Undoing a $5 Billion Acquisition and Building a Durable Standalone Plaid (with Plaid CEO Zach Perret)

Transcript: (disclaimer: may contain unintentionally confusing, inaccurate and/or amusing transcription errors)

Ben: Hello, Acquired listeners. Today’s episode is with Plaid CEO Zach Perret. You are probably familiar with Plaid as the bank linking service that lets you link your bank account to other bank accounts and FinTech apps. They have had a pretty insane journey where in 2020 they agreed to be purchased by Visa for $5.3 billion.  

Plaid then terminated this deal after the US Department of Justice filed an antitrust lawsuit to block it. The few years since then have been pretty wild too. They were valued as high as $14 billion than a recent fundraising round of $6 billion, so more than the Visa acquisition but (of course) lower than the sky-high valuation in between.  

Today’s conversation with Zach is about weathering all of that and about Plaid’s actual business they were building along the way, growing, diversifying, and finding ways to leverage all the data that they have to build a better and more modern finance ecosystem.  

Well, one quick announcement before we start. As many of you know, we are doing a massive live show at the 6000-seat Radio City Music Hall in New York City on July 15th with our friends at J.P. Morgan Payments. There are just a few seats left, so make sure to get yours before they are gone at acquired.fm/nyc. The evening is going to be awesome. We can’t wait to see you there July 15th. That’s acquired.fm/nyc. Please enjoy our conversation with Zach Perret, the co-founder and CEO of Plaid.

David: Zach, welcome to the show.

Zach: Thank you so much for having me. I’m honored to get to do this. I’m a big fan of everything Acquired, so thank you.

Ben: Thank you for listening. We’ve enjoyed following your journey through the wild turns of events that have happened over the last five years or so. You were a high-flying unicorn. Then I saw some news that said you were acquired by Visa, and then I saw some news that said you weren’t. Then you raised a lot of money at a big valuation, and then you raised more money later at a lower valuation. All while growing the business and then starting new business lines that I bet most people are totally not familiar with. They just think of Plaid as, isn’t that the way that I off my FinTech app to connect to a bank account? Does that seem like a reasonable summary of your life over the last five years?

Zach: Yes, very reasonable summary. They say that startups are like a rollercoaster. Indeed the ride doesn’t end, it just keeps going. The magnitude gets even larger. It’s been an awesome journey. A lot of learning, a lot of fun, and a lot of frustration along the way too. You get your fair share of everything.

David: Maybe to start, take us back to January 2020 and your partnership with Visa. Catch us up from there.

Zach: For a podcast that’s called Acquired. You don’t talk a lot about acquisitions.  

David: No. This is like a throwback episode for us.

Ben: Yeah, but this acquisition didn’t happen, so ultimately…

David: Right.

Zach: That is true. That is very true. All right, so in January of 2020, I think it was January 18th or 19th of 2020, we announced that Visa was acquiring Plaid for a big valuation. It was just about $5 billion, and this was the culmination of a lot of back and forth over the past three to four months. Visa had been an investor, they had shared interest in acquiring us. There had been some other acquisition interests as well.  

We ended up making the very difficult but at the time very logical decision to sell to Visa. We announced it to our team in January of 2020. I remember because this is the last big all-hands that we did in the office. Our office is the ex-Atlassian office. It has these gigantic stairs that people can sit on, so it’s a two floor staircase. It’s super wide, probably 30–40 feet wide, just filled with people.  

We were planning this all-hands. I remember, right before the all-hands, the news leaked, so all of our news-addicted team saw it. The others that were not as news-addicted were like, what’s going on? Why is there so much buzz? What’s happening?

Ben: Do you know who leaked it?

Zach: You never know. The investment bankers, maybe, like one of the lawyers. It wasn’t leaked far in advance. It was leaked like 20 minutes in advance, so it’s not the worst leak in the world.

David: And you’re probably already really nervous about messaging this to the company, right? This is not helpful.

Zach: It’s the second hardest all-hands that I’ve ever done. The first hardest, I’ll tell you in a minute.  

David: Yeah, we’ll get to that coming up.

Zach: The second hardest all-hands that I’ve ever done, I go there, I’m in front of everyone, and I really practiced on what I was going to say and how it was going to go. It went well and it was amazing. You look at the crowd, we probably had 350 people in this all-hands, almost all of them physically there.  

There was anger, frustration, surprise, joy. Some people were crying. I couldn’t tell if they were happy or sad when they were crying. It’s this totally weird thing. Then the Visa team came in. They spoke and they talked about how they were all excited about the acquisition.  

We ended up closing and had tons of team messaging, and so on and so forth. One of the hardest things is explaining this level of change management within the organization. But we got through all that stuff, so it worked.

Ben: Just to be super clear for everyone listening, up until this point in the company, other than being an investor and a partner, Visa is this company, they represented the existing financial system, and you were trying to create this new, faster, more tech-friendly data fabric around the world for finance. Is that right?

Zach: This is one of the things that I think is actually most misunderstood about Plaid and Visa. We are not direct competitors. We were not direct competitors. We weren’t trying to issue cards or build a card payment network or things like that.  

In some meta sense, I guess you could say we produce substitutes, meaning you could pay for something with a bank account or you could pay for something with a credit card. But even those, in almost no single transaction would you consider both of those payment methods to be viable.  

Despite the fact that the DOJ later investigated this transaction for antitrust and alleged that Visa was a monopolist and buying Plaid was a path to expand their monopoly, I have never thought that our products directly compete. We probably wouldn’t have done the transaction if the premise of the transaction was anti-competitive.

David: Certainly, there were many developers who were using Plaid as a core part of building their apps, which were intended to be payment networks and transaction rails outside the Visa system. But yeah, I totally get what you’re saying.  

Zach: That’s very fair. In the meta sense, we were trying to make financial services more efficient, better. We were trying to create new payment methods. We were trying to create a lot of innovation in the system. In that sense, if you say Visa is the historical system, and you say Plaid is the new system or Plaid and all of our customers in this FinTech ecosystem are the new system, then yes we were competitive. But specifically on only one product. I can’t say that we were directly competitive.

Ben: Makes total sense. Why did it feel so emotional, and to the extent that there were people crying and it was tears of sadness, why did they feel the sadness?

Zach: It’s a huge release of pent-up emotion. Certainly when you found a startup, a lot of your identity is wrapped up in that startup itself. A lot of your identity is wrapped up in work. People had worked for us for 7, 8, 9 years. They had a massive amount of equity that had been issued when Plaid was worth (I don’t know) $50 million that was now being sold for $5 billion. There’s a lot of excitement there.  

