38x in Ten Months: Inside One of Fintech’s Fastest-Growing Infrastructure Companies (Farooq Malik, CEO of Rain)

20:36Charles Yoo-Naut:securization infrastructure in the back end that takes basic things like residential real estate.

20:42Farooq Malik:Yes. Shares of art, private cars. Exactly. And the largest owners of those are the beneficiaries of those. It's not necessarily bad because many of the winners or the owners of these assets end up being the pension plans for teachers and public employees and police and fire departments around the world. So some of that is good. But the other side of it is because there's this like hyper-financialization happening and there's like people that are extracting sort of management fees, et cetera, it becomes a bit faceless, right? And so if you look at a lot of these businesses, they're coalescing towards this like franchise model or being part of a larger group.

21:21Farooq Malik:And it's because it's getting harder and harder to run a standalone enterprise. And part of the reason it's getting harder and harder to run a standalone enterprise is because if you don't have scale, you can't negotiate favorable terms from your capital partners or your payment settlement partners or your vendors. If you can make money faster, it solves some of that problem. And so I think there's a lot of really interesting things to think about from an economic lens. I think that certainly much smarter economists and And, you know, actual professional economists probably will start looking into some of the outcomes of what happens as money becomes sort of non-fungible and tokenized and faster and more efficient.

22:02Farooq Malik:And I'm really excited to read, you know, what comes out of that academic research.

22:07Charles Yoo-Naut:What were the kinds of conversations that were around your family table growing up? I think you moved to the U.S. when you were sort of four or five, something like that. But yeah, what were you talking about at home that was bringing you to this point?

22:22Farooq Malik:You know, we were very much like an immigrant family, right? Like many families around the world. And it was always about like, you know, how do you kind of assimilate? How do you get access to opportunities? And a lot of it was like, how do we kind of continue building a relationship with our family and our heritage and people back home? and a lot of time was spent on like you know this was not at the dinner table but like just observing my parents is like how do we send money back to do certain things how do we you know yeah like you know how do we get rid of some of the family assets or something like that whenever

22:57Charles Yoo-Naut:there's a change in the family dynamic and things like that so it was always interesting to see kind

23:02Farooq Malik:of these barriers that existed but then at the same time i was i was raised to be very globally minded, right? Like my parents, you know, very, I'm very grateful for them that they exposed us to the much wider world, right? And shared, you know, a lot of different cultures and exposed us to a lot of different types of things. I always thought about the world as a place where everybody is trying to get to the same outcomes, right? And whether you're rich or poor, whether you're in a developed country or developing market, everybody just wants the best for their kids. They want the best for themselves.

23:37Farooq Malik:They want the best, you know, access to health. They want the best access to kind of opportunity. And I think those are universal norms. And so when it came up an opportunity to kind of start building a business, we really started thinking about it from like a global first perspective, right? It's like, there are people around the world, people transact with each other today. There are many micro frictions. How do we do our best to kind of reduce as many of those as we can.

24:05Charles Yoo-Naut:Did you have entrepreneurial examples growing up? When did that like enter your mind as a thing that one could do? Maybe a little bit controversially, right? Like I think that every immigrant is an entrepreneur.

24:17Farooq Malik:Like they're not really starting a business. They're starting a sole proprietorship of a new life.

24:21Charles Yoo-Naut:Yes.

24:21Farooq Malik:Right. Like that's kind of how I've always used it, which is like you have people going from one place to another. They don't really have any business. I mean, many people around the world, like they go places they don't speak the language, right or they go to places they don't know anybody like for me now like looking back on my founder journey being a founder in an industry that you don't fully understand uh or in a market you don't fully understand with it like where you don't have a network of like investors or people your peers whatever it's probably the closest thing that somebody who's not an immigrant probably get to being an immigrant right which is how do you navigate this like imposter syndrome of like wanting to be successful in this new paradigm without access to any of the social like sort of you know social crutches of how most people are accessing it right and so that it's actually like I mean I've never really thought about it this way until like recently but for me like entrepreneurship wasn't really something that you know I was like oh there's a bunch of people in my family that are entrepreneurial I always thought about it as like my parents are here to give us access to a much better opportunity set.

25:29Farooq Malik:And that's very much like being a founder,

25:31Charles Yoo-Naut:if you think about it.

25:32Farooq Malik:And there was trials and tribulations. And I'm sure if you were to ask my parents, they would say that there was a lot of very difficult times and there was a lot of very good times and every day was good and some days were bad. And it's very much like this emotional and like intellectual rollercoaster that founders and I mean, even early team members, even team members at like even high growth companies go through on a daily basis. Right. So I think it's Like that's, that's kind of how I view it, uh, which is where, you know, I probably wanted to start something. Like I tried to start my first business when I was like 15 years old.

26:03Farooq Malik:What was it? It was a, um, online car auction website. Ah. Yeah. Were you like a car nut? No, no. I used to subscribe to, um, I was, I was a bit of a, I guess, um, a weird kid, but I used to say like, I used to go to the library and read, um, Wired and I was reading, uh, about like uh pure omidyar who had uh started ebay yeah and it was like the article was about like how this was like a marketplace for pez dispensers whatever it was in my head i was like you know and i think my parents were like trying to buy a new car and it was like a used car or whatever it was and i was just like going along with them right and i'm like you know wouldn't it be cool if like this process my parents are going through was like just on the internet and you know i was good instinct i was 15 years old right so like and you know to my dad's credit like he let me figure out uh if the world was going to let a 15 year old do something like that yes and so we like tried the things and we didn't know anybody and like we didn't know any investors we didn't know how it worked and uh honestly like i just went through the magazine and there was like all these um ads for like latham and walk-ins and all these law firms etc right and and i didn't know what those were either so like we just like called one of them and had a meeting and and you know it was it was pretty clear that like a 15 year old kid that didn't know what they were doing was probably not gonna raise a bunch of money i think the world is different now i think like 15 year olds are building you know multi-billion dollar businesses pretty cool but it was a very different time it was it was it was cool it was like an interesting experience um i still own the domain name.

