Undoing a $5 Billion Acquisition and Building a Durable Standalone Plaid (with Plaid CEO Zach Perret)

22:07What code was your team writing to build such an API to a bank account that doesn't necessarily contemplate having an API? That's a good question. So in the early days, we knew that there was this principle outlined under the Dodd -Frank regulations that said that consumers own their financial data and they should be able to permission their financial data in the way that they want to. If you look at the European regulations, they were pretty clearly open banking laws in both the UK and Europe that said that consumers are able to get their financial data and they actually mandated how banks have to build APIs.

22:39In the US, there was this clear statute written into Dodd -Frank, but the rules on how the data would be shared weren't written yet. It was assigned to the CFPB, the CFPB hadn't started working on it. And so in the early days, we went and talked to a bunch of lawyers and basically figured out the thesis that consumers own their financial data and banks have to find a way to provide the consumers with that financial data. And if the banks don't have APIs, then we could build outside in integrations to the banks. So we built screen scrapers to actually allow a consumer to collect their own financial data.

23:09And doing this at scale is very complex. To hundreds of banks with all these different types of things. Probably also. 12 ,000 screen scrapers of banks and financial institutions. I mean, you knew you had the legal air cover to do so, but like... Sure, their IT teams are having alarm bells going off. Well, we tried our best to do it in partnership clearly with the banks. I don't think every bank, if you ask them, wouldn't necessarily agree that they had as much data as they might have wanted. Broadly, our goal was always to partner with the banks. Like, we wanted the banks to be customers, we wanted them to be a participant ecosystem.

23:46And many of the banks actually came to us and said, great, we'd like to move to an API. We haven't built it yet. Please just screen scrap us because our consumers really want to use apps like Venmo and Robinhood and Coinbase, but we haven't built these APIs yet. In a lot of senses, very collaborative. In some senses, it was a little bit more antagonistic. So in some senses, the banks were frustrated with the fact that Robinhood existed because Robinhood was stealing their trading volume. And so they didn't love fintechs. So they made it a little harder for us. Eventually, it got to the point where they see if it started to write the rule and take the actions.

24:15And it became very clear that you can't really tell a consumer they can't have access to their bank transaction data or they're not allowed to see their account routing number. If a consumer wants to open a new investment account, you can't stop the consumer from doing that. You know, eventually we got to the sense of really strong partnership and collaboration. At this point, we have the vast majority of our data comes from API -driven integrations because the banks have had the technical sophistication and time to figure out how to build APIs in a good way. We've also partnered with them. We've built API platforms for them.

24:42We help them launch APIs and so forth. And so we now are in a much more long -term sustainable technical infrastructure state. But in the early days, there was a lot of like work. I was just imagining your early VC pitches where you're like, yeah, yeah, we're screen -scaping the banks now, but don't worry. In the future, we'll get to APIs. We're gonna get people's usernames and passwords. We're gonna store those and then we're gonna have a little bot that logs into their account for them and executes a transfer acting on their behalf as if we're them logged into the bank. It's got like scary written all over it.

25:14But here we are today. This is an amazing tech company story where you envisioned it's gonna be ugly getting there, but then the future when we do get there is actually the thing that everyone wants and is much better for consumers. I think a lot of elements are correct. Individually, when we first thought about building this company, I wasn't sure if anyone was gonna use it. When we talked about, all right, great. A user wants to link their bank account with Venmo. One is anyone gonna do that too, is the infrastructure gonna work. Three is any consumer going to choose to enter the necessary data, which was at the time of user name and password.

25:45It turns out people did it in droves. Despite the fact that we felt very, very good about the infrastructure that we built on the back end, the security team that we built, the level of oversight, the privacy protections we put in place soon and so forth, we couldn't guarantee that consumers would feel good about it when we launched it. And so we were skeptical. It turns out the value to consumers is very, very high. The customers that we worked with ended up building amazing products and this ecosystem just took off. And I think despite the fact that we had this theory early on that all the banks should launch APIs, I think if the ecosystem hadn't taken off, we probably wouldn't have seen the banks actually build this.

