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Fintech Leaders
Nigel Morris, Capital One & QED Co-Founder - Transforming Financial Services for a Billion People
00:46:08
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A
I have a two by two box that I have with my portfolio companies where I ask the CEO. On top of the often 770 page deck that's sent out lines and boxes and graphs is a one pager that says what's going really well, what's not going well, what's keeping you up at night? Which might be different to what's not going well and what decisions do we have to make today? When we invested in Nubank 7 eight years ago, we didn't fully internalize how big an opportunity Brazil would be and then coming out of Brazil, how big an opportunity Mexico would be. Banks constantly confuse loyalty and inertia. It's very different. You can have lots of stickiness, particularly in a non open banking world where people can't be bothered or it's too difficult to switch and particularly to bring your historic data over to a new provider. So they stick around and people assume, incumbents assume that's because they're dearly loved. But yet they'll have a net promoter score that's 12.
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B
Welcome to FinTech Leaders. I'm Miguel Almasa and I'm fascinated by the company's reshaping financial services. Which is why I co founded Gilgamesh Ventures, a fintech fund where we have backed almost 50 fintech companies worldwide. And over the last five years I've recorded over 350 conversations with the top leaders in fintech to extract how they think, what they've learned and insights that can be helpful to builders in fintech. Today's conversation was actually recorded about a year ago in October 2024 but I wanted to republish it because it's full of timeless and high relevant learnings. I sat down with Nigel Morris, co founder of QED and Capital One. QED is a global fintech venture capital firm managing over 4 billion in assets under management has backed numerous amazing companies including Credit Karma, Nubank, Avant, Sofi, Klarna and many more prior to QED. Nigel Co founded Capital One in 1994 and the bank today is the sixth of largest bank in the US and also one of the most innovative financial institutions has inspired countless of entrepreneurs worldwide. First of all, thank you. I know we've been trying, at least I've been trying to get this recorded for close to two years. We both have busy schedules, but especially you and I'm very grateful that you've taken the time and you've welcomed me in your office here in Virginia, close to dc.
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A
Miguel, that's not true. I've been trying to get on your Podcast for the last two years. I had all my people knocking on your door. You had Frank Rotman do this. I think you had a Myers Garrity and now you have to go for the B team, right?
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B
You do what you can. But Nigel, a lot of people have heard about your story. I want to hear early on what shaped you in your 20s and 30s. If you go back and you remember what was driving you back then, what was shaping you, when you think back,
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I think I have to take a little half step back on that a little bit. So I grew up in a very working class family from Snowdonia in North Wales. English was her second language. She never really was that great at English.
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B
Welsh. Did you learn Welsh?
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A
No. She actually really sadly did not speak Welsh around me, which I. Now there's a full circle of now me feeling this, a gravitational pullback to that part of the world. I feel inadequate. I didn't learn that language. Now I was subjected to five years of Latin growing up in English schools, so I can mostly decipher the Latin languages, at least on paper. But Welsh is a very different route. So lots of double Ds and double Ls and Ys and no vowel sounds that you can. So it's much harder language to learn. But I do, I have set myself a goal at some point in my life before I leave this planet to at least get some competence in the language. So thank you for that. So, look, I grew up in a family where it was just making ends meet. And I didn't know, not only did nobody from my family ever go to university, but I didn't know anybody that had ever gone to university. Complete anathema to me. So I was lucky enough to sit an exam at the age of 11 and got into a decent school. And then I found that I had a. There was a. Inside of me, was a pulse, an energy around curiosity of learning things. In my teenage years, while other people were off supporting Manchester City, I was reading Freud and Jung and some philosophy and I. I really thought that I'd end up being a clinical psychologist. That was always where I was leading. I loved the idea of what makes people tick and how do you understand human behavior in a scientific way. So that was where I was heading and I went off to study psychology undergrad. I thought it was a precursor to clinical psychology. And I got to in my second or third year and I started to realize that there wasn't very little real empirical justification for a lot of the theories that we were understanding of Freud And Jung and I rejected it wholeheartedly and became a rabid empiricist with a view that this goes back to Skinner and Thorndike and these people. And it was, if it can't be measured, it doesn't exist. So I was. And I retreated into Applied Math and stats where I felt very comfortable because you have an answer and that the answer is Quadrat demonstratum, where you can read this QED and it's that come up with an answer and you can reverse engineer the equations. So it was so back to the 20s. So what was driving me was I felt like I'd been in a dark, long tunnel without much, without the exposures that I want, that I would have really loved to have had. And as I went to university and as I started to really engage with the world, I just found it absolutely fantastic and amazing that there were all these things to explore. And I think it's even now, as I sit here in my middle 60s, that energy around curiosity and learning is still what drives me the most. So that's. That was what it was. And I think clearly getting some level of financial freedom was important. But I never started off as a businessman. There wasn't ever the FT or the Economist or the Wall Street Journal in the house. And I grew up. My father was a military man and a Daily Mail reader, if you know what that means. And I would tantalize him and annoy him when I got into my teens by bringing home the Guardian and starting to talk about different type of politics. So it's that insatiable appetite to learn and be part of learning that really drives me.
