The Great Restoration - How Fintech Must Adapt to Changing Markets

Speaker A: So it's practical product management, the podcast and today I'm flying solo. Marilyn had a technical difficulty, but I'm m not only by myself because I'm here with my friend Greg Cohen who I've known, I won't even say how many years because that'll make me sound even older than I am. Um, but since I was just a kid early in my career I um, used to work for a startup and at the time the company that Greg was CEO of, they were one of my clients and so that's how I got to know him. And we've just, I've just flown followed his career and we've kind of kept in touch over the years. Um, so that's. We're kind of both payments geeks and we have this background. Known each other for years. I think we're getting younger, I'm pretty sure. Um, both of us. Um, but, but yeah, so that's how we know each other. So Greg, why don't you catch us up on, tell us a little bit about yourself, what you're doing now. Uh, and you know, just jump in.

Speaker B: Yeah, sure. You're getting younger. I am getting older every day. Appreciate. For those you don't know. My name is Greg Cohen. I am m the CEO of a payments uh, business. Uh, we work exclusively with software companies uh, called Fortis. Uh, we are North American based and uh, we have scaled about 10x literally over the last 5 years. I also happen to be an operating partner for a mid market private equity firm as well and so get involved in a lot of their business. Hits the financial technology, uh, area and arena. Uh, I think like I've said, I've been in the payments world specifically about 30 years and watched a amazing kind of evolution. We've gone from the heydays and then you know, valuations and financial technology going through the roof and then about two years ago as interest rates started rising, you know, yeah, some changes going on.

Speaker A: So yes, for sure. I mean there was a point at which I was working for the highest funded startup in Europe. Right. And then it just, I left. But it wasn't my fault, but I left and then it tanked. Right. And so now they're trying to build this thing back up. And so I've been really interested in a lot of what you've been saying. I think you're calling it the great restoration and that impact on Fintech and what that looks like. I mean I'm not really in payments anymore but like you, that was really, I mean I have a 25 year product management career, I think 17, 18 years of it was in payments and fintech and kind of that space. Um, so it's part of it. I'll always be a payments geek at heart and I follow it. Um, so I would love to hear kind of what you see happening, what you think is shifting, uh, in kind of this space and maybe a little bit of how we got here.

Speaker B: Um, look, I think uh, I, I have kind of named this the Great Restoration. And there's a, there's a reason why. Right. And you know, I think everybody knows that coming, coming out of the financial Crisis Back in 2008, 2009, we had a couple of years of kind of doldrums and then it was like, you know, money was free, interest rates went to zero, huge investments in the financial technology, but also a lot of the venture, you know, ecosystems, venture capital firms flourished, you know, uh, valuations went through the roof, all of the other things. It also saw the amazing growth of companies today that we put up on pedestals. Also look at what all the technology companies today that we look at and their valuations from back then, even the Facebooks and the Amazons. But also you think about the newer players, the stripes, uh, and the squares and some of these others that have kind of emerged. But what we've seen happen with the uh, post pandemic stimulus, uh, we saw that continue through there and then all of a sudden with every action there's an equal and opposite reaction.

Speaker A: Right.

Speaker B: And so interest rates go through the roof. And when interest rates go through the roof, that usually puts huge pressure on, you know, investment, especially in high, what you would call speculative venture and high growth investment. And so literally over the last uh, you know, over the last two years we've seen valuations even of great public companies come down 50, 60, 70%. It's happened, uh, in the private market, uh, fundraising for venture and equity has, it hasn't dried up, but it's significantly slowed down. If you took other than very, some kind of the, the pie in the sky stuff, the AI investment adventure, this has been the lowest two years of venture investment in the last 15.

Speaker A: Wow.

Speaker B: Right. And so if you took that category out, because that is the shiny new star that people are running to.

Speaker A: Yeah.

Speaker B: But that leaves about 30, 50,000 venture cap businesses that are overvalued, that are going to have liquidity challenges in the next year to year and a half.

Speaker A: Yeah.