There are also people that had joined us a year before and thought that Plaid’s going to go from our current valuation to 100 times that. Some people were excited, some people were disappointed, some people were saying this is going to be a great outcome both financially and product-wise, some people were saying I’d hoped for more. So there was a mix. But yeah, definitely reading the faces is one of those unique experiences where you see so many different emotions all at once.

Ben: I bet. Okay, so then what is life like after that?

Zach: Life after that was straightforward. You go February, the 1st half of March, are great. We’re doing messaging, we’re moving forward with the acquisition process. There’s a lot of paperwork we have to file, you have to submit it to all the relevant governments, and so forth. We had no reason to suspect antitrust was going to be an issue because again, we didn’t think that we competed with Visa. We had no reason to think that anything else was going to change in the world that was gigantic.  

Then COVID happens in March. We’re very focused on the team through March and into April. Come mid-April, we pulled up and thought about what does this mean for us? Is this transaction even going to happen still? I called the lawyers that we’d used and said, hey, what’s going on with the transaction? And their response was don’t worry, we have a pandemic clause. I said, what in the world could a pandemic clause possibly be?  

It turns out there’s this thing called a material adverse effect, like a pandemic was something that we had contemplated. I think it’s just in the form letter that if a global pandemic happens, you still have to close this transaction, Visa.  

Okay, great. We feel like we’re geniuses because Visa’s stock price has crashed. We have a pandemic protection clause that says Visa still has to close the transaction. We did the math on it and we said, well we’re going to own a large percentage of Visa if this transaction closes tomorrow.

Ben: Whoa. It was a stock deal.

Zach: Partially stock and partially cash. It was majority cash, but from the employee side, the employees ended up getting a ton of equity in Visa, which was dollar-denominated equity, so it was based on Visa’s most recent share price. The math that we did was, oh my gosh, we’re going to own a big piece of Visa.  

Fast forward a little bit more, and the world turned around. A few things happened to our business. One, consumers were stuck at home. They realized they still needed financial services, so usage of Plaid-powered products just caught on fire.  

Also then, money was free, so startups being founded happened everywhere. All of our customers got funded, all of this growth started happening, and that looks great.

David: Crypto is taking off. There are all sorts of on-ramps and off-ramps.

Ben: So many neobanks. This is the FinTech boom time right here.

Zach: Exactly. Man, that was fun. Then we fast forward, going a little further, and we get a first request from the government which is the first request of, hey, we want to review this for antitrust. We expected that one.  

Then we get a second request from the government, and that one we didn’t expect because any big transaction in a first request, great. They want to take a look. Makes sense.  

Second request, we thought that we would get through pretty quickly because we’re really not competitive with Visa. Certainly that’s the narrative that we have. But it turns out there were some bones that the DOJ wanted to pick with Visa about things, and I’m not sure that all of them are really about Plaid even.  

Fast forward with that, our business continues to boom. We get into October, November, everything’s continuing to go really well. My exec team started looking at each other saying, what if we hit one year? Because in one year the exclusivity lapses and we can walk away from the deal.

David: It’s incredible too. Most companies that would’ve found themselves in a situation like yours where there’s a pending deal for a large acquisition by a big player, the business just operates on autopilot. It’s uncommon that the business grows like a rocket ship during this period, right?

Zach: That is true. I think we made a couple of intelligent, you could also call them lucky decisions at the time, where the deal we negotiated with Visa was that we would run fully independently and I would be the CEO of Plaid within Visa. My view was great, we’re operating the same as a startup. We’re going to push as hard as we can as fast as we can on everything.  

Some of the things were harder while the acquisition was pending, so hiring execs was harder because people were like, oh, how’s this going to work post-close. But we did still hired a lot of people. Other than that, we were just full speed ahead. We had this great tailwind of what was going on with SERP, growth rates and such like that.  

We get to October, November thinking that it may lapse. We get into December, January knowing that it is probably going to lapse. At some point in there, the DOJ signaled that they were going to sue to block. While I actually think we would’ve won that lawsuit. I think that lawsuit would’ve taken two years for us to close the deal.  

At that point, I believe the Plaid was worth more. Frankly, a lot of the concerns that we had about our business, a lot of the impetus for selling was gone. We then hit January of 2021, and we made the decision to walk away.

Ben: This is an interesting mental model I hadn’t really contemplated before, that if it’s going to be that one year plus another two, you’re basically locking in a price, almost giving the free option to the acquirer, saying, yeah, we’ll sell it to you for the same price 2–3 years from now, despite the fact that we’re going to keep growing, our business is going to keep improving. Why would you ever give someone that option?

Zach: Exactly. In some cases, it does make sense because the purchase price is so significant. Sometimes, the market craters afterwards and you really want to close the deal, and so forth. In our case, the market and the business had conspired to make it such that our business had grown quite a lot and we didn’t feel like the price held anymore.

January of 2021, this is the actual hardest all-hands that I ever had to do, and this one was over Zoom. I was in the office (I think) by myself and the entire company was on Zoom.  

I basically said, hey, all of you people that thought you were going to get a bunch of money from this acquisition, we’re now not going to do it. But on the plus side, look at all the amazing things that we did over the last year. Think about all we’re going to build together, and it’s going to be an awesome future.

We’ve had some people approaching us with investment offers around that time. I had good reason to believe that the valuation would’ve gone up. But I can’t say that to the company and I’m not going to promise something that I’m not yet sure we’re going to be able to deliver.  

Then we had this whole next wave of employee comms. This one was even harder because despite the fact that you tell people not to spend the money, they spend the money in their heads. I had to go to everyone and say, hey look, you can’t buy that house anymore. I’m sorry. Or basically communicating, hey, you’re not going to get that cash value at this timeline that you expect. But don’t worry. We believe the equity is going to be worth a lot more in the future. We believe that this isn’t up to the right story.

Then fast forward a little bit more, we did this fundraising round and it is a big step up in valuation. Whereas we sold to Visa for about $5 billion, the funding round was at $13 billion. We were able to do some employee secondary for most employees, which was great. it was a smaller proportion of their holdings at a higher price. They couldn’t maybe buy a house, but they could certainly take something off the table, maybe buy a car or something like that.

David: Relieve some of the pressure.  

Zach: We felt good about what we were able to offer employees, and certainly felt great about the trajectory and the long-term prospects of the company independently. That was a journey. I’ve learned more about antitrust and company governance than I ever expected to in that way, and yeah, I hope I never have to go through that again.

Ben: How close then were you to the Altimeter financing? Because that was a big step up, what was it, $5 billion to $14 billion at the valuation of that round? That was pretty soon after, if I recall, from the deal falling apart with Visa?

Zach: Pretty soon, yeah. We raised the Altimeter round. I think it was about a $13½ billion evaluation. That round was in April and the Visa deal fell apart in January.

