Kamron Khodjaev is the Chief Commercial Officer of Koop. Koop is an insurance technology and specialty brokerage company focused on commercial autonomy and robotics.
Robots have different data sets, risk models, and track records of performance than machinery operated by humans. Due to this complexity, many robotics firms find themselves struggling to get insured or paying way too much.
Kamron and his three cofounders realized that they could use their own proprietary algorithms to better chart the risks of autonomy and partner with large insurers the help these companies.
In this episode, Kamron and Aaron discuss the founding of the company, different data his team looks at, and the enormous market opportunity.
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Kamron Khodjaev’s Challenge; Keep an open mind.
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If you liked this interview, check out episode 395 with Çetin Meriçli where we discuss self-driving trucks and episode 357 Jim Gibbs about parking for self-driving vehicles.
Michael Tam is a partner at Craft Ventures, an early-stage venture capital fund known for the development of B2B Saas startups.
Based in Los Angeles, Michael sits on the boards of Bbot, Dray Alliance, Route, Trellis, and Vendr. He also works closely with notable investment companies such as Pipe, Salted, Shef, and Sync, amongst others.
Prior to joining Craft, Michael was an investor at Crosscut, where he led investments at the seed stage. As an operator, Michael managed Uber's business in Southern California markets and launched L., a direct to consumer brand acquired by Procter & Gamble.
Michael also serves on the investment committee of the USC Marshall Fund, which invests in startups in the Southern California tech ecosystem.
In this episode, Michael and Aaron discuss how to break into venture capital, his investments in Shef & Pipe, and much more.
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Michael Tam’s Challenge; Reach out to someone you’re afraid to. Send a cold email w/ intention.
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If you liked this interview, check out episode 466 with Matt Harbaugh where we discuss founding a venture fund.
Text Me What You Think of This Episode 412-278-7680
Dave Fink is the CEO and cofounder of Postie, a platform for making direct mail marketing campaigns as sophisticated as elite digital marketing.
Dave Fink has been building companies for the consumer internet for over 15 years. Over the last decade Dave has launched and scaled over 20 consumer-internet businesses. During the early part of his career he created performance-marketing platforms helping brands as diverse as Walt Disney World, Procter & Gamble and The Gap adapt to the rapidly changing digital media strategies available in the internet world.
Dave also established the customer acquisition strategy that successfully launched consumer brands with celebrities including Kate Bosworth, Jessica Simpson, Rachel Bilson, and Mary- Kate and Ashley Olsen.
In this conversation, Dave and Aaron discuss some basic marketing definitions, the mission behind Postie, and how Dave coaches marketing clients to success.
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David Fink’s Challenge; Find a new hobby to get a break from work.
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If you liked this interview, check out episode 386 with Jon Shanahan where we discuss YouTube marketing, men’s fashion, and much more.
Joe Percoco could not stand the idea that the best financial products were inaccessible to the common person, so he co-founded Titan. Titan is a fintech startup that aims to be this century’s Fidelity Investments
The startup is growing rapidly with 500% growth in the last 12 months, 30,000+ users, nearly 1 billion in assets under management, and a recent valuation of $450 Million. Their investors include Andreessen Horowitz, Kevin Durant, Odell Beckham Jr., and Will Smith.
Joe has been able to build this company so quickly thanks to his pedigree at some of the world’s top business institutions; Wharton business school, Goldman Sachs, and McKinsey.
In this interview, Joe and Aaron discuss the building blocks of a fintech startup, why index funds & day trading aren’t right for everyone, and the near-death experiences Titan has survived.
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Joe Percoco’s Challenge; Answer the question; What is your personal KPI for the week?
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If you liked this interview, check out episode 231 with Andy Rachleff where we discuss Wealthfront, index investing, and a framework for successful venture investing.
