← Becker Business
Becker Business
Building Secure Payments Infrastructure for Private Markets with Todd Sorrel of 6lock 6-3-26
00:25:48
Loading summary
Transcript30 lines
- [00:00]
Scott Becker
When I found out I was going to be a parent, I immediately felt a lot of anxiety and worry. So I went on to BetterHelp to try to look for a therapist to help me with that.
- [00:09]
Todd Sorrell
My relationship with my family and with my boyfriend and with myself were suffering. I really needed help. I was ruminating a lot. Really getting those thoughts out to a therapist and getting feedback was just life changing. Discover what BetterHelp online therapy can do for you and visit betterhelp.com today.
- [00:31]
Scott Becker
This is Scott Becker with the Becker Business and the Becker Private Equity Podcast. Thrilled today to be joined by a brilliant entrepreneur and leader, Todd Sorrell. And Todd's going to talk to us about his company, six Lock. How he got started, what drove him to do it, what solution or problem they're solving, into a lot more. To Todd, can you take a moment and introduce yourself and tell us a little bit about six Lock and what led you to starting six Lock?
- [01:00]
Todd Sorrell
Yeah. Hi, thanks for having me. This is great. Happy to be here. Yeah. I'm Todd Sorrell, like entrepreneur here in Austin, Texas. My background's been in payments and software for the last 26 years and I'm CEO, one of the co founders of Six Lock, based here. Six Lock is a platform, it's a payments platform focused on security ident payments for the private market space. So private equity, venture capital, hedge fund, we serve them on really that last mile of payment activity. So just think about distributions and capital calls, deal side and also just service provider payments. But yeah, our platform really helps folks really just stay secure in that measure when they do go to execute capital events.
- [01:47]
Scott Becker
Fascinating. And talk a little bit about who are the other parties in this business. I see companies like Elkate, but that's different, isn't it? Or Carta, which is different. Talk a little bit about what you're right on.
- [02:00]
Todd Sorrell
Yeah, I think about Carta or even like Juniper Square and some of those others. They kind of moving more into like in the fund admin role. And in that role, you know, they're performing functions not just as like a CRM where they kind of got their start, but they're going a little bit further in functions like compliance reporting, performance reporting, SEC filings, There's a lot of compliance, aml, BSA stuff that they're trying to do too, you know. And so we actually complement them really well. And so we kind of come up alongside them and really do the secure payment side of things for them in a complimentary fashion when it's time to execute a capital event. So yeah, Certainly very familiar with them. They, we kind of see them as partners.
- [02:41]
Scott Becker
Fascinating. And take a moment on sort of how you're growing. And when we talk about sort of verified money movement, what does that mean in practice? And why is what you're doing so much more effective and so much more integral to what funds are doing today than the traditional ways in which they had done some of this?
- [03:03]
Todd Sorrell
Yeah, verified money movement really just, it just means peace of mind when you need to send funds to a trusted party. Verified money movement is something that's really gaining a lot of steam today around the idea of before we send money, how do we verify things? What goes into that? What does that mean? And so traditionally, what we've always done is we've done callbacks and we've sent emails with banking information, and we call and we verify identities around who they are and who they represent. A lot of these are just traditional, pretty human measures of doing things. And so today, in kind of the AI world we're in, and bad guys have AI too, unfortunately, a lot of the human, traditional methods of doing this are, are being spooked. And social engineering is a big part of this when you think of that. So, you know, when you think about verified money movement, we're just going a much further than, than when you would, anything you would experience today going through your bank. So if you think about going through your bank today, you go to your bank to send a wire out today, they're like, hey, Scott, great to see you. How can I help you? You show an ID, they're like, okay, I need to send $100,000 to a cousin in another city. The bank is going to look at you and say, well, great, give me all the sensitive data of your cousin and we'll fire off the wire for you. And you know, and they're not, they're not, they're not verifying it. They're not checking to make sure that is this going the right location or do you have everything right because they want the risk to be on your shoulders?
