“In a lot of ways, people are forgetting the lessons of technology just in general—big companies move slowly, and there's an innovator's dilemma. Outside perspective is generally the fastest way to innovate, and I think it's really exciting.” -- Everett Cook
Everett Cook is CEO and Co-Founder of Rho Business Banking, a collaborative banking platform for fast growing companies. Before launching Rho, Everett was a hedge fund manager at several New York funds, including Deutsche Bank, SAC Capital Advisors, and Taylor Woods Capital. His early entrepreneurial experiences (he started his first company at age 14) and his work under Michael Bloomberg led him to focus on building a fintech company that provides excellent service to startups and growing teams.
Chapters in this interview:
- 00:00:10 – Everett’s background and learnings in startups and finance
- 00:04:55 – Investing as finding out how the world really works
- 00:13:15 – The differences between founding a company and investing in a company
- 00:18:53 – Making asymmetrical bets and being open to pivoting the business
- 00:21:31 – How Rho Business Banking empowers teams to work better with money
- 00:24:21 – What Rho offers that other banks do not
- 00:27:07 – Treasury management, digital currency, and a focus on excellent customer service
- 00:32:49 – Observations and predictions on the evolving fintech space
- 00:39:48 – Everett’s recommended books
- 00:42:11 – Everett’s advice for founders
Links from the Episode
- Connect with Everett Cook: Twitter | LinkedIn | Rho Business Banking
- Richard Koo
- Big Debt Crises by Ray Dalio
- Rho Co-founder Alex Wheldon
- Treasury management
- Bloomberg LP
- Michael Bloomberg
Books Recommended in This Episode
- The Inner Game of Tennis: The Classic Guide to the Mental Side of Peak Performance by W. Timothy Gallwey
- The Art of Learning: An Inner Journey to Optimal Performance by Josh Waitzkin
- The Most Important Thing: Uncommon Sense for the Thoughtful Investor by Howard Marks
After more than a decade of innovation in financial technology, and on the heels of success stories like Square, Plaid, and Robinhood, Everett believes that there’s much more to come in the advancement of fintech. After the first wave of mostly vertical, niche disruption in the financial industry, the largest addressable market in the world, companies like Rho Business Banking are knitting together software and customer service to invigorate lagging spaces like business banking. By bringing together software for managing accounts receivable, accounts payable, and accounting, as well as adding powerful banking features, Rho is creating the first true collaborative bank for fast-growing businesses.
Daniel Scrivner (00:00):
Today, we are super fortunate to have Everett from Rho Bank here with us on the podcast. Everett, thank you so much for the time. I really appreciate it. Thanks for coming on Outliers.
Everett Cook (00:08):
Hey, Daniel, it's great to meet you.
Daniel Scrivner (00:10):
I wanted to start by just asking you to share, you have a super interesting background, you've spent a bunch of time on the investing side before switching over to the founder side and founding Rho. So, I wanted to ask, just to start, if you could give everybody listening just a quick thumbnail sketch of your background.
Everett Cook (00:25):
Absolutely. I spent about 10 years on Wall Street in the investment world before leaving to found Rho. And I left for a couple of reasons. I was always fascinated with the FinTech world and what was happening there. I was fortunate enough to have a couple of close friends that were really early pioneers in that space in the early 2010s, and admired what they were doing from afar. And I also was somebody that really loved building things in any capacity; that started out from a young age when I was starting companies as a kid, most of which didn't go anywhere, actually, all of them didn't go anywhere, but learned a lot through that. Starting with, like I started a web hosting company when I was 14. I started a concert company when I was 18. I worked on a bunch of different little projects. And yeah, that was what I did with my spare time.
Everett Cook (01:07):
I missed that when I was investing, I missed that sense of building and creating something and sharing it with the world. And so, when I had the opportunity to leave the investment management space and build something, I was really excited to be able to do that again because that never left me. I think that's true for any entrepreneur, once you get that feeling, it's really hard to go back, even if you try to suppress it for a really long time. It was tough. I really actually loved the investment world. I loved markets. It was a true passion of mine. And is the world's greatest game, in my opinion, is something that you can spend your life trying to incrementally get better at. But that was, it's a quick overview of what I was doing prior to building Rho.
Daniel Scrivner (01:46):
Yeah. I love that at an early age you were tinkering. Was the idea there, because I did something similar and just had these goofy business endeavors that I did early on in my life, which I still, I feel like it's just wonderful to start learning earlier rather than later. And to give into your interests and curiosities and not have that nagging voice, it's like, "You're too young. This is silly. Beat that down." Well, what do you think you took away from those early experiences, if anything, that's continued to play a role?
Everett Cook (02:15):
It was really important. It was foundational for me. I think the biggest thing I took away was that it's possible. And that's not something that everybody gets. And I was lucky enough to learn that very early in life, but from just trying stuff and from growing up in an environment where I was able to see other people that build things that were much larger than themselves. Once you realize that it's possible, you realize it's possible to change the world. You realize it's possible to, if you don't like the way that something works, you're probably not the only person. And you might be the person to build something better. Once you realize that, it's very hard to come back, I think. And it's very hard to unsee that. And so, just understanding that ignited something within me that never really stopped.
Daniel Scrivner (02:48):
That's such a wonderful perspective. And I love just that takeaway that it's possible, because it really does all start with just that super basic realization that like, "I can do it." And if I can do it, then you know you're in the game and then you can start getting better at it.
Everett Cook (03:02):
I think a lot of people, and especially at a very young age, people build up this image of entrepreneurs is very different than you and I, especially with people that are at the top of the league table. And think about the Fortune 400 or... And obviously, those people are super talented and clearly the best at it, but fundamentally they aren't different. And they did all start with idea. And understanding that it's not something like supernatural power and it's not something that is gifted to somebody, there's going to be winners and losers in that game. But fundamentally it's a game that is accessible. Something that was eye opening for me at a young age. But I think once you see, you can never unsee.
