Episode #355: Sheel Mohnot, Better Tomorrow Ventures “We Think That We’re In The Very Early Innings of Fintech”
Guest: Sheel Mohnot is a co-founder of Better Tomorrow Ventures, a $75m fund that leads pre-seed and seed rounds in fintech companies globally. Sheel is also on the investment committee for the Catalyst Fund, an initiative to support entrepreneurs building financial solutions for the underserved in India, Kenya, Mexico, Nigeria, and South Africa.
Date Recorded: 9/9/2021 | Run-Time: 1:02:03
Summary: In today’s episode, we’re talking with one of the most prolific fintech investors around. We talk about why he’s so bullish on the fintech space and why he focuses so much on the founders at the seed stage. Then our guest shares what it was like to raise a fund during COVID with former podcast guest Jake Gibson. He walks through some of the investments he’s made to date and what piqued his interest in each.
As listeners know, I’m excited about the future of Africa, so be sure to stick around to hear why our guest is also bullish on the region.
Sponsor: Today’s episode is brought to you by Vinovest. Vinovest makes it easy to invest in fine wine. Vinovest’s investment platform lets you buy and sell wines that have increased in value like Screaming Eagle and Chateau Lafite. Vinovest provides access, storage, and insurance. All you have to do is sit back, relax, and enjoy a glass of wine. In fact, fine wine has typically had a low correlation to traditional asset classes. You can get started in just minutes online. Go to vinovest.co to create an account and invest in fine wine today.
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Links from the Episode:
- 0:40 – Sponsor: Vinovest
- 1:30 – Intro
- 2:22 – Welcome to our guest, Sheel Mohnot
- 3:44 – Episode #214: Jake Gibson, Better Tomorrow Ventures
- 3:58 – Sheel’s background and what led him to angel investing
- 7:21 – Sheel’s experimentation in the auction space
- 18:16 – Angels investing alongside Sheel
- 19:49 – His fintech investment thesis and deploying a lead fund
- 22:40 – Some of the names currently in his portfolio
- 29:19 – Making a feature film with his friends
- 32:40 – Global investing themes he seeks out as he travels around the world
- 36:15 – How investors can participate in Sheel’s investments
- 38:01 – The differences between countries when exploring emerging markets
- 41:39 – Thoughts on themes and opportunities in Latin America
- 48:05 – How much capital floats around these days and how it impacts valuations
- 49:42 – Why are seed stage fintech funds so rare?
- 50:28 – Episode #249: Ben Savage, Clocktower Technology Ventures
- 50:53 – Advice for investors looking to step into the angel and seed stage space
- 52:06 – What a good board member looks like to Sheel
- 54:08 – His most memorable investment
- 57:11 – Memories from his $2 a day travel adventure
- 58:24 – Learn more about Sheel; Twitter @pitdesi; sheel.wtf
Transcript of Episode 355:
Welcome Message: Welcome to “The Meb Faber Show,” where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.
Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.
Sponsor Message: Today’s show is brought to you by Vinovest. Vinovest makes it easy to invest in fine wine. Their platform lets you buy and sell wines that have increasing value, like Screaming Eagle and Château Lafite. Vinovest provides access, storage, and insurance, so all you got to do is sit back, relax, and enjoy a nice glass of fine wine. In fact, fine wine has typically had a low correlation to traditional asset classes, and that’s one of the reasons I recently added a case of 2018 Ceretto Barbaresco Asili to my own growing portfolio. We recently had the founder of the company, Anthony Zhang, on the podcast for episode number 349. Make sure you check out that great conversation and then get started in just minutes online. Go to vinovest.co to create an account. That’s vinovest.co. Check out vinovest.co again to invest in fine wine today. And now, back to the show.
Meb: What up, everybody? Another bomber show today. Our guest is the founder of Better Tomorrow Ventures, a fintech-focused VC fund focused on pre-seed and seed companies around the world. In today’s show, we’re talking with one of the most prolific fintech investors around. We chat about why it’s so bullish on the fintech space and why it focuses so much on the founders at the seed stage. Then our guest shares what it’s like to raise a fund during COVID, with former podcast alum and NerdWallet founder Jake Gibson. He walks through some of the investments he’s made to date and what’s piqued his interest in each. As listeners know, I’m excited about the future of Africa. So be sure to stick around to hear why our guest is also so bullish on the continent. We also talk about the importance of leg day when posting half-naked photos to Twitter. Please enjoy this episode with Better Tomorrow Ventures’ Sheel Mohnot.
Sheel, welcome to the show.
Sheel: Meb, happy to be here, man. Thanks for inviting me.
Meb: I’ve known you virtually for a while, but you’re the first person I’ve ever come across that’s ever described themselves as a pronoid. For the listeners, is that like a riff on the 1980’s Domino…was it Domino’s Pizza, Noid?
Sheel: Oh, God. That’s funny. I hadn’t thought about that guy in a long time.
Meb: What does this mean? Explain to us.
Sheel: Pronoid. So pronoid is the opposite of paranoid. So paranoid person thinks everybody’s out to get them, and a pronoid person, which is me, thinks the universe is conspiring in our favor. Like, things just seem to work out. I keep falling into good luck, and somehow the universe is just making this happen for me. So that’s pronoia. I’m a sufferer, fortunately.
Meb: You know, I’m going to adopt that too. The problem with that word is it has such a similar sound to paranoia. So it still sounds like a negative. You were like, “Dude, you got pronoia.”
Sheel: You got pronoia.
Meb: And you’d be like, “No.” My mom used to…when we were kids, she would go up to all the kids and she’d be like, “Oh, my God, you have garments on you.” And the kids will be like, “Where?” And they’d, like, start freaking out because they didn’t know what the garments meant. They thought it’s, like, some sort of bug or something. I’ll take that with pronoia. All right. So you’re one of my favorite angel investors, and we’ll get into all things angel investing. We had your better half, Jake Gibson, on the podcast. Listeners, we’ll put that in the show note links, a really fun chat.
Sheel: Yeah. Listen to him, don’t listen to me. He knows what he’s talking about.
Meb: You’ve had a fun background, and it was a couple of stops that I would like to just hear you talk about a little bit before we get into all things angel investing and what the world looks like here in the summer, fall of 2021. Give us a quick tour. And then I’ll interrupt to hear you unpack a couple of these stops you’ve made over the last few years.
Sheel: Yeah. So a life tour, is that what we’re looking for?
Sheel: Grew up in Pittsburgh, Pennsylvania, we were just talking about it. And had a great childhood, went to college there at Carnegie Mellon University, loved it, made software for hospitals, left, became a management consultant, left, and then this is sort of, like, where my fintech career starts. I decided after watching a movie that I wanted to give back to India, this, like, motherland that, you know, I’ve never actually lived in.
Meb: “Love Actually,” what was the movie?
