Playing the Long Game with Finix's Richie Serna
Elias Torres: Hey, this is Elias Torres, cofounder and CTO of Drift. Did you know that Drift is part of the just 2% of VC backed startups led by Latin American founders? Well, I am aiming to change that. I want to highlight stories of underrepresented leaders and help change the face of corporate America. Once a month you'll hear inspiring stories from other underrepresented leaders as we work to build our own American dream. Hit the subscribe button EliasT and subscribe to get quarterly updates at drift. com/ american- dream. Let's get started. I'm Elias Torres and here I am with Richie Richie Serna CEO of Finix Payments Company. This is the American Dream Webinar. What is the American dream is the opportunity for you to attain your own version of success in the United States of America, and be able to achieve that through hard work. Not by chance. Not by the family. Not by the color of your skin. That's what we're fighting here right is to prove that this dream is alive, that as I'm in my own journey I'm trying to document that. I've learned that this is not a zero sum game. We want more underrepresented people, Latinos and blacks, to be able to hear what we're learning, what Richie and I are learning in the short part of our journey that we've been on, and share it with all of you so you guys hear about this stuff. Because that's how I made the most progress, when somebody else teaches me about what's possible and what's next. That's the whole point of this is to share and document our dream and our own version of success, and give you ideas that if Richie can do it, well we should all be able to do it because we're all amazing, all equally capable human beings that we can do that. Richie, thank you for being here. Please, do you want to tell a little bit about yourself and your COVID new hobby?
Richie Serna: Thank you for having me. I'm Richie Serna, CEO and cofounder of Finix. At Finix we build software that helps any company become a payment company. I can talk a little bit more about where we sit in the payment ecosystem in a few. In terms of my personal story though, I'm from southern California, born and raised down in Santa Ana Orange County, not the typical Orange County that probably everybody thinks about. It's not like the real OC. Santa Ana is 80% Mexican immigrants. My parents actually immigrated there both as undocumented immigrants back in the 60s and the 70s, and it still remains predominately Latino as well. I was the first to go to college. I'm very proud of that. It's mostly a testament to my family. One of the stories I always like to share is that the schools in Santa Ana are not necessarily the best in Orange County. A lot of them are actually taken over by the federal government. My parents camped to get me into better schools, literally camped out some of the best schools in the neighborhood to make sure that I could get a better education. When it came to high school my mom went to the neighboring city of Irvine which has some of the best schools in California. She literally took my test scores to every single school until somebody let me into their school, which is an incredible experience. I was the first to be able to go to college. I was lucky enough to get into Harvard. That was, I think probably the second plane ride I ever took was to go visit. I had no idea of anything. I had never been to the east coast. It was quite an experience to say the least. I studied political science mostly because, in all honestly I was discouraged by a number of people from taking computer science classes. A lot of people told me, " Hey, don't take those classes if you haven't been coding since you were 10. There's not really an opportunity for you to get into the STEM field." I ended up thinking I was going to be a lawyer, but started my career in management consulting. Did that for about two and a half years where I worked at Booz& Company in New York. I got really good at PowerPoint. I got really good at Excel models and then decided that wasn't necessarily the life for me. At the age of 25 had a quarter life crisis as I like to say and decided I was going to learn software engineering in hopes of starting a company. That was seven years ago now. Ended up moving across the company, country excuse me, to San Francisco to learn to code. That was the start of my journey.
Elias Torres: Wow. I think that you said something very important and I don't want to stereotype Latinos I think, but we have to be very careful of who we listen to right?
Richie Serna: Mm- hmm(affirmative). Oh, yeah.
Elias Torres: You learned such a hard lesson that you could have been in computer science at Harvard. I don't know. I'm making an assumption that this person knew about computer science? Did this people knew what was required and what you needed to do for them to have authority to give you that comment?
Richie Serna: Yeah. That's a great question. Actually, I don't remember the specific individual, but I think throughout our lives we have people like that who try to put us down, and try to tell us what you can do, what you're capable of. Most of my life I've never listened to those types of people. inaudible story of transferring high schools and about how my mom got me into Irvine high school. The principal of the school that I went to, Saddleback, was not necessarily as I mentioned a great institution to be at or to learn from. Before I transferred over she told me, and I'll never forget this, she said, " If you go to Irvine you'll be a little fish in a big pond. If you stay here you can be a big fish in a small pond." My response to her was, " Why can't I be a big fish in a big pond?" I think that's the mentality that you have to have where people who are supposed to be coaching you, teaching you, helping you grow are putting you down. There has to be a little bit of the grit, and in the face of those types of naysayers.
Elias Torres: Yeah. Absolutely. And I think that the naysayers... I feel like naysayers are not really successful people or people that we should really be looking up to right? We should be looking inaudible, " You're a successful entrepreneur, then I want to learn from you. I want to hear from you." Usually what I find is that the people that are ahead of me in their own version of success, they tend to give me amazing feedback, and amazing encouragement or criticism because they know something, they've been there. That's crosstalk share versus sometime people are saying these things like when people are like, " Why you should lead startups?" People at IBM when I was there for 10 years were discouraging me from going into the startup world.
Richie Serna: Really?
