00:34:25 · Immad Akhund
[00:34:25] S0: Yeah. I think it actually also, this kind of idea ties to like doing hard things. And like, if it's too obvious, then either everyone would be doing it, and they'll be like competed away. Or it probably doesn't have value. Like, it won't work kind of thing. So like, you kinda have to start with like, you know, at least a somewhat contrarian thing. Like, most people have to believe this isn't gonna work. So... Which is also like, ties to... Like, you have to be unrealistically optimistic in this, like, thing that most people think will not work. Like, that's just the... And most of the time, they're right as well. Right? Like, most things don't work. So so so you... But you really have to have, like, a belief that, like, you know, your vision for it can, like... But, yeah, I also... You know, I do empathize with him kinda... You know, even when your company gets a little bigger, like, there is like a... You know, the default mechanism for most people is in opposition to change. Like, I think entrepreneurs are... Least, maybe not all of us, but I'm a little weird. Like, I quite like change. Like, I like things changing. I think that's kind of fun to have, change and dealing with change, but I don't think most people like change. And then once you have an organization around it, that kind of coalesces to not wanting change in general. So actually, we launched Mercury personal in February, and it was kind of like a mission to get everyone on board with her, because, you know, we're a b two b company, and it's generally b two b... And there's so much to do on the b two b side, right? But the problem with what I didn't want for Mercury, which I think most companies end up doing, is like, it's very hard to do new things. Because like, if you have a big thing that's at scale, right, like, if we get, like, 1% better at doing Mercury for business, we're gonna make millions and millions of dollars. And, like, it's relatively easy to come up with 1% improvements to Mercury business. Right? It gets like, you know, we we improve our go to market a little bit, then like, it's 1% better. Yeah. One percent's not hard to get out of a machine. But to get a new product from zero to even 1,000,000 in revenue, it takes so much work. Right? And each of those bets is kinda low probability.
00:36:41 · Immad Akhund
So you have to do a ton of work to get a million dollars out of something, or you get a 1% improvement out of your core thing. But the, yeah, the problem with the 1% improvement out of your core thing is like, you kinda get to like a local maximum, right? Like where you keep doing this 1%, and then like eventually you get like extractive or whatever. Whereas like the new thing can potentially be that next 10x thing. Right? Like, you can get into a new exponential. So part of, a, you have to... I had to have persistence to say like, hey, I really think Mercury Person will work. In spite of what? In spite of people saying like, hey, why are we... You know, all my teams are like, you know, overburdened, and we could be doing x and y. Like, why are we doing like... You know, why are we hiring for Mercury Personal? Right? Like... And they're very logical. Like, Their arguments are very reasonable. So, how I position internally, and I think we've built a good muscle around this, is to say like, Hey, it's a new bet, and we're actually gonna think about it as an internal startup. So we're willing to put $4,000,000 for seed funding for this new bet internally. And it's a separate team, they're not gonna distract from everything, and we have $4,000,000 already earmarked for it for the next, whatever, year and a half or something like that. And if it proves that, then it'll hopefully become a series A bet, and we'll give it $20,000,000 and so on. So I try to do that internally, that way it's not like, no one else is trying to steal engineers from them, because I'm like, hey, they've raised $4,000,000, like we're not touching their resources. That's a good framing. Yeah. But this is also what makes Mercury fun for me. Because I'm like, okay, I have like these fun. You know, it's not like a... I have a portfolio of startup bets within Mercury that are at various stages. Like, you know, we launched our credit card in 2022, and it took like... Yeah. Now it's like a really scalable thing. Like, we kinda think about it as part of our core mandate. But for the first two years, it was kinda like struggling, and like, had to keep kinda going like, oh, should we still be investing in that? And like, it's a competitive kind of space and all that. But now it's like a core bet.
00:38:57 · Immad Akhund, Joubin Mirzadegan
So, you know, the vision with like all of these bets is like, eventually they become like a core part of what we do. Mhmm. But, yeah. So, I guess, coming back to the original thing, like, you do have to have... To do anything new in any way, even in your own company, you have to have like a lot of kind of conviction that like, you know, regardless of what other people say that it can work. [00:39:21] S1: Every founder I have met will raise at market valuations and in frothy markets raise too much. Yeah. I thought that was particularly timely.
