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Amad, [music] welcome back.
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Today we're going to dive into what it takes to survive a crisis, namely the SVB run on the bank, and come out stronger.
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But first, we're going to do a small segment that we do with all our guests, which is to ask them, if you had to pick three photographs that define your life and what you've learned from it, what would they be?
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>> I don't know if I was prepared for that.
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uh like you know I guess an immediate one that strikes me is uh you know there's a there's a few photographs but there's like a photograph of me and my kind of YC Y cominator batch uh from 2007 uh that was a really defining moment for me like coming out to San Francisco uh and you know being part of this community and uh like really learning to be an entrepreneur.
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I went to a lot of Y cominator dinners.
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I actually did my batch dinners and then I would almost did all of them until 2009.
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Uh just because it was just like so amazing to talk to entrepreneurs and like learn learn all these stories.
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Uh so yeah, I love talking to entrepreneurs.
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I actually have my own podcast that does that as well.
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Uh but that was like a a big uh defining picture and moment for me.
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Uh yeah, I'm trying to think of other kind of defining pictures.
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I'm not like a very nostalgic kind of [snorts] person.
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Uh, but there's a picture of me from when I was a baby, you know, like on my on my dad's chest.
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Uh, and you know, I just think of that picture just cuz I I also have a baby right now who's 8 months old.
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And that picture, I was around that age.
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So, and I feel like when you become a parent, you kind of realize all the things that your parents did for you because before your parents, you just kind of take take them for granted.
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Uh, and so I guess that's the second picture.
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I'm trying to think of a a third defining picture.
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Uh I kind of want to make it about work, but it's hard to come up with like good work pictures.
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Um I mean there is a picture actually when we were at Mercury when we were like a nine person company and Joe Montana came to this like Joe Montana runs this like uh VC fund >> and he's a he's a big former football player, American football player.
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>> Yeah, he's he's he was huge.
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Uh but anyway, he came into this like we were working in like a live work space.
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So we like it was basically an apartment and he came into the apartment to speak to us.
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So we have a picture of like the team of nine and him [laughter] and it was kind of it's kind of like a fun picture from the early >> Does he tower over everyone on the team?
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Is he noticeably uh >> well you know now he's he's not played sports for a while.
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He's definitely taller than everyone but he's not like that muscular.
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He was also a quarterback.
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So I think uh they they tend to be like kind of uh nimble. >> Fantastic.
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And YC back then was just totally different to what it is now.
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I remember going out there in sort of 2014 attending a couple demo days, but you were there even earlier.
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It was a really small kind of informal community, right?
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>> No, I mean it was tiny. It was tiny.
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>> Uh like more than half the companies would literally like stop the day after demo day.
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Like they wouldn't raise money and that was the end [laughter] because there was, you know, they only gave us $15,000.
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>> I want to take you back to March 2023.
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Silicon Valley Bank has failed after a massive bank run.
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it making it the third largest bank failure in United States history.
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What was going through your mind and what was happening the Mercury headquarters that weekend? >> Yeah.
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Uh it's definitely like a a microcosm of like a startup roller coaster [laughter] because it started on like a Thursday and on Thursday it was you know it was all kind of from Mercury's perspective.
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So Mercury was at least for early stage startups a main competitor to SVB at that point.
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uh you know we we' done pretty well.
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Uh we're already kind of a unicorn at that point.
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Uh but they were definitely the 800 lb gorilla that we were like kind of you know uh up against.
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Uh so the first day, you know, there's some of these rumors. Yeah.
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I I guess like I was just like, "Okay, whatever."
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You know, there's these rumors like I think it's probably silly.
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Uh but the you know, our number of signups and number of deposits is like going crazy because all these people are trying to like move money out of SVB.
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And we tried to be like very respectful about it.
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We didn't kind of promote ourselves or >> so you were seeing in real time as the rumors were spreading more and more deposits coming to Mercury.
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So you were kind of seeing this correlation.
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>> I mean not just a small amount like a billion dollars of deposits came in to just Mercury in like few hours.
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just Mercury in like few hours. Uh so this is like the biggest growth you [laughter] know you can imagine as a start like we have like you know seco air back companies that would be like hard to like you know get on a call uh going like hey give me an account in
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like 5 minutes you know I'm like okay we'll give you an account in 5 minutes uh uh and you know these were like established companies and they were relatively uh easy to verify and like uh do KYB and KYC uh so we made this like accelerated process where you know at the top of the onboarding. So yeah, my
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So yeah, my approach with all these things is to try to build product because that's what it's about.
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Uh so we made this process where we moved uh something to the top to the third like hey if you're an SVB customer uh connect your SVB account uh and we'll prioritize uh based on that.
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So we you know we were basically like if you're not an SVB customer you don't need a bank account in these next three days or five days.
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Uh so we would just put you at the bottom of the queue and all the all the SVB customers we put at the top of the queue.
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Uh so we built a little bit of product and but it was mostly like you know mostly at that point I thought it was kind of overblown.
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Uh and we would uh we would you know grow a lot because of this like kind of unfortunate situation for them.
