🎧The Fintech OG Series: Charles Birnbaum and Cynthia Loh

Welcome back to this week in FinTech and another episode of the FinTech OGs. This week I'm joined by two guests whose careers have helped shape. The evolution of modern wealth management. We have Charles Birnbaum partner at Bessemer Venture Partners, and Cynthia Loh, who is a senior vice president at Capital One.

Charles and Cynthia first crossed paths in the early days of Betterment. This is back when robo-advisors were just starting to redefine how everyday consumers invest and have spent, over a decade building in, investing in and advising some of the most influential FinTech companies out there. It's a great conversation and I'm excited for you to dive in!

I also want to take a moment to send out a special thanks to our sponsors this week. 100% of what we got in ads for this episode is going towards Texas Flood Relief. Those of you that know me know that I am based in Austin, Texas, and while thankfully my daughter is too young to go to a sleep away camp, it hits close to home with friends having kids that go to camps that were hit along the river.

The two guests this week, Charles and Cynthia, also both have kids, and it's just unimaginable what these parents are going through. I ask all of you to keep these families in your prayers.

With that, I'll also tell you a little bit more about our sponsors. I have a feeling you guys are very familiar with all of them but just in case you're not.

First up is Lithic, who is a modern payments infrastructure provider that enables technically ambitious teams to build better payments products. Lithic's cutting edge technologies cover issuing and processing, end-to-end fraud prevention, dispute management, and cardholder support implemented as either fully managed offerings or self-service tools.

Learn more at lithic.com.

Next up we have Rho, which is the all-in-one banking platform for startups and the accountants who support them. Thousands of startups switching to Rho because they don't have time to wait days to open an account or the patience for email support queues when they just need real help.

Rho is building a new standard for business banking. With Rho, you get fast banking setup, up to 2% cash back on cards and yield on idle cash. Everything you need all in one platform from day one. Every client gets real dedicated support from a team that goes to the end of the earth to help you win.

Head to rho.co/startups to learn more. That's rho.co/startups. Rho is a FinTech company, not a bank or an FDIC. Insured depository institution checking account and card services are provided by Webster Bank NA member FDIC. See rewards terms for complete cash back details.

Last but not least, we have Spade. It’s 2025 and fintechs can spin up cards in minutes and move money in real time. But we still can’t decipher the transactions on a bank statement. Most still show up as a jumble of letters and numbers — no clear name, no location. Just noise and guesswork. 

That’s why so many fintechs and banks are turning to Spade. Spade’s API maps messy transaction strings to verified businesses — returning real merchant names, categories, and store locations in real time. So if you want reliable transaction data across cards, ACH, and more, head to spade.com. 