Speaker B: And so what that will create, that creates this momentum and I call it the Great Restoration because it's Just like when a hurricane comes through, um, you know, through uh, some of these different markets we've talked about. We saw what happened down in Texas, uh, last week. But like any hurricane comes through normally a lot of the smaller kind of older homes, the ones that aren't built on a solid foundation, they get wiped out. What happens if you've got a house, you kind of build it back up with a solid foundation behind it. Or quite frankly, new homes come in built on that solid foundation and you create a, you know, a much better community years later because now you've got all these homes that are built up to where they need to be, uh, to withstand the next hurricane and the next ups and downs and flows. And so, you know, we're really, we're seeing it today. We're seeing, you know, M A transactions significantly below valuations before. We're seeing public valuations of companies come down, I think I talked about earlier come down significantly. And so these struggles that are going to hit businesses, especially what I would say that kind of smaller tier client is going to kind of come out. And some of these companies that maybe were light on, you know, compliance and some of the backbone things, they really didn't have a great path to profitability. They were just going for. I know you like to always talk about, you know, uh, KPIs and things like that. Like their KPIs were about users, they weren't about making money. Right. Like all of those things are going to really come to a head where when they need money, it's going to come into a point where people are going to say, okay, what's your path? You know, some of these companies are going to get bought. So there's some bigger companies that are in wanted with some amazing assets out of this.

Speaker A: Right, right.

Speaker B: There's going to be, you know, some of the companies that are the solid ones are going to get funded and they're going to get funded and continue to scale and be the winners. And then you're going to have a whole crop that just aren't going to make it to another round. And I saw, I actually think you wind up with a better ecosystem, you know, when you come out of this. But there's a lot of carnage along the way. But there's also a lot of opportunity along the way as well. If you do it right. Um, if you are a bigger company, you have the opportunity to buy stuff as long as you're buying the right things and at the right values, uh, and there's an opportunity to create Great businesses out of these downtimes. Some of the best businesses were founded like if you go back in 2009 and 2010, as they will, as they rode the next wave up. So yeah, that to me is the great restoration and why I've been preaching about it in my own company and the companies I sit on the boards of about right now, it is about focus and it's about scaled long term profitable growth.

Speaker A: So it's interesting as you're talking, a question came up for me. Cause obviously, uh, during the pandemic, I was working at a series C startup, right, that we survived. But it was part of why we survived is the pandemic. If the pandemic hadn't happened, we might not have had the tech that would have gotten us to the next stage because I couldn't build it fast enough to keep up with what we were expected to deliver on that fund, on that fundraising round. Right. And as I'm thinking about that, um, and I'm not picking on them, it's just the nature of where we were in the business cycle. Um, but so much of what was happening when the money was free and easy and flowing, um, was what you said. Like there were all these startups that didn't have very strong sort of foundations. They didn't have really strong business models tied to their technology plans. And you know, and then money got expensive and suddenly investors were like, give us, give us something or we're going to, you need to make a cut, you need to lay people off. We need to, we need to get some, get to profitability, whatever. I also wonder a little, like, I think something you said in there triggered something for me. Like, you know, a. Was, was the money too, too cheap? That's one, one question, right? Was it too cheap and were we not paying? Were we not investing? Well, just as a, just as an industry where we just pump in money at whatever or were we making bad decisions? Is any part of that. And then the second question is something you said. A lot of these companies were so focused on funnels and conversion and getting your client and keeping them sticky and they didn't really have anything that was necessarily something anybody was begging for. Right? It was just like, this is a good idea, let's give it some money and see if it runs. And I'm wondering, like, we changed some of the model of how we even funded companies during that, that season. So am I missing something or is that.

Speaker B: I think you're right. Look, uh, you know, a lot of folks, um, you know, your m money. There were a lot, there was so much m the outsized returns that investors, when I say investors, I mean the big institutional investors, you know, um, you know these are endowments and these are massive private offices and you know, you know, uh, you know, things like that, when they're putting, you know, generally speaking they would, they rush to where you get outsized returns. You know, us as individuals, we're getting our 5 to 8% as we give it to, you know, our retail broker. But they're looking for you know, mid teens returns and they saw these opportunities. So all this money got pushed into uh, the venture, you know, venture and ah, private equity worlds and these people had to deploy capital. And so you want to take in these massive bets across the board, new funds raised, you know, new funds coming in to go raise this money. And so everybody was getting money and you're, you were almost in business to get to your next fundraise.

