Riding Unicorns: Venture Capital | Entrepreneurship | Technology
00:16:25 · Hector Mason
[00:16:25] S2: So what's your approach and tolerance to risk? Because you can make a quick buck by playing into the hype, but you... You're gonna become a billionaire by being, you know, one step ahead. But it's riskier. Like, the money from customers is less available in the early years. So, I mean, just in general, how do you approach risk?
00:16:44 · Shah Ramezani
[00:16:44] S1: Yeah. I mean, risk is a kind of an interesting term. Right? I mean, you know, when I was a founder, a lot of these, like, consultant type of people would tell me don't take, you know, risk. And I was like, you don't assign risk. The risk for someone like me is not taking any risk at all. It's a bit like now. Right? We're taking a bunch of product risks because not doing anything is very stupid because everything is changing and you're not capturing any of that. So I think it depends what you want. There's some founders out here for making a few millions or 10,000,000. Some people wanna build amazing companies. We have no choice. We have to take the risk. There's no choice. But you could take risk in a way. Jeff Bezos used to say that. It's not like risk risk that you just structure it. Right? You make these bets, if they take off, you double down and mobilize resources. But it's not that much risk. Like, you get few engineers playing around with things, then you listen to it. But you have to do something about it. Right? You have to be early there. Imagine, like, Jeff Bezos never took the risk of being a cloud company. I mean, I think the reason why Amazon went into clouds, and I find that the true reason is that they were always criticized of not being a tech company. Whilst tech companies were so hyped, they were like, oh, you're a retailer. And he got so annoyed of that. I was like, this is annoying. So we'll fix that. So then he he just hired some guys from Microsoft. I don't know. Then, like, figure this out. So that was a risk. Right? Played out. And even now, we are moving into agenting payments. You can consider it risk. I don't think it's a risk. I think the risk is not doing it because if we don't capture the next big wave, someone else will capture it and come and outcompete us because they have more resources, more traction, more better people. Also, get to think about it. Talent is actually scarce. You don't grow fast enough, you're not going to capture talent nor retain talent. And I can't be a demanding person if I don't bring the underlying growth. It's very hard. So I think, you know, when you're in the startup growth mode, the only way to win is I just keep growing.
00:18:13 · Hector Mason, Shah Ramezani
[00:18:13] S2: Yeah. So so risk for one person is not the same as it is for another, and it depends on, you know, what your fears are, what you're trying to protect against, how you experience pain from different things. I wonder, in your version of risk, has your approach ever backfired? When have [00:18:28] S1: you thought, fuck. I wish [00:18:29] S2: I didn't do that. Wish I didn't tell you that. And and so how... And where you've had to endure pain as a result of your decisions.
00:18:36 · Shah Ramezani
[00:18:36] S1: I look at it as bets. Let's say you go to a casino. The odds are you put black and white, I don't know, 48% terrible odds. Right? But in real life, you have sometimes these odds where the downside is limited. Let's say it's $10 or something or $20, but then the outcome is like, I don't know, 100,000,000. So that's the great thing about the real world is like it's just odds. Of course, you might be wrong and you lose 20 ks, but as long as you think the odds were in your favor by a massive money, you should take them. That's how I think about it. It's the same thing with investing. I like these companies that limit the downside, only upside because there is a bit of a buffer where it doesn't go. So you just float on it and then it maybe captures a vape or it doesn't, but it doesn't go. But the worst are like huge downside, then then you're out of business. You know, in the real world, the odds are not the way it works in the casino or like sports betting where it's a bit all arbitraged out. There is a lot of arbitrages. And the same thing I... When I bet on stablecoin, I found that a huge arbitrage. There was info... This information doesn't flow fast enough. People don't know. We don't have the time to look at certain industries. But as a founder in that industry, I knew there's only a handful of people who actually know this kind of information, and there is outsized returns. So I think you have to make sure that, first of all, you identify those. Are they exactly as you imagine? Are you biased something? And then you just make sure that that's right, and then you go for And then you... But you do five different bets like that. And then one of them will take off. And then the other one is also like, some don't take off, but doesn't mean that you should not give up on them. Sometimes you have to repackage them. You have to try it again. I'm a big fan of not killing ideas too early. Like, you have to also trust your instinct intuition because sometimes I've seen things take off. It's just a pure marketing and messaging perspective. The product is right, but the marketing, the PR, the landing, they hope everything was wrong. That's why it didn't take off. People didn't get it. So, yeah, that's kind of also part of it.
00:20:13 · James Pringle
[00:20:13] S0: Yeah. And, Shah, you you strike me as someone with strong opinions. And I mean that as a compliment. So apart from your insight into the stablecoin market, do you have any other strong opinions about the fintech industry that you're in and where it might be going?
00:20:30 · Shah Ramezani
[00:20:30] S1: I think, obviously, AI is changing everything upside down. I think some fintech players will be able to capture that really well because they understand what they can... Like, I think, basically, in the age of AI, proprietary data is everything. If you have proprietary data, you are winning. So let's say if you're on Stripe, you have Stripe link and, I don't know, like a couple of 100,000,000 link users, KYC, and everyone has to use your platform to be able to power platforms like Muse or Cloud, and that's huge. That's amazing. I think it's cool. Same for Revolut. They have 100,000,000 their own people KYC and they have provided data on compliance risk. So the people who can basically mobilize that and actually constantly nurture that, they're going to win. Then there are companies like Adyen who are purely infrastructure companies. And I think that's more like commoditized. It's like you you compete with the same people and, like, what what I'm gonna switch because software is so cheap, switching becomes easier. Switching costs gonna go lower. So people are like, we're like, I'm gonna switch quickly now to this one. I think fintech actually is a bit protected because you have regulatory stuff. But, again, you have to play smart. I think you if play smart, you can make a killing. You can grow very fast. I think Stripe has done a phenomenal job. Sadly, a lot of the other payment companies haven't, but it's just because as of the nature of them being in San Francisco and being with all the AI guys and understanding, they always see like everything from a year one year ahead of time because people come into their office and show them the latest like prototypes. So I think some companies will play it right. I think Revolut is obviously always on top of their game. You could see they never miss any any trends. Even on the stablecoin side, they've been one of the fastest fintechs to adopt that. On the crypto side, they were one of the fastest to adopt that despite all the regulatory challenges. And then also on the AI, they're doing a lot. Mean, they already have those things launched. So I think it's really adapt or die very quickly. You know, I always say in the world there is no such thing as a linear structure. You know, there's either everything is compounding or like it's a logarithmic or it's like also compounding downwards.