00:39:32 · Immad Akhund
[00:39:32] S0: Yeah. So I think it's kinda funny because like VCs especially love saying this, they're like, you know, don't raise too high, like... And it's like, I think it comes from a reasonable place, but it's also obviously self serving. Right? Like, you wanna, you know, if someone is on like 2,000,000 revenue and they're raising at like a 200,000,000 valuation, like, you know, if you're VC, you're like, actually, you should raise at my 100,000,000 valuation term sheet. And here's like a set of reasons why you should, etcetera. I think that's all reasonable. But the reality is, you know, when a founder goes out, they go to the market. Right? And like, you go pitch like 10 people, and two of them... And like, normally it's the good VCs. Like, good VCs give you like high term sheet, high prices. Right? At least my experience has been, actually good VCs tend to have more conviction. So you've got good VC with good terms, and then maybe also good VC with worse terms. You're just not gonna take those worst terms. Like, at least I have never seen a founder go do that. Like, maybe they take slightly worse terms, but they're not gonna take two x worse terms. So so then it comes down to, like, in this market, same thing in 2021. You know, we had a... I was making 12,000,000 in revenue, and we raised at a 1,600,000,000 valuation from Coatue, which honestly was a little crazy, but that was the market. Right? It was 120 x, and that's what everyone was doing. So I think the... I think instead of, like, going... You know, all these other people on X was like, oh, raise less money, blah blah blah, like, lower valuations. I think it's better to say, okay, you know, if you're gonna if you're gonna do it no matter what, how should you handle it? My mental model, and, like, I would say we raised too much for our series a, too much for our series b, and then we were profitable. So, like, actually, we also raised too much for our seed. So we raised 6,000,000 for our seed, 20,000,000 for our a, and 120 for the b. So I've tried to hold this mental model and think we've stuck to it. It's just like, just assume you raised how much you would raise in a down market. So to me, that was like... My seed round was like a 3,000,000 raise, my series a was a 10,000,000 raise, and my series b was more like a 30,000,000 raise. So that's my mental model. I'm like Wait.
00:41:48 · Joubin Mirzadegan
[00:41:48] S1: Sorry. Explain that again. But you didn't end up raising those amount.
00:41:51 · Immad Akhund
[00:41:51] S0: Raised the full amount. Yeah. I'm just saying I... In my mental model, I was like, this is how much we would have raised if the market was not so good. Yes. Right? So not like completely shitty market, maybe we wouldn't. But like if it wasn't like a frothy market, like... Or like if I wasn't like good at raising, I would have raised less. And then I try to allocate my costs against that versus how much I actually raised. So I will try to do... And mostly, like for us at least, is hiring. You know, for token companies, it's probably slightly different. But you know, for us, it's mostly like, what does the hiring plan mean if I had raised, you know, half as much or whatever it was? And then I'll only unlock the rest of the money if I think I'm doing like, you know, if I have grown enough to justify spending more money. Like, if it's like, you know, I'm so sure that I've grown way beyond what the next round would look like, that I'm like, okay, know, now I can unlock the rest of the money. So basically, think it's fine to raise a lot of money, just don't spend it. But it does require discipline. But at least my observation hasn't been VCs are telling me to spend it, really. I think this is probably like separate point, I don't know if you have it in one of my tweets, but like, I don't... My experience at least with Mercury has been like, you want VCs to be your partner. If you're ever in a situation where VCs are telling you to do things, you've kind of screwed up that relationship already. And I am telling VCs, hey, what do you think? I'm thinking of doing this, etcetera. And they have opinions, but I've never had any of our VCs say like, hey, you know, do this instead, and I think you should go do this kind of thing. It's been much more like, okay, that's reasonable. Like, what have you thought about this, etcetera? Like, it's it's very collaborative. And I think that's how VCs like to operate with the entrepreneurs. I think this whole model of like VCs are telling me to spend money or like VCs are telling me to do x is like kind of a a flawed model that I don't think entrepreneurs should like fall into.