HeyZap cofounder launches bank for startups

Four years ago today’s guest sold HeyZap for $45M. It was a long journey which we’ll talk about in this interview but I also want to find out about what he’s building now.

Immad Akhund is the founder of Mercury, a bank that helps startups scale. I tweeted out before this interview looking for negative stories about the company. I couldn’t find any. I want to find out how he’s grown a bank that’s for tech-savvy entrepreneurs.

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Immad Akhund

Immad Akhund


Immad Akhund is the founder of Mercury, a bank that helps startups scale.


Full Interview Transcript

Andrew: hey there, freedom fighters. My name is Andrew Warner. I’m a founder of Mixergy where today’s guest is in. Reminded me. I’ve been doing this for 10 years. and I remember interviewing his cofounder years ago. Let me introduce him a mod Monaco. And I’m pronouncing your last name, right?

Immad: Yeah, I’m good. Thanks for having me, Andrew.

Andrew: Thanks for being on here, dude. I remember interviewing new cofounder years ago about Hayes app and. Getting so freaking sucked into the games on the site that I couldn’t stop. And then it feels like you guys pivoted the company, you became an ad, uh, serving tech company and you sold for what? $54 million am I right? 45. I had it

Immad: Yeah, it was, it was a long journey. Should I walk you through that journey a

Andrew: go through it within this interview. I just want to set this up. So then the other thing that happened was, um, I. We somehow had an interview set up and I said, I want to, I want to get it to know Amazon’s new company. So I tweeted out, Hey, does anyone know about mercury? It’s a brand new bank. He set it up and I’ll be honest with you, rod.

I really like you. I was looking for negative stories, not because I want to like hi you in the face, but I feel it’s, it comes across really sad when the whole interview is, this is amazing. This is great. Come on, look at you. Big boy. You did it. Another car, right? But couldn’t find any negative stuff. And I’m telling you, I talked to dozens of your customers who are using mercury bank, and these are pretty.

These are people who are very tech savvy. They don’t look for the first bank option. They want to make sure that they get the right, the right thing. They showed me how your, your software works. They showed me why they’re with mercury. It makes sense. Now I want to switch to mercury. You asked me why I hadn’t, what it’s going to take.

I’ll tell you in the interview, I’m going to find out about mercury. We’re going to find out about, Hey app. We’re going to find out about what happened. Did you have a private life after haze app? Did you have fun? I’m going to find out about your investments. I know you’ve got a rolling fund with angel list.

I talked to angel list, you know, for. Understanding of how these rolling funds work and what I’m allowed to say and what I can, I’m going to find out all about your business. Thanks to two phenomenal sponsors. The first for anyone who’s launching a company, you’ve got to check out launch pier. They will help you by building your ver your first version.

And the second company is top talent. If you’re hiring phenomenal developers or mod, if your companies are hiring developers, you should go to top talent. The first amount of good to have you here.

Immad: Thanks for having me, Andrew.

Andrew: Do you remember the date, his app? Let’s take to that moment from forbid.

Immad: Uh, that’s funny, you know what? I’ll find it. It’s not to describe it to people sometimes like a lot of things that like a successful in a startup takes so long before you get there, right? Like, like we would talking with acquirers for a good 10 months before the acquisition happens. So like, I very distinctly remember when it happened, it was.

It was actually a painful process getting through that cause they should. Uh, but, but you know, it was a such a long time that it’s not, it’s often not as celebratory as you think it might be. Cause you’ve

Andrew: was there a moment of relief? 10 months of talking to people? Was there, mom, where you go, okay.

Immad: W it’s it’s, it’s mixed, you know, especially when you acquisitions, because you’ve been working on this, like we would do it, he’s up for eight years. We started in 2008. So, and then it’s hard when you like, yeah. There’s obviously the positive side of it. You get money and you see a home for the company and employees and stuff, but it’s also hard when you’re like, okay, you know, there’s uncertainty, you don’t know what you’re getting into.

And, uh, so yeah, it’s, it’s in a way should be all positive, but it was definitely mixed.

Andrew: How much did you get to keep from that? Let’s be open.

Immad: Not that much,

Andrew: Okay. Over

Immad: it was getting a bit more.

Andrew: Okay. And so you got to invest the investments that you made and I see dozens of companies. I think it was over 50 companies on angel list. Am I right? Um, 150. Those investments are your money up until recently, right?

Immad: No. so I’ve been doing some thing mostly will on angel list. I’ve been doing like some form of like a fun syndicates, a bunch of different things. So yeah. Early on for basically in 2016, I was investing quite a lot of my own money, but since 2016, 17 onwards, a lot of it’s been funds or other things on angel list.

So the rolling fund is like my newest thing I’m doing on angel list

Andrew: And the thing that they did with you before this was 2015, I think that you sold your company. Am I right?

Immad: start of 2016. Yeah.

Andrew: Start 2016. So the thing that you were doing before was, was one of them where angel lists we’ll find a Y Combinator. Alumni get them some money. And then since, you know, Y Combinator you have access, you can pick the, the, the companies invest in.

Is that one of the things that you did?

Immad: Yeah. So I’ve been, uh, a YC fund lead. I’ve done that eight times. So. So basically 2016 on med. So a lot of my investments are YC companies. I mean, I would do that anyway because you know, I’ve done my Combinator twice and I was a part time partner there. So it’s, it’s something that I understand and I think great companies come from that.

Andrew: What kind of access and understanding do you have when you’re investing that’s unique to you? That makes it, that makes it, what, what do you have that other people don’t.

Immad: I think there’s a bunch of factors. It’s just, it’s easier when you really understand what the other person’s going through. So like, I mean, there’s some like logistic things, like you don’t want to be talking to a YC company off to one month with them making in my seat. Cause they’re like heads down trying to build something they’re trying to make as much progress as possible.

So there’s a timing thing. Like you want to talk to them about two weeks before demo day. That’s when people like sticking their heads up and thinking about investments, um, There’s also like, you know, whether they respond to, like, when I emailed them, I’m like, Hey, I’ve done YC twice. You know, I’m an entrepreneur, you know, maybe I can admit I’ve done these things.

Like they’re much more likely to respond to that. And on the other side, I’m just much more friendly, right? Like I try to be honest with them. I try to be helpful with them. So, um, so that’s, that’s kind of quick Broco and then the last thing is there’s a whole lot of. YC alumni that now in mastermind, I see companies like almost every seed or series of ABC has a YC alumni.

And a lot of them are like alumni from around when I did YC, which was 2007 and 2009. So we, yeah, we know each other and we share deals with each other and all of that stuff. So that’s helpful too.

Andrew: Got it. And so you’ve got a sense of who’s what, because they, how, how the different entrepreneurs are because your friends are investing or talking to them.

Immad: Yeah. I mean, I just don’t have the time to evaluate like all 200 YC companies. Whereas, you know, some of these guys do it full time. So if they are like, Oh, this company is great, I invest it. That’s a, that’s a massive vote of confidence from my perspective.

Andrew: What’s your, your biggest win here.

Immad: Uh, biggest one’s rappy so far, it’s, uh, Postmates for Latin America. They actually huge, uh, you know, many people in the U S don’t know them, but they basically like a combination of Instacart and Postmates and Latin America. So I did the seed round before, like while the NYC, uh, and now they like that last round was a SoftBank round round for like $3 billion evaluation

Andrew: I remember when I was in South America, I think even in Mexico, they’re everywhere. Their couriers are everywhere with those big boxes on their backs.

Immad: Yeah, but I don’t know a bunch of other good ones. Sub stack was one. I did the seed round in, uh, and ed table and rippling, but yeah, there’s a, there’s a lot of good ones in the 150.

Andrew: Did you get to do anything especially fun after you sold his app?

Immad: I’m yeah, I’m kind of a boring person. Like, I’m just very, like, I just like startups. And so like, I went very deep in investing. I like talking to entrepreneurs actually. It’s really fun. I mean, you do this so you know how it feels, but it’s just like spend one hour with someone who’s like trying to do something new and they have this like deep understanding of what they know and they basically teach you for one hour.

I think it’s like super fun. Yeah, I can’t think of them any more fun things to do. Um, after I sold, uh, I had one year at the company that bought us and then I took, I was supposed to take a year off. Uh, I kinda took something like seven months off, but I didn’t really take any time off until I left San Francisco.

And we went to Europe, uh, you know, spend some time with family then other stuff. And that’s when I really liked switched off. Uh, well, you know, I can’t sit still. So like, and I liked talking to him for minutes. So I did a bunch of that and I, I did a bunch of kind of work, setting up a green getting ready.


Andrew: In Europe, you did a bunch of work.

