaller pieces and putting the right amount of money behind the initiatives, the minimum amount that's necessary to prove out what you need to prove. And then it almost feels like you're cheating because you're putting money behind your successes and you're guaranteed to do something very good with that money instead of, you know, spraying it around and then hoping that you find some successes.

• 14:08Speaker 02

  And ultimately, businesses are only real businesses when they're self-sufficient. So I think that there is a, a very, you know, dangerous trend in the VC market today where businesses that have been partially de-risked, they've gotten partway through their journey, they haven't proven out the business model, are attracting massive amounts of capital and a lot of these companies are even going public before the story is actually completed. But the last I checked, there's a ninety-five plus percent correlation between earnings per share and share price of companies throughout the history of the stock exchange. When you think about public companies, it all is in the long run about earnings per share. And if companies can't make money, they're not worth what people are paying for them.

• 14:50Speaker 02

  So yes, we're in a different mode right now where it's risk on and it's about growth and it's about not worrying about bottom line earnings until sometime deep in the future. You know, I would suggest that people think about the interest rate environment we're in and what choices people have about putting their money to work. This is an artifact of the environment we're in. It's not a permanent artifact of how to build business.

• 15:13Harry Stebbings?

  When interest rates go up, do we see the complete evacuation away from venture? How do you think about how interest rate environments will change capital supply into venture? I'm too interested to ask that one.

• 15:22Speaker 02

  Yeah, I mean, venture is venture. Venture is about taking business ideas that have amazing promise, but also have risk and figuring out how to systemically put money behind them to figure out whether the thesis is right or wrong. Like, that is the venture asset class. And there are a lot of different types of risk that you can end up taking. Technical risk, it could be product market fit risk, you know, it could be a regulatory risk. I mean, again, venture exists to de-risk businesses before you put them in the public markets and before you build a big business. So I think venture as an asset class is going to exist, but it might look a little bit different in different interest rate environments. There might be a little bit more price sensitivity.

• 16:02Speaker 02

  It might be that we go back to a time when it matters how quickly you can make money as an organization. These things come and go in cycles. History will repeat itself.

• 16:11Harry Stebbings?

  A, I'm thrilled that you said you're the cheap bastard because I'm normally the cheap bastard around the table. And so I do want to touch on that because, you know, bluntly, I'm looking at markets today and I'm investing today. And honestly, the prices are crazy, especially in fintech. And I don't know whether to be disciplined and mindful and throw my inhibitions to the wind and say, fuck it, play the game on the field. Or whether to say, no, I'm going to be disciplined. This is absolutely crazy. How do you think about this? And I guess what have been your biggest lessons on price?

• 16:40Speaker 02

  Yeah, I mean, it is exciting and disappointing at the same time, the environment that we're in. You know, ultimately, I think outcomes are bigger than anyone expected them to be. You know, that's a very interesting observation more than anything else and should factor into what a company has ultimately worked. But at the same time, a lot of capital has flowed into what is a pretty shallow asset class. Like people think of venture as a very large asset class, but if you study it relative to the truly large asset classes, it's tiny. It's getting larger and I think that's why it's attracting capital. You know, companies have been staying private longer. That means the area under the curve of where you can make money is bigger than it's ever been. There are more startups than ever before. It's easier to launch a business than it ever has been.

• 17:24Speaker 02

  It's easier to figure out whether a business is working or not working in the first few years than it's ever been in the past. So you really have to take all of this in when you start to think about the math of putting money to work in companies that literally have a distribution of outcomes that range from zero to in some cases, you know, a trillion dollars in the public markets if everything goes right over 20, 30 years. So I mean, that distribution is pretty wide, I would say. Because of that, if the distribution is shifting, you have to consider that within your math. Now, what I'll say is, you know, the price discipline has disappeared from the market, and I think it's collapsed to math. So many investors basically say it is now a founder's market, not a venture capitalist's market.

• 18:09Speaker 02

  And by being a founder's market, it means that there are great businesses that lots of capital would like to fund. Right? So you have one to many issue. Here's a one business that everyone wants, and there are many VCs, many dollars that are chasing that founder. So when you're in this type of market where it really is a founder's market, the founder is dictating a lot of the terms and the venture community is saying, that's the game that I have to play in order to win. And it's really math. If a founder says, I want $10 million and I do not want more than 20% dilution, that's not valuation math, that's just division. The founder asked for something, you believe to win the deal, you have to give them what they asked for. And that literally is dividing two numbers to figure out what a company is quote unquote worth.

