Be Ready. Be Stubborn.

Be Ready. Be Stubborn.

Shamir Karkal

Devin Miller

The Inventive Journey

Podcast for Entrepreneurs

9/12/2020

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The Inventive Journey

Starting and growing a business is a journey. On The Inventive Journey, your host, Devin Miller walks with startups along their different journeys startups take to success (or failure). You also get to hear from featured guests, such as venture firms and angel investors, that provide insight on the paths to a successful inventive journey.

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make sure you're ready for it and be prepared because it's a long hard tough road but be incredibly stubborn right like if there were at least you know at least half a dozen times at simple where i was just ready to give up and just be like we can't do this like this is just not doable right like there's so many kind of like you think your everything is fine you have it all figured out and out of left uh left wind or whatever like you just get this like massive shock and you're like everything i've spent the last six months working on throw it away start again right um and and that is you know the the only reason we succeeded is because we just kept at it right like we never actually gave up even though and this is where having a good co-founder is useful because um many times i persuaded josh not to throw in the toggle and many times josh persuaded me not to throw in the towel at simple right we were never all three co-founders ready to give up at the same time thankfully so we never did [Music] hey everyone this is devin miller here with another app episode of the inventive journey and i am your host evan miller the uh serial entrepreneur that's grown several companies uh seven and eight figure businesses as well as uh the ceo and founder of miller ip law where we help startups and small businesses with their patents and trademarks and on today's episode we have another great guest shamir and uh and uh car kyle is that right close enough close enough yeah cockle yeah all right i tried my best and yet i always slaughtered you so um shamir is uh he has a great or an interesting story to tell so he's been a bit of the banking or financial industry so he uh i think he is founded simple.or simple.com and back in 2009 sold that off and then did another uh startup um with i think it's bbva is that right and uh did that for a couple years and now he's on to his uh current business or his current startup so had some success in various industries and now he's on to building his next successful business and are interested and have another great journey to tell so welcome on to the podcast thank you and i'm excited to be here and uh tell you guys a little bit about myself and sort of my uh entrepreneurship journey um cilla is my second or third startup depend on how you depending how you count it up you always want to make it sound better than it is right okay that that works i mean you could argue for fourth as well but whatever um the uh kind of my my entrepreneurship journey started in 2009 and uh i was i was still in my 20s back then but the sort of the start of it you know i used to be a software engineer came to the us went to business school and was working as a management consultant in 2009 and a friend and classmate from business school sent me an email saying uh let's start a retail bank um and i've actually posted that email on a blog on medium sets right and and uh josh who was my friend and is my friend um he had been an entrepreneur before he'd sold a business in australia before he came to business school and then went off to work at startups uh in new york and he had gotten very frustrated with his personal banking because he'd gone from being you know single uh engineering uh cto of a startup to uh to the um kind of uh he'd gone from that to getting married buying a house and his financial life had gotten a lot more complex right um so in that in that process he got very frustrated with his bank he started asking me all these questions about how banking worked uh mainly because i was doing financial institutions consulting and knew a little bit about it and i would actually answer his questions and then he came up with this idea of starting a bank and you'll see how crazy i am that in 2009 in the middle of either the worst or second worst financial crisis we have seen in our lifetimes i actually thought it was a good idea to go start a bank um so i got excited about his vision for easy to use consumer friendly tech uh tech centric mobile phone centric banking and uh and jumped on board right like so he sent me that email and we started discussing it i was based in brussels but i flew back to new york and a few months later hold on it will let you get back to your journey but just as the diving in so if if just to set the context 2009 you've got all these banks that are basically cult and financial institutes in general that are declaring bankruptcy going bust they've all made bad investments and he thought okay with all of these base closing why don't i open my own bank is that about it i mean that does sound makes it first of all opening your own bank period sounds like a lot of work and effort and to figure out all the regulations and the red tape but then to do it in the midst of the what a terrible financial crisis makes it sound all the more crazy so didn't mean to jump or jump in we just kind of glossed over that yeah it would do that i know we just started to start debating