- [04:37]
Scott Becker
No, what's fascinating, what you're talking about is because I have two different experiences in sending wires out, often to private equity funds or venture capital funds that I'm an investor in. And the intuitive experience is this. At Fidelity, I've had the same people I've worked with for a very long time. I send them the message, they get the message with the wire transfer instructions, what fund it's going to, who's it going to, and there's somebody from their office that calls to confirm with me that this is actually me sending it and where I'm sending it. And I have a relatively efficient process. The contrast is I do something similar with Chase, JP Morgan Chase. And because it's so non intimate and so not automatic or so not, however they do is always a. I am always working for days to get a wire out of Chase because they've made it so challenging for the types of reasons that are maybe good reasons, but it's literally become impossible. So I send all my wires for these types of things. Exactly. Out of Fidelity and not of Chase because they've made it impossible. And so you guys have found a way to simplify a lot of that and make it very secure is what it sounds like.
- [05:51]
Todd Sorrell
Yeah, that's exactly right. I, I think a lot of that friction that you're experiencing on the Chase side of things is probably very intentional. Again, the verification on the banking side is very manual. Like they literally have people in the back office and their sole jobs are to make sure that like when they receive Scott Becker's instructions, they want to go over that again and again. They're checking everything out, they're looking everything over. They may call you back. It's, it's really like, it's, it, it's just, it's a lot of surface area. We believe it's a lot of surface area for fraud. I think another point too in this is that you should ask your banks, when was the last time y' all invested in securing wiring technology around fund flows that are maybe going outbound or inbound? For me as a client, whether you're on the consumer side of things or on the business side of things. And six lock really sits on this B2B side of things particular, you know, really honed in on private markets. But you're right though, they're just, they just, they've underinvested in it and frankly it's not, they're really their business. If you think about it. There's loans and deposits moving money. They do too. But it's really, it's really a supplemental type of product that they give you out. Our whole thing is like, look, we sit at the corner of Identity payments insecurity. 6 lock is really designed to make this whole, this whole process of sending money very fluid. 6lock is an infrastructure for companies that want to get out of the way of the fraud attacks and the fraud vectors. So for you, it would just be sending money through Fidelity. Would be connecting your Fidelity account to 6 lock. We verify you. If it's an entity, the entity and your bank account. Then you can invite others to the platform. So therefore we can start seeing the other side of people or entities that you want to send money to once they come on our platform. We do our verification verification. We connect your bank accounts from there. You've really created like a financial network. So to say that you can send and receive funds. I can't even let you know when the funds landed, you know. Pretty sure the banks aren't telling you that today.
- [07:50]
Scott Becker
No. That's fantastic. What happens is I have such a dual experience today and what's happened is you mentioned this development of how much AI has changed the fraud landscape. And I'm seeing this so much right now between we've worked with American Express for a very long time. They've been so good to work with recently because of the fraud landscape. Things are getting more challenging there, you know, and, and to their credit they're trying to defend and, but, but it makes for such a challenging situation trying to deal with some things at, you know. And I contrast the sort of experience I have at Fidelity versus Chase and American Express currently with how different they are because of how much they're all reacting to fraud. And your point, your point on some of them have over invested in it, some have under invested in it and where they've underinvested in it. You're relying so much and you're talking to so many people and you get, you get you know, transferred to this, to the fraud control unit, to the guard services unit, that unit. And it's brutal. It's become literally brutal. And you're spending like time on these things for relatively what should be relatively simple transactions. I'm spending an incredible amount of time in this stuff because they've not invested like you guys have invested. Talk a little bit about as a founder, a CEO, how do you work yourself into the ecosystem to where people see the solutions start to work with you? Are your core customers private equity funds, venture capital funds? Who are the core customers that you're working with?
- [09:22]
Todd Sorrell
Yeah, for us Six Lock is a B2B payments platform and it's a purpose built platform which means all of the features enhancements and really just that overall user experience is really is designed to support private equity, venture capital and hedge funds. And so we're purpose built for these guys and this private market space is really important for us. Like we've seen fraud really move from like targeting grandma and gift cards to like moving up the chain to like large, more high value amounts of money. And they're doing this because now they have social engineering tools in a nefarious way of course through AI and they can do that. So for us we just, that was kind of like one of the things we saw like three or four years ago was this bubbling up or this increase in technology. But the way we've always done things stayed stagnant and flat and like it has been a lot of improvements around that. So for us really just seeing that the private markets had a completely vulnerable, vulnerable in this and they all kind of do it the same way. I mean if you talk to, you know, your very large institutional serving private equity firms way up market, even down to your emerging managers, everyone is pretty much doing it the same way. Very manual, very much callbacks, very much verification via email. We know business email compromises is a hack in a way. We don't know if we trust those or not any longer. So look, six Lock is really just coming at the market saying hey, private markets are just a better way to do this and you are in their sights like they really are seeing how much money you're moving on a daily weekly basis and they're, they're coming for you.
