Immad Akhund, CEO at Mercury: The Reality of Building a Unicorn (and Why it's Worth the Pain)

0:00Immad Akhund:If you don't share the burden, they're not being given the responsibility. So they don't feel like they need to step up because they're like, okay, you know, Imad's got it. Like, it seems like it's not a big deal. Whereas if you tell people like, hey, this is like, we're about to run out of money and like, we better figure it out. Like people rise to the occasion. Hello, and welcome to Giant Ideas with me, Cameron McLean, and me, Tommy Stadlin. We're co-founders of Giant Ventures, which builds and backs purpose-driven companies. At Giant, we're lucky to meet extraordinary people with Giant Ideas that are changing the world.

0:28This podcast brings you behind-the-scenes access to those ideas and the inspiring stories of the people behind them. We explore how one giant idea can kickstart a billion-dollar company, shape culture, and transform life as we know it.

0:45Imara Kund is the co-founder and CEO at Mercury, which is one of the world's most widely used business banking platforms. He also has a front-row seat to Silicon Valley. He's an investor in over 350 startups, which include the likes of Airtable, Substack, Linear, and many, many more. This year, he announced that Mercury raised$300 million at a$3.5 billion valuation, and also his$26 million venture fund, which he's raised to back early-stage startups. In this episode, we talk about why he thinks founders make the best venture investors, his experience with his own investors at Mercury, and what it takes to truly scale a unicorn.

1:24Welcome, Imad.

1:25Immad Akhund:Yeah, excited to join you. So starting at the very beginning, when you founded Mercury, you've mentioned a few times in a couple of interviews that you had a slightly embarrassing moment when you went to pitch Andreessen Horowitz. Tell our listeners a bit about that. Well, going to the real embarrassing stories. Yeah, I distinctly remember it was a Tuesday. And, you know, this is my fourth company. So I developed this. It doesn't actually happen anymore, which is kind of a little sad. But back in the day, everyone had to go to Sandhole Road, which is like this road in this kind of suburb of San Francisco.

1:58Immad Akhund:But that's where all the VCs are. So, you know, I would go there. I'd go to there's a Starbucks there. I'd go there. I'd get my latte, you know, show up a little early, get prepped. So that's what I did. I was pitching in recent Horowitz for our seed round in 2017. And I got my latte. Everything's ready. You know, I pick up the latte and like I forgot to put the lid on it properly. the lid fell off and like the whole thing went all over me uh luckily it was like kind of a brownish shirt or gray shirt so it didn't look that bad but i mean it was pretty obvious i had like half of it had like a latte stain on it but i went into the pitch meeting uh this is the partner's meeting so there's like 20 people in the room but thankfully they turn off all the lights because there's a deck on there so the lights are down and i just do the whole pitch with it with like a massive coffee stain on me.

2:48Immad Akhund:But they ended up investing in me. Do you think they noticed? Couldn't have been that bad. No one ever mentioned it, so I guess not. And what would be your advice now to Imad if you look back going into to pitch Andreessen Horowitz or to some of the founders who one day want to get that opportunity to go on Sandhill Road and pitch to Andreessen? I mean, I was successful in that pitch, so I guess I don't have like, I'm like, do the same thing again. but you know i've done startups for a long time i did my first start for 2006 i've definitely failed uh plenty of pitches uh i think the two pieces of advice i would give myself if i was to go back and look at myself pitching is you know number one i i used to really treat investors as kind of like a transaction i'm like trying to get money from someone you know it's like a and i mean that is kind of the case, right?

3:38Immad Akhund:Like it is a business deal, but at the same time, especially now that I've been an investor for a long time, it's actually like not just a business deal. Like it's a, you know, and actually maybe no business deal was a business deal when it's like this big, but you know, you're trying to establish like a relationship for 10 years. There's a commitment as an investor that like, you know, you'll be there for the entrepreneur. So like, there's just all of this kind of human side to it that I was missing for a long time. Like I wasn't really trying to get to know the person and like, yeah, I think people can tell if like you're there to like actually build a relationship versus there to just be a transaction kind of thing.

4:15Yeah.

