E163: How Thiel Fellows Build Billion-Dollar Startups w/Zaid Rahman

like 10% of Teal Fellows have started billion dollar plus companies.

A third of them have started companies valued at over 100 million.

Some of the best companies in the last 10 years have come out of the fellowship, including things like Figma, Loom, Luminar, OERooms, Ethereum.

Today, I'm excited to welcome Zayd Rahman, founder and CEO of Flex, the FinTech Super App Transforming Financial Management for Small Businesses.

A serial entrepreneur and Teal Fellow, Zayd has recently raised capital at a $225 million valuation in order to build an all-in-one platform that bundles credit, banking, payments, and expense automation for business owners.

Without further ado, here's my conversation with Zayd.

You were part of this very elite fellowship, Peter Thiel's Fellowship, which is over 10 times more difficult to get into YC, which itself is elite.

Tell me about that program and tell me about your experience.

Peter Thiel started the Teal Fellowship now 12 years ago or so.

The idea was that he would select 20 people every single year and give them 100 grand with no conditions except one that you had to drop out of college.

At the time it sort of started as a kind of like a social experiment.

Over time it's sort of scaled into this much bigger thing.

Something like 10% of TL Fellows have started billion dollar plus companies.

A third of them have started companies valued at over 100 million.

And so the program itself is doing doing fantastically well.

Some of the best companies in the last 10 years have come out of the fellowship, including things like Figma, Loom, Luminar, OERooms, Ethereum,

and so on and so forth.

And so it was sort of an awesome experience just being part of that.

And, you know, from my kind of vantage point, I like to sort of joke that I'm the least sort of qualified person in the room when I'm around these guys.

Because to me, it's sort of been just about surrounding myself with the right kind of peers and the fellowship just comes in with this amazingly elite group of people that kind of already driven to be extremely ambitious and kind of really change the way things are done and so it's been an awesome sort of experience being part of that.

Last time you were talking about this very specific way that you use the fellowship in order to scale flex and to solve problems.

Tell me about how you benefit from the fellowship today.

The TL Fellowship has this amazing group of 285 people.

And so, you know, a couple years ago, I thought it was crazy that we were not all in a WhatsApp group together.

And so I created a little group chat and that became pretty successful.

I think the group chat is like 250 of the 300 or so fellows now.

And in that context, if you go on the group chat, I mean, even right now I can see it on the side.

There are people talking about all sorts of problems that they're running across.

Just yesterday, someone mentioned that they're going to an MA and there's a difficult investor and they're giving them a hard time

in the MA process.

Has anyone gone through that?

That three TL fellows, some of them very successful, giving them advice on

how to sort of navigate that situation.

So it's been really awesome to sort of see up close

problems that

this sort of elite group of founders are facing together and sort of take that as an opportunity to sort of learn and also be part of that community.

So you're not only benefit from the camaraderie and everybody going through similar similar difficult problems, you're also building relationships with people, having a personal mentorship network.

And also, you get to see maybe some of these problems are not as esoteric.

So, you get to see these problems solve live.

Some problems you may not even realize other people have the same problems.

Exactly, right?

Like, the MA context is an interesting one, right?

Because at Flex, we have recently been stepping up on MA.

We've done two transactions, and we're looking to do a third one shortly.

And so, seeing what founders are complaining about in the MA process is really interesting.

And, you know, it's sort of like an accumulated knowledge base, right?

You could probably build an LLM to sort of search through all the stuff that's being talked about.

Another interesting anecdote is as Doge was like picking up, you know, there were a lot of fellows helping Doge sort of optimize government spend, and there was just a lot of chatter around that.

It was super interesting to see, you know, people coming in from like, you know, all sorts of

industries talking about how the government could be made more efficient and so that in itself like if someone like just took that kind of piece of knowledge and converted into a report of like actionable next steps that could be a roadmap for like the next 10 years you're using ai within flex to underwrite to make credit underwriting decisions Walk me through how you go about doing that and what have been some of your learnings.

At Flex, you know, our wedge product is our business credit card where we offer you net 60 terms on every single transaction.

So, two months of free float, or you pay us early and we give you cash back in points.