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Percoco: If you have sub $10 million of net worth, you're driving these diesel gasoline vehicles with your money. If you have, if you're wealthy or you're an institution you're running around in a Tesla,
Watson: Hey, what's up everyone. Welcome back to going deeper with Aaron Watson. My guest today is Joe Percoco. One of the co-founders of a FinTech startup called Titan. Titan has raised tens of millions of dollars and has collected hundreds in millions in assets, under management. Thanks to a very specific thesis while some people want to just put their retirement savings into index funds and others want to try and day trade actively on sites like Robinhood and weeble.
There's another population that wants a managed investment portfolio that doesn't just index the entirety of the market has a thesis behind it, but is informed by really. Investment professionals, same services that hedge funds offer that mutual funds offer has to be able to be delivered at a lower price.
That is what Joe's company is doing, and that is what we discuss in today's video. We also discuss the building of a FinTech business, his background at Goldman Sachs and a whole lot more. I think you'll love it. Here is my conversation with Joe Percoco.
Watson: Joe. Thanks for calling on the podcast, man. I'm excited to be talking with you.
Percoco: Thanks so much for having me, Aaron.
Watson: I know I've got a proper guest on my hands when you've got the mic set up, ready to go. Despite the fact that you're running, uh, some crazy enormous company, that's doing like 500% growth in financial services. So I'm excited.
Percoco: No, we'll probably one too many podcasts where I didn't have the setup and you'd come in and it doesn't sound clear for your guests deserve to hear us loud and clear. You know?
Watson: Right on. So let's start on that, that growth, you know, the, the stat that the PR team gave me is you guys have 500% growth in the last 12 months, tens of thousands of clients, hundreds of millions of dollars in assets, under management, that's candidly, you know, I've a mentor of sorts that I listened to.
And he says, you know, small businesses don't stay small on purpose, which is basically everyone wants to grow. Not everyone can kind of crack the nut of how to grow. So, Joe, how did you grow?
Percoco: I think that’s great quote from your mentor. We should pick his brain for what other him or her, what other quotes he or she has?
Yeah. How does one grow? It could boil, I often think, like you think about like business, like microbiology and in a sense, like, what is the like molecule of a business, the molecule of a business, at least how I think about. It's just, how do you delight a single customer so much, so you're willing to open your wallet and pay you a little bit for it.
And you just have to be relentless in trying to give them value and just delighting them in a way the current world does not solve their needs for.
Watson: And so how does Titan fit into that? Because, you know, we've seen, you know, GameStop and the Robin hood mania of all these kind of day traders who are doing a gamified form of investing in their app.
Plenty of people have been, you know, told by their, you know, dad's accountant to just put it in Vanguard index funds and not thinking about it or use wealth front. We've interviewed Andy Rachleff to talk about Wealthfront and that form of kind of wealth building Titan slices, the pie a little differently.
Percoco: We do. And it's funny as you hit on two of the three investing use cases that have been around for all of humankind, there's only three and you discover two of them. So good job. The one is make it go away, which was invented by Bogle, which was the passive revolution, Wealthfront is a great player in that space.
As far as they as solve this investing thing for me, the second is get out of my way. I literally just want to do whatever the heck I want, on whatever platform I choose, whether my uncle told me to buy the stock, or I just really believe in this company that's called self-directed brokerage. A number of different players do that.
They're all just sort of new age versions of the Amsterdam stock exchange from way back when, and there's a third use case called investment management, which is show me the way I want to give my money to someone, to act to invest it for me. And there's a long list of old school players that currently have significant market share in this category from fidelity to Tee Rower price to Franklin Templeton, to state street.
It just goes on and on and on and on it's the largest of the three categories. Um, it dictates the most capital flows, but no one has yet to say who will be the fidelity. For the upcoming generations, I E V, Authority of where their capital should go when they want them to show them the way. So that's what we're building a Titan
Watson: And that's at a very. Kind of generalized broad level, like all those brands that you're talking about. Yes, they could, you know, Hey, I want to play international hat. I want to play small cap. I want to play these different kind of radius. They could take you there if you wanted to. But the brand that's being built is really, you know, come here with your assets.