26:19In some sense, it was a chicken and a everything where we had to build the less scalable integrations before we could get to the more scalable ones. We interrupted you earlier when you were taking us all the way to the Fintech boom and then bust. You call it 2022, yeah. So you asked about what products we were building. So we built the bank linking broadly and as we kind of moved forward in the archive platform, we started to build things that rely on linking or things that are adjacent to bank linking. So we built out a set of credit oriented products. So asset verification, income verification, whenever you apply for a mortgage, you need to verify your assets.

26:52You need to verify your income. If you're applying for an auto loan, you need to prove that you have verified employment. We can do all that digitally. We acquired an ID verification company. So every time you link your bank account, you oftentimes then have to verify your ID that the step before the step after. If we can tie that together, we can make it so that you can verify your ID once. And then every time you link your bank account, we can pull along a verified identity with it because it's very, very powerful. We built bank payments infrastructure. So not only do we let you collect your account and routing number, but we actually let you set up an ACH payment and you could do something like paying a bill or funding an account or whatever that is.

27:25And then on top of that, we built this big analytics layer which I'll come back to later. But in 2022, we had this huge variety of products and endpoints and we're touching a bunch of different markets. And what that meant is, in the one side, we were working with most of the FITNIGHT, the majority of the FITNIGHT companies to do many things. And we're working with more and more of the banks, we're working with more and more of the enterprises. So growth was good. We were also very exposed to the macro cycles of financial services. And as all of you know and all of your listeners probably know, financial services has these big cycles that they go through basically driven by interest rates.

27:58A lot of money was moving when interest rates were zero. Exactly. A lot of money was moving. In the second half of 2022, we saw this kind of rapid increase in the interest rate. What that meant is that investment markets crashed and lending markets basically froze. Lenders didn't want to lend anymore. Stock prices dropped, crypto prices dropped. The funny thing is in our data, we see that consumers rapidly sign up for and purchase stocks when stock prices are high, consumers rapidly sign up for and purchase crypto when crypto prices are high. And when the prices drop, then the usage drops. The exact inverse of what perhaps people should do, but it is the reality of what people do do.

28:35Get greedy when others are greedy. I think it's probably the phrase, right? Yeah, something like that. And what was your business model at this point in time? Were you getting paid on a per transaction fee, a per token fee? Behind the scenes, we have a ton of different end points. We have more than a hundred skews. Each of those is priced a little bit differently, but you can think of our business model as making money in three senses. The first is a per action sense, meaning every action a user takes. The second is in a, when I say actions that actually breaks into two sides, what is a per user sign up fee?

29:04And then one is a kind of per payment fee, and then we have a per user per month fee for the different products that we have. So per user per month actually stayed incredibly stable, per payment stayed fairly stable, then the user sign up is kind of a philosophical cliff. Yeah. So the portion of your business that is tied to essentially volume and usage within the system was going great during Zerb, and then all of a sudden not. Yeah, exactly. So that definitely slowed down. For the most part though, the business continued to stay fairly stable. So we didn't see any revenue declines. We saw a slower revenue growth, because again, the per user per month and the user's fees continued to grow, but we saw a decline in relative growth.

29:39The best way to think about it is, if a lender slows down their lending, they may sign up less new users, but they're not going to stop collecting repayments from the existing users that they have. In our growth may slow, but the absolute amount of revenue that we have didn't. The second half of 2022, the first half of 2023 were much slower for financial services startups generally, but then started to re -exceiverate in the second half of 23, and into 24, and now into 25, we've seen many quarters of accelerating growth. While I would like to not go through an interest rate cycle like that again, I'm aware that we will as a society, and probably as a company, and I will go through another interest rate cycle.

30:15And in a lot of senses, we came out of that much stronger. We launched major new product and business areas. We fully replatformed our strategy, and the business has been doing really great, especially this year. I'm not going to let you get up with a phrase, like, re -platformed our strategy. What does that mean? That's MBA speak right there. That is fair. I am not an MBA. But you did work at Bane though, so. I worked at Bane. I worked at Bane for 12 months. I think it was 12 months in one day. I earned one bonus check, which was $4 ,000. It was the most money I'd ever seen in my life, and that gave me all of the money that I needed to quit and try to start a startup, and lasted me a full two months of rent in New York City until I was out of money again.