Immad: this is,

Andrew: This is afterwards. So when you’re in Europe for fun, what kind of things did you get to do

Immad: Oh, we just traveled. So I have two kids and we just went to Italy and

Andrew: you take a nanny with, you

Immad: know,

Andrew: know, wow. That’s a lot of work to take two kids three year without a nanny. You’re basically not getting to enjoy it.

Immad: like spending time with kids. It’s like part of the fun, right?

Andrew: My wife is big on she’ll just go on to some service and she’ll bring in a babysitter on a, I don’t feel comfortable doing that.

Immad: Yeah. Yeah. I find that awkward as well. Like I want to, and I think, yeah, I never considered like spending time with the kids as work personally. Like I think like even startup things, right? Like a lot of the enjoyment comes from the work aspect. Right. Like you can’t just like, you got to like, enjoy the journey.

You can’t just like, expect like some of the positive moments are done. So I enjoy it.

Andrew: I get it. I’m with you. I like the screaming. I like when they’re arguing, even when they’re like, they’re pissed at me, I can’t, I can’t stop smiling. I have to turn my back sometimes. Cause it’s like this little kid is angry. I mean you’re three years old. What are you angry about? But, um, but at the same time, I do want some space for me and Olivia to just go walk through a new city, explore or sit at a coffee shop for two hours and do nothing but stare right kids.

Aren’t big on that. That, what was the difference, Dan? So you guys started haze app. It was a collection of games, . it was 320,000 sites. So it was really distributed to even more than that last time I talked to your founder, cofounder, Jude, it was that many.

And then at some point you, you change, can you help me understand and what led to the transition and what happened?

Immad: Sure. So we actually did full, full pivots. Um, so we started in 2008 with this concept of just a flash games distribution. Um, and that went pretty well. Like we had, you know, a few hundred thousand websites. We raised money from union square ventures. Uh, so it was working, but it was overshadowed by the fact that like flash games were dying.

Right. So this is 2009. Yeah. I phones were around, but it wasn’t that huge yet, but by the time 2010 came, you know, all of this kind of there’s actually, yes, it’s interesting. Like there’s a, there’s a demand side of it, which completely shifted. Right? Like everyone wanted to play mobile games and not. I think some games on that website and then also the creative kind of supply side at all.

If the game grade is switched to mobile as well, because that’s where the demand was. And it was a, you could make novel games then. So we were seeing this trend and it was, it was very hard to see a future where the flash games will continue to be big. And I mean, now it’s a foregone conclusion, but in 2010, it wasn’t.

So we shifted. So they’re like, okay, we have to do this on mobile. We still had a bunch of money from investors. So it wasn’t like we’re going to give up. Uh, so we basically, uh, wacky. Yeah, we pretty much had acquisition offer then as well, but we were like, okay, you know, we don’t want to set up, we want to keep going.

So we basically launched a social network for mobile is, uh, in 2011. So that’s been the number one. And that was actually, you know, we were pretty good at selling things and persuading people to use things we made. So we’ve got a bunch of game developers to like, promote this kind of, uh, I don’t know if you remember, like full squad.

I did this, that check-in thing. Uh, and we had this check and mechanics that you could check into mobile games.

Andrew: I didn’t know that.

Immad: and it was in 2011. It was, it was in a lot of casual games, especially on Android. Uh, so we had, we got a ton of users about 10 million users,


Andrew: I, can I pause for a moment before we talk about the transition, you’ve got a lot of websites to have your flat host, your flash games. You’ve got a lot of game developers to include your check-in mechanism. How, what do you do to get so many people to trust you, to embed you? What is it?

Immad: I mean, a lot of it just comes down to like consistent sales and having a process. I mean, if you talk about mobile games, like we built a whole, I think. One of the things we did, which was unusual a little bit is that we were willing to like engineering behind sales. So we built a whole scraper that would scrape, but Android and iOS apps still.

And it wouldn’t just like, say here’s the top hundred. It would also look for like the Delta. So every week it would scrape and say, Oh, it looks like this game jumped from my position. In 2002, I positioned 1,500 and we would literally go all the way to that position. 2000. I mean, nowadays you can kind of do some of this stuff with Annie or whatever, but we built all of these scrapers from scratch and we had.

We basically had, like, I think three to five, I can’t remember exactly how much in 2011, but like we had like five ish salespeople and we would allocate these odd. We’d be like this, this tiny game. No, one’s heard off. It’s like growing the shots, go hunt that person down. And they would like do it to them, whatever it took.

And then, yeah, that’s,

Andrew: you coming up with these mechanisms today? Like what you’re talking about, it’s fairly common and it’s a lot of times fully automated, but at the time was that you coming up with the idea, where do you come up with this whole process?

Immad: Yeah, I’m an engineer. So like I apply engineering to productizing things as to as much things as possible. And I was, yeah, I wasn’t, I wasn’t like trained for sales or something. Uh, so, so yeah, it was just kind of very much like, okay, we need to get these people. How do we get them? How do we make a pipeline, uh, for sales and like just, you know, we built these things out

Andrew: Do you go back to, is, is there a framework that you use? Is it something like, I imagine watching you that part of it is you thinking. If I was trying to get one person, what’s the process I would go through, how would I find the right person to contact? How would I get their contact information, et cetera?

Does this scale to multiple people? Yes, it would. Well, I wouldn’t want to scale it to multiple people. How would I, what part of it can I automate to scale to reach out to multiple people? And that is that your process for coming up with this sales system?

Immad: You want to like throw a bunch of creative people at a problem like that? So it wasn’t just me. We have, we, we actually hired salespeople that went. Usually sales, like a top sales person was like a full time polka, a gambler for two years. And he had like, you know, and if you can make money being a full time poke again, but like, you know, pretty, pretty good at, uh, kind of figuring things out and very, you have a lot of grit.

So we would, you know, we hired like these like relatively young and experienced salespeople and. We would go, okay, you have to kit this many. Like we would do it based on like, uh, installs that for the app. So we’d be like, you have to hit this many installs. So a lot of these things will work out by them.

Andrew: Got it.

Immad: and then I combine that with like meet every, you know, twice a week and say, okay, you know, how can we get this better? And if they would like, okay, you know, it’s working really well in this category. We allocate more things around that. So it was a combination of, um, And I just being creative about it and not having like too many rules about things you could do and, uh, and being willing to like spend engineering time on it.

Andrew: Okay. So that was the next thing. What happened after that?

Immad: Uh, right. So, so that didn’t work. We got a bunch of installs, but people just put in, stick around and I, yeah. You think there’s retention graphs? I don’t know if you’ve seen them, but basically like the way this supposed to go is like know, after one month, like maybe 30% of people that after two months, 20%, and then it levels off like starts growing again.

And our retention graph was like a fricking straight line down to zero, no matter what we did. Six months later. We just could not get them to like stick around. Um, I think we’d figured out this distribution mechanic, uh, but there wasn’t a strong enough reason for people to stick around. Um, and we tried everything we tried to, we tried lead bullets inside the app.

We spent two years basically like launching things every three months. That would like really focused on retention because we had the distribution down. So we were like, we could see like people would just stop using and we Austin, why you, why have you stopped using it? They would like by far, the biggest category was always, uh, it’s it’s taking up too much disc space or battery, which is basically like this universal thing that like, it’s just not useful.

Andrew: it’s kind of like when, when people tell me I don’t have enough time or I don’t have enough money for a membership, it’s just, it’s an easy answer, but it doesn’t explain why this isn’t worth your time. Why it’s not worth your money or in your case, why it’s not worth their battery.

Immad: Yeah. So yeah, potentially like this whole idea of like medical social networks, which is like kind of big back then, just isn’t a thing. I mean, even now there isn’t a gaming focus, social Netflix. I just think it wasn’t an idea that really engaged

Andrew: Let me pause again. I keep coming to understand you as a person. In addition to the business, is that you ran as a person. How do you not get just depleted two years, month after month trial, after trial failing, failing, failing, failing, how do you keep yourself going and not feel like man, I can’t make it.

Immad: You know, I think it’s, as long as you have like ideas and you can make things like, I think that’s fun. Like, I don’t like it. I would, I would, there was definitely times when Diane was like, okay, you know, we just wasting our time. But I always had like, okay, what else can we do? What’s like, yeah, just making something and trying to like, fix this, like problem was like kind of engaging.

Um, and. There’s types of things that are hard. I think raising money from investors is hot. And like, I think we tried to raise money during those time period. And, you know, we just like, eh, at the end of the day, invest is like fairly good at reading these graphs and they could see the retention wasn’t that even if the use as well, uh, and that was hot.

Like it’s always hot to like, You know, when you’re struggling with money and you’ve got employees to pay and you can’t raise money. That’s, that’s always like challenging. And I wouldn’t downplay that, but when it comes to trying to solve something, build some products. It’s I think that like, by itself, the journey is like kind of fun.