Elias Torres: Yeah. Everybody was like, " Don't leave. It's dangerous. You're going to fail." Like, yeah but we got to take risks, which the theme of the webinar here is that, and I've been something, honing in on what is the exact way I want to help Latinos in this country. inaudible there's so many problems, so many challenges we have in our journey inaudible that I'm just saying let's just take more risks. If all of us took more risks we would break the ceiling right?
Richie Serna: Yeah. I think what you probably experienced too going from IBM to getting in the startup world is that once you're inside and you kind of are in that room you realize that you can compete. You realize that you have those skillsets and it's just the outsiders who are telling you, " No. No. You're not worthy. You can't make it in this world." I think it was probably my second or third year at Harvard in just realizing, " Oh, shit! I can do this. I can not only just compete. I can perform at a level that other people didn't expect." When I got to the age of 25, and having been in consulting for two and a half years and realizing that that wasn't fulfilling, you start ignoring that noise that you hear from people. When I made the transition people thought I was crazy. 25, going to San Francisco to learn software engineering. But until that point being in consulting where you're staying at the W hotels, you're getting$ 100 a night steak dinners and you're like, " This is not fulfilling. This is not what I worked so hard for. This is not what I wanted my life to become." You ever seen the movie Fight Club?
Elias Torres: Mm- hmm( affirmative).
Richie Serna: You know the scene where all he does is look at all the things he can buy off of IKEA? That's what it felt like my life had turned into. Seeing that your bank account's going up and seeing that you have that sort of prestigious job wasn't fulfilling, allowed me to take that risk to go into the startup world.
Elias Torres: Yeah. I don't want to necessarily paint the picture that entrepreneurship is the only way to go. I think that people have different levels of ambitions. That's why I love the definition of the American dream that is everyone should achieve their own version of success right?
Richie Serna: Yep.
Elias Torres: For us being immigrants to be able to work at a large company, get to grow up, climb the ladder, be a vice president and have a home, and a family, and a white picket fence, whatever your definition of success is a fantastic thing. For some of us that might not give us the purpose and the motivation, and the freedom to move around and feel the impact of our work. Then the same it could be for going into non- profits and other places, helping the community. There is not one thing. I don't want to say everybody, but what I'm illustrating is that my network right now at the moment tends to be about entrepreneurs. Tell us about your company, the size of it. I know a lot of people love to talk about funding rounds crosstalk. You got some juicy stories with Sequoia and other things.
Richie Serna: We'll save that one for another webinar. Yeah.
Elias Torres: crosstalk stories, just context. What's Finix right now?
Richie Serna: Yeah. We started the company back in 2016, probably spent the first two and a half years or so really just building the product, focusing on our MBP and getting to the point that we were able to raise our Series A last June or July. Since then we've raised about$ 100 million from VCs across the industry. As you mentioned Sequoia was involved at one point. We've also raised money from Bain Capital Ventures, Home Brew Ventures, Insight, and most recently Lightspeed. We've also brought in some incredible investors from across the payments ecosystem, so Visa and Amex, excuse me, are both investors that we're incredibly proud of.
Elias Torres: Yeah. Tell us about that right, in the world of investment. You go to a VC and there's different tiers of VCs. Teach us a little bit more about that, and then also teach us about why do companies need strategic investors?
Richie Serna: Yeah. In the world of VCs as you mentioned there's different calibers of venture capitalists that you can work with. I guess the saying is not all money is green. There are different investors that can bring different types of value and there's also different investors who focus on particular stages. For example at our seed round Home Brew led our round and also had participation from Act One. I think some of the investors from Act One are probably on this webinar today led by a Latino investor as well. They're really focused on getting you from that zero to one, really thinking through how do you build a company. At the time that we raised our seed round we were only about five people. Scaling a company from five people to 15, really just getting your MVP out and starting to build the business is a very unique skillset. Then going from the Series A to where we're at today is a very different challenge where you're thinking about how do you take your company from 15 to 100 employees? How do you build actually an enduring business, and enduring culture? And how do you set yourself up to scale the operations which is an entirely different skillset as well? As we thought about how we built out our VCs and who we wanted to work with it was really thinking about each of them as a tool in a toolkit. What was each individual's investor's superpower? Could they help you think through product market fit? Could they help you think through how to hire next level of executives? Those are all things that each investor that we work with brings a little bit different perspective. The way that I like to think about how to put together the best set of investors is not only ask them where they think that they can add the most value, but I ask the portfolio companies that they work with, the founders that they've spoken to. I always ask all of our VCs to introduce us to three companies they've funded. I'll ask them for two that have been rocket ships, the people who've taken off, but also one who didn't work out that well. Because you want to know what your investors are like when the going gets tough. It's easy to be a part of a rocket ship, but there is no linear path to success in the world of startups. It is very much a rollercoaster and you want the investors who are going to get in it with you.
Elias Torres: Let me blend in a little bit I think some of the questions that people are putting in to some of the comments you made. One is that Andreas Baretto says that you could have built anything you wanted. Why tackle this problem?
Richie Serna: Why tackle the world of payments?
Elias Torres: Yeah.