30:54All right, listeners, we want to thank a new friend of the show, plaid. The name is likely very familiar to you after our recent ACQ -2 episode. Odds are, you've used plaid before, without even maybe realizing it. If you've ever linked your bank account to apps, like Robinhood, Venmo, or Chime, you're one of the millions of people, like one in every two Americans, who've already used plaid. I feel like I've grown up in the tech industry alongside plaid. There are so many modern experiences that are powered by them, and at its core, plaid isn't just about making it easier to connect to your bank.

31:28It ends up being the backbone for thousands of companies building faster, safer, and more seamless financial experiences. So whether it's reducing fraud, speeding up onboarding, or turning old school banking processes into something that feels instant and effortless, plaid is making it happen. So last year plaid rolled out some powerful tools. Think cashflow data for better credit decisions, anti -fraud tech with AI, and analytics for bank payments. And this year, they've leveled up again with major updates across all three of those product lines. Yep. They're even helping businesses manage things like direct billing for your subscriptions.

32:02So the bottom line is plaid is making it easier for companies to build smarter, safer, and more personalized financial experiences that just work. If you're building financial tools or infrastructure, plaid's data analytics can give you a serious edge, whether it's fighting fraud, underwriting smarter, or managing payments more efficiently. So if you want to learn more about how plaid created one of the biggest networks in financial services today, listen to our recent ACQ2 episode with plaid's founder and CEO, Zach Paray, and our thanks to plaid. You have a totally different strategy now. You have diversified into three new businesses.

32:36I just read your annual letter. Would you have diversified the business away from just bank account linking if it weren't for this bursting of the FinTech bubble? We definitely would have. So the strategy that we've always had is we need to build the API for your bank account, the bank linking functionality. But in the long term, we believe that, based on all the data that's coming through the system and the user patterns that we see, we can build a much more valuable analytics business that can meaningfully change the way that we do important things in financial services over time. So we've always had the multi -step process of first build the bank linking business, then use the data to go solve fraud or to go solve credit scoring.

33:17But we had to get to this certain amount of scale. What I will say really enabled it was actually raising the large round in 2021. We took that capital, we rapidly kind of ramped our head count, predominantly in engineering, to go re -platform basically all of the data back end so that we could now shift to being an analytics business so that we can build great analytics products. And then we allowed revenue to catch up and surpass. And that's what you're supposed to do when you raise a fund raising round. And actually looking retroactively at our financials, it kind of follows the exact right trajectory.

33:49So you see the decline in operating margin and then the re -acceleration in operating margin, that round really enabled us to go make this big investment. The products that we've been focused on are using the aggregate data set that we see. So using the users that have linked bank accounts through Plad, seeing all the applications they linked to, again, understanding the fact that we own an identity verification platform and we can link that to a government issued ID, ingesting a bunch of data exhaust from the actions users taking, ingesting third party fraud signals, we've created kind of three major new product areas.

34:21The first one is around anti -fraud. So we have some products that we're going to launch very shortly, kind of expansion of the anti -fraud product set where we can look at users patterns across all of the apps that they're using. And if they commit fraud in one of the apps that can then be reported to us, we can federate out that fraud signal. Or we can see the fact that they've just signed up for four loans in the last 12 hours. All right, maybe that's a flag. So we can build this kind of algorithmic type of fraud tool, serve that up to all of our customers and they can better protect fraud in the ecosystem.

34:49And it's an angle on fraud detection that no one's ever had the data to build. That's one example. The second big example is building a real -time credit system. So FICO came out with the way that credit scores are built in the late 80s, early 90s. And up until now, most loans have been made based on FICO data. We believe that FICO data is great, but if you augmented that or expanded that by using real -time data, you have a much better picture of a consumer. So then if you got a new job tomorrow, don't go get a new job. I'm really glad that you're doing the job you're doing. But if you got a new job tomorrow that paid you five times as much, you would be a much better credit risk because you would have more free cash flow available, you would be able to pay down greater debt service.

35:29Yet, FICO doesn't include that kind of data very well. And so we have a lot of real -time data that can look at changes in jobs, changes in spending levels. If you move into a cheaper apartment, but you didn't get a new job, you're actually a better loan risk. So we can understand what is the underlying spend on a given month or a quarter a year, and then build a credit score that sits on top of that. And then we've done a bunch of work on payments analytics, helping enable bank payments to be something that can be more reliable, more predictable, so on and so forth. So basically everything that we've launched over the last two years has been a version of an analytics product that leverages the aggregate data set that comes through the rest of the platform.

