Chaz Englander: Co-Founder and CEO At Model ML on how he raised $75m 6 months after their seed

0:00Hello and welcome back to the Scaling Europe show. I'm Seb Johnson and I'm here with Chaz. Chaz, one of the co-founders of Model ML. Before we get into Model ML, it's a super interesting AI company building at this moment. You raised two big grounds last year. But I want my first question to be, have you ever had a non-entrepreneurial job?

0:23Chaz Englander:uh i did i did uh straight out of uni i worked a little bit for a company that was helping startups raise money but that was only for like a few months so i was i was always in the sort of startup scene so to speak from uni and then because i was thinking you did is you you you co-founded a company called fat llama um which i think was yc backed as well yeah yeah all three yeah and then that got acquired and then you were fancy which was obviously uh acquired by gopuff in the big quick commerce wave and now you're building model ml so this is your third company i know most people think it's absolutely crazy or i'm crazy but you must love it yeah we're in it for the game that's for sure yeah can you touch for those who don't know a bit about model a bit bit about model ml yeah sure so um so after we sold the second company uh arnie and i so my brother and i have built all the companies with we put our money together into like a small family office type setup and then so we're investing our own money across a variety of different strategies and we end up writing a lot of code uh to improve that you know in terms of you know trying to be more efficient but also just trying to get to a level of insight quicker um that ended up being really good uh and people kind of wanted it uh and so we spanned out to model ml so you know we are we're a workflow automation product like specifically for financial services so an ai based product obviously um you know our customers are pretty evenly split at the moment between kind of asset management uh banking and consulting and like i'm interested because it sounds like okay you had a you kind of went into this space because you were seeing some real life experience about it but the companies that you founded to date have all been pretty varied you know like quick commerce to ai what's that transition been like so i think look i actually think the first two were quite similar they were quite sort of brand heavy consumer businesses um the second one was probably a little bit more operational because it was virtually integrated so we had like drivers and warehouses and anything else um everyone always says to me you know like why why have you started a b2b business particularly in financial services which is like notoriously difficult i think to be honest with you you know given given the changing landscape in in artificial intelligence like everyone is really running a consumer company in other words like we don't like we don't know what we're selling in 12 months time and the customers don't know what they're buying and therefore we kind of have to be incredibly user-led so as an example like if you were selling a crm five years ago you're selling a crm people know what they're buying you know what you're selling in our world just purely based on the speed at which these products are changing nobody knows so in that respect i kind of look at us more as a b2c company or certainly a b2b2c and that's interesting because i saw you talk about um fdes yeah and i guess maybe that's a that kind of ties in with it as well right that you sort of need people from your team to be almost embedded to sort of show people what it is that you're you're capable of well yeah i think actually a big part of that is kind of what i just said there you know in in a world where you are building product this quickly and we'll talk maybe in a little bit about how quickly you can build products in the air world but like you have to stay as close to the user as possible so literally if we can have people working out of our customers offices uh that is like the best way to do that and i think everyone is kind of realizing that in other words like if you look at companies as large as salesforce as you know small as a two three person startup everyone is realizing like you've just got to be as close you can to the customers so that you can learn as quickly as possible in order to iterate i think yeah yeah Yeah, no, that makes sense.

4:20Can we touch a bit on your fundraising journey? So in many ways, you know, being a repeat founder, you're like a hot commodity in the VC world, you know, two companies under your belt, two exits. I think I saw that the company was founded in 2023. You then announced your, I think, was it seed or pre-seed or like a very early round at the beginning of last year, which is$12 million.