Speaker A: Yeah.

Speaker B: Not to necessarily get to a long term sustainable business model. And you know, and if you said you're, you know, to go get the next $2 million you just need to have 2,000 users. I don't care how you get them, how you get like that's what you got to do.

Speaker A: I am. Right, yeah.

Speaker B: Go. Yeah.

Speaker A: That's why Google made all that money. That's right. I mean that's what we were doing. We were buying traffic like we were 100% just, it was all paid traffic. Right. And we were just pumping easily a million, million and a half at it. Right.

Speaker B: They were probably just trying to get to that number and not thinking about the cost of acquisition. Right. And then the lifetime value of that client that would come in.

Speaker A: Right.

Speaker B: Those are the metrics that you look at for long term sustainability. But if you' if your goal and your, your board, right. We're all at the, we're all kind of driven by what our board tells us to do. Of course, if they say get, you get 20,000 customers like hook or crook and I'm getting 20,000 customers.

Speaker A: Right.

Speaker B: It's kind of what they're telling you to do is what drives the business. It also drives the mentality of different folks. Right, right, right.

Speaker A: And I think it's tricky for someone like me where, I mean I've spent my career working with engineers and building stuff. Right. That's what I do. I'm a product manager. Right. I take requirements, I want to know what the customer, the voice of the customer. I bring the information in. I get with engineers and designers and we build Stuff, And I sort of was in it for, let's build the right thing. It's got to have this vision. It's got to go this direction. But there is this moment where you're like, that's all lovely, Leah, but we need to get to the next race. Right. Or we need to get to profitability, or we need. And I think that's a. It's a. I think it's a conflict for product managers. Right. Because we want to build what customers are asking for, what they want, what we're hearing. And often the board, the investors are saying, yeah, we don't care about that. I mean, they do, but it's not there. It's not their focus. Right?

Speaker B: No, no. Even if it's. Even if it's out there as, uh, the vision of the company to create, you know, ours is. Create remarkable payments experiences. Right. But, like, sometimes, uh, you know, I've got a private equity guy who sits on my board and says, that's terrific. Get me this. Right.

Speaker A: That's nice.

Speaker B: Yeah, no, totally get total. Get the. The conflict. And I think, like, as a project, I'm assuming you probably know this better than I do. Like, that is sometimes not even in this cycle challenge. That's a. Oh, this board. This quarter, we had a board meeting and said, instead of doing that, we'd like to do that.

Speaker A: Yeah.

Speaker B: You get those changes. I just think you saw it a lot more frequently.

Speaker A: Yeah.

Speaker B: And I think the other piece is you saw, you know, especially as money was getting pumped in and you. Or even you got that next raise, the company went from doing this. Oh, we should be doing these other five things too, because I saw this other company make money here.

Speaker A: Yeah.

Speaker B: You went from this focused, probably, you know, seed round company that was really good, or, you know, creating a stake in the ground on this.

Speaker A: Yeah.

Speaker B: And everyone's saying, well, you should do this and do this, do this and

Speaker A: this and this and this and this. Right. Yeah.

Speaker B: Opposed to the natural order of. Opposed to the natural order of things. Things. Right.

Speaker A: Yeah.

Speaker B: There's a natural order of when to do things. And I even saw that with company. Whether you think about the Ubers or the Squares or the folks like that, that the world I live in, like, all of the stuff that they now have in house, they didn't start that way. Square was dropping dongles out to consumers back in the early part of the, you know, the, the, you know, 2012, 2013. That's all they did before they got into capital and cash and all the other.

Speaker A: Yeah, I Mean when I went to Amazon we, I literally went to Amazon, we were going to compete with Square. Right. And that was, I ran the platform for that. We were building the platform to do that. But we had a totally different way of seeing it because we already did a lot of the things that they wanted to do, but they already did things that we didn't do. Right. And so it was this. So from a product and a build and a customer focused perspective, there wasn't to your point, a natural order of what we were trying to do. Right.