36:02And this is really cool because I imagine there's nobody else who sees as much data across consumer finance as you. What's the 50 % number you guys have something like, is it 50 % of Americans use PLAD? Yeah, more than one in two people in the US that has a bank account that has linked to the PLAD. That's incredible. You know, you could be JP Morgan and be the largest financial institution out there, but the only data you're seeing is JP Morgan, Waldgarden data, or likewise you could be Visa and be the largest credit card network out there. But all you're seeing is credit data across the actions that your customers are taking with payment data with Visa, you're seeing the whole picture of everything everyone is doing.

36:50The way that we think about our data set is that we have a lot of unique elements of our data set. So we don't have anywhere near the depth of customer information that JP Morgan has on JP Morgan customers. The customers upload a lot more data to JP Morgan. The customers use apps a lot more than they would interact with PLAD. So there are a lot of things that JP Morgan would see that they can build really wonderful products for JP Morgan customers. We have a unique data set in as much as it's an aggregation of a bunch of things that hasn't been aggregated in this way before, meaning we see all the applications that consumers link to.

37:23We can see the activity within some of those applications. We can link that to government issued IDs or a bank account data and so on and so forth. And so our thesis on product development is not just that we have a large data set, but it is that we have a unique set of things that come together in a way that no one has ever analyzed for fraud before or no one has ever analyzed in order to build credit scores before. That's the vector that we push on, which is what are the unique things that we can do that haven't been built before? David and I are so interested in these multi -hundred billion dollar trillion dollar businesses where their first idea was actually the good idea.

37:56And then everything else after that has just been like cute. You look at TSMC tried to get into solar cells and all sorts of things and the right answer was just keep making integrated circuits. Are these new business lines interesting for you guys in working or was it just like actually bank linking is an amazing idea? Well, bank linking is certainly an amazing idea and don't get me wrong. We're still investing in that that is still growing and I think there's a lot of room left for it. The way that we came up with all these, it's based on the things that our customers are trying to do with the data but they don't have the scale to do themselves.

38:31So we had a lot of customers that were trying to build credit scores on top of transaction data that was coming or credit analytics that were based on transaction data that's coming in. But they just didn't have the data scale to be able to do the level of analysis that they needed to do. And so they would come to us and they would say things like, hey, can you just do this analysis for me? Or could I like send someone to like work in your database and just build some queries for us? We didn't do the second one to be clear. We were taking these real time things that exist out there and then just backing into, okay, great, because we have the data set structured in this way, then great, we can build a lot of these analytics.

39:03I would say on the fraud side, it's fairly similar. We're looking a little bit more into the future on the fraud side because not a lot of people have had this kind of data that are queriable in the way that we have. But I would say for the most part, yes, these products are working. They're still very early. Credit scoring is a gigantic market. We are a tiny, tiny sliver of it today and we hope that that is the start of something really large, same for fraud and frankly, same for bank payments. It is very fun to go in and be able to sit down with customers and hear them say, hey, I really wish I could do this thing with my data but I think you can do it with your data in a much bigger, better way.

39:35Okay, I was expecting you to answer with a stat from your annual letter and I just have to say it because I think it's astonishing. You were very humble there. New products, the three that you just talked about, represented over 20 % of ARR in 2024, compounding at 93 % annually. That's what it's supposed to look like. That is when you have a core business and you're launching new growth businesses, that's the exact profile that you are hoping and dreaming for. I agree and we've been pleased with the progress so far. I think there's a lot more to go. Well, you are ready to be a public company CEO.

40:07There's a great book. And I can't remember who wrote it, but the title of it is Please But Not Satisfied. And just the title of that book, I have it on my shelf behind me. Normally I have a bunch of books behind me when I do these. Please But Not Satisfied. I think that represents a lot of my management philosophy. Okay. I want to shift back to the managing a growing business in a cyclical environment, both cyclical on your customer side because people are using Fintech's apps more and less as the or there's an ebb and flow there. But also on your own funding, your own valuation, you raised a large successful financing round this year at a much lower valuation than your big 2021 round.