Andrew: Did you have anything else going on on the side that made you believe in yourself that made you see progress and success?

Immad: um, not particularly.

Andrew: So there was no exercise. Was it angel investing that was starting to do well at that point for you or

Immad: No, I didn’t start angel investing until 2016. So it was fully focused on this.

Andrew: So, this is just you saying this is the problem. It’s a challenge. I feel I’ll just keep trying as long as I’ve got ideas, I believe in each new idea. We’ll figure this out. That’s interesting. Okay. All right. So then what happened next?

Immad: Um, okay, so that retention thing wasn’t working, uh, and then this was a funny time. So, you know, mobile ads were becoming a big thing back then. So we had this game company, it was called DNA, D E N a. It’s a big Japanese social company. Ah, so they were try to break into the U S market, you know, actually w we have the sales post and who kind of led this up.

And she literally like turned up with a 60 chick K check from them. Right. This is like our first significant record when you would meet as a company also like four or five years or something, uh, the 60 day check from them. And, and that would just like drive installs to us. And they didn’t like, it was no attribution, nothing match to the 60 K was like it’s 60 K like yeah.

Drive installs to us and tell them what to tell

Andrew: Because they just needed new installations in the

Immad: Yeah, they would just like, and back then, like, you know, it was a wild West of like, uh, kind of mobile ads. Um, so we were like, wow, that’s like 60 K that’s like, you know, a significant, uh, jumped the revenue. And we did that with the feel of the people’s income, betas money.

Um, and we were like, okay, you know, we’ve got. All of the users, but they don’t stick around, but we also have one of these game developers that are putting in our checking button. Could we also sell them these ads? Because we have these advertisers that are willing to pay for it. Uh, and at that point we were like very close to running out of money.

So we went to our investors and we said, Hey, we think this good work. Yeah, give us a million dollars and six months. And like, maybe we can like turn this into like actual, like profitable company. Uh, and this is crazy because, you know, I thought everyone’s going to leave the company because it’s just, you know, we’re doing another pivot.

This is like a third full pivot. Pretty

Andrew: thing that in mind believes in

Immad: sorry.

Andrew: another thing that you believe in after two years of you believing in things that didn’t work out. Okay. But

Immad: we kind of changed strategy a little bit and, you know, We decided to be super transparent with everyone. And it was just like, Hey. We have to get profitable. It’s going to take six months. Hopefully we will do it. This is the plan. Uh, and we’ve got million dollars extra.

So we have runway. I don’t even remember how much, but it wasn’t long. It was like nine months runway, maybe. Uh, and really surprisingly, like most of them, he stuck around pretty much everyone started around like all the engineers duck around. All the salespeople stuck around and we did it. Yeah. It was a, like, we managed to get into some pretty big games as like, they kind of, I think pretty much like exclusive ad network at the time.

And we managed to get a bunch of advertisers and I think we needed to get to around like 150 K in monthly revenue to be profitable. And we managed to do it in like six months, which

Andrew: Wow because companies were willing to pay for installs. And we’d seen that that did become a real, um, a real value.

Immad: Yeah. And we managed to, like, we had a great designer back then. His name is manga. Uh, and he came up with like, she, uh, Fairly unique, kind of had which w which then go copy by the whole industry. So if you have a seed like this, like full screen interstitial ad, which is like interrupts you best, like very high.

And like I said, the graphics of the game, and it’s got like installed button. He was, as far as I know, he was the first person to come up with that. Uh, But, you know, having that like relatively unique kind of thing, it was like, well-designed also be able to game developers because they didn’t want like, you know, ugly things in their game.

Uh, bring the experience. Uh, so yeah, so again, it was kind of Android focus because you know, we’d done well up to then with Gandalf was on Android. And that was also back then. Everyone was like iOS focused when it came to advertising. So we were able to win a lot of market share there.

Andrew: Why did you go through 10 months of selling? What was it that made you say it’s time for us to let go of this company?

Immad: Yeah. Ever since we got into the ad stuff, um, I, it was never something that I wanted to do. Right. Like I think the game stuff, like, you know, distributing games or working with game developers, like that was kinda exciting to me I’ve was like games. Uh, but that tech side, it was something we kind of accidentally fell in and like as partly out of necessity.

Um, and we. So we were, we were thinking of selling for like multiple years and we’d had discussions with multiple people. Uh, and actually we’d actually stopped talking to acquire us because we, we were doing something. So there was actually this last pivot that we haven’t touched on yet. Just we went switched from like just being an ad network, to being a developer tool where we would like in the app developer would put Hayes up in and we would.

Figure out, like what’s the best ad to show right now? Is it a Facebook ad is a Google ad. There’s a, uh, it’s got mobile mediation. So we just switched to that and we were quite excited about it. Cause this was mobile. Was this big company that was sold for like 400 million to Twitter doing this exact thing.

And it kind of, after it was sold, it was, it wasn’t like given a lot of attention. Uh, so we thought it was a big space. We wanted to do it. Yeah. So we actually shifted to that. And at that point we were like, forget these acquirers, you know, there’s no point in wasting time on them. And then as soon as that started doing well, Then we had this acquirer kind of come through us and the, you know, we were like, okay, are you serious?

Like, we’re like, you know, we don’t have time for you, but they kept and they were quite persistent. And then like, okay, what’s the price and the name, the price. And it was like, I was like, Oh, okay. That’s kind of interesting. So we started entertaining that acquirer. And then we talked to another acquire who, so that one didn’t acquire us in the end.

We talked a second company that did end up acquiring us called CIBA, which is a, uh, at the time it was a public German company. Uh, and. So the reason it takes a long time. I mean, there’s this initial part where there’s this like initial dance of like figuring out what’s the price and like all of that stuff that took a long time, like the first acquire took a really long time doing due diligence and then giving us an offer.

And then we managed to parlay that into a second offer from the second company. But yeah, it was a long process. It was, I think even that thought was like three or four months. Um, And then, so, and then after you get that accurate offer, like it’s called the term shooter. Otherwise I think it’s normally called that other way.

Then you have to do all that extra due diligence where they’re like, literally look at your books, look at all of the, all the paperwork. Uh, so that was going on. And that was like in the middle of that we had one month where we had bad numbers, so we’d been going like very consistently. And then we had, as I distinctly remember, this is October we’ve fell by like 5%.

Instead of previously, we were growing by like, Fairly consistent, like maybe 15% or something. Uh, and they were like, okay, you guys full fell by 5%. It’s not working. Like we want to renegotiate this. Uh, so w this is like six months into it. Like we negotiated the deal. And, uh, that’s like for along the process by another three months, because then we ended up waiting shading the whole thing, and we wanted extra protection.

And then actually November was a huge growth month, but. Obviously by then we would deepen this renegotiation. So, uh, other, having a good growth on board, we helped like finally close the deal. So we ended up signing it, like getting everything confirmed, like the day before Christmas or

Andrew: And, and you’re not freaking out as a person. You’re not worried. You’re not what’s going on with my life when things are in disarray, none of that goes in your

Immad: That was a, that was definitely a little bit of that. Like, you know, once you’ve signed that deal, you’re fairly committed and you’ve started imagining what your life is like afterwards.

Andrew: goes away. Right.

Immad: Yeah. And you’re like worried that’s going to fall apart. So there’s definitely a little bit of that. And yeah, I actually think like Motley, it might’ve been better to have someone impartial be the negotiator because you do get as a founder, like there’s so much kind of on it for you.

It’s like, like at that point I had like, basically zero or net wealth I bought from like this one thing that might come out of this. Uh,

Andrew: you feel that acquirers know that they’re right. They know that they give it to you and then if they take it away, it’s so painful. It’s worse than if they’d never given you the option, the opportunity in the first place. Right.

Immad: they can definitely be a lot less passionate about it. I mean, the other thing that’s tricky about acquisition stuff is you don’t. Yeah. You haven’t, there’s not that many examples of all the entrepreneurs you can talk to about it. Like CVSA financing. There’s tons of entrepreneurs that will talk to you about it, but.

Acquisition stuff. Yeah. I don’t know that many people who’ve been acquired and every everyone’s acquisition stories is so different. Um, so you don’t have like necessarily that peer support network that can help you through it.

Andrew: Who do you talk to at that point? Who was your person?

Immad: I mean, we had a, we had, uh, kind of an investment banker person who is, who was actually quite helpful in helping us guide us. Uh, apart from that, you know, we’ve always had a fairly supportive, we will fund it by union square ventures and they’re very founder friendly and supportive and

Andrew: And so would you able to pick up the phone and talk to the partner there and say, this is what’s going on and have them reassure you, give them. They’ve had years of experience.

Immad: yeah. Yeah. They will helpful through that.

