Welcome to the Join Up Dots business coaching podcast interview with with Warren Hogarth
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Introducing Warren Hogarth
Warren Hogarth is my guest today, on the Steve Jobs inspired Join Up Dots business coaching podcast interview.
He is the money man who is passionate about the way we think and manage our money.
In 2016 he launched Empower Finance based on the belief that all people deserve access to expert financial advice (and it should be available for free).
Instead of going to some dusty old office, with an old guy in a grey suit telling you to stick everything in bonds or shares, you deal directly with your own financial advisor working for you 24 hours a day.
How The Dots Joined Up For Warren
As he says “We were fed up with banks and traditional “advisors” so we built Empower to be your independent, trusted financial advocate. Empower helps you stay on top of your finances, get objective, personalized recommendations to make your money go further, and discover and save hundreds of dollars per year.
Check account balances & track your spending, Automatically save to build wealth or pay down credit debt, Find a high-interest savings account, Manage bills and renegotiate to save (utilities, mobile, security), Review subscriptions you’re paying for and many more things too!
Now you maybe saying “Why is it free?” and isn’t that the quickest way for a company to go bust with all our financial information?
Well for most people that might be the case, but today’s guest has helped 3 companies go from $0 to $1 billion, and he’s seen other companies go to $0 (after looking promising initially).
Growing up in rural Australia, he studied engineering, and ended up as 1 of 8 Venture Partners at Sequoia.
They’ve invested in companies like Square, Uber, WhatsApp, and AirBnB, and he stood shoulder to shoulder with founders to build large, enduring businesses (3 went from zero to over $1 billion).
As he says “There’s no guarantees in startups, but I have a lot of lessons learned on how to approach starting and growing a company” which I am bringing into Empower Finance everyday.
So when did the idea to go it alone come to him?
Was it overnight or bubbling under the surface for many years?
And what is the biggest failing that people make when undertaking a startup?
Lack of capital of lack of commitment?
Well let’s find out as we bring onto the show to start joining up dots with the one and only Warren Hogarth
During the show we discussed such weighty topics with Warren Hogarth such as:
Warren shares the number one reason for a startup to fail, and you might be interested that it is rarely down to capital.
Why a company is generally always going to go through a pivot to find it’s true life calling. Not many companies get it right the first time.
Warren Hogarth shares that moment where he knew that he was on the wrong path, and the steps he took to get onto the right one.
Why it is so important to start a business in a market where there are great tailwinds now and the next ten years. Dont let it never get going by lack of interest.
How To Connect With Warren Hogarth
Or if you prefer just pop over to our podcast archive for thousands of amazing episodes to choose from.
Audio Transcription Of Warren Hogarth Interview
When we’re young, we have an amazing positive outlook about how great life is going to be. But somewhere along the line we forget to dream and end up settling join up dots features amazing people who refuse to give up and chose to go after their dreams. This is your blueprint for greatness. So here’s your host live from the back of his garden in the UK David Ralph
David Ralph [0:21]
Yes, hello, a good morning to you. Good morning, every single one of you and welcome to join up dots This is the place to be it really is the place to be. And I wouldn’t want to be anywhere else except for perhaps where my guest is today, where it’s sunny. It’s Gloria now she’s dark and rainy. So I want I want nigga too much. But he is a man who I’ve been wanting to have on the show for quite a while because he’s doing something quite interesting. He’s a man who is passionate about the way we think and manage our money. Now, in 2016. He launched empower finance, based on the belief that all people deserve access to expert financial advice should be available for free. Instead of going to some dusty old office with an old guy in a gray suit telling you to stick everything in bonds or shares, you deal directly with your own financial advisor working for you 24 hours a day. Now, as he says, we were fed up with banks and traditional advisors so we built empower to be your independent, trusted financial advocate. Empower helps you stay on top of your finances, get objective, personalized recommendations, to make your money, go further, and discover and save hundreds of dollars per year. Now check account balances and track your spending automatically save to build wealth, or pay down credit debit for the high interest savings account, manage bills and renegotiate to save utilities, mobile security review subscriptions you’re paying for and many more things to Now you may be saying, Why is he Why is he Bry? It sounds to do good. And isn’t that the quickest way to pace for a company to go fast with all our financial information? Well, but most people that might be the case, but today’s guest has helped three companies go from zero dollars to one big and he’s seen other companies go to $1 after looking promising initially. Now growing up in rural Australia, he studied engineering and ended up as one of eight venture partners at Sequoia that invested in companies like square, Uber, Whatsapp and Airbnb. And he stood shoulder to shoulder with founders to build large enduring businesses free went from zero to over 1 billion as he says there’s no guarantee in startups, but have a lot of lessons learned on how to approach starting and growing a company which I’m bringing into empower finance every day. So when did he get the idea to go it alone? Was it overnight or bubbling under the surface for many years? And what is the biggest failing that people make when undertaking a startup? Lack of capital or lack of commitment? Well, let’s find out as we bring them to the show, to start joining up with the one and only woollen Hogan. Good morning Warren. How are you?
Warren Hogarth [2:52]
Good morning David I’m terrific. Thank you very much.