40:48Can you talk us through how you thought about that, the mechanics of it? And it seems like you were pretty intentional about managing things like employee liquidity in that. Absolutely. So we signed paperwork to sell the company to Visa for about $5 billion in 2020. In 2021, we raised around a financing at $13 .5, give take, $1 billion valuation. We then raised around this year at around $6 billion valuation. So big spike in valuation and then it's a kind of valuation on the other side. What's happened in that period is largely market multiples have changed. I mean 2021 was all time high market multiples and even better, we had just had the best advertising ever for the company happen.

41:30Meaning, you know, the DOJ wrote this big letter of why Plaid was going to take over the world. It was so awesome. Visa shouldn't be able to have it and so on and so forth. That is the best possible environment to raise money in. And then this year we raised money very different multiple environment. The business was fundamentally a much stronger business. So great growth, break even, new products growing really quickly, compounding at a great rate, really solid customer base. All of the metrics looked much better in this year than they did in 2021. We were kind of telling the story in 2021 of getting to where we are now.

42:01The reality is market multiples change. From an internal standpoint, I think we try really hard to consistently have this employee message saying, evaluate our success based on the metrics that we set out, the impact, the progress that we're making along the stretch of goals that we have. And the valuation will fluctuate as multiple fluctuate. Now, we can say that until we're blue in the face and employees will still care quite a lot about the valuation. It's not to say that we don't care about the valuation we do. But ultimately, we focus on the things that we can control and try to improve the fundamentals over time.

42:30And then we believe in the long term, the market will weigh that accurately. So mechanically, the way that venture capital financing works is someone invests that evaluation. And then as long as that valuation keeps going up, every party is happy. The investors are happy. The employees are happy given this whole crazy strike price options thing the way that employee compensation works in this system. That's just the way it's supposed to work. What things break when your valuation goes down and how did you account for that? We don't issue options. We issue RSEs. And so because you're issuing RSEs, you don't have the kind of strike price issue.

43:11Without getting into too much of the tax detail, it means that that is not as much of a problem for us. We were fortunate that all of our rounds have had very clean terms, meaning that investors may well be disappointed that the prices come down. Actually, I shouldn't say may well be disappointed. I'm sure they were disappointed that the prices come down. But ultimately, they are still long for the ride. We actually had a lot of existing investors reinvest in the most recent round, believing that there's a great deal of growth ahead of us. I mean, they obviously operate in the same as fluctuating market conditions as founders do too.

43:42Now, I would say that's not a surprise to any of our investors. We've been pretty transparent with our investors in our team over time. We've cut the internal valuation multiple times between the 2021 round and now. As much as this is not a fun process to go to to get here, I am excited now to have this behind us and be focused on post valuation research just really laser focus on growth. It must just be maddening when a number that everyone is anchored on is going down, but you are well aware that the business is at the strongest point in history. Intrinsically worth more. Yes. I wonder if it's perhaps because your actual operating business is also indexed to the financial markets.

44:26You can either fight the cyclicality of your industry or embrace it. And it feels like if you're going to operate in financial services, you just kind of need to embrace it. It feels like you've adapted that mindset. We do both. We fight the cyclicality in as much as we launch products that are either not cyclical or counter -cyclical. And over time, as we get bigger, cyclicality should impact us less. But we also embrace it. It is just a reality of our business. I hope that my lending customers grow a ton. And even to find launched products that are counter -cyclical, I hope that they continue to create cyclicality forever because they've grown so much, and they represent such a large portion of our business.

45:04But on the flip side, it is something that we have to be aware of. It's something that we write in our shareholder letters so that our investors understand it. Thinking about one day becoming a public company, we want to continue to be very transparent. Now, on the drivers of growth for our business, we control a lot of the fundamentals of the business, but we don't necessarily control the way that macro is going to impact us. We can react to it, we can prepare for it, we can't predict it. Could I ask about your different moments in time of product market fit with banks? Because it seems like you always had product market fit with users being willing to, off so apps can do cool things.