4:16Immad Akhund:So that's something I think I missed until, you know, now I'm like, I mean, I just behave like a human, right? Like I'm like, hey, you know, what are you doing for Christmas? Like I'll try to build a relationship and like actually understand people and like, you know, help them understand me beyond just like the transaction. So that's one big thing. I think the second thing that is also kind of pretty hard, especially I'm an engineer and I tend to take things like very literally and not want to exaggerate. I'm also from the UK. So, you know, we hate like overselling. Overselling, modest, exactly.

4:56Immad Akhund:But that just really doesn't work in like an early stage startup pitch, right? Like what you're really selling is not like a valuation. What you're selling is like a low probability of an extreme outcome. And it kind of is bullshit, right? Like, I mean, maybe that's the harsh way to put it. But like, it's very low probability and very hard to believe. But like, you're really selling that vision. Like you're selling like this low probability event. It's like, you know, it's not like 0.1 % probability. It's actually like 2 % probability that this will be a$10 billion company. And that's why you should give me like a$20 million valuation.

5:36Immad Akhund:And that took me like a really long time to get my head around, like how to think about this like grand vision when like, you know, day to day and like early stage startup, like everything's going wrong. You don't have any ideas. Like you can't build anything. You have no idea whether it's going to work, right? There's a lot of doubt, but you have to kind of bottle up all this doubt and make this really grand pitch. So investors are people. So treat them as such. It's a long-term relationship, almost like a marriage. I guess the second advice would be sell the dream, right? We have a bit of a joke inside a giant, but I give a bit of a discount to whatever the American entrepreneurs tell us they're going to do in terms of numbers.

6:10And we put a bit of a premium on the Brits and the Europeans and the Nordics. And that rings quite true.

6:17Immad Akhund:It's not even just about the numbers. It's like the whole story, right? Like I think the Europeans often don't sell this like$100 billion idea. It's like, you know, everyone knows it's like a lot of things have to go right to get there. And I didn't actually know you started in the UK. How did you make it over to Silicon Valley from the UK? I did one. So, you know, I worked for one year at Bloomberg. That was my only real job I've had. And then I did one startup, which didn't really go anywhere. It was like a Yelp in London. But I just kind of got addicted to like the feeling of like doing a startup and being in the ecosystem.

6:52Immad Akhund:And yeah, even back then, this is 2006, there was a wave of entrepreneurs kind of moving from London to San Francisco. And like the stories they would tell you were very fantastical, right? Like it's like people raising money, like getting millions of users and all this stuff, which was like, you know, much rarer in the UK, especially in 2006. It was a tiny little ecosystem. There was like two VCs. So it just seemed like, yeah, I decided in a very short time period that this was just something I wanted to do for the rest of my life. And it seemed like San Francisco was the place to do it. Awesome.

7:25And so you started Mercury in 2017, almost eight years ago. It's now valued at 3.5 billion. What was that moment when you knew we've got product market fit?

7:36Immad Akhund:I was very skeptical of product market fit. I didn't want to like, you know, we launched and there's often this like idea of like the valley, it's a valley of sorrow, sorrow of death or something like that. I don't know. But the idea is that you launch and people use the product trough of dissolution. That's it. Yeah. Lots of people use the product and then, you know, the buzz kind of dies down and then you have to think about like, well, what's the long-term distribution and what's the long-term kind of fit and like really find product market fit after that point uh so we launched uh but we actually grew like every month after we launched like we grew like more than 40 every month for the first year and i and every every month i'd be like oh you know i don't know if this product market fit like you should you know it's like delayed excitement and we still have to figure something out and like we weren't doing any sales at all this was just pure organic growth.

8:28Immad Akhund:And then, so we launched in April, 2019, and then COVID hit in March, 2020. And I was like, this is it. You know, I knew we didn't have product market fed, like every, you know, the whole world paused for like a month. So I was like, okay, I'm glad we didn't spend too much money, et cetera. And then the month after that, like literally March, like was one of the worst months we had, oh, by far the worst month, I think it was March or April. And And the month after that, we doubled because that COVID pause was so short. But everything about Mercury kind of fit the moment because this was a digital banking.