Ben: Okay. At least this promise or this implication that you’ve thrown out there to employees of the intrinsic value of our business is higher, someone’s going to recognize that, you’re going to be able to recognize some paper value of that. That came true reasonably quickly.

Zach: It did. We were able to show some good growth proof points as well. We constructed a good narrative and frankly, the best narratives come from very hard data on the backend. We were able to talk employees through it, but still it’s a jarring prospect. You expect you’re going to work for Visa, you don’t work for Visa. You have a certain expectation of the culture you’re going to work in, and now it’s a very different startup-oriented culture.  

We’d hired people that expected that they were going to work for the startup version of Visa but as Plaid as a subsidiary, and we found that they weren’t as much of a cultural fit, or they themselves opted out when we were long-term independent. There was definitely some whiplash. We had hired quite a lot of people, actually, during the one year transition because we were growing so fast. So a very hard set of employee comms and then a lot of actions in the back backend.

Ben: It’s so funny. When a big acquisition like this falls apart, I don’t want to say company killing, but it’s usually so demoralizing that it’s hard to ever really recover and hit new all time highs on any metric you want to assign to at valuation or revenues or anything like that. It’s a very rare scenario where a $5 billion acquisition from a big, public company falls apart for a startup, and then the next two years look amazing in gangbusters and nothing but rainbows and sunshine for the company.

Zach: I agree it’s rare. I don’t think we’re alone in this, though. One of the most interesting moments of the acquisition for me was actually this call that I got the day after the acquisition went public. I’d known Scott Cook for a long time. Scott Cook is the founder of Intuit.

David: I know the story you’re going to tell.  

Zach: Yeah, he sent me an email more or less the day of the acquisition or the day after the acquisition. He said, hey, call me. We should chat. I called him and he said, hey Zach, congratulations on the acquisition. I’m really impressed. I’m really happy for you. It seems like it’ll be a great landing spot and it’ll be great for the company.  

But I just want you to know that if the acquisition fails, you’re going to be fine, and actually you might be great. I said, okay, interesting. Does this have something to do with your acquisition? And he said, yeah, absolutely. The best thing that ever happened to me is that the acquisition of Intuit by Microsoft was blocked for antitrust. After that, Intuit went on to be a multi-hundred billion dollar company, just amazing gross trajectory and so forth.  

His point was, look, congratulations. But if it doesn’t work, you might be better off. In some sense, I guess that was foreboding.  

David: That’s amazing that he planted that seed in your mind the next day.

Zach: Exactly. I think the day that I announced that we were not going to do the acquisition, I sent an email and said, hey, could we get dinner? I’d like to talk to you.

David: Thank you for manifesting this.

Ben: What is your advice to make your idea come true?

Zach: Exactly. Well it was also I wanted to ask some advice on how to do employee comms and keep people from revolting and such.

Ben: Okay, so you entered this period of rainbows and sunshine. That ended. What did the end of the FinTech boom look like for you guys, and how did that manifest in your business?  

David: And maybe also to give context to that, what was Plaid during this era, and that’ll help ground the end of this and then into the next era?

Zach: Perfect. I’m going to go backwards a little bit and explain a little bit of where we came from. We started working on Plaid in 2012. At that time, the core thesis was that banking and financial services (broadly) was built for a world that hadn’t envisioned the Internet. Despite the fact that in 2012 we all carried smartphones in our pockets, we did a lot of things online.  

2012 was the year that Instagram sold to Facebook. Instagram had a gazillion users. People were used to doing things on the web and on mobile devices, yet financial services required you to walk into a bank branch and talk to a banker for almost everything in their financial life. You want a new checking account, you want a loan, oftentimes if you wanted a replacement debit card, you had to go into the bank branch.

David: And Venmo had launched but was only a couple of years old right at this point. On- and off-ramps from Venmo, probably still very difficult.

Zach: Yeah. In 2012, Venmo was live but had very few users, and paying someone on Venmo involved linking a debit or a credit card, and paying a 3% fee. It’s not that attractive of a proposition to pay the fee.  

Venmo (I think) for a little while also gave away free fees, but then they were losing a lot of money. They were in this conundrum of free equals good growth, but free is very expensive.

David: I imagine for you guys back when you were starting, it’s this proof point of, hey, this is what’s possible, and there’s so much consumer demand for these experiences that people are willing to eat 3% to make it happen.

Zach: There was a very good proof point. At the time, there were very few FinTech companies. You look at Intuit, then Mint at the time. Mint was one of the examples. You look at Venmo. There’s PayPal that’s out there. I guess it’s right around that time when PayPal ended up acquiring Venmo.

Ben: Braintree for online payments. This was pre-Stripe, or pre-Stripe growing really.

Zach: I think that Stripe was early at that point. Braintree was early even, even themselves. It was early FinTech. We didn’t even have the name FinTech. I think FinTech came in 2016.  

Anyway, prior to Plaid, we were building consumer apps. We tried to create mobile budgeting tools, recommendations like where to spend, and so on and so forth. Turns out all of these apps, think of a personal financial management tool. We launched a personal financial management tool. We recommended to people that they spend less money. No one wants to use an app that tells you to spend less money.

Ben: There are still 20 or 30 of them out there today, and none of them are Plaid-type businesses because ultimately they’re telling people to spend less money.

Zach: Well some of them are actually really interesting. As a brief aside, Rocket Money is a really cool one. It’s a budgeting tool that ties into your ability to get a mortgage. That sounds super well. Rocket has been able to monetize this thing massively.  

I actually believe that personal financial management is a viable market. I’m just not a good enough consumer product builder to come up with the idea of how you do that. This was before the infrastructure even existed in the way that it does today.  

We were spending 90% of our time figuring out how to get the data into the app. At that point, we didn't even have the time to build a good app. We ended up doing this pivot where we dropped the consumer side, we just focused on the infrastructure side.  

It was actually this conversation with the head of engineering at Venmo where he said, hey, hey look guys. Your apps are pretty dumb. I would like to license the backend to what you do and we’ll pay you for that.

David: You’re like, oh that sounds better. Yeah, let’s do that.

Ben: Were they your first customer?  

Zach: They were the first meaningfully-sized customer to show significant intent. What then happened was we went and got into this nine month procurement process because they’d been bought by Braintree, which got bought by PayPal, which got bought by eBay. I was dealing with the eBay procurement officer for nine months.  

Along the way we sold a bunch of other small startups, including Robinhood, Coinbase, and a couple of these other quite meaningfully-sized companies. But yeah, it took a while to get there with Venmo.  