27:38Farooq Malik:Oh, because you're a huge domain hoarder, right? I'm less now. I used to be, I was like,

27:44Charles Yoo-Naut:what are the chances that two domains that I'm hoarding are going to spark a good business? I'm the same way. I'm like, if I even think about it, I'm like, I got it. Let me just see of the availability there.

27:56Farooq Malik:What was the domain for that one? Ridearound.com.

27:59Charles Yoo-Naut:Ridearound.com. That is pretty good. Wow. Oh, that's a good domain. Do you have any domains that you're like, I really want to do something with this.

28:09Farooq Malik:Honestly, I no longer have the mental space to think about that. I'm so glad that we... I met my co-founder, Charles, in OnDeck, which is the founder fellowship. We really connected because I was like, look, I have this domain I'm hoarding. It's not particularly good, but it's signandwire.com. I just think it's stupid that nobody's built checkout for documents. For whatever reason, I think maybe he was humoring me, but it resonated with him and we started building it. And so like that is how we ended up with rain. So like now I'm like, okay, well, you know, I've already gotten my ROI on my domain hoarding.

28:44Farooq Malik:So I can, I can, I can rest easily unburden myself and start like not renewing some of these and honestly give some of these good names back to the world in the form of registrable domains. That's right. That's right. I personally really have a lot of disdain for domain squatters. I know. Hoarders are different, but squatters.

29:04Charles Yoo-Naut:You know, all of them are sort of, you know, in a closet, in a, you know, in a box rather than, you know, trying to sell them for a huge profit here. You've had this like really interesting career before Reign, in my opinion, because on the one hand, there's like a lot of traditional sort of roles in it. Like, you know, you work at Lehman Brothers before the crash as an intern, which is, you know, kind of an interesting chapter. then Booz Allen, very traditional stuff. And then also extremely high openness, it feels like, where you also do a scooter startup. And as far as I could tell, you briefly ran for city council.

29:39Charles Yoo-Naut:Help me understand, what were you looking for in those early parts of your career? What were you testing?

29:44Farooq Malik:I don't think I really tested anything. I was mostly just trying to do things I was interested at the time. So when I got out of school, I worked at Accenture in management consulting. thing honestly it was a great role and i got to experience a lot of different things you really mean that i did i like i'll tell you the most important thing i think i learned as a young person which is the value of sitting down and shutting up is that a good value i honestly i think it's one of the most underappreciated values of four people very early in their career right like i think everybody we're all told that we're all very special and we're all very smart and i I certainly used to think that about myself.

30:25Farooq Malik:I've learned the reality is not quite like that. But I think one of the most valuable things I learned early on was that there's a lot of people that know a lot more than you. And this is an opportunity for you to learn. And if you don't take advantage of it and you're essentially using it by squandering your ability to build a relationship by your hubris or whatever it is, which is often uninformed or ill-informed or misguided, you are going to squander this opportunity. And I certainly did squander a lot of opportunities by being sort of a brash, young, annoying person, right? You give off such a different vibe.

31:03Charles Yoo-Naut:Were you really a brash?

31:04Farooq Malik:Yeah. I was probably no different than many people in the world, which is high on my own supply, right? Which is, felt like I could, you know, I was better than everybody else or whatever, right? And it's largely because, you know, I'm fortunate to have gone to public school in the United States and for better or worse, like a lot of my peers and me were told that we were better than everybody else. Right. And we were always going to have a lot of success. And it was actually one of the best parts about the education system. I think it manifested itself later in life as like potentially something negative.

31:35Farooq Malik:Um, but you have to kind of learn. And sometimes the easiest way to learn is by like making mistakes. And, um, I think now it's like, you know, I, I, I think that, you know one of the things i've learned is you know not knowing things is actually a huge like it's a huge power right because you can learn it and you can learn it from somebody that knows it a lot better than you and somebody that has the experience to teach you how not to make the same mistakes that they've made and if you don't think about it from like that perspective you may end up in a position where you feel like you're the only person that has the wisdom to make the right decision.

32:12Farooq Malik:And most of the time that's wrong.

32:14Charles Yoo-Naut:How do you protect yourself? You know, if you follow that through, you almost certainly wouldn't found rain to some level, right? Like there's has to be some level of a beginner's mind that makes you think all the mistakes that people have made, I've heard them, but actually I don't believe it or I'm going to avoid it. Like how do you keep the sort of good ignorance that you need to be a founder in some ways, but also have the wisdom to listen to people? Like there's some tension there.

32:44Farooq Malik:Well, I think a lot of it is discovery, right? I think just taking things for granted that people tell you to be true is probably not the right way to go through life either. Right. I think you should validate the advice. And I mean, it's like, you know, I guess there's a famous quote from Ronald Reagan, right? Like it's like, you should trust, but verify. And I mean, if you're trying to build stuff, you want to do things with your life, well, you should try to trust, but verify, right? Like I wasn't particularly interested in running for city council, but like, I was like, you know, cost a hundred dollars.

33:15Farooq Malik:I wonder what like the worst thing that could happen is. And I filed it and, you know, I ended up on the ballot and I realized pretty quickly that I'm like, you know, I'm just not passionate about this, but I had, I learned that after I started doing it, right. Rather than just making up my mind beforehand. And so I decided not to do it. So I, you know, I wasn't technically in the race because I was on the ballot, but I was not on the polls. I see. Okay. Or whatever. I wasn't in the actual, uh, the ballot paper. And then, you know, I think other things in my life, I've wanted to just learn different industries and try to figure things out and like, just be exposed to those things.