Transcript

Opening

Julie Verhage-Greenberg 0:12

Hey everyone, Julie here. I want to take a moment to send out a special thanks to our sponsors this week. 100% of what we got in ads for this week will go towards Texas flood relief. Those of you that know me know that I am based in Austin, Texas. And while thankfully my daughter is too young to go to a sleepaway camp, I, for instance, have one friend whose daughter was on the wait list and could have very well been in that cabin with the eight-year-old girls that got swept away. So it really hits home. I've been holding my daughter extra tight. The two guests this week, Charles and Cynthia, both have kids. It's it's just unimaginable what these parents are going through. So I'm I'm so thankful for our sponsors this week to being able to do at least a little bit to help offer some relief and support. And I ask all of you to keep these families in your prayers and in your thoughts. It's just heartbreaking. With that, I will also tell you a little bit more about our sponsors. I have a feeling you guys are very familiar with these three, but just in case you're not, first up is Lithic, who is a modern payments infrastructure provider that enables technically ambitious teams to build better payments products. They provide a hundred-plus clients with secure infrastructure for consumer and commercial card programs across debit, prepaid charge, and revolving credit. Their product philosophy is grounded in developer-first primitives while minimizing the operational complexity of launching and scaling programs, and they believe payment infrastructure should be modular and flexible. Lithic's cutting-edge technologies cover issuing and processing, end-to-end fraud prevention, dispute management, and cardholder support, implemented as either fully managed offerings or self-service tools. Lithic's clients value flexibility, speed to market, and reliable scalability as they are building the future of agentic commerce, cross-border money movement, and modern credit products, to name a few. If that sounds like you, learn more at lithic.com. Next up, we have Roe, which is the all-in-one banking platform for startups and the accountants who support them. So why are thousands of startups switching to Roe? Because they don't have time to wait days to open an account or the patience for email support queues when they just need real help. Roe is building a new standard for business banking. With Roe, you get fast banking setup, up to 2% cash back on cards, and yield on idle cash, everything you need all in one platform from day one. And unlike most platforms, Roe doesn't leave you buried in help center articles or stuck in ticket cues. Every client gets real dedicated support from a team that goes to the end of the earth to help you win. And once you hit hypergrowth, Row OS takes over. Built on Roe's banking cards and treasury foundation, Row OS helps you scale your finance stack with fewer tools, fewer hires, and less friction. Idle Cash earns yield automatically and moves back into checking when it's time to spend. Receipts get matched and coded instantly, and Row OS puts accounting on autopilot by learning your transaction coding patterns. So stop accepting compromises and start embracing a new standard for business banking with Row today. Head to row.co slash startups to learn more. That's rho.co slash startups. Row is a fintech company, not a bank or an FDIC, insured depository institution. Checking account and card services are provided by Webster Bank and A member FDIC. See rewards terms for complete cashback details. This week I'm joined by two guests whose careers have helped shape the evolution of modern wealth management. We have Charles Birnbaum, a partner at Bessemer Venture Partners, and Cynthia Loh , who is managing vice president at Capital One. Charles and Cynthia first cross paths in the early days of betterment. This is back when RoboAdvisors were just starting to redefine how everyday consumers invest and have spent over a decade building in, investing in, and advising some of the most influential fintech companies out there. So in this conversation, we explore how FinTech has evolved from a niche product into the fabric of our daily financial lives, whether that be wealth management or embedded banking or even the new wave of AI-powered experiences, we also dive into what's still broken. Spoiler, it involves checks and waiting to get paid, what has progressed faster than they expected, and why there's never been a more exciting time to build in FinTech. So whether you're curious about financial services infrastructure and how that's changing, or you're looking for advice on where to start your own fintech journey, this episode is full of insights from two people who truly have seen it all. So and subscribe on Apple, Spotify, or wherever you listen to podcasts and let's dive in. Do you guys know each other just because of Betterment? Or are there like any other connections? Have you worked on any deals together or anything?

Charles Birnbaum 5:44

That's how we met, I believe. We've kept in touch because Cynthia's been in in super relevant roles to all things fintech and wealth management ever since. So and I live in this world constantly. So we're just often in touch. But I think that's how we met. Yeah.

Julie Verhage-Greenberg 6:01

That's right. What year would that have been? Take me back. Since Cynthia, I forget what year you ended up leaving Betterment, but you were obviously one of the OG employees over there. Yeah.

Cynthia Loh 6:13

When I started at Betterment, there were, I want to say 80 employees total. I think it was 2015.

Charles Birnbaum 6:22

I got involved in the business in 2013 when we were.

Cynthia Loh 6:25

You just funded recently. That's right. Yeah.

Charles Birnbaum 6:28

Yeah. We were involved even earlier than that. That's just when I, that's just when I joined Bessemer and got super involved at Betterment. But yeah, it's been quite a journey.

Julie Verhage-Greenberg 6:35

Well, I want to come back to that in a second, but something else that I want to do first, just in case anyone is listening to Ace and is not super familiar with each of you. I'd love you each to do just like a quick 60-second intro on how you got into fintech and what your role is right now. So we'll do alphabetical, we'll do Charles first and then Cynthia.

Career Paths Into Fintech

Charles Birnbaum 6:55

So I actually kind of stumbled into FinTech a little over 12 years ago. So still feel like I'm just getting started because financial services, which is what I call it, not fintech, is not one thing. It's many different things, right? Wealth management, payments, insurance, the mortgage value chain, banking, digital currencies, and crypto. Like these are independent industries in and of themselves within financial services. And I'd say technology has impacted each of them differently and continues to. I started my career on Wall Street, like more traditional background, did domestic bank a little bit, but then quickly switched over to capital markets and was on trading desks and on equity and convertible debt issuance. So loved the tech companies that I was covering and didn't love the transactional nature of that. So ended up joining the startup world myself. I was an early employee at Foursquare, where I was for a few years. And then coming out of business school, I stayed there. And I got recruited to Best Firm. My mentor here had been doing FinTech for a really long time, before it was trendy, before it was cool, Rob Stavis, who invested in the series A of Betterment when I think he was probably a third of their AUM personally. And they were just getting started and nobody else had been in the category. So I took the job to work for him, and he had been doing financial services innovation investing for the prior couple decades. So I just shut up and learned. And between Betterment and Gerson Lerman Group and Kroll Bond ratings and Zopa and some of the United Capital, some of the businesses he was already in, I just started to soak it all in. And I was like, wow, there's a lot to do here. And then FinTech blew up while I've been doing it. So just more right place, right time than anything else.