And so, that net 60 product has been extremely powerful.

You can now use it to even pay for ACH and wire transactions through our bill pay later product.

Underlying all that, you obviously need to manage your risk really well because you're providing these business owners the ability to sort of use working capital to extend payment terms.

And so, we have had

significant amounts of investment in order to automate our risk management, our portfolio management, and just how we think about transactions at the time the transaction happens.

Let's say you're a $50 million revenue business in logistics,

go up to a regional bank, which is what most of these business owners rely on for working capital in the mid-market, which is another counterintuitive thing.

You go and ask for

a credit line.

What ends up happening is that a banker will ask you for a bunch of documents, PLs, tax statements, bank statements, credit card reports, and those types of things, and

spend four weeks going back and forth to underwrite this business.

Well, it turns out the challenge that the sort of SMB credit industry has not been able to solve for is

all of this data is unstructured.

And if the data is unstructured, you have have to first normalize that data to actually then use it to analyze it.

Once the data is structured in a way that's like normalized in the same format, it's actually quite easy to sort of build a basic algorithm and sort of figure out what the current ratio and quick ratio and cash volatility of a business is, and so on and so forth.

And so we started implementing LLMs for the specific problem of normalizing unstructured data in the SMB space in general.

And that has sort of allowed us to take underwriting from 25 days down to 48 hours on average, which is allowing us to scale our business significantly.

And if you look at the reports the LLM is able to generate, you won't be able to distinguish this from a manual underwriting approach.

And so it's showing significant improvements in time and sort of effort.

And then beyond that, I think there's a huge opportunity to then re-underwrite these businesses on a daily or even multiple times a day basis to see if their quality of revenue and you know expenses is going up or down to offer even more credit over time.

And so that's been a very exciting kind of piece of sort of improvement that is orders of magnitude better than where we were even six months ago.

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How much paperwork is the AI analyzing on a typical underwriting decision?

And why is it 48 hours?

Why is it not five minutes?

What we did with LLMs was we just feed it something like 40 distinct files per application, somewhat automatically, that is collected through these API integrations, and then basically spit out a report that takes 10 to 20 minutes for the system to generate.

And then we have today at least a gatekeeping function where one of our senior underwriters will then review that and sort of decide if the company is valid and maybe ask some follow-up questions.

But we've started to add LLMs even in that process.

And so we think we can take the 48-hour window further down to maybe 20 minutes.

How accurate is the AI today?

And how has that evolved since you've started implementing AI?

We started implementing AI two years ago.

It used to be not super accurate two years ago.

To, you know, a year ago, it was like a little bit better, but still not super reliable.

As of Q1, the AI is like 90% of the way there.

I mean, it's able to think of things even our underwriters sometimes miss.

And so we have started to ask ourselves the question,

what else can we do based on this analysis?

Talk about your competition.

You have

heavily VC funded Brex and Ramp as competitors.

How do you differentiate against these other competitors?

It's a fantastic question.

So if you take a step back, on one end of the spectrum, you have these tiny micro-businesses.

that are running with two or three employees, a few hundred thousand dollars in revenue.

That's what historically the big retail banks have really, really focused on.

So Bank of America, Chase, Citi, et cetera, et cetera.

On the complete other side of the spectrum, you have very large enterprises and venture-backed businesses that have large inflated balance sheets, right?

That's what the sort of glamorous B2B fintech companies have focused on.

Ramp and Brex being awesome players in that space that have done amazing work, particularly Ramp, which has gone very deep in the enterprise and has done hundreds and hundreds of integrations that are very specific to Fortune 500 businesses.

However, there's a very large middle market, right?

And these middle market folks, we call them jumbo shrimps internally.

They're small, but kind of large.

Now, these folks, you know, have very interesting dynamics, right?

They're running EBITDA-positive businesses, they're owner-operated, they tend to be really profitable, and if they're profitable, they tend to spend a lot of money.

This is the client base that Amex's black card really serves today.

If you go around and see someone with an Amex Centurion card, more likely than not, they're actually a mid-market business owner running a business in some sort of boring kind of traditional industry like construction or logistics or kind of a large franchise restaurant or something like that, right?