45:37When did it start to change with banks where it went from feeling like you were pushing a rock up the hill to banks looking and saying, oh, your vision's right. We agree with you about this future. How do we help you? That's a good question. There were a handful of moments where banks started to understand and really think about technology, using technologists to serve their customers in a more modern way. The first one was actually GovCloud. I think that was in, oh, it was like 2014, maybe 2015, somewhere around there. I'm not sure actually when it launched, but this is certainly when the banks started talking about it.

46:13When the government said, oh, my gosh, we can put data in the cloud, Amazon launch GovCloud behind it. That was a big step forward where the banks said, if the government can put data in the cloud, then maybe I can put data in the cloud. The next one was a series of announcements from JPMorgan saying, this year we spent $2 billion on technology. Next year we spent $4 billion in technology. Recently, they're saying $17 billion in technology. They're the leader. They're the biggest. Every other bank looked at that and said, you're spending $17 billion in technology. I should be spending on technology.

46:44And what will I get for it? The third big thing that happened is that the fintechs did really well. These companies, Robinhood, grew a lot. And in growing that much, they started to steal customers. They started to have high valuations. A lot of the financial services players either had to react to them. So you saw Schwab cutting their fees, cutting their trading fees. You basically don't find flat trading fees anymore in the industry, because Robinhood said, no, no, no, it's free. And everybody had to react to it. Or you find them copying. You often find both. So reacting and then copying. And as the bank started to lean in and build great financial technology products, they were using it to better acquire customers, to serve customers more cheaply.

47:24Things that are less visible, they started to use tools to avoid fraud, to make better underwriting decisions, to improve efficiency of their teams, so and so forth. So the reality is just the value is there. But it took a handful of these proof points. The expansion of fintech, the GovCloud launch, JP Morgan just announcing these gigantic numbers in terms of how much they spend for the industry to follow along. In a lot of ways, you guys are kind of like Microsoft or maybe Microsoft in the late 90s, early 2000s. In that it's important that you have a great brand, both with consumers and with large enterprises and financial institutions.

48:01And usually those things are not the same playbooks. How do you think about Plads brand and building trust with consumers and trust with JP Morgan? Well, first I have to acknowledge any sentence that compares Plads to Microsoft is the greatest compliment that you could ever say about our business. So thank you. But you're welcome. We think quite a lot about how to build a brand on three sides. We want to build a brand for developers, regardless of where they work, but for developers. So where we started, we started with developer routes. We want to build a brand that financial institutions know and understand because they are key partners to us.

48:41Yes, they're oftentimes customers. They're also data sources and partners in a lot of ways. And then we want to build a brand that consumers understand and trust. And actually, I think the consumer one is the hardest because we build a very, very thin user experience. Our user experience is embedded in every plad -powered product and it says, hey, you're linking an account via plad in order to do this thing. And this is what plad does. But we don't have a lot of real estate there. In a lot of senses, we think about a brand that's like the card networks, but the card networks have the cards with the logo on the back of it.

49:10We have just this 15, 30 -second user experience that a consumer sees and goes through. And your goal is to actually minimize that to make that experience as short as possible? Yes. And so it's hard to take credit there. But the feeling that we want to create is a sense of, oh, that just worked. Or oh, that was simple. And a sense that, oh, I trust this. I feel like I have resources and tools. And so we've built a handful of tools that you could interact with either via that linkage or asynchronously to see where's my data going, how is it working? We're working on a handful of things that are related to increasing security and privacy protection for consumers.

49:45So ultimately, we think we want to create the brand that is steeped in trust, steeped in clarity and understanding for consumers. But ultimately, it's an ingredient brand. It's a thing that you interact with for only a few seconds that supports the brand of the customer that you're going to go use. So plads branch should support Venmo in some sense. It should create a little bit more trust or a little bit more simplicity for Venmo. But we never want to use SERP. The brand that Venmo has created with their own customers. All right. I know you're close with Hamilton Helmer also. Give me your own seven powers analysis.

50:15Why can I not just wander out there tomorrow? Now all these banks have these nice APIs. And I'll just build something that looks a lot like plan. I think a lot of it comes back to network effects. I think it's probably the easiest place to start. So the thing that matters most to our customers is how many users that try to sign up end up signing up. And in some sense, you could say we're onboarding the service. If a user wants to sign up for Robinhood and that user fails to sign up for Robinhood, Robinhood is frustrated. If the user signs up for Robinhood successfully, they're very happy. And we provide a lot of lift there.

