20VC Mercury Founder Immad Akhund on Why Angel Investing Makes Founders Better Operators, The Right Way For Founders To Discuss and Present Competition To Investors & How To Think About Your Initial Wedge Into The Market and How It Expands Over Time

In this episode of "20 minutes VC and Founders Friday," host Harry Stebbings interviews Imad Akund, the founder and CEO of Mercury, a company that offers banking solutions designed to help tech companies scale. Akund, a British entrepreneur in Silicon Valley, has an impressive track record, having raised funds from top-tier investors like Andreessen Horowitz and notable individuals such as Elad Gil and Naval Ravikant. Before Mercury, Akund was a part-time partner at Y Combinator and founded Hay Zap, which was acquired in 2016. Throughout the conversation, Akund shares insights on the importance of storytelling in fundraising, the value of picking the right idea and market, and the significance of building a company culture that aligns with the company's vision. He also discusses the challenges and advantages of being an outsider in the banking industry, the role of transparency in investor updates, and the impact of being a parent on entrepreneurship. The episode also features promotional segments for ActiveCampaign, Intercom, and Ezra, companies offering marketing automation, customer messaging, and health scanning services, respectively.

• Harry Stebbings introduces the "20 minutes VC and Founders Friday" podcast.
• He highlights the success of British founders in Silicon Valley.
• Imad Akund, the founder and CEO of Mercury, is introduced.
• Imad's background includes roles at Y Combinator and founding Hay Zap.
• Acknowledgment of Sagu from CRV for introducing Harry to Imad.

This is the 20 minutes VC and founders Friday with me, Harry Stebings at H Stepbings 1996 with two B's on Instagram. Now, over the last couple of months, I've had this realization with the likes of Alex at Clearbit, Rahul at Superhuman, Josh Buckley, whose episode's coming out shortly, and the realization is that the Brits in the valley are just about the best founders.

Harry Stebbings introduces his podcast and the common thread of successful British founders in Silicon Valley, setting the stage for his conversation with Imad Akund.

• ActiveCampaign is promoted for its customer experience automation platform.
• Intercom is highlighted for improving customer experience on websites.
• Ezra is mentioned for their full-body MRI scans and upcoming launch in new cities.

With their platform, you can create unique customer experiences that attract, nurture, and convert leads into customers into repeat customers. Over 80,000 companies use Activecampaign to hit their sales targets with intelligent automations that send the right message to the right person using the right method at the right time.

The quote describes the services offered by ActiveCampaign, emphasizing their role in enhancing customer experiences and the success they've had with various companies.

• Imad has been involved in startups for 13 years.
• He shares his initial naivety about the difficulty of startups.
• Imad highlights the freedom and creativity involved in entrepreneurship.
• Imad's frustration with existing banking products led to the creation of Mercury.

I've been doing startups for 13 years. I actually only ever had a job for one year. I worked at Bloomberg out in London actually, and I left Bloomberg without really a good idea.

Imad Akund discusses his transition from a traditional job to entrepreneurship, emphasizing his long-term involvement in the startup ecosystem.

• Imad founded Mercury to address his own needs as an entrepreneur.
• He experienced specific pain points with banking, such as the lack of an API and issues with cash flow.
• Mercury was founded with a strong vision and plan, contrasting with his previous company, Hay Zap.

That came of this, it's actually the only startup that a solves my own need. And I've been thinking about this for years.

Imad Akund explains that Mercury was founded out of a personal need for better banking services, which he had been contemplating for years.

• Imad discusses how each company is unique and reflective of the founder's growth.
• Mercury is described as a product built for Imad himself, with a clear vision from the start.
• He contrasts this with his previous company, Hay Zap, which pivoted multiple times.

Yeah, I think every company is like a child. It's always like, you're a different person, your views are different.

Imad Akund compares the evolution of a company to the growth of a person, indicating how his perspective and approach have changed over time.

• Imad emphasizes the importance of hiring the right people who fit the company culture.
• He reflects on past hiring mistakes and the difficulty of firing someone who doesn't fit the culture.
• At Mercury, there's a deliberate focus on finding individuals who embody trustworthiness, long-term thinking, and customer empathy.

Yeah, I mean, the biggest, mean, everyone says this. I think people are the biggest driver of a company and getting that right.

Imad Akund acknowledges the crucial role of people in a company's success and the emphasis on hiring individuals who align with the company's values and culture.

• Imad Akund emphasizes that ideas do matter significantly in entrepreneurship.
• The right idea in the right market can be crucial for a startup's success.
• Starting with a poor market choice can lead to difficult pivots and challenges.
• The initial idea for Hazap was in the flash gaming market, which was not ideal in 2009.

"I'm much more now off the feeling that ideas do matter a lot. Like Hazap started off in the flash gaming market, which was the most wrong market you could be in in 2009."