And so we are really focused on these types of folks capturing every single dollar in their financial journey from the time they make a single dollar of revenue to the time they spend it on their personal lifestyle.

You've ramped up Flex very quickly.

It's your CEO entrepreneur.

This isn't your first startup.

How did you go about building your team and recruiting in a hyper-competitive market that is the startup ecosystem?

It's a great question because recruiting is something that we spend a lot of time thinking about.

So there are a few things.

Yeah, this is my third company.

I've sort of gone through the ups and downs of, you know, being a founder.

And the reality is that the team you build is the company you build.

Right.

And we know what Coastal is saying, there's a huge difference between a zero million dollar company and a zero billion dollar company.

Right.

And so from that context, you know, going about how you hire is really, really important.

And so in our context, we have really, really focused on making sure that every single person is quote unquote a 10x hire, right?

Where you've heard the phrase 10x engineer.

What if you could hire a 10x salesperson, 10x marketing person, 10x, you know, customer success management person, and so on and so forth.

And so, in order to do that, you have to be extremely selective.

And so, now we're about

approaching 100 people.

We have been very sort of

selective in who graduates through our funnel in recruiting.

Typically, the last interview is me.

And I've, you know, replicate is not sort of a novel thing.

A lot of very successful founders have done that.

And one of the things I do, just as a sort of a practice, is

on average, I try to say no to two in three people that are presented to me

just to sort of up-level our bar.

in terms of who we are hiring.

And then over time, I think our team has gotten better at pattern matching and who are the most amazing people we've brought onto the team.

That typically sort of involves people who have extreme sense of urgency and agency and are very intense in the work they do.

And they don't mind working super hard and working super smart and are very obsessed with creating, you know, amazing user experiences for our customers across every single aspect of the company.

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High agency, obsessed people, delivering customer value.

Double click on some of those characteristics.

If you look at your best employees today, what are some patterns among them?

I came across a framework a while back by

one of these sort of unicorn Indian founders.

The framework itself is called Delta 4.

Have you come across this at all?

No, so it's a really, really interesting framework.

So

if you think about the most impactful products in the last 10 years, right, they all share this characteristic, which he describes as Delta IV.

So I'll give you an example.

What was the user experience quality of hailing a cab in New York City in 2008 on a scale of one to 10?

In New York City, probably a six.

In San Francisco, somewhere around two.

Okay, let's say San Francisco, right?

The experience is two on 10.

Now, think of an Uber, right?

On a scale of one to 10, what is that sort of experience like?

Probably nine or 10.

Right?

So the delta from going from two

to nine is greater than four, right?

So when you have this delta of greater than four,

three things happen.

The first thing that happens is that it is totally irreplaceable, right?

Like you're never going to go backwards to hailing a cab in San Francisco, right?

The second thing that happens is that it's extremely brag worthy.

You know, you're talking to all of your friends about it.

Like, the first time you use an Uber, you probably told, you know, 20 friends about it, right?

The third thing that happens is that you have a very high tolerance for bugs, right?

You're willing to withstand just a ton of issues.

Like, even if an Uber ride, for whatever reason, wasn't super high quality, you're still going to call another Uber tomorrow.

And so, from my kind of perspective, in order to create a Delta IV experience for our customers, it starts with people who really, really care about providing that Delta IV-like experience, right?

And so, when you think about fintech, the reality with fintech is that it's a commodity, right?

Like all these products, using a credit card, a bank account, sending an ACH, the reality is that these things have existed for decades.

But the opportunity that exists is making the individual experiences super duper simple to use and stitch it together with each other so that it creates one large cohesive experience, much like an iPhone or driving a Tesla, where the individual units in a Tesla have existed for a long time.

But when you add kind of all the components and vertically integrate it, it becomes a very interesting sort of experience for the customer.

And so effectively, my kind of definition of what makes a great sort of teammate is how much do they care about creating these Delta IV experiences for our customers.

Double-click on that.

Why would somebody care?

What are the characteristics of someone that cares about

creating these Delta IV experiences?

The first starts with taste.

You can't teach an employee taste.