Retirement may seem daunting. These other financial goals may seem daunting and, and there is a degree to which almost like the. The messaging, the branding kind of, um, reverberations, you know, you can understand why someone outside of the industry wouldn't really be able to delineate those different brands too much, because it's a similar message that they're all trying to pass along.
Percoco: Totally. And it's, honestly, I feel for people who are trying to figure all this out from the outside, like I was there, I didn't, you know, despite going to Wharton, working at Goldman Sachs, I didn't figure out how to invest my first dollar. And I was 26, the very, very meager savings I had. After paying off some student debt, it all just lived in a bank of America checking account.
Like it's the most paralyzing thing in the world trying to figure this all out, all the jargon everyone's competing for your attention, and you're just sort of part of the reason why I started this whole thing. I was like, this, this shit's up because frankly, like there needs to just be a way easier, more modern tool to do all.
Watson: So what makes it easier? Give us more, give us more detail.
Percoco: Yeah. So if you think about like the status quo, what is like the hallmark vehicle, if you want to give your money to someone to manage it for you in an active way, like you were saying, Hey, let's go put 10% of your capital in these small cap stocks.
They think they're going to do really well. Or, “Hey Aaron, let's go check out China internet. Those could be the next big thing. Like the American internet revolution.” What's the primary way you do that. There's a few vehicles. One is ETFs, those are fine, but they're inherently black box, they often have layers of fees. You're never going to communicate with the person actually running the ETF. Another thing is called mutual fund. You're probably getting goosebumps or allergies. Just thinking about putting your money into a mutual fund. Everything I just described about the ETF is sort of like way worse from the mutual fund standpoint.
Percoco: And so with us, we said, okay, core human behavior. Is there people deserve to be able to give their money to an expert, to do go find the best small cap stocks. And then what we, what we said was it just needs to be mobile first. It can't be a black box. Aaron deserves to have a direct line to whomever is running the thing. And so with that, it's sort of like our clients, we say used to be seated outside the stadium. Go figure it out yourself, but we'll take your money in this ETF with tightened clients, we bring them courtside seats. So we send our clients, you know, an in-app video saying, Hey, we just invested in you in XYZ stock, Instagram stories. Like they get it.
We show them full transparently how their money's in real time. So it just sort of a going back to what I said, like why it's honestly really tough just to try to do this whole thing, ETFs mutual funds, you know,
Watson: So it really sounds more like you've kind of triangulated this point between, and if this is a miscategorization, you know, pick me and tell me on the one end of the spectrum, you have hedge funds, but hedge funds have, you know, they're trying to solicit institutional investors where they can get enormous sums to go and invest. And the average Joe Schmo, like, I don't know what you had. I'm sure you're doing pretty well. If you were out of Wharton and Goldman in terms of income that you could potentially invest, but most of the characters, you know, the millennials between 25 up to 40 or, or past that don't have some, super high bar to go start investing in a hedge fund.
And at the other end of the spectrum, you have a much more kind of conventional financial advisor. That's collecting a fee, but playing almost more of the social game of, “Hey, you know, relax, set a habit. Let me coach you and less of the I'm a tactician as it pertains to a real investment thesis.” And I don't want to disparage all financial, there's a degree to which that's the game.
Percoco: And the two important points, which I want to separate what you've shared.
They're both exceptionally important. One is, so you'd be thinking about it. Like, let's say Aaron has money to invest. First question where should it go second question. Let's go get it there. So where should it go? Number of different ways institutions and people figure that out. And then institution let's say like Harvard endowment has their own internal team figuring out. Okay. Should we go, should we go invest in private equity in Latin America? Or should we like buy us stocks? They have their own internal team. A human being will say, let me hire a financial advisor to try to help me figure out where it should go. Then there's like, okay, let's go get the money there.
If you're an institution. If you're a normal person, the menu you have is quite limited in terms of, okay, like we're ultimately, can your money go? Probably it's stocks based, maybe a small cap, ETF, you name it. If you're an institution, the menu has about a hundred more pages. It's like, “Hey, venture capital, hedge funds, private equity, and so forth”.