Andrew: Okay. Alright, let me talk about my first sponsor. And then I want to come back and find out about a little bit of your time at Y Combinator, right after you left, right.

You spent about a year as a part time pound founder at Y Combinator. Anyway, my first sponsor is a company called launch pier. They basically build companies with developers. Their ideal is a equity free online incubation programs for nontechnical founders. I want to tell you about one of their companies.

Do you know gotcha. Group. I never heard of them either. And I was again like, like everything else, I get suspicious. Are they a real thing or not? Because their idea was they were going to become the Uber of college campuses. They’re going to do scooters, cars, everything that you need. Right. Some of these like whacked out cars, they’ve got them on college campuses.

Of course, college, college kids are into it and we’ve got a confined environment so they could test this stuff. Well, the founders of the company had this idea that they could provide these mobility options on campuses that college students would be more open to it, that they could partner with a university and then roll it out throughout the university and give students options for getting around.

And so they started hiring companies to build it. And the first company that they hired, wasn’t doing a good job. And then things were taking too long and they were just getting fed up while they were selling. They got universities to say, yes, we’re interested. But the software wasn’t there. So after failing a bunch, they finally went to launch here and they said, look, we need a first version of it.

Can’t just be a phone version for iOS and we’ll roll it out slowly. It needs to be on all these different devices because students have different devices. And if we’re going to serve them all has served month. We need an admin panel for the university in order for them to sit at a web page and manage it and all that.

And launch beer said, okay, we could do it. They went through a 12 week, not 12 month, 12 week development timeline. They worked in two weeks sprints. They gave a gotcha demo at the end of each sprint and throughout they stayed in touch via email and gotcha. I had something that worked as a result gotcha.

Was able to pitch colleges and they knew that they had something worth testing. Gotcha. Ended up rolling out to Washington state university, Vanderbilt university, Florida state university, a whole bunch of other universities that now have this on, on campus. And so the reason I’m bringing this up is that’s what launch pure does they help companies, especially non co founders get their product out there.

And if you’re ready to hire them, they’re there for you. But if you’re at a point where you say, I’m not sure I’m ready to hire them, I’m not sure if we have a product market fit. If I have an idea that actually has, as that makes sense. They’ve got a free program for anyone who is listening, that will help you figure out if you’ve got a business, it makes sense.

And we’ll walk you through how to create the first product, how to get people interested in it. How to know if you’ve got something that actually will sell and they’re going to give it away for you, giveaway to everyone, makes her do for free. Here it is. If you go to launch pier.com/mixergy, you’ll get it.

That’s launch, you know, like. I’m going to help you launch and then peer, because they’re going to be your peer, your palliate, your connection, your equal in this, a weight of getting things started go to launch pier.com/mixergy. Take that free course. They don’t have an upsell. Then on the info product business, they just say, Hey, look, when you’re ready to work with us, we’ll be there to help you build that business launch period.com/mixergy.

You know, I remember when you and I did that interview about 10 years ago, it was you and two other white Combinator companies. And I remember I was using one of my listeners. I can’t remember what, like tweet chat or something to record it. Cause I wanted to support and he had a good product. And the recording didn’t work out.

And I remember apologizing you guys, how much that we’d have to rerecord it. And I said, I owe you one. And because I said, I owe you one, which is like a whacked out thing to say, I owe who says this. We’re like, we’re in like the real estate business of the mob, but I said it and on my head, I keep thinking, I owe you one.

I can’t let it go until I go. You know what I mean? do you even remember that I owe you

Immad: that.

Andrew: What you don’t remember that at all right? Of course you don’t because you’re not a psycho. Um, it was, uh, the founder of postural. I remember feeling especially like a sense of debt to him for some reason. I’m not sure why.

Anyway, back to Y Combinator, you then go and you become a part time partner there. How do you help companies? What’s the thing that you were able to add to them?

Immad: Um, yeah, good question. I think the, this, this kind of specific things you can help people with that if you really understand the industry or whatever. Uh, like if it was studying a struggling with retention and a social app, I know all of that. And there’s like more generic things useful to everyone. So like fundraising advice, how to build a sales team, like all of these things.

So I think most of the time you focus on the, on the generically useful things, you know, I’ve been, I guess, by that stage success successfully and unsuccessfully raised money many times. So. Hopefully I knew like the good things and bad ways of doing that. Uh, and then I had, you know, if it was at day echo games or, uh, social, I had like a lot of kind of industry specific experience.

So I tried to be helpful with.

Andrew: Are you a systemized person to the point where you might even have a dark with the steps that you take to raise money? Are you the person who’s, who’s got a process written down like that.

Immad: Not like super specifically, actually I do quite a few of these like tweets films where I try to like write out my process every now and then, and those are kind of useful. Uh, but you know, when you’ve done things, lots of times you obviously. Have built up a process, even if it’s not like silly system magic, but when it comes to fundraising, like, you know, actually running a pipeline, uh, you know, I write every time I’ve ever done a fundraiser, you gotta write down a pipeline.

All the people you’re gonna hit up, who you’re going to get introductions

Andrew: You mean, you, you write it down on what, in a spreadsheet or, or let’s say air table, you do.

Immad: spreadsheet right now. But

Andrew: It’s just a list of who’s everybody that I know who I can go and raise from.

Immad: yeah.

Andrew: Okay. And do you go into your email or anything like that or is it just top of mind?

Immad: Uh, mostly top of mine.

Andrew: Top of mind, put it in a list. Okay.

Immad: yeah, I guess, I mean, do you start off with like people that, you know, right. That’s like, step one, then there’s like people that, uh, that are well known that you would like to get, uh, you know, actually like Y Combinator has like a pretty good investor database, uh, which is always like a useful thing.

You can see all the

Andrew: So you go on the database and you say, who do I know who feels like a good fit? I’ll just add them to my list. Okay.

Immad: I know. I mean, the other thing that’s, you know, the, the seven months when I was kind of investigating, setting up mercury, uh, I spend a lot of time, like you basically have to like to pre-research kind of thing. Okay. Like you talked to the people that, you know, and you’re like, okay, who do you know that you think would be interested in this.

So, so you, I think that’s actually like super useful. And then, you know, maybe you talk to them straight away. Maybe you just put them in, put their name down in the list and say, okay, you know, I know if I ever a need to get to index ventures or something like this guy was funded by them and he knows them very well.

So I’ve got to put that in my

Andrew: It’s just on a spreadsheet. It’s not even anything more sophisticated that.

Immad: messed up like fundraising. You don’t want to have like 5,000 people in that. Like you want like 5,200 people

Andrew: Still, I think I would like to use something that’s a little bit more of a database so that I can remember so that I can write better notes. It’s shocking how much people still use databases like that. But I would use pipe drive or, or air table lets you set up, um, you know, Kanban board with sales for everyone.

You’re smiling at this. It makes sense. But not your process. You want it simpler than that.

Immad: Yeah. I mean, I think whatever works for people that the most important thing is to have a process.

Andrew: Okay. Alright. So that’s your first, the first part of your process. You make this list. What’s the next part of your process

Immad: So fundraising, I think then. So, what I like to do is best thing, like write it down. No, everyone loves that. And I like practicing it quite a few times.

Andrew: with a friend or something?

Immad: Yeah. With all the entrepreneurs. Um, you want people who are going to be like a little credit, cool fit. They’re going to ask you questions that are gonna make you go okay.

You know what happens at Finn? And must ask me this question. How about I answer it? That kind of thing. And I mean, even before you get to any of that, like, do you want to get to a stage where you want investible? Right. Like the tricky thing with mercury was I can make a bank without raising money and even, yeah.

And then even when I raised money, it’s going to take me a lot long time. Like we, we raised money in August, 2017, but we didn’t launch it April, 2019. So at that stage you might just say, okay, you know, I can make any progress. I’m just going to write a deck and see if someone will give me money. But I don’t think that’s like a good way to go about it.

So. You want to basically de-risk as much as possible. So like I work with a designer from Hazel app, uh, to like, firstly like make a bunch of mocks and like just, you know, realize the vision into like what an actual design would look like. Um, so that was, that was one way to de risk it. And other way was, uh, I worked with, uh, And there’s this guy called Daniel Kimberlin, who did a company called standard treasury?

Uh he’s he’s a great guy. Who’s now a FinTech investor. Uh, but he had previously basically done a company that was kind of trying to make a bank and he sold his bank to SVB, which is a main kind of competitor. Uh, so yeah. Hi. Hi, worked with him quite a bit. Before that point, I had him down as an advisor so that when I went to an investor, that was like, it wasn’t just like Emma, who knows nothing about like setting up a bank and trying to do this.

It was also, you know, these other people that like added some gravitas to the pitch that could say, okay, you know, there’s other people that have given me some

Andrew: And what was his connection to you? It looks like he’s a Y Combinator

Immad: Yeah. He’s a, he’s a wife.