And so you have to, you know, I think the job of the founder in some odd way is actually to be a tastemaker.

You're curating the taste of your company and the products you create, right?

And it sort of boils down to every single thing.

So, how you commit code, and what do we think is high-quality code in production?

How we think about architecting systems.

Do our systems work well together, which is allowing us to move faster?

And then, when you think about abstracting code even further in an AI-first world where you can use something like Cursor and generate entire sort of parables of code in seconds, you know, that's not possible if you haven't modularized your systems in such a way that you can move faster, right?

The really subjective, hard-to-quantify thing here is taste.

And you will see that in every single successful founder out there, where

there's some kind of X factor that's hard to describe.

And I think that's sort of the X factor thing that we're looking for in every single person we hire.

I think what happens at most companies, though, is, you know, you do that really well for, let's say, the first 20 people or even 50 people, or maybe even 100 people.

But then you start compromising on quality.

It sort of becomes really hard.

You don't have the bandwidth to interview every single person at the company.

And then soon the company culture dwindles.

And that's when you hear about these cases where the company needs to lay off hundreds of employees.

And, you know, you have bloated middle management of of people who are just managing people and not really contributing to the underlying code or the marketing collateral or sales or risk or whatever, you know, that person may work on.

And so I think there's an opportunity to really, really focus on, you know, just keeping the bar super duper high and finding people that have

an insane amount of care about their craft and a highly proactive, sort of high agency, resourceful people working on building this amazing thing and how can you tell somebody's taste through recruiting process through the interview process what exactly are you looking for the easiest way to figure out if someone's full of shit or not is just ask them what is the most complicated project you worked on what were the challenges you faced and how did you solve it

and then just listen and then ask follow-up question after follow-up question to figure out if they are you know bsing their way to an answer that's interview-appropriate.

By minute 20, they typically will start cracking and showing signs

of their actual work.

And so that's when you start deciphering how they think about making decisions.

And you can apply this to every single role, right?

You know, we asked this for literally people working on our risk automation engine, all the way down to folks working on our brand design, to folks who are sort of,

even,

I should you not, we even ask folks, you know, who are sort of talking to customers, you know, in the wee hours of the night, right?

So it's just a matter of like, what is the most complex thing you worked on and how do you think about solving these things?

And then you just decide subjectively if you, as the founder of the company, would have gone about making similar decisions.

And sometimes you'll be surprised.

You'll learn some things.

Right.

And you'll learn kind of ways to sort of operate better.

And it's just that simple.

What's a great answer to that?

So you ask somebody how you create a risk management system and they start going into details.

What are you trying to ascertain?

There are a couple of things that we're trying to ascertain, right?

So the first thing you're trying to ascertain is

what ends up happening at companies, especially

employees that worked at bigger companies, that worked at a FANG business, for example, you have no idea what they actually contributed at that business,

if anything, right?

And so, what ends up happening is that you'll hire these folks, and then you know, they're really good at like appearing like they're working, but you have no idea if they're actually like contributing and moving the needle every single day, right?

So, what you want to decipher really, really quickly is how much actual individual contribution did they bring to any team.

And by the way, you should apply this to even executive recruiting, right?

Because you don't want to hire people who all they do is just manage people, right?

And so by doing that, you're deciphering their level of

involvement at the kind of nuts and bolts level of whatever their work is, right?

The second thing you're sort of deciphering is

as you hear them talking about all the problems they face, the challenges they faced, you'll start understanding that, oh, actually,

you know, this person is very clever in finding shortcuts to solving really complicated problems.

Oh, oh, this person thinks at a first principles level.

Or, oh, this person has really good taste in comparables or inspiration for solutions to replicate.

Stuff that you should look for in terms of stuff not to say,

probably giving away too much.

Stuff they should not be saying,

the first kind of thing they say, and it's like a negative sign, is the words best practice.

The moment they say best practice, done.

They're out.

They are not a first principles thinker.

So let's say you're starting a completely, maybe even new position in the industry.

You're trying to understand how to build your bonus system for heavy credit card users.

First of all, how do you even define that position?

And how do you go about finding somebody to do this unique position?

Yeah, it's a good question.