Cynthia Loh 8:32

I've got some similarities to Charles, but also some differences. When I was an undergraduate, I actually majored in cognitive science with a focus on artificial intelligence. And it was the first year that Cal was offering this as a major. They combined computer science and neuroscience and linguistics and psychology. And so I have always really been interested in how you can leverage tech to drive greater efficiencies. I also ended up in investment banking, but not necessarily because that is the path I wanted. But it was actually when I interviewed, it was the only other cognitive science major that I think I'd come across. And so I ended up going into tech investment banking and spending the next decade in traditional finance. So I was in investment banking and then I went to Pimco and did asset management. I think that in that decade I'd felt a little bit more of a pull to do something more entrepreneurial and operational. And I remember reading Reid Hoffman's The Startup of You. And it totally changed how I was thinking about managing my career and managing great career more like a startup, like ensuring I was pivoting to the right skill set that meets market demand, pursuing opportunities with high growth potential, developing competitive advantage and this all mentality. And I loved that. And because I had subject matter expertise in traditional financial services, going to a startup on FinTech made sense. And so when Charles and I met, it's when we kind of overlapped at Betterment. I went on eventually to work at Goldman, where we had purchased United Capital, which Charles mentioned as well. So a few crossovers there. And I think for why I stayed, I really like hard problems. This is a tough industry. It's highly regulated, and it tends to be a little bit slower than the consumer space. But I think over time I've also become a bit more mission-driven. And all the problems that I'm trying to tackle are either kind of democratizing investing and financial planning with lower asset thresholds. Or right now, what I do at Capital One is help provide better tools and services to small business. And both of these segments of the market have really traditionally been overlooked. So I think in a nutshell, there's just a lot of hard problems to solve and customer experiences to improve. And with the increased pace of innovation and AI and all of that, it's just really exhilarating to see what will come of the next decade.

Julie Verhage-Greenberg 10:47

Yeah, I'm very excited that I'd have done the order of season three as I have so far, because in the last episode, I had Sheel from Better Tomorrow Ventures and Amis from Excel, and they talked about how I brought up the aspect of consumer fintech because it's been very much people haven't wanted to invest in it the last few years. And something Sheel pointed out is a lot of places like Robinhood, Chime, Betterment, et cetera, they grabbed a lot of the low-hanging fruit in consumer. There definitely is still things that need to be done, and consumers will demand better financial services experiences. But I would love your guys' perspective on it, both from the betterment side of things, since you guys, that's your tie there. But also whether you studied AI or are looking into it a lot now, I feel like AI might be something that ends up changing the desire to invest in consumer fintech companies moving forward too.

Consumer Fintech Then And Now

Charles Birnbaum 11:41

I'll start on the first part of it. Like I think 10 to 15 years ago, there was low-hanging fruit, but most folks started with a really specific wedge. Like did they didn't go too broad. And I think that even includes Robin Hood and Betterment and SoFi and some of the biggest names today, right? SoFi was like really laser focused on the arbitrage of like misunderstood and misunderwritten student debt for folks that were like really well employed and just paying silly interest rates that in a moment in time with low private interest rates, they were able to capture that arbitrage and then expand from there and become a bank. And that's what they are today. Robinhood really started with simplifying and gamifying trading in a way that was magical. It wasn't a full wealth management solution, like the incredible product it is today. And Betterman really started with this really simple offering of there's nowhere to go when somebody asks you what to do with your money that makes sense for most people. Because most people don't need a financial advisor when they first start to have these issues, but they shouldn't be paying high fees. There was just a very specific wedge that they started with. I'd say they probably have rebundled much less aggressively than those other two. And we could go through all the other examples, right? Chime and all of their peers and all the other different angles in the market. But most folks like picked a specific wedge and then grew from there and then rebundled and became super apps, like what Revolut and others have become. And I think that opportunity is still there for everyone else. And now there's dozens and dozens of APIs and third parties that you can easily work with to rebundle really quickly if you figure out a wedge. So I actually think it might be one of the most exciting times to start consumer fintech companies. It's a little contrarian at the moment. But I think when there's real specific pain points for a specific demographic or a specific industry where like solopreneurs, like all the types of things we've seen entrepreneurs try and attack, it's actually a really powerful time because that these incumbents now, which are which are the startup incumbents, have a lot to do. So I think you can hit them at an Achilles heel just like what Instagram did to Facebook. That's how I think about it.

Julie Verhage-Greenberg 13:56

You mentioned SoFi and student lending takes up like 25% or less of their revenue at this point, even though that's where they started and that was their wedge. Yeah.