Sheel: The movie was called “Rang De Basanti.” It’s an Indian movie. And I was inspired by watching this movie, said, “You know what, I’m going to move to India and do something for India.” So I found this organization called Indicorps. They helped me build this project, which was working in microfinance. And there’s a website called kiva.org that lets you, anybody in the world, make a microloan to an individual in the developing world. And you can do it with 25 bucks using your credit card. And I thought this is really cool. We can help farmers in Ghana, and herders in India, and all sorts of other stuff build their businesses, all using the internet. And so I fell in love with this idea, came out here to San Francisco first, then moved to India to set up operations in India, because the number one thing people are searching for on the website was India. And I had a crazy experience. I decided to live like a burrower. So I was living on sub-two bucks a day for the year, and there’s a lot that went along with that. I got sick. I had all sorts of issues, mostly positive, some negative.
And after doing that, there’s a professor I really wanted to work with at the University of Michigan. His name is C.K. Prahalad. He wrote the book “Fortune at the Bottom of the Pyramid.” Just a brilliant guy. So went there, got to work with him, wrote some case studies with him. And he told me three things. He said, “Do three things in your life. I want you to work on hard problems, want you to work in emerging markets, and I want you to write about it.” And I was, like, “All right, you’re the man. I’m going to do this stuff.” And then I decided not to do anything right after I graduated. I was deciding whether to go into tech or consulting. I had split my summer at Amazon and BCG and then just had a ball at BCG. So I went back to BCG. In hindsight, if I had stayed at Amazon, that stock would have been worth a shitload of money. So whatever, c’est la vie. I’ve had a good life. Went to BCG, left because a buddy of mine from BCG was starting a company, asked me to join him. We did that. It was a payments company called FeeFighters. We got acquired by Groupon beginning of 2012, basically, at Groupon’s peak price, $20 billion. And then stayed there for a little bit, ended up starting another company afterwards, in the auction space. That company did very well actually, got acquired in 2015.
Meb: I’ve heard you mention that’s an interesting story. So what’s the story behind this auction company?
Sheel: All right. First of all, it’s like a five-minute story, just so you know, just so you’re prepared.
Meb: That’s fine. Let’s go.
Sheel: All right. So let’s say you wanted a top-level domain. Let’s say, just because I’m on Zoom right now, let’s say you wanted .zoom. So if you own .zoom, you’d own meb.zoom, you know, sheel.zoom, everything.zoom, and you could sell that on GoDaddy or whatever. Actually, let’s say it wasn’t .zoom. What would you want, Meb, if you wanted to make the most money?
Meb: So this is a funny topic listeners have probably heard me talk about. I own a lot of domains that are fairly terrible. My favorite of which would be a great fintech startup for you, so you can have it, I promise, called oneclickdivorce.com. I’ve sold one. I sold a domain once for almost $20,000, so I’m probably still at net negative, because I have like 100. But, yeah, I don’t know. Denverbroncos.com if it wasn’t taken.
Sheel: Well, then, so we’re talking about the top level, which is, like, the .com, or .org, or .net.
Meb: Okay, .meb.
Sheel: .meb, okay. So let’s say you wanted .meb. You had to apply to ICANN in 2012. ICANN is the governing body of the Internet, Internet Corporation for Assigned Names and Numbers, used to be part of the Department of Commerce, .com, and then split out as an independent intergovernmental body 25 years ago. So if you applied for .meb, you need to pay $185,000 to apply, and then if you are the only one that applied, you would have gotten it. And then you pay your annual fee, and you have .meb. But let’s say you weren’t the only one that applied. Let’s say me, you, and Jake, all separately applied for .meb. Remember, the application was just due one day. And you don’t know who else was applying. So if we all applied for .meb, then ICANN said, “You guys figure it out amongst yourselves.” If you can’t figure it out at some later date, ICANN will hold an auction, and they’ll get all the money.
So me and my buddy went to these guys, and these guys aren’t jokers like Sheel and Jake. These guys are Google, Amazon, Cayman Island billionaire who made all of his money in domains. There’s, like, a public company that all they do is domains, all they do is just top-level domain stuff. There’s a company that raised $180 million of venture capital money just to do this. So these are guys that have a lot of money. So we go to these guys and say, “How are you going to settle this?” He said, “We’re going to get him to renegotiate.” I say, “Do you think you’ve got better negotiating chops than whoever Google is going to throw at this thing?” They’re like, “Yeah. I don’t know. Whatever.” We say, “What if we can create a transparent, fair, and efficient way for you to do this?” And they’re like, “All right. We got our ears perked.” So we did, and it was an auction that we ran.
In our auction, I’m going to make up some numbers here. Meb, let’s say you’re willing to pay 5 million for .meb. I’m cheap. I’m only willing to pay 1 million. And Jake is willing to pay 6 million. So in our auction, it’s a three-party auction. The bidding starts at $600,000. Every 20 minutes, it increments up another $600,000, and in the second increment, I’m out. At 1 million, I’m out, because the bidding went to 1.2. Then it goes up to 5 million, and then you’re out. And then Jake wins it, and he pays 5 million. He pays the second price. And then that money gets split evenly between the two of us. So we each get 2.5 million bucks. So he’s paying us off via the auction, and that was sort of, like, the brilliance of this auction. It did really well. It works for all parties because the big guys who want to win the auction end up paying less because, as a small guy, I’m incentivized to bid lower because I’m going to get a payout if I lose. And so it, actually, like, is a win-win for everybody and was an awesome business. We charged 4%. So in this $5-million auction, we would have made 200k.
Meb: And so what happened? You sold the business? You’d sunset? What’s the end game for that?
Sheel: There were only a total possibility of like 190 names that were in contention, and we did 155 auctions, and we basically owned the market. The other contentions either got settled in some other way or went to the ICANN auction. But it was a fantastic business. We sold it, so to speak, but really we took the profits and called it a day.
Meb: Does that auction style…did you ever think, “Man, this could apply to some other industries?”
Sheel: Yeah, we think about it all the time.
Meb: Residential housing is such an odd process on sort of the buying and selling homes. I was wondering why that’s not an auction style, particularly in this type of market where there’s 15, 30 bidders, seems much more advantageous for the seller.
Sheel: In a seller’s market, it absolutely should be an auction process, and the reason it’s not is the realtors in this country have a monopoly and don’t want anybody to mess with their monopoly. But in a seller’s market, particularly like what we have on the coast where, in San Francisco, you list a place, it’s going to sell on the next month, and they underprice it and expect an auction mechanic, but it’s not a transparent auction mechanic. So that sucks. Like, I was trying to buy a home six years ago when I bought the place that I’m in right now, and I found out that the home sold for something like 20,000 more than I had bid. And, like, I was actually willing to pay probably 100,000 more than that. And if they had run an auction, they would have gotten $100,000 more from me.