- [10:59]
Scott Becker
No, it's a fascinating perspective because your point is even in watching stuff like Intralinks, Carta, some of these other services that work side by side with private equity funds, they've really changed the game over the years from how much manual this was used, how much manual activity there was in some of these things compared to what there is today. And you're doing something similar on the payment side. You now you've had great success in this, you did something similar in the insurance business, you know, not very long ago over a 10, 12 year period. Talk a bit about, you know, what you're, what you're seeing here and what lessons as a founder and I love the fact that you're really developing solutions for a very specific audience, for a very specific group which I think has tremendous value in our niche driven world. Talk a bit about what lessons you've, you've gained over the years in developing services like this and now really focused on the private equity hedge fund, VC space.
- [12:03]
Todd Sorrell
Yeah, no thanks for that. I think for us some of the lessons over the years that we've learned. My last company was called Epay Policy. It was niche, vertically focused on commercial insurance. It was very multi segment. So we were serving different customers that had a little bit different needs but at the same time as a platform play because we gave UI and user experiences that were that served the different segmentations of commercial insurance. So that could be like policyholders on the retail side, wholesalers, underwriters, there's premium finance companies that need to be a part of this too. And so one of the biggest learnings for us, or coming away from that was just how do you lean in and listen to them? So much so that the feedback that they're giving you from their experience with the company with EPAY Policy would help drive our future technology roadmap and what we build for them in the future. And I think one of the learnings that really led that really bridges over to six Lock really well is really just the security side of things, right. We started to learn more and more about like security is meaning more and more about identity, who is behind that payment and how do we line ourselves up with the regulatory winds that we're seeing these days. Coming down through FinCEN, you know, which is a bureau of the Treasury Department, United States, trying to fight, you know, fraud through money laundering and also terrorist watch lists. You know, how do we line ourselves up with that and how do we take our learnings there and leaning into our customers and bridge that over to the private markets here, which, you know, we found that, you know, they really have a huge problem on their hands. The way they used to do it is not going to work going forward. So how does 6 Luck serve them in the best way to. To provide them with the payments platform built around security and identity? And I think that was a big learning for us, was just like taking what we have from. From EPAY policy, bringing it to 6 lock from really from this security and identity side side of things also too, I think what was a, what was a big deal bringing from EPAY policy to 6 lock as well was the idea that multiple people have access to a platform, but there has to be like a lot of reporting that needs to come out of that platform to serve needs that have long tails on them and those, you know, in the, in the world of private markets is off is. Is. Is odd or office due diligence. And so things have to be auditable, things have to be reportable immediately out of your platform. That was a big deal. We had to learn really how to put a lot of reporting a lot of functions and features immediately in our platform. Probably reserved more of the 3 or 4.0 version, but we had to pull a lot of that in to serve them immediately. And the demand was obviously very high for that. But it was, we felt like that was just had to be more table stakes for us, we had to serve
- [14:51]
Scott Becker
them in six lock and talk a little bit about. When you look at today's private equity, venture capital, hedge fund world, you see so much movement. There's an explosion of the number of funds, some of the largest doing really well at the mid market, the small market just all over the place in terms of results, but all facing similar problems and not wanting to have 10 people on staff dealing with payments back and forth. What are some of the operational challenges that they're facing in dealing with some of this stuff that they used to probably have to spend a ton of internal people power or labor power on to just make sure it all went right. What are some of the operational challenges that you're watching?