David Ralph [2:55]
You sound terrific. You sound like you’ve got a rocking and rolling life. Yeah, you’re in Australia. Yeah, you young. Yeah, handsome, young, earning good money, you’re starting companies, life’s good for you in
Warren Hogarth [3:05]
their lives pretty good. I also have two young kids that keep me on my toes all the time as well. So there’s never a dull moment. I’ve been proven,
David Ralph [3:13]
I’ve been proven. And honestly, you might be moaning at it at the moment. But when you you’re moaning because they’re still in bed at three o’clock in the afternoon. That’s worse, that’s worse. It’s a white when they’re coming in. Praising open your eyes, my kids used to come into my bedroom when he was still dark, and go is anyone in the eye and prize your eyes open. I miss those days when I miss those familiar, is familiar, it gets old of us at one stage or another. So we’ve your startup, let’s get straight into it. Because there’s so much sort of information that you’ve got. I like that question that I posed lack of capital or lack of commitment? Where do startups fail? Is there no sort of like blueprint of success? Could they fail for any reason? You know,
Warren Hogarth [3:56]
there’s many reasons I think in in the current market, which is still, you know, a very capital rich market overall. It’s generally not lack of capital. The, I’d say the biggest reason startups fail is saying, like, the dogs don’t eat the dog food, the customers aren’t buying the product. You know, you often hear of this concept of, have you got product market fit? Is it something that customers really love? And, you know, every, every entrepreneur in the beginning likes to think that they know what the customer wants. And, you know, it’s, it’s, it’s tough, because you’re you’re going out on a limb, you’re taking a huge risk, you think you’ve seen some insight that no one else in the world has ever seen? Sometimes, right, and sometimes a little off the mark. And, you know, there’s plenty of companies, I mean, if anyone who’s in a modern workspace these days probably uses a tool called Slack, for example. Well, that company started off as a, as a gaming company that they thought was going to go great. You know, 18 months in, I think it was something like this, that it wasn’t working, they basically did this massive pivot and started doing, you know, communication software. And, you know, a few years later, that’s a 510 billion dollar company. So we don’t always get it right the first time, even the best people.
So it really varies.
David Ralph [5:18]
And is it good that you don’t get it right the first time, because I’ve seen in my business, I would say the majority of people that I speak to in join up dots they didn’t get it right, first of all, they guys kind of got an essence of what they wanted. But it wasn’t until sort of like three versions down the line that it started to come together, is it? Is it good that we don’t hit a home run straight away?
Warren Hogarth [5:41]
Well, that’s another very loaded question. I mean, you know, it’s kind of like, maybe as you talk about bringing up kids, you know, do you do you hand it to everyone on a on a plane? Or do you do you learn a bit of grit and determination and failure along the way? And does that make you a stronger and better person, I suppose, and I think you with, with many companies, you learn so much from the mistakes, it often teaches you to be better, more efficient, more humble, a better listener to your customers along the way. And it’s you know, I wouldn’t want to say universally, it’s better, but the, for the people who take it the right way, the learnings that come out of that can be pretty invaluable. But you can also I mean, you can also set yourself up to, you know, in from a mindset and a philosophy of the way you want to build your company to be sort of agile, I think that’s one of the other critical things. I mean, you know, even with empower, when we were building our first prototypes, we sort of went through an alpha phase, where we, we built what we thought we wanted, what we thought the customer wanted, we release it to a few hundred people, we took feedback for three months, then when you went into sort of a beta phase where we released that we said, okay, now we think we’ve got it, we release it to a few thousand people iterated for a few more months, then we released the to everyone and, you know, frankly, we’re still improving listening. And, you know, you see that in, in, in the numbers in the way the product continues to improve, and people stay more and more engaged over time. But it would have been, I think, a mistake for us to put our heads down and try and build to the end point without, you know, going through that those iterations and those phases.
David Ralph [7:24]
I think it was a loaded question. That’s what I like to do here. Well, and I like to give you a bullet and then get you to shoot yourself. But um, I think if there’s truth in that, I really do i do think that I would personally have hated to create something straight off the bat that really did well, I think it is through those lessons, it becomes stronger and more defined. Now you said something, and I’m going to jump back on it because it intrigued me. You said the word humble, you become more humble. Was that a cocky woman? Was there a cocky version of yourself that thought that you could sort of take on the world all by yourself? Was there a previous version that has become more humble boys? You went?
Warren Hogarth [8:03]
I have definitely been humbled along the way. I think I you know, yeah, early, early on. And definitely in parts of my career, I thought, you know, you’re, you’re bright eyed and bushy tailed you, especially when you’re in venture and you think you know, your your man, your your opportunity is to work with founders to change the world. And in many ways it is. But it’s, it’s easy to get a little over your skis sometime and be a bit overconfident. And you learn a few, a few good lessons along the way, especially when you lose 10 or $15 million, the first few times,
David Ralph [8:42]
and how did you lose it? Was it down the back of a sofa? Or was it on the bus? How did you lose? You know,
Warren Hogarth [8:49]
you said venture capital, you know, you’re investing in people when it’s three or four ideas, three or four people and an idea. And, you know, you’re trying to make 10 to 100 times your money. So the first rule of thumb is if you’re not losing some money, you’re not taking enough risk, because you can’t win them all, if you’re taking on and trying to make you know those kinds of returns. So
David Ralph [9:11]
I was a hell of a risk, isn’t it? 15 million jumping in there. I think once I’d got to about 2 million, I’d be thinking bloody something’s going wrong here.