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B
What was your first job?
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A
My first real job was actually coming out of business school. I never really worked in the UK for long. I went straight through from undergrad to the mba. And I was hired when I was at Wharton by a BCG spinoff called SPA Strategic Planning Associates. And SPA basically became Oliver Wyman. And I had offers to go to other consulting firms in the uk, but SPA said you can work in London or work in Washington. I thought, wow, I'll go to work in Washington for a couple of years. It'd be great to work in America. And then I'll go home again. And of course, here I am now, 40 years later, still thinking, I'm going to go home again one day, but we'll see about that. But no, that was my first real exposure to business. And I did consulting, candidly make off, because I didn't know what else to do and I didn't feel I was equipped to actually go and do anything other than try to leverage my kind of research and analytical skills. So consulting was a way for me to kick the can down the road until I was able to perhaps learn pragmatically some of the basics of business. I could. I'd learned how to do them academically, but never in practice. I was. I mean, green would have been a massive overstatement. Naive is probably a better way of describing it.
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B
It's so interesting because you mentioned that realization you had about being more empirical and wanting to measure things. Right. I've interviewed and met so many people who have come out of Capital One. And when we talk about what is special, what was special back then, what's still special about Capital One is being very number driven, measuring everything. They say that the culture is very, in many ways, the personality of the founders. That's what it's sounding to me like that Capital One, the culture is a representation of how you think. Also how Rich Fairbanks thinks.
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Yeah, in oh so many ways. So Rich and I started the banking practice at Spa when we were there. So we're talking now 1985, 86. And this is when specialists were starting to emerge in consulting. Before that it was just people who had gone to good business schools. But we started to learn about banking. And I jokingly say that in those days I didn't know the difference between a letter of credit and a line of credit. And I used to get assets and liabilities mixed up, and I still do. But we were going to school in a very first principles way on how banking works and where money is made. And I reference this often, a book by a McKinsey partner called Lowell Bryant. And the book was called Breaking up the Bank. What he basically did, and this is part of what we did as consultants, was take all of the businesses that are in banking, break them into their constituent parts, allocate not only overhead to them, which is a process that would often be done, but then allocate economic capital, not regulatory capital, economic capital, how much economic capital would you need? And then look at where the shareholder value accretion is occurring and what we found time after time. We worked for Chase and Citi, we worked for Wells Fargo, I think Chemical Bank, a whole bunch of the mainstream banks is that time and time again you would find that economic rents above the cost of capital were being made in unsecured credit and unsecured credit was growing and unsecured credit was going through a renaissance. Where on the one hand you had Fair Isaac, who was Starting to collect 300 variables on every consumer. And that data was very predictive in terms of actuarially who will pay back and who won't and the bits in between. And relational databases were emerging so you could now amass large data sets and then attack that data with using a batch basis with SAS and SPSS type packages. So yes, I think so much of the root of what became Capital One in its DNA was go went back to those SPA days and the training that I had prior to coming into consulting. In my view it is fanatical focus on unit economics comes out of our background in understanding actuarial analysis. And when I was at SPA we did work for several insurance companies talking to actuaries about how they did what they did. So I spend a dollar today and then I will get these returns back and then I use an appropriate discount rate and I can come up with a net present value per customer, which to me is the holy grail of lingua franca of how do you evaluate different ideas? Not LTV to CAC, not other ratios that people use, which are shorthand. NPV is the real McCoy and that's how you should do it. So on the one hand it was that the second thing that we applied was the scientific method of developing hypotheses through observation and through past hypotheses and then testing those hypotheses out in classic Karl Popper language, you would look to try to disprove the hypothesis. Today all too often and clearly in a world of advanced AI, a lot of people just throw a lot of spaghetti against the wall and see