Daniel Scrivner (03:37):
No. And I just love that perspective. And I think that's something that I've always had, is just the sense that if you have something that you're interested in, the sooner you can move from being on the outside, looking in, which just has a bunch of distorted reality features with it, and the sooner you can get some skin in the game, it really does demystify it.
Daniel Scrivner (03:54):
And then I think the other thing too, is as soon as you are actively doing it and you're around other people that do it, you suddenly realize that the realities of the day to day and what the job actually involves are so wildly different from the success stories.
Everett Cook (04:07):
Totally. It's not as glamorous. It's not as much fun as it looks, but it's as rewarding for sure.
Daniel Scrivner (04:12):
Yeah. And everyone is just winging it. And I've always taken immense comfort from that reality.
Everett Cook (04:16):
I mean, it's kind of. Right? In some ways that's right. But I think more specifically, it's that you're making iterative steps and trying to be deliberate about that. You can start at a problem, where you really don't even know what the right questions are to ask, but as you move forward, each step gets clearer and incremental. And I think the challenge is always breaking it down from this, "How do I go 100 miles to, okay, what is the first step? And am I pointed in the right direction?" And if you're pointing the right direction, then each one, it makes sense. It's logical. But it can be like, how did someone build a company that's worth 100 billion dollars? How did people build this technology company that is so transformative? It can be overwhelming, but if you work backwards, it starts to make sense.
Daniel Scrivner (04:54):
I think that's such a great perspective. I'd love to transition a little bit and spend some time talking about investing. And one of the things that I love that took away from the call I did with you, when we were planning out this interview, is just a great quote where you said investing is finding out how the world really works. And I love that perspective. That's how I've related to, and thought about investing in a lot of ways. Can you expand on that and just maybe flesh that out a little bit more?
Everett Cook (05:16):
Yeah. I mean, that's what drew me to it in the first place. And I think it's true regardless of which market or part of the investment world you're within. For me, I was in macro, which was just a passion of mine in college and I followed it after college. It was amazing that you basically got paid to be an amateur macro economists/handicap/prognosticator. And it was crazy to me that you could actually get paid and potentially get paid really, really well to do that job. Because again, what it is, it's basically you're trying to understand how the world works, trying to understand if X happens, where is Y and what does Y happen? And it's equally an understanding of human behavior and psychology as well as an of systems. And again, that's true, if you're a venture investor investing in startups. It's true, if you're like a macro investor betting on where interest rates are going to go or where broader markets are going to go.
Everett Cook (06:08):
The better you get at that, the better your bets are going to be. And the way you get good at that, in my opinion, and from working for some great people and trying to learn as much as I can from them is really by reducing that decision making process into as few important inputs as possible. So, understanding that the world is a very complex and noisy place, but there are patterns to the way that things evolve.
Everett Cook (06:32):
Each instance in markets is different, but there is a consistency that is logical. It is a collection of people that are acting logically or based on what they believe is logical to try to make the best decision for themselves, whether they're economic actor or whether the market participant. And so, how do you unwind that to try to understand, "Okay, where are we today? And where do we think we're going?" And then layer on the second layer of, "Okay, where do I think we're going versus where does everybody else think we're going? And where do we think that there is a delta between the two that is worth the bet?"
Daniel Scrivner (07:03):
Yeah. I love that framework, because that was one of the questions I was going to ask is, especially for anyone who's top down or is coming at it from that macro economic point of view, it seems like there's an overwhelming amount of data and overwhelming amount of opinions, and overwhelming amount of historical context. And it feels very difficult, at least for me, in the way that I think about the world to try to tease that apart.
Daniel Scrivner (07:21):
So, I'm curious, we don't need to go through a super fine grain example of that, but at a high level, can you walk us through how you would go about deciding what the critical inputs are? Because that process, to me seems both super important, but also I don't even know where to begin. So, I'm curious, there's an example, you can tease that apart a little bit.
Everett Cook (07:40):
I mean, I would always try to perform informal walk forward tests, just like a statistical technique, but it's not very complicated. You basically go to the same way that like, if you think about performing music. You're going to play someone else's song before you start song writing. It's a better way to learn than just saying, "I'm going to start writing music." And have never even played that song before. So, I would study history a lot. You understand moments in history. Try to understand what you would have known ex-ante at a particular given point in time. And would that have informed what happened in the future or would that have informed how you would have made a decision at that point in time? And you have the benefit of 100 years of pretty good data or at least 50 of pretty good data.
Everett Cook (08:21):
And so, you can try to test your assumptions that way. And if it doesn't work, go back and understand, "Okay, what else could I have known at that time? You're not going to have ammunition. You're not going to have future knowledge. But as you hold those assumptions constant, you start to understand, "Okay, actually these are constants that make sense. These are constants that it's different each time and understanding that is like the second part of it."
Everett Cook (08:43):
But overall, there's a pattern to the way that the world works. And it's just about testing those assumptions logically and rigorously. But again, you don't need to do this in our, you don't need to do this mathematically that you can just sit there and think and read and say, "Okay, where could I have known what was going to happen before it happened?" That's where you're seeking for signal in the middle of a lot of noise. And again, I think that's very true across investment styles and across markets, and even across timeframes, where you're trying to just understand that.
Everett Cook (09:11):
But that was how I always found, it was the best way to learn. I've learned from great people. But nobody sat me down and said, "This is how the world works." Everybody is forced to figure that out on their own. And for me it was like, "Okay. Well, I don't know what the future holds, but I know how things played out historically."
Daniel Scrivner (09:25):
I love that perspective because it seems much more practical than you would expect. It feels like sometimes when you listen to people sharing a perspective or walking through something at a macroeconomic level, it doesn't sound very iterative, experimental. I guess, well, hearing you walk through that gives me a sense for how that plays out. I'm curious, just one last question on that, because this is another area where I feel like there are a lot of voices, if you tune into that space in the macroeconomic field, it feels very hard to know. I don't know who to trust or who has an interesting perspective there. Are there any figures or firms that you look to or think they have a really interesting perspective, or they typically have some interesting point of view?