4:43I guess what was it that unlocked that round? Was it the kind of the pedigree of founder that you are having these exits under your belt was it some product that you've been building and had seen good traction with before you got to that round what what was it that gave those

4:57Chaz Englander:investors the conviction to invest um so i think first of all that the first round definitely like your very first round which was last fairbish you know being a second and third time founder um yeah for sure does make that easier you've ultimately built trust with a number of people a lot of people that invested in our previous businesses that ended up investing in that round um you know there was a lot of private individuals that we'd known for a long time so yes i think the second round like i mean you don't raise 75 million like pretty much 12 months after launch if not under um you know without having serious traction to be honest with you and like yeah frankly our growth rate uh and our customer references sort of spoke for themselves and that's a big thing like i do think that you know particularly in a world where there's a lot of trials going on and things like that it is actually like you know you need to really lift up the bonnet and think about how much the underlying user is actually enjoying using the product um and you know it was preempted as well right so i was actually in san francisco i was in san francisco onboarding uh a customer of ours at feel spending some time with them um and over kind of a three or four-week period it kind of just exploded uh and we ended up you know having about five or six you know lead type offers and ultimately closing in the way that we did i mean it's huge yeah 75 million dollars yeah and it was yeah i think it was november it was announced and the first round was february um and so obviously you saw you must have seen amazing traction amazing customer feedback last year is there anything that you can say to that like was there a specific growth was there number of customers is there some metric that you can show that you're particularly proud of um i mean yeah between kind of probably july and maybe even october beginning of november we 10x the business like it was like and and frankly we've almost 10x again since then um blimey i think like if you look at our world so we we went heavy on workflow automation so our view was these general research type products so like a chat based type interface don't get me wrong they are absolutely epic i love them but when your workflows are like pretty complicated to think like ending in a excel model or 100 200 place powerpoint presentation etc there's only so much you can do in a chat based interface like to actually automate that workflow you need to build a worth automation like specific type product and so i think what happened with us was um you know that ended up just being what the market wanted um and you know frankly people were willing to pay for it uh and you know still are and i think that yeah that's kind of where the growth came from and so you saw that 10x growth then you're on track to another 10x since then how how long do you think you can keep that scale of growth up do you have a specific target in mind for 2026 uh yeah i think um you know we have a you know the idea would be to get to close to 100 million arr by the end of the year um to be honest um and i mean absolutely we can keep that greater up i mean you know without mentioning any names you know some of our customers are enormous you know 400 000 people and you know under a single customer right so even if that's a 100 000 seat type contract these numbers can get pretty big pretty quickly and frankly we're only scratching the surface you know like right now we're a seat-based product you know in future that may change i think the whole of the agent world may change into a slightly different pricing model um you know the potential town we're going after is astronomical and given the type of customers and the type of contracts you know these are three four five year type contracts if not more um and yeah the customers are all blue chip and what are you seeing in real terms to do with that the adoption of ai you know do you think the the industry that you're building in in within financial services is is that do you think uh particularly good at adapting and adopting ai do you think as an industry that's performing well uh so we were so we were lucky in terms of So if we actually just rewind this back, right?

9:20Chaz Englander:Like the thing is, AI, you can't really compare to like, you know, previous sort of software offerings in any vertical, frankly, right? So almost all large businesses had to figure out a way how they could procure software, i.e. this new AI software at record speed, right? So all of our customers quite quickly, and hats off to them, frankly, set up AI committees that were really mandated to assess and deploy AI products. So they've been pretty good. Look, but it's still time, right? Being honest, it's anything from the quickest is maybe from the commercial, yes, to live is six weeks. average is probably more like four five six months longest is 12 months um it's also also worth noting that we are we're a self-hosted product predominantly with our large customers so we deploy we're deploying the infrastructure of our customers we do that so that i mean the system can run without the need to communicate with external services right um for a pure kind of confidentiality perspective um that adds additional complexity for sure that's like probably an extra two three months at a minimum yeah and that very sense it's um highly regulated confidential industry it's a lot more complicated than perhaps perhaps other industries do you see use cases for other industries is your vision to build this for you know finance and financial services initially and then look at adjacent categories or do you think actually the market is more than big enough to just dominate this one space um yeah i mean to be honest i don't know um You know, for now, it's all about focus, particularly, you know, given the competitive landscape and the speed that products are being shipped.

11:11Like, it's just, it's all about focus.

11:14Chaz Englander:So we're very focused on what it is that we're doing now. And so, you know, our product is very, very good at what we call material creation and verification. So the ability to create sort of long form PowerPoint presentations, Word docs, emails, you know, Excel files or web books. et cetera, and then verifying those things. That's what we're very good at. So you can obviously apply that to many industries. At least for now, we are absolutely staying finance-focused. Yeah, and that makes total sense. I want to also talk about your, not just your category and your category, but also geographical.