Speaker B: And um, you have an existing and you have, you have this. It's, you know, one of the things that we've seen come up out of this kind of market is that you had these high growth startups do this and then they've had to pull back. Right, right now because their investors are now saying what's the path to profitability? So now they're kind of going the opera way. Let's go focus again, stop doing this stuff. Uh, it's interestingly left a great opportunity for like I almost call it the incumbents.

Speaker A: Yeah.

Speaker B: To take some of that because they've got the cash to invest where they see market opportunity going back to your remarkable great create products, blah, blah, blah. They're the ones doing that now while the startups are really just okay, let me go back and focus in my little hole because I got to get the profitability right.

Speaker A: Right. And it suddenly becomes a real interesting game of, you know, are we going to be able to raise or will somebody gobble us up? And either of those could be a perfectly fine solution, right. For the, for the founders, for the team, for whomever. But it's the people in the, I think in the intersection that either don't find a buyer and can't get to profitability now because they are running too lean or not focused enough. Uh, or their product doesn't have the basics. Like there's an interesting space in there that I think is. There's going to be some, there's going to be some like collapse. Right.

Speaker B: Like there has to be. Right. There's too many. If you think about some of the problems that have been trying to be solved, whether it's in my world buy now, pay later or you know, enabling payment facilitation or tablet pos, there's too many. Right. And ah, so there just needs to be a natural order of things to get that in that uh, but it'll also available. Some of these companies will get acquired by some big bank. They're getting Acquired by Chase or by bma. Yeah. Because they were doing something BMA wanted to do and could never have built it in.

Speaker A: Sure, sure.

Speaker B: I think it's great. But you're. There's going to be a lot of things that just don't make it to the other side. And that's why the fundamentals matter. If you've got that, whether it's continuing on your own or continuous part of someone else. Yeah, you've got a, uh, you've got, you've got a path to get there. And that's where your project management stuff, uh, you know the hard part about project management, sometimes you are being told what you need to product manage, opposed to helping make that decision of.

Speaker A: Yeah, yeah, it depends on. Yeah, depends on the level.

Speaker B: Right.

Speaker A: I think, you know, it depends on where you're sitting. And I think for Marilyn and I, who do this podcast, I mean she's sitting pretty significant in her spot. I was running, you know, teams and I was running. I mean I was the chief product officer at the last company and you know, and so you're making these decisions, but sometimes you're like you're asking me to do something that goes against what I do. Right. And so you have to sort of decide like, well, how can I do this for a while or do I want to do something else. Right. And I think that's every, every product manager, every engineer has to face, like, what kind of what do I want to do? Right. What's interesting to me.

Speaker B: Yeah. And um, I'll take it up. One of the things that you said is that it may or may not work out for the founders and this and that. The other is that right now one of the challenges is if you've raised money at ah, a billion dollar valuation.

Speaker A: Right.

Speaker B: But in reality your public competitors are trading at a value that is 60%, 70% lower than it was three years ago. That billion dollar valuation really should probably be 400 million to 500 million.

Speaker A: Yeah.

Speaker B: But now you've got investors that put money in at that value, you wind up with a very complicated discussion.

Speaker A: Right.

Speaker B: When you think about your next steps as a CEO or as a board and how prefs go, I have seen founders basically move into having jobs opposed to having any, uh, real realistic upside values because of the way that they had built their capital stack. So it's just gonna be a very interesting. That's why I call it the great restoration. There's just a lot of things happening.

Speaker A: Yeah, yeah, no, totally. It makes total sense. Do you think it will Change? Uh, I mean, maybe it has to. But how do you think it will change? Um, how we put together leadership teams and think about leading M companies.

Speaker B: Oh, I mean that's, we're seeing it already. Right. Uh, I talked to, you know, I get pinged by recruiters all the time to ask me who I know who can do this or do that. I think it's a fundamentally different way to manage a company. It's a different way to manage sales, a different way to manage all go to market product, project management. When you are thinking about a business built for scale last, you know, long term facility, it's, it's almost like you hate to say that. It's almost like how do I go find some old school folks to go help out the new school guys and some fat or girls. And the uh, you know, the hard part is some of the new school girls and guys like may never actually be able to survive in a, you know, kind of the, this scalable growth model. Because the term I used to use is product monsters. Product monsters die. Like this is, this is so, you know, foreign to what they do.