Warren Hogarth [9:20]
Yeah, well, you know, you you spread your bets and and you stage them a little bit as well. So the first checks, often more like $5 million. The problem is sometimes you get a bit starry eyed and you have to keep supporting a company before you know whether it’ll succeed or fail. But I started my investing career back in 2008. If people remember, or the the slightly older folks listening will remember, you know, this was the time of, I’d say peak, clean energy and green euphoria and that we could, technology could massively change the way we produce our energy energy. And in actually has in many ways, if you look at like solar penetration and wind penetration right now it has but just to give you a listeners a sense, there were about 350 solar startups in the Silicon Valley bay area alone, in 2008, 2009, I think they’d raised I don’t know, a total of must have easily been four or $5 billion of capital. I think at the end of the day, three or four years later, they were maybe two of them that survived. All the other capital was written off. So we lost some money I and we lost some money in that, that period as well.
David Ralph [10:38]
And then did you ever actually have to go back to your wife and say, to you, well, I had a bad day today, I lost 50 million. Do you do? Do you just kind of keep it keep it to yourself? Because I don’t think I could share it with my wife?
Warren Hogarth [10:51]
you have multiple bad days along the way, they generally know what’s going on. You know, just wait, you don’t just walk into the office one morning, go Holy shit, where did it go? It’s, it’s you certainly see it coming when? You know, but look, it’s you know, that’s sort of the, you know, the jovial nature of it right now. But the serious nature is is also a lot of, you know, that it’s much more serious medical says often 30, 4050 people more of these companies. Yeah. And you better make sure you find a home for them and what have you. And so it’s it’s it’s a tough period of time.
David Ralph [11:27]
And how do you deal with that responsibility? Because I think so many people, they go into these ventures thinking that it’s going to lead to a life of freedom, and wild abandonment. And then as it proceeds through, you realize, actually, the only way to scale is by hiring people. And then the responsibility comes to keep it going, because these people are relying on you on some ways. Have you been through that journey? Did you have that kind of this is going to lead to freedom, and just all of them? holidays forever vacations forever? And now you actually employing people and had that kind of fear? Or maybe it’s not a fear? Maybe it’s just a responsibility?
Warren Hogarth [12:06]
Yeah, look, I think most of that responsibility for me is come. I mean, as an investor right now, I have my own company, and I have that directly. But fortunately, we haven’t gone through those kinds of gyrations yet. And, but but, you know, going back as a sort of board member, main funder of the these companies, yeah, it’s a huge responsibility. And I think, you know, the main thing is, there’s, you know, there’s a lot of transparency, when you’re hiring people, people are coming on to these companies knowing that often having worked at a large company before, in two parts, either they’ve worked in a large company before, they’re not enjoying it, because they don’t have the responsibility, you don’t have the thrill of the adrenaline rush that you get from the highs and the lows of a startup of scaling fast have, you know, a company maybe being 30 people today and maybe being 60 people six months from now, and you know, all of the challenges and the personal growth that comes through that. And so people come all the done that before. And so, you know, people are naive when they join these companies, but it’s still never on the other side of funding. And, you know, fortunately, with many of these companies, these are terrifically talented people, and, you know, when things aren’t working, they’re, they’re highly employable. And they usually get, you know, especially in the last five or six years, they get snapped up, you know, quicker than you can sort of click your fingers. And it’s, you know, they’re off to a new experience and something very new. So, but you know, you want it, there’s a lot you can do to make sure that’s a smooth transition for all the individuals involved.
David Ralph [13:48]
So come on you You’re so calm, you’re like, You’re like an Australian, Zen Buddhist. You know,
Warren Hogarth [13:55]
I look, I take it from my personal mindset as well, which is, you know, like, why, why are you here? What are you? What are you doing? What are you seeking to achieve, and, for a lot of people, it’s, especially for me, it’s about personal growth, it’s about learning every day. And, you know, the, you set yourself up, you know, from a personal point of view, where you, you know, your personal burn, no matter how much you’re earning is, you know, if you keep that low, you can keep the flexibility to do some amazing things. And, yeah, so you know, you gotta, you gotta take risks have reward
David Ralph [14:37]
system, what makes what makes whirlwind spit out is dummy and kick his legs and for himself on the floor, where, what makes you lose it what really gets under your skin.
Warren Hogarth [14:48]
I think the most frustrating thing for me is inefficiency. You know,
I like to run a tight ship. You know,
I like to
time is very precious, it’s more precious than capital. And so I really enjoy working with great people. And I and inefficiency is also I want, you know, other people to take responsibility and take action and all the way around. And that way, a lot of stuff that you can get a lot of things done, until the things that frustrated me just when we have a call them avoidable mistakes, or people sort of taking the initiative on things.
David Ralph [15:29]
But let’s play some words now, then we’re going to jump back into course, your personal story, but of course, empower finance as well. He’s Jim Carrey,
Jim Carrey [15:37]
my father could have been a great comedian, but he didn’t believe that that was possible for him. And so he made a conservative choice. Instead, he got a safe job as an accountant. And when I was 12 years old, he was let go from that safe job. And our family had to do whatever we could to survive. I learned many great lessons from my father, not the least of which was that you can fail at what you don’t want. So you might as well take a chance on doing what you love.
David Ralph [16:03]
So you grew up in rural Australia, you studied engineering and was it wasn’t a given that you were going to end up where you are now, or could you have followed the route of, of your father’s, like, so many people have done before.