what sticks. We were very hypothesis driven. So a combination of this fanatical focus on unit economics and then real A B testing where we did thousands and thousands of tests in real time. I think I once described Capital One as a giant experimental laboratory agar jelly in real time. So any conventional wisdom you would test to see where it worked and where it didn't work and what was what were the when the idea when the conventional wisdom would run out of gas, where it would start to break down. So the learning that came from that was just massive. And that led to breakthroughs in terms of risk based pricing which if you and I went for the same to the insurance company to get insurance on our car, we would get different prices. Right? You're younger than I am, therefore more risky. You drive around in that beautiful red Maserati that I see outside now as I look out of the window and I'm driving around in an suv. We would get different pricing. And we understand that. But in credit cards at that time, 1980, everybody got the same price. $20 fee, 19.8 annual percentage rate. So risk based pricing was one breakthrough. The second one, I think that was really powerful was the ability to put together teaser rates. I'll give you a lower rate for a period of time and balance transfer apparatus so I could move your balances across. And that led to us being able to attract positively selective customers on a giant scale. And the third one is really for opening up the near prime and subprime space. Half of America today can't get access to a credit card from the mainstream banks. And they couldn't in 1988 either. So those three big breakthroughs allowed us to be able to scale. And then at Sigma bank, that led to the spinoff of Capital One. But the DNA, it was very much, I think that if I would add two back to the DNA that is Capital One. And now that Capital One diaspora spread all over the planet. I'm very proud of the people that came out of that grist mill is that it's that relentless focus on getting the analytics right and being insatiably curious and then figuring out how to mobilize those insights with technology, with product, with scaling. BCG McKinsey and Oliver Lemon and Bain would go and tell Amex and Citi and Chase and B of A how to do what Capital One did. But very few of them were able to do it. Not because they didn't have lots of clever people. It comes down to the culture and the people that you hire and the way you manage those people. That is where the secret sauce is. The, the old adage that culture eats strategy for breakfast. Yeah.
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B
And when it comes to culture, what have you learned about how to build it? I mean, you have to be super intentional.
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You have to be very intentional. Because if cultures will form whether or not you like it or not. And cultures will be driven by what you say in part, but much more what you do. So being very clear about what your culture is and what your culture is not. I've seen so many cultural statements over the years, Miguel, that are just so motherhood and apple pie and they're so obvious that they are inactionable. So being really clear. And one of the things I try to work with us young CEOs who are building culture for the first time is say what it is and say what it is not and then give vignettes and examples that bring it to life. And then when you look at that and you stare at it, say to yourself, am I going to embody that? Because if you say that the culture is XYZ and then you don't live up to it, it causes dissonance within the organization and the organization never will really adhere and certainly won't scale. And that's a real challenge. So back to your earlier point. In a sense the culture of an organization is a manifestation, a projection of the human beings that. And it's a big weight on your shoulder to be the embodiment of the culture because you're constantly looking at yourself and what you do every day. So am I living up to that? Am I real? You do 360s on yourself and those things. But often if you, if you become a founder, a co founder of something and it scales massively, very quickly you can become isolated and very quickly you can become detached from your humble scrappy, trying to stay alive roots.
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B
I want to switch gears a little bit, talk about a topic that I know you enjoy discussing and that is the first the unbundling and then the rebundling financial services, specifically in fintech. I mean let's take Nubank as an example. But this is happening all over. They started with a credit card only after seven years they expanded to other products. Now their borderline is super app.
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Right.
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They do basically anything you would want a financial services company to do. Plus more what is it feels like many fintech companies have started exactly that way. Unbundling the big gorilla. But then they all become the gorilla. How do you think about this?