What we have found.

time and time again is when we have hired people who have worked on those explicit problems in the past, often they come up with mediocre long-term solutions because they're too married to their existing way of doing things.

So for example, you talked about creating a new reward system for credit cards, right?

We hired someone from Amex

and lo and behold, they replicated Amex.

And we sort of asked ourselves the question, like, why do we need to, you know, if you go to AmericanExpress.com and they're an awesome company, they've done a lot of things really, really well.

But you go and look at, you know, some of these big bank credit card kind of pages, they'll have like 10 different credit cards.

This card does what travel well.

This card is, you know, when you're dining at a restaurant, use this card.

You know, when you're, when you need float for a transaction, use this particular card.

And the question we asked ourselves, why can't this be just one card?

And, you know, the customer can choose your own journey.

And so,

you know, we

dramatically kind of changed course.

And this idea actually came from an engineer on the team that had no credit card experience.

They came from a consumer startup.

And they were like, well, actually,

the reality is that business owners are people.

They're consumers, right?

They just want a good experience.

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They don't care.

And one of our contrarian thoughts is our business owners don't care if it's a commercial card or a consumer card, care like if it's

XYZ network or

ABC bank partner.

All they care about it is it just works.

And so whenever we do our orientation, we have the slide from Steve Jobs where Steve Jobs is pondering and it says behind him, it just works.

And we throw in the Flex logo.

Our goal is not to innovate.

Our goal is to make it just works.

And so in order to do that, you just have to sort of

really, really obsess over.

that Delta 4 customer experience.

And the first thing to do is really, really understand what the problem is that we're solving and then go about creating a solution versus going and copying a best practice that some other company did.

Quirks might be a combination of high levels of innovation, or really there are some best practices that also do work as well.

So it's not about you innovating, it's about the customer experience ultimately.

If you're to apply like truly first principles thinking to like every single problem set,

you may come to the conclusion that actually the way this has been always done is probably right.

And, you know, we actually concluded that, you know, in one area, which is credit underwriting.

We realized that

for a century, you know, companies have been underwritten, and there's some elements of underwriting that just works,

right?

So it doesn't need to be innovated on.

Maybe we can make the user experience of how you go about getting working capital a lot better and then combine that with a software kind of ecosystem such that we're actually helping you become a bit better business owner.

But I think, you know, my thought process has always been you got to break down problems to its most finest kind of units and then sort of go from the ground up rather than go from the top down.

We found a magic number, magic number of interviews that takes to understand

the context of the problem set you're solving around, for example, points.

So you're 30 interviews in, you're like, okay, these are like the legacy solutions.

I now know more or less what people are doing.

Now I could actually write or think about what I actually want and, you know, talk to me through the evolution of creating a new position.

The other kind of hack that I learned over time is that let's say you're a founder in a space that you have not operated in the past.

Interviewing is actually a really easy hack to learn a lot about that industry.

And so, for example, let's say I did want to learn a lot about rewards.

The easiest thing I can do is I can call 30 leaders who build various reward systems and interview them and sort of talk to them and just like learn like, how did they go about building it?

And over time, you'll actually form patterns that will sort of inform you that, okay, this is quote unquote the best practice.

And this is how you sort of possibly innovate.

And this is what customers truly love, right?

And how do you sort of replicate the best parts and not the parts that don't work, right?

And so the magic number to answer your question is sort of varies on every role.

But we had a senior role where it took us over 200 final interviews to get to that final person.

And it was a hard one.

It took us a year and

it was very challenging.

It was mentally and psychologically exhausting.

But you don't want to compromise on that bar because that, you know, by hiring the wrong person and them investing and creating like solutions that sort of contrary to what you're trying to do is actually going to cost you much, much more in the long term than just like waiting a little bit longer and hiring the right person.

One of the reasons you were hired interviewing so many people is you hadn't yet found the excellent.

You knew what excellence looked like and you hadn't yet found it.

Yeah, it's like that.

It's really hard, right?

Like, because I get asked this question often.

It's also

essentially a CEO taste.

Yeah, exactly.

What is that excellence, right?

And I think the taste piece is really important, but I'll give you an example that's a little bit more quantitative, right?