Warren Hogarth [16:17]
That’s what I was set up to do. My dad was a chemical engineer. When he graduated, University of Queensland, they were there were two oil refineries, one on each side of the mouth of the Brisbane River. And he went off to work in one of them. And you know, as a chemical engineer, that’s kind of the pinnacle of, of what you can do or used to be anyway. And I had done my internship in my new between my third and fourth year of uni or college, as they say, in the US. And I’d done it at BP at the refinery on the other side, and I was signed on to go and and, and build oil refineries and design and help run, run the equipment. And, you know, I went to this lecture from a professor talking about the future of energy and data, materials and bio materials. And I’d had all of these little side businesses growing up from lawn mowing, to tutoring to working on on on ranches, and what have you to, to make a little bit extra income and, you know, keep my mind turning over. And I just thought I don’t want to work for big company. And I want to be part of an industry that’s going to be dynamic and changing over the next 40 years and not be the same. And that was there was literally that it was that moment that lecture and that Professor ended up becoming my PhD advisor. So next day, I went in and applied to do a PhD with his professor, I thinking that would be my ticket also to go overseas. That’s something I’d really hope to do. And sort of that sort of started off this series of events, I swore I’d never do a PhD, I thought that was for folks that were unable to get a job. There’s still a few people that go into that path that way, but there are a lot of also also very talented people who go down that path. You know, I say a little tongue in cheek. And I also swore I’d never do an MBA. And that was another thing that brought me back to the US. And so it was a very interesting and formative period where I was fortunate to sort of have these moments where a cause me to reflect on what I wanted to do over a 40 year career and how dynamic I wanted it to be. And so that’s sort of what led me down this path, but still had no idea I’d be in Silicon Valley or in the US or anything like that.
David Ralph [18:42]
And then did you have that moment of where you felt kind of routed to the spot where you knew what you wanted, but you kind of felt that I don’t want to I don’t want to show people that this was a wrong turn. I don’t want to let people down because it seems to be a truth. But most of us have maybe six months a year, sometimes a lot more than that when we know what we want, but we’re not willing to do it because of how it’s perceived.
Warren Hogarth [19:08]
I that has been, you know, frankly, less of an issue for me. I don’t know why. It’s sort of, I’ve always, you know, I think Fortunately, I again, if I go back to when I was young and making these decisions, my family was extremely supportive of whichever sort of path I wanted to take. And, you know,
so is one of those things at some point, it was like, it’s okay, if you make a wrong, you know, even on the PhD, if I got in a year and and didn’t like it, I could have gone back and done one of these other things. Yeah. Similar to, you know, I had applied to the scholarships to go overseas. And, you know, I thought I was I was hell bent on going to Europe, I’m part of my PhD and spend some time studying in Europe. But, you know, I was fortunate to win a very nice scholarship to come to the US. And that sort of changed my mind as well as like, Well, hey, you know, this is back in 2003, when, you know, when all these were traveling overseas, and you ran into an American, most Americans didn’t want to say that they were American, they would say they’re Canadian. Because
David Ralph [20:26]
they tried to hide, because I would have said I was a Mexican.
Warren Hogarth [20:31]
This was, you know, this was I was in I did my backpacking my rz tour, through Europe and London, in 2002. And, you know, it wasn’t that long ago. But I remember they had the military deployed at Heathrow because they were worried that there were people going to shoot down a plane. So it was not long after the Iraq War, I think it started. And so people were, you know, pretty hesitant and cautious, that period of time. So, you know, it’s just sort of following the various opportunities and keep just always keeping your hat in the ring carving out some time to, you know, even now try and do it, you know, if you can carve out 10 20% of your time to make it to that sort of, sort of meetup or meeting or coffee meeting that you want someone that’s interesting, that might, you know, you might get some nugget of information that could change your mind about something.
David Ralph [21:22]
So let’s bring the conversation right round to empower finance, okay, because that is your that is your baby. That is well, it’s more than a baby. Now, it’s probably a toddler is this, the culmination of many different startups is this, because of those other ones that you’ve been in, the ideas came over, this is totally off the bat, this, this was an idea that just slammed into you. And you knew you had to do it.
Warren Hogarth [21:48]
This, this was
really the learning of nearly eight years, you know, at Sequoia building startups. And me taking a little bit more of a full realistic approach to things. So for, you know, big lessons I learned where if you’re going to build a company, one of the first things is you need to have sort of some kind of sort of secular tailwinds shift in the market where, you know, you’re not one of those 300 solar companies where things fail, really, because it’s outside your control in this case, you know, the Chinese spent $25 billion building solar and there’s no way that US companies are going to compete, you want to try and pick a market where, to the best of your knowledge. There’s great tailwinds, and they’ll be great tailwinds for the next 10 years.
The second thing was just sort of thinking about
the incumbents and how they can respond. And I think this is an area like in consumer financial services, especially in the US. The banks have just proven time and time again, that they’re just not going to innovate, they’re not going to do anything that’s going to help the consumer. If you know, for your listeners in the UK right now, it’s actually an amazing time, because there are all these startup and challenger banks, because the government’s been very pro regulation. And I think if that was the regulation over here, we would be doing the same thing, but in a slightly different format. We’re trying to do something similar here in the US, but we’re trying to do it within the regulatory environment with God. So it was great tailwinds, you know, we saw these opportunities, both also from the millennial generation over here that, you know, the top four banks in the US are amongst the least love brands of any by a millennial, they really don’t care about the bank, there’s no relationship is lost all of its personal touch. Until was about taking those lessons thinking about a an area where over time, we could build, you know, a high gross margin business, and you can do that work very well with software. And take those lessons see those tailwinds that opportunity. And then for me, it’s, it’s always actually, you know, had to take the personal passion box. And ever since I’ve been in the US, I feel like, I’ve been disadvantaged by the financial system here, and I’m one of the lucky ones, and financially educated, I’m on top of my money. And yet at the same time, I’ve made plenty of mistakes that, you know, still impact my credit score today, even though I’ve never missed, for example, a payment in my life, it was just simply the fact that I didn’t borrow money early enough. It’s just all of these little. So was it passionate? Was it a great market opportunity, could I build a great business, and then I found the right people to go started with and when all those things came together, we pulled the trigger and started running as fast as we possibly could.
