E25: Frank Rotman of QED on Navigating FinTech and Crypto Investments

29:59So you start with this problem statement and solution statement, but that solution statement needs to lead to a financial statement. And the financial statement is basically saying, let me explain the levers on the business and let me put assumptions in that if they were to come true, I build this magical, mystical business that really is a profit machine. The goal of business is to make money. I know people don't like to hear that, but that is the goal of business. the only type of sustainable business is one with free cash flow everything else all you're doing is solving a problem and passing investor dollars back to the user of your product and you're subsidizing it but you know the concept of business is to have this magical mystical spreadsheet that over time you refine your assumptions and eventually if you're right You build this incredible cash machine.

30:55And venture capital was really meant to take those assumptions and put a learning agenda in place and turn them over one at a time. And founders are supposed to be asset allocators. As a CEO, you are an asset allocator. You are taking people and you are taking money. And you are actually applying them against hypotheses that you have or core assumptions that you have about how the business should work. and you're either creating proof or you're creating anti-proof, you know, with the money and the people that you're deploying. And if you have proof, it means that you're on track. And if you have anti-proof, it means that you're not on track and you have to fix the business, right?

31:38So like the concept of venture capital was about turning over cards one at a time and saying, this is a critical assumption. How do I learn whether I'm right or wrong? And if I'm right, I can put with a lot more confidence a number in that spreadsheet that's a good number. And then I can go back to the market and say, now I've earned the right to raise some more capital so I can turn over another card because I have proof. I've de-risked the business to some level. Then I raise more capital, I turn over another card or two cards, and I look. And if I have more proof, I'm actually building a business that turns into this wonderful cash machine.

32:20The problem with cheap and abundant money is the discipline just disappeared. So instead of having a learning agenda, instead of turning over cards one at a time, founders were falling in love with their solution, not with the problem. They were assuming that it was correct. And they were capitalizing the business and attacking it as if they were correct. And if they were getting anti-evidence, it didn't matter because they could raise more capital and just keep going on the hope and prayer and promises and the ability to tell a narrative about why the business is going to be a great business.

33:01And in fact, instead of staging ambition, which is about turning over cards one at a time, they would do everything at once. right they would try to turn over all the cards at the same time and it would be sloppy and you'd waste a lot of money and you'd have asterisks next to everything because you know you would make mistakes along the way and say no just give me more money i can fix these things you know i'm trying to build the biggest business as fast as i can you know so you would expect that it's going to be a bit sloppy so to me it was i keep using the word dizzying because is I would try to help businesses.

33:37I mean, our brand at QED is to be the best advice that our companies can get bar none. And we would try to give advice to our companies. And all of a sudden, massive amounts of money would pour in at valuations. And they would hire lots of people and try to turn over all of the cards at the same time. And it's hard to give advice, good advice in that environment. It's hard to maintain discipline in that environment. I wrote a thread saying my description of the past few years leading up to now is that Darwin went on vacation, but he's finally returned. And with money drying up and not being abundant, not being cheap, Darwin actually gets to tell you whether the market is slapping you in the face or the market is telling you you're on track.

34:22If you have anti-evidence or anti-proof, you're not going to be able to raise more money until you fix it. and you're going to have to fix it with the money you've already raised. So what I think this is going to lead to, and you're seeing it happening right now, is that businesses are going to be much more disciplined about asset allocation, about the people they hire, the money they spend, because now they have to actually stare at, what am I learning for this money? How much can I learn how quickly for how much money? That is a critical, critical question to ask when you're building a startup.

34:59And you can't be basically capitalized to perfection where everything has to go right for you to get the results that you need to raise capital. So adding buffer, being disciplined, doing fewer things, but doing those things well, all important. The other thing that's going to emerge is that it's going to be critical for businesses to recognize that the purpose of business is hopefully to make money at the lowest level of scale possible. And this is like a foreign concept to a lot of venture capitalists and founders who only know the environment we've been in. But the concept is if you can make money at a low level of scale, you can invest your free cash flow and doing bigger things.

35:45And in fact, you now have optionality because with profitability means you have the rest of the market to attack and create operating margins that are profitable. right and if you can deliver that profit back to investors or back to the business and reinvest it it means that you become incredibly capital efficient so i i think businesses are going to learn how to make money at lower levels of scale i think act two and act three businesses are going to be unfundable where you know they define it as act one is make customer happy scale customer act two figure out how to make money like those businesses are gone very hard to fund in this environment.