Everett Cook (10:02):
There are definitely. I think with the caveat that nobody is right too much of the time. But I think that firms that I really liked when I was in that space, really like the work that like Richard Cue did, even though he was pretty wrong on a bunch of stuff. But I had a really strong framework for thinking about a lot of the macroeconomic problems that we were facing as society and in markets post great financial crisis.
Everett Cook (10:23):
I also really admired and respected the work that the folks at Bridgewater did and thought about the world in that extremely robust and clear way. I think that there's a ton of hyperbole in the space. And if you like turn on TV or CNBC, and you see a lot of people making predictions and stuff like that.
Everett Cook (10:40):
And as someone that was practitioner in the field, you're not really supposed to make predictions, you're supposed to handicap what you think is going to happen. But you never see people on CNBC saying, I think that there's positive, expected value in the fact that the market is going to rally, right? Say the market is going to go up and the market is going to go down, or interest rates are going to go up and going to go down. That's not really that helpful from an informational perspective. So, it's always about, I think understanding and thinking about things probabilistically.
Everett Cook (11:06):
And then look, I think in startup world as well, it's very similar. You're playing a game of incomplete information like poker. And you're never going to drive through a certainty. If you drive it through certainty, you've probably spent too much time. And frankly, you're probably wrong. It is, "How do I get enough information, where I can make a bet that I think has positive expected value and manage my risk of ruin accordingly?" And again, that's something that is a really common concept in poker. It is really similar in startups as it is in markets.
Daniel Scrivner (11:37):
I love that you brought up that CNBC point because it's definitely, I don't think you're going to find your way onto CNBC, if you want to handicap your predictions and help give people a broader framework of how to think about that and how to incorporate that into their models or perspectives.
Everett Cook (11:50):
No, it'd be super boring.
Daniel Scrivner (11:52):
Yeah. And it would be a lot of ifs, ands and buts. But I also love that you brought up Bridgewater, because I agree, I think there's also a lot of hyperbole around Bridgewater. But I've always found their perspectives and research and writing super profound and interesting, and definitely robust.
Daniel Scrivner (12:05):
And one thing I was going to bring up there is, Ray Dalio published it, although I think it's technically all was done by Bridgewater, but there's a book that they put out all about big debt crises over time. And I've got that at home. And I was just opening it up over the weekend. And I was like, "I'd love to start making my way through this because in a lot of ways, it seems timely to what we're experiencing at the moment." And for anyone listening, first off, the book is incredible, but it's also super daunting. But man, you open up that book and just the amount of research and nuance, and historical context that they pulled into a single book is staggering. It's remarkable.
Everett Cook (12:38):
Yeah. They're really comprehensive. I wish I was as good. And frankly, it's well resource in terms of team as they were... Because yeah, they don't get it right every year. And I think last year was tough for them, but they have the track record to prove that. And I think that they think about things in a really structured way, problems that frankly, most people don't think about it structurally, including in markets. In spite of it being 2021, there are a lot of people that are guessing. And that's okay, in some instances. Yeah, there's an important knowledge, I guess, in your subconscious, but supporting that with super well researched and tested logic is definitely something that they do really, really well.
Daniel Scrivner (13:12):
Yeah. And I love that term that you pulled out there of structured thinking. I think that's super important. So, I'd love to pivot now from investor to founder because you've made this transition. I've had a few other guests on the podcasts that have made this transition. And I just find it fascinating, because to think that founders that have an investor background bring just a different perspective and set of mental skills to the table. It's also something where I think as an investor on the outside, looking into companies, and again, going back to this starting businesses early on, you can have some perspectives that are a little distorted. So, I'm curious as you made that transition, were there big surprises? Were there any big aha moments that you had as you moved from investor to founder, and with a lot more intensity than maybe you had previously?
Everett Cook (13:53):
Yeah, completely. I think coming as an investor, your job is generally to think and to generate ideas. And so, I think I actually, it gives you a huge leg up when you're thinking about where is there an interesting business model, where is there an opportunity to disrupt or think about a market or a segment very differently than other people? I think when it comes to building, it's harder for sure. I'm not an engineer. I'm a non-technical founder. And definitely there are engineering challenges. I was like, "Oh, that shouldn't be that hard." And the opposite is very much true.
Everett Cook (14:25):
I was really fortunate in so much as I was able to, first of all, but I thought it was a decent understanding of my strengths and weaknesses, and was able to partner with an outstanding co-founder who was able to compliment that. And he was really just a phenomenal operator and builder. So, when I would come to him and say, "We should build this, it should be really easy." And he was able to say, "No, that's not easy at all. We should not do that." And then we have to rethink it and figure out the best way to approach it.
Everett Cook (14:49):
But I would say coming from an investment, generally, or coming from a different background, the most important thing is to surround yourself with great people. And that's probably the thing that just important as a founder in general, that's my number one priority at Rho is to build a phenomenal team full of people that they compliment each other's skillsets. But yeah, there's definitely the things that you overestimate or underestimate frankly too, and things that you think might be really hard that are actually not that hard when you're coming in from a different perspective.
Daniel Scrivner (15:13):
Yeah. Just on team quality, I've always found that, and it's incredibly difficult to do that consistently to make sure that you've got just incredible people around you and incredible people in the right roles. But when you are able to do that, it solves so many challenges. It's like the meta solve that just makes everything easier and more enjoyable, and more fun.
Daniel Scrivner (15:31):
I'm curious, one other question in that vein is, you talked a little bit about structured thinking, the approach you take in investing and how you approach that job. And I'm curious, where do you focus and spend your time as a founder versus an investor? And are there any, I guess, primary differences there? I'm sure structured thinking still plays a role. I'm sure mental models, I'm still sure using it as thinking about how the world works. But can you talk a little bit about your focus and how you spent your time as a founder, a company builder?