David Ralph [24:36]
It’s interesting you say about credit score, because I grew up in a sort of household about you saved up for things, and then you bought them, you never didn’t credit. And I remember getting into terrible difficulties with trying to sort of expand certain things, due to the fact that I couldn’t get credit at all, even though I had money in the bank. And I would say to him, Look, I need a deeper little bit, and then I’ll give you the money straight back. No, no, you can’t do it. So is that something that people should think about? building a better credit score, right, from an early business, early stage, even if you’re not planning to have a business, it could come in useful in the future.
Warren Hogarth [25:12]
So that’s the way the current system forces you to be. And as you just said, it’s completely asinine. I mean, if you know, Microsoft, where I forget where it was now, five or six years ago, you know, they never borrowed money in the past, I think they had a few, like, 100 billion dollars of, of cash on the balance sheet, and, you know, spinning off tons and tons of, you know, free cash flow. It’s not like a bank would say, Well, hey, Microsoft, you’ve never borrowed money before. So we’re not going to lend to you. You know, you’d look at the cash flow of the business, you’d look at the current assets, you’d look at the, you know, the quality of, of what’s going on around the business, and you’d make a decision. And I mean, but in the least the way it works here is, if you haven’t borrowed money before, no matter how responsible you’ve been with money, if you’re never, you know how to lead payment in your life, if you never overdrawn your account in your life. And you go to borrow in you know, you’ve got great income, and you go to apply for that first credit card, you will get denied. I mean, it’s just retarded. And then, if you haven’t done this for, like, if you haven’t had three different they call it the lingo in the industry is three trade lines for three years or more, which basically, if you haven’t had, you know, three credit cards, which How do you get the third one, if you need to have the first one for a few years, if you haven’t had three credit cards, or a home loan, or, you know, auto loan all these things for at least three years, you know, you still won’t get one. And if you also if you have w two income, which means if you don’t have, so if you have, if you don’t have salaried income, then you often get denied. So you know, 40% of millennials going to be 50%, in two years, have side hustlers. But that’s getting a lot that gets heavily penalized, even though those are people that tend to be able to, you know, get jobs easier, have multiple sources of income, so that you can write at any bump in the night. But they’re disadvantaged heavily from, you know, borrowing. And so there’s all of these like, sort of backwards things that were built for a system when, you know, software and data didn’t exist. And we had to sort of, you know, proxy people’s income by the fact that they had, you know, a bit of the same job for 20 years.
David Ralph [27:23]
So, so, stepping back, I want to give the listeners a sort of blueprint to follow as much as we can. So would we say that the first thing for them to think about is trying to find a gap in the market that isn’t a sort of a parasitic company is not relying on the success of another company to allow it to flow it, she’s it would that be the first thing that they need to look at?
Warren Hogarth [27:47]
Yeah, it has to be, you know, a gap in the market. And then I’d say it ideally something that you have experienced firsthand, either through your professional life or your personal life as a customer. And going back to that sort of, you know, really making sure you understand the pain and the nuances of it.
David Ralph [28:09]
So you would be the ideal avatar, so every individual out there, they would have something in their life, where they’re thinking, this is rubbish, this, this really is rubbish, and it’s their pain point, I should look at, you know,
Warren Hogarth [28:22]
all the companies that we backed, I’d say 80 to 90% of them, that was the case, people that either worked in an industry and understood it, or they personally felt the pain. And so
David Ralph [28:33]
so how do you back something out, you look at somebody else’s pain and go, yeah, I can see this, this is worth investing into, you know,
Warren Hogarth [28:42]
on from the investor side of things, and you were fortunate in that we can rely on customer references. So when somebody comes knocking on the door, you know, you know, we’ve generally been investing in a market for some period of time. So we’ve, we’ve spoken to a lot of customers already. But if even if it’s a completely new market, and there’s a good chance we’ve invested in other companies in a similar sector that have sold similar customers or to the same customer, so we just pick up the phone and start calling people.
David Ralph [29:18]
But how do you how do you? How do you know which people to phone this? This is the thing that I’m interested in? How do you know, the right referrals to get, you know, we all go on TripAdvisor, and we all look at hundreds of reviews of different things. And they kind of go blind after a while How do you know very good ones. You know,
Warren Hogarth [29:38]
this, this is, you know, this, again, this is wearing the investor hat. This is where it’s more of the art and the science. You know, you know, fortunately, taking place like Sequoia that’s been an investor for for 30 years and helped invest in build, many leading technology companies were fortunate that we can pick up the phone and call, let’s say the CTO or the Chief Product officer, or the Chief Information Officer, or the head of security at, you know, a handful of the most of interesting places. And then what we’ll do is if they say, Yes, we’ll try and get those people as customers for these companies, even before we invest. So that’s one way we do it the other way. I mean, frankly, it’s, you know, one thing we thought we had a blind spot in is, you know, really understanding the millennial like, you know, the college age audience, at one period there, and so we literally went out to 10 different campuses and, you know, created an ambassador program where, you know, we would give advice and mentor students and an exchange, when we needed some feedback on various ideas that we needed to get a pulse on what was going on, you know, who what was going to be the next Snapchat or Instagram, you know, we would send out these surveys and get on the phone and start talking to people. So that’s how we would do it as an investor. Don’t get Snapchat,
David Ralph [31:01]
I don’t understand it at all. Did you? Do you understand it? I I come from a background where you create content to last forever. And this 24 hour business? I don’t get it. What’s the point? You know,
Warren Hogarth [31:15]
different generations tend to react, you know, have have sort of these adverse reactions, I think, to the prior generation, and I think there was a, there’s a generation where, you know, the vanity of Facebook and Instagram, people wanted something where they could just be themselves, but it couldn’t stick around. And so the ephemeral nature of being able to send something, but know that it wouldn’t still be on the internet and creating this fingerprint of you was very appealing to to a very specific generation.