9:04Immad Akhund:You could sign up online. There was this huge movement to digital entrepreneurs wanting to set up businesses and do e-commerce and all this stuff. And Mercury was right there for that movement. So at that point, I was like, wow, if we can take a global pandemic and still grow again, And we probably have pretty strong product market fit. And at that point, to some extent, I'd been starving the company of resources. I was not hiring in front. I was hiring behind our growth. So we didn't have enough customer support. We weren't building too. But at that point, I was like, OK, this is really working.

9:39Immad Akhund:Let's go actually try to invest ahead of the growth rather than be behind and be stretched continuously. That's the kind of trajectory everyone dreams of, right? but that is pretty rare for a startup to kind of see that consistent growth yeah seriously i mean this was my fourth startup this was the first time effort to me uh yeah i think it is rare i think it was a combination of things that allowed it to happen um i guess i can dive into them if it's useful yeah i think useful uh so i think there's like a few things number one this happens much better in like either consumer startup or like a founder prosumer like you know we were selling to founders.

10:18Immad Akhund:So it's very hard to have this kind of instantaneous product market fit if you're doing enterprise sales or something like that. You have to build a go-to-market motion there, which is different. So that's number one. Number two, we had a surprisingly polished product because it took us a year and a half to launch initially. And that's mostly because we ended up doing one partner bank integration and that didn't work out. So we had to switch that partner bank to another partner bank. So the way Mercury works is the whole backend is based on sponsor banks, and we ourselves are just a software that sends customers to the sponsor bank.

10:52Immad Akhund:But that means the integration is quite deep with these partner banks. But because the first one didn't work and we had to spend another six months building a new one, we just had the designer and the front-end team had a ton of time on their hand to rebuild the product. And we actually ended up rebuilding the whole product. So it ended up being a very polished product by the time we launched. And that was like a pretty important part to the Mercury story. It's like, hey, normally people are so used to having this like very janky experience with a banking product. Like it's going to, it's actually like slightly better in the UK.

11:31Immad Akhund:So maybe you guys don't feel as much. But in the US, it's like a very painful product to sign up for a bank account. You have to go in person. You have to stand for three hours in a line. And then, you know, you find out that the wires aren't enabled. You have to go back to the bank branch to enable the wire. When we started Mercury, we signed up for like 12 banks to see the experience. So it's really painful. And conversely, Mercury was like this real, really delightful experience. So it really got people hooked very early on. And then the other thing is I refused to launch until we had like a pretty complete feature set.

12:03Immad Akhund:Because I was like, you know, I've been running startups for a long time. Yeah, exactly. Like people, you know, especially in 2017, there was a lot more like MVP, do the minimum possible thing. but I was like yeah if we don't have wires there's no point in launching because that's what startups need if we don't have multi-user support there's no point in launching because startups have multiple co-founders and they're often higher people that need to manage the bank account we also wanted to support immigrant founders because I was like hey I'm an immigrant when I started my first company but also you know about 50 % of startups have like at least one immigrant founder uh so like because we had this like high bar i mean that's partly why we ended up switching partner banks because the first one wouldn't give us all the features we needed but because we had this high bar by the time we launched it was you know it was a complete product it wasn't like it wasn't like there was bits missing that were like stopping product market fit because yeah i knew exactly what the feature set needed to be and there was no point in kind of going out there without like that completeness.

13:06Amazing. And so then you hit product market fit, you're growing healthily, you decide to go bring on some capital and really supercharge this thing. You've brought on some of the best investors in the game, A16Z, Sequoia. Do you think they've had a tangible impact on your trajectory? Is it something you would advise other founders to go optimize for?

13:26Immad Akhund:So one funny thing about Mercury is, you know, we are selling to the portfolio companies with these VCs. We actually did this analysis where, you know, for our early VCs, about 60 % of their portfolio uses Mercury. But for someone that's not a Mercury investor, it's like averages out to like 30, 35%. And the funny thing is like, it's not like our VCs, like, you know, we try to make promotional like perks and things like that for them, but it's not like they're like actively pushing it that aggressively, but there's just something about being backed by the VC that also invests in you, that just lends a lot of credibility to Mercury.

