Immad Akhund: How Mercury Saved The Day For Startups

15:00Mike Maples, Jr.:So then you had this idea then for Mercury to been percolating for a while. How did you stress test the insight behind Mercury? Like how did you decide whether to pursue it or not? Did you know, did you interview a bunch of customers or did you just kind of know and there was no way to prove it other than just to do it?

15:18Immad Akhund:So I really, there was like two things, maybe three things that gave me confidence. Number one was just my personal experience. I was just like, I know something needs to exist here and I know I would use it. And I felt like I was like not that different from other entrepreneurs. Number two, there was a reasonable amount of success that other neobanks has had, especially in the UK and Europe. So several business banks at that time, there was Tide Bank and Quanto, there was many consumer banks, Monzo and 26. So I was like, okay, this is a movement that will happen here. And I felt like the fact that it was successful outside the US made me get confidence in it happening in the US.

15:55Immad Akhund:You know, one thing that was like a little hard right at the start is like, I could not get any FinTech VC to invest initially. So I had Andreessen Horowitz come in on the round, like very quickly. And I was like, oh, you know, it'd be nice to get like a FinTech VC, like FinTech fund to invest. But it was just funny. It was just like completely impossible to get them to invest, even though Andreessen Horowitz had already committed. Back then, fintech VCs were very focused on building infrastructure and tools that would sell into banks. That was the main thing they invested in. So this idea that someone could disrupt banking, and I was laughed out by several fintech VCs.

16:32Immad Akhund:That was a little disheartening because I was like, oh, these people, maybe they know something I don't. It took a really long time to launch. It took a year and a half for us go from this funding round to launching just because we had to do like bank partnerships and it took a long time to kind of get them in place like we did one and that one didn't work out so we had to kind of strip it out and do something else you can't launch half a bank right like you need to launch like the full service for someone to actually like want to use it and i had this like idea of like a pretty broad feature set that i thought was the minimum spec to like build a great product so we were kind of in this hole for a year and a half and you know i did this the general value consensus of like, go talk to a lot of customers.

17:12Immad Akhund:I remember I talked to like a hundred startups that could like use Mercury. I remember after that process being like a little bit depressed and worried because, you know, we were in this whole building something and I talked to like a hundred people and I remember like two of them were very excited about it. They were like, yeah, I'd love to use it. Like, tell me how I sign up. And the others were like very lukewarm about it. Like, you know, not that many people like against it, but it wasn't like, it wasn't this exuberance of like, I can't wait to sign up that I kind of wanted and expected. So I remember at that point being like kind of worried about it.

17:42Immad Akhund:But when we finally did launch in April 2019, this was the first time I launched something, which was just like an exclusive launch. It was basically successful from day one and people started signing up. And we had this moment like four days after we launched where like someone I'd never met before, never spoken to, like transferred a million dollars into a Mercury account. And I was like, I don't even know who this person is. And my mind was blurred because, you know, I thought every single person that does like something significant like that, like I would know when I talk to and kind of, you know, get them sold on the product.

18:17Mike Maples, Jr.:So what do you think explains that? You know, why do you think just immediately after you launched, people just glommed onto it, right? They just gravitated to it immediately.

18:27Immad Akhund:So I think like one thing that's funny is like, if you go talk to a hundred people and two people are really, really excited, you know, that sounds small to you, but if the market is big enough and for us, it's like every single, you know, especially when we were tiny, we don't require millions of people. We've required like, yeah, a few hundred people to get rid. So the 2 % of people that are really excited when we launched this thing, they were like, Oh my God, I've been waiting for this thing my whole life. Right. So that actually got the snowball going. It's like, As long as you get in front of enough people, then they become advocates to the next set of people because they were the most excited.

19:00Immad Akhund:And as long as you deliver on that, they can become strong advocates going forward. We were doing something audacious. And I actually think people underestimate how much just doing something audacious has its own kind of power to it. People want to talk about it. There's this marketing value built in. People get excited about it. It's easier to hire people when you're doing something ambitious. and I think another thing that people underestimate is like there's been accumulation of like these bad experiences that people have with like these incumbent banks. Yeah, everyone's got a story about like how, you know, something simple just took so long.