on one of the worst timing that you could have done or maybe the best timing uh so we thought it was actually good timing and and you you are you aren't wrong actually i mean my last two projects at mckinsey before uh josh emailed me where a country bailout and a bankruptcy of a large european bank which was which was gigantic right so those were all like multi-billion multi-hundred billion projects by the way you know the the numbers involved were insane right and i was of course a very small player uh in trying to kind of uh help clients but um but yeah that was that you know and then i left mckinsey and went off to startup bank uh but the kind of our thesis was that that was exactly the best moment because it had become clear to everybody not that banking was broken right i mean especially in the u.s i'd say whatever you know 80 percent of people have a bank account there's an underbanked segment there's an unbanked population uh those people have historically been underserved but the vast majority of people before 2008 may have been okay with their banks right nobody really enjoyed the banks like mobile apps but there weren't that many mobile apps anyway you didn't you didn't go to a bank for technology but you trusted the bank for its stability and and the fact that you know money is so important to you well in 2008 2009 everybody quickly learned that your the security did not come from the bank the biggest banks in the world could robust the security came from the fdic and government insurance uh which then brings up the question if it's really the government that's behind all these banks then why are we putting up with lousy service crazy fees uh all the things that people hate about banking right and this was the moment when occupy wall street was happening um so our thesis was that this was the best moment to start a bank and i think at the end we went far wrong on that what we didn't fully realize is how hard it actually is to do that um between 2000 and 2008 every year in the us there were between 100 and 300 banks started so every year like there was a there was a whole cottage industry starting banks mostly small community banks in kind of you know suburban or rural areas right and we were like we can just co-op that start our own bank it takes money and time it's not like an overnight thing uh but you're determined to go through with it uh except that between 2008 and today in 2020 i believe that have been less than 10. um so that whole cottage industry of starting banks kind of just died in 2009 um and we didn't realize that because i remember i was in brussels i've been in brussels for a year even though i'd been in and i'd taken a transfer just before the crisis to europe came back and was like oh everything's changed here the regulate on the regulatory side there are no bank charters being approved anymore and we can't get one so now how do we do this given that we can't get our own bank charter uh and he we figured it out we found a bad partner we found a processor figured out that it wouldn't work i think everything that we figured out we did it wrong at least once um and hey it's all good startups do you got to do it you got to do everything wrong once so make sure you do it right the second time if we did it wrong if you did it right the second time that was good for us i think sometimes for the third time but anyway you know we found a bank we found a processor figured out how to connect them added like three or four more of them and finally got to the point where we built like an api layer on top of which we could then build our web and mobile apps um and that was uh you know that's when we launched simple that journey took three years so from first email to actually launching simple was a three-year journey um and uh and then less than like 22 months later we sold it to bbva which is a big spanish bank uh for 117 million right and we raised less than 20 million so it was a good exit uh everybody made money some of the early investors made over 6x which is you know it's a decent venture return right um anywhere i can 6x my money i'll take it so it sounds like you could return to me yes and and in less than five years right so it was it was a good good return i think nobody complained um and and for us i mean obviously we made some money as well as founders and management but we took i think we took a little bit over 8 million dollars of that 117 and distributed it to about 100 employees um so every employee made money and you know there was there were customer service people in their early 20s who kind of you know a month after the sale went out and bought their first house right um which you know portland isn't that expensive but it's not that cheap either and uh and so it was it was a life-changing event for a lot of people and i'm pretty proud of that um the uh kind of a few months after the acquisition uh i was in the offices of uh you know the bbva execs uh in madrid and one of the execs mentioned this idea of building an api platform and for those of you are not familiar apis are application programming interfaces this is how computer systems connect to each other so you know the like you could think there's a lot of api companies out there now everybody from aws to stripe uh square all of these are you know uh they serve businesses online but they serve them electronically by providing the ability to do things like operate data centers or process payments right uh and and bbva wanted to build an api platform for uh financial innovation or fintech