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A
We did a lot of consulting work for the banks pre Capital one in the spa days and it was pretty clear that many acquisitions were justified at the altar of we're going to be able to cross sell products. And almost universally it never manifested. And so many of the M and A deals that are done within banking are much more about how much of the revenue can I hold and how much cost can I take out. That's how it's justified. And so many with a very fragmented banking system. In America with 5,000 banks, there's still huge amounts of consolidation yet to come. Where the end game in classic Michael Porter ways is that you end up with five or six players all with a comparative advantage, only 80% market share. That's where we are headed. It'll take a generation or two to get there. In America, Australia and the UK and France have already got there. They don't have the legacy of state bank structures. So my starting assumption is that left to their own devices, left to consumers will unbundle, will fragment, will cherry pick different products from different financial providers that give them the best service and best pricing. And that should be the base assumption. Banks constantly confuse loyalty and inertia. It's very different. You can have lots of stickiness, particularly in a non open banking world where people can't be bothered, or it's too difficult to switch and particularly to bring your historic data over to a new provider. So they stick around and people assume, incumbents assume that's because they're dearly loved. But yet they'll have a net promoter score that's 12. You mentioned Nubank. The public data on Nubank that they talk through is that their net promoter scores are in the 90s, certainly in Mexico. I don't know how many of our listeners are thinking that their own net promoter scores are, but I know how herculeanly difficult it is to get to a net promoter score that starts with an 8, let alone a 9. These are incredible net promoter scores. So null hypothesis is that people will fragment and will break apart and unbundle. Now then, how do you get bundling to work? And it's true that nubank and entities like Commission Lane here in the US have started with lending. Lending is much harder to start with than debit, which would be Chime, Albert, Current, Monzo, even Revolut, who have got a different, slightly different twist on that. But yeah, so it's much easier to do that because the feedback loops much faster and you don't have this hanging liability of am I going to make money on this customer? Any fool can lend money. The challenge is getting people to pay back. And you won't know that for a long time. And in a way, the, the mecca, the heuristic by which you figure out lending is that by you lend people to the wrong. You lend money to the wrong people and then you make sure you don't get any more of them and you weed them out. And that process, that iteration, that learning loop takes not months or quarters can take years. So cracking that code is really hard. But as David Velez would say from nubank, look, in the end most of the money's in lending and doing that right is really important. Okay, so how do you get. What's the story on rebundling now? There's not that many entities that I can point to that have successfully rebundled. There's a lot of talk, nubank being the poster child of amazing success in an environment where the Brazilian mainstream incumbents did not take them seriously, where the service Levels were massively different. People did not need to walk into bank branches in Brazil that were basically like Fort Knox. And David Dillet talks about some of his own experiences there. People can be serviced digitally, people can be originated digitally and they are very happy with that. The old, the mindset that exists with incumbents that says I need to be able to see you face to face and drag you into my bank branch is rapidly declining and maybe it's people who are my age or older that are still seeking that. When you see the ascension of Klarna and nubank and Credit Karma and Revolut, it's chime. It's pretty clear that's not where that's a thing of the past. And a company like the MIDI where QED is on the board competing against the western unions of this world. So what does it take to bundle? Well, you have to have a proposition that makes sense for the second product where you understand the unit economics a priori and all the customer has to do is press on the button and get it. Sometimes when you're roaming around the web and somebody you see a pop up ad with a company that you know already and they know you already and you say, okay, I'm going to apply for this product and then they ask you what your name is, they already know what your name is and then you go, okay, I'm not going to bother. So you have to make it seamless and frictionless and pre qualified that the customer can get that product and that it's a product that's compelling to them that is really crucial. So you earn the permission to rebundle based on doing a really great job for your customers. It's not something that's a given. Sofi has done a really solid job of it in the us. I watch them doing a good job and many others are trying to. It's easier to sell lending on top of debit than to sell debit on top of lending. It's easier to sell lending products because the consumer would actually like to have your money. Particularly in near prime and subprime spaces where the appetite to take on more debt is in general pretty high. And there it's a question of how do you make sure you lend money to the right people.
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B
When you think of the next iteration of Fintech, what are you, where are you spending your time when you're thinking? Because I mean this is what you do, right? Your team here, you invest in the future of the industry. That's also what I do. I'm sure you have takes on what's coming.