Everett Cook (15:59):
Yeah. I think there's some of that, but it's definitely a small percent. It's a lot at the beginning. And then a lot less as you get forward. And then as you go forward, it's more about, at least for me, in my limited experience, it's more about making sure that your team is aligned around those objectives. That you're really, really clear and concise in terms of removing noise, removing distractions, focusing on a single goal and maintaining a super high standard for both yourself and for your team.
Everett Cook (16:24):
One good thing about, I think the investment world that is helpful from a management perspective, and certainly hedge funds are not the best people managed places in the world, generally speaking. But is that you understand high-performance environments and you understand how people work in high-performance environments. And that's helpful in terms of like thinking about, how do you build a high-performance team? The high-performance people are substantially more productive than lower performing people. And it becomes a self-reinforcing ecosystem. Right? Where really high performance people want to work with other really high-performance people. And high performance organizations, frankly make more money, therefore you're able to pay your people better, therefore you're able to attract more high-performance people.
Everett Cook (17:02):
The caveat to that is you have to be somewhat disciplined in terms of policing that, and in terms of preserving that. Certainly, one of the firms I worked with was outstanding at that. And I think that was the primary reason for their success, was they were able to just attract the best people in the world and make sure they were really happy. That's what we're trying to do at Rho as well, very different space for a different vertical. But fundamentally, we believe that if we do that, frankly that solves frankly, all problems.
Daniel Scrivner (17:25):
So, I had one more question on the investor turned founder side, and that is one thing that you said when we were chatting before this interview is just this idea, and this is definitely an idea that's rooted in investing is, when you're a founder in a business, is really thinking about the bets that you're making and trying to make asymmetrical bets. And I just thought you had an interesting perspective there. Can you talk a little bit about how you take that perspective and apply that at Rho?
Everett Cook (17:48):
Yeah. I mean, the challenge when you're a founder that's probably different than an investor. So, when you're doing things reasonably well, it's you really only get one bet, or that's like the way to think about it at a high level. In reality, that's not really true. Right? You are constantly making bets every day with your time, with your resources, with your team. And so, I think the biggest thing is to try to make sure that you're not just making one giant bet, or you're not just putting it all in black. That doesn't mean you spread your resources around and try to do tons of things at once, but it means that you try to move fast, iterate and make iterative sequential decisions based on information and what happens.
Everett Cook (18:24):
So, I think it's really about making sure that you're not basically making one big bet with whatever it is you're doing with five years of your life or something like that. And really just trying to break it into, okay, you have built a machine, that machine should be making good, positive, expected value bets every day that it exists. And assuming you do that and you build your culture and your team in a way that occurs, you really improve your odds of overall success, because you're no longer like as reliant on luck, or as reliant on random events that do happen every single day.
Daniel Scrivner (18:53):
Yeah. I love that quote, that principle of just trying to every single day, make the success of whatever you're doing a little less about luck and a little bit more about scale, and just trying to get better at that. On the flip side of making bets, there are the times where you make a bet and then midway through, or at some point you realize that that's not working and you need to spend that down. Have you guys had to go through that at all at Rho? And can you talk about your thought process or you've approached a decision like that?
Everett Cook (19:17):
Yeah. We've definitely had to do that. I think if you don't do that, if you've never had to do that, you're probably missing something or you're probably sticking too long with bets because nobody's perfect and nobody gets it 100% of the time. We try to be really disciplined about cutting losses, about moving on. We try to avoid that upfront by being really deliberate in terms of, what are we building? Test that out in the market. Test it with our existing customers. Understand what is going to help our customers achieve success before we roll it out. But that doesn't guarantee success. It's not perfect. And so, sometimes it's just about deprioritizing it from a work perspective. Sometimes it's about just rethinking the direction overall.
Everett Cook (19:52):
At the very beginning, when we started Rho, we made a really big change. We actually started initially thinking, conceptualizing the product on the consumer side. And we spent a lot of time thinking about, "Okay, how do we build the best consumer banking platform in the market?" And we picked a segment, we want to go after people that are mid high net worth earners that weren't satisfied with operating out of like a chase account, but also weren't ultra wealthy and have private people that do all the things for them. I thought that was a really good thesis at the time. And I still think it is. And I think there's a couple of people that have done a really good job at executing on it.
Everett Cook (20:26):
As we went into that market, we basically did a lot of customer research. We did a lot of interviews. And a lot of those people are entrepreneurs. So, we had a good sample. And what we kept hearing from them was that they actually weren't that dissatisfied with what existed today in the market for themselves personally, or they weren't that invested in what it could be really, but they all lived in their business bank accounts and business finance stacks. And they kept telling us, "Please fix that. Please make that better." And so, we dropped a lot of the work that we had done. We hadn't spent too much time on it, but we dropped a lot of the work that we did to move there, because we felt like it was just a much more asymmetric bet. It was a better place to build. We could frankly, do more and have a much larger impact on our customer's day-to-day lives by purchasing it that way.
Everett Cook (21:07):
So, you don't want to make those changes every day. And that's the biggest change we've made as a business. But I think if you were too anchored to a particular outcome or path, you'll potentially make bad decisions.
Daniel Scrivner (21:17):
Yeah. I love that story and I love that pivot early on it. And I think you made a really great point there, which is if you're always making bets and you're never unwinding bets that aren't working, you're clearly missing something. I think that's a great point. You can't just have a ton of bets out in the world and not ever be assessing those.
Daniel Scrivner (21:31):
So now, I'd love to pivot and really talk more about Rho. And I think this tees off really nicely from what you just shared. But the one thing that popped out to me from our prior conversation is that the mission of Rho is actually much more about empowering teams to work better with money, as opposed to just making a better "bank" or making it suck slightly less. And I just love that analysis because I think in my experience that is much more the root of the problem that exists today, than just banking overall. And it's a much bigger, more interesting opportunity set. Talk about how you arrived at that and why that's the vision as opposed to just focusing on banking?