So it’s stupid, and there are other really interesting use cases for this auction. One of which is in Mexico, the government gave out oil drilling rights in these rectangles. So, like, you have a rectangle here, I have a rectangle next to you. We’re both drilling into the same oil. So guess what, it’s just a competition to see who can get at it first. That’s stupid. So what they should have done is have only the one of us drilling into that same oil, and the way you’d sort that out is just auction where the loser gets paid.
Meb: That’s interesting. So you took the profits of that business, and then what, just piña coladas on the beach? What was next?
Sheel: I am an occasional piña-coladas-on-the-beach kind of guy. And actually, it’s funny, Jake’s favorite bar is Margaritaville. So we do a lot.
Meb: So it’s not by choice, but I’m sure I’ll enjoy it. Tonight, I’m in Colorado, listeners. I’m going to Red Rocks with my brother. And he’s taking all of his kids, which are mostly in the single-digit ages, but he’s like, “Meb, you want to go to see Jimmy Buffett?” And I was like, “Sure, that sounds fun.” He’s like, “We’re going to take all the kids.” I’m like, “They don’t know who he is. But whatever.” So I’ll report back how it goes, but at least it’s Red Rocks, and I’m sure it’ll be fun, but.
Sheel: Yeah, that’s funny. Yeah, Jake goes to Jimmy Buffett concerts too. It’s a funny side note on Jake.
Meb: Well, oddly, I’d stay for a conference at the Margaritaville Hotel in Florida, and it’s surprisingly nice. They redid it in a certain way. I was kind of shocked. I thought it was going to be full sort of Daytona Beach, Panama City, but it was actually a really nice hotel.
Sheel: Apparently, the Margaritaville Resort in Times Square is incredible. It’s, like, a really nice property, people say. It’s just hard to imagine, for me, but…
Meb: Pretty soon, this podcast can be sponsored by the Parrot Heads. All right, let’s keep going. All right. So no piña coladas. What did you get into?
Sheel: So I love the idea of investing. As a founder, pitching investors, I was like, “I want to be that guy.” That guy is the one dictating the future, got the money, and I thought it just ought to be really fun. You get to work on many businesses at once, and a bunch of things that resonate with me. So I started doing some angel investing after our exit in 2012, loved it. And I think the part that I loved most was helping founders at the earliest stages. I’ve been through this shit, and I can help you through that shit with my thought process. And I love jumping on a whiteboard, cruising through ideas. So I thought, “Let me do this more.” And 500 Startups is one of my first investors. And so I was talking to them, and they said, “Hey, why don’t you come on board? Be a mentor and see where it leads.” So I came on board. Originally, I signed on for a few months to help with an accelerator batch. Felt that I loved it, decided, “All right, if I’m going to continue doing this, I’m going to invest my own money into it.”
So took some of that money from the auction, put it into early-stage fintech startups, and then started this fund called 500 Fintech. 500 Fintech, originally, I wanted to start a fund, but who the hell would give me money? You know, I had no reputation, no nothing in the industry. So to bootstrap the fund, I basically put all of my own money into it, and I called it a fund, but really it was my own money. And it went really well, amazingly. We have a bunch of bangers in that fund. It’s a small fund, 15 million bucks. Eventually, I had other investors in the fund. It wasn’t just my money. And Jake was one of those investors. So Jake had started NerdWallet, and so I always looked up to NerdWallet significantly. And when I met him, I was like, “Hey, you got to come, mentor my companies.” He did. He had a good time. And then he ended up investing in the fund with a sizable check and also becoming my EIR, entrepreneur in residence. And that’s when we started working together, and that was in 2016. Here we are five years later, now we’re equal partners in this fund, and it’s been a great run.
In 2019, Jake and I were both trying to figure out what’s next. We had interviewed with a bunch of, call it, tier 1 funds, had success, had offers at some other funds, and then we were just kind of feeling like none of these places feel like home. We had spent time in those Monday GP meetings, and we were like, “This doesn’t feel like the future for us.” We were both talking about it. And then we were like, “Hey, let’s just do something together. It might be smaller, maybe it’ll have to be with our own money to start with, but it’ll be our own thing.” And so we decided to start, towards the end, Q4 of 2019, started the fund, and it’s been great. It’s been a wild ride, because we were raising the fund mostly during the pandemic, and at some point, we were like, “I guess we’re just going to have a small fund.” And then that was in April of 2020. And then, in May of 2020, like, everyone came back, and then, all of a sudden, our fund was immediately oversubscribed. We were hoping to raise 60 million, but you set a hard cap, 25% above that, we actually ended up setting a hard cap at 75 and went to our hard cap. And in hindsight, we could have raised a lot more if we wanted to, but I feel great about our fund size, the fund 1.
Meb: Listeners, Sheel may get the title of hall of fame of the dozen or two dozen probably syndicates in investments. Listeners, know, they’ve been following along over the years since 2016 or 2015, I think I started angel investing, and I looked up, while you were chatting, had done one angel investment with you per year, and those were Albert, Chipper Cash, and Smile Identity, which all three of those have been phenomenally successful. We’ve had Ham and then Mark, I’ve actually known Mark for a long time, on the show, and they’re both great. So we’ll have to round it out with Albert, eventually, but all three of those have been really great.
Sheel: Yeah. I think nobody knew it at the time how, starting in 2016, when you started investing in my syndicate, I think people hadn’t predicted the massive rise of fintech and tech, in general. But I think if you had invested in all of those 500 Fintech syndicates, I think it was like 100% IRR, last time I checked.
Meb: How many investments did you do in those before starting the new fund?
Sheel: We did close to 80 investments in that fund.
Sheel: Yeah. And the majority of them at very low valuations, so call it sub-5 million.
Meb: It’s weird to think about in sort of today’s…I mean, I’m looking at all three of these were all sub-10, 886. I think those are post-monies, too. And then, sort of, a lot of the announcements of fundings in 2021 of some of these seed valuations that have gone, I saw one the other day, it was like 80 million or one was like 120-seat. Well, they called it seat. I don’t even know what that means. But let’s talk about your thesis, Better Tomorrow Ventures. What are you guys looking for? How far are you guys in the process of fund 1 deployment? Let’s talk about the framework real quick, and then we can talk about some companies, and themes, and all that good stuff.
Sheel: Yeah, sure. So we are a lead fund. So almost, let’s call it 80% of the time, we are the lead investor in a company, and we are leading pre-seed and seed-stage fintech companies. Now, to your point, Meb, some of these “seed-stage companies” that are raising at $100-million valuation, that’s not our sweet spot. Our sweet spot is what I’d call traditional seed, which, these definitions, who the hell knows. But we’re in the sub-20, usually sub-$15-million valuation, sort of, like, where our entry point is. And then I think our average ticket has been 1-point-something, less than 1.5 million, in that ballpark, has been our average first ticket. And usually, we’re investing pre-revenue. We’re really investing in people more than anything else. Is this a talented person that’s going to execute on this idea incredibly well? Have they done some customer development? That’s sort of, like, what we want. And all we do is fintech. Jake and myself have started fintech companies in the past.