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It's really interesting that a year and a half ago we did a fundraise into a pretty austere miserable maudlin environment and one of the questions we were getting from was where are we in this fintech journey? Are we in chapter two just at the beginning of a series of revolutions Are we in chapter eight? And the low hanging fruit has already been taken down now it's advantage incumbents and we worked with our friends at BCG to do a study and with the we just revitalized refresh that study but basically that it was attempting to answer that question where are we? And I point to two pieces of data that allowed me to be able to sleep at night Miguel Now I do have a dog in the race so I'm looking for confirming evidence to some extent but two things really struck me. One, the size of financial services worldwide is about $14 trillion on a worldwide economy that's about $105 trillion. So somewhere around 15% is financial service some geographies more India for example, some a bit less and where it's less is because it hasn't evolved yet. So NG net 20% of the world is financial services, insurance and banking. When we add up all of the revenues from all of the fintechs okay you get to between 2 and 3% penetration that is 97% of financial service revenues are not fintech. So that would suggest to me that it's hard to believe that this thing has run its course. 1, 2 I touched on net promoter scores earlier as a measure of product market fit and yes the people can criticize the methodology and I'm inclined to watch net promoter scores through time with a constant methodology, with a constant company as a, as the, the best way to see if you're making progr but also just by virtue of measuring it. I mean somebody, one doctor may have said what gets measured gets done, right? And so many if you look at the net promoter scores that are published by the incumbents often they're 5 and 10 and 15 whereas you look at the net promoter scores of the FinTechs and they're 78s and 90s that's a huge difference. Now part of it is because people rate digital distribution higher than branch based distribution that accounts for some of it but not all of it. And these are the incumbents that show their net promoter scores. Watch out for entities that don't one don't measure it or even worse measure it but don't talk about it. And very few of the banks will talk about their net promoter scores or their journey. So we saw there back to the where are, what chapter are we in? I'm firmly believe we're in chapter two now. Then you say okay, so what do you think the future chapters are going to be? Well, I think I point to a number of issues that would be a number of opportunities. One is I think that the geographic expansion of inclusion across the developing world is massive. When we invested in Nubanc 7, eight years ago, we didn't fully internalize how big an opportunity Brazil would be and then coming out of Brazil, how big an opportunity Mexico would be and how financial services has taken the fold there and how the regulatory climate, particularly in Brazil, Brazil partly mumbled on India is so progressive and so supportive of allowing financial service companies to enter and be able to get traction. That speaks to a regulatory body that is yes focused on the fidelity of the system and indeed focusing on making sure that products are good as they face off to consumers, but also focused on inclusion. How do we get half or 70 or 80% of our population to have products in their hands that help them learn, help them grow, give them flexibility, give them power in the hegemonic relationship with incumbents and at the same time actually we can track it and tax it. Shipshore is on everybody's mind. So we see that. We look at Nigeria with its huge population and its educational system. We look at India where we've made several investments that have gone really that have gone blisteringly well with an economy that's on a very different cycle to that of the West. High GDP growth, positive regulatory climate and a talent, quality of talent and depth of talent that's unrecognizable anywhere else in the world. I think that's really exciting. And then now into the Middle east where we are investing. Half of QED's investments are done overseas under the leadership of Bill Salutho, Frank Rotman focuses on the early stage domestically. I think that's really exciting. I think that the opportunities to be able to move to real time payments is incredibly powerful. We have not yet seen seen major mass market wealth management businesses emerge. We've seen stock trading, we haven't seen mass market wealth management that will come. And then on top of all that, not necessarily as a third chapter but more of a galvanizer across the board is leveraging AI to be able to improve the economics. How does that work? Yeah, I can't profess Miguel to say I can judge a different AI algorithm over one versus the other. I Can't judge that. And I don't think that's where the leverage is, to be really honest with you. I think it's very clear that big tech is going to end up developing the best algorithms. They've got the scientists and they've got the data and then they're moving at a geometric rate. But you can see how companies can use AI to make customer contact be much more efficient and effective. And we're seeing that work in real time. I went through an example with one of our portfolio companies where they basically took all the human text, plugged it into an off the shelf AI machine and within five weeks they were coming back with betas where this thing where the AI was answering questions and you can have a human in the loop so people can talk to human if they need to and you can have humans deal with difficult questions and the AI will learn one dramatic change and productivity gain that's coming in the days of Capital one. I used to glibly say we sell the right product to the right customer at the right time at the right price targeted. And there was some truth in that because we were doing direct marketing by and large, direct mail. But you know what? We didn't have 5,000 variations, 50,000 variations of text that we had in our letter. And now you can target the individual pitch to N equals one and that means that product, that CAC will go down, cost to acquire, and all things being equal, the economics will be better. The third category is in writing code where we're seeing open, open source coding support systems. Five years ago, if you were a coder coming out of the top schools, you were demanding huge salaries and they were massively in need. Now we're seeing these engines that support writing code where 80% of the code could be written immediately and then you can have a human being look over it and make it better. So we're seeing that as a productivity game which opens up all kinds of universes. But I really believe that venture is on the, the frontier edge of seeing the third chapter start to, to occur in real time. And I mean I have no doubt that we're very early on in this book and I just hope that I stay around long enough to be able to see the, the epilogue.