Everett Cook (22:06):
Yeah. We started pointing in the direction of banking. We knew this was a really large industry that had a lot of problems with it from a user perspective, my experience perspective, and pricing and everything. And we knew that we could deliver a better experience. But we also knew very quickly that wasn't enough, because actually the fundamentals of banking are not so broken that necessarily deserves reinvention.
Everett Cook (22:26):
We believe that what the biggest problem as we think about companies and companies that are scaling is that most financial tools for a company are fundamentally set up as like single-player games. You have one point of entry, one point of exit. That single player is typically someone in the finance team. But that's not how companies work. That's how our teams work. And as a result, you create this really large bottleneck for growth and speed, and progress that slows companies down.
Everett Cook (22:50):
My co-founder Alex, experienced this a lot firsthand when he was founding and building and growing companies himself throughout his career. And so, we thought about really hard, what does the finance stack, or what does the banking stack look like for the 21st century? It was that, it was about the way that most other software works on an organizational level and enterprise level. It exists to basically bring people together and to help them work together with data, with revenue, with whatever. And we asked ourselves the question, why doesn't anything finance related to that? Sometimes the answer is because of security and controls, but that's not a reason to not do it. You just have to think about that and build that into every facet of it.
Everett Cook (23:29):
And so, that's how we came up with our mission statement, which is to help organizations work better together with money, because we feel like that is much more powerful than just building a better business checking account, or then building a better credit card. That is what companies are actually trying to do, not just have a better account.
Daniel Scrivner (23:44):
No, I love it. And I think that's a super interesting conclusion because in my experience that checks off two boxes that I think a lot of mission statements don't, which is, it's something that you can literally work on for decades. It's a problem big enough that you can continue to push forward on it for decades. And it also feels like something that is big enough that it's not going to change. It's not a super small mission statement that's going to go out of style or it's going to lose its relevance at some point in time.
Daniel Scrivner (24:07):
Both for myself and for people listening, I think it'd be interesting just to try to talk a little bit about the landscape of business banking, because I think at a high level, you say those words, business bank, business bank account to understand what it is, but I don't think people understand it with much nuance. So, one thing I wanted to do to start that off is, as you guys were thinking about what you needed to build, what you needed to offer customers, and I'm sure a lot of this is customers telling you, maybe just start with what are the jobs to be done of a business bank, and what are the things that you've really focused on hitting out of the park that are just critical things, that are non-negotiables, or that you think are things that you can and add value that competitors aren't?
Everett Cook (24:43):
Totally. So, we have a lot going on over here, some of which we haven't announced yet. So, I won't try to tip our hand too much. But if you think holistically about like, what does business bank do for a company? Realistically, they're in the business of storing your money, moving your money and finding any money, whether you're borrowing it or whatever. And everything can be boiled down to those three things from a building block perspective.
Everett Cook (25:06):
So, first we wanted to make sure that we were best in class at every one of those things. We started with the business checking account and the treasury management program, which is enterprise grade can support multi-billion dollar public companies, but it's intuitive and clear. And also, we wanted to make sure that we eliminated a lot of the fees that frankly were immaterial and made people feel like they were getting nickel and dime by something that should be like just a really important relationship. That was, I think the first step.
Everett Cook (25:32):
We view a lot of those products as fundamentally as commodities. It is largely a commoditized space. How do you de-commoditize it, what is fundamentally a commodity? You need to add value to it. And the way we add value is two ways, via software and via service. So, it's by taking those core components and pulling them together in a way, so the whole team can work on it. You have great analytics, great visibility, and really easy use backed up by world-class service.
Everett Cook (25:59):
We believe that companies of any scale are not simply going to click an ad, convert and migrate to a business banking platform. It's not going to happen. That might be the way that very small companies operate, but that's certainly not the way that organizations operate. And we were really oriented strategy organizations. It's not really hard to bring in the best people to help support the companies that come onto Rho, help them understand how to use it, be there for them to think through challenges that they have. And then taking that and delivering it to customers. And trying to understand who is our best customer.
Everett Cook (26:28):
And we found that out really early, our best customer are companies that are growing. And that may sound like a little bit trying to answer it general, but it's really true. CFOs and controllers at companies that are growing, whether you're in e-commerce, whether you're in construction, whether you're in manufacturing, you're all facing a lot of the same problems. Very small companies don't face those problems. Companies that are stagnant, usually don't face those problems. Those problems come about as companies experience growth. And so, orienting around that and orienting around those type customers, and really understanding like what they're going through on a day-to-day basis has helped us to both develop our product and approach them in the right way.
Daniel Scrivner (27:07):
One thing there that I'd love to dig into just a little bit deeper, and you talked to about it really quickly, is treasury management. And one, just to zoom out and again, I'm not sure this is even something you're thinking about, if it is probably down the road, but if we zoom out a little bit, the whole treasury management piece seems like it's getting a lot of discussion recently of, "Are you putting a portion of that into Bitcoin? Are you putting a portion of that in different things?" And at a high level, it feels like, what is treasury management? It's just, we have money that we need to keep on our balance sheet that we want to make sure is held in a secure way and hopefully appreciates. But I'm not sure that's how you guys are thinking about it. How do you think about that treasury management piece? Any thoughts just at a meta level of what's happening around digital currencies? And then any thoughts about how you guys approach that at Rho?
Everett Cook (27:51):
Yeah. We've spent a lot time thinking about digital currencies. We don't offer that our platform today, but that's certainly something that we think about. In terms of like treasury management, it's fairly simple. You're basically parking excess money that you have in a highly secure and safe way for future use. Right? So, we built basically directly into a network that allows us to drive up to $75 million in FDIC insurance for our customers per entity, which means that we're able to deliver more coverage to them than a traditional bank account would. And that pairs with our checking account, and it's all integrated into one platform. So, companies can basically put their reserves aside, move what they need on a monthly basis or quarterly basis into their operating account and still be 100% safe and earn a yield on those funds, so they can grow over time as they're not using them.