Speaker A: Oh yeah.

Speaker B: In, in a world that like we're going to do this and do that, like, no, I want to build this and this feature that I'm like, we only have so much capital.

Speaker A: Right, right, right. No, I think that's a really good point. And I think, you know, one of the things that I saw a lot, you know, living in Berlin and as a. I was, I used to go to this, I was the CTO as well for this company and I used to go to the CTO club and you know, I was the only woman in that group. It was 36 men and me, which was, you know, but one of the things I saw a lot of in that, in that environment was there were entire startups that were well funded and they had product people, but they had no product leader who had ever done it for more than maybe three years or four years. And here I am, I'm like, how long have you been doing this, Leah? Uh, 22 years. Right. Like I started it, you know, I started in way back when I was working at Electronic Clearinghouse before I worked for, for Safwan and those guys. Right. Like I've been a product manager for a long time. And one of the things that I've seen is that that particular set of young product managers, they're eager, they're well taught around the theory. This is part of the reason Marilyn and I started this podcast, right? They get the theory They've read the books, they've been in this cycle of like growth, product management, how do I chase conversion, how do I get the number of users? But they don't know what it looks like to build the black box and get real focused and real still and, and hone in on that and turn profitability on. Right. They just haven't done it.

Speaker B: By the way, you've got that. It's, that's not just a product. Like that is in every functional area in many of these companies. And I would tell you that some of the, you know, some of the companies like reject the old. Right. In some ways that was kind of their DNA. Look, we're not, we're not hiring Leah because she only knows this. Yeah. We're just. Hold on, here's the word. We're disrupting everything.

Speaker A: Right.

Speaker B: Okay, well great. Uh, and, and as you continue to get capital they would make. And part of it's actually making the market more rational. Yeah. Some of these companies, and you may have worked for some were doing things that were just irrational in the market. Yeah. Forcing in some cases people to go chase like giving away product or doing things like this. And like a lot of that irrational, you know, go to market and sales stuff is dried up a little bit too. Which is, which is good. It makes for a better long term business model. Because what you don't want is, especially in the world I live in, when you're moving money around, if one of these companies doesn't make it like there is, there's dollars sitting there. And we've seen, you know, we're dealing, right. We're dealing right now with a, uh, you know, business that, banking as a service business that failed. And I won't name names here, but like sitting on ma, you know, tens of millions of dollars of consumer deposits that have gone poof.

Speaker A: Right, right, right. No, and I think it's a good point and I do think that there is a, uh, you know, often in this space I would say the, the couple of startups and scale, like startup and scale up that I worked for in Europe since I've been here. I would say a lot of times I was saying, you know, they would be saying go faster, go faster, go faster. And I'd be like, listen, I gotta do this. And then it's gonna speed up. Like I know how to build. There's a pace. Right. And I've got to get the team honed in on what we're doing and then I can turn the heat up. Right. And they can Run faster. That's not a thing that a lot of these startups understand because all they know to do is go breakneck at it, you know, because they've got, you know, people breathing down their necks. And I get it, you know, but it's just a different, it's such a different world. Right.

Speaker B: So, yeah, but look, I think when you get through it, look, some of these companies, you've already seen layout, you know, you've heard announcements of layoffs here and there. It's interesting. By the way, you notice public company, as soon as they do a layoff, layoff, do you know what happens to their stock? It goes up. You think, wait, I just let all these people go here? That's bad stuff. Uh, the investors are saying, wait, you're getting back to discipline. Yeah, right. And that's, that's kind of what the investment community is saying in those centers. We need to take that lesson a little bit. It's not about laying people off and it's about focusing on what your core competency is.

Speaker A: Yeah.

Speaker B: Finding partnerships to do some of those. Like it's not. Doesn't mean you can't do X or Y. Find the best of breed there, plug it into your system and then like opposed to trying to just build everything and do everything yourself and maybe getting that discipline on the roadmap and managing those things. Right. And making sure compliance is nailed down on the back end as well.