- [15:34]
Todd Sorrell
Yeah, no, that's, I think you hit the nail on the head on that. You know we, what we've, what we've seen in the past is around operational challenges. In the past we just threw more bodies at it. It was more of just FTEs that needed to be added to the org to really face a lot of the challenges that came across. And those can be great things and good things too. A company's growing, they're adding a new fund, they're bringing on new invest or hey, we've grown to a point where adding institutional investors, you know, those all take operational and organizational changes to make happen I think in a really good way. I think today one of the biggest wins they're facing as far as an operational challenge, really kind of keeping up with some of the regulatory changes that are kind of coming their way. You know, FinCEN has recently issued kind of a ruling around know your client, know your business or your customers in a way that is going to make them responsible for all of their flows, knowing where they came from from an anti money laundering standpoint. And that starts like in January of 2028. So our job is to really kind of like create a best practices like platform within six lock as an experience so that they're prepared for that they have everything they need in one place, in one stop as a, as they dive into our platform and use us. Right. So another thing we're seeing too, these are kind of some winds of change I think that, that we're seeing out of some of the operational challenges that are, that are coming this way too is just the fund administrators. They're certainly a part of the life cycle of funds and life cycle of private equity firms of course and they provide so much more now than they ever did. They have a list of things that they do from compliance reporting, performance reporting, budgeting, forecasting, accounting, but also too on the regulatory side of SEC fund filings and all these odd reports and such. It list goes on and on and on. And I think for us too, it's just to say, hey, look, let's how can we help you keep up with all of that too? How can we work with your fund administrators? So again, going back to EPAY policy and tying some of our early learnings, how can we bring in fund administrators to our platform to interact with us and their customers, which are the gps, in a seamless, easy way when they need to share information back and forth or have an eye on fund flows that those are. Those are things we're really kind of working with today as we innovate forward.
- [17:58]
Scott Becker
Literally. Remarkable what you're doing. Now, there's an old adage that if you want to hire the best people, the most trusted people, you go to one of three universities in the country, one of which was always Texas A and M. Can you tell us whether that's true? Is that as good a place to hire from and build people with as any place in the country?
- [18:24]
Todd Sorrell
I feel it is. But Scott, I'm totally biased. I'm a graduate. And we go there to look for talent. And we go there to look for talent because the A and M puts out a student that is very loyal. They put out students that have gone through a pretty rigorous program within the Mays Business school. We know that they're equipped and ready to go. I think a lot of the intrinsic things that A and M provides them is the idea of community serving one another. A and M is really tied into kind of this idea of soldier, statesman and being a servant in the public. So their idea is to send young people into the marketplace to serve their communities and serve businesses and others. And that's attractive to us. And being a graduate there, I'm still very connected to it and still think it's a very special place.
- [19:17]
Scott Becker
I mean, the Wall Street Journal and its periodic surveys and discussions of this echoes your thoughts very much. So in terms of hiring long term great people that do what they're supposed to do and think and are brilliant and do great work, A and M is always in the top three, the top of that list. So I respect it immensely. Take a second, Todd, and sort of looking ahead three to five years, any thoughts on what money movement capital cost distributions will look like in private markets as you guys continue to evolve in what you're doing with the private markets?
- [19:51]
Todd Sorrell
Yeah, no, great question there. It's I think you and I can safely agree that it's going to be less human. I think we can look forward in the future three to five years and say what is a theme that we can see moving forward that's going to be more of or less of? I think we're going to see less human interaction within the within money movement. I think that we're going to see more, you know, a lot of it's Jetsons, a lot of things we used to think and dream about and see movies about. Like it's, it's reality now. So we kind of think about how do we move money accepting the fact that like agentic AI bots accepting voice commands needing to move money are going to be move money between another agentic AI bot on the other side. How do we, how do we make sense of that? How do we work through that? And so what I mean by that, it could be a CFO of a private equity firm really working within our platform. And maybe it's, maybe it's voice command, maybe it's not, but it could be. But it's, it's prompt. So it's more of like a prompt payment that they're giving this instruction set to six lock to, to execute on. But it again, everything that we're, we're reading into the voice and we're putting into our system ties into the fund that they're targeting the amount of money that needs to go out and where it's mapped to all the LPs tied to that. Or on the deal side, it's tied to a cap table or founders that they need to pay off, that kind of thing. Something else we're watching closely too. You know, I think is interesting to me is the fact that the genius act on the Trump administration was passed and we have the Clarity act coming out too. Following that is the, is the, is the crypto phenomenon that's really happened. What does that crypto dynamic due to payments going forward in the future? We're keeping a really close eye on that. You know, does the legislation that was passed around crypto, does it last to the next administration? I don't know watching that very closely. But what does that do for moving money? That's a fascinating thing from a technology standpoint. It's certainly very much there. You think about on chain Bitcoin really has lightning and other rails that we can be used moving money. But we also have to like does that fit our marketplace? We have to ask ourselves good questions too and say, hey, institutions are high net worth Individuals or hey, family offices, would you be comfortable with like a digital wallet if we moved money this way? And so those are all questions we're asking too. As we go through the process of looking three to five years down the road, we have to prepare for it. We have to model our technology roadmap in such a way that it does line up with the demands and trends of what we're seeing of technology, especially within B2B and private markets for our space in the next few years.