We think that we’re in the very early innings of fintech.
Now, what’s funny is, when we started raising Q4 of 2019, there were people that told us fintech was over, and it is so comical to think about that today. They said there haven’t been any great exits in fintech, which is true. Actually, only two years ago, there were not many great exits. And now, subsequently, there have just been exit after exit. And we truly are in the early innings. A lot of the infrastructure to build fintech stuff just is not there yet, has not been there. And those building blocks just make it so much easier, that there’s going to be a lot more activity. And that’s really exciting for us.
Our name is Better Tomorrow Ventures. We do invest for better future, and we think financial technology is a phenomenal way to improve people’s lives. And so, on that note, we’re based in the Bay Area, but there’s incredible talent all over the world. There are unmet needs all over the world. So we don’t constrain ourselves geographically. Most of our investments have been in the United States, but we’ve also invested in Nigeria, Pakistan, Brazil, Mexico, and India, and Indonesia, actually, Indonesia. So we’ve invested in a bunch of places that are, call it, big markets. So each of those countries has a greater than 100 million population and growing smartphone penetration. And that’s sort of like what we look for. Smartphone penetration is a proxy for middle-class growth, and that’s what we look for. And we’ve had a lot of luck investing internationally. As you know, as an investor with us in Chipper Cash.
Meb: Walk us through maybe a couple of names. I know you were just coming up your itinerary and stops in a lot of different places. You mentioned being on the board of a number of companies. But maybe just, like, as a source of thesis of a couple of names, and we can kind of go tangential off that, but any names in the current portfolio, etc.
Sheel: Before we got on the podcast, we were talking about travel, and I was saying I’m heading to Salt Lake City, New York, Pittsburgh, and Mexico City in the next week and a half. So Meb was saying, “What are you doing there?” And I said, “I have board meetings in New York and Mexico.” So let’s just talk about those companies, because they’re top of mind, because I’m going to see them.
So in New York, two companies, one is called Unit. It’s a banking-as-a-service company. So if you want to build banking into your product, Unit makes it really easy. In the past, you had to go and get a bunch of different services. You had to have a bank partner, an issuer, a credit, a KYC provider, and all these things, you know, required a head of compliance on your side and probably a team of at least eight people to build this thing. And it would probably take you a couple of years. An example is, remember Simple, the bank, started about a decade ago. It took them, I think, $12 million and 2 years to get their first card issued. Now, with Unit, two people working on their own can get a card issued in six weeks, can build a whole app, have a card issued in six weeks.
So if you think about what that means, that’s a game-changer for new fintech products, because think about how easy it is to get set up. You might test a bunch of things. You might have a not fintech company that becomes a fintech company because it’s so dang easy to do it. So an example would be you’re building a mind-body online, you know, Yoga Studio software. You’re the product that the Yoga Studio owner is sitting in all day long. They are using it for marketing, scheduling, payments. Well, they also could be using it for their bank, and you could give them a debit card. It’s sort of all integrated into the same software they’re using for everything else. And as software and finances merge, we think there’s a huge opportunity for companies like Unit. So I have that board meeting on Monday.
Meb: If Oprah was like, “Hey, I want to launch a credit card,” is that something they facilitate?
Meb: It seems really interesting for a lot of, if you think about it, brands and personalities where it’s almost like the rewards, right?
Sheel: Yeah. So I think that there will be a lot of banks and “debit cards” built on top of brands, and we do have some phenomenal names building on Unit already, like names you’ve heard of that are building a card exactly like what you’re talking about. It’s not Oprah, but.
Meb: I’m always surprised, some of these membership cards, listeners are used to my total tangent conversation that’s very dislocated. I’ve always been surprised that a lot of these big corporations, whether it’s Apple, or IBM, or something, where you couldn’t just have a card with a huge premium. So let’s now talk about, like, the $500 Chase Sapphire, but I don’t know, $10,000, but it would give you a higher level of status across, like, American Southwest, but just pay for it. I’m surprised that’s never existed. Maybe it does in some format. But the FoundersCard was the closest I’ve seen. It gives you some of those benefits, but it seems like an opportunity, anyway. Unit, listeners, if you want to do a credit card, that sounds like a fun one.
Sheel: The other one in New York I have on Tuesday is Coast. It’s a fleet payment card. So there are a couple of public companies in this space, WEX and Fleetcor. They are terrible companies. In fact, Fleetcor was just sued by the FTC last week for deceiving and misleading their customers. And by the way, the FTC sued Fleetcor two years ago for the same thing and settled. So this company is just a terrible company. So what these companies do is if you run a fleet of trucks or cars, this is a credit card specifically built for fleets. So our company, Coast, is building a modern version of this. Fleetcor is built on 30-plus-year-old technology. They’re not accepted everywhere. They don’t take into account technology. So you could take your Fleetcor card and fill up your personal tank. Versus today, with technology, you can actually match a person to a tank to a card and location, with smartphones and telematics. So Coast does a bunch of things that make it easier to pay for fuel, and you can control and track spending. The way to think about it is, are you familiar with Ramp or Brex?
Sheel: So it’s like what Ramp or Brex do, spend controls, that sort of thing, but for fleets. And it’s actually a massive opportunity. So Fleetcor is not a phenomenally run business, as I mentioned, but it is a $25-billion business. And WEX sort of similarly poorly run, I believe, is an $8-billion business. And you know, we think Coast is going to come in and take a ton of share very quickly. So it’s a company I’m really excited about. The founder of Coast, Daniel, was formerly founder of Bread, a BNPL company that sold for 500 million bucks. And we think it’s a Red Cat that built this business. So that’s exciting.
Meb: Brex has been kind of a rocket ship, I think illuminated a lot of opportunity for, like you mentioned, some derivative sort of ideas, but I always laugh because the old public market investors can remember one of the biggest stock market frauds ever was a company called Bre-X. And the symbol, their logo looks nearly identical, and it was, like, a gold mining company. Listeners, Google the story behind it. The founder got, like, thrown out of a helicopter. Crazy. It was, like, Enron level before Enron. When they named this Brex, I was like, “Are you guys kidding me? This would be, like, coming up with a startup name like Enroni or something.” Very questionable choice of name and logo.
Sheel: Nobody remembers the Canadian gold mining company.
Meb: Oh, man. It should be made into a movie. That’s a fascinating story. Anyway, listeners, Google it. Find it in Wikipedia. It’s a fun story.