36:26You know, the path to profitability is going to be very important. And I think founders are going to do well if and only if they're good asset allocators. And not blitzscalers in this environment. Blitzscaling was a moment in time? No, I mean, no disrespect to the book. I mean, it's an interesting book, but I think it defines a particular point in time when capital is abundant in a very particular class of company that requires a massive amount of scale or the ability to unseat incumbents through being relevant in an ecosystem with speed. And look, I mean, there are businesses where blitzscaling is probably the right answer.

37:14Let's call that 1%. Then there are 99 % of the businesses that really need to build themselves in a disciplined way. where blitzscaling is not the answer. So I think the book has been just misused and misinterpreted given the capital that was available. It's interesting because a lot of us were able to convince ourselves that the years of excess were maybe just an evolution where maybe the tools had gotten better, the founders had gotten better, There are more people in tech and maybe this was sustainable. Like maybe this was, hey, the exits are getting bigger. The outcomes are bigger. And maybe the valuations just made sense because over time, maybe that's how it should work.

38:05Yeah. So let's unpack that a little bit because some of what you said is 100 % true, right? So the ability to get from zero to one to actually launch a product is now nearly guaranteed. If you have the right team, like, I mean, there are bad teams and they fight and don't have the ability to ship code and everything lives in code now. But the number of quality engineers that have now worked at a startup or been trained in these modern coding languages that enable you to ship code quickly and high quality, the number of engineers is through the roof. I don't know whether it's 20x or 50x or 100x what it was at the beginning of this cycle, but it's an order of magnitude or two orders of magnitude bigger.

38:55I mean, I remember when the smartphones were really just a new thing and some of the companies that we were talking to, it was a crazy idea to launch a mobile app. And it required hiring people with very specialized skills who are on the forefront of doing this thing. Well, that's not true anymore. Like there are lots of people who actually know how to launch apps on phones and you would expect to be able to do it when in the past we expected to not be able to do it. Right. Right. So the ability to get from zero to one, I think, has improved massively. The ability to ship code with only a few engineers has increased exponentially.

39:38you're seeing what's happening now with AI and the ability for AI to actually reduce the cost of creating your base code, creating websites, creating logos, right? I mean, anytime that you can replace carbon-based units, i.e. people, with silicon-based units, i.e. code, like you're reducing the cost of launching anything. And if you think about a, you know, a chat GPT, you know, query, it might cost 20 cents of compute time. And if that creates logos or images or code that could take a human being, a carbon-based unit, an hour or two hours to do, that person actually costs somewhere between$1 and$2 a minute.

40:25So you've replaced$100 to$200 worth of people time with 20 cents of compute. Or maybe you have to run the query four or five times in order to, you know, get something that you can actually use. So a dollar worth of compute time to replace 100 or$200 worth of people time. So all of these things, I think, are going to make it, you know, a truism that it is cheaper, easier, with a higher success rate to get from zero to one. So the base of the pyramid has changed. But I think the, this particular cycle has not created the discipline to create companies that are giant cash flow machines that are durable with business models that can withstand cycles.

41:11There are some, there are some amazing companies that have come out of this cycle, but by and large, a lot of the companies aren't as durable as you would expect. because if you really want the outcome of a venture-backed company to become a real company, like, I mean, you can define that in any way you want, but around 20 years from now, 30 years from now, 50 years from now, right, it needs to be durable, needs to be profitable. And I think that's what this next cycle is going to prove, you know, that the venture community can launch businesses that qualify for being real businesses. It was interesting.

41:50I remember you did a podcast with Keith for boy and, um, I can't remember who, uh, who hosted it. Um, and, um, Keith said something along the lines of, we we've come to terms with the fact that we're price takers now because the best entrepreneurs, you know, uh, have competitive term sheets. So it's Jared Hecht that actually, uh, was the host of the podcast. It was called 80 % of the way to Mars. And then we did a follow-up called 90 % of the way to Mars. And it was all about price discipline in a world where it didn't seem like there was any price discipline. Like I found it actually a pretty interesting podcast.

42:28And, you know, Keith's take on it was, you know, in a world where capital is abundant and inexpensive and flowing freely, and you have a lot of new players, I call them tourists because now they're gone. But they were coming into the venture space with speed and with huge sums of capital. With all of these changes, Keith was saying discipline was about picking the companies that you wanted to invest in that could become generational companies. But price is what the market would ask in order to clear the deal. So I mostly agree with that. During this period, I think there are a lot of other ways of winning deals than just price.