Richie Serna: The true story is back when I was living in New York and I was in management consulting I had interviewed a bunch of VC firms and I had failed to get a final round offering. Through that process started working on my own startup ideas with my brother, with some of my college roommates, trying to figure out what our idea would look like. Some of the earliest ideas were, if you guys remember like Birchbox, we were trying to do something like that but for like nutritional supplements. We were working on another thing to do Airbnb but for open spaces, so any sort of retail space that wasn't taken care of. I was actually calling up restaurants and retail spots and trying to get them to use our product. Realized at that point that I needed to have a technical background to help me really take those prototypes to life. Realizing that I didn't have the technical chops and I didn't go down that technical background I started reading about people learning how to do software engineering in San Francisco. That's what inspired me to come out there. In terms of how I got into payments it was pure luck. I interviewed at one place and one place only. It was a company called Balanced which was a competitor to Stripe. Really what Balance was is basically the first payments API for marketplaces. If you think about marketplaces, crowd funders, platforms, they were the first ones to really service that segment of the market. I didn't know anything about payments, didn't think it was cool back in 2013 when I first got introduced to the company, but I hit it off with one of the founders. His name is Jereau Waday. He actually now works at Finix and he's our CRO. Jereau was just an inspiring person. He's exactly the type of person that you'd want to work for. The story behind him, he's a black guy from Tucson. All of his friends are Mexican. I'm Mexican. A lot of my friends in college were all black. We looked at each other and we're like, " You're my other half." I knew that I wanted to learn from him and he was an inspiring founder of color that I wanted to work for. I begged and pled for them to give me a job. I actually found the email that I sent to Jereau back in 2013. I said, " I know that you guys have engineers who contribute to Python, and Ruby, are world class engineers. I will work for food." For$ 3, 000 bucks a month for an entire year that was basically my degree in computer science. It was an incredible experience not only into the world of engineering, into startups, but also into payments, really getting in that early when I think I was number seven or eight in terms of the engineering team, and being able to soak up that experience, there's nothing like that.
Elias Torres: The amazing thing is the world is just so open and full of opportunities. We just need to learn how to seek them. But there's so many paths. So many people, I don't know, I don't have full stats but... Well I have some stats that it says that the most successful founders are over 40 right? There's some bias that everybody thinks that you have to be 22 years old to start a company. There's stats about age. I don't know about what are the stats for first time founders for first companies, the one that is the most successful. So much time, you know life is short but at the same time it has plenty of time for us to be successful. It's like my approach, I worked at IBM and then I worked for David as my partner and gained experience from him as opposed to me join a first time founder and being two first timers doing it. You being at that company, it just clarified to you the problem and it gave you the confidence that hey, you can do pieces of it. Now you can do the whole thing. Which is what happened to me at HubSpot. It's like, seeing that company going public gave me enough craziness, confidence, to where I could just go start my own. It's harder than I thought.
Richie Serna: There's a little bit of inertia to it in just taking that first step. For us at Finix, after we ended up exiting to Stripe in 2015 we were basically out of a job. We had a bunch of companies reach out to us saying, " Hey, we really love the technology that you built at Balance. What if you came in house and did that for us?" That was the light bulb moment first of oh, there's a unique skillset that we have that people are willing to pay for. What if we could actually turn that into a product? We didn't know how big it was going to get, but we knew that there was a sort of business there that we can look at and just start to build upon that. I think that's really what every startup, how they all begin, or for most of them. Very few people come into it and say, " Hey, this is going to be a hundred billion dollar idea. I know it from today." It's just, " Here's the business and let's get started, and let's see where it grows." We can iterate. We can pivot. It starts to snowball into something bigger.
Elias Torres: Yeah. I don't know, but in hindsight it's pretty clear knowing Strip that the payments world is pretty big.
Richie Serna: In hindsight. Hindsight's 20/20. crosstalk-
Elias Torres: Hindsight's 20/20. We talked about that though because people are asking, do you have to verify that before? But you gave me... how did you know it was going to be a big business?
Richie Serna: I'll touch on the Strip story and the world of payments, and how it got so big. When we joined at Balance back in 2013 most VCs were not putting any money into the fintech space. It was, before Stripe PayPal was the last big exit in the financial services sector. Yeah. If you think about it there's not that many proof points. Now all money is going into fintech.
Elias Torres: Everybody thinks it's so obvious right?
Richie Serna: Yeah. Go ahead?
Elias Torres: 10 years later though.
Richie Serna: Oh, yeah. 10 years later. Exactly. I remember when BrainTree, which was another payment company in our industry, they sold for$ 800 million. We were there at the time at Balance and we thought that was the craziest thing we had ever heard. Now to see where the world has progressed and how big fintech has gotten where I think it's like 15% to 20% of all VC funding is pouring into this industry, it was not the hot thing to do seven years ago. Anybody even when we raised our seed round, this was back in 2017, every single investor would just talk to be about Bitcoin. " Isn't Bitcoin going to wipe payments away? Aren't they going to destroy this?" It was just like, " Jesus."
Elias Torres: Yeah. It's like people don't realize there were all these naysayers crosstalk from getting there. It says what experiment or method did you get to your first product market fit?