19:34Immad Akhund:You know, we thought about banking like end to end, right? Like I was the one and me and my co-founder were the ones that were responding to every single customer support ticket. Like we were like there to like really deliver this like great experience. So the contrast was huge, right? Like even today, I try to be really accessible to people if they have like problems with Mercury. And yeah, no one's talking to like Jamie Dimon saying like, this isn't working for me. Being this like strong contrast, like what was out there was a big differentiator.

20:01Mike Maples, Jr.:So these 2 % early folks who were really excited or the guy that gave you a million bucks after a few days, what was it about them that got them so energized compared to the other 98 % do you think?

20:15Immad Akhund:there's element of it that's like risk taking nature like in terms of product mercury is was obviously better even from the start but banking is like this very high trust service right like there's you're putting your money inside a startup bank account like you gotta you gotta trust that that they're gonna keep that safe so we did a bunch of things to try to like engender trust in the system like you know we had in recent horowitz we had like the original founder of svb was an investor. So we had like this portfolio, like I had 60 investors in my like seed round, because I wanted to like kind of project trust.

20:50Immad Akhund:And then we'd built a really good website and really good app that would also kind of engender trust. But there's still like an element, like even from my perspective, this person who transferred a million dollars without talking to us was like a little crazy. Like they were willing to take a risk on this like early stage startup. And I really appreciate them to be clear. But it did require like some element of like risk taking. Most of the other people that started were like very small, right? So I think when you're like really early in your business, it's less of a risk. You're just like, hey, you know, sure, this service seems better than my local bank.

21:23Immad Akhund:And I'll just sign up to Mercury. And if there's a problem, I can always move kind of thing. And yeah, when you are like a more established business, it's much more of a pain to move banking. But when you're really small, and you're not doing that much, something that's quick and online is like a nice, easy way to start. So it's definitely like on the whole, it was smaller companies at the start. Early on, it was like, if you ever raised more than$5 million, you would move off Mercury. Then it was like 10 million, then it was 20 million. And now we have many companies that raise more than 200 million using Mercury and are happy with it.

21:55Immad Akhund:But if you raise a million dollars, you'd probably still leave Mercury. So there's still kind of this, how big we are and who would trust us changes as we can establish ourselves over time.

22:05Mike Maples, Jr.:And did you have a way of making it more palatable to take the risk? Like, for example, the Lyft guys, when we were working with them, John had this idea for the pink mustache and you put it on the cars. The reason he did that was he thought, OK, people are going to be afraid to get in a stranger's car. And so if you see these cars riding around San Francisco with a big pink furry mustaches, that's not a long term thing. But in the short term, it'll cause people to say, hey, what's up with that? and they'll be more likely to give it a try or the benefit of the doubt. Are there things that you did to make it feel less risky, right?

22:41Mike Maples, Jr.:Like open a tiny account with Mercury first before you open a bigger one or ways that you could prove that it would work, that they could trust you before they had to trust you all the way.

22:52Immad Akhund:I really think, I mean, this one is like unintuitive and I didn't think this would be the case, but it turned out to be the case. is like actually just building like this amazing onboarding process engender trust a lot. People are used to having like a very painful experience when you're signing up to a financial service. You know, you're going to like walk to the bank branch. It's going to take you three hours and they're going to tell you you're missing some document. You're going to have to go back and get like, dig out your utility bill or something like that. But we made this like really smooth process and we would do all sorts of things.

23:22Immad Akhund:So like we scraped all of the crunch based investors. So, you know, as part of like the onboarding process, like you could type like mike and they would pop up with like oh is mike maples an investor so we'd we'd have a form that's like invest so we did all these like little touches to make it like much much easier to sign up unexpectedly to me at least like people were like wow this is like so good and so well built that like they must really care uh and it created this like really strong lasting first impression and literally a lot of the people that like you know then went on to like tweet about it or like post about it were like saying like wow this is just the most amazing sign up person i mean even Now we get these.

23:59Immad Akhund:Like it's the most amazing side of process I've ever had for a service. You know, when you build this like really focused on like product and design, it can be like a true differentiated and like the reason that people like actually trust you in the long term.

24:12Mike Maples, Jr.:Was there anything in the early days then that was an existential problem or like, did you have any near-death experiences or did you just kind of launch? You know, like when I talked to Kevin and Mike over at Instagram, they're just like, well we launched it it blew up and that's that right you know and it's like how about with you

24:31Immad Akhund:guys i was really worried about like do we really have product market fit or is this like a just like a prolonged kind of you know there's the thing before the trough of uh disillusion or whatever there's like the uh the you know the launch energy or whatever and i just thought maybe like people are just excited but it's going to die out and i i really didn't want to like take it for granted that we have product market fit because I, you know, I've done a lot of companies like at Hazep at one point we had like a mobile gaming social network and we would just like, we pushed distribution so hard.

