Balancing Growth, Innovation, and Profitability
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My guest today is Stuart Sopp, CEO and Co-Founder at Current, one of the largest New York fintech platforms offering financial services to US consumers.
Launched in 2015, Current serves almost five million customers and is backed by Andreessen Horowitz, Tiger Global, TQ Ventures, Avenir, Sapphire Ventures, Foundation Capital, Wellington Management, QED, and many more.
We recorded this conversation live in the heart of NYC at Barclays Rise, as part of a series of events during New York Tech Week.
“I'm 46 and I was 38 when I started Current. And I'd hit that midlife crisis when most people buy cars like Ferraris, whatever. And I decided to do a startup.”
Stuart Sopp had a successful 16-year career trading at major banks like Morgan Stanley, Citi, and Deutsche, living in various countries, but felt it was more about making rich people richer. But in 2011 at Morgan Stanley, a young intern handed him a white paper in its early stages, which he initially dismissed. This was the now famous Bitcoin white paper, Bitcoin: A Peer-to-Peer Electronic Cash System, and after reading it, he had an epiphany about the transformative potential of programmable money and its ability to democratize finance globally, leading him towards the intersection of trading and consumer finance. You might wonder, who was the intern who handed him that paper? That was none other than Trevor Marshall, now CTO of Current
Stuart initially tried integrating Bitcoin and crypto trading into Morgan Stanley's operations, but it was too early for the mainstream financial world to understand or accept it. Around 2013-2014, he left Morgan Stanley with the goal of diving into decentralized banking and crypto. But despite initially exploring Bitcoin as the foundation for their banking system, the team realized its limitations in terms of volatility and public understanding, making it unsuitable for building payments on, leading to a pivot away from a Bitcoin-centric infrastructure.
The VC community was more attracted to the idea of disrupting the traditional banking sector, given the high profits banks were making and their low NPS scores. As a result, the team decided to build their own comprehensive tech stack from scratch, even though they initially lacked many capabilities. Starting with limited capabilities led them to target the teen market, as it matched their initial tech's capabilities and mirrored their end goal of serving those living paycheck to paycheck. As their technology evolved over time, their brand and target market have also undergone various iterations.
“What it means to be the era of value is going back to what it used to be, which is you need a solid business from the ground up. Forget infinite money tree, right? Proof points are about making money.”
Reflecting on their journey, Sopp believes that perhaps they could have balanced growth and tech development better. While they pride themselves on having top-notch FinTech technology, he recognizes that business success fundamentally boils down to cash flow and profitability. In the initial phase of Current, decision-making was spontaneous, often based on what seemed interesting or cool, highlighting the agile nature of startups where quick decisions are often the norm. As the company grew, the decision-making process evolved, shifting between top-down and bottom-up strategies. Current emphasizes the importance of data-driven decisions. While they value customer feedback and conduct extensive research, they recognize the difference between what customers think they want and their actual needs, highlighting the importance of utilizing both qualitative and quantitative data in strategy formulation.
“For 10 years, we were in the zero interest rate policy era, right? And that was an amazing time. You look back and you're like, ‘man, wish you had those years back’, didn't know how good it was. They're not coming back, I think. That era is just not gonna come back.”
The past decade was dominated by a zero interest rate policy, encouraging growth over profitability in fintech. This era, which favored growth due to penalization for holding onto money, is unlikely to return. The shift towards "the era of value for fintech" means that fintech companies now need to focus on building fundamentally solid businesses from the start, prioritizing profitability and sustainable growth over rapid expansion funded by venture capital.
“What I spotted then in 2018, was that distribution is everything, at the end of the day. And so the CPMs in influencer space were extremely cheap. They're not now, actually, not anymore. They're not extremely cheap. They can be cheap. They're just not as cheap as they were.”
In 2018, Current sponsored Mr. Beast, one of the biggest YouTubers globally, resulting in an exclusive brand deal for several years. This partnership gave Current significant exposure, as they were featured in numerous videos on YouTube, making them a recognized financial brand among influencers and their audiences worldwide. They’ve also worked with numerous social media influencers and learned that while big influencers or celebrities might have vast reach, their level of engagement with their audience might not be as high. On the other hand, micro-influencers often have a stronger connection and trust with their followers, resulting in higher engagement levels. Influencer strategies should be thoughtfully crafted, considering the engagement factor as a vital component.
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