Like we were in the market looking for someone to run risk, and you know, we came across a lot of people who had done

that job at a lot of very sizable companies, many of our peers, many large banks, and those types of things.

But

the thing that I kept sort of running across is that everybody was sort of like very kind of formulaic in their thinking.

No one was able to just question their own formula, if you will.

And so the easiest kind of cracks in most of these interviews was by simply asking them, why

is it done that way

right and most of them were like not able to like truly like get down to first principles and so yeah you know it became like really apparent um when we brought on vishal who used to run co-branded cards at citibank you know if you've ever sort of seen the american airlines card or the home depot card he he was part of that team And, you know, in that context, it was very clear that he was able to sort of think at a much deeper kind of at a level of physics rather than at the level of like underwriting, right?

And so,

you know, so we brought him on.

And, you know, that's sort of giving him a huge compliment.

But I think, you know,

you can sort of apply that to almost every single role down to even, you know, an account executive you bring on.

You know, I'll give you an example from just a few weeks ago.

I was interviewing the sales guy.

And, you know, most of these sales conversations, the guy is usually selling, you know, guy or girl is usually selling me on something, right?

But in this particular context, he actually pitched me a new product idea, and he very passionately explained how this could sort of improve the optimization of our kind of sales conversion and so on and so forth.

And we ended up talking for two and a half hours about this new product.

And by talking to him about this new product, I got to learn how much he understood the customer's problem set, which effectively, you know, was a very easy sort of sign that they would crush the sales job.

What do you do when you're 70, 80 interviews and you find, you know, somebody that looks excellent, but they're not a culture fit.

You want to hire people first and foremost for the culture fit and then for their expertise.

Because if they are the right cultural fit, which in our context is, you know, having really high standards and like really like thinking through first principles and really, really caring about our customer experience and so on and so forth, they naturally will learn what they need to learn in order to go about solving these problems.

It may not be the perfect solution if you're trying to, you know, hire somebody who's, you know, who comes in with a wealth of experience in that specific area and just like, you know, you know, just kind of comes in and applies frameworks that they've learned from the past and just sort of like, you know,

get the job done.

But oftentimes you will find people who are able to ask bigger questions and actually move the needle much more effectively.

And there's a founder that I came across that likes to say that the best people they hire

tend to have an impact week one.

If they haven't created an impact within one week, they're the wrong hunt.

In my experience,

The people who have had the most impact within the first week are not the experts.

They're the people who are able to think in our sort of cultural terms.

Expand on that.

If you think about it, the best people you hire, and you've probably experienced this in your own experiences, right?

Within the first couple of weeks, they come in and they're able to very quickly understand where the gaps are and they're able to go attack and solve for those gaps, right?

Now, of course, you need some level of skill and expertise if you're completely blind, you know, or not knowledgeable.

It'll be quite complicated to do that.

But oftentimes, you know, the people that tend to sort of question existing things and sort of propose solutions that make it better are the people who have the freshest eyes, right?

And so from our perspective, we're looking for people who are willing to sort of think different

about, you know, the same problems and,

you know, just ask, you know, how can we make things better?

And so oftentimes that does not come from people who have like a very like kind of um they're very dogmatic about best practices and those types of things.

Have you ever found somebody with a high skill set that has learned culture?

Is that something that is learnable?

A few things you cannot teach

people, in my opinion.

You cannot teach people to have high integrity.

You cannot teach people to work hard.

You cannot teach people to have the right taste.

Is taste another synonym for

what you call it, uncommon sense?

So, for some reason, common sense is extremely rare, but I don't know why it's called common sense, but is taste another synonym for common sense?

That's actually an interesting way to put it.

I never thought of it that way, but

yeah, I guess you could call it common sense because the best solutions are the most obvious solutions, right?

Like when you use an iPhone, right?

Of course, like you touch your screen, it's like so much more obvious than having a keypad, right?

But I guess you needed a lot of kind of leaps and

thinking in order to get to that point where you came with this insight that, oh, we should put a screen on every device and then go through the exercise of technologically making that possible.

When you look at these 10x engineers, 10x salespeople, 10x fill in the blank.