Anyway, the theory was we wanted to build an API for your bank account. We believe that if we create an API for your bank account, that is the missing link in creating great digital financial products. We got the insight for that from building these consumer financial products ourselves, which we’re all terrible at, but we pivoted to finding this really important niche that allows a consumer to link their bank account to a digital application.

Originally, that started with consumers linking (let’s say) their Wells Fargo account to the Venmo app so that you can actually pay your friends with Venmo. Or Wells Fargo account with the Robinhood app, so you could fund your Robinhood account. Or fund your Coinbase account, or build budgets, or do expense management, or bookkeeping, or whatever it is. We work with basically every FinTech company.  

Over time now, it’s become, the way that you open a Citi checking account, you need to fund that with an existing checking account, so how do you actually do that connection? And increasingly, a lot of the large enterprises are using us, so in the way that you pay your bills, or the way that you apply for an apartment and pay your apartment rent, or something like that.

Ben: Can I ask a funny question about this era? These days, you formally partner with banks in a bunch of ways. You talk engineering team to engineering team. That was not the case back in 2012 and 2013. What code was your team writing to build such an API to a bank account that doesn’t necessarily contemplate having an API?

Zach: In the early days, we knew that there was this principle outlined under the Dodd-Frank regulations that said that consumers own their financial data and they should be able to permission their financial data in the way that they want to.  

If you look at the European regulations, that were pretty clearly over open banking laws in both the UK and Europe, that said that consumers are able to get their financial data, and they actually mandated how banks have to build APIs. In the US, there was this clear statute written into Dodd-Frank, but the rules on how the data would be shared weren’t written yet. It was assigned to the CFPB. The CFPB hadn’t started working on it.  

In the early days we went and talked to a bunch of lawyers, and basically figured out this thesis that consumers owned their financial data and banks had to find a way to provide the consumers with that financial data. If the banks don’t have APIs, then we could build outside integrations to the banks. So we built screen scrapers to actually allow a consumer to collect their own financial data. Doing this at scale is very complex.  

Ben: To hundreds of banks with all these different types of—

David: Probably also terrifying people of screen scrapers, of banks and financial institutions. You knew you had the legal air cover to do so, but…

Ben: Sure their IT teams are having alarm bells going off.

Zach: Well we tried our best to do it in partnership clearly with the banks. I don’t think every bank, if you ask them, would necessarily agree that they had as much data as they might have wanted.  

Broadly, our goal was always to partner with the banks. We wanted the banks to be customers, we wanted them to be a participant in the ecosystem. Many of the banks actually came to us and said, great, we’d like to move to an API. We haven’t built it yet. Please just screen scrape us because our consumers really want to use apps like Venmo, Robinhood, and Coinbase, but we haven’t built these APIs yet.

In a lot of sense, it is very collaborative. In some sense, it was a little bit more antagonistic. In some sense, the banks were frustrated with the fact that Robinhood existed because Robinhood was stealing their trading volume, so they didn’t love FinTech. They made it a little harder for us.

Eventually, it got to the point where the CFPB started to write the rule and take the actions, and it became very clear that you can’t really tell a consumer they can’t have access to their bank transaction data or they’re not allowed to see their account routing number. If a consumer wants to open a new investment account, you can’t stop the consumer from doing that.  

Eventually, we got to the sense of really strong partnership and collaboration. At this point, the vast majority of our data comes from API-driven integrations because the banks have had the technical sophistication and time to figure out how to build APIs in a good way. We’ve also partnered with them, we’ve built API platforms for them, we helped them launch APIs and so forth. We now are in a much more long-term sustainable technical infrastructure state, but in the early days there was a lot of legwork.

David: I’m just imagining your early VC pitches where you’re like, yeah, yeah, we’re screen scraping the banks now, but don’t worry. In the future we’ll get to APIs.  

Ben: We’re going to get people’s usernames and passwords. We’re going to store those. Then we’re going to have a little bot that logs into their account for them and executes a transfer acting on their behalf as if we’re them logged into the bank. It’s got scary written all over it.  

But here we are today. This is an amazing tech company story where you envisioned it’s going to be ugly getting there, but then the future when we do get there is actually the thing that everyone wants and is much better for consumers.

Zach: I think a lot of elements are correct. Individually when we first thought about building this company, I wasn’t sure if anyone was going to use it. When we talked about, all right, great, a user wants to link their bank account with Venmo, (1) is anyone going to do that? (2) Is the infrastructure going to work? (3) Is any consumer going to choose to enter the necessary data, which was at the time of username and password?  

It turns out people did it in droves. Despite the fact that we felt very, very good about the infrastructure that we built on the backend, the security team that we built, the level of oversight, the privacy protections we put in place, and so on and so forth, we couldn’t guarantee that consumers would feel good about it when we launched it. So we were skeptical.  

It turns out the value to consumers was very, very high, the customers that we worked with ended up building amazing products, and this ecosystem just took off. Despite the fact that we had this theory early on that all the banks should launch APIs, I think if the ecosystem hadn’t taken off, we probably wouldn’t have seen the banks actually build this. In some sense it was a chicken and the egg thing where we had to build the less scalable integrations before we could get to the more scalable ones.

Ben: We interrupted you earlier when you were taking us all the way to the FinTech boom and then bust.

David: Call it 2022, yeah.

Zach: You asked about what products we were building. We built bank linking, broadly. As we moved forward in the air for Plaid, we started to build things that rely on linking or things that are adjacent to bank linking.  

We built out a set of credit-oriented products, so asset verification, income verification. Whenever you apply for a mortgage, you need to verify your assets. You need to verify your income. If you’re applying for an auto loan, you need to prove that you have verified employment. We can do all that digitally.  

We acquired an ID verification company. Every time you link your bank account, you oftentimes then have to verify your ID, the step before or the step after. If we can tie that together, we can make it so that you can verify your ID once and then every time you link your bank account, we can pull along a verified identity and it becomes very, very powerful.

We built bank payments infrastructure, so not only do we let you collect your account routing number, but we actually let you set up an ACH payment. You could do something like paying a bill, funding an account, or whatever that is. Then on top of that, we built this big analytics layer, which I’ll come back to later.  

In 2022, we had this huge variety of products and endpoints, and we’re touching a bunch of different markets. What that meant is, on the one side we were working with most of the FinTech, the majority of the FinTech companies to do many things. We’re working with more and more of the banks who are working with more and more of the enterprises. Growth was good.  

We were also very exposed to the macro cycles of financial services. As all of you know and all of your listeners probably know, financial services have these big cycles that they go through basically driven by interest rates.

David: A lot of money was moving when interest rates were zero.

Zach: Exactly, a lot of money was moving. In the second half of 2022, we saw this rapid increase in the interest rate. What that meant is that investment markets crashed and lending markets basically froze. Lenders didn’t want to lend anymore, stock prices dropped, crypto prices dropped.  