• 18:52Speaker 02

  And I find myself in, you know, many conversations with founders to say, look, you know, ultimately, a business is worth the intrinsic value of what the business is worth today, plus the option value of what it could be worth in the future. And if you're ascribing massive amounts of value to the option value, to a business that has no intrinsic value, you could not sell it today. You know, you're basically looking at a distribution of outcomes and we might see it differently. So we have these conversations with founders where you say, look, when you say your company is worth X, until you show me that someone has a term sheet to buy your company lock, stock and barrel for that price, 100% of the business, that's not what the business is worth. Let's actually sit down and have a conversation about what the risk is of the business, what you want to accomplish, how much money you actually need,

• 19:37Speaker 02

  what you're going to accomplish with this money, what the business is going to look like after you've put this money to work. And then let's have an open dialogue about what the right price is for the company. So it's a frustrating environment to be in, but I would say is the environment we're in, and it means that you have to understand the dynamics and live within them.

• 19:56Harry Stebbings?

  How do you determine whether to pay up or whether to say that Frank's gonna sit on the side? On this one, one hundred and fifty million is crazy.

• 20:02Speaker 02

  It's about comfortable being uncomfortable. It's about conviction. It's about knowing when to bend your own rules. And we've done it with a number of companies over the past year where the environment has just shifted so quickly. Where I thought we were offering the highest price that we could, and it was the lowest by a factor of two.

• 20:19Harry Stebbings?

  When you've bent your own rules on price, have you subsequently been pleased and they have turned out to be the best deals? Or have they not? And you've actually gone, we did pay too high a price?

• 20:29Speaker 02

  For a lot of the companies that, you know, we ended up paying up for, so far, so good. You know, they were the ones that we stretched. They were the companies that had massive momentum on their side. I mean, extraordinarily high growth companies are hard to figure out what the right price is. Because you're staring at a plan and you're looking at trajectory of the company and momentum that they have. And the plan is almost unbelievable, right? I mean, the the speed with which companies can grow today are so far beyond the speed at which they were able to grow in the past. When I first started in this industry in two thousand and eight, you know, two thousand and nine, two thousand and ten, the early vintages of companies that we ended up investing in. The best companies would grow by two X year over year.

• 21:10Speaker 02

  And now you're looking at companies that between the signing of a term sheet and the final documentation, you know, getting across the finish line, a company could have doubled or tripled.

• 21:19Harry Stebbings?

  But I think that goes to, you know, the rise of preemptive rounds a lot, but also kind of bluntly a question on deployment cadence. And this was my other one, which is like, you know, I'm the student of venture for the past ten years. I remember when we all said three year cycles, three year cycles, and now funds are being deployed in twelve months. Or do you actually believe that, you know, temporal diversification does matter and stick to three years?

• 21:40Speaker 02

  Well, when you're being entrusted by your LPs to put money to work, hopefully they trust more than a plan that has to change when you hit the field. The environment that we're in is the environment we're in. And the LPs, if you have the right LP base, understand that this is an illiquid asset class. It runs in ten year cycles, you know, hopefully the LPs that you have are in it for more than one fund. I mean, when you're underwritten, a typical VC is underwritten for multiple funds by their LPs, right? Two, three funds, pretty. Typical, some of them, they intend on being with you forever. So the LPs, if they are the right LP base, have an understanding that these things come and go in cycles. So this is the environment that we're in.

• 22:21Speaker 02

  If you end up investing at the pace that you see good quality companies coming across your desk, which might mean deploying capital faster, putting more money to work in a deal than you intended when you originally went out. It means that if you're right, it's because everyone is right. And if you're wrong, it's because everyone is wrong, right? And it's not like, you know, you are going to be different than the entire vintage. And it could be that there are vintages of venture that just underperform relative to other vintages. But within that, you know, hopefully you have a decision process that works. Hopefully you have a competitive edge that, you know, makes you better than the others out there. And hopefully you have a brand and value proposition that brings the best companies in. So within the vintage, you'll do, you know, better than the average bear. I would suggest anyone who's in the industry, you're in the industry.

• 23:05Speaker 02

  And you really do have to play the game, you know, that's out there right now.

• 23:09Harry Stebbings?

  I do want to also, because we spoke about like trajectory and speed to, you know, a certain growth rate or a certain revenue number. When we think of speed of winners, like, how do you think about the lessons you've learned in terms of speed of outlier companies and how fast do you know that their breakouts?

• 23:25Speaker 02

  Yeah, it's interesting. The one truism in in venture is whatever the financial plan is that a founder puts in front of you just isn't going to come true.

• 23:34Harry Stebbings?

  Always.

• 23:35Speaker 02

  Doesn't mean you shouldn't analyze it. In fact, I spend a lot of time analyzing plans because I think about the plans as a numerical articulation, a financial articulation of how the founder sees the future playing out. And there's actually a lot of insight in financial plans that, you know, people ignore. I find it lazy underwriting when they say, well, the plan isn't going to happen, so why should I spend time on it? But there's a lot of embedded information that you can pull out of plans by having conversations with the founders and understanding what they expect to happen, when they expect it to happen, why they expect it to happen, and it's all embedded in their financial plan.