Andrew: was well, but was he then just an advisor? Was he an investor at that point or just a buddy of yours?

Immad: You know, one of the best things about entrepreneurs, especially if you’re like trying to do something that they find interesting is they just like very free with advice and like, you know, him and his go found, uh, uh, just, uh, helped a lot.

Andrew: Without asking for anything. And then investors, didn’t say why you bring a buddy of yours? Who knows we should be investing in your buddy instead of in you.

Immad: Fun, you know, he wasn’t doing the startup, but, uh, yeah, he’d just been like super helpful. And actually I actually really wanted to give them advisory shares and they ended up not taking it because they were setting up a VC fund and I don’t really know why they didn’t take it. They should’ve really I’ve.

Cause you know, I want to give back to people who use looked at me. Uh, so they would just like very friendly and helpful people. Uh, but it was very important because you know, when you entering this new space, Uh, which FinTech was like pretty new to me. Uh, it’s useful to have people who can like really answer the dumb questions and like over and over again.

Uh, which is, yeah. And like entrepreneurs are like much more open to doing that because they’ve been in that position themselves. So they

Andrew: want to get to mercury and a little bit, but coming back to your time at Y Combinator, I feel Mercury’s, it’s just, it’s so fricking done. It’s I feel like this is the part that I hate as an, as a listener when the person is so abusive. But it’s, I would describe it. You’re doing for banks getting what Stripe did for credit card processing.

That it’s just like Stripe. When I, when chase says to me, why don’t you switch to us? And I say, I’m with Stripe. And they start saying, what’s the percentage they’re giving you. I realize that. Don’t get it. It’s not just the percentage. Just that my virtual assistant, you can give somebody a refund in a clear way, way it’s that somebody can make up a form app and I could connect them Stripe to it today without any headache.

It’s those little things that you do. I don’t understand when you’re saying what’s the percentage. It’s not like I could give you a clear, straight up percentage. Right. Anyway. Um, it’s the same thing. The thing with you, what you did with mercury was you created. A reasonable experience, a one that just makes it the truth is all I’ve seen is two things really well done.

Um, I saw the Ruben Gamez. He said, Andrew, you’re not going to get until you see it. He screencast it himself, logging into the account, which God bless him. He trusted me. Um, I see all his banking information. Then he goes, look about to pay this person. I do this, these types of payments on a regular basis, usually a pain.

He fills out a form that’s super clear white screen, just to clear fields that you have to enter payments sent out in less than 30 seconds. I thought chase was good. Cause I used to be with Citibank, which was awful. Chase now looks like an antiquated grandparent, you know, completely out of touch with the reality of the world as it is today.

The set, uh, the second thing that he showed me was you said I also searched for. For payments on a regular basis or for a firm, I searched for transactions and he went to search just standard search it. Pre-populates it’s just beautiful. Everything is, he found it right away. Um, so I get, I get it. I want to get to how you figure it out that this was a thing to get into.

I want to know what you’re thinking future. I want to know how you got your first customers, especially since I’ve talked to dozens of your customers now. Um, And I’m surprised you have that many raving fans, but let’s, let’s spend a little bit more time investing in them, get into that. Okay.

Immad: Yeah.

Andrew: So you, you help them out and then what do you, what else do you do?

Would you go when you’re in Y Combinator and walk them through, walk, walk with them too, an investor meeting. Do you personally invest along with them?

Immad: so. I guess like sticking a step back, you know, this is 2016, I’ve been doing startups since 2006. I’m like 10 years and doing like basically continuous startups. Like I have never posed in that time. So I was basically trying to decide then, and I spend a lot of 2016 and early 2017, deciding this is like, do I want to become.

A full time investor or do I want to do another startup? Those are like kind of the two options I was weighing. Uh, so that’s why I got into becoming a bathtime Putnam because you know, it was something I could do while my nap was happening and I could kinda dabble my toes into it. Uh, and at the same time also, Yeah, the best way to learn these things is just by doing them.

Right. So I decided that I was investing very aggressively. I think I invested in like 30 companies, the Methodist. Yeah. Um, so, so that was how well I was approaching this. I was seeing, I was kind of testing it out, like, is this something I could see myself doing in the future? And so. When it comes to YC.

Uh, yeah, they don’t, I wouldn’t say an, another investigation. I will, will, can do an investor meeting with you. Like you kind of want to give the confidence to the founders to kind of stand up for themselves and be able to kind of do these things themselves. So yeah, you were, you help with this things like introductions.

Helping them hone that pitch, you know, sometimes a little bit of like negotiations. It’s like, Oh yeah, I want a 10 million valuation. That’s investors saying 7 million. And then, you know, you as an somewhat external ADI can say, okay, you know, this is fair based on like what I’m seeing in the rest of the market so that you can be helpful in lots of ways, but you don’t want to kind of the end of the day to find has to do that on Joe.

Andrew: What were you looking for? What were you thinking of?

Immad: I mean, these things have changed over time. Um, I, I think the biggest thing for me is kind of what I want the future to be like. Uh, so often I see an investment and I’m like, Oh, this might be interesting that like, it’s not like aligned with my vision of the future. So if you take at table for example, right, uh, I am a possible use of spreadsheets as we touched on it a second ago, but also I’m an engineer.

So I’m just like, and then you, as an engineer, you make so many crud apps, right? Like these basic apps that do the same thing over and over, it’s like you save some form, you display the form and it’s like, and so you’ve got these spreadsheets that are like fairly powerful and you’ve got this programming, which is powerful, but there’s nothing like in between.

Right. And this is. Yeah, back then, obviously the whole no-code thing. Wasn’t radio thing. Uh, so that’s yeah, I could see that. I was like, okay, this is the future is going to be people being able to make relatively complicated apps without pushing code, uh, and any table that vision from the staff.

Andrew: and it was, it was apps that are fast. I thought that air table was nobody uses databases. We’re going to make a database that tricks them into using it because it’s going to masquerade itself as a spreadsheet, which they’re using for data. Anyway.

Immad: Well, I mean, engineers use databases all the time. Right? So

Andrew: But I meant the average person, obviously people use databases a lot, even when they don’t

Immad: the, that’s the bridge, right? Like how do you get an average person? Like when you’re manipulating data in a database, as an average person, you’re basically like coding. Uh, although like, it doesn’t feel like that. Right.

And like the. The basis of like, has a database, that’s the start of like a fully fledged app. So, I mean, actually I was able to just launched a bunch of features this week, uh, which, which like build on top of that underlying database. So you start with the database and a really good like editor for it, but then you can keep layering on top of that to build actually like fairly full-featured app.

So we actually launched mercury res. I guess that was last week. And actually the, the front end for micro raise is just to add table form. And then the back end of Macquarie raises this gallery, which we’ve also built using a table. So we managed to like launch this like full project, uh, which is, you know, fairly powerful, but it’s all built without any programming.

Andrew: See, what’s mercury res um, what is it? It’s a place if you’re raising your seed round to add yourself to a list and then have investors check out your, your company. Okay. Oh, and you’ve got some pretty interesting people in there. OSI Hill Lavanya, um, Ryan Hoover. Got it. And so all, they just get to see all of these different potential.

Immad: Yeah. I mean, we medically about 35% of mercury uses like stopped using mercury right after they incorporate. So we have this like really early stage startups using mercury. And, you know, obviously I tried to be helpful and talk to them and they’re always asking me, Hey, can you put me in touch with some seed investors all the time?

And I tried to do that on every now and then, but obviously I can’t do it for everyone. So we decided to kind of make a program to try to help these

Andrew: I can see how this, this would make sense. He also feels a lot like angel list version one, you know, we just put a list together and you send it out to people. Okay. So. I see, I see your, your vision is, this is what I’d like to see in the world. Here’s someone who’s creating it. I’ll go and back them.

But what about like gecko robotics? They do infrastructure inspections using robots. Is that a future that you’re really eager to see? Or is it just an

Immad: I mean, obviously like when it comes to like industries where you’re not like a deep expert and I was in no way, a deep, but then you have to like, hear their story and say, okay, how does this work in your future? So the bits that I am passionate about is like kind of connected robots and like, especially doing like dirty work.

Right. Like, you don’t want, like before GECA robotics, right? If you’ve got an inspection to do on like a poet blonde people, illiquidity, like setting up this kind of ad hooks, scaffolding climbing up the scaffolding, and it was like multiple debts. The, uh, people doing this used to take multiple days. They made a little robot that would do this inspection for you.

Uh, so even though, like, I don’t know anything about that industry. And I had to like, uh, they had to like convince me that, like, this is, this is a need in the industry. It’s definitely like something. I was like, wow. Like in 10 years, I can imagine people are going to be climbing up this scaffolding. If a robot can like climb up for you.