Richie Serna: I think we were really lucky in that we were very early in the payment space back at Balance where we got started. We knew that we were on to something at that time. That was Finix 1.0. that was our first foray into building payments not just for merchants but for platforms. When we first got started people didn't know what payments for marketplaces looked like. They didn't know what payments for platforms was. Now it's this massive segment of the market. It was hard for us to articulate the value proposition then. Then towards our latest days at Balance I think that's when we really started to see what we had built was incredibly special. When we started Finix we already sort of knew what we were building, and we knew if we were to rebuild it again how to build an even better version of that. That's really the inception of the first few days. Finix is actually Phoenix in Spanish but instead of Fenix it's Finix. The idea here is it's the Finix back from the ashes, the better, bigger payment company that we're building the second time around.
Elias Torres: Love that. The whole play on Spanish, Fenix.
Richie Serna: Yeah. I think there's a lot of room for mentorship and advising. Not all of us have a ton of capital. It's one of the things that I talk about that's one of the most difficult things about starting a company from an underrepresented background. If you just purely look at the statistics the average Latinx or black family has maybe$20, 000 saved across their entire family. If you look at the average white family it's about$ 140,000. It's just a difference in terms of magnitude in what that family can contribute to their children being able to start a company and being able to take that risk. When people say, " Go off and start your company, and use the friends and family around and that's how you get started," most people from our backgrounds don't have that luxury. The other thing is that a big part of raising money comes down to your network. If you don't have the network with the VCs, you can break into that door, it's very difficult to do that. Most VCs probably get over 1, 000 decks sent to them every single year. They invest in maybe five to 10 investments per year? That can be something that can cut off people if they didn't go to the right schools, if they don't have the right contacts. Then it comes down to momentum. If you don't have the right momentum in the beginning because you don't have the capital to start your product it's very difficult. What you can do though, and what I have always taken a lot of pride in, is helping to mentor and advise first time founders, help to mentor people towards getting into their first job at a technology company, coaching them through that transition of their career as well. Those things are invaluable. Helping people navigate a very complex world, it's not the same sort of cookie cutter progression that you see in finance or consulting where you can come in as an analyst, and you go to the next step. Startups is the wild wild west in trying to help people get into the right companies at the right time. That's something that we can continue to help young people breaking into that industry even if they don't have the capital to do it.
Elias Torres: Absolutely, which I think we're going to take some time to talk about capital. How much money do you need to have saved to start a company?
Richie Serna: It's definitely an interesting question. I will say that I saved up a lot of my money after I left management consulting because I knew that I was going to take a massive pay cut to invest in myself, invest in this new career trajectory into learning software engineering. Probably from that point until where I ended up raising our seed round I maxed out all my credit cards, put people's payroll on those credit cards to make sure that we could make ends meet. Put my own personal credit line for paying our AWS servers and stuff like that. There is an element of risk that that's there and some of that can be scary, but I think you and I have talked about the certain point when you don't have that plan B and this is the only plan A, it pushes you to that ability where you know that you're going to make it work. That was something that for me when I didn't really have a backstop, I didn't have anywhere else to go, or any place to rely on to help me pay for the company early on in its earliest days, that was a incredible sense of motivation.
Elias Torres: You're the real deal. I don't have that story of-
Richie Serna: Don't tell my mom about it. She wouldn't be happy about it, that I did those things.
Elias Torres: AWS server bill on your credit card. It's such a common thing. I'm giving the alternative to that. I didn't have any money saved inaudible. I didn't have any money saved but I was living paycheck to paycheck when I went to the startup world. I was crazy. I left IBM. But I worked with another entrepreneur that was able to do some fundraising. I'm just giving to the audience a hint of there's ways to do it. I had probably at most three months' of extra money when I went into the startup world leaving IBM after 10 years in cash.
Richie Serna: I think one of the things that inspired me to make the move as well was that basically with a laptop you can get started on your own company. You can start building those prototypes. You don't need a ton of capital these days to get a business started. That's one of the unique things of being able to get access to some of the incubators that are out there. YCombinator which is one of the most prestigious incubators out there, takes a lot of companies who are pre- product, who have a few years of experience in a specific sector. Pitch an idea and then give them 150, or 200,000, I forget what the last amount is, to go off and start their company. I think just getting started and working on the idea, and thinking through the business model, that's enough these days to get going. There's a ton of capital that's out there and people, particularly investors are looking at places to park it.
Elias Torres: Yeah. Absolutely. I'm trying to keep on the questions here. I think like you said it's like no plan B is something that we want to share with people here. What do we mean by that is that the people that have too many options, it makes it much harder for them to make a decision to start a company right?
Richie Serna: Oh, absolutely.
Elias Torres: When all their family has gone to Harvard or MIT and they're doctors, and they're lawyers, and they grew up here, and they have a lot of privilege, there's a lot of pressure. You need to be this. Your parents were CEOs of companies in this big industry and not the startup world or medical, it puts pressure of who you are. For me I had no choice. When our first company with David fell, and David calls me and is like, " You want to start a company with me," I had no plan B. I had no job. crosstalk I'll start this. I don't know if he was going to ask me for my credit card crosstalk pay for the bills. I just said yes because I had no other option. Having no other option I think simplifies the thinking right? crosstalk.