Everett Cook (28:36):
So, it's a boring part of the business, but it's important. And it's important for companies, especially as they get bigger. And then we build all that on top of the movement layer. The movement layer is probably the most interesting part because it's really where there's the most hands-on. And movement for us is, for most companies today actually encompasses a lot of different FinTech products that sit outside the banking system and bank account. And we believe that that was like a broken paradigm, really. You shouldn't need like five different products to basically move your company's money.
Everett Cook (29:06):
We continue to build and invest very heavily in that space, but today companies have access to global transfers at no cost, foreign exchange that are really low rate. we integrated accounts payable into Rho and built that platform directly inside the product, so that companies don't need to use a third party product like abill.com or something like that, which incurs additional costs.
Everett Cook (29:26):
Additional complexity is another set of user permissions you have to manage and also just slows down your payments. And as we continue to build into the platform, that is where we put in the most investment. From our perspective, if you think about a wire or a check being sent, or a credit card being swiped, these are all fundamentally the same things. They're just ways of moving money. They're ways of paying. And today companies have these things happening in a lot of different places, which means that they don't have really good visibility into what's happening in a holistic basis. Right? I can't see what it is that Daniel's done at a particular point in time, unless I'm checking all five systems, and maybe you're on all five systems. So, from our perspective, it's just about bringing it all into one place and building that into the banking experience. That way companies really have a single operating system and dashboard to be able to grow.
Daniel Scrivner (30:14):
No, that makes a ton of sense. I want to talk a little bit about customer service, because clearly even as just a second ago, you were describing all these different layers and all this technology that you're doing. And clearly you guys are very much focusing on the technology side and the product experience side of banking. But customer service is also really important. And I think from someone from the outside, looking in, you'd be like, you scratch your head at that. It's like, why... I thought because I think for a lot of people, they have this slightly idealistic idea that technology solves all problems. And we don't need people anymore. And clearly, I don't think that's the case here. Can you just expand on that a little bit on what you've discovered?
Everett Cook (30:47):
Yeah. We think a great banking experience starts and ends with great customer service. Technology is there to reduce the amount of customer service that you actually need or eliminate it. We know that people need help. We know that this is a complicated space and there's a lot to do. And so, we've wanted to make sure that every customer at Rho, basically has an account manager assigned to their account, is able to reach them directly via chat or email, or other means. And we get back to them as close to immediately as possible.
Everett Cook (31:16):
Everybody has had the experience of trying to call their bank and waiting on hold. Banks, despite the billions and billions of dollars that they invest in technology, need customer service, and we're certainly no different. So, I think that it is about understanding our customers and understanding that that is not something that you should seek to remove from the system or automate out. You should make it as self-service as possible. And we do that. But you will never fully drop that because banking is all about edge cases and exceptions.
Everett Cook (31:47):
Every company is different. Every company does things differently, every controller, every CFO. And the best way to get them to be successful, get them to use your product the best way, get them to understand how it works best way, is to help them with that. So, that's something that I think was counterintuitive when we started building. Most companies in tech, you certainly seek totally remove that from the process. And we didn't think that was the right way to go about it. The tech is really there to make sure that people, frankly don't have to ask questions, but we know that they will.
Daniel Scrivner (32:15):
Yeah, they will. And there are definitely times where if you're sending a particularly large wire, sometimes you feel more secure talking through that with someone in person. Is that what you found is, maybe it's those edge case experiences or it's when people are just moving particularly large sums of money, or doing something complicated that they really want and need that in-person support?
Everett Cook (32:33):
No, it's not just that. I think it's throughout their journey as they are understanding the capabilities of the platform, understanding how best to use it, and then yeah, day-to-day things as well. But again, our objective isn't for you to have to talk to us and certainly you don't have to, but for it to be there when you need it.
Daniel Scrivner (32:49):
One thing just to zoom out for a little bit, the FinTech tech space in general is just obviously undergoing, there's more competition than ever, but that also inherently means that there's more just interesting players doing really interesting things in the space. Everyone from like Apex and larger, more established players, to Plaid, even just Visa starting to use stable coins and experiment with having cryptocurrencies process on their platform. So, I'm curious, you're in the space much more than I am, what do you think is really interesting either from a trend perspective or where things are headed, or just players in the space that you think are doing interesting things, just any general observations?
Everett Cook (33:26):
I mean, I think it's probably not one of the fastest growing area in tech for a really good reason, it's one of the largest sectors in the global economy. It has certainly had some degree of disruption, but relative to the size of the market, not that much. You think about the size of Stripe, and then market cap, and then versus the percentage of processing that they're actually doing, with versus companies like Worldpay, for example, I really feel like we're just getting started. And I think that the investor community is waking up to this and is understanding the setting pretty clearly right now.
Everett Cook (33:58):
I think when we started this business in 2018, there were a lot of question marks. There were a lot of question marks around why would people use the digital thing? Aren't people just happy with what exists today? And what the big banks just they spent, Chase tens of billions of dollars on technology. Won't they just build a better product? Why don't they just fix this? And I think that in a lot of ways people were forgetting the lessons of technology just in general, which is that big companies move slow. There's an innovator's dilemma. And outside perspective is certainly the fastest way to innovate.
Everett Cook (34:29):
I think it's really exciting. It's a really exciting time for everybody in FinTech. And we're one small part of that. I think the world is waking up to the fact that the traditional financial institutions that have dominated over the past 50 years are no longer invincible, and there's a better way for consumers and for businesses to basically manage their money and move their money, and accept payments.