33:51Farooq Malik:Right. And so I'm very fortunate. I've had the opportunity to do that. I'm also very fortunate that I've been able to do other things, right? Like, I think a lot of people are worried about, you know, if I do this or take this job, then I'm forever going to be this. like if I do the you know job doing ABC I'm always gonna be the ABC guy yes I think some of that is

34:10Charles Yoo-Naut:overblown yeah well I think you know it's one of the traits that I find most admirable is people who are willing to sort of reinvent themselves reimagine themselves like I think it takes something that's it says something about your mind that you're able to hold in your head like yeah I'll give it a shot to be a city counselor but then also say actually you know that's not for me i'm gonna do something totally different i'm gonna be a a scooter mogul or a stable coin

34:36Farooq Malik:mogul like those are two very different things like i do credit my like brief stint in scooters to like re uh spark my interest in entrepreneurship right like i was kind of in this like larger enterprise um motion in my career and i took a sabbatical i ended up working at a friend's scooter startup on an uncompensated basis like just as an advisor and um it was a very magnetic place. Like there was a lot of really young people and they were motivated and they were trying to make things happen and do stuff. And like, and the company was making a bunch of very simple mistakes. And, you know, I think later in my clear, at that point I've just, I'd kind of been around operating and I'd realized that like, oh, like some of these are just, like, these are easily solvable mistakes, right?

35:21Farooq Malik:Like unit economics, like if you get it right, like on the micro level, like you kind of don't have to worry about it for a while, right? As long as you're not losing money in every transaction the more transactions you do like the better you generally know okay i'm doing okay right but there's like businesses where if you don't get that right the more you and i've had that too like i i had a you know a brief stint at a i mean i wanted to start a business like sort of before i went back into banking and uh i sold toilet paper on the internet and i had the unit economics all wrong oh wow okay very easily lost like tens of thousands of dollars as a business during scaling.

35:58Farooq Malik:And so these are lessons you learn, right? Some people learn these in an MBA, and you pay for that, and sometimes you learn it in real life, and you also pay for that. It's just important to learn it.

36:09Charles Yoo-Naut:So you go to On Deck, which is sort of where this begins in a sense, and that's where you meet Charles. Did you guys immediately sort of hit it off?

36:18Farooq Malik:Yeah, I think so. We kind of chatted on a video call. I was in San Francisco. He was in New York and a few weeks later I was going to be in New York. And so I just told him, Hey man, like, would it be great to catch up for coffee that we connected. And I kind of pitched him on this like sign in wire sort of micro SAS idea. And, uh, yeah. And I feel like, I think he wanted to try something, right? Like, I think, you know, I think the really great thing about on deck was that it was a community of people that really were highly motivated to start something. Yeah. And I think the challenge of being in a community where everybody wants to be a co-founder or something or start something is you spend a lot of time validating ideas.

37:00Farooq Malik:Right. And so you're meeting a bunch of people, they have ideas. And like, I'd been on deck, like I'd been on in the on deck, uh, group, like in a different cohort much earlier when I was like kind of building a different business. And I was trying to get people to join that business and be my co-founder for that and like it kind of didn't work because it was my idea to be honest it was probably a bad idea too so anyways it was a bad idea real estate data right yeah that wasn't the original pitch it was like i was trying to build like a neobank or whatever it was uh for landlords and um it wasn't a particularly good idea it wasn't like i wasn't particularly the best founder to do that idea either and i was trying to pitch other people to like be my co-founder on it and like a lot of

37:40Charles Yoo-Naut:other people weren't really the best person to build that either with right like they didn't

37:44Farooq Malik:have an experience there they weren't particularly interested in like joining somebody's half baked idea they would much rather come up with a full like an early baked idea or put the ingredients together come up with an idea early on and have that pride of ownership of wanting to do it and like when I kind of was in the process of winding that business down I you know I decided okay this is over and so I was just re-engaging with folks and being like okay like I want to join somebody I want to do something I want to do something else and I don't have any idea what it is and so we went through sort of like the idea maze a little bit together and this is just a stupid thing i was like look you know this is just a way for us to see if we can work together right because ideas are ideas opportunities are opportunities but like the biggest reason most companies fail is like co-founder dynamics right um it's so you yeah you actually fail before you even get the first customer or the first dollar or whatever it is and uh i wanted to really make sure that like you know hey let's let's just try something let's just build something very low pressure and I think we were fortunate that we just actually set it up properly we had like we set up a company we gave each other equity we like did the stuff we like signed the forms like and uh we like both seeded some money into it right together and just tried and we were we I think it was just uh we were a good partnership like we were good at sort of rounding each other out in ways that we uh were like you know in the ways that we weren't so strong right like he's really good at some stuff that I'm not so good at.

39:11Farooq Malik:I think I'm okay at stuff that he's maybe not so good at. And so I think that's, yeah, that's essentially how it happened.

39:19Charles Yoo-Naut:And Sign & Wire is still up and running, it looks like. It's not up and running. It's still live? We still have the website up.

39:25Farooq Malik:It's not live. It doesn't have any, like, there's no, you can't sign up, you can't use it. We keep it live just, you know.

39:31Charles Yoo-Naut:For the lore? For the lore, yeah.

39:33Farooq Malik:It's a good internal Easter egg. Yes. We keep it live because, look, it's, you know,

39:39Charles Yoo-Naut:I made the website, you know, Charles did everything else.

39:42Farooq Malik:Oh, wow. I love it. But yeah, so we keep paying for the domain largely because I think our Google account is linked to that domain. Yeah.

39:51Charles Yoo-Naut:Was there a point at which you like clearly felt your ambition sort of entered a new level from Sign & Wire? Or was it always sort of just like, hey, this is clearly a tester for a bigger thing ahead of us?