43:13But you're not going to win a deal at one-tenth the price of someone else. So when a market is setting price, the biggest decision you have to make is the distribution of outcomes if this is my entry price. Is the distribution of outcomes meeting or exceeding my threshold for return expectation based on the risk that I'm taking? So the math had changed quite considerably. And the math actually worked if you believed we were going to be in that environment forever. The problem is when you're investing in companies, it's a seven to 10 year journey and sometimes longer, you know, to build them up into something that compounds over time to become this giant profit machine that you eventually can take public or sell.

44:05So it's so hard to project out seven to 10 years in the future, the environment that you're in. And we've seen what happened. right the environment we're in right now is not the environment that people were assuming it was going to be when they're investing at peak valuations right and the exercise I ask people to go through when they don't understand why stocks correct when interest rates go up you know you can take any public company you can take their forward projections and just apply different discount rates to their future earnings and if you apply different discount rates to their future earnings, which would be the equivalent of a rising interest rate where the cost of capital goes up.

44:46Very easy to see how valuations get punished by 50%, 60%, 70 % with the rate increases that we've seen. So it's literally a math exercise. And then it can be compounded by the rate increases actually punishing the economy and a variety of other things that are second order effects. But the environment we're in is not the environment that people assumed when they were investing. So not a surprise we're seeing a lot of markdowns. Not a surprise we're seeing valuations correct. Not a surprise there's a ripple effect from the public markets into late stage investing into mid-stage investing. And it's just starting to hit into the early stage investing.

45:26But it has to. It has to ripple all the way through. And I think the last place it will correct is in kind of pre-seed and angel investing, where there still seems to be some denial about what's actually happened and what the environment is that we're in. But I think that's going to correct as well. And if you had to steel man, you know, like the Tiger Global stance, for example, or strategy and how they must be, you know, reflecting on it kind of years later, like, what do you think was the strongest version of their thesis of why that strategy could have made sense? So every time I hear steel man, I feel like I'm channeling Chamath.

46:09I can't do. I cannot do it. But if I had to steel man the argument, the concept that venture capital was investing in disruptive technologies that by and large were attacking incumbents that were public incumbents with these, again, these huge profit machines. and that it is easier to create a company with a blank page, blank technology stack, blank idea, than to refactor an existing business with new technology. So if you start with that premise, you believe that the concept of venture capital is going to produce enough winners that market share is going to move from the public markets into the private markets and then eventually back from the private markets into the public markets when the companies get big.

47:06But the concept is that you're going to have these technological S-curves that are best adopted with a blank sheet of paper than it is to refactor an incumbent's business model. So you have to believe that in order to believe that market share is going to flow So first to the startups and then back into the public markets. The second thing is, if you believe that there are going to be enough winners in the venture space, the concept of indexing against the scaling greatest companies that are being built isn't a dumb strategy, right? Like there's more area under the curve of value being created in the private markets than there was in the past.

47:56So if you could get the beta of the area under the curve, you would do quite well. In order to get the beta, they had to have free and cheap capital, which means overpaying, in order to win a position at the table. right but if you're overpaying you're not now getting data right you're now eroding beta because you're overpaying for you know your positions within the ecosystem but in order to combat that they really went after what i would call a qualified beta strategy which to me is almost like putting a morning star rating on every single company and then saying i'm only going to invest in the four and five star you know companies so what they did is they found the best companies, the ones that were growing the fastest, the ones that had the tier one investors who they could trust had better track records than the norm.

48:54And they would throw turn sheets out at the companies and say, I'm going to win most of them by overpaying, but because I'm investing in the four and five star rated companies, it will all balance out at the end and I will end up with the beta of the venture community. So that would be my steel man argument for at least the strategy and what they were trying to accomplish. I think that's a great overview. I want to, gearing towards closing here, I also want us to reflect a little bit on crypto. You went down the rabbit hole over the pandemic on NFTs, on DeFi, Web3, and it's great threads about it.

49:33I'm curious, maybe you could briefly summarize what got you so excited and maybe reflect on how should we think about the space you know a few years later so it's important to understand the history of why i got involved and when i got involved which won't take me long to explain but i think it's important um so i was introduced to crypto many many years ago when i was a high stakes poker player and on the high stakes online poker player. And the government was in the process of making it very difficult to illegal to get money on and off the poker sites. They were enacting the Bank Wire Act of 1961 to make getting money on and off very difficult.