The funny thing is, in our data we see that consumers rapidly sign up for and purchase stocks when stock prices are high. Consumers rapidly sign up for and purchase crypto when crypto prices are high. When the prices drop then the usage drops, the exact inverse of what perhaps people should do but it is the reality of what people do.

Ben: Get greedy when others are greedy, I think is probably the phrase. right?

Zach: Yeah, something like that.

David: And what was your business model at this point in time? Were you getting paid on a per transaction fee, a per token fee?

Zach: Behind the scenes we have a ton of different endpoints. We have more than 100 SKUs, each of those is priced a little bit differently. But you can think of our business model as making money in three senses.  

The first is a per action sense, meaning every action a user takes. When I say action, that actually breaks into two sides. One is a per user signup fee, and then one is a per payment fee. Then we have a per user per month fee for the different products that we have. Per user per month actually stayed incredibly stable, per payment stayed fairly stable, and then new user signups fell off a cliff.  

David: So the portion of your business that is tied to essentially volume and usage within the system was going great during SERP, and then all of a sudden not.

Zach: Exactly. That definitely slowed down. For the most part, though, the business continued to stay fairly stable, so we didn’t see any revenue declines. We saw slower revenue growth because again, the pre user per month and the usage base fees continued to grow. But we saw a decline in relative growth.  

The best way to think about it is if a lender slows down their lending, they may sign up less new users, but they’re not going to stop collecting repayments from the existing users that they have. Our growth may slow, but the absolute amount of revenue that we have didn’t.

The second half of 2022, the first half of 2023 were much slower for financial services, startups generally, but then started to reaccelerate in the second half of 2023, and into 2024, and now into 2025. We’ve seen many quarters of accelerating growth.  

While I would like to not go through an interest rate cycle like that again, I’m aware that we will. As a society and probably as a company, we’ll go through another interest rate cycle. A lot of senses, we came out of that much stronger. We launched major new products in business areas, we fully re-platformed our strategy, and the business has been doing really great, especially this year.

Ben: I’m not going to let you get off with a phrase like re-platformed our strategy. What does that mean? That’s MBA speak right there.

Zach: That is fair. I’m not an MBA, but…

David: You did work at Bain, though.  

Zach: I worked at Bain. I worked at Bain for 12 months. I think it was 12 months and one day. I earned one bonus check, which was $4000. It was the most money I’d ever seen in my life, and that gave me all of the money that I needed to quit and try to start a startup, and lasted me a full two months of rent in New York City until I was out of money again.

Ben: You have a totally different strategy now. You have diversified into three new businesses. I just read your annual letter. Would you have diversified the business away from just bank account linking if it weren’t for this bursting of the FinTech bubble?

Zach: We definitely would have. The strategy that we’ve always had is we need to build the API for your bank account, the bank linking functionality. But in the long-term, we believe that based on all the data that’s coming through the system and the user patterns that we see, we can build a much more valuable analytics business that can meaningfully change the way that we do important things in financial services over time.  

We’d always had the multi-step process of first build a bank linking business, then use the data to go solve fraud or solve credit scoring. But we had to get to this certain amount of scale.  

What I will say really enabled it was actually raising the large round in 2021, we took that capital. We rapidly could have ramped our headcount, predominantly in engineering, to go re-platform basically all of the data backend, so that we could now shift to being an analytics business so that we can build great analytics products, and then we allowed revenue to catch up and surpass.

That’s what you’re supposed to do when you raise a fundraising round. Actually looking retroactively on our financials, it follows the exact right trajectory. You see the decline in operating margin and then the re-acceleration in operating margin. That round really enabled us to go make this big investment.  

The products that we’ve been focused on are using the aggregate data set that we see, so using the users that have linked bank accounts through Plaid, seeing all the applications that they linked to, again understanding the fact that we own an identity verification platform and we can link that to a government-issued ID, ingesting a bunch of data exhaust from the actions users are taking, ingesting third party fraud signals.  

We’ve created three major new product areas. The first one is around anti-fraud. We have some products that we’re going to launch very shortly, expansion of the anti-fraud product set, where we can look at a user’s patterns across all of the apps that they’re using, and if they commit fraud in one of the apps, that can then be reported to us. We can federate out that fraud signal. Or we can see the fact that they’ve just signed up for 4 loans in the last 12 hours.

All right, maybe that’s a flag. We can build this algorithmic type of fraud tool, serve that up to all of our customers, and they can better protect fraud in the ecosystem. It’s an angle on fraud detection that no one’s ever had the data to build. That’s one example.  

The second big example is building a realtime credit system. FICO came out with the way that credit scores are built in the late 80s, early 90s. Up until now, most loans have been made based on FICO data. We believe that FICO data is great, but if you augmented that or expanded that by using real time data, you have a much better picture of a consumer.  

Ben, if you’ve got a new job tomorrow, don’t go get a new job. I really am glad that you’re doing the job you’re doing, but if you got a new job tomorrow that paid you five times as much, you would be a much better credit risk because you would have more free cash flow available, you’d be able to pay down greater debt service, yet FICO doesn’t include that data very well.  

So we have a lot of real-time data that can look at changes in jobs, changes in spending levels. If you move into a cheaper apartment but you didn’t get a new job, you’re actually a better loan risk. We can understand what the underlying spend is on a given month or quarter a year, and then build a credit score that sits on top of that.  

Then we’ve done a bunch of work on payments analytics, helping enable bank payments to be something that can be more reliable, more predictable, and so on and so forth. Basically, everything that we’ve launched over the last two years has been a version of an analytics product that leverages the aggregate data set that comes through the rest of the platform.

David: And this is really cool because I imagine there’s nobody else who sees as much data across consumer finance as you.  

Ben: What’s the 50% number you guys have? Is 50% of Americans use Plaid?

Zach: Yeah. More than one in two people in the US that has a bank account has a link through Plaid.

David: That’s incredible. You could be J.P. Morgan and be the largest financial institution out there, but the only data you’re seeing is J.P. Morgan walled garden data. Or likewise you could be Visa and be the largest credit card network out there, but all you’re seeing is credit data across the actions that your customers are taking with payment data. With Visa, you’re seeing the whole picture of everything everyone is doing.

Zach: The way that we think about our dataset is that we have a lot of unique elements of our dataset. We don’t have anywhere near the depth of customer information that J.P. Morgan has on J.P. Morgan customers.  

The customers upload a lot more data to J.P. Morgan. The customers use apps a lot more than they would interact with Plaid. There are a lot of things that J.P. Morgan would see that they can build really wonderful products for J.P. Morgan customers.  

