Invest Like the Best with Patrick O'Shaughnessy
00:48:54 · Patrick O'Shaughnessy, Micky Malka
[00:48:54] S0: One of the great joys of this business for me is picking sides, deciding that you're gonna throw your conviction behind somebody who's going after something. What does conviction feel like to you? Like, if you had to describe the feeling of conviction when you get it and have it, how would you describe it? [00:49:12] S2: As a team here, we have the conviction. We just don't listen to anybody else. We just don't listen. And people will say, no. But this and that, I'm like, yeah. Thank you. Conviction is one of the most important traits, I think, for any human. If you don't have conviction, you end up diversifying. And diversifying is like a conviction. It's not an investment philosophy. It's just like a conviction. So most people that are successful in life and find joy in life is because they found a handful of things in their lives that makes them very happy. You don't need 50, you don't need diversification. You don't think of that. You don't have more kids to diversify. You have more kids because you have conviction that you can be a good parent. All of those examples are just the ways we sort of think about it. [00:50:02] S0: I think heart pairs incredibly well with conviction. You're one of the biggest hearted people that I've met in this business. What is the role that heart plays in Ribbit's story?
00:50:02 · Patrick O'Shaughnessy, Micky Malka
[00:50:02] S0: I think heart pairs incredibly well with conviction. You're one of the biggest hearted people that I've met in this business. What is the role that heart plays in Ribbit's story? [00:50:13] S2: It's core and center. It's central. It's the central system of everything. First and foremost, we're all humans, and we all have flaws, and we all have attributes. If you're not willing to embrace those, both of them, then you're in the wrong business. We have had a share of founders that have found themselves in controversies that have not been fun for them or their families. And we end up going out, reaching out to them, calling them, meeting them in person, and then even backing them for the next venture when that occurs in their lives and being there from early days. Why? Because we had conviction. We got to know them. We saw them. We did our work. And no matter what you read out there, no matter what people say, if you really understand them as humans and they recognize that there was a mistake made, and we're all humans. We all make mistakes. I wouldn't be here if a lot of people allow me to make mistakes and keep believing. But there's times in society when that's not allowed, but we should not forget that that's hard. [00:51:19] S0: Where do your personal dreams come from? What are the source materials, the ingredients?
00:51:19 · Patrick O'Shaughnessy, Micky Malka
[00:51:19] S0: Where do your personal dreams come from? What are the source materials, the ingredients? [00:51:25] S2: This concept of making money better. And that has driven me since I was five or six years old, and it will probably drive me until my last day in this planet, which this concept of every time money becomes better, people live better lives. Doesn't mean more money. It means better money. It means it's easier to access, it's easier to save, it's easier to get a loan, it's easier to do aspects with it that you couldn't do before so you can build your vision and your life. So the metrics that I care the most at Ribbit, it's more the number of people that we touch every year in trying to make their lives better because that will probably drive the output of what investors want, which is returns and impact and all of those measures. But right now, we touch 900,000,000 people every year with financial services that we make their life better. I would like that number to be couple billion.
00:52:23 · Patrick O'Shaughnessy
[00:52:23] S0: Maybe it's a great excuse to talk about an investment that you made, a very big one, that was very creative and very different, which was a partnership with Walmart. Maybe tell us the story, but use it as an example of how you and your team at Ribbit work. Where did it come from? What was the process that happened behind the scenes for you to get excited about it and shape it, the things that you cared about as investors. I want a couple excuses like this to ask you about the process. Like, once you find something, what then happens? But this one was so unique and different, and I know you've done one or two others like it, but maybe can you tell us the story of the joint venture that you did with Walmart?
00:53:00 · Micky Malka
[00:53:00] S2: This goes to that point we were discussing about during the COVID era. You had FinTech or financial services blowing up around the world, growing up to the right, everything was becoming digital. People were stuck in their homes, they were using more and more financial products, but also the cost to acquire customers, the way to get the attention of them, the way to build a brand that they trusted was becoming more and more difficult. So we sat on a whiteboard right before COVID and saying, who could be a great partner to build a financial services company with a brand that people already trust, that we could go and do something completely different, but digital from inception. And Walmart was one of the top two brands that we had on the list. So I had through Sarah Fryer, I had a chance to meet Doug McMillon, the CEO of Walmart, and he had left me an offer that, Hey, if you're ever in Bentonville, drop me a line. I don't know why would I go to Bentonville except to see him. I texted him in January and say, Hey, I'm gonna go to Bentonville. Can I stop by? So we went to see him. Before that, we had walked the Walmart stores. We have transacted every single financial product that you can imagine from the money center to the prepaid cards, to the remittances. We had tried everything. And we had all of the user flows and all of the things, and we had found two bugs in their systems. So when we show up in their office, I sit down in the room with Doug and I say, Hey, listen, before we start, wanna tell you that we tried a new product. And we found two bugs and here they are. And I show it to them. And he literally gets out of the room, leaves me alone in his conference room and comes back five minutes later with a $20 bill. And he says, here, 20. He says, what is this? This is a bug bounty we pay at Walmart. And he gives me $20 And what I learned from that experience was they are playing an infinite game. They're here to serve hundreds of millions of customers, and they really, really care about making their lives better.
00:55:02 · Micky Malka
And we sat down and we sort of structured with Doug and John Furner, the CEO of The US, this idea of building a new company from scratch with the right team led by Omar and David that we convinced to join from inception from the beginning to go build a company that was gonna serve their hundreds of millions of customers with digital financial products and shut down all of the services that they had been built since 1990, that had never accrued more than 1% of their sales. And so we did that, it's a company called OneApp. It's on their second or third year of existence. It's actually quite big inside the Walmart stores. If you wanna pay inside Walmart with your phone, the only way to do it is through One, the OneApp. And the beauty of working with them, we got to understand what it was to work with a big company from inception. What are their datasets? What are their concerns on privacy? What are their concerns about regulatory? How to build these kinds of ideas? And it's very unique in the sense that you have the trust of their millions of users from inception to go build something. So that was what we were doing during COVID versus trying to do a lot of other investments later stage and pay higher multiples. We were building from scratch something that right now we're starting to see the joy of it.