11:50So, you know, where are you seeing the most success? Is it, I guess, finance, but it's probably New York, London. What are the hubs where you're having the most success telling to?

12:00Chaz Englander:yeah so so right now we have four offices so one in san francisco uh one in new york one in london and one in hong kong um we our main sort of front office is is new york uh the bulk of our engineering team and product team are in london but obviously we have a front office when i say front office like sort of onboarding account managing sales etc uh in london as well um i think they are i mean you have to you have to win new york you have to win the us to be a category leader that's clear um uh but also you know we are seeing amazing traction you know to be honest wherever we go and and how are you finding it because well your like fancy was was um uk right i mean and how are you finding it comparing it kind of building and scaling a startup in london to now kind of being centered in New York what's your experience been like um I mean me personally I love the US I feel like if uh it made sense I would you know I'm predominantly based in New York so I probably do half my time in New York um the rest kind of split elsewhere um look I mean I think the US has a slightly different level of ambition and I also think like the work required in order to win to be honest in any like ai application at the moment you know you've got to be working 996 an overall team at a minimum i'd say but at a minimum um you know i feel like i've been rocking 997 for about two years um that type of culture i think is quite difficult to hire for and it's quite difficult to maintain in europe comparatively speaking to san francisco right i think in any scenario it's tough um but obvious kind of that's what it's going to take to win yeah and and how you think about talent then you know and and i guess culture as well are you able to translate that culture from new york where you kind of have that that 996 997 culture is kind of embedded in tech world are you able to find and source that talent here in london as well yeah so so this was like we were actually based in san francisco as a company and uh up until last june i think it was um and then we moved everyone back um uh to london as in from an engineering perspective the reason we did that is like the way to think about is and this is just like random numbers but just conceptually makes sense is like there's probably 10 times the talent in san francisco but there's probably 20 times the companies right in other words like like the talent here is incredible it's just that little bit less um competitive you know i'm talking for like the top one percent of the one you know top one percent of one percent and also it's worth noting and only people realize is like these companies are going to be a lot smaller so the importance of hiring and hiring correctly and hiring the best of the best is you know 10 times more important than it was when we are building fat alarm or fancy just given their size yeah that's really interesting one of the things i've also heard people talk about is um the loyalty within within america is that in american companies yeah you may have you know maybe more talent better talent higher salaries whatever it is but people will just drop and change so much as soon as they get a better offer i i think that's that's you know i wouldn't say that i think it's unbearable to say that culturally you know americans are less loyal I think it is just naturally much more competitive.

15:39Yeah, yeah, 100%. And people are willing to write much bigger checks to try and pull people away.

15:46Chaz Englander:Yeah, and to be honest, again, the best of the best, it's like sports teams at the moment. The offers and any kind of salary bans, throw them completely out the window. If you think about these companies, you're going to have on the product engineering side five people at the most that are going to take you to a five, $10 billion company in terms of influence, to be clear. You know, you have to pay for those people. And how did you find it scaling so quickly, you know, from very early next to nothing to global company raised millions of dollars in four hubs? So there's definitely things that we learn from before.

16:34Chaz Englander:In fact, something that's really stuck with me is something that Noel Quinn, who was the CEO of HSBC, said to me, said, you know, as a company, you should almost treat your colleagues like school and university friends, right? In other words, if you scale, but you are all very close as people and you like each other as people and you're nice to each other exactly as you would be to your school and university friends, a lot of the problems that you have from a scaling perspective tend to get out the window. So I think that's the first thing. I think being very mindful of like who that core group of people are, I think super important.