25:03Immad Akhund:We had like 10 million installs for this mobile app and we just never had any retention, but it took like a long time to figure that out because the retention would like die off like steadily over like 12 months. But we would be so good at like getting distribution for this thing that like the, all the numbers look great. Like it's like everything's going away. So I really wanted to like not delude myself into thinking I had product market fit. And actually like in some ways I actually held back Mercury for a bit because we just wouldn't, we would hire always behind our growth. Like we wouldn't invest in engineers that much.

25:35Immad Akhund:We wouldn't get customer support, like all the things that we really needed. Like ideally, you know, you try to go like, okay, I'm going to grow this much and I'm going to try to hire like one month ahead of that. So that like, everyone's not like fricking stressed out because they're like underwater and everything. So for the first year, I was like very scared we didn't have product market fit. And then what happened is COVID hit on like March 2020. So we launched April 2019. And then COVID hit March 2020. And that was probably the most existential moment, at least from a month and a half, because we basically lost half our revenue, because we used to make money on kind of float on the deposits, and that disappeared because interest rates went to zero.

26:13Immad Akhund:Also, So everything just froze for like a month. And back then, everyone was freaking out. Like they thought this was the end of the world. And thankfully, like we had raised a bunch of money. We'd raised 20 million, which we hadn't really spent. And then the month after that, e-commerce blew up for us. And e-commerce wasn't even our primary target, like early stage startups were. But we were in this kind of perfect moment where e-commerce companies were blowing up and they needed a bank account. And there was, you know, you could literally not walk to a bank branch in like March or April 2020.

26:45Immad Akhund:So the only way they could get a bank account was with Mercury. So actually our revenue ended up doubling the month after, which was insane. Like it halved and then it doubled back to its like previous base and then, you know, grew like an insane amount in 2020 and 2021. And at that point I was like, okay, you know, if we could take a global pandemic, we probably do have like really, really strong product market fit and we should like start like investing into the future a lot more. Almost every year at Mercury, some really crazy things have happened. And most of them have been these macro events, whether it's COVID or the 2021 bubble and the 2022 bust and then the SVB.

27:21Immad Akhund:And most of these in the end have turned out to be kind of a positive force for Mercury. But at the time, it was definitely every one of them. You were like, oh, what's going to happen now? I feel like most startups are not as affected every year by some crazy macro things. Like maybe it's the times we live in, but there's something about Mercury that like, because it's such a banking, such a fundamental tool for, for businesses and the startup ecosystem that like where sends it to like what's happening in that ecosystem in a way that maybe other companies and all. Yeah.

27:52Mike Maples, Jr.:And I've heard you say this before, when your product is kind of on the right side of history, things can kind of go unexpectedly your way. And I think that this is kind of, I think COVID and some of these other things that happened more recently might be good illustrations of that. So can you elaborate on that a little bit?

28:09Immad Akhund:Yeah, I mean, a part of my pitch was always like, hey, this is a secular trend. Entrepreneurship is mostly digital now. People are going to run businesses online. And then the second trend is like these banks just don't know how to build great products for these businesses. And it was obvious to me, and I think everyone would agree now, but it was obvious to me that most of the interactions that people would have with the financial services will be via tech companies. And some of that will be like banks become tech companies, but I thought a lot of it would be tech companies end up dominating financial services.

28:42Immad Akhund:So that was kind of the, those were like the two kind of underlying secular trends. As long as the trend is in the right place, like most things that happen tend to accelerate the trend when it comes to like, when you are a startup in that trend, if that makes sense. So the trend is like more digital businesses and more tech companies offering financial services. and like yeah COVID is a perfect example that like massively accelerated it you know the SVB crash like you know I don't have anything against the SVB folks but you know we were already replacing them in the early stage startup ecosystem and when this happened to them it just allowed us to kind of have a higher inflection point and kind of grow grow much faster than we were before it but yeah yeah as a startup you kind of have to be ready for this change and like you have to be continuously adaptive but as long as like you are nimble you have this kind of advantage that like you can just move faster and you can react to things and you can adapt to whatever you know whatever comes your way and as long as you're on the the right side of history and right side of these trends uh you will generally like have some

29:45Mike Maples, Jr.:advantage from them yeah it's almost like a a positive rendering of what Nassim Taleb talks about with being anti-fragile, right? You're not just being resilient, right?