And then like one 10th of the time, uh, So it’s that kind of thing. Right? So it’s not just, you understand that. And sometimes you have a very specific thesis and you’re like, okay, I have this like general thesis where I’m like, I never want to go to the doctor. Right. So I ended up investing a ton of like telemedicine companies, which is some of them have done well.

Yeah. I tried to come up with like broad things of like, where I think the future will be. I think robots will do most things that humans don’t want to do. I think

Andrew: No. The one that I would really like to see do better is circle medical. I met the founder at lunch. I started using it. They send somebody into my office, a doctor, a real doctor into my office. What. It’s unbelievably great. It was kind of weird though, because I forgot yeah. What it was. Maybe I thought I had a hemorrhoid or something.

It was weird in the office to like take down my pants and have the doctor check out. So that was a little bit off, but it just made so much sense because I don’t want to go to the doctor. Um, it’s just a waste of time. All right. That’s too much information about me. I want to ask you a little bit more about mercury and about the rolling stones.

You got a little more time with us. Good. Alright. Second sponsor is a company called top towel. Do you know anything about top towel?

Immad: I’ve heard of them, but not much.

Andrew: They do, they screen out developers and then they have a matcher. Who’s like, I’m like a matchmaker who just says, Hey, come on. What do you need? What kind of developer let’s talk about your business.

Do you need one person, a team of people? Is it part time? Anyway, they have all that. And then they cook you up with a person or a few people. And if you like them, you can get started right away. If you don’t, you move on. Let me ask you, instead of me doing a plug for them, Do you have a tip for somebody who’s looking to hire an outside developer on how to do it right.

And we’ll make that the ad for top talent.

Immad: I had to do it. Right. Um, I think like actually having a consistent programming challenges is a good thing to have. Then you can judge whether someone’s good. Uh, yeah, one thing that’s worked really well for mercury is we, we, uh, backend is written high school, which is like a fairly unusual programming language.

That’s like somewhat niche. Uh, but a lot of engineers are very passionate about it. So, you know, if you can pick a tech stack that like is unique, that’s a good way to differentiate as well.

Andrew: Okay. I think, um, first of all, they do, absolutely. They rock these tests. I see people go on medium and write blog posts about how they failed the task or what they learn from it and how they want to do it again. But I think it makes sense also, you’re saying, in addition to that, do you recommend that somebody who’s hiring from top Cal offer their own test to their own programming test to see if the person’s right fit.

Immad: It just depends on your situation, but I mean, you kind of want to compare who you’re talking to, to like all the engineers you have and like other sources you probably should. Yeah. Depends on your exact situation.

Andrew: If you’re out there listening to me and you need to hire a developer, maybe you’ve got a project that’s just come to mind and your team doesn’t have time to focus on it, go to top talent and you can hire someone who’s done a similar project excellently, and you can do it quickly. All you have to do is go to top isn’t top of your head, talent and talent, top towel.com/mixergy.

And I should tell you why you should use that slash Mixergy, because if you do. They’re going to give you 80 hours of developer credit when you pay for your first 80 hours, in addition to a no risk trial period, all you have to do is go to top cal.com/mixergy. The rolling fund. My concern with it was I talked to two to a angel list.

I said, look, I wanna, I want to interview someone about this. My concern is, am I allowed to promote this? It feels like I’m going to be in trouble for promoting someone else’s investment vehicle. And that person’s going to be in trouble for posting said, it’s not an issue, right? As long as you let angel list, screen out the investors and make sure that they’re accredited, meaning they have certain milestones, like more than a million in the bank or a certain rec, then it’s totally fine and you’re letting them screen it.

And so you’re allowed to talk about it

Immad: Yeah.

Andrew: and even raise money from here.

Immad: Yeah. It’s kind of interesting because there’s like, Pulled together, a bunch of these like disparate innovations into like one package. That’s like really, uh, there’s the obviously like able to promote it to everyone aspect. But the other big aspect is before you wanted to invest in a fund, like if you want to go invest in Mexico is fun.

I can move on. They won’t let you do it. But number two, you probably have to put in like 500 K to get into, right. Like you can’t do it, but like five, 10 K or something like that. So they’ve also like, Made the barrier to entry for LPs way, way smaller, because you can just invest in a quarter and you can invest with a small amount of

Andrew: What’s the smallest amount that you’re, that you’re accepting.

Immad: Uh, I accept 10 Cape Dakota. Uh, so those two combined combined together, and the fact that it’s on the Angeles back form and it’s like, they automatically do accreditation and all this kind of stuff. Uh that’s what’s made it like actually like something you can talk about, but it’s worth talking about because anyone who’s listening to this, anyone who fits the accreditation status and has money and wants to invest in

Andrew: And the rolling part is date. It’s basically a subscription. They came up with. I’m assuming they came up with the phrase of rolling fund, right? And the idea is the subscription. Anyone who’s interested can just put $10,000 into your fund. It would be be 10,000 a quarter in the future. It might be 10,000 a month or 10,000 per whatever period you do pick for now, a quarter is what, uh, I think the smallest period that they’re allowing, and if you invest the money then great.

If you don’t, it just rolls into the following quarter and you can invest the money. Then anyone who’s invested, um, can decide to continue to subscribe or cancel at any time. Right. And then you get 20% of all the upside plus what like a 2% management fee fee.

Immad: Yeah. Basically

Andrew: Yeah, I nailed it.

Immad: Angeles takes 15 5% of that 20%. So that’s

Andrew: Five percentage points.

Immad: Yeah, they take 5% of

Andrew: Got it. So they get 5%, you get 15% and the people who invested get the rest of the 80% of all the upside, how are you raising money for this? What are you doing?

Immad: Uh, yeah, I I’m really busy with mercury, so I love talking to entrepreneurs. I’m happy to do that on the, on the raising money for my running fund, I’m doing like the least amount of work possible. And one of the great things is the angel list has a bunch of LPs and they have a platform and they obviously get an incentive for like promoting my fund.

Andrew: That’s what it, the 5% is. If I understand it, right, they take a different percentage. If they bring the investor to you versus if you say, Hey, Andrew and I are friends, Andrew will invest. Then it’s a smaller amount that they take much smaller.

Immad: Yeah. Then they only take that initial fee. They take like a 1.5% fee. Um, but, but for me, they do most of the LP stuff because I’m just too busy too. I mean, there’s a few of my friends doing it, but a lot of therapies are bought directly by Angeles, which works great for me because I don’t want to, I don’t want to go spend all my time, like talking to LPs.

Andrew: you’re also a brand and you’re associated with another brand Y Combinator. And so the combination means that anyone who buys into this world says, all right, I know I’m not, I’ll just put money in through angel list.

Immad: Yeah, and I have a pretty good track. So that helps as well. Uh, you know, back in 2016 when I was starting out, like, you’d have, you’d be crazy, dude, go, just give me some money to invest. Uh, but now I’ve done 150 companies. I have almost a 50% Iowa. Uh, and

Andrew: internal rate of return.

Immad: I mean, obviously they’re not liquid investments, but yeah, that’s what my current kinda run rate is.

Andrew: Let me then move on to mercury. I feel like I’ve tapped out. I, I’m kind of excited about the whole idea of a rolling fund. Just the, the concept is interesting because it’s innovative in the fricking guys at Ingles is so freaking innovative.

Immad: Yeah. Yeah. Yeah. I mean, they’ve been trying to like, you know, innovate the Skyway syndicates or nothing until like angel listed it. And then, uh, my rolling funds is a new thing and I think it will be bigger than everything else they’ve done.

Andrew: You do. All right. Um, wait, one last thing. Do you, since you’ve got a bank, do you get to then have insight into how companies are doing, which then you use to make your, your investment decisions? I’m assuming.

Immad: Uh, well, a, you know, I wouldn’t do that. Like, it feels a little unethical and I think Macquarie raised actually is like a good way for me to do it because then a company’s opting into like share information into Macquarie raisin. Yeah. I will. I’ll be one of the investors on that platform, but there’s definitely like, people have to trust that they’re using a bank and there’s also some information that like is fairly personal, that goes in the bank account.

So, you know, I wouldn’t like mind that data in any way that wouldn’t feel right to me.

Andrew: Okay, but you, even though you don’t mind it, you still get a sense of what’s working in the world where the money is, right. There are certain places where if you stand in the market, you understand how businesses are doing

Immad: Yeah, for sure. I mean, I can see, I can see like, Yeah. What I tell businesses are actually more important than I’m just talking to entrepreneurs all the time. Right? Like, uh, that’s probably speak to like five to 10, like customers. Uh, and I try to be helpful as whatever it is, like every week. So,

Andrew: Yeah. One dude said he signed up. I wish I had their names, but stinking, Twitter. They’re great. Except when they’re not, I can’t go into my direct messages, which is where I want people to message me about mercury because I wanted private stuff from them. I can’t go and search my private messages, my DMS and Twitter, all I can do is search for the names of the people who, who I talked to.