Cynthia Loh 14:04

I think I think what you said, Julie, about Shines and the Rabbit Hoods being the dominant players of the last couple of years is totally true. And where Charles went with all of the kind of bundling that you're seeing now, like in the small business space, right? The ramp and Rexes of the world using the entire ecosystem to serve all the needs. I think the thing about AI that I'm most excited about on the kind of consumer finance base is twofold. One is hyperpersonalization. So even if you think about Robo with Betterment, at that point in time, 10 years ago when they started, you had a hundred different portfolios to choose from, whether it was 99% equities and 1% fixed income or the opposite. And now you're going to be able to totally customize that to the types of companies with the values that you want, the geographic areas. Like you should be able to customize it to specifically what you want. And I think that's really interesting. And the other part of it that I really like of customer service. You know, I think no one really broadly solved the problem of, hey, if I go into your chat and then I call and I also sent you an email and then I call again, like all of those conversations are not unified. And that's super frustrating as a customer. And now you're seeing the ability for AI to transcribe all of these conversations, link everything. So you really have a total picture. And so the kind of broader theme is, gosh, I want the whole picture. If I'm going to see my advantage of the life, I want the investing side and the budgeting side. If I'm going to work with a company, I want them to know everything I've ever ever from every single vendor and every customer interaction we've had and when what like ads they've sent me. And you should be able to get that in the next few years as we start to leverage this more and more.

Charles Birnbaum 15:44

The one place, truly, that I think we've seen the most on productivity over the last six to 12 months with all this generative AI like fuel in builders' hands is like attacking the mid-concept. And everybody's been trying the PFM stuff for for years. And obviously there have been some good outcomes and some really interesting products built there. Copilot money is a great product. I use it personally, even though we're not investors. And there have been some really interesting stuff built. But I think that's like this whole concept of self-driving money and autonomous money that takes care of things for you. And the things that are are boring could become really attractive to consumers when you're basically, especially in a market where normalized interest rates are here again. I hate to say high interest rates. These are normal interest rates. If you go back to your macro, my macro beacon textbook from I'm not going to say how old I am, but when I was studying at undergrad, like these are normal rates. This was the risk-free rate in the textbook. And I think there's a lot more you can do with kind of autonomous like management of your money, where you should it shouldn't be sitting idle in the what large bulge bracket firms give us in our checking and savings accounts and how painful it is to generate that. I think there's some really interesting stuff happening with automated solutions. And I think there's a wedge there that entrepreneurs are attacking is pretty interesting.

AI’s Role: Personalization And Service

Julie Verhage-Greenberg 16:59

And for our next sponsor, we have Spade. It's 2025. FinTechs can spin up cards and minutes and move money in real time, but we still can't decipher the transactions on a bank statement. Most still show up as a jumble of letters and numbers, no clear name, no location, just noise and guesswork. That's why so many fintechs and banks are turning to today's sponsor, Spade. Spade's API maps messy transaction strings to verified businesses, returning real merchant names, categories, and store locations in real time. So instead of a cryptic code like SQ Star Coffee Shop, you get Blue Bottle Coffee on Market Street in San Francisco. Leading financial institutions use Spade to power better rewards, cleaner insights, and smarter authorized decisions. So if you want reliable transaction data across cards, ACH, and more, head to spade.com. That's spade.com. Yeah, question I have for you, going back again to previous episodes of this, in the very first one, David Marcus pointed out that a lot of what's been built in FinTech has essentially just been lipstick on a pig so far, where it's been building things that still run on old architecture, but just build on top of it and try to make it look better, et cetera. How do you think that's gonna play out over the future as we use more AI and stuff? Because something I think about with the self-driving money is that if I look at my Amex account or my Chase account or my city account, the way an Uber transaction might be labeled, depending up if it's an Uber ride or Uber Eats, et cetera, it can be like five different things, right? So it's not plain and simple. It's gonna be the exact same thing every time. So it's easy to just know that's what it is. It gets qualified as this expense, et cetera. And I use something called Monarch, which is similar to what a co-pilot is. And it's the same thing. There's sometimes on them like, wait, why did you categorize it this? And you have to go back through and write the rule to say it's not gonna be something else. And while I'll do that, majority of consumers aren't gonna want to take the time to have to go through and relabel that. So, how do you think AI and the things we're doing now can help? I don't know, make it so it's not just slipstick on a pig and you're getting a new pig instead.