really and when i heard that i was like yes please do it the world needs api platforms in banking if this had existed in 2010 josh and i wouldn't have spent three years building our own right we could have we could have punished such a good accent so it still worked out all right so maybe if hard if i were to jump in or just for a second and explain apis i think he did a good job but if you're to say hey you know what makes a lot of times whether it's you know square or it makes you know that you can log in or you can interconnect different websites they can be banking apis can also be done but it's really a way for different systems to talk to each other and it's the protocols to allow them to talk to each other so if you wanted to make a you know something that you know hooks into a a banking system or you want to have a payment platform like stripe or square or other things if you're a third party you use their apis it basically makes it so that you're using the sending data back and forth in the format that their system wants is that a fair fair summary that is a that is a very fair uh statement and what apis really allow is scale and speed right i mean 50 years ago you could walk into a bank and and sign a piece of paper and say you know pay x or or and and that's how all money used to move there weren't that many computers 50 years ago right everybody was still paper based yeah 70s or maybe a few computers but certainly not a lot so 50 years ago the computerization of like u.s banking really happened in the 70s it was like you know it started in the early 60s the the first computers the i think the first 10 ibm mainframe sales uh went to like the department of defense of different areas of like the military and uh and insurers and then very soon after that like banks right um you've got to remember up until 1960 the word computer was a job description for a person and what that person did was just add numbers in a ledger and the place that had the most computers was banks like if you were a large bank and you had to produce your end of the quarter report you know people would write it into ledgers and ship the ledgers over at the branch you would go up to regional headquarters would then add it up there and regional headquarters would send it to like the big city and they would add it up there it would take like a month to add up all these numbers on paper right so as soon as electronic computers became available banking execs were like i can take this you know room full of 100 people writing on paper and replace them with one machine which is only half the size of the room sold right and so 60s and 70s that's you know pretty much all the large banks in the u.s got in computers right now now bringing it back to where we're at today so we get to go on nostalgia and computers and banking and all that for all long deep history buff oh and i am too so i it would be a fun conversation but if we were to try and keep on topic and not do too many rabbit holes so you did simple and then that got acquired or sold out to bvva you did that for you stayed with them for a period of time working with that and then you said okay apis came out i can now where it took me forever to and learn a lot of mistakes and figure out how to do my own bank now i can simply do the apis and be able to make or make those connections and hook up without having to do all the background work so you have the idea and what made you decide was uh you know because you're working at the time of bb bb ba and if i can say it right and you know why not go pitch it to them or you know what was the decision between oh no no i did them or doing it on your own i i kind of like i said i tried to do everything wrong once before i do it right so when i heard the idea at bbva i was like let's let you should do it and they were like well we don't know how i was like i'll write you a document i'll tell you how to do it uh and i did and they spun up an internal ventures team to build this as a kind of an internal venture within bbva they asked me to be an advisor and a year later i was running that business so i left simple and moved to the parent company and built two api platforms one in europe and one in the us and we built it and we launched it and i spent two years of my life doing that and even now right like if you go to the industry press that they're touted as big successes but what i quickly realized was i could build a tech but i couldn't change the bank right and i couldn't change the bank's culture and processes and strategy and compliance and risk and legal and so while where a customer could spend two weeks integrating into the technology and be like technical integration is done we're ready to go live i'm like now starts your two-year journey with our risk and compliance system at bbba to get you launched right and that doesn't work in today's world i'm not sure it ever worked but definitely not in today's world right like everything about innovation now is hyper competitive and hyper speed for a bank launching a new product is a three year journey for a startup launching a new product is like a three week maybe three months for a complex product right you can't afford to wait that long so i kind of had to tell all my potential customers while i was at bbva to go somewhere else right because it will just take too long with bbva that was frustrating as health so i left bbva thought about what to do with my life and realized that i still wanted to solve this problem right i still wanted to make it easy for anybody