• 24:10Harry Stebbings?

  It just helped me understand this, like, how do you dig deeper? When you see the financial plan and you see marketing spend going up and to the right, or you see CAC reduction, like, how do you take the thought process? Or extract insight from a potentially inaccurate plan.

• 24:24Speaker 02

  Yeah, a lot of it is really spending time with the founder, questioning what you have to believe in order for the plan to come true. What do they already know that they're putting money behind? Versus what have they not figured out that they're going to have to figure out? And what is their learning agenda that's behind the plans? And what are the expectations and assumptions they're making to deliver that plan? You know, so if marketing spend is going up, you know, do they know where they're going to spend that money? Have they tested those channels? You know, have they tested how deep the channels are? Have they ever spent that amount of money before? You know, so there are a lot of questions that you can actually ask for any given dimension of a financial plan. You know, you can ask about margins increasing, like, do they understand where that margin improvement is going to come from?

• 25:08Speaker 02

  Do they already have plans in place? Are their resources being put against it? Is there a learning agenda? Or is it just saying, we will figure out how to improve margin by two points every year for the next four years? That's a very different type of thinking than spending time with a founder, really, you know, diving into the business itself and tearing it apart down to the atomic unit and figuring out where they're going to put their time and energy.

• 25:31Harry Stebbings?

  I totally agree in terms of the atomic unit and going as granular as you can go. If the plan really doesn't work out, and it's not just like slightly missing it, but it really doesn't work out. And say there's an insider round that takes place. I'd love to dig in on how you think about the effective that you've seen of these insider rounds and how they've played out in terms of just providing that runway extension.

• 25:51Speaker 02

  It's interesting because there's a term that I use with founders that I help. And I call it, everything that you do is either proof or anti-proof, right? Everything that you learn falls into one of those two categories. You're either proving that the assumption that you had is correct, or you're getting anti-evidence that it actually isn't correct. And to me, a lot of times, that's the market slapping you in the face and telling you that it was a nice try, but it's not the way a consumer wants to buy the product, or it's not how things are really going to work. And the problem with insider rounds is usually it comes on the backs of having some anti-proof, right? It's about something that didn't go well, something that didn't go according to plan. And now you're staring at anti-evidence. In the face of new projections for the business going forward and trying to attract

• 26:36Speaker 02

  new capital at a time when you just surfaced a whole bunch of anti-proof is the wrong time to raise from a new investor. So insider rounds come together, usually when you haven't accomplished enough, you haven't proven enough, you have anti-evidence that something that you tried didn't work. And now you have to earn your way out of that anti-evidence, right? You now need to figure out something else to go right to basically brush the anti-evidence under the rug and say, we're back on track. So insider rounds, when they come together, and this is not universally true, there are good reasons for insider rounds to come together when a company is doing extraordinarily well. But for most insider rounds, when they come together, when it's not preemptive and it's

• 27:18Speaker 02

  not just saying, you're doing so well, here's some more money, get back to work, don't be distracted with sharing your information out with other investors and on the street. We don't want data leakage. Like, again, there are a lot of good reasons for insider rounds coming together, but if it's an insider bridge round, it really is about figuring out more proof on the board to overcome the anti-proof that you probably just generated.

• 27:39Harry Stebbings?

  Do you know what Frank, when you do have those situations that take place, I'm a people pleaser, one of my terrible criticisms of me, I find it really hard to explain to founders why I'm not going to be reinvesting and why the anti-proof isn't enough for me to continuously allocate capital to them over the other lines of the portfolio. Do you have any lessons, just advice for me in terms of how to communicate that in an empathetic, but also constructive way?

• 28:01Speaker 02

  It's hard. I mean, you build long-term relationships with people who you hopefully like and you want to see succeed. The hardest part of the business is when someone is trying, they're executing well, and the thesis is just wrong, right? And the market is basically telling them that the business is just harder to build than they thought it was going to be. And as an investor, you've got to think about that. Every dollar that you put to work in company X is a dollar you don't put to work in some other company. You know, so having that tough conversation with the founder and saying, look, the business actually is having troubles, the thesis isn't playing out the way that we thought it would. You know, we want to be supportive of the company in many ways. But maybe not with a capital check. And that is a very, very hard situation to navigate,

• 28:46Speaker 02

  especially when a founder is trying to raise capital. You know, I like to think in terms of truisms. And I can tell you with the tens of thousands of businesses in the venture world, I would be surprised if you did an analysis of them if it was more than one percent of the companies, probably even a fraction of one percent, where the founder shuts the door on the business for any reason other than they ran out of cash. Right? So founders quit when they run out of cash, not when they run out of ideas. So the founder is going to constantly be trying to get to yes answers and trying to figure out how to fix the business. Their identity is actually wrapped up in the business. The people they've hired, their identities are wrapped up in it. You know, they've spent a lot of time championing, you know, this idea. Their identity is the business. So they are going to keep trying.

