Invest Like the Best with Patrick O'Shaughnessy
00:02:12 · Patrick O'Shaughnessy
[00:02:12] S0: My guest today is Mickey Malka. Mickey is the founder of Ribbit Capital, one of fintech's most influential investing firms. Ribbit's mission is to change the world of finance through financial innovation rather than through financial engineering. Through Ribbit, Mickey has backed transformative companies like Coinbase, Robinhood, and Nubank from their earliest days. We discuss his perspective on fintech's evolution, including his provocative declaration that fintech is dead, and explore his theory of the grid how knowledge, wealth, and power are being transformed by technology. We also dive into his deep interest in digital art, which he sees as an early indication of broader cultural and technological shifts. You'll soon hear how he is taking a truly generative approach on all fronts. A final note for me, the world just needs more people like Mickey. He's one of the kindest, most alive people that I've met in this business. There just aren't many people like him. Please enjoy this in-depth conversation with Mickey Malka. So, Mickey, I know this is a hard question, but I'm gonna ask it anyway. I wanna just have you describe what Ribbit is. It's one of these firms that's if you know, you know type firm, but there's basically no information of any kind about Ribbit anywhere. You can learn if you ask lots of great founders out there, but that's kinda how the word on Ribbit has spread. It's through founders, not through normal channels. Can you just describe what it is today and what it was when it started? We'll ask about the origin story, but I know it's a hard question to answer because it's an amorphous entity. But what is Ribbit to you? How would you describe it?
00:03:37 · Micky Malka, Patrick O'Shaughnessy
[00:03:37] S2: That's the hardest question I think you're gonna ask me today until probably the next one. We are a bunch of rebels. Let's start there. And from inception, we always use Star Wars as our motive and our decks and our presentations. And we're a bunch of rebels. The way that we describe it is wherever the status quo grows bloated, wherever there's not enough innovation, wherever there's nothing new that benefits the customer, you're gonna find us there as rebels, trying to find the rebels who are gonna change the status quo. And that's who we are. And there's no bigger status quo in the last twenty years than financial services. And that's where we started. It wasn't innovating. It wasn't bringing new services to the customers. It wasn't bringing anything new to the businesses. And we were like, this cannot be. Where are the people that are going to change this? So we dedicated the first decade of our lives just to do that. [00:04:35] S0: How did it start? What was the first couple months? Who did you raise money from? How much did you raise? How did you think about it? The firm is structured in a very unique way. And I know you've been super intentional about the structure of the firm dictating what it will then do. What was the first moments like?
00:04:35 · Patrick O'Shaughnessy, Micky Malka
[00:04:35] S0: How did it start? What was the first couple months? Who did you raise money from? How much did you raise? How did you think about it? The firm is structured in a very unique way. And I know you've been super intentional about the structure of the firm dictating what it will then do. What was the first moments like? [00:04:49] S2: The first were thinking, if we're going to be rebels, what's the right structure to be a rebel? We spent like a year figuring out, hey, is a fund the right structure? Really? Is that rebel enough? That feels like cookie cutter. And having a fun is not... We struggle with the structure until we say, You know what? Let's start here and we'll figure it out where it goes in the future. And that was in 2012. And then we raised the money from a bunch of entrepreneurs that had known me because I was an entrepreneur for a long time. And they were like, yeah, this guy seems like he has an idea on what to do. Let's give him some money. It wasn't until a friend once told me, if you wanna take this serious, you gotta go really think about institutional money also. It wasn't obvious on day one. [00:05:33] S0: Question on the institutional partners. Having been through this process myself, I know that there's a wide range of types of people. What attributes did you select for? Like, what kinds of institutions can back a rebel alliance?
00:05:33 · Patrick O'Shaughnessy, Micky Malka
[00:05:33] S0: Question on the institutional partners. Having been through this process myself, I know that there's a wide range of types of people. What attributes did you select for? Like, what kinds of institutions can back a rebel alliance? [00:05:45] S2: Our first deck had more Star Wars analogies than anything. I had no investor track record. I had a bunch of records as an entrepreneur. And so if the conversation started by saying, but wait, who else is here? And what's your track record? And I will say, You know what, this is not meant for you. So they were looking at me and said, Wow, you're willing to say that? I'm like, Yes, that's who we are. We say what we think. So it took a while until we found the right people that understood and were confident that if I had hired thousands of people in my life and I had fired thousands of people in my life, we were gonna be able to build a team that we were proud of. [00:06:21] S0: Can we talk about the foundations of Ribbit and specifically the founding principles that you've talked to me about before that make all this possible? Because it seems that most investing firms, in order to raise money, define a strategy. And then many times they become enslaved to that strategy. And Ribbit's been the total opposite. The funds look so different from each other and we can walk through that history, but it seems like they're really grounded in those core founding principles. Can you describe each of them to us and how you came to them?
00:06:51 · Micky Malka
[00:06:51] S2: So in 2011, I was finishing my first startup with my co founder, which we had done in altogether around the world in financial services, we're here in Silicon Valley. And we decided that that one in particular called Lemon, it was the first wallet on the App Store. It didn't needed the two of us to be full time CEO. So we've played this role multiple times. So we agreed he will be the CEO and I'll be the chairman. So I get to fire him. Fun job to your co founder. And I spent the whole year just traveling the world and talking to everybody, all the entrepreneurs that we have met or people that we have interacted with or worked with. And one thing was clear, I didn't wanna be a VC and I didn't wanna be called an investor because until then, the whole life was entrepreneurial. I had started four companies, had lived in four different countries, all of these things. And yet I think the foundational mindset was one of saying, where is the passion driving you and where can you be the best version of yourself? So working through that, we wrote some commandments of life on how we wanted to operate. I don't wanna be boxed. As somebody who didn't grow up in America, one of the things that I've learned is that everybody here has a label. They put labels on you. You went to this school. You went to this career. You are a good student. You are good in math. And I did not grow up like that. They... We had no labels. It was as fun and social, and it was a lot more melting pot kind of Latin American vibe than it had been labels. So the first rule for me was no labels. And hence why from day one, some of the principles were, we're not a venture firm. That's why it was called Ribbit Capital, not Ribbit Ventures or whatever. I did not know if we were gonna be early stage investor or late stage investor or public investor. Actually, 2012 when we started, I think we were the only fund that in their documents allow for buying crypto. No one else could do it because they didn't have a permission to do it. We could. We could do anything. We had it structured like that. I looked around Silicon Valley and around the world to all these firms, and they behaved like firms. They were a bunch of partners working together. But were they truly working together or are they all together because combined they can do other stuff that they couldn't do by themselves?
00:09:21 · Micky Malka
Did they really love each other? Were they really engaged in a different way? So for us, it was much more about let's build a company that happens to be in the business of deploying capital. Let's behave like a startup. Let's build systems. Let's open anybody in Ribbit can read anybody else's inbox, email from day one. Everybody at Ribbit has access to the same data. When you align, and as an entrepreneur, anytime you start a company, you put a lot of your set equity and your capital equity to your startup because you fund it. So when we did that and put a lot of bunch of my capital into our first fund, we aligned incentives. The incentive structure of charging fees just to manage capital to me seemed completely broken. It didn't align long term with your partners the same way, so we changed that. We had a budget system. Anybody that joins a team, no matter when they join, they have retroactive looking because you have just one team. So no matter if you join us in 2023 or 2015, you will have exposure to all of it. So it's a bunch of rules around what to invest in, what stage, how do you wanna be known. We have no brand. People don't find... There's no... There's barely a website. You're even contact us on the website. So all of those things were by design from the beginning. They were not accidents. Some of them were, but a lot of them were by design.