Lipstick On A Pig: Data Quality Realities

Cynthia Loh 19:10

I get take it, Sabbath. That's I the thing that I think about, especially having worked at bigger sort of financial institutions the last kind of decade or so, is it's the cost of building, right? That's so egregious. If you've been on a mainframe and trying to transfer years and years of systems and millions of customer data and all of that, I think at the core of what you're talking about is data and being able to abstract data and making it integrate seamlessly. Like I use Monarch 2, I'm a big fan. The thing that's so hard is like time and like type, and you'll spend something on your credit card that's $80, and then with the tip, it's $100, and it shows up as $80, and then the next day. So all the back and forth of transactions, it's so hard to find source of truth. And so I think the first big thing in order to even leverage AI, you have to make your data clean and usable and from many hundreds of different sources at many of these large institutions and figure out how to really get to that source of truth. And so to me, that's the first wave of fixing the pig, which is can we get clean data that we can trust 100% at the time, even if it's not like what I would consider tier one data where it's coming from your bank account or your credit card company, where it's coming from maybe accounting software and it it self-inputted or that type of thing. Like, how do you think about those data layers and the accuracy and present it to the consumer so it's not frustrating?

Charles Birnbaum 20:29

There's been, and Juliet, that's been a problem in the industry for the last several years. And there's been a bunch of companies that have just attacked that problem specifically, right? Pave, spade, plaid tries themselves, and they have a lot of folks internally that are working on that data cleansing. You have companies like Nova Credit that use it for cash flow underwriting and Prism data. Like there's an entire industry of cleansing the data aggregation layer to make the data usable to folks like Monarch and Copilot and everyone else, and those are the customers. I think that those are really interesting companies. I don't want to be negative about them, but I think there's a moment where AI, I'm sure those companies are using LLMs or investors in anthropic. Like I would imagine they're using Anthropics models and OpenAI models and Gemini models to do this stuff more effectively and with fewer human interactions, like what Monarch is asking you to do. And that's where this is all heading. It's gonna be it's gonna be fixed, but it takes good input to create good output. But I think that'll probably be a solved problem over the next few years. And that'll be really exciting. I think you'll see new consumer applications built when the integrity of the data shoots up. So I think this is actually some of the stuff I've been thinking a lot about. Is like we're seeing so we've seen so much infrastructure get built over the last 10 years. And I think I'm more excited about the entrepreneurs that are building problems. We just announced our portfolio company, Milio, is being acquired by Zero. And that's a business that's been solving like really hard pain points for small businesses for a long time and doing all of this. Stop themselves. I think if that company started today, they'd get out the gates even more quickly because they had to do a lot of this data cleansing and transaction analysis to make their risk models work and the fraud stuff. It's just going to be a really exciting time for builders. You're not going to need as much capital to get going.

Cynthia Loh 22:16

So we Capital Ones partnered with Milio and our small business solution as well. And I think the really interesting thing about Emilio is even though it was so far ahead on the data piece as well, it also met customers where they were. So if a customer said, yes, I want to do a digital payment, but I also want to send a paper check, it offered that. And you don't see necessarily a lot of TED companies that move across the spectrum and can serve the one that wants to do this totally in an automated fashion, but also then check. But anyways, that was a great acquisition in that kiddos to you, Charles. Sounds like an exciting day in the portfolio too.

Charles Birnbaum 22:50

Kudos to the team. They do it all.

Julie Verhage-Greenberg 22:53

Going off of this front, too, what are some areas like clearly you guys are both excited about the future of consumer fintech? But you know, what areas in particular, whether it be on that front or on the B2B side, are you most excited about right now? Yeah.

Infrastructure, Clean Data, And Builder Momentum

Charles Birnbaum 23:10

From an investment perspective, like maybe before Cynthia talks about the strategic stuff from the lens of the incumbent, I think look, stable coins are really interesting. And I know it's become more of a meme. And obviously you see the retail investor reaction to Circle, some of the recent legislation. But this has been in the works for a few years now. And I said this before, like in other forums, but like the DeFi casino spit out this useful thing. And by by needing to peg uh cryptocurrencies to stable currencies and fiat currencies, like they create this technology is really powerful for a lot of B2B transactions, a lot of cross-border innovation. And I think we're just starting to see nascent signs of certain elements of the global B2B payments infrastructure be impacted by it. But it's impossible not to be excited by what we're seeing there. And that's why I think you're seeing so much capital flowing into space, so many entrepreneurs spending time there. Because if you think about, I mentioned I've only been doing this for a little over 12 years. I feel like I'm still just I've been focused on payments for 12 years, and I feel like I'm just getting started because the payments ecosystem is really complex. And I think if stablecoins deliver on their promise, they could have just as rich an ecosystem around them that is just being built from scratch right now. So that's it's pretty exciting. And I can't say we have it all figured out, but we're studying it pretty closely.