40:04Farooq Malik:Look, we didn't really have that ambition going into it, right? Again, our goal was to figure out if we're good collaborators. And our other goal was let's build something people use. And we built it. We had people that were asking us, hey, the stablecoin thing's going on. Can you add support for that? So we did a quick sprint. Charles did a sprint over a weekend. I had no technical capabilities. But anyway, so he did that. And we had stablecoins running on it the following week. And then we shared that with some folks that had asked us for it. those people connected us to other people that were in the stablecoin ecosystem we were also separately going into uh you know just exploring what was going on in fts and some of this other stuff in the market um in our personal portfolios we were just interested in like what was happening right it was a really interesting space like charles knew a lot more about it than i did um but i did notice something which was that some of the smartest people i knew in traditional financial services were going into digital assets and i was like i'm probably i'm too stupid to know what it is that they're seeing here, but like, that's definitely something's going on.

41:09Farooq Malik:And so I was interested in figuring out what that was. And, um, we just got sort of plugged into the slipstream of people that were interested in stable coins, just sort of by engaging with early customers for sign and wire. And from there we learned that, okay, like there's potentially this pretty large opportunity. And at the time the opportunity was, there's like a hundred billion dollar digital asset treasury market, which was companies building in the digital asset ecosystem and their goal was to make money right like they were businesses they had raised capital they had teams they were selling products and services they wanted to make money and um their native currency was stable coins and so it felt very much like you know a top 50 global economy didn't have the ability to move any money or do anything they had no financial infrastructure and then i remember going on the internet looking up like how much is the largest i think the the country comp at the time was like jordan and i i remember looking it up i'm like how much is the biggest bank in jordan worth and it was like billions of dollars and i was like you know what like what if we become the biggest bank in this small economy yeah and by the way jordan is growing every year you know yeah it's growing every year i'm like okay what if we become like the largest instructor player in this like small ecosystem i looked up the math and i was like oh well you know you could be pretty big yeah i mean not massive but like not small yeah but yeah as

42:25Charles Yoo-Naut:Yeah, if you imagine that the country of Jordan's doubling every year, then suddenly it gets really, really interesting.

42:30Farooq Malik:And then we were like, okay, well, what if we'd like dig into this? Like, what if we'd start solving? And then people were like, please help us solve these problems. The more we looked into it, the more we dug into it, the more we figured out that like, wow, like this is most likely. I mean, look, it's already the contemporary future because people were already transacting in real time around the world. And there was billions of dollars of it. we also realized that this more or less is going to be significantly better than the traditional infrastructure when there's regulatory clarity. We started digging more into it and I looked up like, you know, what are central banks and regulators saying about this stuff?

43:03Farooq Malik:And government regulators were saying one thing. Central bank regulators were saying, this is the future of financial services. So you're like, okay, well, central banks will most likely get the world that they want

43:15Charles Yoo-Naut:because they are the ones that drive global monetary policy. I mean, of all the things that you could have picked during that era of like very peak crypto-y stuff, like you really picked a good one. Like, you know, I think.

43:27Farooq Malik:Look, I think yes and no, right? Like we could have picked things that would have had a much faster maturity arc, would have had a much faster valuation jump, right? Much faster revenue arc.

43:41Charles Yoo-Naut:Like what?

43:41Farooq Malik:Like, you know, like we could have picked like being a NFT checkout, right? But that would not have aged so well, right? Sure. But, you know, many of those people eventually either made hundreds of millions of dollars in that cycle.

43:54Charles Yoo-Naut:Yeah.

43:54Farooq Malik:Which would have been a great outcome in revenue and like profit. Many of those folks ended up converting themselves to a stablecoin orchestration business. And then many of some of them have exited. Right. For billions of dollars. And like it might have been smarter. Right.

44:10Charles Yoo-Naut:Like it's a time value money. I think your game would have, you know, either you would have had to reinvent yourself along the way or the game would have been run. I mean, yeah.

44:17Farooq Malik:I think for us, we had conviction in what was happening here. For us, because I came from that institutional background and Charles had spent time at Intuit, which is also a large business, I think one of the things we realized was you can't bootstrap time. You can't bootstrap time in market. You can't bootstrap number of customers served and for a period of time. right and so our thinking was like look institutions are going to have to adopt this because central banks will effectively mandate it um and regulations will come in that makes this interoperable with existing financial infrastructure and that was our bet it was an easy bet to make at the time because there was draft bills that were saying that in like europe and the u.s and like it wasn't like oh we're operating out of nowhere we're like geniuses or genie whatever like we're you know fortune tellers it was just there was all this stuff like you could just see it and read it right and it ended up taking a lot longer than we expected which very easily could have gone a different way and you know we're just very fortunate that things just started moving in the direction that they did and things started evolving the way they did and we've actually been just incredibly you know pleasantly surprised at like just the massive amount of enterprise interest and what this means for their business, which means that many people like us have been following this technology for several years and they've had working groups and they've thought about this and there's people that these companies that have been there for like five, six years, seven years, eight years, thinking about like, okay, when we can act, what would we do?

45:53Farooq Malik:And so many of these people now are coming to us and saying, hey, we have a fully baked idea. We're ready to go. This is how we would use this, this, and this, and we want to turn it on. When did that change?

46:03Charles Yoo-Naut:How long was it really a grind for? And at what point did it start to feel like the market was pulling you a bit more than you had to push it?

46:12Farooq Malik:We were always very fortunate for the grind because we knew that we were building the hard stuff. We were building the financial infrastructure, the authorization technology, the settlement technology, the reconciliation infrastructure, the ability to do it from multiple chains and multiple tokens and multiple currencies. All that stuff was hard. building that without massive market demand pressure was actually really good, right? Because we got to build it. We got to test it with the customers we had. That had a natural organic growth curve. So we were continuing to grow. We were continuing to build our time and market and our reputation with our customers.

46:48Farooq Malik:I think one of the coolest things about it is that many of our customers, like on the consumer side today, the founders of those companies were people that were involved in some of the earlier B2B partners that we had. And they ended up quitting and becoming founders and doing stuff. And they had a good affinity, like the positive affinity with Rain because they used us as like their corporate product. And it worked, right? It just worked. Like it worked for them and they trusted us for it to work for their new company. And we were really fortunate to have gotten into that slipstream to have that trust, which is the hardest thing to bootstrap.