50:21And a bunch of the poker players said, well, you can get your money on and off through this thing called Bitcoin. And I said, well, aren't you really going around government regulations? And they said, well, yes, you know, that's the purpose of Bitcoin is to go around government regulations, right? They're trying to shut you out of something that you want to do. So why would you let them do that? Now, you have to put in perspective that I was a fintech investor at the time, right? Basically working within the banking ecosystem to launch businesses that were compliant. So my introduction to Bitcoin was through the lens of people that were using it for a very specific purpose, which, by the way, is very different.

51:01than if you were in Latin America at the time or you were in some other country and you were worried about the devaluation of your currency, right? So I, by and large, ignored Bitcoin and crypto at the beginning, saying, wow, I can't imagine buying something with the express purpose of going around government regulations or government intent. So the reason why I bring that up is I think people's introduction to crypto can color what they think about it. because this coloration made me lose sight of what this thing was and what it was evolving into for many years, because I had this one view in my head about what it was and what it could be used for.

51:42And it was, it was naive and it was what I would call very shallow, right? A shallow view of the possibilities. And we'd gotten very busy at QED and it's a very, very complicated thing. You can't understand it a little. You either understand it or you don't. And as it became more and more prominent, as it became more and more solidified in different ecosystems and different geographies, it kept coming up conversations more frequently with companies that we're looking at in companies in our portfolio. And our brand to our companies, as I mentioned, is to be the best advisors to them bar none. And they started asking questions that I felt we didn't have great answers for.

52:27And I remember talking to one of our CEOs at one of our CEO summits, and he said, you should learn this in public as a way of doing a service to the industry, as well as catching yourself up on something that's an emerging technology. If you think about crypto, So it's digital programmable money. Like that is fintech. It is financial and it is technology. And it's something that, you know, we did not have the expertise around. So I actually committed to him about 15, 16 months ago that I was going to learn in public. And he knew that I was a first principles thinker and would see it for what it was, not immediately go down the rabbit hole and become, you know, like a messy overnight or, basically come out of the rabbit hole and say, this is a bunch of crap.

53:17I would try to learn it and see it for what it was. So I've been on this journey. I think it's been incredibly interesting. I think it's not all good. It's not all bad. It is very complicated. So that is the truth. But I also think very few people actually understand it at the level that they claim they do. Now, I'm not claiming to be an expert at this point. I'm claiming to be intelligent enough to have learned enough to understand what it can do, what the technology is, where it's evolving to, the problem statements that it's trying to disrupt, the solution statements that it's trying to provide.

53:59What I'll say is over the past year and change, it's been very frustrating talking to a lot of crypto native founders, especially when they're trying to disrupt the banking ecosystem. Because a lot of them are just speed running the mistakes that banking has basically made over the past 200 years. And I would ask them questions about analogs that I knew, like things that I knew had happened in the banking ecosystem or the reason why banks are operating the way that they operate today. And it was, I'll call it a near complete ignorance, and ignorance not in a bad way, just lack of knowledge about why the banking ecosystem works the way it does.

54:43And I would have conversations with founders about maturity transformation and about asset liability matching and counterparty risk. And it was like I was speaking a completely foreign language to them. And at the beginning of my journey, I didn't understand the language they were speaking. So I felt like it was very difficult. And part of the reason why we weren't conversing well is because I didn't speak their language. Well, now I can speak their language. And for the past couple of months, a lot of the things that have been happening were the things that I had been talking to them about for a very long time.

55:19right so you talk about you know a crypto protocol creating their own token right their own currency and i would you know draw analogs to the wildcat banking era of the 1830s where banks basically printed their own currency and when there was a bank run the currency went to zero because no one else would take the currency and you know you needed a reserve currency in order to make that work and you know people look at the ftp token and say wait that's very similar to what you're talking about. And we would talk about the safety nets of FDIC insurance and what happens when people are taking money out of a protocol or a liquidity pool, or in the case of a bank, out of a ledger, out of a bank account.

56:02And there really are more similarities than people think. It's just completely different language. So I think the crypto world is going to gain a lot of appreciation for banking. And I think the banking world has a lot to learn from crypto about some of the new technologies that really can take friction out of the system. So like the concept of a single immutable ledger with good money on it at all times that doesn't need a bank settlement process, and all you need are on-ramp and off-ramps in order to get it into a native currency. That's actually a really interesting thing, given how difficult it is for international money settlement.