who wants to innovate with money uh payments funds flows whatever it is i wanted to build a platform for them to do it quickly and easily and so i built cilla now the difference with syrah is that we are a startup we're not a giant behemoth we still work with banks but we have one partner bank and we operate as an ap api layer on top of them we found a great bank who's able to move much faster and it's a small bank based in memphis tennessee so you know they just move faster but but also we encapsulate a lot of like the compliance and risk and legal and everything else that you need to do we have built api capabilities to do that automatically and they've also built in-house you know processes to manage that um so most of our customers never even need to interact with our backend partner bank right we act as the api layer and the technology layer and i think our record now is we had a customer go from discovering cilla to being live on the platform in production in 20 days and compare that to what took josh and me three years uh at in 2000 you know between 2009 and 2012 right so the so what we do we do very well and we do it very fast and we are very efficient at it uh at a level that a large bank uh could never even dream of doing um or any large institution i think but especially not a bank and we're very early stage ourselves we just got launched october last year but we are growing nicely uh launching a whole host of services and if you're familiar with it we do identity verification linking of bank accounts and payments uh via ach right now and soon wirecards and you know other payment capabilities but we encapsulate that all into a very easy platform on top of which you can build your products and services and uh i mean i can talk for hours about seller or any about this but i maybe you know i'm sure you have some questions so no so you did that and you know one of the things i think we talked a bit a little bit about is you know if you're to go so when you did simple and you built it up and then you had you know i think that you mentioned um you had you know you had some late stage events for investors that came along and you know the the without enough cash reserves and there was some there re motivations for selling the company you know selling the company or with simple.com you know what was the kind of the lessons you learned or you know as you kind of said okay we're going to do another startup we're going to do this differently you know was it hey we're not going to take on investor dollars was it we're not you know we're going to be careful of who we hire or you know who i partner with or all the above or you know kind of what was that hey if i'm going to go back into kind of doing not the exact same business but a similar industry trying to do something different what were some of the lessons you learned between hey i did this the first time and now i did the second time yeah so ah so many right um one of the things that i like to kind of think through like what we did right at simple right like you know the thing that happens with this joke that you know generals are always fighting the last war um and i want to make sure that not only do i not make the mistakes that i made at simple but i also do the things right that we managed to do uh at simple right i think we had an awesome team at simple there's at least half a dozen if not a couple of dozen startups started by ex simple uh employees um and and uh we had an amazing team and i'm super like focused on making sure that we keep the an amazing team because especially you know uh as you get bigger it's not about you anymore it's about the team executing and of course you want to have processes of course you want to have technology but ultimately people are super important so i think that's one thing that we did right before and i think we are doing it right again now um the uh the the thing that ended up happening with uh with simple was that it took us so long to launch and and this is where the remember it was very early days in fintech nobody anywhere in the us and maybe anywhere in the planet had started a bank before and it took us so long to launch that a lot of people just wrote us off as vaporware and not our customers because our customers actually stuck with us throughout the whole thing but like uh not but especially in the investment community and the uh kind of the end result of that was that once we finally launched we had to climb a wall of sort of negative expectations that people were like what those guys are still around we're like yeah we actually launched and we're growing nicely and we have a customer base and an interesting business people are like you must be kidding me right like i thought that thing vanished like two years ago i'm like no no so that's that that was the you know the uh kind of the uh the there's the upside of the hype cycle but there's also the downside of the hype cycle right and we managed to get ourselves caught in the downside just as we finally launched um product market fit wasn't that hard i mean in industry overall is amazingly uncompetitive in the sense that a lot of banks large banks are rolling out innovations now which were things that simply did eight years ago and i'm like really took you eight years to copy that damn man what were you doing for the last seven you should have done it like 10 years ago um so the the it took a little bit of work to get to product market fit but not that much like six months after launch all the metrics were beginning to look up