Cynthia Loh 24:38

Yeah, I think there's so much talk about stablecoin and the venture community. I feel like inside the walls of the incumbents, maybe a little bit less. I think the thing that maybe a couple things that come to mind, the first is just the like non-financial players that are able to play in the financial services space, I think is gonna continue to grow and grow. Like FinTech and Hope will just become a thing where you used to have an internet group and you really don't have that anymore because everyone's leveraging payments. Like you look at a healthcare company or even a restaurant company and you're like, oh wow, the revenue attribution is payments, right? So I think from an international payment perspective, stablecoin is gonna be really interesting for B2B. But I also think like all of these sort of banking of the platform plays are gonna continue to get embedded and it's gonna be more part of everyone's everyday life. The other thing that I've been playing around with is just like AI and advice. I've played with it from like a therapeutic perspective, but also financial advice. I think it's really interesting to start to have like advice layers from AI and how that impacts financial advisor community, how it works in tandem with them or not. But I think like this whole idea of hyper-personalization and having exactly what you want, whether it's necessarily good for the investor or not, is another question. It will be available, is my hypothesis, right? And I think that's gonna be just like really interesting to see how that manifests.

Julie Verhage-Greenberg 25:59

Yeah, it's interesting. I have a whoop and you can go in and your advisor will give you your daily rundown and stuff. If you could do like even a weekly or monthly rundown in Monarch or co-pilot, I think that would be something that's super interesting.

Cynthia Loh 26:13

Peer reviews, like probabilities. You can start to run all of that data on your own without having like really sophisticated planning tools.

Julie Verhage-Greenberg 26:20

Like we're buying a new house and I have to have a down payment by X day. Okay, like where can I skim back? What do I need to think about saving every single week, et cetera? Totally. Going on more of a personal level here, both of you are very accomplished and have done a lot in this space, but that doesn't come without various highs and lows. I'd love to like asking that question what's a certain high and low that kind of stands out to you? Charles, you obviously have a good one today with Emilio, but I'm sure there are others along the way as well. And then with the lows in particular, what have been some ways to overcome them to get where you are?

What’s Exciting Now: Stablecoins And Embedded Finance

Charles Birnbaum 26:55

Oh man, well, yeah, the lows come often in the startup world because nothing is easy. And I think my biggest lesson from the last 12 years is if it's all going too well, that's when I get skeptical. I think I love companies that go through really hard walks through the desert, especially in FinTech. If you're not building something that's hard, it's not real because this stuff's messy and you got to deal with so many different elements to get there. And I think to me, the moat that the outcome, obviously, we're really we're celebrating today and celebrating the team and their seven and a half year journey of building that company, but it's the milestones along the way that are most enjoyable. When you close a massive partnership, when you launch a product that you've been working so hard on and starts to resonate with users, like when I walk in uh the offices of these companies that we invest, we invested in that company when it was three guys in a pitch deck and they didn't even have a name yet. Alloy invested in the Series A when they were 18 people in Chinatown and next to a dialysis center, and walking in that office and thinking about all the banks that are powered by that system. That's what really motivates me. The lows are just so frequent in the startup world that I that I'm numb to them at this point. I try and just keep the team focused on the big picture and why they're doing it as best I can, almost as therapists.