56:44And guess what I just described? It's a stable coin. So there are technologies like that that I think are extraordinarily interesting. But a lot of what's happening in DeFi is a lot of crypto people with hammers looking for nails, and they're trying to reinvent things that actually, by and large, work. And they're not putting the safety nets in place, and they're not learning from history. They're just using a new technology to offer something that's already been offered. Now, with that said, I think there are other technologies within crypto that are extraordinarily interesting, like NFTs. And when I talk about NFTs, people immediately jump to, you know, JPEGs of monkeys and such.

57:25And I am involved, by the way, in some of those projects. I find them incredibly fun. Quirkies is one. KiloBears is another. Menji is another. Like, there are projects that I find very interesting and fun. But when I talk about NFTs, it's really the technology layer, which is a container for metadata, right? That's what an NFT is. It's a container for metadata. And if you combine that with the self-custodian nature of wallets and you put the two together, some really interesting things can get created. Finally, we have a way for people to own their own data. Finally, we have a way for people to own their own things, trade their own ownership.

58:12And I think that we're going to see some interesting new business models get created, you know, as a result of this NFT technology. I think there is an example I used on Cartoon Avatar. So I was on their podcast talking about it, where I said, to me, it's a narrative violation that someone can graduate from college. and there's no way that you have of actually proving that you went to that school right the certificate they give you no one would believe is actually proof it's a piece of paper and you could recreate that piece of paper very easily so in order to prove it an oracle i.e the university ends up taking data and publishes it to a centralized database called the national student clearinghouse that you don't have access to about your own data.

59:01And if you want to prove to anyone that you went to that university and took the classes you took and got the grades that you got, you have to pay that central database and get permissions with a lot of friction to basically prove something about yourself. The concept of an NFT and self-custodianship means that that same oracle, the university, could actually drop a soulbound token into your wallet with all of that information in it, right? So that you have at your disposal, your fingertips, your ability to give permissions and access information about something about yourself, right? That you went to a university, that you went to certain classes at certain times, and you earned certain grades and eventually got a certain degree.

59:47So I think there's going to be new forms and fashions of data ownership and ownership of things, ownership of money that I think the new technologies are going to be fantastic containers for. To extend that a little bit further, it is interesting to think about with crypto, what are some of the ways in which it will recreate the financial system, but in a decentralized way and or some elements of the financial system and what are some of the kind of uh new like what will look similar to the current financial system and what will be totally new and and which rules should be broken almost do you have a framework like some people say that maybe the benefits defy is really it's just or just some of the crypto stuff in general just regulatory arbitrage based on some of these antiquated laws that were you know created maybe 100 years ago and maybe the benefit is it's a workaround to kind of recreate the laws for internet era age where some people say no actually the technology is fundamental breakthrough and will enable new you know use cases that um didn't exist prior yeah how do you think about some of these questions so there is an ethos and a zeitgeist around crypto that's very hard to separate from the attitudes that people have about what the end state is going to look like and how we're going to get there.

1:01:09So there's a diehard libertarian element to some of the OGs in the crypto space. Like you can't ignore that, right? These are people who basically are putting their fists in the air and saying the global financial crisis is bad. Look at all the bad things when you centralize power and look at all the bad things that can happen when you have a fractional reserve system of money that gets out of control. And the idea behind Bitcoin and some of the early tokens, it really was a statement about disbelief in the current banking system in a way of creating a new, in some ways, a new global reserve currency that people could believe in that was not controlled by the powers that be.

1:01:56So if that's where your starting point is, you're going to have a very different view of its purpose than if you're looking at it as a technology right now i look at it as a technology right so i think it's important to understand like which perspective i had apologies i'm moving away from the sun um but you know i come from a a core premise that you have problem statements and you have solution statements It's not about a technology for technology's sake. You have to be solving a problem. And if you're not solving a problem, then you're building an artificial business, right? It's a manufactured problem, and therefore you have a manufactured business, which doesn't mean it won't succeed.

1:02:42It means that it's probably going to be tiny, right? It's probably going to be a niche business unless you're solving a real problem. So from a technology standpoint, I do believe that blockchain technology with all of the promises of having provenance and understanding how immutability matters, the ability to have certainty of data and uptime on these chains at all times. Like, there's something that's really interesting about the technology, but it's not a perfect technology. It is not a technology that is the technology that should be used for every problem. Right. In the same way, tokenomics and tokens themselves, different chains, like they need to exist to solve problems.