And so the, the big thing that I at least was really personally frustrated by, um, from a 30,000 per year sundown. Um, in New Jersey called Hillsborough was that the menu was just different from like where I've lived versus where I ultimately went to in New York. Um, so what we're predominantly trying to do is let's make the menu the same.
Percoco: All of those, all the really amazing vehicles that institutions invest in with philosophies long-term compounding, unique asset class exposures. How do we get that to everyday people? So we'll let other people solve for the wealth planning that, that tax planning. Hey Aaron, if let's say you're getting married, here's how we should think about your budget.
What we're firmly solving for is where your money goes. Let's game let's level, the playing field on the menu. By getting you access to the 20 pages, you don't have access to.
Watson: So you know, in the, in the spectrum of, like you said, this is so complex for people trying to figure it out and you referenced Jack Bogle and the indexing revolution and the whole thing there that, you know, now fidelity beats, the same drum is just for cutting fees, cutting fees, we're cutting fees before everything else cut those fees, pare them down to the point where I saw someone making fun of it, where it's like, you know, Fidelity's trying to brag about this.
Like, it's literally. Uh, like a half of a, a basis point or something different. So it's like at the end of the day, that's not actually making the difference on the outcome of retirement. Go down from a 2% fee to a, a 0.1% fee makes a difference. You know, at some point you're, you're splitting hairs.
Watson: So what I hear, you know, you're not positioning this and I think there's okay. We do this with our own services of Piprr where we say, you know, we're not the cheapest. We are also not the Maserati necessarily, but we are something in the middle that kind of satiates a number of these different needs.
Kind of explain why it's not just a, how much fees you are paying when you invest type of decision and how you know that, although in index funds work for some people, why a different approach might be more relevant.
Percoco: Yeah. I'll enter this indirectly, the world. I see the world of investing and it's part of the reason why, like I'm running so hard at Titan.
And like what wakes me up in the morning is I see the world as if you have sub. $10 million of net worth. You're driving these diesel gasoline vehicles with your money. If you have, if you're wealthy or you're an institution you're running around in a Tesla. And these are just fundamentally better vehicles that get you to different destinations, better destinations, but you just can't afford to get into it.
And so for us, the primary question isn't even price. It's just this person who's driving a diesel cannot even fundamentally walk into the Tesla dealership. Like that is just like, it's just stuff I didn't read about. I saw all these PhD papers talking about like, Hey, like here's the optimized ETF with like three basis points.
Percoco And it's like, what? That effectively, as I read it is like, this is the fastest diesel car we have on the market. And here's the miles per gallon. I'm like, you're literally missing the point. Like, you're trying to optimize a diesel car, like the elephant in the room and consumer FinTech is a fact that if you're wealthy, you're not even in that room.
Like you were just over there. Like there is no Robinhood, there's no GameStop. You've got your capital in a hedge fund or venture capital firm. You're sitting back when the market goes down, you're not scared. You're literally grabbing pennies to try to figure out how to do. Um, and that's just a world I sort of like refuse to live in.
Um, so it's why like we're moving really, really fast as a team and why we're just trying to get our product to market as fast as we can back to the whole, like how, why is our company growing it's I think predominantly because we're hitting on that nerve.
Watson: So tell me a little bit about that transition, right? Because there's, there's plenty of characters that at least from the outside, looking in would say that, that you kind of checked all the boxes of kind of conventional goals being accomplished, graduate from Wharton, head to Goldman Sachs work at McKinsey for awhile. Um, you know, there's plenty of people that would say I've kind of hit, I've landed at this spot. There isn't a next Lily pad to get to those. Those are the leap pads that people aspire to. Yeah.
Percoco: And so like, we're, we're, um, Like what wakes me up? Let me know how to answer your question. Um, like ultimately I'm from a family of immigrants, Puerto Rican immigrants on the one side, Italian immigrants on the other.