47:23Charles Yoo-Naut:Yes. Yes. If you use a RAIN card today, let's say I am going to the coffee shop and one of your customers, you're powering it. What exactly is happening in the flow?

47:35Farooq Malik:Yeah. So, I mean, we have different types of products. We do a pre-funded product or a prepaid product, which is playing against an on-chain balance. We also have credit products. The credit products are a lot more complicated because there's usually a warehouse lender or another capital partner on the back end. that is originating, like we're originating the receivable, selling that to a capital partner, then there's a repayment period. And the repayments can come in. We have programs where some of the repayments come in in fiat, you know, just the normal traditional way. We have other products where it pulls against like a DeFi protocol and then you just pay the DeFi protocol back.

48:08Farooq Malik:So there's a bunch of different ways that you can architect the credit stuff. On the other side, we have sort of a wallet linked spend product, right, where you can connect any wallet with any balance on any blockchain and any token and you tap that instrument there's a way for us to kind of put that into a pending state the same way that systems work today we never take that money from you like it's always in your custody for any of these custodial products and we have partners that are custodians they hold custodial assets um under the licenses and when the settlement comes in for the request for the finality of that transaction comes in from the payment network, we're then settling that transaction entirely on the blockchain.

48:49Farooq Malik:So there's no fiat dependency. All of it is seven days a week, 24 hours a day between us and our partners. And then also with the payment networks, we have our own kind of internal ability to, you know, clear the balances across the various different tokens we support, across the chains we support and get them into the right sort of correspondent currency to be able to settle with our counterparties.

49:12Charles Yoo-Naut:And how do you sort of conceive of the business and its sort of constituent parts? Like, do you think of it as sort of a credit business and a different chunk? Or how do you put the pieces together in your mind a bit?

49:26Farooq Malik:Yeah, we think of ourselves as a money business, right? So we're financial technology infrastructure. We're software for money. We're effectively a money router, right? Like you're familiar with token routers for AI. We're a money router, right? Right. And part of the value of routing is you want to understand the context for that transaction. Right. And why it's being done, where it needs to go and what is the path that it needs to go down. And that's how we think about our business. The other side of it, which is like the complexity of like, hey, the different products like credit, virtual accounts, pay ins and pay outs, fiat interoperability, token interoperability, debit card versus charge card versus credit card, etc.

50:07Farooq Malik:The way we think about that is that these are all different use cases for the operating system we're building for money. Money is the lifeblood of every business. It is literally their actual life for a business. And our thinking was that as tokenized money is coming in to the market, as it's gaining adoption, as there's regulatory clarity for Genius and MECA and Europe, etc., As additional countries are coming out with stable coin legislation, as some countries are coming out with CBDC regulations, over the next five to ten years, people are going to realize that this is just not only real money, not only is it legal tender, it's also table stakes for their business.

50:50Farooq Malik:And when people realize that it's table stakes for their business and this is just legal tender and it's just the eventuality of where the world is headed, they're all going to have to find a partner to do the thing with. The way we think about it is that how can we be in each individual use case so that we can support the eventual demand that will come from enterprise, small business, anybody.

51:13Charles Yoo-Naut:I think you've said before that you're a fan of the art of war. What are the places in Reign's history where you've had to rely on some of those lessons or strategies most? Are there things that come to mind?

51:27Farooq Malik:I think if you read The Art of War, and I recommend it, it's like a very quick read. It's not particularly difficult. Most of it is about waiting, which is not particularly exciting or sexy. But if you're an early stage company, you're up against so many different things. You're up against resource constraints. You're up against the ability to execute with a limited set of resources and people. You're up against a deficiency in the amount of trust that people place in you. you're up against people with more money more resources larger platforms and i think art of war is useful because the book is really about like being an underdog and like how do you use the attributes of whoever you're competing against against them right and that's why it's like super interesting like i mean that's why i really like it as like a book about being a founder really.

52:20Farooq Malik:Not to say that like we're in a war, like we're definitely not, we're very fortunate to not have to do any of the hard stuff that happens in war. But I will say that it is really valuable to think about like the importance of patience, right? Like I know that, you know, many of my peers and a lot of other really talented founders and builders are out there doing like 996 and they're grinding and they're doing as much as they can. A lot of the time, you kind of have to do the work and you have to let the world kind of respond and just simply keeping the tempo up or pushing as doing as much as you can doesn't necessarily get you the outcomes you want like sometimes you have to like stand by the riverbank and wait until the right time or the right weather or the right whatever and then you got to cross and do the next thing right and i think that was really poignant when I read it.

53:12Farooq Malik:And it was, it was very important to like, you know, take her time. Like, you know, when things weren't going well, there was opportunities to pivot into things that were going well. Like we could have launched a token, we could have launched a DeFi protocol, we could have done a bunch of different things that would have created economic value in that time. But for us, like, we didn't have any counterpoints to our thesis or vision, right? We were thinking, okay, this is going to be the future of financial services. Regulations are going to come in. Eventually there'll be regulatory clarity and enterprise interest.

53:42Farooq Malik:And there was actually no counterpoints. Banks like JP Morgan were running JPMD offshore. Other institutions were exploring tokenized deposits. Countries were passing regulations or markets like Europe were passing regulations. And so it very much felt like, okay, well, there's no counterfactual that we're up against, which is that this is not true. The world we believe is going to exist is not going to exist. And so it kind of made it easier to just stay focused. Whereas like, I think if you are up against counterfactuals that say, okay, your idea is stupid and here's why, and here's the reasons why, like you probably should switch.

54:19Farooq Malik:Right. I think for us, we were, I mean, maybe we were naive or stupid or ignorant, and we weren't paying attention, but for us, it just seemed like, okay, if we just keep going, there will be a there there.