17:13Chaz Englander:And then there's other things like I think staying very organized at an individual and team level, you know, really is what unlocks speed in the midterm. In other words, if you think about scaling teams, a lot of where things start to break down is to do with communication breakdowns. if everything is you know tidy and organized in terms of your documentation the way you communicate etc that helps um and the last thing i'd say is like from a founder perspective is um uh founder mode is an actual thing i know i see you've spoken about it quite a bit but like you know you've got to stay very very close to the customer and close to problems um as much as possible and so kind of what founder mode says and is is is exactly that like you know as a founder even if you go from 10 people to say you know 70 or 80 over a three-month period you've still got to stay close to customer and that might mean that you're going to walk into a room you know and there's a meeting going on and you and people weren't necessarily expecting you to be there but you've got to throw that out the window and everyone has to respect that i think every member of the team particularly leadership need to see and understand that like ultimately the the closer founders can state the core problem the higher likelihood there is of success yeah amazing that's great advice um and i also want to touch on you building this with your brother right like this is the third company that you've built with your brother how does that kind of i guess what advantages of what challenges does that bring having that family dynamic on top of you know all the complexities of trying to grow and scale the company so arnie or arns as we call him so uh it's slider for now i mean the arms and i've done this three times right so we're you know very good at working with each other i'd say look the the benefits are pretty clear right you have acute personal alignment which i think is really really important um you know you know and understand each other personally really really well you know the things that frustrate out you know frustrate each other and upset each other that obviously helps i think the thing is is as long as there's very clear sort of segregation of duties um but common interests uh things tend to work really really well you know with arnie and i you know whilst i think i am a software engineer i am not i did not study computer science i like to think i'm pretty handy when it comes to production co um you know arns has always owned all that product design engineering and i've always owned finance commercial and everything else but if you draw us as a venn diagram we have this overlap in the middle which is product right we just are obsessed with building cool things that users end up enjoying i think that's pretty important um but yeah i mean for me personally and i'm sure i'm saying the same there's just nothing better yeah it's every work you're coming into work with like a best mate and having a laugh it's great yeah i mean it's amazing you know like um yeah i think it'd be i've got a brother myself i think it'd be i think it'd be amazing it's such good fun and what's it like when you go back home and you're hanging out with your family is there are you able to to leave work chat behind um well the thing is it's not you know our our life is our work you know and my uh my friend and my close friends uh and family have always known that with Arnie and I you know you can't you know we regularly when I was San Francisco I worked you know 60 70 days straight you know Lama at 3 30 m and you know in bed by us of 9 10 p.m like that's clearly clearly like a normal lifestyle right and so the people that are close to us know and understand that um you know particularly family but we've also got two other brothers um that are very very different but we just we equally you know we get on um you know everyone has their interests and as brothers you have like your overlaps of interests as well um you know arnie is obsessed with football and is an arsehole fan and i don't think i've ever watched a football game he spends the whole time talking about football to my other brothers uh but yeah it's it's it's nice i mean it's it's it's not as regular clearly as you'd probably like it to be as a founder but you know the time is now and i think you know the whole family can see that amazing and look i'm conscious of running out of time but i want to ask final question what are your own personal favorite ai tools and use cases that you're using to i don't know 10x your own life if and i don't just mean you know people in technology if everyone should be using clawed code or cursor right now i i think that like um i don't know whether exciting or scary is the right word but you know what non-technical humans are able to build and build quickly um is just baffling i mean you know yesterday afternoon i uh was thinking a few things and thought it'd be cool to you know spin up a random app so i was building like a health and fitness app um native app so i had like xcode open the simulator open claw code open i had like four terminals running with like you know that's like four different areas of context that you've got to be thinking about and i built a fully fedged app with like native app a full genetic system in the app in about four hours wow think about that in comparison to like when we launched our mvp for our previous companies that was like months genuinely that's like months into a matter of hours um that's amazing and i think that that will mean that companies will change not just ai native companies i mean companies will have to change because the barriers uh to entry in terms of writing software are just so much lower and it is epic like it is if you're not doing it everyone should get involved it feels like magic it truly feels like magic you know that you know when you when you're trying you're testing something and it sort of works and you can see this thing that you've created and built by i don't know yeah it truly is magic it's the closest thing to magic i think we've ever done in technology it's uh it's bonkers um well thank you so much for joining me like i've absolutely loved chatting congratulations on what you're building i'm sure 2026 is going to be an even bigger year than 2025 it was so um thank you for joining me and let's stay in touch thanks very much and as i said at the beginning you know uh swastion your uh linkedin posts and newsletters are unbelievable so thank you so much no i'd love to hear it Thank you.