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B
Nigel, we have heard a lot about some of the great companies you've backed at QED, but I'm sure, I mean, you've been doing BC for about 15 years, right? I'm sure at the beginning you were green in the space, right? You were coming from a leadership Position traditional banking. But then you started investing as a venture capital. Maybe tell us about some of the mistakes early on, what you've learned that is important for venture capital investing.
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A
Well, look, you're quite right and I don't say this as much now because I don't feel it as much as. But certainly in the early days I would say constantly that I'm an operator masquerading as an investor. When Frank and I and Caribou Honig began this journey managing our own money Post Capital One, when the handle of Fintech didn't even exist, we were applying just frameworks, heuristics from Capital one days to early stage companies. And at that time we found Credit Karma for example, which is a big breakthrough. But yeah, so I think we are, we are not your orthodox VC by any means. I still think like and act like an operator and I just sometimes if you show me a transcript of a board meeting, I can tell you where people are in the cap table. So I'm all about helping young, talented, capable people who are half my age and twice as smart entrepreneurs build companies. If we can help them build companies and change the probability of success all just by a little bit, then that's our job. And if that, if we do that well, there are plenty of spoils to go around. So that's how we think about it. What have I learned? If I look back over the years, I think that it would be obvious to say the odds of success of any young talented entrepreneur that sits opposite you when they pitch you is small. Is it 1 in 10, is it 1 in 20? Is it 1 in, I mean 5? Who knows? And it depends on where they are in their journey, have they done it before, etc. But it's low odds. Now they don't believe that because if they believe that, they wouldn't be sitting there. They go do something else and they've got to be possessed. So you want to, you look for people who are possessed. And I think I have my own demons on my own shoulder. I'm looking for people that, not just brilliant, not just obsessed with making a difference, not just obsessed with the plant, but have the ability to when it fails, when it doesn't work, to think in terms of decision trees, to dust themselves off and go at it again, that is really important. So you're looking for some notion of tenacity. And candidly, people who have gone to great high schools and then cruised into Ivy League schools and all ended up with distinctions and then went to Goldman Sachs, these are the elite of our world. Many of them never seen or touched failure. So you're looking for people that can power through that, that they have some kind of energizer bunny in them that will take them to the next level as well. Two, you want people that can build team around them and that can find people where enough of what they are, what their superpowers are and look to augment their superpowers with skills and competences that create a gestalt of capability beyond what they are. And I love finding two people in co FOUNDER OF Management One who's more and extroverted and more passionate about a vision of solving a problem. And then somebody who's more technical and analytical who can build the capability behind the person who steps out in front. That is usually a really powerful combination. And then you're looking to see if they can get along and not only get along in their existing framework, but can they get along six months from now, two years from now? How long do they have the flexibility in their own personality to be able to grow together? And if I look at Vish Fairbank and I think I grew up in strategy consulting and then at Signet bank and then at Capital One, the total number of years was something like 18 years. We worked together, we went through very different stages in our career and our evolution from when I was in my basically my middle 20s up until in my middle 40s. And then Frank Rotman and I have worked together since he came out of grad school. So he and I think have worked together for 32 years. So you're looking for relationships that can stand the test of at different stages that I think is really powerful. I look for people that listen. We've made 200 odd investments now over 17 years and very seldom do you see a business that is truly magnificently unique. We've seen parallels, we've seen analogs, we've seen versions. And it may be a unique combination in a different geo, but we've seen these. So you're looking for people that are listening to, to QED when we say ah, we've seen that before and that didn't work because of this and we saw that and that did work. Now how do you combine that with this that are listening and absorbing if they are thinking so linearly that they're going, yeah, just give me the money. That is a pretty big red flag. And it may be it's a process of self selection. I want the people that would say, you know what? I think these QED guys are Going to challenge me in ways that others want because of their experience and expertise and because it's their model. Venture is not stock picking. It's not here Miguel, here's a bunch of money. We really love you. We love your idea. Here's a hundred units of money. Will you come back pleasing with three or 400 and we'll all be happy. Bring me back a thousand. Venture is not that way. It's hands on and it's helping make the building the recipe and then helping cook the meal. And I want people that are willing to share that journey in a way that's productive and beneficial to both entities. So you're looking for that.