54:30Charles Yoo-Naut:In general, I find like the argument around 996 that, you know, like Twitter becomes obsessed with sort of dull because it's just like, of course, to build something excellent, you have to do excellent work. And there's lots of different ways to do that. The way that you were just describing it then, is it fair to say that your culture is more output driven than input driven? Do you care about like, maybe it's not exactly those hours, but how do you make sure you get what you need to out of the team?

55:00Farooq Malik:Yeah, look, I think we hire people that have agency and we give them the responsibility to deliver the thing that they're responsible for. Then we get out of their way to the extent possible, right? That has been working for us, right? I think one of the biggest challenges that every company probably faces as they grow is things that used to work stop working. New things have to work, right? So we're always fine tuning it, but I think the main thing we're focused on is how do we get folks that want to solve the problem and have purity of vision on what we're hoping to accomplish. If you can solve for those things, you end up with people that want to do that, right?

55:40Farooq Malik:And they have the patience to do that. A lot of times it's very hard to find people like that.

55:47Charles Yoo-Naut:You mentioned in an interview that you gave recently that the data that you guys see is very compelling around stablecoin flows and that much, much more of it sort of originates and terminates in America than people realize. You know, I think myself included, I often think of stablecoins as sort of like an emerging market story, you know, an Argentina story, a Nigeria story. What are people missing there? And like, what is the what explains those flows to America? One of the easiest ways to explain that flow, right, is that the United States is the source of much of the world's innovation over the last several decades, right?

56:27Farooq Malik:Many of the world's largest platforms for, you know, home shares or travel or buying goods and services or streaming media or music, they're American, right? and thereby they acquire, or like even AI, right? Like massive amounts of our customers are transacting on AI tools. All of those are, I mean, not all of them, but like many of them are here in the United States. Even many of the routers that are routing to like Chinese tools, like they're also here in the United States.

56:55Charles Yoo-Naut:Yes.

56:56Farooq Malik:And so that explains a lot of where the money ends up, right? Where consumers around the world are increasingly and continuing to buy US goods and services.

57:06Charles Yoo-Naut:And people just don't realize that many, much of that purchasing is already done with stable coins across these services. Yeah. Tens of billions of dollars.

57:14Farooq Malik:I mean, and this is just getting started. It's unbelievable. There's merchants that are getting billions of dollars of annual volume in stable coins. We've chatted to some of them. They're like, we had no idea. It's pretty crazy. It's a really cool part of the market that we get to see, which is just how many of these people are not even aware that this is happening under the hood. How can that be that they're not aware of it because it's such a tiny percentage of the whole for them? Well, settlement for them, on their side, it's still going through the traditional infrastructure. The way they interface with it is the same way they interface with everything.

57:50Farooq Malik:So for them, they'd have to opt into it. Look, the way I describe it to people is if you think about how mobile phone adoption worked, if you had a landline, you never had to opt into a mobile phone. right? Like somebody could call you and you picked up the phone the way you're used to.

58:06Charles Yoo-Naut:Yeah. You don't know they're calling you from a, from a cell phone.

58:09Farooq Malik:Maybe the quality was worse, right? Like quality was bad. And so like, maybe that's how you found out. And then they would say, okay, you know, can I text you? And you'd be like, what are you talking about? You can't text me. I'm on a landline. And so that's how people mostly found out about they were interfacing with mobile phones, right? Like the consumer told them. And that was a really amazing way to get adoption for mobile phones, right? And so for us, like that that's the exciting part about this is that our customers can opt in and no one else has to right like we have if you had interoperability so if you want to send money in and out of an account you want to send money to a european bank account whatever it is mexican bank account in and out you can do all of that you want to use a payment credential to pay for something at any pos terminal largely anywhere in the world you can do that too and the consumer doesn't have to pick And that is a merchant.

58:59Farooq Malik:And that's really exciting for us. Just because technology is shifting or there's innovation happening, why does anybody have to opt in? Why force them to make a cognitive decision?

59:10Charles Yoo-Naut:You mentioned that you're not in a war, which is true, but the market you're in is certainly one that people are interested in, right? Like you have people who are, you have competitors, you have big incumbents that are interested in this space. When I was talking to some folks in the stablecoin space and I was saying, you know, what are interesting things for me to ask Farouk? They said, it would be interesting to hear his take on why Stripe doesn't just win this whole thing. You know, they bought Bridge. They're clearly very interested in this space. Stripe, Visa, whoever you want to pick. Like, why doesn't this become winner takes all with, you know, favoring some of the bigger companies in the space?

59:48Farooq Malik:What I'll say to that is also pretty straightforward, right? Our viewpoint that is that all money is changing everywhere in the world for everybody, whether you like it or not. And if you want to quantify the opportunity space for what that means, that means that every institution anywhere in the world, including individuals and your local bodega, whatever it is, has to figure this out. And there's going to be an upgrade of everything in the backend at some point. Just even to support interoperability with the new stuff, even if it's not moving everything to the new stuff. What that means from a magnitude perspective is that money quantifiably is larger than AI.

1:00:26Farooq Malik:It's larger than food. It's larger than oil and gas. It's larger than municipal water supplies. It's larger than government spending. It's larger than defense. It's all of these combined. So if you think about how many trillion dollar companies there are in AI, how many trillion dollar companies there are in every other market, how many trillionaires there are individually, that's the addressable market for what's up for grabs. That is enormous, right? And so for somebody out there to be a$160 billion company like Stripe, by taking advantage of this, maybe they can get to a trillion dollars, two, three, four, however big.

1:01:01Farooq Malik:That will still be a fraction of what is up for grabs. And so our viewpoint is that if the entire world is shifting, why bother thinking about like, oh, I'm going to compete with so-and-so or I'm going to compete with that. the amount of people that are going to be impacted by this is massive and it is much larger than every other market combined and so like what is the prize of that software grabs what is the what's the what's the first place company going to be worth what's the second place company going to be worth like it is unfathomably large and so it's almost not even worth thinking about the other thing that we would say is that the stripe team is excellent like they're executing very well They're, you know, we have a ton of respect for them.