• 29:30Speaker 02

  And the hard conversation to have sometimes as an investor is to say, it's okay. You did everything you were supposed to do. It just didn't work. You know, there is a fine line about being supportive and actually being supportive to a point where you're actually enabling the business to continue that maybe the market is telling you shouldn't exist.

• 29:47Harry Stebbings?

  I think almost a responsibility of investors to let the founder know it's okay to fail. I've met a lot of founders and they're like, a weight of responsibility. I can't lose you your money. And you're like, no, no, you can. Like, this is the point of venture. Like, you're not supposed to always win. And then it's like, oof, it's almost not for them, it's for us in some cases, I find.

• 30:06Speaker 02

  Yeah, it is amazing. When I was very early in the investing journey, you realize that the pain of a company actually not succeeding is so much greater than the joy that you get from a company hitting plan or growing or raising a funding round. Like, the pain of a founder who's struggling, who you like at just a friend level, in addition to being a mentor and advisor, and, you know, hopefully someone who is along the journey with the founder. It's just very, very hard.

• 30:36Harry Stebbings?

  No, listen, I totally agree. And I think you're absolutely right. I mean, on the inside around elements, sometimes they can be used to build ownership. And sometimes VCs kind of position them in that way, sometimes strategically. In terms of like ownership and sizing, I'd love to hear your lessons from. Really, the importance of initial sizing of that initial position.

• 30:55Speaker 02

  Yeah, it's gotten to be very, very difficult to buy up your ownership stake over time. So that's been a major shift in the venture community. There's so much capital sloshing around, so many new funds that are out there. That if you're a founder, you have to weigh the benefits of taking additional capital from people who are around the table. You know, versus going back to market, you know, really taking a pulse on what your company is quote unquote worth. I use that word loosely because, you know, what a company is worth is in the eye of the beholder. And ultimately getting potentially someone who has a different skill set or a different Rolodex or is additive to the business by bringing in new capital. The challenge in venture today is that that initial check that you write

• 31:37Speaker 02

  almost sets the stage for how much ownership you're going to have in the future. Unless you are an extreme value added venture capitalist, a player where the founders, the other investors around the table are incredibly supportive of you buying up your share to not disrupt the dynamic of what's happening around the board and the advice that the founder is getting. So we've been able to execute back to back lead checks into companies a few times. And it's when the company is doing extraordinarily well, the dynamic is extremely healthy with the other investors around the table. And the founder starts to think this would be really easy just to raise capital from the people around the table. They've already raised their hand, they said they're interested, I like working with them, things are going well.

• 32:21Speaker 02

  I won't have to go back out to market to fundraise. And then we can run for another eighteen months or twenty four months before we have to figure out what the narrative is and how to tell the story. So we've been able to actually do that a few times. But the stars really need to align in today's market for that to happen.

• 32:37Harry Stebbings?

  Do you worry about signaling risk now, given that you've done that on a number of cases and then haven't done it on other cases? Is there a signaling risk problem?

• 32:44Speaker 02

  No, there's no signaling risk because some of the companies that are the absolute rock stars in our portfolio, like they grow beyond our ability to even fund them, given the market dynamics. And sometimes it's very rational for a founder, you know, to take outside money and again, bring extra skills around. The table that they might not have otherwise. You know, conversely, on the other end of the distribution, there are, there are companies that, you know, we might not want to lead a second round and we're very comfortable with our ownership stake in the company. So it's not like the signaling risk is a single signal. It's a bunch of mixed signals and, you know, the market is the market and it's competitive, you know. So, you know, all the players out there trying to figure this out for themselves.

• 33:23Harry Stebbings?

  You said about kind of the dynamic needing to exist between the different kind of co-investing parties. I think kind of the, the theme of competition versus collaboration is, is kind of a crucial one to discuss. You know, I'd love to hear how you think about this, maybe how VC mindsets have changed. So how do you think VC mindsets have changed when it comes to competition versus collaboration?

• 33:43Speaker 02

  Yeah, this is probably one of the biggest areas of disappointment about how the industry has evolved over the past 10 years. I actually used to be more collaborative where the venture community would come together and discuss companies. You would see syndicates come together with, you know, two major leads or even three leads coming together and splitting ownership. You know, figuring out how to ultimately get the ownership that the early investors need, maybe in a later round, right? But the founder would get the benefit of having multiple voices around the table. And I think that that environment worked incredibly well when you had unity of vision within a business, but diversity of experience and diversity of Rolodex. As long as everyone had a unified vision for what the business should grow up to become, and more importantly, what the business should do tomorrow.