And so both sides of that are like super education focused. And we are going to create a very, you know, education focused family. We're going to do it right. We're going to be here in America. And it's sort of like that immigrant attitude still carries with me to this day. And so, and now you can sort of get the point where this whole dichotomy of population A gets this population B gets that sort of like coming from a family of immigrants, you can see why that would like light me on fire.
Percoco: So it's what ultimately it's ultimately how I just like, realized what I needed to do and have the courage to go leave that whole track that you just described, which a lot of really great institutions, really great firms that I think they're wonderful and I'm really proud of them as an American, but ultimately I said, okay, I go, I need to go build what's missing.
Um, and I felt a deep sense of calling to do it, believe it or not. So, yeah, but still a lot of work to be done.
Watson: I dig it. So there's a mean in certain, like channels of entrepreneurship and the thing that's coming to mind, I'm not sure if you're familiar with Andrew Yang, but before he was like running for president and mayor, he was, uh, running a organization called venture for America.
And he wrote this book called smart people should build things. And he talks about being a reform lawyer, doing all these other things. And, you know, the, the emergence of, you know, the best human capital that we have out of those kind of very, you know, high end traditional professional services into different entrepreneurial ventures.
And, you know, I feel like sometimes that idea gets taken in the direction of like, “okay, we'll go buy a bunch of self storage facilities or a trucking company or construction company”, which works is cool. But when I look at something like Titan, It almost seems like it necessitates the background that you've had in order to start it, like most people without actually kind of seeing behind the curtain, like you said, at a place like Goldman, seeing those high levels of corporate finance would even have the legibility to go about like, you know, what, what are, what are even like the component parts that go into starting a you know, scaled consumer FinTech play. Most people don't even have legibility into the pieces that are required.
Percoco: It's a totally great observation. And it's probably, I think the biggest reason why it hasn't yet been solved is because once you're in, let's call it that back of the restaurant. You're like, I, this is comfy.
Like why would I ever leave to go back to the front? I make, you know, one makes a ton of money back then. It's cushy, you got all the institutions lining up for what you offer. Like it's almost like pull up the rope ladder. Like now that you've made it and–
Watson: just social status too, like you said, your family was pushing you on the education, but even you meet someone at a bar and you say, I work at golden rabbit like that, like that is the lights on.
Percoco: Yeah. Um, and it's part of the reason why my family was like, “wait, you're getting off this track. I thought like you, do you realize why like grandmother came from Puerto Rico? Or why am I Italian to him?” I can't remember like, like, hold on. Like you're about to ditch all this. Um, but what was clear to me was that, you know, as you're saying, like oftentimes the domain expertise and one has almost a, gets a sense of responsibility, almost how, like you see a lot of these really great med tech companies are run by some of the best doctors. And they just like infuse into the company, just like patient empathy in a way a doctor would otherwise a non-doctor wouldn't otherwise be able to do so.
So same with Titan, like one of the reasons why, and if you read our reviews, I think we've been able to nail the user experience is because like, I've literally been both sides. I like sit in every major product review and my voice isn't necessarily one saying, here's how we can complete this derivation of the product feature on this life.
Well, with the predominant voice I play in that meeting is that is too confusing. Look at all these other products, people currently shoulder shrug at them. What can we do to push the envelope here, to just blow someone away who has no education? That's like the predominant voice I play. And it's, I think it's like an important one to go into your point.
I think domain expertise is really critical for many different businesses at once is going to start.
Watson: Absolutely. So can you take us just into the component pillars of a consumer FinTech startups. So, you know, we, we cover all sorts of different businesses on the show. And we've talked with an office furniture wholesaler about how his capacity to increase the square footage of his warehouse is like this primary driver of his profitability and business growth.
I talked with a Haitian immigrant who started a trucking business. It's literally make enough to buy a truck, make enough to buy a second truck. And it's, you know, it's somewhat linear, but it's still fascinating to get an insight into what are the component pieces here cause there's, there's also, you referenced medicine. Those are two of the more regulated industries as well. So I'm sure you need a nice lawyer bill, but what else goes into it?