50:47So for users that we've seen before, we can do a lot of things to make the user experience faster and easier. If you've verified your identity once, we can automatically pull that identity through in a better way. So first and foremost, we get onboarding right. And we do that a lot of that through network effects. Second is that there are data network effects on the backend as well. So because we see all this data coming from all of these users and all these places, we can now build products that are differentially useful to our customers. So we can build a fraud analytic that no one else can build.

51:14We can build a credit product that no one else can build. And so that's probably the foundation of it. I would like to think that in the long term, we'll have some brand differentiation, but I don't want to kid myself, because even Hamilton says that brands are the weakest form, perhaps, of power. Ha, ha, ha, ha. Ah, it's funny. We disagree with him on that, but. No, I think brand is actually super important. It's why I asked the question a minute ago, like you've kind of, to my view, done this amazing job of you started by powering this new wave of FinTech apps that felt almost sort of like dangerous to use.

51:49It was millennials who were young at the time who were like using Venmo and be like, yeah, why not? You know, sure, I'm going to give my bank credentials to Venmo. Taken things into my own hands, even if it's a little risky. And over time, you've now become, oh no, this is actually the safer way to do this. That's a very difficult thing to do. The big shift for us was my mom, a couple of years ago, and she was in her late 60s at the time. She called me and she said, hey, my friend recommended this rocket money product, and it helps me manage my bills. Is that safe? And I said, yeah, mom, it says powered by a plant.

52:25The middle of the side of the boat. You recognize that. And she said, I guess so, OK. And she's like, I'm going to tell all my friends. She did. She told all the friends. We saw this like, you know, mass number of sign -ups from people that we never thought would be interacting with financial technology. And not just from your mom's spreading the word. Not just from my mom. There's a lot of different areas. The one other thing, while we're talking about power, the thing that I know might not fall into the seven powers framework, but I think it's really important, is also just a willingness to move fast and build products faster than others in the market.

52:56And I know that it is not, you know, what Hamilton might call a durable competitive advantage. But I think it matters quite a lot. And so that for us is one of the things that we also push on is we should be, like, move fast as a company value. We push quite a lot on trying to be the first, the best, the highest quality of the fastest moving and so forth. My pretend MBA, which I don't have putting that hat on, I would say that's just operational excellence. That's not strategy. Everybody wants to be the fastest and everybody wants to have the culture that ships the most product. And you just believe you're very good at it.

53:27Exactly. Hamilton would call the best company as process power. And he would also say that tech companies are not allowed to consider themselves as having process power. But I should say we should also aspire to have that one. OK, so you talked about how you started as a developer -focused company and how important it is to build trust with developers and make their lives easier. The whole notion of being a software developer is extremely different today than it was a year ago with the advent of AI. How are you thinking about being a company with developers as sort of your primary stakeholder?

53:57We started out building products for developers. We thought that developers would be the changemaker within the organization. When I say it today, it's really boring and people probably roll their eyes. But when you started saying this in 2013, it was unique. Twilio was the one that was selling it. Yes, exactly. Ask your developer. Exactly. When we went to financial services, the developers were like, oh my gosh, you're building things for us. How do I even do this? At the time, our competitors made it really hard to access the docs. We just put the docs online. That seemed very easy and simple, but it generated a lot of excitement.

54:27And there were a bunch of these examples on things that we did. We built an arrest architecture. Our competitors built in soap. We tried to stay what I would call just making normal decisions along the way, but it turns out that was the more on the company. Building modern software. Exactly. Modern software. These days, the nature of development has changed massively. So so many more people can consider themselves to be developers or vibe coders or whatever they want to call themselves. The way that we think about writing software has changed. And I think we'll change much more over the coming years.

54:59For example, we've shipped it to launching a platform to the MTP server so that developers can very easily build platform integrations directly within cursor or WinServe or whatever it is that they want to build in. We're continuing to push down this path. I think the way that people not only build products, but potentially even discover products is going to change hugely. As they in the cursor chat, they just type in like, hey, what should I use to set up an ACH payment? Or what should I use to set up a bank linkage? We need to make sure that cursor both says how you should use flat. But also then when it says how you should use flat, they might say, and do these two or three things or tell me these two or three things and I'll set it up for you.