So I can’t get the exact name of the person, but one of the people who signed up for mercury said, One 58 in the morning. I had a question he responded to mod the founder responded. He said, all right, I buy into this and he signed up. I said, have you been disappointed? Goes, no, it’s great. Um, so let’s see, go back to where you came up with the idea for mercury.

Immad: Yes. So I think it goes back to that point of, by investing is like, you see the future and yeah, I’ve been an entrepreneur since 2006. And if you remember in 2006, yeah. All of these business tools like really suck, right? Like you, you, you use Skype for like talking to, uh, talking to your colleagues. You would.

Yeah, there wasn’t a Stripe wasn’t around when it came to payroll, you had to deal with kind of these broken stuff. So, uh, yeah, as time went on, like these tools got better and better and yeah, I kind of call it like consumerization of business tools happened. Uh, so by the time 2013 came along. And yeah, I’m, I’m pretty good friends with the Gusto founders.

So I sold that journey very closely. Uh, they took something payroll, which before they launched payroll was just really bad. Like I remember there was like me and Jude, we were sitting on a apartment in San Francisco and we had someone come with like fricking like literal file, like filing binder to like, make us fill out like payroll forms.

I was like, how is this? Like, that’s

Andrew: know what I had that too, from ADP,

Immad: Yeah. As

Andrew: he didn’t come with a piece of paper. He was so proud. He had an iPad. I look at it. It was an iPad with like a DocuSign for me to sign it.

Immad: That’s like, I didn’t win the game. It’s like three pieces of paper anyways. So I sold that to anyway, like they were all became like fully, like as good as. Other, you know, online, uh, consumer apps, but banking just hasn’t improved, right? Like it’s, we’re dealing with the same kind of bad bank software where you have to go inside a branch or like do with emails to sign up.

And that was just like, you know, in 2013, I was distinctly remember just feeling like the pain of having to. Deal with just talking to people who work at banks, you know, you can, they don’t, they don’t have like modern, modern customer service kind of tools. Right? Like you can’t just like chat someone and get an answer.

And it’s like relatively quick, uh, everything about dealing with a bank is painful. And then on top of that, they charge you fees, all sorts of things. And it’s so confusing. I don’t know if you’ve ever seen like a fee schedule for a business bank account, but it’s just a complete mess.

Andrew: I shouldn’t interrupt, but I absolutely did this week. I was told that I needed to set up an account for like retirement. The retirement plan. I set it up with chase, chase emails, me the link to the thing that I have to fill out using something voltage or something. But what is voltage? I have to email an email address, take the whole message.

They just sent me, I forwarded to an email address and then they forwarded me something else that I could log in if I have the password. So I did that. And then at the end of it, I got like, A wire information. So no, this is from chase to chase. Okay. I’ll get the wire information. I put it into their site.

It literally says the price of a wire is zero to, I think, $15 to then how do I know that? You’ll see it on your statement now. How do I, am I going to go into my statement a month later to see what, whether it was. 15 or nine. And then ACH also is some price, but I thought ACH was included for free and I couldn’t figure it out.

Then I said, screw it. It’s 15 bucks. It doesn’t really matter. I’ll take a screenshot in case I need to remember this moment and do something with it, but I’ll move on. But yeah, I totally get what you’re talking about.

Immad: Yeah. I mean, everyone has some story about some crazy stuff that the previous

Andrew: But here’s the thing though. I’m not, it’s not that big of a deal for me, so yeah, it sucks, but really how much does it suck? $15 sock for, and if I did it often enough, I just find the price for ACH. And then I enroll in their ACH program at 15 bucks a month. And then I know it was all free, but how do you know what sucks that badly?

Immad: I mean, right now we’re using zoom, right? When we’re using Google meet, like, it doesn’t sound that much.

Andrew: No it does. I couldn’t use Google meat. No, I could clearly tell you with Google meet. I can’t get a recording of your audio. Separate from my audio with Google meet. If you have multiple people, it’s very hard on certain devices to see just the person who’s speaking or all the people to get. Anyway, there are lots of different issues.

Immad: Yeah. So there’s specific points where it sucks really bad. And then the specific points where it just sucks quite a lot. So one thing that we’ve done really well with which, you know, it’s crazy that like in April, 2019, this was completely new to the U S but like you couldn’t set up an online business bank account before we launched in April.

So. For most of the big banks, the only way to set up a bank account is like walk into a branch, sit there for three hours and then you get a bank account. Uh, and we’ve been, yeah, while we were doing Macquarie, we set up like nine or 10 bank accounts. It’s like, feel the

Andrew: Just to understand it. Was there a moment? When you saw this, did you see your, um, entrepreneurs, you were backing goals through this problem? Did you feel it yourself or were you just saying, I know that everything needs to be modernized. What’s a part of the business stack that hasn’t been modernized banking.

I’ll go in and I’ll figure it out. Which, which approach was it?

Immad: That particular pain point is something I had felt, but it’s one of those things where you feel it like one off and then you’re like, okay, you know, not have a bank account left and moved on. Uh, the other things that I had felt like more distinctly at Hayes, Apple, number one, we can get an API from my bank.

Um, so the way the Hayes app would work is, you know, we would do ads things. We’d, we’ve had advertisers like pay us a bunch of money. We want to then. Take someone betas 50 K. We would want to put that into our system. Uh, and then at the end of the month, we would pay out 600 developers and to do most of that with the bank, it was all manual.

Like you’d have to log in everyday to see who had paid you and then like enter it into your system and then end the month. Do this like crazy. It took us like three or four days every end of the month, like, okay. Yeah. Up to everyone. Cause we were manually entering in like all of this data and making sure we don’t make mistakes and all this kind of stuff.

Uh, and you just like, you just can’t get an API from a bank. Uh, even today, apart from mercury, I don’t think there’s any other bank that has like an easy online kind of modern API that you can use. Um, so that was, that was the distinct pain point we felt, um, Uh, other things. Yeah, one thing that still kills me and like you reminded me of it when you were talking about searching for transactions is every bank.

They only give you transactions on their dashboard for the last three months. And you have to go into these PDF statements to try to like, get any data. And I, I swear to you, I thought there was like some sort of law that made it like this because it’s such a consistent thing between every bank. Uh, and I investigated that isn’t a law.

It’s like, you know, all of these banks all use these really antiquated backend systems to run the run, their online stuff. Uh, and all like all of these backend systems have this like relatively dumb restriction, uh, which is why every bank has this restriction. So a lot of things you can kind of reimagine if you just.

Approach it from like those principles and like it’s almost these frustrations add up for people and there’s no, there’s no reason for it anymore. Right? Like every other tool we use as modern and good, like there’s no reason why the bank has to be stuck in the past.

Andrew: What about this? If you’re just being a bank, which is where you are right now, where’s the money coming and it feels like my bank doesn’t make any money from me, which is why they keep setting me up with different sales people to switch my credit card processing to them, to switch my life insurance. My, this is my 401k.

Immad: Sure. Um, so the two faces, we would make money as number one, we give people debit cards and when people swipe the debit card, we wear the card issue and we get 80% of the interchange, which is fairly substantial it’s for business cards. It’s 1.8% or so. And then the second place is, uh, when people stole money with us.

Uh, the way it works is we work with a partner bank to keep the money, uh, the money doesn’t start directly with us, that partner bank. Yeah, every deposit you have as a bank has value attached to it because you can then lend out that money, uh, to other people. Uh, so they give us a rough show on those deposits.

So those are the two main methods. Uh, but there’s also, you know, one of the reasons like banks always make the most of their money, right? Like they have deposits to make money on lending, but when they’re not lending. To you as a customer, they want to try to still kind of Milky for money, which is why, like, a lot of the worst experience people have with banks are like, when they don’t have as much money at the bank, right?

Like that’s when the fees go up, that’s when you have like a much worse experience. So I fundamentally don’t think that should be the case with banks. Like there’s definitely, you know, maybe on. 50% of our customers. We don’t make any money or we don’t make as much money as it cost us. But with the top 10% of customers, we make a ton of money.

I w I would much rather have like, kind of like a freemium mentality to it that like, you keep your costs of service as low as possible. Like, we don’t have bank branches, we try to automate as many things as possible and try, and then you serve this kind of free tier and. And the other secret is like with entrepreneurs, you know, someone can have nothing for like six months and then suddenly they, they become a huge company.

So if you can support them early on when they’re like zero, you can grow with them. And when they become bigger and most people don’t want to switch back so that you can kind of stick with them through the journey, you feel that.