AI Advice Layers And Investor Behavior

Cynthia Loh 28:11

I think I'll hit on just because the channel said a good front seat to the time embeddement, building out the 401k was so much fun. John Stein, who was the founder and CEO at the time, recruited me to build out this B2B initiative, but it was a totally white face. Like we didn't even know we were gonna go into the 401k business. And so we pretty quickly put a business plan together to build a 401k record keeping system from scratch. Now that I know what that would take, I would have never proposed that back then, but I didn't. And I was pretty new to the 401k space. I hadn't been working in it. And so um I literally had to go to the New York Public Library and pick out PDFs of ERISA books because none of them had been digitized. Turns out they weren't super popular and they were all written in the 80s when the ERISA legislation had come about. And John was really excited about the idea, but not totally convinced and basically fed me that if we could sign 10 businesses in six weeks, he would fund the build for the next few months to get it out the door. So I brought my head of sales over from ZachDoc, my previous employer, and the two of us pounded the pavement and we got to 50 companies in six weeks. We didn't have a contract, we didn't have a product, but we just had a presentation on a PowerPoint deck. But over the next three months, we built a 401k record keeper. We transitioned our own 401k from our current provider to Betterment itself. And then over the next six months, we signed up another 300 customers. We like beat out Fidelity on some of these and other incumbents, and we ended up signing deals with Uber to serve all the drivers with IRA options as well as ADP, the biggest payroll provider. And that was just, it felt like a huge win. It was a ton of fun. We got great press. The New York Times, I remember called and said, We're running a piece tomorrow on this, and we didn't have a website. So I was literally like typing a website, pushing publish before the piece got put to print. And we ended up winning an award from wealth management on the best 401k customer experience. But at the end of the day, it was all about like small businesses don't didn't have access to affordable 401k options that were user-friendly for the like very tech-oriented app to use. And that was what we were doing. We were enabling that to happen. So, mistake-wise, also have a lot of mistakes. Maybe I instead of calling out specific examples, I'll talk about specific themes. The first is something I've been thinking about, which is just like the analogy I'll use is surfing versus rot climbing. I think you find the waves when you're surfing, you ride the waves, and it's still hard, but you have this momentum behind you. Whereas rot climbing, you see these companies that are just gonna climb this mountain no matter what. And so I think, especially when you're looking at the thin neck world where you invest, where you pick a job, you've got to really make sure that internally everyone's aligned. This is the direction of travel, and externally, there is that client need. If those two things are not in sync, it just makes it really um, and that's when you don't see as much success. The second, I think, is really being mindful of the regulatory environment. A lot of the things that I worked on in the last 10 years, we built ahead of regulation. There was just no regulation that existed about robo advice about some of the areas that we were going into, and it came after the fact. And so penalties come after the fact as well. And so I think I had to learn pretty early on that partnering with your regulators and trying to become friends with them is like the way to go to make sure they understand what you're doing and you understand their viewpoint and how this will eventually evolve. Um, and the last thing I'll say is you hear this all the time, but it's so true. It really is about the people and who you are working with, able to influence, able to partner with that talent that's like scrappy and hungry and will run at the wall at all costs. That's the type of people that tend to do really well in these environments where it's so hard it seems impossible, and then you find a way through.

Julie Verhage-Greenberg 32:02

So, what advice do both of you have for someone that's coming out of whether be an undergrad or an MBA and wants to join fintech? Are there certain areas you'd encourage them to go into or just things you'd encourage them to think about when joining a different place? I'd love some insights there since both of you were still fairly young when you got into this field.

Highs, Lows, And Hard Lessons

Charles Birnbaum 32:21

I think it it's gotten so expansive at this point that I think you need to think about your own skill sets, your strengths, and and what type of place you want to be. Do you want to be at a place that's going to work on a hard thing for a while and eventually get there to the rock climbing analogy that Cynthia made, which is, I think, where a lot of the value gets created. In fintech, it's hard, it takes time, it takes patience, but then the value is just so real, it's durable. It's there's equity in what you've done, right? And I have a lot of examples of that in our portfolio, but it takes time. So that's not for everybody. Or do you want to take more of a swing on riding a wave and something that's already working and finding a way to get on the train and and then and finding a way to add value and just getting a lot from that experience? I think first you want to decide that. And then I think just coming back to my earlier point, like financial services is a lot of different things. So I think you you have to focus a little bit. Like, are you passionate about wealth management? Are you passionate about insurance? Are you passionate about just the way people bank day to day? I think you want to think about the kind of companies you find interesting and shrink the world a little bit and get focused. That's even what I do as an investor. It's like it's too hard to just boil the ocean and react to pitches all day. I have to spend time with incumbents in these markets and develop a point of view if I'm going to have conviction anywhere.

Julie Verhage-Greenberg 33:40

Yeah, and I'm even thinking about what stage of a company you'd want to join to. It's very different working for a seed stage versus a series D stage company. Cindy, what about you?

Cynthia Loh 33:49

And the biggest thing that comes to mind is starting with the customer problem, right? Like I think the tech is so interesting right now and can have such complex and native solutions, but you have to really make sure it's solving that pain point at the end of the day and not about necessarily like maximizing revenue or spend. It has to be about what is this pain point and how big of a pain point for the customer it is. I think the second thing is not being afraid of partnering with the compensation. Like distribution is a real moat, and you can get so much leverage when you have 30 million customers to open the gates to. It's really hard. It takes a long time, but it can accelerate impact in such a way that you couldn't get by picking off clients one by one.

Julie Verhage-Greenberg 34:31

All right. We have time for probably one more question. It's my favorite question that I do here too. Especially when people have been in FinTech for 10 years or more, thinking back to when you first started, what's something that you thought would have been accomplished by today, but hasn't been? And then the reverse, something that we do already have now that you would have thought would have taken longer for us to get.