Imad reflects on his past belief that ideas were not as important as execution in entrepreneurship. He now believes that having the right idea is critical, using Hazap's initial misstep into the flash gaming market as an example of a poor market choice that created challenges.

• Firing is a challenging aspect of leadership, especially for empathetic individuals.
• Imad suggests that firing can ultimately benefit all parties involved.
• He advises acting decisively, maintaining open communication, and not delaying difficult decisions.
• Clear and fast action can prevent prolonged periods of bad communication and team dysfunction.

"I think anyone that's empathetic will not like it, and maybe it's not something you should like."

Imad acknowledges the discomfort of firing but suggests it's a necessary aspect of leadership that may not be inherently likable, especially for empathetic people.

• Previous working relationships can be beneficial in talent acquisition for new ventures.
• Imad highlights the high attention and time required for hiring, which can be a challenge for founders.
• Mercury's use of Haskell as a programming language has given them an edge in attracting talented engineers.
• Having a product that resonates with people and addresses their pain points aids in talent acquisition.

"Five of the nine initial set of people we had at mercury were people that worked with us at Hazap."

Imad illustrates the advantage of being a serial entrepreneur by mentioning that prior colleagues from Hazap joined him at Mercury, showing the benefit of established professional relationships in building a new team.

• Balancing entrepreneurship with family life can be challenging, especially in environments where having children early is uncommon.
• Imad found support and normalization of his situation through connections with older founders who also had children.
• He stresses the importance of sustainable productivity over excessive work hours.
• Being a parent entrepreneur can lead to a more focused and long-term perspective.

"So getting outside that and seeing these other founders with kids and it being completely normal helped a lot."

Imad shares how connecting with other founders who had children provided him with a sense of normalcy and support, which helped him navigate entrepreneurship as a family man.

• Imad considers himself an "Ideas man" and has contemplated the idea of building a bank for a long time.
• He believes in the value of ideas that have been refined over time, with additional layers and insights.
• A top-down approach to idea generation involves targeting large markets with the potential for significant impact.
• Imad advocates for focusing on big industries, as even a small share of a massive market can lead to a successful company.

"I'm also a very top down kind of guy. I think people don't always like this."

Imad explains his preference for a top-down approach in idea generation, where he looks at large markets and industries to identify opportunities for impactful ventures.

• Imad discusses the concept of using a small insertion point as a wedge into a massive market.
• He believes the initial wedge should itself be a substantial enough market to support a successful business.
• The strategy should allow for growth into larger market segments without being too complicated or unrelated.

"I think it's nice if the initial wedge is a big enough company, but it can grow into, we can do any sort of business in the US which is obviously much bigger."

Imad shares his perspective on market entry strategies, suggesting that the initial focus should be on a niche that is sufficiently large and has the potential to expand into broader markets.

• Discusses the challenge of addressing entire markets such as business banking due to diversity within the sector.
• Highlights the benefits of having a "wedge" as a focused entry point into a market, allowing for a more dedicated product and better word of mouth within that segment.
• Warns against the wrong way of implementing the wedge approach and emphasizes the need for careful consideration in choosing the right strategy.
• Suggests that the ideal wedge serves as a market segmentation tool, where the same product can be expanded to a larger market, although this is not always possible.

"So it's good to have a wedge and it's always good to go execute something that's very doable."

This quote explains the strategic advantage of starting with a specific, achievable target within a larger market, which is referred to as the "wedge."

• Imad Akund discusses the benefits of entering an industry like banking without prior industry knowledge.
• Points out that banking industry insiders are often trapped in traditional ways of thinking and may overlook opportunities in areas like depository services.
• Argues that outsiders can bring fresh perspectives, unburdened by industry mindsets, which can be advantageous when creating innovative products.
• Emphasizes the importance of understanding the problem being solved, even if one is an outsider to the industry.
• Discusses the learning process as an outsider and the value of speaking with experts to gain a deep understanding of the industry.

"I think a lot of the lessons that are learned by insider professionals are the things that need to be unlearned."

This quote highlights the idea that industry insiders often carry preconceived notions that may need to be discarded for innovation, which is why an outsider perspective can be beneficial.

• Imad Akund shares his perspective on competition in the context of challenger banks in the US.
• Notes that competition may seem fierce from the outside, but often, companies are not directly competing due to differing market focuses.
• Shares past experiences where competition was not the main factor in the success or failure of his company, but rather the quality of the product and market fit.
• Advises that in cases where competition is direct and intense, it may be necessary to raise more funds to stay competitive.

"I think, number one, often from the outside, something can feel very competitive. And when you're actually on the inside, you're like, oh, no one else is doing this right."

This quote emphasizes that an insider's perspective can reveal a lack of direct competition even when the market appears crowded from the outside.