and to the right but convincing investors of that was very hard and so one of the lessons i learned is that once the investment community writes you off getting them to rethink the kind of the consensus there's a herd mentality right when you're the golden boy and everybody thinks you you can almost do nothing wrong once you people write you off it goes the other way just as bad no that's i think that's across the board whether it's bank or anything so i think it's interesting when you talk about herd mentality because if you take it you know and and for people you know what you always want when you're trying to do investment rounds is to get a lead investor right because if the lead investor he does the most due diligence the most work and usually somebody reputable or a bigger person and then the people come along and say okay well if he's invested or if he got a good lead investor ever makes opens up all those doors you know much more easily but if you have a difficulty or if those lead investors fall through or otherwise it can make the job much more difficult because now they're saying well why aren't they investing or what's wrong with them so i completely get that so one question and you know not to jump too much topics so you you built the first company you know simple.com ended up selling it off making a good return now you're on to you know selling money and doing that so you know would you is he based on you know doing the first one and building it up and selling it off is a projection for still money that you want to try and replicate the success and get a good return for investors is it hey i want to build this i want to keep this and it's something you want to build for the long term you know kind of where do you see the trajectory of the company going well so i think the opportunity size now is is much much larger um if you look at it uh the kind of the over global advertising industry right the same the space that facebook and snap and google all of them make the revenue from advertising that's like a 600 billion industry globally financial services as an industry is 15 to 20 trillion in annual revenue it's the one of the largest industries in the world and that makes sense when you think about it right like the world isn't built on advertising it's built on like agriculture and transportation and construction and finance and things like that right those are the building blocks of what people do advertising is just like a thin layer on top right um and the world of finance has not changed much in the last 20 30 years everybody from paypal uh which was one of the first fintech startups 20 21 22 years ago from paypal to stella everybody combined is not even one percent market share of that you know 15 20 trillion uh the the money is all still at the banks and they are old outdated they have lousy uh customer service i mean nobody like find people who genuinely love their bank and i'll be surprised at that right you can find people who love facebook you can find people who love twitter love gmail also find people who hate it right but find people most people when it comes to their large bank are like whatever they work most of the time i put up with it right and i'm like that should not be how one of the largest industries in the world works right so there's a massive opportunity for innovation and i think cilla could easily be orders of magnitude larger than uh than simple and there are right like there are companies like paypal stripe square very large companies which have been started in the last 10 years even and who are still growing rapidly even 10 20 years after they were founded just because the space is so large no i think that i i'm in agreement with i think there are a lot of industries that eric could do it's a it's shocking or how bad so many industries are customer service and doing things well and i always you know and i've talked about on the podcast a couple times before but legal industries which is i'm in first of all all lawyers have a horrible reputation and you know everybody has a lawyer joe but even beyond that you know you look at maybe a different industry but you know a lot of people at some point in their life use lawyers or need lawyers or otherwise encounter with them and yet the average on that you know for a lawyer in our industry is you know anytime you make any sort of a correspondence so email or phone call or text or anything it takes a lawyer at least three days to get back and a lot of times up to five to seven days and you're saying these are people that are clients or want to give you money or anything else and they just are horrible so i think that there's a lot of and i think financial industry in a large long large way is a lot of the same things it's right for destruction disruption a lot of things you can do to change it so well we could go on and go down a lot more rabbit holes have a lot more conversations and i'm sure at least the two of us enjoy it but everybody else would probably start to wade so as we do that as we start to wrap up the podcast um i always ask two questions at the end of the podcast so i'll kind of jump to those now um but the first question i always ask is and we've kind of hit on maybe a bit throughout the conversation but we'll ask it anyway um what was the worst business decision you ever made uh worst business decision i ever made um probably to sign a term sheet with a private equity firm um that came back and rebounded on us badly at simple and uh it eventually led to kind of like uh you know