Andrew: So that brings me to why I’m not with you. As soon as I saw that, I said, this is solving all my problems. I feel like it’s such a pain. I have to go back to pilot. Right. Which is doing my books and say, I’ve got a new bank account. I have to put in. I would want to put in a minimum of a quarter million dollars with you guys.

Right. For some reason that seems like the savings I would have on sending wires seems like it would be worth it. Oh, ACH is free no matter what. Okay. And then I have to remember which of my account is money going into, and then eventually start to wean off of chase, you know, and remember that at some point I’m going to go below their minimum.

So then that’s an, you know, it’s such a pain to switch. No wonder you’re going after new companies first.

Immad: Yeah. I mean, it’s probably less of a pain than you than you think it is. You know, pilot were like very well integrated too. And we have a concept of like a bookkeeper can, so you can, you can invite your pilot user to it. We made like, you know, saving, uh, like a new recipient, super simple. So, uh, you know, both sending ACH and wires will be as easy as possible.

Uh, so although it feels like a little painful and you know, it’s not trivial, uh, it’s probably not as bad as you initially think it is. Uh, and you know, we don’t have any minimums or any of the, we had stuff, so you can just try us out. Uh, and then later on, if you’re like, okay, this is working out, you know, one thing that people do often is try as for like a specific use case.

Uh, so maybe they don’t switch over completely for us with us, but they might try, like we have mutual clouds, for example, which chase probably doesn’t have. So, uh, you can use us with electric on and have a little bit of money, then get comfortable with it and then switch over over time.

Andrew: I’m actually I do. I did it right now. As you were answering that question halfway through, I said, let me try to see, cause there’s no downside, right? If I have another bank account, am I out anything? No. Right. Okay. So I did it. I think I’ve gotten out. I had to tell you guys that I wasn’t in the gambling space.

Cause you guys don’t do that. You don’t do any in weed. Right. But other than that, I think I’m okay.

Immad: I mean, you’ll miss something. Okay.

Andrew: Yeah. I, I, I mean, I think I’m done here. I probably just need to give you my address and then we’re and then we’re done. Alright. I’m into it.

Immad: Did you just do that on an iPad?

Andrew: I only use my iPad. Yeah, I’m on the iPad. That’s another pain in the neck.

I can’t do certain things on an iPad. So here you want to know my legal business name. I do wish that it was easier to switch off from a no. Okay. I want to make sure that I don’t make a mistake on this, but it seems like a pretty straightforward thing to do that. One of the things that I discovered when I was going through this was when you told me that this would come up. People said that there was an issue with, uh, international wires or international payments.

What happened there?

Immad: Mmm. Yeah, we do. Like, especially as we’ve grown, like, you know, we do thousands of these things a month, uh, and people are very sensitive with money as they should be. Obviously when something goes wrong, uh, people. Should get worked up about it. Uh, so we were previously, the way it looks is international wise systems are like the most antiquated of the, of the payment systems there exists.

Uh, so there’s this concept of like correspondent bank. I won’t bore you with it, but the process was not very smooth. Both. It would take a long time. Uh, why is, would sometimes have like random fees associated to them? Uh, and people get very frustrated about that. Uh, we actually, what would that existing provider to improve the process?

Now it’s much smoother. And we also have, uh, a new provider that like is working out much better. Uh, but you kind of have to. Especially like most of the problems people will complain about are things to do with like when you interface with these legacy systems and yeah. Especially when you’re growing fast.

And you’re trying to like, you know, for example with like when you’re sending, uh, international wire to India, that’s a special code that you need for the branch that’s receiving the wire. And, you know, you get end up, like we haven’t ton of like per country, like things that we had to build over time. And like, you know, while we don’t have it for like a few weeks, people get really mad because then the why is not working.

Yeah. And they should get mad about it. Uh, but yeah, the way we try to handle it, it’s like, Hey, obviously try to get to the root goals and fix it, but be just be like, Yeah, really talk to the customer. Yeah. There’s any fees then we fund them and hopefully most people appreciate that. And like, yeah. And actually one of the fun things is about serving startups is if we do make mistakes, uh, they, you know, they are very empathetic because they’re like, Oh yeah, you know, you guys are a startup.

Like, I understand that. Like, yeah. As long as you don’t try to like, yeah. Not, not admit responsibility, like you feel like very transparent about things. People actually like surprising the understanding.

Andrew: All right. While you were answering that, I finished everything except for the upload of documents that I should look afterwards. Now I need to show you the documents that shows that I have a DBA. I need to upload the company formation document, which I just discovered. And I took a picture of the other day and then my Yaya number, and then I’m done.

And then I’m in with you guys. And hopefully pilot’s not going to charge me extra for another bank account. And then all I have to do now, just start transferring more of the money with you guys. And I get to experience what it’s like to be on mercury. How much did it cost you to get mercury.com?

Immad: Oh my God. Uh, uh, I don’t know if I can, and then even if I’m allowed to say specifics, but so I’ve been working on mercury mercury to Oklahoma is a long story. I won’t bore you with it, but I’d been working on it for

Andrew: Give me a summary of it. What happened?

Immad: Uh, basically it was mercury dotcom was this huge company called mercury interactive, that sold, I think for like 2.5 billion or something, it was an Israeli based company that sold to HP.

So HP then like subsume their product. So they stopped using the domain. But then this funding out to HPE, which was the software division and then HPE sold a bunch of things to Microfocus. So this microphone is UK based company. So that company owned by greed.com. The one using it. Uh, and I just had to like persuade them to like, be open to selling it because they were like, Oh, sales and marketing things that like, there’s still some brand association that like, I was like, okay, really?

No one knows about it. Doesn’t point to anything. I mean, it took two years of

Andrew: So, how do you convince a company to sell to you? It’s not like they need your money and the people on board aren’t getting right.

Immad: uh, so, you know, one thing we were funded by Andreessen Horowitz and like. Yeah. The initial intro was like straight from like Mark Andreessen, because he’s on the board of board of HP, uh, to HB. So that like helped facilitate a little bit, like establish credibility to some extent.

And, uh, and then after that there was somewhat of a, like a waiting game. It was just like, kind of hit them up every three months and say, Hey, you know, let’s talk about it. So you just have to do, like, we just have to wait possibly. So we ended up paying. More than a million for it, but we extended it over five years.

So the payments of five years, uh, which, you know, as a startup, we also back weighted it. So the bulk of the payment is towards the end of the five years. And, you know, my reasoning was, and it’s also been the case, like if we’re going to get a little bigger in five years, so, you know, the same dollar value will be less painful to us.

Andrew: and you guys raised $26 million.

Immad: Yeah.

Andrew: And then the final thing is you’re not a bank yourself. If I understand it, right. You’re basically working with a bank. You’re the front end, right? What’s the bank.

Immad: Yeah. The bank is called evolve bank and trust. And it’s a 90 year old, I guess, not a 94 year old bank and the way it works, it’s true for most challenger banks. So like chime is the biggest challenge a bank, and they also work with another bank. They work with Bangkok and the way it works is. You the money never touch it touches my crease.

Uh, yeah. That’s the tricky part is obviously banking is heavily regulated, but there’s also distrust component. Uh, so if, you know, when we talk to customers, we’re like, Hey, we work with 94 year old FBIC insured bank, the money money, actually doesn’t ever touch us. We’re really like providing a, you don’t have to interact with that bank.

We’re providing all the software, the card, the customer service, all of that. Uh, but in terms of like where the money’s going, like the money goes directly to that bank. And then. We effectively send them like instructions to like send money back

Andrew: And you have the ability to switch away from them. If you need to. At some point in the future, I’ve got a friend who I think switched away from a who’s running a challenger bank. That’s switched away. It’s a pain, but it’s possible.

Immad: Yeah. And like, once your moment show you, you might have like three backend banks that like appropriate for different use cases.

Andrew: There I do. This is such a great idea. You’ve got you nailed it with this one. I feel like Hayes app made sense. I don’t fully get the gaming space. I told you I hated being in gaming. It just like even playing it. Suck me in. This just feels like it makes so much fricking sense. A bank for businesses that works like the rest of the software that we use, you know, it just, everything else makes sense.

And then we go into banking where we’re going back to her grandfather’s world, which made sense for them, but not for us. Congratulations. All right. I got nothing now to add to this, everyone should go check out mercury.com. It’s a great domain name, great company name. I want to thank the two sponsors who made this interview happen.

The first is launch pier. That’s there. Your peer launch, peer.com/mixergy. If you’ve got an idea you want help thinking it through, they will help you do it for free launch pier.com/mixergy. And the second when you’re hiringĀ  you owe it to yourself to go to top towle.com/mixergy on. Congratulations. Thanks so much for doing this.

Immad: Thanks for having me, Andrew.

Andrew: Bye everyone.

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