David Ralph [31:44]
Well, he’s appealing to all generations, I go back to the 80s. And that’s bizarre things I used to get up to, and dodgy haircuts and stuff. Nobody carried a phone round with him. Nobody had a camera. It’s all it’s all evidence, it’s been wiped away. I’ve had some dodgy stuff go on. And no one’s knows about it, that this is what people need. They’ve got to realize it’s not about Snapchat, it’s about time travel, go back in time, and you can sort this out instantly. Or in the future won’t matter, because we’ll just be so so accustomed to it that all those dodgy things everyone will know. And, but it just won’t matter. Oh, what a depressing way to think. I thought I’d get you into a positive coming travel don’t but you went you went sensible again. Now, woman. So when you go back to empower finance, let’s look at that, because that is your baby. I looked at that. And I thought this is brilliant. But in the back of my head, I thought, I think I’ve heard other companies doing this. Is this a brand new idea? Were you the first one I’m other people jumping on the bandwagon? Because I seem to think there’s something called like plum or something that does similar things. You know,
Warren Hogarth [32:50]
about this two main buckets of competitors that we think about one is there was a company about 1213 years ago now that started calling mint. Yeah, so you know, this was a company. So again, just context for, you know, people that aren’t in the US, you know, the 16,000 banks in the US, most people have their money in at least four or five different places. And so just simply understanding where you are, at any point of time can be tricky. Because you don’t, you know, you’re not logging into five different, you know, credit cards, investment accounts, banks, etc, all day, every day. And so this company men started, it was a web company, and they allowed you to aggregate that information. And it was fantastic. But unfortunately, they were bought by a large tech company, and nothing happened after that they never took it to the next phase, or the phase after that, where it said, rather than just show you where your money is, like, give me advice, tell me what to do. A lot of people don’t have sort of some fundamentals in in like how to best manage their money. So if you had sort of that, you know, trusted aunt or uncle or a friend that would you know, is really good with money that will help you know what to do, or simply that a lot of people, we just don’t have the time. So what if someone’s just looking after a 24, seven, and pushing you a notification if there’s something you should do or to change. And so they didn’t build all of the sort of technology to take that data and actually make recommendations on it. And then they didn’t do that last step, which is, once you give someone a recommendation, allow them to take action on it in two or three taps, because the worst thing is someone says up, you know, you know, hey, hey David you could refinance that loan interest rates just went down, or you know, what, if something just happened, your credit score improved, you got great, but I don’t have time or what you know, it’s, I know, it’s going to take me 45 days to do it. By the time I go to find 10 different pieces of paperwork and do this crazy signatures and what have you. If you tell someone what if you say, Okay, now just tap three times, you know, agree that, you know, make sure you understand what you’re doing. And then we’ll take care of the rest for you. And that’s really what we how we think the future should be. So today’s our main competitor, there’s also a handful of companies that really focus on investment advice, like what to do with your stock portfolio. And we stay away from that a little bit, because that’s great. But it doesn’t apply to people’s day to day cash and living expenses, and loans, etc. And that’s where we think we can help a lot more people.
David Ralph [35:24]
So how did you start with this? You get this idea? And you think this would be good? I couldn’t fathom how to start this. Do you surround yourself with people? Do you go and find the right people? Do you sit there in a in a room like a mad professor has been come out six days later would be a hairball over the going is alive is alive? I’ve done it? How do you actually start getting one of these things off the ground? You know it,
Warren Hogarth [35:48]
this is one of those things that this is an idea that have been bugging me for four or five years. And at some point, I thought someone was going to do something about it, but no one was doing anything. And then there were two big aha moments for me I would one is I just get out and talk to a lot of people. And then finally, I was with a was with a good friend of mine who lived in this place called Conway, which is just outside of Little Rock, Arkansas, in the US, it’s a very small town. And, you know, I was in the Silicon Valley bubble and I was trying to make sure I got out of out of that bubble and understand if people in the rest of the country would want a product like this. And without I didn’t bring this up. He proactively brought up just the challenges of managing his own personal finances. And they’ve got four kids, and you know, one income and student loans and home loans, all of this kind of stuff. And just like this just kept coming up time and time again of like, hey, what should I do? How should I best be managing this? What have you seen? What could I be doing better? I know, there’s more out there, there’s so many choices, I just don’t know what to do. And that was the final one to me, because this was sort of like, Hey, this is not just a, you know, a problem of sort of young felt like, you know, wealthier young professionals or people on the east or the west coast. This is problems that are affecting everyone on a day to day basis. And then the other big one for me is there is this shit technology shift happening in the US where the pipes, sort of digital pipes being built between all of the various banking institutions that will allow us to build the product that I want, that wasn’t possible five or 10 years ago was very brittle. Now we can add like especially that last piece of being able to structure the data to make recommendations, as well as be able to allow people to in a few taps, move money, refinance their loans, all of that kind of stuff has only been possible in the last two or three years, because of new innovations that are happening in the ecosystem. So it was sort of those two were the final pieces that clicked together. And that made us decide right now is the time to build this business.