- [22:43]
Scott Becker
No, I think it's an absolutely fascinating perspective as I sort of go through this with different banks and institutions. You know, in one place, I feel like I'm transferred from person to person to person through different fraud control units to get a wire out. You end up really welcoming this concept of being a little bit less human, even though that's so interesting to say. But we all appreciate that today, like when I have to. What I'd rather email to do something than get on the phone to do something, whether it's something small or large and whether I'd rather plug it in and pay it by phone in the old days when I did everything by checks, much rather do it in a more automated way today, as long as can do so safely and securely. It's certainly where I think people want it to move, even though it's a scary frontier in some ways from a different perspective, but it's, it's. I mean, I can't even tell you the amount of people I need to talk to to get a wire out of Chase. And I love JP Morgan Chase. I've been a customer for a very long time. They're terrific. But the amount of people I have to talk to makes it so I literally stopped using them for that.
- [23:48]
Todd Sorrell
Yeah, no. I saw an article this morning. Jamie Dimon was quoted from someone interviewing him. The question was about, hey, are you worried about crypto? And his statement was, I'm not really worried about crypto. What I'm really worried about our fintech companies coming up and taking parts of our business away. And that really, that resonated with me. It's like, yes, that's kind of what we're doing because we have the technology and the Rails and the ability to serve where we see a problem that's not being served currently. So that's. Yeah, I think he's right on the money.
- [24:20]
Scott Becker
And that is so fascinating. What you're talking about there is sort of like this evolution from a point solution to a platform where you've got a major, major institution that's doing a piece of their business in a way that's suboptimal because it's not the core to their business.
- [24:35]
Todd Sorrell
Right.
- [24:35]
Scott Becker
So you folks go in and, and really go after dealing with that part of the business where there's clearly inefficiencies. I mean, I, I, I, I see what you're talking about so clearly from my own vantage point without living in this like you do. And I see it so clearly how this is not decor. So you don't have a point solution that does this piece of it so much better and you've got to expand to make sure that's a platform, not just a point solution. So you don't get point solutions out of business.
- [25:03]
Todd Sorrell
Yeah, no, fair enough, right? Yeah. And that was, I think that's kind of one of the early questions we had asked ourselves at one point, like, hey, is this a product that we can build a company around or is this something just like a feature that if someone else can come along and just build like a Carta or Juniper square. And so we really felt like, well, we can really build a product around this and I think it's going to lead to other people products down the road too. For us that's really exciting too because like look, fintechs have all just born, been born out of the nature of that because us banks are doing a lot of things really just subpar, they're not doing them well. So fintech companies are born out of coming up saying, well, I'll do credit card issuing better than you. Where there's chime, I'll do, you know, money movement for you. And that's six like so it's interesting. You just see how like, you know, you know, it's classic, you know, innovators come along and say I think, I think I can, there's a problem here, I think I can do better with that.
- [26:02]
Scott Becker
We absolutely love Todd, what you and your team are doing at six Lock, we understand it, we love it, it's fantastic. I can't tell you much. I appreciate you joining us today on the Becker Business, the Becker private equity podcast. What a pleasure to visit with you.
- [26:15]
Todd Sorrell
Thank you very much. Appreciate you having me.
- [26:20]
Wayfair Announcer
Hey there, it's Wayfair here where delivery and setup are as easy as a few taps on your phone. You're relaxing in an old hammock scrolling Wayfair's app when you spot it, a brand new patio set. Next thing you know, Wayfair delivers it right to your patio and sets it up. Oh, you need a new grill, too. All right. Wayfair's got you covered. With Wayfair's room of choice delivery and fast expert setup on qualifying orders, life gets a little easier. Visit Wayfair.com or the Wayfair app Wayfair
- [26:47]
Todd Sorrell
Every style, every home.