- [35:47]
B
Sulti, you mentioned that you can look at the scrap the transcript of a board meeting and kind of know the cap table. What have you learned about great boards and board meetings?
- [36:01]
A
The great board meetings are. I mean there's some hygiene things that are important. I have a two by two box that I have with my portfolio companies. When I asked the CEO, on top of the often 770 page deck that's sent out lines and boxes and graphs is a one pager that says what's going really well? What's not going well? What are you really? What's keeping you up at night? Which might be different to what's not going well and what decisions do we have to make today. And a good CEO can do that off the top of their head. If that takes a CEO two days to write down, it's just blocking bullet points and I don't care about whether or not it's in Dylan Thomas prose. If you can't do that as a CEO, you're not on top of your business. You should carry that around with your head all the time. So that one, make sure you get the material out in advance. If there's things that are controversial. I would love you to talk to the, to some of the board members in advance and know which of the board members are going to have an issue. So Miguel, I think I'm willing to. I'm going to want to talk about this pivot that I'm going to make and I know that you're going to, you're going to find this really interesting or controversial still. Let's have a conversation about that. Let's get, let's frame that in advance to the extent so that it's not a surprise when you go into the boardroom when you can have all kinds of non sequiturs that can occur in a boardroom if people are surprised. So take the surprise out of it, and then be willing in the boardroom to have really constructive conversation and not to be a box ticking exercise. And you have real conversations. And I often say to my CEOs, what is it that you really want to get out of today? Which should be in that fourth box? What decisions do we have to make today? But what's important to you, us, to help you drive your business over the next two to three months. And I think that the good boards are good with people who've got different perspectives from different experiences and are willing to authentically put them on the table and offer counsel and advice. One of the dangers that occurs, sadly, is as companies become later stage, board meetings become less and less pivotal. They become more and more readouts and management is like, I've got this board meeting in two weeks. I'm just going to write the deck. That is not controversial, that is not where the key issues are. Because I just want to keep the board out of the way so I can run my business. And that increasingly occurs and it's partly for a number of reasons. One, the founders don't really trust the board board process or the board management. And candidly, a lot of the people that are in the board room, as companies become more and more mature, add less value. I mean, I do, I'm being facetious now, but you will hear advice like, I think you should really focus on increasing your revenue and decreasing your costs and it's not terribly actionable. And because you've got very clever people around the boardroom, candidly who haven't ever really run a business before. And so that's, I mean, I'm being facetious because it's really important that management and the CEO gets the best out of their board and board members. And that requires an authentic, engaged, intentional coming to terms with what are the key issues and how to help navigate them. And genuinely for the CEO to look for help and assistance in that process. I call it the Ghostbusters effect. And I want qed, my partners and my friends at QED want them to be the, the call. I want the founders to call them when they're in a pickle. I just won this deal or I've beat my budget or my revenue's soaring, I've got this term sheet. Founders are beautifully communicate when that happens. But when they're staring at a fork in the road or they've got a crisis, be it a people crisis, a compliance crisis, funding crisis, who do they call? And we aim to be the best advice you can Get. So I want my partners to be the ones that get the call because candidly, as operators, I think with the best intentions, we can help founders navigate those ups and downs.
- [40:04]
B
Aja, two more questions before we run out of time. How does your typical day look like?