Do you see any correlation with high egos, low egos, or is it completely an independent quality?

The common denominator, if I were to like really take a minute to think about what are the most common attributes amongst the people who are doing the best at Flex, as an example,

they really, really care.

And they really care not only about the customers and the quality of their work, but they also care about their peers.

And they also care about the company.

And

you know, if you really, really care, right, you will you will actually learn what might be the right taste, right?

What might be the right decision-making framework, what might be the right way to do things, right?

And so you can often tell, even if you hire an intern, let's just say, and they really care about excelling and they're very sort of ambitious, they will quickly learn how to get things done.

Is there room for a non-10x person that's a glue and just a culture bearer and just makes everybody better?

There are kind of two answers to that, right?

The first answer is one of the elements of our culture is

high quality performance, right?

So if you're a culture fit, you're definitionally performant.

But those are sort of subjective things, right?

Like what is high quality performance?

It's not someone who necessarily is working 18 hours a day.

That's not high quality performance.

High quality performance is ultimately

comes down to results.

And so that's kind of my perspective on that.

I think the second thing is when you have people who are not performing at the level of your peer set,

it actually is demotivating to the people who are performing.

Every time we've had to make the very, very tough decision to terminate somebody who was not performing, the morale at the company is actually increased.

There's this concept in psychology called negative contagion, and where it's just really intense.

When somebody is not performing, it significantly decreases everyone's performance

non-linearly.

So, literally, you could have one person on a team of 10, and it has this massively negative contagion event.

And sometimes you could also have positive contagion, but the negative tends to be even more pronounced.

You'll hear the kind of

phrase that

we are a family,

right?

And the reality is that that's a disservice to everybody, including yourself.

The reality is that we are a team.

If you go to a

high-performing team,

whoever wins the championships,

the members of those team

are really, really happy to be there.

They are excited.

They work hard.

They really care.

And they are

winning together.

And so we want to create a team that wins together.

And what we have found is that it might be challenging for the wrong people, but for the right people, it is the most rewarding place you can be.

And we have found that our retention is effectively 100%

because of that winning culture and that sort of

strong alignment that we have created that this is the bar of performance.

We talked about this at dinner last time.

You guys worked these crazy hours and I'm really starting to double click on burnout.

Do you believe that burnout is really when there's not momentum, or is it just the amount of hours somebody works?

In other words, could it be sustainable to work these crazy hours for many years without burning out?

It's a great question.

I think, you know, there, you know, this is something that I'm trying to learn myself because I work like, you know, as much as I possibly can, right?

Every single day.

It's not even 996.

I think it's like seven days a week.

I think it's a good question.

Like, you know, know, I ask myself, is like work-life balance a real thing?

And you hear the Jeff Bezos thing of work-life integration, and then you ask yourself the question: what is work-life integration?

Well, turns out, I think that people who work very hard for extended periods of time, you know, you hear them do that for many, many decades.

Like, you hear someone like a Warren Buffett that is literally running Berkshire Hatsway at the age of 95,

it's not because they have work-life balance, It's because they love what they do.

They quote-unquote tap dance to work.

And I've actually found that, you know, those types of people have very little risk of burnout.

Yes, if you create a bad culture that's toxic and there are like workplace fights happening and there's someone underperforming and they still are on the team and demoralizing the whole company, like, yes, you will have, you know, sort of misalignment and you'll feel like, oh, that, you know, the company doesn't care and those types of things.

But if you have, you know, extreme sort of alignment of, you know,

setting the standard and the intensity that's needed to perform and create this like awesome place, I feel like the risk of burnout is very minimal for people who love what they do.

Alex Hermosi, previous guest on the podcast, says that people that complain about work-life balance are really bad at both.

I look at burnout as working a lot for a sustained amount of time with no positive feedback.

So essentially a lot of work and nothing coming back.

But as long as you have those milestones, you celebrate those milestones as an organization and you're able to internalize some of that success.

I found to the same people could go decades.

You have a paradoxical belief that FinTech is back in now May 2025.

Why do you believe FinTech is back?

Taking a step back and zooming out.

If you think about, you know, financial services, financial services is literally one of the oldest industries out there.