• 34:27Speaker 02

  That's where you need unity and the diversity of having multiple voices around the table really gave the company a better chance of success because it meant they had more resources at their disposal. The challenge of building a startup into one of the world's greatest companies is such a daunting challenge that having more people around the table with you just felt very comfortable and that environment has shifted.

• 34:48Harry Stebbings?

  So my challenge here is I'm totally aligned to you, but then I'm also aware of what you said in terms of the importance of initial ownership and position size and the challenge to increase it. And so how do we make both worlds happen and make us both happy? When you need 15% or 10%, and I don't, but say I did, say I need 15 or 10%, how do we make this work? This is too tough to make work, man.

• 35:08Speaker 02

  Yeah, the constraints are real. Venture capital. Capital is a product like anything else that the venture fund is actually selling to the founders. Right. It's a combination of capital. It's the time and effort that the venture capitalist is actually putting in. It's the hands-on help. It's the brand. It's the network effect. I mean, there are a lot of things that come with the product that they're actually putting in front of the founder. And unfortunately, there are some constraints that come with it, especially if time is a constraint. So the reason why ownership matters to a lot of venture funds is because there only are so many investments any individual partner can manage if they're an active investor. So that's a real constraint. Unfortunately, it means that this world of collaboration

• 35:51Speaker 02

  of highly active investors can be challenged when not enough equity is being sold in the round. And this is something that's changed as well. Founders are selling less equity in rounds than they were in the past. So typical dilution in the past might have been thirty percent, you know, in a round. And that might have shrunk to twenty percent in a round today. That delta of ten percent equity could make the difference between having two co-leads and having a single lead for the round.

• 36:15Harry Stebbings?

  Is there a financial instruments way where we could do this? And what I mean by that is like you take more dilution than, you know, the people want to take today at the seed, the A and the B. And then when we get to the C, the D, the E, where you guys have kind of got it covered from the board perspective in most cases, but it's not quite pre-IPO, where you have ClearBank, you have Hight, you have any of the kind of innovative funding solutions, Capchase, which provide those kind of financial instruments. Is there a financial instrument way we can solve this?

• 36:42Speaker 02

  I think time will tell. There's a lot of innovation that's taking place, you know, in that space. We'll see if these solutions scale, you know, we'll see if they're able to actually create a form of non-dilutive capital that makes founders less price sensitive or less dilution sensitive in the early rounds. I think the environment that we're in right now, you know, again, the founders have a little bit more control than the venture community does in figuring out what the clearing price is and the clearing dilution is for any given funding round. So in the environment that we're in today, I think founders are going to look at some very good options on the table and they have the ability to choose. Among great partners that are out there and they can have the valuation they're looking for,

• 37:25Speaker 02

  the capital they're looking for and the help they're looking for all in one clean package. So it's made us and all the other venture capitalists up our games. What it takes to actually win a deal, what it takes to woo a founder and be part of the journey. Cause you're really being invited along to their journey.

• 37:41Harry Stebbings?

  What have been your biggest lessons in terms of what it takes to win? Is it getting the team around? Is it showing your experience from Capital One? Is it this services? What are the lessons in terms of what it takes to win?

• 37:52Speaker 02

  Well, this is actually one of the challenges in today's environment. You know, historically, the way that, you know, Q E D has won deals is that we're all ex operators that aim to be the best advice that you can get from any of your advisors around the table. And not advice that's generic about what you need to do to grow up to be a great company five years from now, but more importantly, what should you be doing tomorrow? Right. It's a very different type of advice. Yes, we can give advice on what the company should grow up to look like in five years, but we can actually get down to the granular unit of what are you actually working on? Right. How could we be helpful to kinking the curve on outcomes? Is there something that we could do to actually help you avoid mistakes? Or sharpen the pencil on your learning agenda?

• 38:37Speaker 02

  Actually find resources that can, you know, help you kink the curve on outcomes in different ways. But we're there at the line of scrimmage with a servant's mentality to help the founder actually succeed. And the way that we would win deals is during the diligence process, the founders would very quickly realize with the questions that we are asking, the way that we were helping them think about their own business during diligence, what it's going to be like working with us and we would win the deal during diligence. So if we would get to a yes answer, we almost uniformly would end up with a yes answer from the other party. And in today's environment, that entire diligence period has been compressed. It's gotten to a point where there's very little time for diligence. And in some cases, you can just put a diligence question mark, like it's optional, you know, check the box, yes, no.