55:35We're continuing to push quickly down that path. And I think we have a lot more to do. Interesting. All right. What is something that you used to believe that you have completely changed your mind on? You know, I think we're in an interesting period of work wherein the returns on hard work are not as obvious as they used to be. So in the early days of plaid, one of the things that we were able to differentiate on was what I called grinding projects or grinder problems where if we just went and did the work more efficiently, oftentimes through brute force than any of our competitors, we would end up with a better product.

56:27So we built 12 ,000 bank integrations. How did we build 12 ,000 bank integrations? There's nothing hard about building 12 ,000 bank integrations. We just did it. We set up incentives. We set up teams. We set up structures. We set up a culture where we just said, we're just gonna go brute force do all the stuff that we need to do. In today's software development environment, that is no longer a differentiator. It's not about the pure volume of work that can be done necessarily because agents will do much if not most of that work for you. They're increasingly the decisions that you make as a developer or as a product manager or as a designer or whatever it is.

56:59The quality of those decisions matters quite a lot more. And so I think they're increasing returns to strategy. They're increasing returns to thoughtful decisions, but there's a decreasing return on just pure volume of work. And that may change in the future again. So it may get to the point where we've all evolved to use the new tools and then volume of work actually matters again, but right now I don't think pure volume of work matters as much. That's good news for our friend Hamilton. Yeah, that's interesting because in theory, once everyone learns to use the new tools and this is making an assumption that the amplification of new AI tools are static, which is wrong, but let's just go with it for a minute.

57:43Then theoretically, everyone just has the same 100x multiplier on their work. Exactly. And I think we're in a unique period of time where we're not there yet. It hasn't happened yet. No one is using the tools at maximum efficiency yet. We're not at the next kind of efficient frontier. And until we get there, use of tools effectively will matter perhaps more than volume of work. I think Hamilton would probably say, okay, you have to assume in the future that people will learn how to use tools effectively. That'll be evenly diffused throughout society. Yeah, your point that like strategy is gonna matter a lot more in the current slash coming world.

58:24This is a really interesting one. I'm so glad that I came up in a different era. I feel like I just worked extremely hard for 80 plus hours a week for a decade starting in age 18. And that's the only way that I achieved anything in the world was by working harder. I was not a good strategist in my 20s. My co -founder and I were having dinner with a friend a week or two ago, my former co -founder. He's now off to starting a new company. And we were having dinner with a friend, a week or two ago, and the conversation was basically, we all wasted our 20s. We all did work in our 20s. That at the time was really valuable, but today, a software tool could do in an instant.

59:06Except that it turned into you becoming a large owner of a company called PLAT. Like you converted that labor into capital for sure. Sorry, I'm not saying about happy with the results of the work that we did at the time. It's just the inefficient way that we did it. We're seeing it with new AI companies now. Like companies are getting started in a matter of months hitting 100 million in ARR. That's because like the barrier to get to that scale, you needed to grind that existed before. It just kind of doesn't exist anymore. It's gone. Well, Zach, that's a great place to end it. Where would you like to point listeners if they want to learn more about you or PLAT or follow you anywhere in the world?

59:43So to find PLAT is just plad .com or at PLAT on X. If you want to find me, I'm at Zach Perez, ZAC, H -P -E -R -R -U -T on X. And if you have thoughts or feedback on PLAT products, I hope that you'll reach out to me. I would love to hear it as always. Awesome. All right, listeners, that is a wrap on our conversation with Zach. If you want to come to Radio City Music Hall on July 15th, we would love, love, love to see you there. That is acquired .fm slash NYC to get one of the last few tickets before it is sold out. If you want to know every time a new episode drops, check out our email list. It's also the place where we show little hints at what our next episode will be, share corrections, updates, and little tidbits that we learned from previous episodes.

1:00:28That's acquired .fm slash email. If you want to chat about this conversation that we had with Zach or anything else, go to acquired .fm slash Slack to hang out with the entire Slack community. So with that, listeners, we'll see you next time. We'll see you next time.