Banking and enabling people to move money and borrow money and those types of things, this has always existed and will always exist.

So that's kind of a first principle kind of statement.

The second kind of statement is if you think about

where in go

if you think about where incumbents are today,

the sort of average incumbent financial services firm, The reality is that the amount of

bad user experiences that they have created is insane.

And there are a lot of technical reasons for that, right?

They're maintaining code bases that was written in the, literally in the 80s and 90s.

So it's really, really hard for a large, traditional financial institution to create a user experience that has that Delta IV, that amazing, like, you know,

taxi, you know,

hailing to uber cab sort of experience right and so from that standpoint um i think that you know we're still very much day one in fintech now if you think about statistics right um fintech is something like less than 3 percent of banking assets globally you know you have these massive companies new bank has publicly traded at 60 billion in latam revolut has raised massive rounds uh in europe uh you know trading at well over 40 billion in the private markets you have these massive companies in Southeast Asia and whatnot and in India.

And yet, fintech still represents less than 3% of banking assets.

And so, from that standpoint,

we are very, very much day one, right?

If you just look at

Flex today operates in a bunch of discrete markets, not just cards, but also stuff like banking and B2B payments and things like personal financial tools.

And we're going deeper into the stack, becoming the single source of truth for for the business owner.

If you really like take a step back and think about it, it's insane to me that the corporate card market in the US is $2 trillion,

and all the sort of corporate card companies combined are doing less than something like

3% of that.

Right?

So, like, less than two%, like, I think the best one is like at 1% of that market share.

Highly fragmented.

Highly fragmented.

And it's not like you know the best sort of large that's at the top there are so many regional banks and so many like just random kind of companies that exist that you know just have subpar user experiences right and so i think there's a massive opportunity to create a much better experience for the customer such that they have a much better time building their aspirations and so you know the tagline that we've sort of started playing with internally is flex fuels ambition um and so you know,

there's a real kind of there there to that where, you know, we want to sort of partner with the best and most ambitious and help them succeed.

And it's still very much day one in our industry.

And it is very much day one in most of our customers' experiences.

What's next for Flex?

What's on your roadmap?

There's not a lot that I want to sort of over kind of share.

Okay, I'll give you this.

Now that LLMs are true,

what is possible, right?

There are entire industries that have existed in accounting, in financial advice, in wealth management, that frankly, perhaps should be reimagined from the ground up.

The thing that LLMs today, especially the open models,

are sort of lacking is deep proprietary understanding of the individual user and business owner in the financial context.

because financial data is still very much sensitive and it's not sort of overshared, right?

And so we have been, you know, thinking a lot about that.

And so, given our level of understanding of the customer, where we have all of their inflows and outflows, we have all of their sort of credit card transaction history, we have all of their sort of counterparty information,

who they do business with and who they employ,

there is so much advice we can give them in optimizing their business.

I was having a conversation with a very large audit firm with their head of AI,

and he shared something insane with me.

The big audit firm has built an internal LLM to do audits faster.

Found that their LLM was able to have a 98% accuracy from an audit perspective.

So one of the partners of the firm was like, 98%?

That's like a 2%

inaccuracy, right?

Well, it turns out the humans...

have a 65% accuracy at the big audit firm.

So this is an order of a magnitude leap that we've made with LLMs.

And so, we have started asking ourselves a question:

hey, what is possible today, which was not possible three months ago, six months ago, 12 months ago,

and really sort of provide this kind of full stack solution.

And, you know, our strategy is kind of well positioned to sort of really capture that because of our approach of being a multi-product ecosystem where average customer uses four or more products.

This has been fascinating.

I didn't get to all my questions.

We got to do this again sometime.

How should people follow you?

How should people follow Flex?

I'm on X at Zaydr M-N.

I'm also the same on Instagram and LinkedIn.

And in order to sort of sign up for Flex, just go to www.flex.1

and would love to support ambitious business owners.

Thank you.

And as I mentioned, I'm not getting paid for this, but I'm a very happy user.

So

thanks for providing solutions for our firm as well.

Thank you so much.

Thanks for listening to my conversation with Zayd.

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