We have a unique data set in as much as it’s an aggregation of a bunch of things that hasn’t been aggregated in this way before. Meaning we see all the applications that consumers link to. We can see the activity within some of those applications. We can link that to government-issued IDs or bank account data, and so on and so forth.  

Our thesis on product development is not just that we have a large data set, but it is that we have a unique set of things that come together in a way that no one has ever analyzed for fraud before, or no one has ever analyzed in order to build credit scores before. That’s the vector that we push on, which is what are the unique things that we can do that haven’t been built before.

Ben: David and I are so interested in these multi-hundred-billion-dollar, trillion-dollar businesses where their first idea was actually the good idea. Then everything else after that has just been cute. You look at how TSMC tried to get into solar cells and all sorts of things, and the right answer was just keep making integrated circuits.  

Are these new business lines interesting for you guys and working, or was it just actually bank linking is an amazing idea?

Zach: Well bank linking is certainly an amazing idea. Don’t get me wrong. we’re still investing in that, that is still growing, and I think there’s a lot of room left for it. The way that we came up with all these is based on the things that our customers are trying to do with the data, but they don’t have the scale to do it themselves.  

We had a lot of customers that were trying to build credit scores on top of transaction data that was coming in, or credit analytics that were based on transaction data that’s coming in, but they just didn’t have the data scale to be able to do the level of analysis that they needed to do. So they would come to us and they would say things like, hey, can you just do this analysis for me, or could I send someone to work in your database and just build some queries for us?  

We didn’t do the second one to be clear. We were taking these real-time things that exist out there and then just backing into, okay great. Because we have the data set structured in this way, then great, we can build a lot of these analytics.  

I would say on the fraud side, it’s fairly similar. We’re looking a little bit more into the future on the fraud side because not a lot of people have had this data that is queryable in the way that we have. But I would say for the most part, yes, these products are working.  

They’re still very early. Credit scoring is a gigantic market. We are a tiny, tiny sliver of it today. We hope that that is the start of something really large. Same for fraud, and frankly same for bank payments.  

It is very fun to go in, be able to sit down with customers, and hear them say, hey I really wished I could do this thing with my data, but I think you can do it with your data in a much bigger, better way.

Ben: I was expecting you to answer with a stat from your annual letter, and I just have to say it because I think it’s astonishing. You were very humble there. New products, the three that you just talked about, represented over 20% of ARR in 2024, compounding at 93% annually.  

That’s what it’s supposed to look like. When you have a core business and you’re launching new growth businesses, that’s the exact profile that you are hoping and dreaming for.

Zach: I agree. We’ve been pleased with the progress so far. I think there’s a lot more room to go.

Ben: Wow, you are ready to be a public company CEO.

Zach: There’s a great book, I can’t remember who wrote it, but the title of it is Pleased But Not Satisfied. Just the title of that book. I have it on my shelf behind me. Normally I have a bunch of books behind me when I do these. Please But Not Satisfied (I think) represents a lot of my management philosophy.

Ben: I want to shift back to the managing a growing business in a cyclical environment, both cyclical on your customer side because people are using FinTech’s apps more and less, or there’s an ebb and flow there, but also on your own funding, your own valuation, you raised a large, successful financing round this year at a much lower valuation than your big 2021 round. Can you talk us through how you thought about that, the mechanics of it? It seems like you were pretty intentional about managing things like employee liquidity in that.

Zach: We signed paperwork to sell the company to Visa for about $5 billion in 2020. In 2021 we raised a round of financing at $13½ billion (give or take) valuation. We then raised a round this year at around a $6 billion valuation. So a big spike in valuation and then a decline in valuation on the other side.  

What’s happened in that period is largely market multiples have changed. 2021 was all time high market multiples, and even better we had just had the best advertising ever for the company happen. The DOJ wrote this big letter of why Plaid was going to take over the world, Visa shouldn’t be able to have it, and so on and so forth. That is the best possible environment to raise money in.  

Then this year we raised money, a very different multiple environment. The business was fundamentally a much stronger business. Great growth, break even, new products growing really quickly, compounding at a great rate, really solid customer base. All of the metrics looked much better in this year than they did in 2021. We were telling the story in 2021 of getting to where we are now.  

The reality is market multiples change. From an internal standpoint, I think we try really hard to consistently have this employee message saying, evaluate our success based on the metrics that we set out, the impact, the progress that we’re making along the stretch of goals that we have, and the valuation will fluctuate as multiples fluctuate.  

Now we can say that until we’re blue in the face and employees will still care quite a lot about the valuation. It’s not to say that we don’t care about the valuation—we do—but ultimately we focus on the things that we can control, and try to improve the fundamentals over time. Then we believe in the long-term the market will weigh that accurately.

Ben: So mechanically, the way that venture capital financing works is someone invests that valuation, and then as long as that valuation keeps going up, every party is happy. The investors are happy, the employees are happy, given this whole crazy strike price options thing the way that employee compensation works in this system. That’s just the way it’s supposed to work. What things break when your valuation goes down, and how did you account for that?

Zach: We don’t issue options, we issue RSUs. Because you’re issuing RSUs, you don’t have the strike price issue. Without getting into too much of the tax detail, it means that that is not as much of a problem for us.  

We were fortunate that all of our rounds have had very clean terms, meaning that investors may well be disappointed that the price has come down. Actually, I shouldn’t say may well be disappointed. I’m sure they were disappointed that the prices had come down. But ultimately, they are still along for the ride. We actually had a lot of existing investors reinvest in the most recent round, believing that there’s a great deal of growth ahead of us.

David: They obviously operate in the same fluctuating market conditions as founders do too.  

Zach: And I would say it’s not a surprise to any of our investors. We’ve been pretty transparent with our investors and our team over time. We’ve cut the internal valuation multiple times between the 2021 round and now. As much as this is not a fun process to go to to get here, I am excited now to have this behind us and be focused on post valuation reset, just really laser-focused on growth.

Ben: It must just be maddening when a number that everyone is anchored on is going down, but you are well aware that the business is at the strongest point in history.

David: Intrinsically worth more.  

Zach: Yes.  

David: I wonder if it’s perhaps because your actual operating business is also indexed to the financial markets. You can either fight the cyclicality of your industry or embrace it, and it feels like if you’re going to operate in financial services, you just need to embrace it. It feels like you’ve adopted that mindset.

Zach: We do both. We fight the cyclicality, and as much as we launch products that are either not cyclical or countercyclical, and over time as we get bigger cyclicality should impact us less. But we also embrace it. It is just a reality of our business.  

I hope that my lending customers grow a ton. And even if I launch products that are countercyclical, I hope that they continue to create cyclicality forever because they’ve grown so much and they represent such a large portion of our business.  