Daniel Scrivner (34:49):
Yeah. It's embarrassing, but I think even just as you were saying, just getting started and making that comment that, yeah, we've seen a lot of players in this space. We've seen a lot of funding in this space, but disruption of incumbents is non-existent. Even look at the brokerage space of Robinhood and Public, and Etoro, and some of those, and has that toppled any large player? Absolutely not. They are still growing accounts. And they are still growing assets under management. Yes, I think that's a really interesting perspective because I think that's non-consensus and a narrative violation in a lot of ways.
Everett Cook (35:17):
Yeah. And I mean, not only that, the pie is also growing, the economy is growing, the amount of money in the economy is growing, the amount of businesses that exist are growing. So, it's not totally just about disruption. It's also about just growing the ecosystem overall. The investment space, more people are investing than ever. Again, like that coupled with the fact that you've had slow growth and slow innovation from legacy players, just creates a massive opening for companies like us and a lot of people across verticals, whether you're the brokerage space within the consumer space, within the payment processing space to build phenomenal products that really serve those end markets. And so, yeah, I really do believe we're in a very early phase. This is in my opinion, the most exciting space in tech.
Everett Cook (35:53):
And even though I think you can think of FinTech as really getting started in 2010 with all the lending companies, it's much more comprehensive now. It's much more interesting. Because as opposed to just slapping a UI on a legacy process, founders are really reinventing the way that finance works overall for companies. And it's really exciting from DeFi and crypto at the frontier of it, companies like us and to more established companies like Chime, I think there's just a wholesale change in attitude and opportunity.
Everett Cook (36:22):
And I think the consumer and the end user, and the businesses have finally woken up to the fact that there are better alternatives out there. And I think that wasn't clear to them before. And now that they understand that, it's like when Airbnb emerged versus hotels, and at first people were comparing the two and they were saying, "Airbnb is a little bit cheaper than a hotel, better to stay at an Airbnb." And you fast forward five or seven years, and it's now, "Well, I'm going to stay at Airbnb because it's better than a hotel, because I prefer to stay at a home. It's bigger. It's nicer. Even if it's twice the price, I don't care."
Everett Cook (36:55):
And I think that's what's happening here. Whereas you started out with, okay, digital products are just cheaper. And now it's like, not only are they cheaper or at least just cost competitive, they're fundamentally better. And that is what expands the market 10X.
Daniel Scrivner (37:10):
Yeah. And I think fundamentally better across multiple different axes, I think is what's always really interesting. And just one of the things just to build off what you were saying, to me, there's a really interesting progression that happens and even talking about FinTech, maybe that disruption. And I'm sure this is not accurate and maybe someone could pinpoint this more accurately. But you threw out that number of 2010 and let's take that as a starting point. And if we think about the industry, it almost feels like the first wave of disruption is people focusing on really narrow niches and developing all this underlying layer of technologies and these small pieces. And then what I always enjoy is, and what I think is the master move because it's, you're executing it more of a meta levels. Then you tie all those things together and you can deliver a value proposition that is fundamentally different than what people can get. And I think Rho is such an amazing example of that. And pulling those individual technologies and points of view together, and delivering something that's totally different. And it's truly 10X better.
Everett Cook (38:03):
That is what we're trying to do. You think about a lot of these pieces are first of all redundant. You're redundant from at least a core perspective. And so, putting them together is not necessarily building five different products. It is five parts of a product with similar internal components.
Everett Cook (38:21):
And the second thing is yeah, I think that there was a really strong focus at the beginning of FinTech in terms of building your very verticalized, very narrow solutions. And there's a lot of companies that are doing that today as well, some of which are doing really well. I think that we have a different approach and different perspective on that, which is that there is similarity across finance teams in terms of how they operate regardless of the industry that they're in. And they experience the same problems.
Everett Cook (38:45):
And frankly, these are hard problems to solve. Being great in this space is really difficult and there won't be a lot of companies that are great at it. So, we actually, I think disagree with part of the popular consensus that there will be a banking and payments, and stuff like that for architects and for plumbers, and for software companies, and for e-commerce companies, because we fundamentally think it's just hard to be really good at it. And then we think the best product is what's actually just going to win across the board regardless of vertical.
Daniel Scrivner (39:12):
I'd have a plus one in your column. Definitely, I think that's the more realistic approach to how that plays out well. And that also goes, I think one quote that always bubbles up in my mind is, when you think about those kinds of people competing in these small little areas is ultimately the player with the biggest scale, the player with the biggest network, is almost always going to win because they can deliver things at lower costs. They can deliver a better product experience. And even just thinking about that, what is the difference? If I'm a plumber that wants a bank, do I still have money needs that are basically the same as almost anybody else? It's kind of comical.
Everett Cook (39:44):
That's right, we don't think it's as differentiated as people think. And again, we think quality is what ultimately wins.
Daniel Scrivner (39:48):
So, I want to move on to a few closing questions. And one that I wanted to start with is book recommendations. So, talking before this, I know that you're a little time-starved to be able to read. I know, I've been flow.
Everett Cook (40:01):
I used to love books. And I'm like, "Man, I haven't read a book in an embarrassing long amount of time." Because I simultaneously started a company and had a daughter, which means I barely get any sleep. So, hopefully soon. But yeah, I mean, there were a bunch of books that were really important to me and foundational in the way that I think. I really liked when I was in the investment world and just in general, I really liked books on performance psychology. I really thought that was like a really interesting thing to understand about yourself and about people. And obviously a lot of that comes from sports, even though I'm not a very good athlete.
Everett Cook (40:35):
There were a couple of books that I really liked. I really loved The Inner Game of Tennis, which I think it was written in 1979 or something like that. But it is a classic.
Daniel Scrivner (40:43):
Do you play tennis?
Everett Cook (40:43):
I do play tennis, not very well, but I love tennis. But it's a great book about, in a lot of ways touches on a lot of the same things around thinking fast, thinking slow. It's about understanding your inner self as well, and not letting that get in the way of progress, and understanding the duality of that. I thought that was just a phenomenal book in terms of how to drive for self-improvement.