Richie Serna: Yeah. That was something that I've seen with a lot of my friends from college who, parents who try to do their entrepreneurship and try to start their own companies, and weren't necessarily rocket ship companies, told their kids not to do it, and told them, " Hey, there's easier ways to make money," and there are probably easier ways to make money. As you said it comes down to purpose, and impact, and what's fulfilling for you. I think for me making it to college, that already surpassed my parents' wildest dreams and anything that I was going to do from that point on was just cream on top. For me being able to take that sort of risk, I always like to say the risk that I took is nothing compared to what my parents did. Coming to this country undocumented, building a new life, that's real risk. What I'm doing here is something I truly consider a luxury, and something that is incredibly exciting and fulfilling for me.
Elias Torres: I got a question here. It says, "At what point in your entrepreneur journey did you start to see momentum?" When was that shift?
Richie Serna: Probably two, three years in to be honest. Very few people have the overnight success. I think everyone thinks that it's like hey you start coding and your product sells itself. It's unicorn status right away. You raise money from all these incredible investors. That's not what it's really like, at least that wasn't my experience. The first two years was just slogging it away. In fintech in particular we always tell our customers it takes you probably two to three years of building a payment system before you can run your first transaction. Having built two payment companies that is very true, and it doesn't necessarily get any easier the second time around. In the earliest days when you don't have a ton of capital you're just heads down focused on building, building, building. You're ignoring the noise. You're in these tiny little offices with no windows. I always like to say that my first year of Finix was like the movie Castaway. You remember Tom Hanks just being on this island talking to a coconut, or not a coconut a volleyball. Wilson. Wilson. There you go. My Wilson is my dog Daphne. For a year I lived... Actually for the first five years in San Francisco I lived in a seven bedroom apartment in Chinatown. I would go from my bedroom to the living room and just work. That was just what I did every single day. It was knowing that you're building towards something, and having that bigger picture of what you want to be able to build. Now we're processing billions of dollars on our platform every single year which is incredibly exciting to see that sort of transition but you have to put the reps in at the beginning. It doesn't just happen overnight.
Elias Torres: That's incredible. You know that's just so encouraging that we got to keep reminding ourselves that we're having to live in a crowded space, in a very tight space with lots of people sharing to be able to afford the rent, to be able to see that you have the opportunity of building a company with 100 million funding, with billions of dollars... You're processing billions of dollars. That's awesome right?
Richie Serna: It's pretty cool. I do love it. It's a ton of fun especially when you think back on those earliest days. It's just baby steps. It's those little, incremental steps to get to that momentum, to get to that next fundraising round, to close that next engineer, to close that next executive, to raise that next round, to close the next customer and continue to push that ball forward.
Elias Torres: Do you think that people should move to San Francisco to start a company?
Richie Serna: You're seeing companies started all around the US, and all around the world frankly. For me, I love San Francisco. I love just the small pocket of concentration of weirdos, and VCs, and engineers, and that's what I like to geek out on. I've lived in New York. I've lived in Boston. I've lived in LA. Each one of them has their own really great cultures but for me San Francisco is definitely home now.
Elias Torres: That's fantastic right. But it shouldn't be a deterrent from starting a company.
Richie Serna: Yeah. No. I mean you can start it anywhere.
Elias Torres: I see now more investors are investing in companies remote, more meetings now. The reason why there was such a concentration, at least my understanding, I've never even lived in the Valley, is that Don Valentine for example, Sequoia, they would just invest in the companies that they could bike to. That was the privilege and the access that they had before, so you had to come closer to them. Because if they invested in those five, 10 companies they didn't want to be on a plane to go to a board meeting. But now they're having those meetings over Zoom, and so the barriers are breaking and now people are like, " Oh, I'm investing in companies wherever I can meet them now," because crosstalk.
Richie Serna: Pre COVID though it was basically concentrated around South Park in San Francisco. If you've been in that area basically every single VC moved from Sand Hill Road inaudible. You could just be in that one little pocket and you'll see every single VC in there. You go to the Blue Bottle coffee shop right there and you could probably see every single person pitching. There's something very unique to not having, as a founder, also fly from a different city into San Francisco.
Elias Torres: Yeah. But I mean we're breaking those barriers because people are investing in people that they never met in person.
Richie Serna: Zoom.
Elias Torres: This is the opportunity that we have crosstalk it's more now than ever that we can be anywhere in the US and pitch to the right people. I would see sometimes... I have roots in Tampa, and I would know friends that went to school there, and they were only pitching to people close by. They were raising so little money for so much of their company. There was never an opportunity. You've got to look at the benchmarks and not take money... Maybe this is the backing to not all dollars are green right?
Richie Serna: Yeah, exactly.
Elias Torres: You can't take$250, 000 for like 50% of your company right? It's just never going to work and so you have to be... All this information is out there and that's why we're recording this. Let's talk about the other side. One side is, I can go and work for the next 20 years to crosstalk experience in startups. Convincing people to give me money, work for... The average lifespan of a company is what, 10 years right? It's like the companies do not go public in less than 10 years. These are the fastest growing companies in the world. Then it takes 10 years to reach 100 plus million dollars in revenue. You dedicate all that time, only one in thousands makes it to that spot. Then as a founder, then you might become wealthy, upward mobility, change your lifestyle right? That's really difficult. All this hard work. What are other ways that we can increase upward mobility in what I call generational wealth? I found out why people have more access to, is because they've been building and accumulating over the years. How can we, that we just came to this country and had nothing, how can we start building that generational wealth?