But on the flip side, it is something that we have to be aware of. It’s something that we write in our shareholder letters so that our investors understand it. Thinking about one day becoming a public company, we want to continue to be very transparent on the drivers of growth for our business.  

We control a lot of the fundamentals of the business, but we don’t necessarily control the way that macro is going to impact us. We can react to it, we can prepare for it, but we can’t predict it.

Ben: Could I ask about your different moments in time of product/market fit with banks? Because it seems like you always had product/market fit with users being willing to off, so apps can do cool things. When did it start to change with banks where it went from feeling like you were pushing a rock up the hill to banks looking and saying, oh, your vision’s right, and we agree with you about this future. How do we help you?

Zach: There were a handful of moments where banks started to understand and really think about technology, using technology to serve their customers in a more modern way. The first one was actually GovCloud. I think that was in, was it 2014? Maybe 2015? Somewhere around there. I’m not sure actually when it launched, but this is certainly when the bank started talking about it.  

When the government said, oh my gosh, we can put data in the cloud, Amazon launched GovCloud behind it. That was a big step forward where the bank said, if the government can put data in the cloud, then maybe I can put data in the cloud.  

The next one was a series of announcements from J.P. Morgan saying this year we spent $2 billion on technology. Next year we will spend $4 billion on technology. Recently they’re saying $17 billion in technology. They’re the leader, they’re the biggest. But every other bank looked at that and said, you’re spending $17 billion in technology, I should be spending on technology. What will I get for it?  

The third big thing that happened is that the FinTechs did really well. Robinhood grew a lot. In growing that much, they started to steal customers. They started to have high valuations. A lot of the financial services players either had to react to them.  

You saw Schwab cutting their trading fees. You basically don’t find flat trading fees anymore in the industry because Robinhood said, no, no, no, no, it’s free and everybody had to react to it. Or you find them copying. You oftentimes find both, so reacting and then copying.  

As the bank started to lean in and build great financial technology products, they were using it to better acquire customers, to serve customers more cheaply, things that are less visible. They started to use tools to avoid fraud, to make better underwriting decisions, to improve efficiency of their teams, and so on and so forth.  

The reality is just the value is there, but it took a handful of these proof points, the expansion of FinTech, the GovCloud launch, J.P. Morgan just announcing these gigantic numbers in terms of how much they spend, for the industry to follow along.

David: In a lot of ways, you guys are like Microsoft or maybe Microsoft in the late 90s, early 2000s, in that it’s important that you have a great brand both with consumers, with large enterprises, and financial institutions, and usually those things are not the same playbooks. How do you think about Plaid’s brand, building trust with consumers, and trust with, like J.P. Morgan?

Zach: Well, first I have to acknowledge that any sentence that compares Plaid to Microsoft is the greatest compliment that you could ever say about our business. Thank you.

David: You’re welcome.

Zach: We think quite a lot about how to build a brand on three sides. We want to build a brand for developers regardless of where they work, but for developers. So where we started, we started with developer roots. We want to build a brand that financial institutions know and understand because they’re key partners to us. Yes, they’re oftentimes customers that are also data sources and partners in a lot of ways. Then we want to build a brand that consumers understand and trust.  

Actually, I think the consumer one is the hardest because we build a very thin user experience. Our user experience is embedded in every Plaid-powered product, and it says, hey, you’re linking an account via Plaid in order to do this thing, and this is what Plaid does, but we don’t have a lot of real estate there. In a lot of sense, we think about a brand that’s like the card networks, but the card networks have the cards with the logo on the back of it. We have just this 15–30-second user experience that a consumer sees and goes through.  

Ben: And your goal is to actually minimize that, to make that user experience as short as possible.

Zach: Yes, so it’s hard to take credit there. But the feeling that we want to create is a sense of, oh that just worked, or oh that was simple, and a sense that, oh I trust this, like I feel like I have resources and tools. So we’ve built a handful of tools that you could interact with either via that linkage or asynchronously to see where my data is going? How is it working? We’re working on a handful of things that are related to increasing security and privacy protections for consumers.  

Ultimately, we think we want to create the brand that is steeped in trust, steeped in clarity and understanding for consumers. But ultimately it’s an ingredient brand. It’s a thing that you interact with for only a few seconds, that supports the brand of the customer that you’re going to go use.  

So Plaid’s brand should support Venmo in some sense. It should create a little bit more trust or a little bit more simplicity for Venmo, but we never want to use SERP, the brand that Venmo has created with their own customers.

Ben: All right. I know you’re close with Hamilton Helmer also. Give me your own Seven Powers analysis. Why can I not just wander out there tomorrow, now that all these banks have these nice APIs, and I’ll just build something that looks a lot like Plaid?

Zach: I think a lot of it comes back to network effects. I think it’s probably the easiest place to start. The thing that matters most to our customers is how many users that try to sign up end up signing up. In substance, you could say we’re onboarding as a service.  

If a user wants to sign up for Robinhood and that user fails to sign up for Robinhood, Robinhood is frustrated. If the user signs up for Robinhood successfully, they’re very happy, we provide a lot of lift there. For users that we’ve seen before, we can do a lot of things to make the user experience faster and easier. If you’ve verified your identity once, we can automatically pull that identity through in a better way.  

First and foremost, we get onboarding right and we do a lot of that through network effects. Second is that there are data network effects on the backend as well. Because we see all this data coming from all of these users and all these places, we can now build products that are differentially useful to our customers. We can build a fraud analytic that no one else can build. We can build a credit product that no one else can build. That’s probably the foundation of it.  

I would like to think that in the long-term, we’ll have some brand differentiation, but I don’t want to kid myself because even Hamilton says that brands are the weakest form, perhaps, of power.

David: Ah, it’s funny. We disagree with him on that, but I think brand is actually super important. That’s why I asked the question a minute ago. In my view, you’ve done this amazing job of starting by powering this new wave of FinTech apps that felt almost dangerous to use. It was millennials who were young at the time, who were using Venmo and be like, yeah, why not? Sure, I’m going to give my bank credentials to Venmo.

Ben: Taking things into my own hands, even if it’s a little risky.

David: And over time you’ve now become, oh no, this is actually the safer way to do this. That’s a very difficult thing to do.

Zach: The big shift for us was my mom, a couple of years ago and she was in her late 60s at the time, called me and said, hey my friend recommended this Rocket Money product. It helps me manage my bills. Is that safe? And I said, yeah, mom, it says Powered by Plaid, the middle of the sign [...]. Don’t you recognize that? And she’s, oh, I guess so. Okay. She’s like, I’m going to tell all my friends. And she did. She told all her friends. We saw this mass number of signups from people that we never thought would be interacting with finishing technology and…

Ben: Not just from your mom spreading the word.