14:06Immad Akhund:If you're selling to startups and that's a core segment that matters to you, I think having great VCs is 100 % useful and successful. And that's worked really well for us. Outside that, I do think most of the time you're not going to be successful or fail because of a VC, but there are very tangible specific things that almost every VC has done for us, like helped helped hire like a VP of people or, you know, helped us through some other time or close a candidate. So I think VCs are like very useful and powerful when used correctly, but they're not like the reason you're going to succeed or fail.

14:43Yeah. I always talk about it with my team is they can, we can tilt the scales. We're not going to decide which way the scales ultimately fall, but we can help tilt them one way or the other. So you've now built a unicorn. We actually had Tom Blomfield, one of your London to San Francisco peers back on the show a couple months ago. and he's been incredibly open about the toll that Monzo took on his mental health. He's been quoted saying, I'd remember what's happening in my life and what I'd have to do that day. And this enormous weight of anxiety would just descend on my chest and push out all the air as I realized what my life was like.

15:16It's quite dramatic, but also quite intense. What's it been like building Mercury? Has it been tough in that way? Or what's been the toughest part for you?

15:27Immad Akhund:You know, I have this outlook that like I had that, you know, that one job I had for one year. And I just remember being just like so unmotivated. You know, I'd wake up in the morning, I'd do that like 45, 50 minute commute on the tube. And I just like, did not at all feel like I was enjoying myself and I was like really tired after the day ended, even though I didn't even do that much work. And then I remember this feeling of just like starting a startup and I was like working, like, you know, I mean, I was young back then. I was working like the whole nine, nine, whatever, nine, nine, seven.

16:04Immad Akhund:Yeah. I wasn't, I wasn't not working. That's all I was doing. But I just remember the feeling of like, just going like, wow, I'm just like so excited to build something. So I, I just feel like what I do and like, you know, get to build something and like set my own rules is like such a privilege that I can't imagine doing anything else. So that's like, hopefully keeps my mental health like a little bit in check. There's definitely like times of like, like it's an extreme up and down life, right? Like sometimes you're great, sometimes you're not like this. Yeah. As I said earlier, like there's plenty of times I've like tried to fundraise and failed.

16:45Immad Akhund:And that's like one of the most disheartening things because like, you know, but you put your soul into this fundraising process and everyone says no. And like, you know, to some extent, your ego is attached to the company that you're trying to build. And, you know, like it's that's probably like some of one of the worst feelings is to have that process. And then you have to figure out, like, what the hell do you do with this, like startup that has employees and all this stuff? So it's definitely like an extreme lifestyle choice. but uh but it's also like i think i consider it like a big privilege as well so like even through like there's moments where it's like hard like i try to think of that and go like okay you know what else would i be doing like i feel like i can do something here and and so that like helps center me i've also been you know married uh with a very supportive wife for like most of that time and she helps helps give me perspective as well um it's definitely hard though i mean it's not it's not like easy uh i think one thing that has helped me also is like i don't see it as like all on me like i don't i don't personally go like wake up in the morning and like the only way mercury succeeds is like if i if i think of solutions to things and like work really hard like you know we have 1100 people working on mercury now and i think it's like a shared responsibility and obviously some people have it more than others but i have two co-founders i have 12 person exec team but you know even when there was nine of us uh which is like the kind of initial core team uh i didn't think of it as like it's my job to make mercury successful i was like hey how do we make it together uh and i think that helps a lot i think sometimes and i did this earlier in my career as well like taking it too much on yourself i think that's quite unusual i think a lot of founders uh founder ceos do feel the opposite actually do feel like uh at least at the beginning that it all stops and starts with them and and they're gonna have to like yeah ultimately be the one who drives it forward so how did how did you was that sort of a cycle deliberate psychological trick or that's how you've always been this is a collaborative effort we're all i mean it happened over time well a i've always had co-founders so i mean there is like hopefully most people feel like they have that shared uh shared responsibility with them uh but there was this like distinct time probably in 2013 uh where my previous startup was like about to fail one of those times where like not you know not raise money etc uh yeah union square ventures stepped up and gave us a million dollars basically they were our series avc uh when like you know we basically presented a plan to them saying like hey in six months we'll profit we'll be profitable we need a million dollars to like kind of bridge the gap so they gave us a million uh but it was you know they didn't say it but it was pretty obvious this was like the last money we were gonna get uh so we had to figure it out uh and we went to the team and we were like hey we have this much money, this is a plan for the next six months to become profitable.