Sheel: I feel like there were a ton of those back in the day, right, Canadian and Australian mining companies that were fraud.
Meb: If you ever have a company that’s still on the side in, like, Vancouver, Salt Lake City, where you’re going by the way, any number of…it’s like, you better be very, very careful on a lot of these. Thankfully, the internet has a lot more disclosure and disinfectant on things than in years past, but still, there’s a lot of shenanigans going on.
Sheel: Hey, there was a movie about this.
Meb: Oh, there was?
Sheel: It’s called “Gold.”
Meb: Interesting title. I can’t comment on how good the movie is, but.
Sheel: Matthew McConaughey. We should watch this movie.
Meb: Yeah. Let me know how it is. I mean, as a recent movie star yourself, didn’t you participate in some sort of filming of something?
Sheel: Yeah, a couple of things. So me and some friends have been making a feature film. It’s not going to be good. It probably won’t even be released. But we went professional on it. We got a real filming crew. We’ve been editing at Lucas’s ranch.
Meb: Skywalker Ranch, I’ve been there.
Sheel: Yeah. And I’m one of the main characters in this film.
Meb: Well, between “The Zoom Bachelor” and your shirtless pictures on Twitter, you’re going to have a longer IMDB than most of my actor friends in Los Angeles.
Sheel: Yeah. The one funny thing, when you first said movie, I thought you might be talking about the Justin Bieber video. So for context, I have, like, a two-second role in a Justin Bieber and Ariana Grande music video called “Stuck with U.” It won an MTV music award, and somehow, in the MTV music awards explanation, they include a bunch of people who are in the video, and I’m trying to remember who else is in it. It’s, like, Ashton Kutcher, like, all these people, and then they mention my name in the MTV music awards, super strange. I’ve no idea how that happened. Here it is. “The home videos were interspersed with shots of celebrities including Kendall and Kylie Jenner, Demi Lovato, 2 Chainz, Paula Abdul, Stephen Curry, Gwyneth Paltrow, Chance the Rapper, Lil Dicky, Sheel Mohnot, Michael Bublé, Jaden Smith, Ashton Kutcher, and Mila Kunis.”
Meb: You know, that sounds like today. That sounds like a normal cap table.
Sheel: Yeah, that’s right.
Meb: I’m actually putting together this book, maybe an exaggeration, but we’ve been writing some content. I haven’t published any of it, but this concept where 10, 20 years ago, if you had an athlete, a celebrity, an actor, that was the dumb money. Never did those almost ever work out. But you’ve had this shift over the past 20 years where a lot of people of influence have come to understand. And if you look at almost to a teal, these big-time moneymakers that get into the hundred million-plus, even billion, it’s sort of business investing. It’s never through their career, so this concept of how to transform income into wealth, which can be applied all the way down to regular Joe investors too. Trying to get everyone to invest. Anyway, it’s been an insane shift because it wasn’t always the case. Ten, 20 years ago, you hear about somebody famous being on the cap table, you’re like, “Oh, God, we got to run away.” But it’s been an odd shift.
Sheel: Yeah, it’s so true. And I think, like, a lot of folks, to your point, make more money investing or doing something else than what they’re famous for. I guess, like, it’s been true for a while, I guess. You know, Steve Jobs made more money off Disney than Apple. Clooney made more money selling his tequila than acting. George Foreman made more money selling grills than he ever did boxing. Dr. Dre.
Meb: We have a list of about 50 people, and we’re trying to figure out the messaging for the piece because we don’t want people to read and be like, “Well, obviously, Jay-Z can parlay his money into untold riches investing because he had 10 million, 50 million to start with, whatever.” But you kind of walk through and say, “Well, maybe you couldn’t have signed a deal with Nike like MJ did, but what if you bought Nike stock?” Anyway, topic of a totally different conversation, but it’s fintech-related, sort of.
Sheel: Yeah, sort of.
Meb: Let’s talk a little more, your themes, what are you looking for, companies, as you travel all around the world. What are some of the things you’re seeing that you think other people don’t appreciate? What are some of the areas you’re looking for to be funded that aren’t funded? Is it just a world of opportunity as far as location? Just give me some Sheel thoughts.
Sheel: I think it’s a world of opportunity. I’d say, like, we’re less thesis-driven than we are opportunistic. I think it’s seed. It’s hard to be really thesis-driven. We tend to meet teams and just fall in love with the team and back that team in what they do. And oftentimes, it changes. A bunch of my best investments were pivots. What I invested in was a different company, and because the team had the tenacity and smarts to go after and figure out what the right business was going to be, they made it work. And one thing about today’s environment is they may not get that chance and opportunity, because part of the reason they shifted is they got feedback from venture capitalists, like, “Hey, this probably isn’t going to work. We need to see monetization,” something like that. In today’s market, a lot more ideas are getting funded than were before, and they might not get that feedback that I think was really critical. So you’re actually seeing fewer pivots today than you used to just because the market is frothy.
Now, your question about, like, travelling internationally, when I travel, I do often think, “Where is there an opportunity here for something different than what exists elsewhere?” A recent investment I made is in India. We did this company called Indiagold. And in India, there’s something, like, over trillion dollars of money sitting in gold in people’s homes. My family in India is very poor, but if you go to their home, in a locked cabinet, they have, like, some small amount of gold, and that’s how they’ve saved money throughout time. My great grandmother had, like, a tiny amount, and then they’ve been adding to it. And it’s actually a drag on the economy, because it’s just, like, an unproductive asset. So what this company does is they say, “Stop storing it in your cupboard at home. Let’s store it for you securely. We’ll come, pick it up from you for free, and store it in a secure way, insured all along the way, take it to our lockers, you’ll pay some nominal fee for the locker, and then it’ll be there. And anytime you need it, you can get it back. But while it’s there, if you need money to buy a TV, we’ll give you that money. It’ll be backed by your gold.” And so that’s the business. We think it’s super interesting.
Meb: What’s the name of the company?
Sheel: It’s called Indiagold.
Meb: Indiagold. I think I’ve seen you tweet about this. Sheel is a good Twitter follower, listeners. We’ll put his Twitter handle in the show notes. I was smiling as you were talking about this, because two days ago, we were on the mountains of Colorado, and I got a four-year-old. And so we toured a gold mine in Colorado and did, like, the gold panning at the end of it. So upstairs, I have a little vial of some gold flakes, but he was super into it. That’s a fascinating idea. How did you come across these founders?
Sheel: These guys, they’re actually active on Twitter, and I really liked them, and I learned about what they were doing. And I cold messaged them. It’s funny because you had mentioned the shirtless picture, it kind of was right around that time. And I had another friend who had cold messaged them, and they didn’t respond. But I cold messaged them, and they responded right away, and they said, “Hey, I think we have the same workout regimen.” It’s really funny.