David Ralph [37:53]
And so how do you do it? How do you do that? You’ve had this five year niggle you haven’t done it on your own. You’ve had the conversations you think is right. How do you start? Do you? Do you get people that know how to build a platform? Or do you get people who know how to build a business? Or is it just a hybrid that you look for.
Warren Hogarth [38:11]
David Ralph [39:58]
an Easy Company, because I clicked on it, I looked around and I read this sort of information. I wasn’t 100% sure whether it would work in the UK, and Australia and America is mobile thing.
Warren Hogarth [40:11]
So right now, it’s, it’s a US business for some regulatory reasons and complexity reasons. So we just because we’re still small eight people, today, we focused on US Bank, so if you have a US Bank, you can connect to empower and get the full benefit of empower, we will be opening it up to various other international markets probably in sort of, in the six to 18 month timeframe. Once we have a little bit more bandwidth to focus on making sure we take the right boxes as we go internationally and integrate properly with those banks as well.
David Ralph [40:49]
And it’s kind of just standard money as we it’s not like Bitcoin and all that stuff.
Warren Hogarth [40:55]
No, it focuses your your, your normal fit or standard currency. However, the fun thing is you can also pull in all of your own cryptocurrency balances as well. So if you if you like that, you enjoy dabbling, a little bit of crypto, which is 2030 million people now in the US alone. You can look at that side by side with your your normal or your real money.
David Ralph [41:21]
Bear. Bear in mind my rant about Snapchat, you can imagine my feelings about Bitcoin as well. I don’t get it. I don’t get it. I just see it as a bubble that’s about to burst. And I think it’s already a leaky bubble, isn’t it?
Warren Hogarth [41:36]
I would I would, I might disagree with you a little bit there. I don’t disagree that there’s necessarily a bubble. But I think there’s a lot of a lot of use cases for cryptocurrencies, both as programmable currencies and smart contracts, as well as for things such as international monetary transfer, faster money transfer. The so many things are broken with the existing financial system, there’s been so little innovation, there’s a lot of possibility. Unfortunately, with new things like this, there’s a lot of scams. So if, if you don’t know what you’re doing, I would steer clear of anything except Bitcoin and Ethereum. Otherwise, it’s very easy to get taken advantage of, you know,
David Ralph [42:22]
won’t you can disagree with me all you want. But who edits these podcasts who just take take you out, put some words in it as it always sounds like I know exactly what I’m talking about. But I’m gonna play some words from a guy who didn’t know exactly what he was talking about his Steve Jobs
Steve Jobs [42:40]
Of course, it was impossible to connect the dots looking forward when I was in college. But it was very, very clear looking backwards, 10 years later. Again, you can’t connect the dots looking forward, you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust the something, your gut, destiny, life, karma, whatever. Because believing that the dots will connect down the road will give you the confidence to follow your heart, even when it leaves you off the well worn path. And that will make all the difference.
David Ralph [43:16]
Now, obviously, he’s a he’s a legend in Silicon Valley. All new legends coming along? Are we going to get a new kind of Steve Jobs? Or do you think he was over time?
Warren Hogarth [43:28]
I think we are. And I think you’re already seeing some of them. If you look at Elon Musk, I think what he has done with Tesla with SpaceX. Now he has this company called the boring company that’s trying to speed up, you know, underground travel. I mean, it’s, it’s pretty insane. As an entrepreneur, and that’s I think, you know, that’s not really a challenging question to say, who’s sort of the next person like that, because he’s had, you know, 50, 20 years ago and do that. If you’d go another generation? I know, I know, we were, you might be cautious about cryptocurrency. But if you if, if this continues to happen, if you look at the founders of Coinbase, for example. And if you look at the companies, they talk about the PayPal mafia, for example, in, in Silicon Valley, if you talk about what’s the next PayPal mafia is probably going to be people who are early employees at Coinbase. If you look at Brian tchotchke, of Airbnb, and what he’s built, and the team there is built, but as a leader, and someone who’s inspiring and building sort of a next generation of company, and even if you look over to China, as well, and you look at the the Alibaba story of the 10 cents story, I think we’re so fortunate to be living in a time where, you know, with jack Marinelli Barbara, what have you people at a that are doing some amazing things, I would argue that you’ve got any, if you look at that person stories, I’m sure the biographies is plenty more to be written. They’re probably just as rich and interesting a tapestry as Steve Jobs. Yeah.
David Ralph [45:07]
Hey, you know, Musk is meant Oh, isn’t he really, he’s talking to me. I don’t know. I was watching Stephen Colbert on the light show, interviewing him a while back on YouTube. And he said, You know, he could quite easily be, you know, the Bond villain, basically, the things that he’s doing, he could quite simply be sitting there stroking a cat destroying us all. Fortunately, he’s doing it for good, but it’s a mental way of thinking and that
Warren Hogarth [45:33]
it is actually thing. I mean, I think they cost him as one of the characters in the Iron Man movie. Yeah, so I think I think he actually has probably sat there and being that villain.
David Ralph [45:44]
I think we all love it sometime, Emily, I haven’t got a cat. And my wife tells me not to stroke myself. So I don’t I don’t know where we’re going with that. But um, well, where are you heading? Now we’re coming up to the end of the show. This is the part that we call the Sermon on the mic. But before if you can empower finance to have you got baby empowered, you got other ideas have been niggling away in your head.