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Uh and then you know halfway through Thursday all the wires stop but you know we still don't know what's going on.
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And then it's Friday when you know the FDI walks in and shuts down the bank.
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walks in and shuts down the bank. Uh and at that point kind of the emotion kind of flips the other way because it's like hey you know if if SBB which is like a 40 x 40ome year old bank that's like you know public company worth 20 billion
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plus can like you know basically fail you know why is s why is mercury safe which is like a startup and you know this is the kind of questions our customers were asking us and you know all day I'm on on calls with customers saying like hey you know uh we don't have the same FTIC insurance uh situation. We're sweeping money to other
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We're sweeping money to other banks uh and you can also use our US government T- bill product uh and your money is safe etc.
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But obviously like you know the SBB CEO was also saying your money is safe just before this happened.
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>> Uh so people were and there was just like this like crazy sense of like uh fear in that on that Friday and and then yeah so the whole team was working really hard.
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we were still on even though no money could move out of SVB, we had like this big backlog of like customers that wanted to sign up.
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So the whole team was working kind of uh through the weekend kind of signing customers up.
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Uh and you know on Saturday morning I was like hey I'm I keep having the same conversation with people where I'm trying to explain like their money is safe and you know why don't we make a way to visualize where the money is exactly uh and also extend insurance.
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So so we ended up doing two things.
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Number one, I worked with our partner banks to, you know, at that point we had 1 million FDIC insurance.
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We extended it to 3 million and then 5 million by the end of the week.
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Uh, which is mostly just working with, you know, before this point people just hadn't asked that much like they didn't they didn't think or worry about like whether their bank deposits were safe.
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Uh, so we worked with our partner banks to kind of distribute the funds kind of more broadly to their kind of sweep networks and extend the FDIC insurance.
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So the the basic FTSA insurance is 250K in the US and we extended it to 5 million.
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Uh and then the second thing we did is we built this product which we called Mercury vault.
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Uh which helped you see you know yeah how much more money do you have than FDIC insurance?
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Have I got the US government T bill mutual fund set up?
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Uh if you don't have it set up like helped you get it set up uh and then showed you you know like is your money like kind of covered between these two products.
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Uh and that really like people really liked that like instead of you know us talking about it uh we were like showing them an actual product and transparency but it also showed how we were different from um an SVB because like we weren't lending against these deposits uh our partner banks were sweeping these deposits to a broad set of broad set of banks.
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So it was a very different proposition.
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So yeah there was a ton of fear even afterwards.
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actually you know first republic failed u and then was acquired uh basically a week afterwards.
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So, so this kind of fear around like uninsured deposits kind of continued for a while but you know we really flipped the script on that story thanks to that product uh and the work that the team did there uh and the whole team went you know at that point I don't know exactly how big we were probably like 350 or something but you know most of the time
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when you have a bigger company everyone's not working towards like one very specific thing you know we're all doing different things but but it was kind of a fun moment for the for the company where we were all working on this like one objective like you getting customers signed up and like answering the questions and like building Mercury Vault. Um, so even now like if you ask
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Um, so even now like if you ask you know employees of Mercury who who were here back then a lot of them would say that was the best best weekend they had ever agree with those like uh kind of intense work and stress.
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Um >> are there any um are there any leadership lessons that you draw from that they that you take forward or you think it's such a specific moment in time?
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Um, no, I think there's like two things.
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Number one, um, you know, I I believe a lot of kind of transparency and openness, but I think you do have to couch your like that doesn't mean you get to be emotional as a CEO.
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Um, like I think as a as a CEO, it's actually like you kind of have to be very like, hey, we're dealing with this. It'll be fine.
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uh and normally is fine, but like no matter what you have to say, it's going to be fine and we're on top of this.
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If you sound like you're panicking or worrying and stressing, uh you know, that that is infectious.
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Uh so I think that's one thing, you know, I try I've tried through these uh any difficult times to like, you know, I'm very open with like here's all the problems, here's all the things that could go wrong, but I try to be like optimistic and very like calm as a person.
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And that's how I project uh project things.
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Uh number two, I do think I don't know if this is a leadership lesson, but it's definitely like a lesson for Mercury is that we try to answer with product.
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Like that's our strength. Uh like words are cheap.
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I think it's better to make something and like have that be your answer to your problem.
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Uh I don't know if every crisis has like a product solution.
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Uh but I think there is like something to it.
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Like I think uh doing something and like doing something just feels better than like talking like as a as a builder like giving the team like something to build and like talk about the thing we build and like it also like speaks to our
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customers to say like hey you know these people aren't like sitting down over the weekend like sending emails these people like building something that's going to like actually help improve my experience in Mercury. Uh and that's like so
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Uh and that's like so different from like what any uh like large financial institution would do, right?
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Like that you can't imagine uh a bank like building a product over over a weekend to try to like uh solve a customer problem.
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So >> it was a it was a crazy time.
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I remember it very I think it's the whole the whole of the technology ecosystem Silicon Valley and beyond was just holding their breath, right?
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Uh >> no just like what's going to happen this weekend?
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It was like Sunday at like 400 p. m.