Richie Serna: Well, I think part of it is the classic immigrant story. I think if I look at my parents in terms of work ethic and where I picked that up, it's 100% from my parents. My dad's a bus driver, OTCA employee of the month. He just received it a few months ago so big shout out to pops. I don't think he missed a day of work in like 20 some years. This man would wake up every single day at 4: 00 AM, drive around the clock to put food on the table, to provide, and I never heard him complain a single day. He would show up every single day to work fresh pressed, dry cleaned, bus driver's outfit. I think that is the inspiration and the sort of archetype that I always tried to model myself off of when it came to hard work and that upward mobility, and doing whatever it takes to get to that next step. In terms of starting a company is incredibly difficult, especially in the world of venture to achieve that, I think what you're getting at is investing in other companies as well, and getting that upside and that exposure without having to actually be a founder yourself. There's a lot of people who've made generational wealth by investing in companies, being the first check in Uber, in Amazon, in eBay and things like that, and that had these rippling effects for them. I think that's one of the things that historically the world of venture has been concentrated in a small pocket of individuals who, they'd name funds, get to get the pick of the litter when it comes to the best companies. One of the things that we at Finix have done to not only diversify our cap table but also diversify the opportunity and the upside for people in our community is we actually raise an additional round of capital as a part of our series B just for founders, or excuse me just for investors of color. It was largely inspired by Act One's sort of diversity rider, which is really intended to help new VCs break into the industry, and giving them the opportunity to invest in a company like Finix in hopes that rising tide raises all boats. That was something that was really important for me was to have not only a diverse company but a diverse cap table. The hope is not only do we create a few 100 millionaires out of our earliest employees, and massive returns for investors, but hopefully a few VC funds get started out of their investment in Finix.
Elias Torres: Yeah. Absolutely. This is mind boggling. This in some ways is also fairly new to me. I think what you're doing here... It was only a few years ago that I started investing in companies as an angel investor. This is an extremely, extremely important topic here. I just don't usually hear it. I think that it's like we're starting to be familiar with the notion of entrepreneurship and starting a company, and just being a founder and being successful. That's okay. That's really hard. But I think that we might not be really paying attention to all those... I know a couple, two or three people that are early investors in Uber. Go look those things up right. What did$75, 000 early check turn... I think it was like$25, 000 turned into like$ 125 million inaudible 75, 300 and blah blah, and so forth. It's just massive, and it's just for no work. No work was put into... Besides the amount of money for that check to become that. Those people did not have to do anything. But what we are not realizing that we do not have access to those networks. It is a privilege for you to know those founders that are not immigrant, that are not of color, that are building those companies with tight networks giving access to the investors. These people are riding and making that money, creating that generational wealth. What you're doing is extremely special. It's like people don't even realize that you don't need any more funding from people like me. You don't need that to run your business, but you are actually opening up part of your cap table to give access to those that we would not have access to those things. It's incredible. Please, I want people to pay attention to this, and learn, and read more about becoming an angel investor inaudible.
Richie Serna: Yeah. The incredible thing about this webinar is representation matters. I think that's one of the things that we want to share these stories so people can see other founders who look like us who are going off and starting incredible companies. Not too long ago, five, six years ago we didn't see those types of stories. We didn't hear about those stories. That is powerful. But there's a certain amount of power also to allocation of investment and attribution of investment, and being able to get your dollars into a deal that could... More than 100x, and being able to take that and invest in other founders of color as well, and create more opportunity. I think that's one of the most powerful things about something like YCombinator. All these companies come together and they invest in each other. They use each other's tools. They help bootstrap their businesses to these rocket ships. I think that's a unique opportunity for us to be able to create in our community as well.
Elias Torres: My first motto was, after HubSpot went public, it was like as an entrepreneur I said, " I want to help. If I cannot personally invest I'm going to go help make sure that you get investment for people that work for me." That was it. I wasn't really aware and understood, should I be angel investing? How do I make those decisions? Slowly I've been starting to learn more about it. One of those is Klaviyo, company in Boston here. Do you know it? Are you familiar with them?
Richie Serna: Say that again.
Elias Torres: Klaviyo. Klaviyo. I might even be messing up the name but they just raised another round. They're a$ 4.4 billion company.
Richie Serna: That's awesome.
Elias Torres: Andrew, I just went for a walk this morning with Andrew, the CEO, the founder. He used to work for me at one of my startups with David.
Richie Serna: Oh, that's incredible.
Elias Torres: It's just so incredible to see him and the success he's accomplished inaudible. I was able to help him with the investment, and I was able to do some early investment in that. By starting to see the growth of that and the potential it's encouraging me to invest more right?
Richie Serna: Yeah.
Elias Torres: That's when you reached out crosstalk for me to be able to invest in Finix it's like such an honor to get that request, but we want to encourage people here to think about it. Work. Save that money like you did. Maybe you don't have to start your own company. Maybe invest in these companies. Build a network. Come to these webinars. Get to know these people, because there's so many ways to make money. With those returns is where we can create the new funds, that we can go and invest in our community and our people. Because otherwise we're not going to have that confidence vote for us for the kind of companies we want to build.