Meb: I was wondering if the shirtless picture, with the analytics on followers/unfollowers photo would have been that.
Sheel: Some large amount of people probably unfollowed me. And to be clear, the same workout regimen means no workout regimen.
Meb: So you guys don’t do syndicates anymore, do you? And is this only fun-related? Because I imagine a lot of listeners would be like, “Sheel, I love that idea. How do I invest in it other than cutting you guys a check?” I mean, I know VCs are always raising new funds, so I’m sure you guys will have fund 2 coming up soon and then 3 in a couple of years. But what’s the current focus?
Sheel: Yeah. So we still do syndicate sometimes. I’ll tell you the way it works, though. Like, our fund is a lot larger now. So first, we syndicate to our LPs, and then we syndicate to a broader audience of potential LPs, and then we syndicate broadly. So depending, some of the deals end up getting done just with our LP cohort, but we do. So you can follow Better Tomorrow Ventures on AngelList. We’ve really liked using AngelList as a platform. It’s just super easy for LPs. But we’d love to have you guys on there. We tend to do, when we syndicate deals, it’s for something that is, like, a later-stage opportunity for something that we already invested in. And so we no longer would syndicate something at the seed or anything like that, but you know, potentially, at the A, more likely at the B, we do syndicate deals.
Meb: So where are the founders in the process with, you said it’s Indiagold?
Meb: Are they starting to collect some earrings and stuff, or?
Sheel: They are, yeah. So they’re live in India in a few different cities, and they give out gold loans. And then they also have, like, an app that you can buy gold on and stuff like that.
Meb: Is there something like that exists in other countries already, I mean, other than the buy gold stores that you see on the corners across the U.S.?
Sheel: I don’t think so. I think India is somewhat unique in the amount of gold that people store and, like, how it is they store value. I think you can probably work in Pakistan too. Obviously, a lot of similarities in lots of the same country. But I’m not sure that it makes sense in many other countries.
Meb: You’ve done a handful of investments in Africa. Talk to me a little bit about the differences between some of these markets and focus, where they stand, what the opportunity set for listeners between all these very developed and emerging markets you crisscross.
Sheel: Yeah, sure. So I’d say, like, the emerging markets are South Asia, Southeast Asia, LatAm, and Africa, and they all have large and growing populations. That’s sort of, like, the one thing that ties them together. They have a lot of differences, too, though. Africa, particularly, since you brought it up, I think, Africa is a massive underbanked and unbanked population, but it does have growing middle-class and mobile penetration. So a lot of people do not have a bank account but do have a mobile phone. So if you have a mobile phone, you want the people to buy things online. But you may not be able to. So I think that’s why there’s a huge opportunity in Africa.
Also, it’s just growing so dang fast, and it’s young people. It’s all young people. I think some staggering stat where, like, the young adult population is going to grow by 50% in the next decade. And if you think about what that means, that’s just a ton of people who are going to be digital-first, getting their first phones in the next 10 years, massive amount of people, and they’re going to be wanting to bank digitally. And that’s a big opportunity, especially when two-thirds of the continent is completely unbanked.
And so we’re really excited about that for all those reasons. Demographic trends, limited banking infrastructure, high and growing internet and mobile penetration. And then I think another opportunity is alternative data. So United States, there are only so many things that you can underwrite a customer based on. Because of fair credit reporting and all these other issues, a customer won’t give you data. In Africa, you can just take all the data from their phone and use that to make an underwriting decision. So I think that’s an interesting opportunity, and we need to be excited about investing in that market.
Southeast Asia, you know, again, has the demographic trends and increasing mobile penetration. It’s a little bit different in that they do have some better banking infrastructure right now. A lot of money has gone into Southeast Asia in the past six or seven years. It’s crazy how much both of these markets have grown. I think, actually, like, Meb, I think we connected on Twitter about Africa six months ago or something, and at that time, there was actually only one unicorn in Africa. It was Interswitch. And Interswitch, yeah, it’s a unicorn, but it’s really not a startup by any means. It’s like an old ass company. It’s like 20-plus years old. And then, since then, it’s, like, every month there’s a new one. Flutterwave became a unicorn. OPay valued at 2 billion. And then just this week, Wave valued at, I think, 1.7 billion if I remember correctly.
Meb: You know, when Stripe acquired that company, was it last year, for a couple hundred million…
Meb: That was a big, just stamp where I feel the echoes of that, you could feel all these people around the world waking up and being, “Wait a minute, what’s going on here?”
Sheel: Totally. Oh, if Stripe believes there’s an opportunity in Africa, there’s an opportunity in Africa even though that acquisition was only 200 million bucks, although Stripe’s stock has 3x-ed since then, so it’s been good for them. Yeah, it’s a great opportunity. And then Jumia, which is, like, the Amazon of Africa, has also had a great run. It went out with a bang publicly in 2019 and then was really in the dumps all of 2020. I think the stock went to 2 bucks, which is, like, a couple of hundred-million-dollar market cap. And then it had a huge surge in 2021. So I think the public markets are also open to the African story.
Meb: Well, it’s funny you mention that. You do a lot in LatAm, too. To me, in my head, that would be a more developed region, but LatAm, like Brazil, in particular, with the public markets, it seems to always be on the cusp of getting its act together, then it doesn’t, and it was always a ton of political and governmental headaches and inflation, all these sorts of things that we deal with. What’s the prospective on LatAm? Any countries in particular, any themes, in general?
Sheel: I’d say, look, we look for big markets. So the countries we have tended to focus on so far had been Mexico and Brazil. And I think Brazil has a population of 200 million, Mexico has a population of 125 million. And then, sort of, like, other markets to be considered would be Colombia and Argentina, both around 50 million. But the prizes are really in Mexico and Brazil at the moment, and they have, again, similar situation with growing middle-class, growing smartphone penetration. And Brazil, in particular, has a lot of eCommerce business, and that’s really exciting. We invested in a company called Divibank in Brazil that is, like, a Clearbanc for Brazil. Actually, I should say Clearco. They changed their name. But Clearco provides debt capital to growing eCommerce businesses.
So they sort of have this return on ad spend calculator that allows you to constantly underwrite how good your ad spend is if you’re an eCommerce business, which is everything in eCommerce. And then they’ll just give you capital. So they’ll give you the insights and then give you capital. They’re an integral part to your business if you’re an eCommerce company. And we saw the trends in Brazil, and eCommerce is growing like a weed in Brazil. So we invested in a company called Divibank there, and it’s doing a similar thing. That’s been a good, exciting investment.
Other investments in the region, we led the seed of a company called Mendel. It’s an expense card for LatAm. Think of it like a Brex or Ramp but not focused on startups. So we think the startup market in that region is probably not big enough to have a brand for Brex-like opportunity. Clearly, it’s not. It’s a smaller startup market. So Mendel, mendel.com, and it’s expense reporting plus cards for LatAm, and they have signed on a bunch of, like, really huge companies, many thousands of employee companies to use their product. And what’s really interesting about this is they’re competing with AMX, right? And in LatAm, it’s a lower trust environment.