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the FTIC was like all double deposits insured and everyone was like thank God.
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>> And in a way in a way bailed out bailed everyone out if if we're honest.
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Um I think it was the right decision.
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>> It definitely bailed everyone bailed everyone out.
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But I remember thinking like you on Wednesday, no this this is like this seems farfetched.
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And then Gary Tan's email to YC got forward to me by one of my friends in the YC batch.
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And then I saw the found the the email from Peter Teal uh founders fund and then I was like, "Oh, this is this is going to be a self-fulfilling prophecy at this point. This is happening."
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And uh you did what you could, right?
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But uh it was it was hard to do too much at that moment in time.
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Um and how did you take that moment and that crisis and have you solidified it then?
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I mean, it seems like it was a pretty important moment in Mercury's success trajectory.
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You got two billion deposits in just four months, 26,000 customers.
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you know, how did you kind of drive the organization forward after that huge influx?
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How did you ensure that the customer stayed around?
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>> Yeah, I mean there was there was two aspects that we wanted to like do well.
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Uh number one, obviously that set of customers we wanted to do a great job of u and in general banking is very sticky but this was like a weird moment where people had to like deal with this.
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people had to like deal with this. So you know we we really wanted to spend time with them right like make them feel like hey this is you know this is what features I mean I would say our product was far better so like you know most
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people who experience it don't want to leave uh but but we also had to like speak to like you know this is really safe and like this is this is how the FD so like you know a lot more around like that transparency and like why where your money is and what it's doing. Um,
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Um, and we ended up I haven't seen the recent stats or anything, but I think 6 months later, 96% had like stuck around.
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>> See, it seems like products your superpower, Amad.
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You've come back to it a few times. >> Yeah. >> Is that it? >> Yeah.
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Uh, I mean, I would hope so.
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Uh, I think like I think probably Mercury superpower is like a combinational product and like real customer centricity, you know?
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It's not the product doesn't stop at like the design and feature experience.
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It's also like what's the customer support product?
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What's the compliance product?
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like it's you know we try to think about that end to-end experiences like the product experience.
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Um so I was going to say the second thing that was really important is like you know keeping the momentum and like becoming the market leader.
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Uh I don't know if we did one thing to like make that happen.
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Uh but we did end up like like the month before March 2023 and two months after that were like 80% difference in like sign up rates.
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So like and that stuck right basically like almost doubled and like it was it was an inflection point in that way.
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>> The it sounds like the definition of never let a good crisis go to waste. >> Yeah.
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I mean I feel bad for the folks at SBB.
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I mean I don't you know I think there's good there was good people working there and it's it was definitely like a you know a set of situations where like it wasn't like there you know it wasn't a bad bank.
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Uh it was just like a crazy kind of situation.
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uh both in terms of the interest rates changing, the commitment they did and uh obviously the bank run.
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Uh so I feel bad for them uh but yeah it was definitely like you know when your when your biggest competitor gets taken out like that's that's definitely an opportunity to uh spend time in doubling down.
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Um, kind of reminds me recently of this like, you know, there was this like scale AI thing where like, yeah, that's like a $15 billion company where the, you know, Meta did this weird thing where they, you know, bought out the CEO and some of the team uh, and there was like a ton of activity around like all of their competitors kind of, uh, taking the most taking as many customers as possible.
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Last question, Ahmad, which we often ask many of our guests.
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What do you think it's about it is about you that has enabled you to be so successful having come from London to Silicon Valley and and do what you've done?
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>> I do think like being an engineer was quite a powerful step.
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Like I you know when I did computer science in 2002, I definitely did not know this is why I was doing it.
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It was just like something that I was good at.
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But but having that skill and being able to build things uh is such a powerful uh part of like the early stage of entrepreneurship.
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you can, you know, you don't need to like rely on other people. You can just do things.
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Uh so, and I, you know, there's always like this anti-computer science sentiment like people now like, oh, AI is going to replace computer scientists or whatever. But I think that's BS.
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Like I remember when I was doing my degree, everyone was like, oh, you know, why are you doing this?
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Like all the Indians are going to do the coding.
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I was like, well, you know, I'm just doing it because I like it.
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I didn't have like a good answer at the time.
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Uh, so anyway, that was definitely useful.
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I think coming to Silicon Valley was powerful for me like just being surrounded in this and immersed in this ecosystem and uh that's been a fun like I don't know if I would have been quite as ambitious and wanted to do big things if it wasn't for being here.
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Uh and then I guess probably the third thing is like I just have a weird uh weird like I don't think about risk in the way that most people think about it.
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Like I think it's I think it's more of a risk to not do things and have a boring life than to do things and fail.
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Like I think like but I don't know why I have that mentality.
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I like I don't know if anyone ever told me but I've just like always had this like weird relationship with risk.
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>> Seems like a healthy mentality.
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On that note, we're going to wrap it up.
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But thank you so much for sharing your lessons.
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Hope to see more British entrepreneurs making the jump to Silicon Valley and and building huge businesses like yourself.
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>> Yeah, thanks for having me. Cheers.
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Hope people enjoyed the podcast. >> Thank you. [music]