Richie Serna: That's awesome. That's super inspiring that he did that and started his own company. People always ask like, " Where do you want to take Finix, and what's the aspiration for it?" We talk about how big we want the company to be, and taking it public, and creating a company that's iconic in the same ways that PayPal and Square are. But one of the things that excites me the most is this idea that was inspired by the PayPal Mafia. The PayPal Mafia was a group of the first 100 employees who worked at PayPal and then they went off after and started their own companies and became CTOs, and founders, and heads of VC firms, and everything in between and had massive impacts on Silicon Valley. We always talk at Finix about how we want to create the Finix Mafia and having people who came and worked early at Finix and built bigger and better companies elsewhere. That's incredibly inspiring. We actually just had our first Finix Mafia member who just got started. He was our lead front end engineer Carlos Rodriquez, just got into YCombinator a few weeks ago. That was one of the most emotional, inspiring things for me, so seeing how we can continue to help grow that community crosstalk.
Elias Torres: Absolutely. And by you being inaudible these are the trailblazers that you guys here, the audience have seen. Originally you were inaudible right?
Richie Serna: I actually was not. I was not.
Elias Torres: But we know inaudible and we know others that are.
Richie Serna: Yeah. We know a bunch. Yep. That's right.
Elias Torres: We go and we start breaking into these networks into these circles. People start getting familiar with us, and then we can reach out and bring them into it. crosstalk do your homework. If you need an introduction to Sequoia, if you need an introduction to the firms Lightspeed and other ones that you're working with. We are your bridges to that. It's hard to help everybody. It's like you got to learn how to ask, learn how to show some value because we are a little bit overworked and underpaid. We have to figure out how to help you. But breaking that engineer into YC right, we want to encourage. I want to encourage everybody at inaudible to go start their own companies as soon as the time is right and is ready. That's why it's really important to balance. You don't have to go with no skills go start a company and learn everything the hard way. It's so much better when you work at a company, like working at Finix is going to give them this experience crosstalk before and the network to then be able to start a company and be able to use you as a resource. It's such an incredible opportunity.
Richie Serna: Experience is expensive man. It is super, super expensive. If you can use people like myself or you to learn from our experiences and where we fell short, and where we made mistakes, and how we can advise others, always happy to do stuff like that.
Elias Torres: Yeah, absolutely. I think that there's Andy Jasee from AWS from Amazon says there's no compression algorithm for experience.
Richie Serna: I love that. That's gold.
Elias Torres: It's crazy. I think there's some questions. inaudible says, " For those of us who may not have the funds to contribute to a startup as an angel investor how else can we approach?" There's just so many ways to start investing now. There's like, what's it called, an angel list. There's syndicates for example where you don't have to put in$ 100, 000 but you can start with seen 5,000, 1, 000. Any other opportunities, ideas Richie for that?
Richie Serna: I think that's the main way that people break in. It's with syndicates and SPV, special purpose vehicles, getting a bunch of people together, pooling their capital and having them invest in a bunch of different opportunities. There's usually networking groups. I didn't go to business school but I know a bunch of the business schools have their own sort of angel networks and things like that where they'll talk about different opportunities to invest. A big part of it's breaking into that network as well and asking people, " Hey, how can I get involved?" I think one of the unique things about the tech world compared to the world of finance and consulting is that people want to help each other. I think the best example of that is open source technology, the idea that a bunch of people will come together in a community to build some technology that they'll give away for free for the greater good. That doesn't exist in finance. It exists in the world of Silicon Valley. I appreciate all the people who helped get me into those networks and helped me ramp up and learn. I think that's probably the best way to do it.
Elias Torres: It's incredible. If you could do it all over again at Finix or Drift what would you do differently?
Richie Serna: Oh, man. I could write a book on that yeah. There's so many things that I would do differently. Oh. I think a big part... Actually this is something I've been thinking about a lot lately is investing more in myself, investing in coaching, mentorship. You can go off an start to run your own company but that doesn't mean you actually know how to be a good manager. It doesn't mean you know how to necessarily be a good leader. Building those muscles early on is really critical. I think that's something that I've been investing a lot of, an exec coach and things like that. I wish I would have got those things earlier definitely.
Elias Torres: Prudy Holden, I just had my first coach a couple of years ago. Nothing better than to have somebody watching you at every meeting looking down, taking notes. I say something and I'm like, throw the Latino fire into a meeting and just go crazy. Notes are being written down. crosstalk-
Richie Serna: Everybody needs coaching.
Elias Torres: Yeah.
Richie Serna: Everybody needs coaching.
Elias Torres: Yeah. Name escaping me. The Checklist Manifesto? A tool.
Richie Serna: Oh. I have the book right there. I read it this weekend. It's awesome. crosstalk read that book. Yeah.
Elias Torres: Yes. You should. Amazing story. Sports. Did not have coaches until Harvard and Yale, like 75 something... Players just played against each other and they just went at it. There was no coaching. They were the first ones to get coaches and that was an amazing hit story. But nobody else uses coaches. He's a surgeon. He's one of the most successful surgeons in the United States. He was like, " Okay," he just does surgery and no helps him improve. crosstalk watch him do surgeries crosstalk him all the things he was doing wrong. Then he went and did this mortality rate, and birth rates in India and so forth. That's what's been convincing me because I kept hearing the word coaches, coaches, coaches, coaches. I'm like, " What is this? Is this some fancy therapist thing?" crosstalk against it.