• 39:21Speaker 02

  But for us, that's how we would win deals. Like the founders and the first calls would realize that we were different than the other V C firms out there. And within two or three conversations. With us, you know, many founders would say, look, you are our preferred partner. What does it take to get to a yes answer? So that's our struggle in this market is that we have to figure out how to speed up and condense, you know, the quality of those conversations into a very compressed period of time.

• 39:45Harry Stebbings?

  I mean, thinking of kind of the challenge there, I know that you think a lot about how you can be the best investor that you can be, and how anyone can actually be the best at what they do. How do you think about how to be a better VC? What have been your learnings?

• 39:58Speaker 02

  Yeah, it's interesting because I find this job a very easy job to do poorly and a very difficult job to do well. I think that's actually the criticism and it is a just criticism of the VC industry by the founder community. Because everywhere you look, there's a lot of people doing the job poorly. Now, there are tons of people who are doing it well. There are people who I respect immensely in the industry. But the difference between the two, I mean, there's a chasm between the venture capitalists who do the job well versus do it poorly. And I think part of it starts with the clarity of thinking. The way I describe clarity of thought is that if you were to ask someone the same question five days in a row, or five weeks apart, or a year apart from, you know, asking the question originally, would you end up with the same answer from that person?

• 40:41Speaker 02

  And the only way that you can say yes to having the same answer from the person is if they understood why they made that decision in the first place, and there's logic behind it. So we talk about superpowers all the time. I think clarity of thinking is one of my superpowers, where if you take any of the businesses that I actually underwrote over the past, you know, 12 or 13 years, and there are hundreds of them that I've dug into deeply, and there are probably a few thousand of them that I've actually looked at over that period of time. If you gave me a few minutes just to review the last Investor Day, I could tell you precisely why I made a yes or a no decision, and probably have a 30 to 60 minute discussion with you on that company, right? And you're going to get the same answers from me whether you ask me today or a year from now, and it's going to be the same answer that it was five years ago.

• 41:24Speaker 02

  So, once you have that clarity of thought, you can now anchor your decisions around frameworks. You can anchor your decisions around, you know, what you believe and didn't believe in the moment, based on the information that you are seeing. Then you can study outcomes. Then you can study what happened within the companies. You can see where you were right and where you were wrong. You can see whether you ended up with the right risk distribution of what you said yes to and what you said no to. But without that clarity of thought, it's actually hard to fine tune your own decision-making process. So I think it actually starts with knowing why you make every decision that you make.

• 42:00Harry Stebbings?

  Can I ask, where are the commonalities in where you got it wrong? Is it, I didn't anticipate CACs going up as fast as they did. I didn't expect regulation to move as quickly as it did. And there are commonalities where you're like, this time and time again, I didn't expect.

• 42:15Speaker 02

  Yeah, so there are some commonalities. One is, th- there is a survivor's bias issue in venture capital. Where if you have great teams and they really are going after big media opportunities. So, you know, very large TAM with unaddressed opportunities in the ecosystem. If you take talented founders, sometimes there's a bunch of unknowns that come together that are just mysteriously discovered that you never could underwrite to when you originally underwrote the deal. In retrospect, you know, they are the survivor because they found a path that was not obvious when you were underwriting the company or the founder or the opportunity when it came across your desk. So a lot of the biggest companies that we passed on, if you actually saw the original thesis behind the company, the original investor deck,

• 43:00Speaker 02

  the ultimate business didn't look anything like what the original thesis was. So those are businesses that for someone like myself are very difficult to underwrite. Because I try to underwrite based on the information that I have available to me. And there are other investors that are team and TAM investors that basically say, look, this is a talented group of people, they're going to figure things out. We don't know what those things are. It's a big enough space, big enough opportunity, just give them capital and let them go. And by the way, there's nothing wrong with that. I'm just not a team and TAM investor because I want to be on the journey with them. I want to have the conversations about what we're going to do tomorrow to figure things out. And if I can't see a path based on what you know in the moment to building an interesting business, then it's just hard for me to get conviction around.

• 43:42Harry Stebbings?

  Is that not the difference between an early-stage investor and a growth investor? So I am a team and TAM. I believe that majority of things are transient, even the market's transient completely. Covid changed so many markets. I'm as team-oriented as you could be. Like, is that not the difference between early and growth investing?

• 43:57Speaker 02

  It's not early in growth. I think it is a way of approaching diligence and conviction, right? So you gain conviction by having conviction around the people, right? And around just their raw talent and ability when thrown against a big For me, you know, that's a piece of what goes into conviction, but I actually need to understand the problem. Need to understand the industry, need to understand the backdrop, need to understand what are the plans tomorrow? If I were running this business, how would I run this business? So if I can't put myself in the shoes of the founder, I'm just the wrong investor, right? If I don't know as much about the space or close to as much about the space as the founder. If it's a problem that I don't want to be thinking about 24 hours a day, you know, seven days a week for seven years.