Percoco: Yeah, so for the, probably the overarching mental model, which you're hitting and I really love. Yeah, every business in the world requires starting capital. You, then go build something with this capital.
You then sell it to people and you earn revenue and then you have expenses, which are the people that you need to support it and market it. Every business goes through those same pillars. So for consumer FinTech side of things, you need capital to stand up the backend, let's call it like plug into the marketplace. It's called like a broker dealer entity. You need back-end. You need capital to solve the regulatory equation and get registered. You need capital to hire your early engineers and designers actually build the frontend product. And then you build this mobile application, which is offered to the front end, like a normal customer.
Percoco: You have the backend, which let's say plugs into the market, or if it's like a welfare plugged into a bank, you've built that you have the legal and all the regulatory done. And then you also built all the backend things to accept accounts. Let's call that the like, okay, we've built an initial product from there, the business side, you have to build it in a way that people want to actually use like a lot of. Good consumer FinTech businesses, and a lot of bad consumer FinTech businesses. The primary reason between good versus bad is often did you literally build something people want to use? It's not anything genius other than that, are they paying you, you get revenue and then your costs are usually. You know, you have really high, gross margins because it's software, your costs are predominantly the people that you keep to build the thing, maintain it, iterate, and then any marketing expenses one may have. So if let's say, how do you get people aware of your product? Is it referrals? Is it organic or do you have to go buy a ton of TikTok ads?
If so, that's a major difference in the marketing line. And ultimately as a business, you then hopefully earn some profit over time. So that's like consumer FinTech business in a nutshell
Watson: So it's I think a parent that, you know, there's initial the licensing with the broker dealer on the kind of initial stand-up of the product itself.
That could be a seed investment, a small team that's grind in the tussle, and to get something that has a, a kind of sufficient, you know, capacity to it is very different than I think your recent, most recent run a fundraising was like $450 million valuation, not, not the totality that you raised, is that kind of, that, that to me as an outsider, seems like we're getting close to the moment where let's, you know, pour the proverbial gasoline on the fire and marketing dollars to actually help this start to spread. Um, is that, do you feel like that's kind of close to where you guys are now and what was the signal that all right, It's time to actually do this.
Percoco: Yeah, you hit on the nail. What you first seek to do is the goal is to use like ultimately from like a Warren buffet sort of perspective, your goal is to build a business which generates high returns on capital. What that means in non-finance speak is you're going to go to the world and say, world, give me money because I'm going to create a lot of impact to it, to society and shareholder return. I will give you more back than what you gave to me.” And so what you first do is say, look like I don't need a hundred million from you guys right now. Just give me a little bit, so I can show you a proof of concept. If that proof of concept works, you go back then.
I've now, hopefully de-risk that I'm going to waste all this money on some business adventure that doesn't make sense. Look at this data. If we put more money in and flesh it out from a V1 to a V10, this could really be big And then it's like, okay, we've built something amazing. Now we have to hit the turbo buttom and let's go raise even more money to make this a really big brand and cement our market position.” And so that's where we're at. So we're, you know, we built an amazing proof of concept for years ago. It then got a ton of scale without us even trying people were just sharing it. And now it's like, okay, let's go take this from V5 to V10 and hit the turbocharge button.
Watson: And I have to imagine, you know, part of the turbocharger is also bringing different offerings to the market, which we can talk about in a second. But the other thing that, you know, in traditional B2B SAS is always one of the core metrics is the net revenue retention or the general retention of users. Um, and I have more experience looking at that from like a B2B SAS standpoint where you're, you're trying to drive like, you know, net dollars growth because you're adding more seats, you're adding more usage, selling into a large org. Is that, is that relatively similar? Because if people have more assets under management, you're also going to have that net revenue retention.
Percoco: Yeah. You're you're spot on. I would actually like hold the perspective that most businesses are more similar than they are different.