1:01:45Farooq Malik:They've been an amazing business in this fintech space for a long time. And the way we think about it is that like they have made up their mind to go after kind of a platform strategy, which is very much built on individual building blocks that are in their ecosystem. From our vantage point and, you know, some of the things we hear in commercial conversations is that it feels very much like a secret garden or walled garden, a closed loop approach, which again is great. They have scale, they have massive merchant adoption, they have massive volume, and their ecosystem is very large. The reality is that in any, again, if you look back to most innovation in most industries, if you look at the early days in the internet, the early days of the internet was punctuated by people that wanted to build a closed loop ecosystem.

1:02:34Farooq Malik:And it was enormously valuable. If you look at AOL, that was an enormously valuable business.

1:02:39Charles Yoo-Naut:Like massively valuable. Wait, help me out there. What do you mean by a closed loop system for AOL, for example?

1:02:44Farooq Malik:It was a curated internet. And AOL was on all sides of it. It was the only way to access it was through AOL. I see. Every property that you engaged with was AOL. Everybody inside that ecosystem was curated by AOL. There was private enterprise there, but it was all curated by a single party. And it was an enormously valuable business. There were some companies that were building the open internet. and the open internet was the wrong decision for a long time. But ultimately it was the right decision because the open internet is an order of magnitude, many large orders of magnitude, larger than the closed internet.

1:03:20Farooq Malik:That's kind of the same thing we feel like is going to happen here, which is that there is going to be credible opportunities for people to build a very large, valuable property around their ecosystem because they have distribution, which is phenomenal. Yep. There are people, the vast majority of the world is outside of their ecosystem.

1:03:36Charles Yoo-Naut:I'd love to talk a little bit about your style as a builder, how you run the company. We've touched on it maybe a little bit. But one thing that struck me was you and Charles apparently do one 30-minute meeting a month as the only sort of standing meeting. Is that still true?

1:03:53Farooq Malik:Yeah, that's true. Yeah.

1:03:54Charles Yoo-Naut:How do you maintain enough alignment that that's the only sort of on-the-calendar conversation that's required?

1:04:03Farooq Malik:To be honest, I don't know. I don't know how we do it.

1:04:06Charles Yoo-Naut:Do you guys sort of see things very similarly naturally?

1:04:10Farooq Malik:We're just very vision aligned. We are hoping to accomplish the same thing. And everything is working off of that. So everything we think about is driven by that. We're very aligned on how we want things to work and what it takes to get there. And we set the agenda at the beginning of the year. We fine tune the agenda, I guess, in these 30-minute sessions. And we get on with it. right like there's so many other demands on our time like we we trust each other right like he runs a very large part of our organization and i trust him to do a great job right i think similarly if i don't know i don't want to speak for him but i hope that he trusts me to do it i

1:04:50Charles Yoo-Naut:would i would think so given this is the arrangement i if i have to imagine what requires that 30 minutes a month is it like 90 people stuff like what actually like

1:05:02Farooq Malik:needs that calibration a lot of it is like prioritization right like you know i i have a saying the team's making fun of me before it is um everything life is fluid and so 30 minutes are spent like figuring out like which which way to go like on what right because in one month we may have a priority for one thing next month we may have a different priority that is superseding that old priority and so a lot of it is just calibration like most of the time we spend together is calibrating, which is, hey, what are the things your team is sprinting on? How do we kind of move them up or down the queue?

1:05:36Farooq Malik:Who are the deals that we're closing or what are the opportunities ahead that are interesting or important? How do we start slicing them in now so that it's not a surprise in two months that we have to do this?

1:05:46Charles Yoo-Naut:I love hearing this is the thing that the team makes fun of you for, because I think something that CEOs learn as they scale, as far as I can tell, at least is that you end up having to repeat certain messages over and over and over, right? There's like five things that because new people are coming in, priorities are changing. What are the mantras that are most critical to know inside of RAIN?

1:06:08Farooq Malik:Look, I had a meeting the other day with several members of our team. One of the things I shared with them is that, look, when you join a company, maybe at the scale people perceive us to be at, right? I wouldn't say it's the scale we're still a very small, scrappy company. And we like that. We want to stay that as long as possible. But whenever people join from outside and they come in and they're like, wow, this is a whatever. People project so many things on us. And what I told them is that, look, you're here because you're special and you have made it and you meet our standards. You have a lot of great ideas about how your day-to-day sucks and how it can be better.

1:06:50Farooq Malik:You are probably hesitating on sharing what those are because you feel like there's some organizational inertia or some amount of special effort. And smart people have spent a lot of time making it the way it is. But most likely the way things are is just because they had to be this way. And it wasn't something that was well considered or thought out. It just became this way because we had other things to worry about. And so if you have good ideas, you should raise your hand and say, hey, this sucks. I have a better way to do it. Or hey, I already tried a better way to do it. And we should all do it this way.

1:07:26Right.

1:07:27Farooq Malik:So I think it's really important to always share with the team, especially in early stage companies, especially if you're growing fast with new people joining, is that just because the market says that you're a Series C startup or whatever it is, doesn't mean that we are what most Series C startups would be. Doesn't necessarily mean that we have that pride of infrastructure or pride of durability or whatever it is on our side that we have thoughtfully curated. There's a lot of things we're trying to thoughtfully curate, but not everything is going to be like that. And if you're coming in and you're immediately being confronted by something that sucks or was broken, that's not by design.

1:08:06Farooq Malik:That's largely because it's an oversight or, you know, it hasn't been stress tested to be able to, you know, support somebody that has the experience and caliber that you have. And so we should be fixing those things. So like, that's one of the things that we find ourselves repeating over and over again, which is like just reminding the team that they have the agency to make this the kind of place that they would like to work at and make this the type of place where their day to day is the way they want it to be. Right. I think a lot of times, like you have that organizational inertia and if you don't specifically say it, it ends up, people just get that negative reinforcement where they're like, well, you know, maybe the CEO likes it this way.