1:03:32And when I think about Ethereum, just as an example, which really is smart contracts and digital programmable money, and there's a lot of interesting things that are in there, there are specific types of problems for which it's a very good solution. But again, you've got to think about it as a technology. I shouldn't say you have to. I think about it as a technology because I'm not coming at it from a zeitgeist or an ethos about wanting to overturn an entire system. So that's a helpful perspective. To zoom out a bit and return back to our FinTech hearing towards closing here, I sent another investor at a great firm, a lending company that we invested in once.

1:04:16And one thing that she said back was, I don't do lending companies because I'm uncomfortable with a certain kind of macro risk. They're great in some environments, not great in other environments. And putting aside that answer, I'm just curious how you think about what kind of macro risk you're comfortable taking or not taking for some companies that only really make sense in certain environments. Yeah. So any healthy business is a durable business. And if you actually think about economic cycles, if you think about credit cycles, if you think about, I mean, fill in the blank, there's so many different types of cycles.

1:05:00There are very few businesses that are just immune. If you think they're immune, you haven't looked deep enough. Right. So you can look at what's happening in SaaS companies now. So, I mean, talk about the class of companies that venture capitalists love to invest in, vertical SaaS companies. Like if we're up to the VC community, everything would be a vertical SaaS company. Exactly. 98 % logo retention, 120 % revenue retention, and you invest in print money, right? Like that's what they want. But the reality is even vertical SaaS companies are going through a cycle right now. Yep. So if you're trying to build durable companies, you're not building them for tomorrow.

1:05:45Right? you're building them to be around 20 and 30 and 50 years from now. So it means that you have to build into the model enough flexibility that you have degrees of freedom to manage through cycles. Now, I come from a very cyclical world, right? Banking and, in fact, credit within banking, where every, you know, call it seven to 10 years, there's some credit disruption, some economic disruption that you've got to rethink your credit policy and change your approved decline in pricing decisions pretty radically. So I'm used to kind of weathering these up and down cycles. And there is some truth to it.

1:06:25Part of the art of a startup is you have to get far enough fast enough to attract the next amount of capital so that you can continue de-risking the business. And if you're coming up on a new cycle, you have to be very careful about when you invest because you might be investing naked, where you're the only investor for the company. when the cycle starts shifting. So again, there are good times and bad times to start building businesses, but you have to be resilient to cycles when you hit your destination. You just have to be. Yeah, 100%. And maybe wrapping on this upcoming question, which is a good segue too, is like, I'm curious if you have kind of a request for startups within FinTech.

1:07:11You can be alluded to certain things you're excited about earlier in terms of like payments applied to specific domains. But if you could, if hundreds of people, we're listening, a thousand people listening to this conversation, wanting to pursue something in fintech, exploring different sub areas, look for white space, or if you yourself had to go pursue a, go start a company in the space and you had any sort of set of skills that you'd want, where would you point people? Or what's your request for startups? Where do you want to see people sort of do some rabbit holes in? Yeah, I mean, it's interesting.

1:07:46We have over 20 investment professionals around the globe now. Each one of them has somewhere between two and four major investment theses that they're chasing. So you can kind of multiply all that out and realize that fintech is actually a pretty big thing. So hard to point to just one thing. I think all of the pillars of banking and financial technology, like very, very interesting right now. We are a bit promiscuous. Like if it is in or touches fintech, we will take a look at it. But I would just encourage people to go beyond what v1.0 of fintech was. So if I had to answer the question, you know, v1.0 of fintech and insure tech was really about UX, UI and APIs.

1:08:38It was slick front ends, reducing the friction to application processes. And that's interesting. And it kind of proved the art of the possible of how you could disrupt some of the incumbents by building something that people just like to interact with. That's now table stakes. So if your business model is just a nice little layer on top of something in the back end, it's going to be much harder to build a big, durable business. than if you're fundamentally recreating the manufacturing process of the product itself. That is a helpful note to end on. Frank, this has been a great podcast. I must say that for anyone looking to go deeper on some of these topics or just FinTech in general, your threads are a must and you've aggregated them helpfully on your website.

1:09:29And then also lucky to be on a few cap tables with you guys at QED. and you guys are always the most favored investor. And so highly recommend any founders building something very ambitious to be working with QED or applying to work with them. Thank you so much, Frank, for sharing your learnings here on the podcast with us. Well, much appreciate the kind words and anytime. Awesome. Turpentine VC is a podcast from Turpentine, the network behind Moment of Zen and Econ 102. If you liked the episode, please leave a review in the Apple Store or rate us on Spotify. Thank you.