29:59Immad Akhund:Actually, it's not one of our core cultural attributes, but I talk about it a lot at the company, like how do we build an anti-fragile company? And like, actually you can think about it in lots of different dimensions, right? Like I think part of anti-fragility is like, I shouldn't be the only one that comes up with ideas. And like, you should try to build, and like we call these autonomous product teams. Like I want every team to be like continuously iterating and have ideas and talking to customers and like own a domain where they can, they can innovate. And it's not like just through me. And I think sometimes I talk to CEOs and they're just like, it seems like everything is like bottlenecking through them.

30:32Immad Akhund:Like they are like deciding everything. And I actually see my role at Mercury as like accelerating things when I get, when I get involved, but like nothing should be blocked by me. Like a great thing should happen whether I'm involved or not. And like, sometimes I can like step on the scales and like try to move them faster. You know, I want Mercury to last a hundred years. Like, and it's not going to do that if it's like something that's like super dependent on just me, you know, like super fragile and like things can break it. Like it has to be something that can last. Yeah.

31:00Mike Maples, Jr.:And one of the things I think I've learned is that, um, part of being anti-fragile is a culture that accepts criticism. So I know that you and I both read, uh, David Deutsch's book, the beginning of infinity. One of the things that Deutsch talks a lot about is how, um, criticism is a form of error correction, right? So it's almost like you have a conjecture about reality and you're exposing it to criticism and the criticism hones your explanation to ever better versions of the explanation. And so a lot of the companies that seem to do well are anti-fragile in the sense that they're not being resilient to criticism.

31:40Mike Maples, Jr.:They look at criticism as a positive input to error correction that they in turn use to make their products better. And so the more they get criticized, the more they improve. And so to me, on some level, that's kind of an abstract way of framing anti-fragility, right? It's like, you're not just resilient. You're not just withstanding pressure or criticism. You're actually improving in the face of it. It's actually a positive input variable for you relative to the other folks.

32:09Immad Akhund:I think one thing that we look for when we hire people, and this is like super important for leadership in exec roles is like people who are humble. As co-founders, we were quite humble and we can't stand very high ego people. But it gets tricky when you're hiring really senior people and they've done a lot and they come and they're like, yeah, I know this, I can build this. And you feel like, oh, wow, ego can feel like confidence and I can feel like they know what they're doing and you should hire these people. But I have found again and again that actually like hiring people that like are open to kind of learning and open to criticism and open to growth is just like so much better because whatever experience they might have like the Mercury situation and will be different and like you know whatever we want to do in the future will be different and like you need people who who can learn and adapt and and grow rather than people like stuck with like I've done this before and this is how you do it kind of thing I don't think Mercury has made it in any way.

33:08Immad Akhund:I think we're still just at the start. I don't take our success for granted. I'm sure whether it's the incumbent banks or the next startup, we are not safe. This book has an amazing title. It's an Andy Grove book, Only the Paranoids Survive. I'm optimistic and I love what we're doing, but I don't take it for granted that we will survive. I think we have to fight every day to do that. Is there anything you do differently?

33:33Mike Maples, Jr.:you know are there any major mistakes that you made that you think people can learn from where you're like oh wouldn't do that again honestly like things went pretty well so you know i i'm

33:45Immad Akhund:not like oh wow if only you've done this yeah so most of these changes like micro i think one thing that i do feel like we should have done differently is you know we launched in 2019 and at that point like I felt like the corporate card game was done. Like Brex was already a unicorn. They ended up launching a competitor to Mercury like four months after we launched. So that was also kind of a scary moment for us because we were like a tiny startup at the time and they launched basically like a bank account that was competing as they were already a unicorn. So that was like a scary moment as well.