Speaker A: And I think we see. I mean, it's similar to the big companies having that stock moment. I saw a lot of things where companies would get a fundraise and then immediately turn around and do a layoff. And people were like, we just had a party to celebrate our fundraise and now you're laying us off. And I was like, yeah, they had a fundraise because they promised they would lay you off. That's what happened. So sorry. You got laid off because of a promise that, you know, so. And I was, I tried to sort of educate on that. And what was important for me was learning how when we got money, you didn't just go hire double the size of the team. You base it on milestones. You hire what you need to start delivering. And if I meet this milestone, then we hire 20 more people. And if I meet this milestone, we hire 100 more people. There are things you do right, but that's so old school, right?

Speaker B: Yeah, look right now, in this environment, look, whether it's venture debt, whether it's traditional debt, y, whether it's just equity investment, it's like, how do you string that on as long as you possibly can? Because you've got to get it to where you may not. They're not, may not be another round at the other end of that. So at the end as, ah, these things come together and your expense burn is here and your profits are here, like when do they cross? And so you need that next investment to get you to here.

Speaker A: Exactly.

Speaker B: Um, that is, that is the goal of every round right now. And that's why, to your point, you said it exactly. They gave you money but said, uh, you got it, here's your money to get to profitability. Do this and this to help do that.

Speaker A: Ah, yeah. We'll only do this if you make this deal and you're like, all right, you know, we need the money to get 18 more months, so we got to get rid of, you know, a quarter of the population. Right. Okay. I mean it's terrible. It's terrible to have to do it, but that's the deals that are being struck.

Speaker B: You know, I think in a lot of the companies, as long as if they're decent, I mean, if they're really small, it's hard. It's 50 people. This is a hard thing to do. In the bigger ones, you're saying, okay, this division, like, maybe it makes sense for us, but not right now. And they'll take the entire division and say we're not going to do this.

Speaker A: Right, right, right. So I mean, it feels a little like what we're saying is there's a, there's some interesting things that we've learned through sort of this, this season and some things that we're seeing that some of the startups and some of the kind of older companies have are, you know, the big companies are doing that. We're like, yeah, keep doing that. But let's start to infuse it with some of the things we already know about running a good business model. Right. And find a, find a bit of

Speaker B: a balance there on the back of what I would say is a interesting, you know, you got a regulatory environment right now, uh, across the globe. This is just, you know, that is, that is pretty. I uh, won't say it's anti business, but like M and A. M and A. Some of the big M and A has been taken off the table, uh, especially here in the U.S. right. With the new kind of, some of the, some of the things that can't be done. Um, you've got, you know, banking regulation and auditors in M my world that have become A much bigger piece of that. So, like, but what does that mean? It doesn't mean you don't do what you're doing. It means, oh, my goodness, I have to invest more of those dollars into, like, compliance.

Speaker A: Yeah.

Speaker B: That doesn't help me get new customers,

Speaker A: but I want to stay in business, right? Uh, totally. I mean, when I was working at Amazon and the platform team, we had a whole team that was keeping us from being a bank. Right. And so we were always doing this, like, you know, dance where we would build something and then be like, okay, how close to the banking line does that get us? We don't want to be a bank. Right. And so you, but you, you spend the dollars on that overhead to get to the next thing, to the next customer, to the next, you know, whatever.

Speaker B: And it also creates a moat where other people are going to make that investment, what have you, and they get in a bad spot. The good news is you were at Amazon and you had unlimited capital cash. Right? Where, you know, others, others aren't in the same. Our others are in the same boat. So it's, it's been fun to watch. We, uh, the other area that I talk about is as you scale up the investment that people don't think about is we just call it rtb. Run the business.

Speaker A: Yes.

Speaker B: You got to be, operate, you know, operationally efficient. Right. Our job is we, we want our OPEX to grow at a lower rate than our revenue is growing. Right. Unless you're making some big investment, you capitalize it. But like, that's how you think about operating leverage. And any business needs to think about, like, as you scale, you can't outspend your revenue like that. Right. You should always, your revenue should always be growing faster than your opex.

