Column, a software company that owns a bank, makes over 90 percent of its money from software and charges per API call, passing bank economics to customers like Bilt, Wise, Ramp and Mercury.
William Hockey argues founders should seek out non-consensus places, and says San Francisco's consensus culture is both a clutch and a founder's most valuable asset.
Hockey says venture capital pushes companies into chasing trends and constant fundraising, so Column instead funds employee buybacks with 25 percent of its earnings each year.
Column's founder builds bank software and rejects Silicon Valley consensus
Column treats financial infrastructure as a software business that happens to own a bank. Hockey funds it from earnings rather than venture rounds, at heavy personal risk, to keep a long horizon and avoid trend chasing. He sees the dollar's role in global trade as the reason US financial infrastructure matters, and he looks outside Silicon Valley consensus for ideas.
Takeaways
Column is a software company owning a bank. Column supplies payments, deposits and credit to software companies such as Bilt, Wise, Ramp, Brex and Mercury. It earns over 90 percent of its money from software, charging per API call and passing most bank economics to customers.
Venture capital pushes founders toward trends and fundraising. Hockey says Plaid would not exist without venture, yet the model drives trend chasing and constant fundraising. Column grows from its earnings, spends 25 percent of them each year buying back employee shares, and pays nearby staff $2,000 monthly toward housing.
Independence cost Hockey heavy personal risk. He pledged over a billion dollars of Plaid stock to borrow $70m and buy the bank, was margin called several times, and calls the first three years the most stressful of his life. Plaid's roughly $5bn Visa sale was blocked.
The dollar is a national security tool. Hockey says the dollar settles most global trade, including Qatari gas bought by Switzerland and Chinese and Russian energy trade. He credits sanctions with weakening Venezuela and counts financial services as part of national security strategy, alongside defense firms such as Palantir.
Founders should look beyond Silicon Valley consensus. Citing Dan Wang, Hockey calls San Francisco and Beijing the most consensus societies and says Silicon Valley is elite-dominated. He finds underrated growth in emerging markets, pointing to Kaspi in Kazakhstan and Rawbank in Congo as fast-moving banks.
Early employees now carry more risk than founders. Hockey says founders take too little risk today while early employees take far more. Dilution and preference stacks are poorly understood, and an early-stage founder will probably lose 50 to 75 percent of equity value to dilution alone.
AI value accrues to distribution, not AI companies. Hockey expects rapid progress toward superintelligence but says value will go to companies with distribution and brands. Banks will be either the most disrupted or the largest beneficiaries, and he urges entrepreneurs to try less crowded industries than Y Combinator's AI-heavy batches.
Hockey's advice for builders
Hire people who are building their second company.
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On this episode 2
Show 1
Put a product customers will pay for ahead of mission.
Specialise deeply in boring niches, as Hockey does, drawing on his reading of banking history in Japan and China.
Aim to be a customer's best partner over 10 to 15 years.
Offer early hires a promise of no dilution over a 10 year period, as Column does.