34:18Immad Akhund:But at that point, I definitely thought like corporate card is done. Let's not try to compete against Brex and let's like focus on banking and we ended up doing treasury and a few other things. But then Ramp actually launched after us as a corporate card. And we ended up launching our corporate card product in 2022. But there was this three-year period where there was actually like, although I thought it was done, it was like everything was still in play. And I think now we've done pretty well in the corporate card. And actually for Mercury customers, they use the Mercury IO corporate card more than they use ramp or brex or amex uh but i i still like kind of regret like giving them this like kind of three-year head start or three-year time where like i wasn't i wasn't in the game and yeah i really it's a it's a really interesting lesson because like it really felt like it was done like brex was just like so dominant and like ramp just came along and completely whooped them and it turned out like that whole market was like huge just as big as banking now we play in it but I just kind of regret not playing earlier.

35:21Immad Akhund:I don't know what the lesson is quite here. Like it's, I think sometimes you look at people and they seem really successful and impenetrable. But like, actually, if you do have a good wedge and like you feel strongly about like your product and skills that like, maybe it's just not as impenetrable as it seems, I guess. Like often I feel like I do this a lot in the, like I'm also an investor, but I do this a lot. I sometimes think of like spaces as done. I'm like, this player, this company is a winner. that space is like kind of done and like, you know, but like then something crazy happens, someone else comes along and like, you know, kind of blows it away.

35:56Immad Akhund:And like, actually, it turns out the space was like 10x bigger. And like, even though we thought it was done, it was very much not done.

36:03Mike Maples, Jr.:And do you think there is a way to tell the difference, right? Like, is there, are there some markets where they really probably are done and the leader is achieving escape velocity and, you know, creating barriers along the way versus, you know, some markets, it's got a lot more room to play out? I think it's a good question.

36:21Immad Akhund:I think to some extent, maybe just like software and Silicon Valley just continuously being reinvented. And like you have these kind of new hyper trends, whether it's like mobile or cloud or AI that like create these opportunities to kind of reimagine what that product could be. And at least historically, incumbents haven't been good to adapt to these new trends. And I think it seems like in AI, they're doing a better job maybe.

36:44Mike Maples, Jr.:But yeah, I think it's probably,

36:45Immad Akhund:if no one has like really innovated and the space is big enough, it probably isn't done. It's like probably my conclusion. And there's always like ideas, but it doesn't mean anyone can break into it. But I think if you have like a unique approach and a unique insight, and like you are kind of maniacally focused on product and iteration, then you can

37:03Mike Maples, Jr.:probably build a new company there. So I like to ask this towards the end. And what do you think your experience lends to other really ambitious founders who are listening to this?

37:17Immad Akhund:I think people should think about entrepreneurship as like, you know, what is the sustainable fun thing you can do in life? And like, think about it with that mindset. And I think sometimes people get a little bit too stuck on like, you know, they're trying to make money or they're like trying to like kind of copy someone else's way of doing things or whatever. And I really feel like a lot of the times, like I have been most successful and had the most fun when I'm like trying to think about like, you know, what is my purpose and like why, what's going to keep me doing this for the next 10 years.

37:47Immad Akhund:And I have to like relearn this lesson often because like sometimes you can end up doing, especially as a CEO, end up doing things that like you feel like you have to do, like you have to go. And like there is an element of like, you just have to go do fundraising or whatever it is. But I think it's important to actually step back and go like, okay, you know, what do I actually enjoy doing? And like, I personally enjoy talking to customers and like building products and like thinking of ideas and like, you know, being in the weeds on these things. And I have to kind of often step back and say, okay, am I doing enough of that, that like things that actually energize me, especially when you're young, you just think like you're, you're good in two years, you're going to be so successful.

38:21Immad Akhund:And like, you know, you have this like very short term mindset, but like, I think anything, anything good takes like a long time to build. and you have to have that like long-term mindset of like how could you do this for 10 years? And I think it's important to like always go back to that.

38:36Mike Maples, Jr.:All right. Well, thanks, Ahmad. I want to respect your time. I know you've got lots going on and congrats on all the success you've had with Mercury. I mean, amazing success story, right? It's been fun to watch from the very beginning and every time I hear about you guys, you just surprise people on the upside of how big it's gotten. Yes, lots more to come. Thanks for listening to the Pattern Breakers podcast. You can follow me on X at M2JR, and I encourage you to check out our newsletter at patternbreakers.substack.com. I'd love to have you subscribe wherever you get your podcasts so you don't miss an episode.

39:13Mike Maples, Jr.:And if you like the show, I'd be grateful if you could leave us a review. Until our paths cross again, I hope you embrace the power of thinking and acting beyond the conventional boundaries. it's the people who dare to be different who truly make a difference