- [40:10]
A
The only thing I know about my day is that the way it starts isn't the way I planned it to be, is not how it ends. If you've got, if you've got 150, 50 active companies, every day one of them will have a crisis and every day one of them will have a huge opportunity. And being called into that really suits, I think the sort of ADD that's in my nature. So I think that happens. But I think that yet that these are long days in venture. It's really hard and it's, there's an intensity about this that doesn't exist in running a public company this time of the year, in the middle of October, I'd be planning for next year's numbers and I would know that 87% of next year's numbers are already in the bag. And all I need to do is to get the 13% and put a bit on top of that and I'm going to be home and dry. These companies are fighting the oxygen all the time and are on a knife edge and that means you have huge volatility and with that huge stress. We have companies that look like they were rocket ships today and tomorrow they're down at the, they're in the dungeons and vice versa. And we have companies that go from rags to riches to rags again. And it's a, it's a roll. So that's so dealing with that. This is a very unstructured environment. What do I do? I get up in the morning and I usually hit the emails for an hour. I see what crises are going on and talk about the crisis. I try and get an hour in the gym. I come to work and I sit in meetings that are short and sharp as best I can where I get to really get lots of nourishment and energy from, from with my co mates at qe, I've got board meetings all the time. I sit on a number of boards and, and I spend my time looking after the ecosystem that is qed. I try to keep, I try to look after myself as best I can because I'm getting old here so I have to look after myself physically so I can keep up with people of your age. But there's nothing, there's nothing more fun in the world.
- [42:03]
B
And so the rumor that I heard that you bite four hours a day, is that true?
- [42:10]
A
No, that's impossible. But I do have a secret that I'll let you in on, and that is many years back, I heard of a mountain biker that climbed a million feet a year. So I went through the mathematics of this, and if you've got a million feet divided by 365 days a year, you have to. You have to climb a little more than 3,000ft a day. Now it's really hard to climb 3,000ft a day when you live in Alexandria here. So most of my biking is simulation on a machine where somebody. Where I can use software to pretend that I'm climbing up Alpe d' Huez or Ventou or the Stelvio Pass. And what I do is I set out seven years ago to do a million feet a year, and I do that. So If I'm pushing 250 watts at a 7% slope and I need to get to over 3,000ft a day, it takes about an hour. So on average, I'll cycle an hour a day. So nowhere near four hours a day. There's just not enough hours in the day. And I often quit with Frank Rotman, my co founder and dear friend. He has the luxury of sleeping half as many hours as I do, and that was a real comparative advantage in my spot. I still need. I need my seven hours of sleep.
- [43:31]
B
Love it. But the cycling millionaire, getting to that million a year.
- [43:34]
A
Million feet. I'd love to hear how many of your listeners want to take that on. I can show them how to do it.
- [43:41]
B
All right, let's get some answers. Nigel, Amazing. Thank you for this. I learned a lot. I'm sure everyone else will as well. Fascinating stuff. And it really feels like you're just getting started.
- [43:54]
A
It's a phrase that Matt Rockenheimer uses at Remitly. And we're just getting started. Look, I. I've been incredibly blessed in so many ways in life, and I want. There's so many things that I want to do and so many things that I want to achieve that I haven't had chance yet. I think that the aspirations of where I can. Where we can take. Qed. And I'll leave you with one final thought. And this is something that there's an itch that I still haven't entirely scratched. I think Fintech is a force for good in our society. It levels the playing field, empowers consumers and small businesses. It takes away the friction. It's much more efficient and it shakes up the incumbents to improve their game, which candidly, many of them don't take us as seriously as they might. I would like to believe that before too long QED can impact the lives of a billion people, people around the world. I've got, I was, I've got Klarna and I've got Credit Karma and I've got Nuback and I've got one card and I've got clear score and I can add up these companies remittely and the math is that I can get now over 400 million I've got that leaves I've got 5 to 600 to go. I can only get there, I believe by India, Nigeria, Indonesia, huge countries that are now really embracing fintech maybe and Brazil and Mexico perhaps. So that is really important to me. So am I just getting started? Yes, because I've got a long way to go and fintech can add so much value to our world.
- [45:34]
B
It's a lot of people. I love it. Thank you so much. It was amazing.
- [45:39]
A
Thank you man. Thank you. Thank you. You.
- [45:40]
B
Thanks for tuning in. I hope you enjoyed this great episode with Nigel Morris from qed. If you want more interviews, make sure to subscribe, follow and leave a review on Apple Podcasts, Spotify, YouTube or whenever you get your shows. It helps and truly means a lot. And if you have any suggestions or thoughts, just drop me a line on LinkedIn. Signing off till next week. I'm your host, Miguel Armasa.