Zach: Not just from my mom, not in a lot of different areas. The one other thing, while we’re talking about power, the thing that I know might not fall into the Seven Powers framework but I think is really important, is also just a willingness to move fast and build products faster than others in the market. I know that it is not what Hamilton might call a durable competitive advantage, but I think it matters quite a lot. That for us is one of the things that we also push on is we should move fast as a company value. We push quite a lot trying to be the first, the best, the highest quality, the fastest moving, and so forth.

Ben: My pretend MBA, which I don’t have putting that hat on, I would say that’s just operational excellence. That’s not strategy. Everybody wants to be the fastest. Everybody wants to have the culture that ships the most product, and you just believe you’re very good at it.

Zach: Exactly. Hamilton would call the best companies process power, and he would also say that tech companies are not allowed to consider themselves as having process power, but I should say we should also aspire to have that one.

Ben: Okay, you talked about how you started as a developer-focused company, how important it is to build trust with developers and make their lives easier. The whole notion of being a software developer is extremely different today than it was a year ago with the advent of AI. How are you thinking about being a company with developers as your primary stakeholder?

Zach: We started out building products for developers. We thought that developers would be the change maker within the organization. When I say it today, it’s really boring and people will probably roll their eyes. But when you started saying this in 2013, it was unique. Twilio was the one that you—

Ben: You and Twilio, yes, exactly. Ask your developer.  

Zach: Exactly. When we went to financial services, the developers were like, oh my gosh, you’re building things for us. How do I even do this? At the time, our competitors made it really hard to access the docs. We just put the docs online. That seemed very easy and simple, but it generated a lot of excitement.  

There were a bunch of these examples of things that we did. We built on a REST architecture, our competitors built on SOAP. We tried to stay what I would call just making normal decisions along the way, but it turns out that was—

Ben: Modern. You’re building modern software.

Zach: Exactly, modern software. These days, the nature of development has changed massively. So many more people can consider themselves to be developers or Vibe coders or whatever they want to call themselves. The way that we think about writing software has changed and (I think) will change much more over the coming years.  

For example, we’ve shifted to launching a Plaid MTP server so that developers can very easily build Plaid integrations directly within Cursor or Windsurf or whatever it is that they want to build in. We’re continuing to push down this path.  

I think that the way that people not only build products, but potentially even discover products, is going to change hugely as they, in the Cursor chat, they just type in like, hey, what should I use to set up an ACH payment? Or what should I use to set up a bank linkage? We need to make sure that Cursor both says, hey, you should use Plaid.  

But also then when it says, hey, you should use Plaid, they might say, and do these two or three things, or tell me these two or three things, and I’ll set it up for you. We’re continuing to push quickly down that path, and I think we have a lot more to do.

Ben: Interesting. All right, what is something that you used to believe that you have completely changed your mind on?

Zach: I think we’re in an interesting period of work wherein the returns on hard work are not as obvious as they used to be. In the early days of Plaid, one of the things that we were able to differentiate on was what I called grinding projects or grinder problems, where if we just went and did the work more efficiently—oftentimes through brute force than any of our competitors—we would end up with a better product.  

We built 12,000 bank integrations. How did we build 12,000 bank integrations? There’s nothing hard about building 12,000 bank integrations. We just did it. We set up incentives, we set up teams, we set up structures, we set up a culture where we just said we’re just going to go brute force, do all this stuff that we need to do. In today’s software development environment, that is no longer a differentiator.  

It’s not about the pure volume of work that can be done necessarily, because agents will do much, if not most, of that work for you. There are increasingly the decisions that you make as a developer or as a product manager or as a designer or whatever it is. The quality of those decisions matters quite a lot more.  

I think there are increasing returns to strategy, there are increasing returns to thoughtful decisions, but there’s a decreasing return on just pure volume of work. That may change in the future again. It may get to the point where we’ve all evolved to use the new tools, and then volume of work actually matters again. but right now, I don’t think pure volume of work matters as much.

David: That’s good news for our friend Hamilton.

Ben: That’s interesting because in theory, once everyone learns to use the new tools—this is making an assumption that the amplification of new AI tools are static, which is is wrong, but let’s just go with it for a minute—then theoretically everyone just has the same 100x multiplier on their work.

Zach: Exactly. I think we’re in a unique period of time where…

Ben: We’re not there yet.

Zach: It hasn’t happened yet, yeah. No one is using the tools at maximum efficiency yet. We’re not at the next efficient frontier. Until we get there, use of tools effectively will matter perhaps more than volume of work.

David: I think Hamilton would probably say, okay, you have to assume in the future that people will learn how to use tools effectively that’ll be evenly diffused throughout society. Yeah, your point that strategy is going to matter a lot more in the current/coming world is a really interesting one.

Ben: I’m so glad that I came up in a different era. I feel like I just worked extremely hard for 80+ hours a week for a decade starting at age 18. That’s the only way that I achieved anything in the world was by working harder. I was not a good strategist in my 20s.

Zach: My co-founder and I were having dinner with a friend a week or two ago. My former co-founder. He’s now off to starting a new company. We were having dinner with a friend a week or two ago and the conversation was basically, we all wasted our 20s. We all did work in our 20s. At the time it was really valuable, but today a software tool could do it in an instant.

Ben: Except that it turned into you becoming a large owner of a company called Plaid. You converted that labor into capital, for sure.

Zach: I’m not saying I’m happy with the results of the work that we did at the time. It’s just the inefficient way that we did it.

David: We’re seeing it with new AI companies now, companies are getting started and in a matter of months hitting $100 million in ARR. That’s because the barrier to get to that scale you needed to grind that existed before, just doesn’t exist anymore. It’s gone.

Ben: Well, Zach, that’s a great place to end it. Where would you like to point listeners if they want to learn more about you or Plaid or follow you anywhere in the world?

Zach: To find Plaid, is just plaid.com or @plaid on X. If you want to find me, I’m @zachperret on X. And if you have thoughts or feedback on Plaid products, I hope that you’ll reach out to me. I would love to hear it as always.

Ben: Awesome. All right, listeners, that is a wrap on our conversation with Zach. If you want to come to Radio City Music Hall on July 15th, we would love, love, love to see you there. That is acquired.fm/nyc to get one of the last few tickets before it is sold out.  

If you want to know every time a new episode drops, check out our email list. It’s also the place where we show little hints at what our next episode will be, share corrections, updates, and little tidbits that we learned from previous episodes. That’s acquired.fm/email.  

If you want to chat about this conversation that we had with Zach or anything else, go to acquired.fm/slack to hang out with the entire Slack community. With that listeners, we’ll see you next time.  

David: We’ll see you next time.