Speaker A: Absolutely.

Speaker B: So the one way to do it is around people. The other way to do it's around technology and innovation and things like that. And like, that's an investment. And so when you think about your dollar allocation into technology and systems, like, it's got to go into, you got to scale your business. When you go from a hundred customers to a thousand to ten thousand, there's a big investment needed there to scale that. Right. And that's the other piece that I think a lot of these folks forget. They got to hear. They're like, okay, now we're going to get to this next level. I got the dollars, I want to go create these next features. Oh, geez. But our, our, our, our service department needs this. Our risk department needs that. Like, we've gotta Double our capacity over cyber, you know, uh, security, like all of those things.

Speaker A: And you find, I mean I see a lot of companies in that situation then saying, okay, well now I'll partner with somebody, now I'll hire somebody to do these pieces. Well, those are expensive contracts. Yeah, right. Like you're. But you can't build it fast enough if your team's not big enough and you don't have that expertise. So you go have these people partnerships that now lock you into contracts that you're like, can I afford?

Speaker B: I mean you, you ever, you ever implement Zendesk or implement Net Suite? Like these are not Salesforce. Yeah, Salesforce. These are not like A, they're not inexpensive and B, the implementation of these things is a project in and of themselves throughout your entire. And a massively disruptive project.

Speaker A: Right, Totally. And the end. They lock you in to, to. Once you head down that road, you're real. It's real hard to unwind. Right. It's. I can't unring the bell as they say. Right. It's a tough one. So yeah, 100%. All right. I have one sort of totally separate question for you that I just want your opinion on. What do you think is what, what do you think is going to happen with Buy Now, Pay Later? Do you. What do you think it's like I

Speaker B: think um, there, I think over look it is a tender type that the market has a. There is demand for it.

Speaker A: Yeah.

Speaker B: So that's good. Right. And so we know that it's. So it's here, it's here to last.

Speaker A: Yeah.

Speaker B: I think it uh, what will happen is, I think which is a good thing is it will get regulated and that will get out and actually for the, for the, for the mainstay players, the affirms of the world and folks like that. Yeah, like that would be great. Now we've got the, we've got the rulebook and everybody else has to play in this rule book. And so things like their competitors that were doing what I was saying that were those irrational market things, those go away. And only the compliant companies, the ones that play by the rules, the ones that can scan, will survive. And so that's where I think Buy Now, Pay later fits. It is a payment. It will not like Visa and MasterCard aren't going away. Shocking. This is, this is a, ah, payment method for certain consumers that they want to use. And I think it actually evolves from just bought, like I call it point of sale financing. Yeah, more than just. I think there's Huge applications in the B2B environment which we haven't seen. It's mostly be consumer focused and other verticals and we see a little bit in healthcare. But it's, it's, it's okay. What's done in that space. Like there's other pockets where point of sale financing can significantly scale up and I think with the rules of the road and vertically focused, uh, folks going after that which, which have the compliance things and aren't quite frankly aren't taking advantage of consumers.

Speaker A: Right.

Speaker B: Once the rules are written it makes it a lot better business, but it also means there's a lot of companies that aren't going to make it through.

Speaker A: Yeah, it's interesting because when I, you know, when I was in that, in that space I would say like, you know, well, if you want to break into the US market you have to decide, you have to get over the fact that you're not going to replace Visa, MasterCard and you have to figure out how you're going to build a consumer base that, that is, you can handle them still having a credit card because in our, in the US at least you got to have one or you can't rent a car, you can't get a hotel room, you can't do any of these things until you regulate and get this payment method kind of being credit scored or what you know, in, in those ways. And for me that was always the like you can't, you can't do one thing and say you want to be something else in this, in this particular payment method.