Warren Hogarth [46:09]
I have plenty, but there’s this, there’s so much more to do with empower, I think, you know, our sort of Act One is, is to build a tool that allows people as I said, to get sort of the best financial advice and be able to take action on that. And as you know, in a seamless way. Act Two is okay, how do we improve the existing products and financial system? And, you know, the early peak is actually very similar problem you were describing before, which is, you know, you are very responsible fiscally as an individual, but you hadn’t borrowed money and you go to the bank? And they say, No, because you haven’t borrowed before? Well, how do we sort of short circuit that, that we can. We don’t need to rely on the historic credit score. And we will be doing a lot more around that to give access to responsible people access to capital without having to have gone and borrowed money in the past.
David Ralph [47:04]
Are you ever going to be happy, though? One, are you ever gonna sit there and think, yeah, I’ve done it now. Now’s the time for the island, and the cocktails? Are you always going to be looking at something else that needs to be fixed?
Warren Hogarth [47:17]
My I think my wife will be asking me that question for a long time. And I’ll probably keep answering the same way, which is, I personally am happy when I’m, like challenging myself and trying to, to learn and, and, and do something different. And that’s what actually brings me happiness. And, you know, it’s this problem solving. They’re all puzzles. And so, if I stopped doing that, I don’t think I’ll be happy.
David Ralph [47:43]
All right, she amazing, you aren’t see your wife’s questions. That’s brilliant. I just kind of go and just, just just walk out before she asks, again, I’ve learned I’ve learned that’s the way to operate. Well, this is the end of the show. And this is the part that we call the Sermon on the mic, where we’re going to send you back in time, a one on one with your younger self. And if you could go back in time and speak to the young woman, which age would you choose? And what advice would you give him? Well, we’re gonna find out because I’m going to play the theme. And when it fades you up, this is the Sermon on the mic.
Unknown Speaker [48:19]
We go with the best.
Warren Hogarth [48:39]
So I would choose a young version of Warren, which who is probably in second or third year of college, and it would, it would be a discussion, although in the future, I don’t think people will go to college, perhaps because they weren’t need to. But it would be a discussion of like, what is is what is a career what brings happiness and fulfillment to you. And, you know, there is this, you know, when I was in college is still very much this notion that, you know, you’re likely to choose one career path and be the doing that same thing for 40 years. And, you know, I’ve now come to believe very much in the notion that, you know, you can have multiple careers. And if you over let’s say, you’re going to work for 40 years, young Warren, you know, why not have 410 year careers, where you do completely different things, but the, the connective tissue between those is how you learn to learn, or how you problem solve, or sort of the plasticity of your brain and what you learn from each prior experience. But, you know, experience, one might be, you know, go develop technology, be a technologist, you know, look at work in biotechnology, or something along those lines, career to could be, hey, go, go learn business, if you want to create something interesting. Join a startup, create a startup, start your own business, that’s a fine path as well. And then, you know, you can do that you might even do that two, or three times in a 10 year period with two or three companies, or four or five companies. And then if you want to, if you if you want to expand beyond that, you know,
choose the next 10 years. And, you know,
maybe you could focus that on
something like a personal mission, if you have, you know,
if you’ve spent 10 years doing science and 10 years doing business, and you want to focus on a cure to a disease or something along those lines, you can go into that, or if you want to build a nonprofit, or if you want to make a difference to you know, changing the way people are educated, like all of the learnings that you take, are so valuable. And you know, the most important thing I think in any career is just to make sure that you’re challenged and you feel like that you are learning and if you’re not, don’t be afraid to change. And then the final thing I would say to my younger self is to always make sure you are taking the time to have those new experiences carve out that 10 or 20%. of of your time to explore new things and be exposed and you think so you can always be challenged and and I think you’ll have a you’ll have a good career if you follow that advice.
David Ralph [51:46]
Right advice for everybody. So well and what is the number one best way that our audience can connect with you. So
Warren Hogarth [51:53]
the best way is using old session Twitter at Warren who got
David Ralph [51:58]
that was very, very quick. We’re gonna say Snapchat and everything. Just to prove a point. I want to thank you so much for spending time with us today and joining up those dots. Please come back again, when you have more dots to join up as I do believe that by joining up the dots and connecting our past is the best way to build our futures won’t hold off. Thank you so much.
Warren Hogarth [52:17]
It was a real pleasure. Thank you very much.
David Ralph [52:21]
Woman. So do you think you could create a startup from scratch? Do you think that you could find the right people? Do you think you can bootstrap it find investment come up with that idea with the towel wins? I tell you what, there’s a lot of people out there trying it and there’s a lot of people succeeding so you could well be even next person. So if you are interested in that, of course tweet to woman and I’m sure he will respond. If not, we are going to be getting some other startup people onto the show recently. And we’re here to inspire you. If there are people out there that you would like to actually here interviewed on the show, let us know just drop us a line at join up firstname.lastname@example.org and we will connect them and see if we can get them on the show to share their stories, share their passions, share their investment styles, whatever they’re doing. And of course if you want personal free coaching you can come across to dream starters Academy just come to join up dots Facebook group, click on the link at the top and we will invite you in as long as you answer the pre very easy questions. Until next time we will see you again this is David Ralph that was join up dots with sia
David doesn’t want you to become a faded version of the brilliant self you are wants to become. So he’s put together an amazing guide for you called the eight pieces of advice that every successful entrepreneur practices, including the two that changed his life. Head over to join up dots.com to download this amazing guide for free and we’ll see you tomorrow on join up dots.