Charles Birnbaum 34:52

I got the first one. The thing that's there's companies that are have put band-aids on this solution, really effective band-aids, but I think it's insane that people still have to wait to get paid with all the data we have, with all of the payroll systems and time in attendance. There's great companies like Daily Pay and Even, which was acquired and Claire, a lot of companies that are working on this problem, but it's insane to me that people still wait to get paid. And that's a problem that 12 years ago I was already thinking about and met all those companies and studied the space. And I can't believe people still wait to get paid every two weeks. Yeah.

Cynthia Loh 35:27

My similar kind of annoyance in the world is checks. I cannot believe checks still exist. Small businesses, the latest that I thought even just last year is that 75% of SBs are still issuing and receiving paper checks. Like it is insane to me that people still ask me to bring checks or I receive checks. Like it drives me crazy. It's higher like fraud risk. It takes weeks and weeks. You get flats in the mail, you never cash the check. There's so many issues with it. And I just that needs to go away.

Julie Verhage-Greenberg 35:59

Totally, I agree. I remember there was one year we paid our taxes via check. And then two years later, we got a bill saying, Oh my god, like you never paid, and now you owe this much plus interest and everything. I was like, no way. And I had to go back and find a photo of the check and everything to prove it. It was awful, awful. So I'm right there with you. And then so thinking of the reverse, now, what's something we have today that you didn't think we'd have already?

Cynthia Loh 36:23

I'll go. I think on the consumer side, I do think that we've made a lot of progress on transforming financial success to the broad population. You're seeing a lot more people just get invested in the market, whether that's in a self-directed or robo or other capacity. And I think that we've done great work in lowering the minimums, giving access to like real human advisors in a way that we didn't have 10 or 15 years ago.

Charles Birnbaum 36:47

Yeah, it's it's this is a tough one. I think what like what has surprised me most.

Julie Verhage-Greenberg 36:51

Um one example that people have said is Apple Pay.

Advice For New Fintech Careers

Charles Birnbaum 36:55

Yeah, the adoption of contactless payments is a great one because it was taking so long, and then all of a sudden it happened during COVID. That's a good example. It's funny. Yeah, I don't I wish I had a good answer because I think when you do this day in and day out, and you meet these companies, like nothing happens overnight. People are talking about the explosion of stable coins right now, and it's these are not overnight things. And the way LLMs have exploded, not overnight. Like it happens slowly. And when you're in the venture capital and you meet hundreds and hundreds of companies a year, you see the hard work that it takes and that there's explosive growth that happens, but usually there's years of work that comes into it. So I just I'm never shocked in in a way that I would have expected to be 12 years ago coming into venture capital.

Julie Verhage-Greenberg 37:42

Yeah. Yeah, and Apple Pays. Normally people use payments as the reverse example. Like they would have thought so many things in payments would be more advanced by now, but it's that one thing. Apple Pay is the only, oh no, that went fast, people don't have to carry wallets with them anymore. So yeah, it's funny how that all works. I guess I'll close it out, and this would be one more positive note here. If we were to come back and record this podcast in five years, what do you think would be the big thing that we'd be talking about, the biggest change that would have happened, whether it be consumer side, business side, et cetera?

Charles Birnbaum 38:13

I think in it's something we're observing. I think a lot of the industries that we spend time in are going to be transformed that didn't ever go to the cloud. Like the professional services elements of financial services where the human really the relationship matters when you're in your community and trust does matter, but there's so much waste and paperwork, and there's a lot of noise in AI, but there's some real powerful stuff you can do to do more with less in in these, and I think it's gonna be additive in a lot of the things that financial services firms outsource. So I think there's gonna be some massive companies get built that don't replace SaaS companies, but do stuff that SaaS couldn't do. And we're starting to see signs of that. And I think it's gonna be really cool.

Cynthia Loh 38:58

Yeah, I think I agree. Along the same lines, I just think the like the funding models even now are getting confused. What is a B round? What is a C round when you can do with $2 million what you needed $50 million to do a few years ago? And so I think that and the makeup of the workforce at every level is gonna look at the all very different on the type of org structure that you need and the people around you.

Julie Verhage-Greenberg 39:24

Amazing. Well, thank you so much, you guys.

Charles Birnbaum 39:26

This was super fun.

Julie Verhage-Greenberg 39:27

It's really fun, right? I love this format where it's me and two people that know each other. So it makes it fun.

Charles Birnbaum 39:34

Now I see why he did Coast Pay.

Julie Verhage-Greenberg 39:36

They've done a lot of deals together. Well, thank you so much, you guys. I appreciate it.