1:08:44Farooq Malik:Yes. Maybe, maybe the, my manager likes it this way. And if it's not working or if there's manual intervention required for basic things that are enormously chafing to you, it's not by design.

1:08:56Charles Yoo-Naut:Speaking of fluidity, there's sort of this new economic buyer that has entered the world, which are agents. How does that impact the way that you view what it is that you're trying to build and the way that you steer this ship?

1:09:13Farooq Malik:It's part and parcel of what our thesis is, right? This financial infrastructure will improve and will allow for the creation and maturization and adoption of things that we haven't been able to think about today. I think that's the coolest part. I think I've said this before, which is one of the coolest things that has come out of mobile phones. I'm obsessed with the mobile phone kind of adoption curve because it's so interesting. If you talk to the people that invented the mobile phone and you said, hey, you know, people are going to play Candy Crush on a subway car, they'd be like, what the hell are you talking about?

1:09:48Farooq Malik:It's crazy. And if you tell them, you know, you're going to invent this device that connects to like a radio wave to send a phone call and some guy is going to make a billion dollars in games and like just be one of the richest people in the world, it'd be nuts. Like how are those two things connected? Right. And so what's really exciting about this industry is that element. Like I'm super excited about like, what are the things that our clients and partners and collaborators are going to build that wasn't possible before. There's a lot of things that are possible and you can upgrade them, make them better.

1:10:20Farooq Malik:What are the net new things that were never contemplated or were contemplated, but we're not technically feasible. And that's the really exciting part, right? It's like tokenized money movement, programmatic settlement, infinitely dividable cash to be able to go to wherever. And micropayments, the ability to have an agent consume media on a per view basis or per line basis. How does that potentially reinvigorate printed media? How does that reinvigorate content? How does that create a different dynamic from what exists today? There are so many interesting sort of rabbit holes to think about where the world will go.

1:10:57Farooq Malik:and it's impossible to know. But the exciting part about it is we meet founders and builders every day that are trying to do crazy stuff, right? What's the craziest thing of late? We're running an agentic startup program and some of the agentic use cases are like super interesting, right? It's like, how do you, and they're not connected to payment cards at all. It's just like, how do we get agents to transact for various different things? We have a client that's built a really cool AI concierge service where the concierge will just do stuff for you and they'll just invoice you.

1:11:31Charles Yoo-Naut:Awesome. Right?

1:11:31Farooq Malik:Like it's just basic stuff. Like it's, it's stuff that people have wished, you know, I wish I could get tickets to the U.S. Open. And I think about it today and I forget. And then I don't know where the email is. And then I forget and I just don't have it. And a bunch of people with bots get all the tickets and they sell them to me for much higher price. If I think about it, I asked my agent, I'm like, Hey, can you get me U.S. Open tickets?

1:11:54Charles Yoo-Naut:You know, don't spend more than whatever. X number of dollars.

1:11:57Farooq Malik:Yeah.

1:11:58Charles Yoo-Naut:It's a machine. It's going to remember. Right?

1:12:01Farooq Malik:Like that's a very simple, interesting use case that lots of people can use. Similarly, let's say I'm in the subway and I'm going home. I forgot to get toothpaste. Hey, can you please get me some toothpaste? I don't have cell service. I can't pull up the delivery apps. I can get the text out between stations and the agent can do the thing. Like these are micro improvements, but the net impact of these is potentially very large. Yeah, I totally agree.

1:12:30Charles Yoo-Naut:Well, I always like to end with a more sort of thought experiment or philosophical question. If you had the ability to run any experiment in the world with unlimited resources and no operational constraints, what's an experiment you'd like to run?

1:12:44Farooq Malik:I'm like fascinated by the concept of like UBI and I would probably, if I had unlimited resources and no risk of blowing things up permanently forever, I'd probably run that type of experiment. I'd see like what people do when you have something like that, right? I think more and more people are worried about the prospects for sort of the human condition, right? I mean, I don't know if it's right or wrong to be worried about it, but I know that a lot of people are. and many folks have suggested, oh, well, you know, we'll just have UBI and it'd be great. Like we'll have machines do everything and we'll have all the money we need.

1:13:20Farooq Malik:But what is all the money you need? What is the right amount? Like what is the right amount for who, at what age, wherever? And like, what would they do with it? So it's always curious. Like I'm, I mean, I don't know. I'm just an amateur economist. I like that.

1:13:33Charles Yoo-Naut:That would be, that would be very useful. So I'm just, I'm curious about that type of experiment. If you could assign a book to everyone on earth to read and know that they'd understand that, what would you want to assign? I mean, I've already talked about Art of War.

1:13:47Farooq Malik:I think that that is a, I mean, look, it's a really good book and it has a lot of applicability, right? I think it has applicability in building a business and I think it has applicability in relationships. Many of the lessons to learn, I guess the main lesson to learn is that just be patient and not everything's going to go the way you want and other people have lots of leverage and you sometimes can't do anything about it, right? So I think that's a really good book And mostly like the way that the world is now that people just don't have time to read. And so it's, I think it's like 95 pages or whatever.

1:14:18Farooq Malik:So it's a quick read, lots of applicability in your personal and professional life. And it's off copyright. So it's available at very low cost.

1:14:31Charles Yoo-Naut:Amazing. Farouk, thank you so much.

1:14:34Farooq Malik:Yeah, no, thank you.

1:14:35Charles Yoo-Naut:Thank you for having me. That's it. Thank you for listening to this episode of The Generalist Podcast. Please subscribe on Apple Podcasts, Spotify, or your preferred podcast app. Ratings and reviews help others discover these discussions, so if you enjoyed the conversation, I'd be grateful if you could take a moment to leave one. For all past episodes and more, visit us at thegeneralist.substack.com. See you next time as we continue to explore the future.