So, like, when I got out of college, the first company I worked at, my first day at work, they gave me a credit card. And you just necessarily would not do that in LatAm because of the lower trust environment. So what’s really cool about Mendel is it gives you the spend control. So a CFO can say, like, “If you just started, here’s what you can do. Like, you can buy two coffees a day.” That’s all you can do. Or if you’re a construction worker, you need to buy stuff for your site, and the old way was you had to go physically to a person, get cash, get approved for that thing, it took a ton of time. Today, you can just have a card, and the CFO can authorize you to spend money in a particular location. They can authorize a particular amount of money. Super simple. So we’re really excited about that company. I feel like they’ve tailored the Ramp, Brex to that market in a really good way. And they’ve had a lot of growth and signed on a lot of logos.
We invested in a company in the insurance space called Super, super.mx. And what they do is parametric insurance. Parametric insurance is insurance that pays out when the event happens. So an example is, in 2017, there was a massive earthquake in Mexico City, really devastating, and what happened was a year after the earthquake, 50% of people still had not gotten paid on their claims, and they had to fly claims adjusters in from all over the world. There are all these challenges. If Super had existed, you had insurance from Super, they would just say, “The earthquake happened,” boom, you get paid. So it’s based on the event happening. They don’t need to check your house or anything like that.
Meb: That’s targeting individuals, or businesses, or what?
Sheel: Both. So the first part of it’s earthquake insurance. They also then launched COVID insurance, and then, now, they have life insurance that’s been doing really well.
Meb: We used to talk about this over a decade ago, and it tends to be in the domain of sovereigns, and companies, and big insurance companies on this topic of sort of catastrophe bonds and insurance. And there seems like there could be so much open space and opportunity, exactly what you just mentioned on ideas to de-risk people’s lives across so many different risks and events. It’s fascinating. And we always wanted to try to focus on a catastrophe bond from an investor standpoint. It’s just…they tend to be illiquid, so you can’t do it on our ETF format. But talk about uncorrelated asset classes. You pile together a bunch of those from earthquakes in Japan to floods in the Mississippi. That seems like an area ripe for opportunity and disruption. So it’s interesting it’s happening there first.
Sheel: Totally, yeah. It should be a lot easier to invest in this thing. I’ve come across it because I invested in…I’m on the board of a company called Kin. It’s a homeowners insurance company, and their primary markets today are coastal areas. So when you’re insuring someone’s home, there’s risk of fire, flood, and theft, and theft is relatively small dollars because fire and flood can ruin the entire home. And so really it is a catastrophic occurrence that you’re insuring against, especially Kin, they’re in Florida and California, and these markets, in particular, are prone to that risk. So we’ve seen that, and actually, originally, our reinsurance partner for Kin was a hedge fund that wanted that cat risk.
Meb: And Kin’s been doing great, right? That’s been a pretty solid company.
Sheel: Yeah. It’s a great business. They’re actually going public via SPAC, the ticker is OCA. So you know, I can’t say too much, but I think it’s phenomenal leadership team. And I’m really excited about the future. They’re only in a few states today, but they got a license for, like, 40 more. It’s going to be great.
Meb: Sure. We’re going to have to book you for two hours next time. I think we’re well into length of territory on chat.
Sheel: That’s going to be a long episode.
Meb: Well, I don’t mind. I just don’t want to take up your whole day.
Sheel: I’m having fun. Hey, this is great. I can talk to you all day long.
Meb: So here we are in 2021. We kind of alluded to a little bit of this in the beginning. There certainly is not a lack of capital sloshing around. How does that impact what you guys are doing? Does it at all? Any other just general themes on the landscape that you think are struggles or opportunities, just general thoughts?
Sheel: Yeah. So does it impact? It does, absolutely. On the one hand, it makes us look really smart with our existing portfolio, getting marked up pretty quickly, generally speaking. On the other hand, it makes any new investment we do tougher. We tend to believe that seed-stage valuations have to be within a certain range and don’t really invest beyond that range. And increasingly, there’s a lot of folks who are willing to invest in a seed-stage company at a 20, 30, 40, 50, $100-million valuation that we just don’t feel as justified. So that does pose challenges to us. Overall, not many though. Like, we are excited about a bunch of companies in our portfolio that we did invest at a reasonable valuation, fair valuation according to us. But there are a lot more investors out there.
We have what we believe to be a differentiated spot, which is we’re focused on fintech. We are fintech founders backing fintech founders. We’re going to be helpful and supportive. Any one of our portfolio companies will tell you that. But I understand, if the option is money from us or money from somebody else in a much higher valuation, you have to consider that. And a lot of folks, fortunately for us, many folks have still chosen to work with us, but some folks haven’t. And that sucks, but that’s the world we live in today. Can’t win them all.
Meb: I know there’s a lot of fintech later stage. Are there a lot of fintech seed-stage firms now, or is that sort of the rarity?
Sheel: There aren’t that many fintech-focused funds. So funds we work with a lot are QED and Ribbit, and they are both a stage B investor. In Ribbit’s case, probably like two stages beyond us. And there are some other folks at the seed. There aren’t many that lead deals. So you know, there are folks who work with, like, this fund called Clocktower, a fund called Broadhaven that we’ve done stuff with, and we love those guys. And then, this fund called Flourish that we think is really good, part of the Omidyar Network. We’ve done a couple of deals with them as well. But in terms of pure-play lead seed funds that do fintech, there aren’t. It felt like a gap in the market, and it still kind of does.
Meb: Yeah. Clocktower guys are podcast alums. That was a fun one.
Sheel: They’re great. Yeah, I love those guys.
Meb: As you look back, how many investments are in the quiver at this point? You mentioned 80. How many are in the current fund, a dozen, two dozen?
Sheel: Two dozen, yeah. So we’ve been pretty active. We’ve been actually ahead of pace a little bit. I think everybody is. Like, there are more great companies than we thought. And so we might as well be investing in them.
Meb: A lot of the listeners tend to be individual investors or investment advisors. Any advice on those looking to allocate to this asset class, thoughts, red flags, things to think about?
Sheel: I think, look, in the long term, there are a few things involved in this business. There’s seeing everything, then there’s filtering, there’s winning a deal, and there’s helping. And so you want to make sure that people you’re backing have advantages in multiple of those places. So seeing everything, are they out there? The nice thing for us is, as we build the brand in fintech, you know, Meb, if you see a fintech company, you’re going to be like, “Oh, yeah, I know who to send that to.” And so that’s been really good for us. So we do tend to see most things. And filtering, filtering is a hard one to know because it takes so long to know if somebody is actually good. Hard to know. Winning the deal, winning the deal comes along with helping, which is, like, if we’re at a point where a founder is talking to our portfolio company and saying, “Should I work with Sheel and Jake?” we know we’re going to win the deal. So if they get to that point, like, we’re in, because that really matters.