Speaker B: But since you brought it up, I'll throw it out there. By the way, it's a lending business. It is, it's not like there's a technology component of the way it goes to market. But at the fundamental of this, this is an asset based business. And when your cost of cat think about the market, if your cost of funds goes up, uh, which happens when interest rates go up and if your loss rates actually start to go up, uh, those are like working against each other if you start to think about an economic downturn. And so that's why you have to price this product appropriately. Where you wind up in a, it's not just about how much capital you can put out on the streets. And I think that's where people right now, especially some of the smaller companies really got burnt as their cost of capital went through the roof and then their delinquencies or their charge offs went up. It's, it's not a lot different than managing a credit card Portfolio.

Speaker A: Right. And especially in the spaces where some of these players were backing the transaction with a card. Oh, yeah, right. So that's how you're, that's how you're deciding if you're even going to give the transaction is with. Is checking a card. And I'm like, okay, that's, you know, like this. There's a, there's a game being played there that is a tricky game to play. Right.

Speaker B: I mean people were paying, paying merchants to accept.

Speaker A: Yes.

Speaker B: Their buy now, pay later tender and then giving it away for almost free to the consumer. I'm like this model and going back to the irrational business models. Most of those have gotten cleaned up now. Right. You've seen it happen.

Speaker A: Yep. Yeah, for sure. And I think it is. I think one of the things you said that sticks with me. You know, I think I say the same thing about coaching. Like, I'm a coach, right. And there's a lot of coaches that are really anti regulation of coaching. And I'm like, no, if you regulate coaching, then it legitimizes what we do. And you people don't say things like everybody's a coach these days. Right. Like anybody can say they're a coach. And I'm like, no, I'm for it. Right. But I think that's also a, um, part of my life. Right. I've worked in payments and health tech and all these things that require regulation to legitimize what you're trying to do so that people feel safe. And I. So as a. So I think by now pay later is the same. And so I'm glad that, to hear

Speaker B: you say that, that's where I like, I like, I like uniformity. I like compliance when it gets to go to market, competitive natures. That's where I absolutely. That, that to me is where the regulatory stuff.

Speaker A: Yeah.

Speaker B: Take a, like, just relax a little bit. Like market dynamics play themselves out, you know, supply and demand and you know, the best. You know, like that, that's agree. You know, agree. But like creating a level playing field, you know, is, is really what the regulator should be doing.

Speaker A: Awesome. And then the last thing I'll ask you, ask you and then I'll let you go. What are you most hopeful about?

Speaker B: What am I hope. Look, for every, for every. Every one of these changes creates amazing opportunity on the. Our company. We just, we just did our largest acquisition, uh, in January of this year because it was an asset we never could have gotten had the parent company not bought something they never should have bought. Right.

Speaker A: Right.

Speaker B: And so we were able to do a corporate carve out and buy that because so to me, coming out of the great restoration, you wind up with this great upside momentum, the valuation, you know, you know, interest rates now at least we know, we know we've kind of where they've capped out at.

Speaker A: Right.

Speaker B: You know, maybe they shrink here and there but like we're not, we're not going back to 2020. But like for everything else we did 180° about face, like we went too far this way on where valuations are now. So there's a rebound that comes out of this. So uh, the ability to get better assets, invest in the growth businesses going forward as an investor, to watch that new coming go, like yeah. And I'd say we just, let's learn, here's why. You know the definition of insanity, right? Like let's not go there. Let's learn from what we did before. As you choose where to put your money as you build your business going forward and what you buy. And if you can stick to those principles, like I actually think, you know, I think we're going to have you know, 20, you know, I would say 24 and even a little bit of 25. You're going to see this rockiness and this. But this is a great time to like maybe find some cool assets or whether that's invest or buy or what have you into these really cool things and then watch the market come back, you know, the air come back into the market, you know, two, three, four years from now. And that's, you know, the investment horizon. Right. You think about, you know, these sprints of, you know, five years. Like things change a lot in five years.

Speaker A: Totally. I mean, uh, talk about politics. That's a whole nother game that's going to change things in the next few years. So

Speaker B: that's a whole nother podcast.

Speaker A: That's a different podcast. I don't even want to have that conversation. Greg, thank you so much for coming by and talking to me today and spending some time with us. It was super helpful.

Speaker B: Awesome. Great to reconnect and good luck with everything and uh, chat soon. Thank you.

Speaker A: Awesome. Thanks. Sam. Mhm.