Richie Serna: There are some coaches who are fancy therapists, but the good ones know how to thread the fine line in between helping you become a better manager and a better organization builder.
Elias Torres: Yeah. We say at Drift it's an important principle is always be a curious learning machine. Being humbled by a coach and interviewing your team, and saying all the things that you did wrong, and giving you the feedback right after, there's nothing more humbling. But it has changed my attitude altogether that I'm just used to telling me what I'm doing wrong like all day long. That's the life of an entrepreneur. Loved this. So many good questions. Who are some of the Latino investors, operators that you look for inspiration to model after?
Richie Serna: I think actually I saw one of them is in your... Alejandro from Act One is definitely one of them. He actually gave us our first term sheet back in the day. Immanuel Poitez who does angel investing is now an investor in Finix as well. Samara, who was one of the first Latinas to start her own VC fund I met a number of years ago and she's involved with Finix and an incredible person and investor. They're definitely out there. Oh, Remy Rayez is a close friend as well. I actually me him back at JP Morgan. We were both interns junior year, summer. He is now partner at a big shop fund as well. There's a great group, I think it's the Latinx VCs that have kind of come together. Ramon Layal from Leap Partners. It's growing. It's definitely growing.
Elias Torres: There's representation there. We started to have people that we can go and talk to and get advice crosstalk help us. Then there's everybody in this webinar here has interest in investing, has interest in starting companies, has interest in creating generational wealth. I love that you're all here, that you're hungry, that you want to learn. Really we want to encourage you to take the risk. You'll never regret trying something and failing than never have done it right? Look up Richie. Follow his example and see that his story is in some ways is special, is unique, is extraordinary, but at the beginning of his journey it looks like all of our stories. We all should have access and be like, " If he can do it, we can do it." He didn't even know how to code, and look at where you are and what an amazing empire you're building.
Richie Serna: I think the way to think about it in terms of risk, it's not that you're taking a bet on a company. It's that you're taking a bet on yourself. That's the way that I've always looked at everything. I'll invest in myself all day. I'll take a bet on myself all day. Everybody who's in this webinar has done a lot to take bets on themselves so keep doing it.
Elias Torres: Keep doing it. Invest in yourself. Yeah. Why would you invest in anybody else right? It's like, you're the most important person right now. You have to take care of that person and invest, and take risk. Then make sure that you understand that that there is people that want to help. There might be people that are going to say, " No, I'm busy," but keep trying. Keep asking, offer something. You're always going to have something of value to offer to others and so please, please don't waste that that you can provide and build for others. Try it out and you'll be amazed the relationships and the networks you can tap into and grow with them. The tide the rises all boats, right? I'm usually terrible at sayings so I think I said that one right.
Richie Serna: I think you nailed it yeah. I think that the big thing is I always tell people is just take the leap of faith. Just get started. Put one foot in front of the other. If it's that first line of code, if it's reaching out to that first potential customer, you have to start somewhere.
Elias Torres: Yeah. Absolutely. I was talking to an older gentleman this weekend that he created a device and he was selling. He's an engineer. He was struggling at selling it. I said, " Why don't you call some of those customers." He's like, " Oh. Ah. I should." I love what you said. Talking to customers, those are things that we should shine on, and be able to go out there and take the risk. Thank you so much. It's been wonderful to hear more of your story, your advice, your tips, and what you're doing with your company. You're doing so much for the community and I'm honored to have you here. Thanks for listening to The American Dream. Let me know what you thought of this episode by tweeting me at EliasT. Be sure to hit subscribe and leave a five star review. foreign language. If you're looking for more leadership insights and stories like the ones you just heard sign up for my series, The American Dream at drift. com/ american- dream. Every quarter you'll learn how Drift is progressing towards our mission of remaking the face of corporate America, and you will get insights from amazing Latin American and entrepreneurs of color, and leaders like Manny Medina of Outreach, Maria Martinez of Cisco, and many others, along with curated content, news, events, and ideas delivered straight to your inbox. foreign language and don't forget to sign up. ( silence)
Richie Serna doesn't take no for an answer.
After hearing that he shouldn't study computer science because he hadn't been studying it since he was 10, that he shouldn't go to a better high school because he wouldn't stand out, and that he didn't have the skill set to succeed in the tech world, Richie graduated from Harvard University, taught himself how to code, and started his own financial tech company in San Francisco.
Now 6 years into his work with Finix, Richie reflects on the early days and shares his experiences playing the long game as an underrepresented individual in the tech world.
Some key takeaways:
- Why Richie ditched his political science degree to teach himself computer science (3:50)
- The origins of Finix (10:00)
- Finding the inertia to start a company (17:00)
- The challenges of starting a company as an underrepresented person, and how to pay success forward (20:45)
- Playing the long game in entrepreneurship (27:30)
- Do you have to move to San Francisco to start a tech company? (29:57)
- How immigrants can create generational wealth (33:35)
- The importance of diversity at the cap table (35:00)
- Richie & Elias' biggest learnings from starting companies (45:33)