the the us selling the company which was a very successful sale don't get me wrong but it wasn't something that we were planning on when the the whole process started so i think the lesson i've learned is to really understand your investors and how they operate uh and you know venture capital versus private equity it seems it might be a distinction that kind of lost on some people it was to me nine years ago now i understand it very well uh vcs just operate differently from pe shops okay no i and i and i think you know it's not quite as bad maybe it's more like as you say you know kind of an investor i would say a partner is almost like you know finding a partner of a business is like a marriage in a sense you spend as much time with them you probably have as many fights with them you have to deal with them on a day-to-day basis and you know and everything else and and if you get divorced it's just like having to separate all the assets of the business but investor you know not quite to that same level but i still think that you know you need to sometimes you just you know you look at money as green right and you know money is always a good thing you know you always are looking for money to start up and trying to get things going but i think that you know choosing a good investor as opposed to any investor that has the money can make a big difference in the trajectory because as you take all money has attachments and they can be good attachments and they can be worthwhile or they can push you and your business in a direction that you don't want to go or shouldn't go so i think it's a good lesson to learn is you know sometimes money is not you shouldn't take the money you got to make sure the money you take is the good money so now as we jump to the second question i always ask is so talking to someone that's just getting into a startup or small business just wanting to get going what's the one piece of advice you'd give them make sure you're ready for it and be prepared because it's a long hard tough road but be incredibly stubborn right like if there never at least you know at least half a dozen times at simple well i was just ready to give up and just be like we can't do this like this is just not doable right like there's so many kind of like you think everything is fine you have it all figured out and out of left left wind or whatever like you just get this like massive shock and you're like everything i spent the last six months working on throw it away start again right um and and that is you know the the only reason we succeeded is because we just kept at it right like we never actually gave up even though uh and this is where having a good co-founder is useful because um many times i persuaded josh not to throw in the toggle and many times josh persuaded me not to throw in the towel at simple right uh we were never all three co-founders ready to give up at the same time thankfully so we never did right and and that i think is it's you know it's just raw stubbornness at some point is is what you need sometimes to just overcome right and i'm in agreement i think that a lot of different you know and and sometimes you have to gauge your stubbornness up hey sometimes we need to pivot or we need to make an adjustment so i don't think the stubbornness comes that hey i'm going to just bury my head in the sand and never make an adjustment but i think you have to have enough tenacity that to realize everything's not going to go your way you're going to have to be able to weather the storm and understand it and adjust it and everything else and if you don't have that tenacity or that ability then you it's going to be very difficult if you're ever going to build a business so i think that's a good piece of advice so well as we wrap up people want to check out your product they want to invest in your product they want to be a customer they want to find out more information or just want to reach out to you what's the best way to connect up with you guys uh the go to the website uh cillamoney.com that is s i l a m o n e y dot com uh we're also on twitter uh at uh sila money and uh we're also on instagram um and you know yeah i'm i'm very active on kind of every social media platform except facebook um and so you can you can look me up as well uh but of course you know as a as a brand we have you know we have a sign up where you can uh on the website you can check apis read the docs you can start developing and you can uh you know you can just visit stella money and and check out the product all right well i encourage everybody um to make sure that you check out some money get connected use a product invest in it make it a success and everything else so um thank you again coming on it's been a pleasure it's been fun to talk to you and to hear your journey um for all all of you that have your own journey to tell and would like to come on the podcast to tell us feel free to go to inventivejourneyguest.com and apply to be a guest if uh and if you're a listener make sure to uh click subscribe so you can make sure to hear this episode and all all the new episodes that come out and lastly if you need any help with patents and trademarks feel free to reach out to us at miller iep law and we're always here to help thanks again for coming on uh it's been a pleasure it's been fun to hear your journey wish you the next leg of your journey as good as the last one and we'll have to see how things continue on for you so thanks again for coming on thank you for having me English (auto-generated) All Sales