• Imad Akund discusses common mistakes founders make when fundraising and the importance of storytelling.
• Highlights the need for founders to address potential risks and to communicate a compelling vision of the company's growth potential to investors.
• Explains that successful fundraising is about convincing investors of the startup's potential to become a billion-dollar company despite current challenges.
• Stresses that the upside potential is what truly interests investors.

"There's basically like two parts of investing. There's, number one is the downside stuff. What are the risks involved? And you want to try to mitigate those as much as possible, right?"

This quote outlines the dual focus of investors on both risk mitigation and the upside potential when evaluating investment opportunities.

• Imad Akund challenges the notion that founders should always be raising funds.
• Argues that fundraising can be a distraction from the primary objective of building a great product and generating revenue.
• Notes that investors' job is to meet with entrepreneurs, which can lead to founders overvaluing these interactions and wasting time.
• Advises founders to focus on product development and to engage with investors strategically, building relationships well in advance of actual fundraising needs.

"I'm so out on that statement. I just think it's partly because I don't like fundraising at all and it's partly because fundraising is not the objective."

This quote expresses Imad Akund's disagreement with the idea of continuous fundraising, emphasizing that the main goal of a startup should be product development and customer satisfaction rather than constant capital raising.

• Founders can gain significant insights from the investor's perspective.
• Understanding investor concerns can improve fundraising skills.
• Knowledge of what constitutes red, gray, and green flags is beneficial.
• Awareness of investor questions can reveal their focus areas, like competitive moats.

Know, the funny thing is it has made me a much better fundraiser.

This quote underscores how angel investing experience has enhanced the speaker's fundraising abilities by giving them insight into the investor mindset.

I don't think naturally I'm actually that good at fundraising, but when you can understand how the other person's thinking and what are red flags, what are gray flags, green flags, I think it kind of helps a lot because when someone asks a question, you're like, oh, they're trying to, to find competitive mode when they don't ask you else that.

The speaker admits not being naturally adept at fundraising but has improved by understanding the investor perspective, particularly in identifying what investors look for and why they ask specific questions.

• Angel investing offers educational opportunities from entrepreneurs.
• Investors often receive education on business operations and market insights.
• Investing in diverse fields, such as healthcare, can broaden knowledge.

I think that the best thing about investing is just how much you can learn from these people.

This quote emphasizes the educational value of angel investing, where investors learn from the entrepreneurs they invest in.

I end up learning all the stuff. I'm like, oh, that's like a cool way to do marketing, that's a cool way to acquire users.

The speaker reflects on the practical knowledge gained from observing the strategies and operations of investee companies.

• Honesty and transparency are crucial in investor updates.
• Consistent frequency of updates maintains investor engagement.
• Providing the right metrics and a clear framework for updates is important.

I think with investor updates and talking to investors, especially like ones that are already in honesty and transparency, is like the bad things that make it good.

This quote highlights the importance of honesty and transparency in investor communications, suggesting that acknowledging challenges can be beneficial.

Consistency is important. And then being consistent with metrics you could give and being delivering the right metrics.

The speaker stresses the significance of regular updates and consistency in the metrics provided to investors.

• "Accidental Superpower" offers a macro-level analysis of global demographics and geography.
• The book is recommended for its thought-provoking content, despite not agreeing with all points.

I really like this book. It's called accidental superpower.

This quote is a book recommendation, suggesting its value in providing a broad understanding of global trends.

• Graphs are essential for effectively conveying financial progress.
• Cumulative graphs should be avoided in favor of more meaningful metrics like active users.

A graph. It's just the best way of portraying that at the end of the day, revenue and net revenue is the most important metric.

The speaker advocates for the use of graphs to clearly represent crucial financial metrics in fundraising presentations.

• Competitive matrices can be tricky and may detract from the main pitch.
• Best competitive slides demonstrate a large addressable market and how the startup differentiates itself.

So either completely ignore it, or if you're in a very well known to be competitive market, like you're competing against Google, you just kind of have to talk about it.

This quote advises on the cautious use of competitive matrices in pitch decks, suggesting they can sometimes be counterproductive.

• Following one's passion can lead to both enjoyment and success in a career.
• Skills and passions often align, suggesting a natural path to professional fulfillment.

There's something that you're probably really good at and you should just do that.

The speaker encourages graduates to pursue what they excel at and are passionate about, as this is likely to lead to satisfaction and success.

• Mercury aims to establish itself as a leading startup bank within five years.
• The goal is to build a long-term company that supports entrepreneurs domestically and potentially internationally.

I think we can be very established as a startup bank and go beyond that and hopefully fulfill the vision I have.

This quote outlines the speaker's ambitious goals for Mercury, aiming for significant growth and impact in the banking sector for startups.

• Expressions of gratitude for the opportunity to share insights on the podcast.
• Anticipation for future developments with Mercury and the entrepreneurial community.

Yeah, it's a real privilege to be on the podcast. Thank you.

The speaker expresses appreciation for being able to participate in the podcast and share their experiences and perspectives.