Everett Cook (41:02):
There's another book that I really loved in a similar vein, which was called The Art of Learning, which was about Josh Waitzkin, who was a world-class chess player. But more than that, he described his journey through chess, really learning how to learn. I thought that was, it was really cool. It's a great read. I really enjoyed that book. And he's somebody that I think really thinks deeply about what it means to be great at something and how do you become great at something, and taking that as a deliberate process, as opposed to chance.
Everett Cook (41:29):
And then I'll give you one more, which is probably my favorite investment book, which is, The Most Important Thing by Howard Marks, which is just really, just full of so many decades of wisdom and deep understanding of markets and human psychology, and the way that the world works. He was one of the world's greatest investors. And the book is really good. So, those would be my top three.
Daniel Scrivner (41:52):
Those are great recommendations. And yeah, I've seen Howard Marks speak a couple of times. And he is, just the clarity of thought. If you're someone that aspires to be able to articulate the way that you see the world in a way that you think really, really, really clearly, I feel like you can't get much better, Howard marks, whether it's a book, whether it's listening to him talk, he's just in a class of his own.
Daniel Scrivner (42:11):
Okay. The next thing I want to ask about is just, and I know you're right in the middle of it, obviously, but survival tips for founders or thoughts for someone that is listening to this interview, that's maybe getting started. I don't know, just things that you've learned or things that you've changed your expectations of yourself on, any feedback you'd give to people there in that vein in that space?
Everett Cook (42:30):
I don't know. I mean, I don't love giving advice too much because I'm still in the middle of it. I think that just first of all, trying to survive, that's job number one. Make sure that you're not making any decisions that will fundamentally prevent you from playing the game another day.
Everett Cook (42:46):
I think two is, and is something that I, at the very beginning when I was thinking about putting Rho or when I was thinking about building a company, I had a very long list of ideas in terms of places where I thought there were opportunity. Most of them are bad, but some of them are good. And is understanding that there's a market opportunity, isn't enough. You need to understand that you are the right person to execute that. And that's probably the difference between being an investor and operator. As an investor, find a great idea, find a great company, buy that stock. It doesn't mean you're the right person to create that company. And so, you can have insight without capability.
Everett Cook (43:20):
I had a lot of ideas before I started Rho. And I was like, "Man, this is going to be huge." And then I spent a couple of days really diving into what it meant to build a company in that space as like, "I am so unqualified for this opportunity."
Daniel Scrivner (43:33):
It takes a lot of self-awareness.
Everett Cook (43:34):
I think that it's trying to know your strengths and weaknesses. And I guess the third thing is like, just surround yourself with great people, especially people that frankly cover your weaknesses. Everybody has strengths and weaknesses. Once you understand them, find people to fill in those gaps. For me, day one, it was my co-founder, who's been phenomenal. And frankly, so many of the things that I frankly can't do. But beyond that, the whole team, there is no substitute for sharing yourself with great people. It's not easy to find great people. But as you find one and two, and three, it gets iteratively easier. So, don't let your standards down and really just try to pursue that at all costs.
Daniel Scrivner (44:08):
It's a compounding at work-
Everett Cook (44:10):
Daniel Scrivner (44:10):
Both the benefits and the amount of work it's going to take to go into that. Third question, this is the closing question we ask every guest is, if you can share a personal experience, that's just had a profound impact on your life. And just share a little bit of what you took away from that person, what you took away from that experience and how you apply that today?
Everett Cook (44:26):
Yeah. I think it was early on in my life, one of the first jobs I had was working at Bloomberg L.P. And Mayor Bloomberg was very involved. She was there every day. And it was seeing what one person or really a couple of people could start, and I guess, they'd been around for 15 years at that point, and really how big it can get. It was just mind blowing to me at a very young age. So, it was understanding that, even at the echelon of company building world it is possible to do that and that things that big really do start small. And he's an exceptional person and a tremendous leader in politics and in business, and philanthropy, but he built that. And he didn't get there overnight.
Everett Cook (45:09):
And these institutions that seem massive and impenetrable, and have thousands and thousands of people, they all did start somewhere. And that sounds simple. But it's like... I don't know. For me, that was just an eyeopening experience of, wow, things aren't as rigid as they seem. And these things do have small groups of people that generally birth them. And that was to me really, really inspiring.
Daniel Scrivner (45:32):
It's like going full circle back to the beginning of the conversation, and just demystifying and what it's like to start a business. And just to add onto that, I had a similar experience at Square, from being there super early on. And I think a lot of people look at that company today and are just absolutely blown away, as am I with how far it's progressed. And depending on whatever part of the business you look at, it, it's just a masterclass in a lot of ways, but it started out so humbly.
Daniel Scrivner (45:54):
And it's also, I think by being that close, you also get an appreciation for the fact that these things are very messy as they progress. And companies just like people go through a lot of awkward growth phases and make bad decisions, and have to reset. And yeah, I think you just always take away from one of those experiences that one, as you said at the beginning of this interview, it's possible. And two, that it really does start out very simply and humbly.
Everett Cook (46:18):
That's right. And I mean, look, there is definitely luck that gets involved. And it is a combination of luck and skill, but it all starts somewhere. And that's the biggest thing that I took away and that we're trying to build it around.
Daniel Scrivner (46:30):
You were in those early innings. And yes, you know where you're headed, which is great. Well, this has been an amazing conversation. I think people are going to absolutely love this. So, thank you so much for your time, Everett, and for being so generous.
Everett Cook (46:40):
Right, Danielle, thank you. It's been great being here.
On Outliers, Daniel Scrivner explores the tactics, routines, and habits of world-class performers working at the edge—in business, investing, entertainment, and more. In each episode, he decodes what they've mastered and what they've learned along the way. Start learning from the world’s best today. Explore all episodes of Outliers, be the first to hear about new episodes, and subscribe on your favorite podcast platform.
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