19:36Immad Akhund:And I really thought at that point, like, everyone's going to quit. Because I was like, okay, you know, who's going to stick around for this, like, crazy plan where they won't have a job after six months. But really, I think maybe like one or two people quit. But like, basically, everyone stuck around. And we did become profitable. But it really showed me that actually, like, you know, telling people like, transparently what's going on and sharing the burden is the only way to solve big problems. Because I think the problem is if you don't share the burden, people know that they're not being given the responsibility.

20:13Immad Akhund:So they don't feel like they need to step up because they're like, okay, you know, Ahmad's got it. It seems like it's not a big deal. Whereas if you tell people like, hey, this is like, we're about to run out of money. We better figure it out. We all have our job to try figured that out. I think that people rise to the occasion and maybe they don't take it as like, for them, to some extent, it's a job. They'll get another job after six months, I guess, if it doesn't work out. So they won't take it as seriously as maybe you would as the founder CEO. But they do actually enjoy that. I think people actually like being told what's going on and they're being given difficult problems.

20:53Immad Akhund:So after that happened, from then on, I've been like, okay you know this actually worked great let me try to do that like in all my companies i love that story that feels like an important leadership lesson um and yeah i totally agree startups the highest highs the lowest lows but ultimately a privilege to get up every day and and be building something that you're that you're excited about um shifting attention to the the other hat you wear in silicon valley you have angel invested in over 350 startups i've got to ask you what your process for getting k1s is because that's got to be a whole a whole work stream there but um and you've and you've been in some fantastic companies, a bunch of unicorns, Rippling, Airtable, Rappi, Substack.

21:31What have you learned from those 350 investments? What do you look for in a truly brilliant founder? How do you spot a future unicorn?

21:41Immad Akhund:I mean, part of the reason I have so many investments is it's quite hard to spot a future unicorn. That's one way. I knew for sure. No, I really do think it's like, it's very hard early on to know for sure. and I think like, yeah, I'm a believer in a diversified portfolio because it's so much of the returns are in that power law that like if you can get a$100 billion company and you do 100 bets to do it, that will actually give you a higher return than like 10 bets most of the time.

22:14Immad Akhund:But at least for me, the biggest thing, and it kind of ties into a lesson I learned at Mercury, is that I think the market matters so much. and like I don't think I'm like that much better an entrepreneur when I built Mercury versus my previous companies I'm definitely better but like I'm not like 10x but I'm like mostly similar but the idea for Mercury was just like so good at the right time and obviously well executed but but the idea made a huge difference so that's definitely something I focus on is like I want to, yeah, it's not that the market has to already be huge, but I want to see a path that like in 10 years time, this could be a huge company.

22:57Immad Akhund:And then there's a bunch of things around that. Like to build a huge company, you need to like have like some moats and things like that as you scale. You need to be the kind of entrepreneur that wants to build a huge company. I mean, lots of people are okay with, you know, not doing that. Like it takes like a lot of intensity and commitment to build a big company.

23:21Immad Akhund:and you kind of as an investor have to have like some sort of thesis about where the world is going and that thesis has to change all the time because you know what like what exists as an opportunity either someone already does it or you know like maybe you believe something during the pandemic that you don't believe after etc so so it does require like yeah i'm like i literally look for different things every six months to invest in because i'm like you know i think this has played out and like this is maybe more interesting but obviously you're also opportunistic to see what like entrepreneurs are coming up with um so that's by far my biggest focus uh the second thing is gonna it kind of goes back to like this kind of human aspect of it like i feel like if i invest in a entrepreneur i'm kind of making commitment that like you know if they text me i'll i'll respond and i'll jump on a call on like a sunday evening or something right so i only want to do that if I like the person and if I feel like our values align, if they're kind of not being transparent and open or whatever, that I have an issue with.