Being on the founder’s side, being helpful is everything in this game. It’s a reputation game. And it’s a services business to a certain extent.
Meb: What’s the biggest sort of value-add on the board side? Once you make the investment, you know, you’re on a handful of boards. I’ve never done it. What does a good board member look like to you?
Sheel: I’d say the board aspect is not the most important thing. A board, we meet once a quarter for a few hours. That’s not the important thing. The important thing is what you’re doing every day, every week, which is evangelizing the company. Yesterday, I had two future employees to close, employees that we’re recruiting, one in a head of marketing role, one in a chief operating officer role, that the founder said, “Hey, I’m trying to close this candidate. Will you talk to him?” And in both cases, they close. They both decided to take the job, which is really exciting for me. Right after this call, in 15 minutes, I have another one. It’s a general counsel that I’m trying to close for one of our portfolio companies. And that sort of thing is really important. That’s where we add value.
I think we’re helpful in hiring. We think through distribution. I think we’re helpful in building company culture. I think that’s really important. People miss that a lot. Strategic partnerships, I think we’re valuable because all we do is fintech. So, like, you probably need to do partnership with other fintech company, we probably know them really well. And they know us well enough that, if you’re one of our portfolio companies, they’ll take you really seriously. And they might not have answered your email, but because it came through us, they’ll take you seriously. And that’s led to some really cool stuff. Like, a series D company is working with one of our really early companies, and they never would have taken a chance in a super early company no one’s ever heard of. But because it came through us and they’ve worked with our other companies that that happens. And then helping raise follow-on capital is, of course, critical. You got to have that money to keep the company going. So I think those are the ways we tend to be helpful.
Meb: I was joking on Twitter the other day, as you start to seed more and more funding rounds where it’s down to, like, the middle later part of the alphabet, I said, “What happens when you get past series Z?” Is it like Excel? Does it go AA? Does it go to Z1?
Sheel: Yeah, that’s a good question. It’s going to happen soon. Although, these companies are going public, so.
Meb: As you look back over these probably well over 100 now investments, is there any one investment sticks out in your mind as most memorable, good, bad, in between?
Sheel: It’s hard to choose because I have so many. Any given day, I’m excited about a particular company. I’m excited about, of course, all companies, but, like, I have those two board meetings next week. We already talked about them. So those are the ones that are top of mind because I’m looking through the materials for the board meeting right now.
Meb: But, like, seared into your brain, like either at the time of investing, at the time of liquidation, an investment that just, like, “Damn, that one was so memorable.” It could be a bad one. It could be anything. You got to pick one, Sheel. I’m holding you to it. And it doesn’t have to be a startup. It could be a stock, it could be a Ken Griffey Junior card, it could be anything.
Sheel: Yeah. I mean, okay, so because you’re in it with me, I’m going to pick Albert.
Meb: Tell the listeners what Albert is.
Sheel: Okay. So check out albert.com. They started out as a personal finance manager. And I had seen 100 of these dang things. Everybody thought, “I can build a better mint.com.” Guess what, mint.com itself wasn’t even a great business. Sold 100-something million, but there are a lot of challenges in that business. When I met this founder, Yinon, I was like, “I don’t like this business, but I love this guy. He’s going to make money. I can feel it.” And sure enough, we started out with this personal finance manager, pivoted into a bunch of different things, layered on a savings component that would automatically set money aside for you in their account. Then layered on a lending product where, if you’re going to overdraft, it’ll make sure you don’t. It’ll give you some money. They layered on an investing product, which not only will they set aside money automatically for you, will invest that money for you automatically too. And then, now, it’s gone into basically, like, a full-fledge bank, and the goal is to do everything for you. What started off as a personal finance manager, our biggest realization was people don’t want to think about their money.
Personal finance managers are built for people who want to think about their money. Guess what, most people don’t want to think about their money at all. And, like, somebody like me might be opening the app once a week to check on something. Most people don’t give a shit. They don’t want to know. They just want to know that they’re being taken care of. And so that was a huge realization light bulb, and we thought, “Okay, we have to create this self-driving money thing where money comes in, it goes out, it gets invested for you, debt is paid back automatically, all these things,” and they made phenomenal progress on that path. And now, they have a card product. It’s just continued to grow. And I’m really excited that I bet on this team even though I didn’t like the product. So that’s memorable.
Meb: Yeah. I like the comment you made about most people don’t want to think about money. They just want it to work for you. And on the flip side, they don’t want the companies to just be screwing them, totally hosing them, which is the long history of our world of fintech and, I guess, what are called pre-fintech banks and asset management. It’s just been layers upon layers of conflicts of interest and fees. And that’s changing but, hopefully, quicker than slowly, but it’s cool to see. One more derivation question on this one, and then we’ll let you go. What was the most memorable memory from your $2 a day adventure that you can share? You know, it was like the old Anthony Bourdain quote about travelling poor, but then, when you’re actually doing it in the moment of it, it’s a different experience than probably on reflection. Any that you can share?
Sheel: Yeah. I mean, on the high side, I had so many, but, like, the city I was living in flooded, and it’s like the most disgusting thing, but we’d go swimming in this flooded zone with all these kids. And I actually had a freaking blast doing that. Another thing I remember is, before I moved to India, I had a convertible here, and I remember going to India and riding on top of a truck, because that was how I could get from one town to another, and just thinking, “This is way more fun than a convertible.” I’m standing up on top of a truck. And then, on the negative side, I got really ill. I got typhoid. And that was devastating. Couldn’t hold anything in my body for more than, like, a minute, seriously. It was a disastrous time, but you know, it’s memorable. And what a year it was? It was awesome.
Meb: Sheel, this has been a blast. I know you got to go recruit some people. Where do people go if they want to send you guys a big, fat check, they want to follow along your writing, your various levels of undress? What’s the best spots?
Sheel: I’m on Twitter, @pitdesi. I’m sure you’ll put it in the show notes. I have a website. I don’t update it that much, but it’s sheel.wtf. And then our fund website, btv.vc. Between those three, you should be able to get in touch with me.
Meb: Awesome. Sheel, it’s been a blast. Thanks so much for joining us today.
Sheel: Thanks for having me, Meb.
Meb: Podcast listeners, we’ll post show notes to today’s conversation at mebfaber.com/podcast. If you love the show, if you hate it, shoot us feedback at firstname.lastname@example.org. We love to read the reviews. Please review us on iTunes and subscribe to the show anywhere good podcasts are found. Thanks for listening, friends, and good investing.