• 44:40Speaker 02

  Like, it's the wrong company for me to invest in because I'm going to be there helping them solve problems along the way. So it's, it's not an early late, it's more a disposition of what it takes to build conviction.

• 44:52Harry Stebbings?

  Has your investing style changed, do you think, over the years, Frank? Now, has that style changed? Or have you always been very consistent in that approach?

• 44:59Speaker 02

  There is an appreciation for the art of the possible that just was not there when we first started. When Nigel and I first founded Q E D, we were doing it because this was a niche thing that we understood. We were going to do it, whether it was a big ecosystem or a small ecosystem, because it's all we actually understood, right? We understood banking, we understood financial services, there wasn't even a name called fintech. There wasn't a word to describe, you know, this entire ecosystem that's evolved. But what we knew is we knew payments and we knew lending and we knew investments and we knew, you know, a little bit about capital markets and, you know, we ultimately knew about the core tenants of banking. By knowing banking, we knew where there were opportunities in the space, we knew how banks thought.

• 45:44Speaker 02

  We knew how slow they were to adopt new technology, we knew how the machinery would actually slow down innovation. And we were able to take the battle scars of, you know, all of the work that we had done over, you know, a decade and a half of being in the industry before starting Q E D. And hopefully helping founders identify problems that were meaningful and meaty and could build sizable businesses. And then help them actually build those businesses. But the outcomes that we were looking at were very different than they are today. I mean, if we actually just look at the difference of the fintech industry when we first started and today. Back then, less than a billion Dollars of capital was deployed globally in fintech in a year. And now you're looking at thirty plus billion a quarter being deployed into fintech.

• 46:28Speaker 02

  So the outcomes are different, the number of founders are different. The art of the possible has now been discovered so that you can see what a fintech at scale could look like and what the patterns are for what it took to succeed and how they broke through. So I think my investing style has changed just by seeing what's possible and understanding it and then having a new playbook, you know, to work with the V two dot O and V three dot O companies now that you've seen the first wave come through.

• 46:55Harry Stebbings?

  Everyone's saying about, and this is the final one, and then we'll move into the quick fact. But everyone says about kind of the fintech bubble that we have today. I'm looking at it going incumbents are about to open their wallets. We're about to have a huge new wave of acquirers ingesting these startups. I actually think this is just kind of one dot O. How do you think about that? And do you see this as like, you know, the next wave or fundamentally a bubble?

• 47:16Speaker 02

  So I'm actually more bullish on the next ten years than I have been on the last ten years. And it's been a pretty extraordinary, actually for us, I guess, a twelve or thirteen year run. And part of that is fintech now has the building blocks that are necessary to tackle some of the more profound problems in banking. If you think about V one dot O of fintech, a lot of it was really the movement to mobile. It was about UX UI, it was about APIs. It was about some very basic blocking and tackling to saying consumers and small businesses are now used to applying for products and managing the products in a very different way, using mobile phones or using, you know, online technology. And the banks hadn't invested in that, you know, for decades.

• 48:01Speaker 02

  And in the two thousand and eight, two thousand and nine period, they were distracted with lots of other problems. Right? Capital adequacy problems, we were in a housing crisis. Like, the whole banking system was really retrenching, you know, just trying to solidify a lot of the pillars of of what it took to be a solid bank. But lo and behold, everyone, you know, now had smartphones in their wallets and they had a different way of interacting with products. And the V one dot O wave of fintech really was, you know, UX UI and APIs and different ways of interacting with the product. The fundamental products hadn't changed. And I think now that we're looking at V two dot O and in some parts of fintech, you know, V three dot O, we're now getting down to the atomic units of banking and thinking about

• 48:41Speaker 02

  manufacturing the products, not just putting a layer on top of it about how you interact with the product. And by changing out all of these fundamental building blocks, you can assemble them in ways that we don't even know what they're going to look like, right? But now you have a different set of atomic units that you can assemble, which means you have different value propositions that you can create. And you can start to address some of the more durable problems within banking. So I actually think we're going to see bigger companies built in this next wave than you saw in the first wave.

• 49:11Harry Stebbings?

  I do want to move into my favorite, though, which is a quick fire on Frank. So I say a short statement, you give me your immediate thoughts. Are you ready to rock and roll?

• 49:18Speaker 02

  I'm with you.

• 49:18Harry Stebbings?

  Okay, so what's the favorite book and why?

• 49:20Speaker 02

  I'm a huge reader, so I don't like choosing a favorite book, so I'll actually choose a favorite author. So Tom Robbins, I just think he's a lot of fun. And if you ever want to take your mind into a completely different realm, just read some Tom Robbins.

• 49:32Harry Stebbings?

  What made you and Nigel work so well together for twenty eight years?

• 49:36Speaker 02

  So it is a little bit of an odd couple, but it works. So Nigel has this immense amount of energy. He is expansive in his thinking. He's very pluralist. I think of him as having intellectual A D D or anything that is interesting, he finds interesting. And I'm very much a reductionist, right? I actually like doing very few things, but doing those things extraordinarily well. In fact, I don't like doing things if I don't think I can be the best at it of anyone out there. So putting the two of us together is really interesting because he expands my thinking and I tend to shrink some of the things into a smaller number of things that we can actually bite off and make work. And you've met him. He's actually very charming and everyone's best friend quickly. And I'm actually really good at being boring and holding up the wall at parties.

• 50:20Speaker 02

  So I mean, we balance each other there, too.

• 50:22Harry Stebbings?

  But then I do want to ask, which other firm in fintech do you most respect and why?

• 50:26Speaker 02

  Yeah, I feel like I'm going to betray some of my favorite people by picking a favorite. So I will say there are many, many firms that I respect the people at. But, you know, one of the firms that I've been watching closely and I'm friends with all of the V C's at is Ribbit. And Ribbit has professionalized the art of a specialist fintech VC and really paved the way for understanding what an at-scale specialty player, you know, could look like in this space.

• 50:51Harry Stebbings?

  What do you know now that you wish you'd known at the start of your career in venture?

• 50:54Speaker 02

  I mean, we've talked about it, but 10-year cycle times. Like, if I knew that going in, I'm not sure I would have gone into the industry. I've grown to get used to it, but the feedback loop of being an operator, it really just warms the soul in a way that's very difficult to get, you know, out of venture.

• 51:11Harry Stebbings?

  Warms the soul. I hear you sleep very little. Tell to me, how much do you get and how do you get by?

• 51:18Speaker 02

  So for almost my entire adult life, I would sleep somewhere around four hours a night. I'm about to turn 51 and a few years ago, something shifted and I need more sleep. So I am getting a bit more than I did for most of my adult life, but it's just how I'm built. You know, when I was 12, 13, 14 years old, my parents would try to put me to sleep and I would be in bed with a book and a flashlight till 2 o'clock in the morning and I was perfectly fine.

• 51:43Harry Stebbings?

  Wow, that is not me. I'm not a morning person. Penultimate one, what would you most like to change about the world of venture?

• 51:49Speaker 02

  We talked about that also. I wish it were more collaborative. You know, my favorite show on TV is American Ninja Warrior and, you know, it's a world where people are helping each other because the challenge is just so immensely great that working with others is the best way to take on the challenge instead of take on each other. So I wish that the venture community were much more collaborative in the same way that American Ninja Warrior is.

• 52:12Harry Stebbings?

  And then final one, what's the most recent publicly announced investment and why did you say yes and get so excited?

• 52:18Speaker 02

  Yeah, so the most recent one that I personally invested in is Hello Alice. The mission of the company is really about helping overlooked small business owners get access to the resources and kink the curve on the outcomes of their small businesses. So it's a mission that I really align with. It's something that I want to spend the next seven to 10 years working on. I actually do want to see what their vision is willed into existence and I think the team is amazing and the potential for the business is amazing.

• 52:46Harry Stebbings?

  Frank, as I said at the beginning, I literally have so many of your tweets on Unthreaded. So thank you so much for joining me and thank you so much for me bluntly ruining our schedule with some wayward questions. I so appreciate it.

• 52:57Speaker 02

  Well, pleasure being here.

• 53:00Harry Stebbings?

  I mean, I just so love that discussion with Frank. And if you'd like to see more from him on Twitter, which is such a must. As I said, he's one of my favourite Twitter content creators. You can find him on at Fintech Junkie. Likewise, you can head over to the 20minutevc.com, see more from us behind the scenes. But before we leave you today, did you know that more than 80% of US public stock is owned by just 10% of Americans? This divide is even greater in the private markets. Carter makes it as easy to issue equity to your employees as it is to issue payroll. And for employees, as easy to accept it too. More than 16,000 companies issue equity to their employees through Carter. Whether you're just getting started or getting ready to go public, the team at Carter can help. Check them out at Carter.com. And then another incredible product you have to introduce is SecureFrame.

• 53:43Harry Stebbings?

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• 54:28Harry Stebbings?

  So to learn more about the number one most active law firm representing VC-backed companies going public, head over to Cooley.com and also check out CooleyGo.com. As always, I so appreciate all your support and I can't wait to bring you two phenomenal episodes next week.