And so even if like the language isn't exactly the same, the concept of, “okay, like this business gets revenue and then it grows per customer equals good business.” If it's the opposite direction equals bad, like that's actually just a fundamental principle that holds. Like pretty much all businesses. Ours is exact same.
So ours, we get, you know, it might just be different on the timescale, which is you can get, like, let's say like a Robinhood, for instance, you can get a lot of customers up front and then ultimately it's okay like we believe that over time they'll be able to monetize it. And so hence in the consumer land, people are more willing to put chips on user growth first, before they talk about revenue, because they know it's like, okay, I've seen this story 10 different times.
If you get users, you can then go across the album. A, B, C, D E. So, hence, I know it's a given, the net revenue will be there. If you can go get users, what's called distribution first. So ultimately it all shakes out to be the same, but probably the holy grail of a consumer technology company is how do you actually get people to be aware of you and shout from the mountain top? So that's, what's called distribution. And if you get that usual, If you're a software company, you have high gross margins and if you built a good product, you have strong net revenue retention. So like those other variables fall into place. If you can actually get user growth, obviously I'm, I'm summarizing things very simply, but that's at least the pecking order, first distribution, then unit economics, then let's see.
All right. If you figured that out, how big can this thing actually be? Is this a billion of revenue or is there like 10 billion?
Watson: And that's also kind of coincides with the different level of, you know, they're seed investors who are more akin to those earlier metrics and evaluation points. And then later on, when we're talking about growth capital, they're more akin to those second order types of calculations.
Percoco: Exactly. So like an angel investor will be like, do I think this, do I think this team can figure something out here. And so that often means like, is a team smart, smart, and expertise enough. And is this space have profit? So like, even if their first product is not great, I know that it's just such a valuable space to be in.
They'll figure it out, then see it as like, okay, show me a V1 of your product. And do I think there's a path for you to get scale from user basis, then let's call it like a series B or series C ambassador will be like, okay, show me that's the proof that you can go get distribution and what the unit economics could look like.
And then ultimately, With all the late state strategics come in after a unicorn, they're like, all right, show me exactly dollar in dollar out is what it's called. Like this company will go IPO and it'll re it'll dilute itself, 10% on IPO from there, it'll raise XYZ dollars. Those dollars will convert into Y amount of revenue.
And so my stock price should be X and three years. So you've hit the journey on the nail in terms of like the evolution of metrics.
Watson: Yeah. I just listened to an interview with the ZoomInfo CEO, Henry Schuck, who's also been on this podcast before and he like, he knows exactly $1 spent into his or, or translates into precisely how many dollars of, of, uh, software revenue in the future.
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Watson: So I've got two kinds of questions and then we can aim towards wrapping up with the standard.
Last two questions. The first is it's become common now for founders during these different fundraisers. Another thing that outsiders might not necessarily understand is it takes some chips off the table. In extreme case, you got Adam Newman and we work who’s taken hundreds of millions of dollars out of WeWork as they're raising billions from SoftBank, but just, you know, as the company grows a little bit of chips off the table actually allows for, you know, founders to be financially comfortable to go swing for the fences, which is what those investors want with that money taken out. It's common for founders to now be investing in other startups. And if you think about it, it's like, you know, the best NBA players. Are the ones who can usually tell who the next star on the rise actually is before coaches, before scouts, because they know what it takes. So from that vantage point, given that you've now had your own startup and it's it's on this upward trajectory, what have you learned from starting, operating, founding, Titan that would inform a future investment thesis that you would have looking at potential startups to invest in?
Percoco: Great question. The whole there's that question, Like what do you believe that others underway or don't believe. So there's that old adage like ideas are cheap. Execution is everything. I'd probably revise, the adage to ideas are everything and execution is everything the reason, or maybe even controversially ideas are everything execution.
Make it good enough. Reason being, if a business just starts from a good, like, there's that old quote, like in the, in the, in the tail of a bad business versus a good operator, the bad business always went. And it just like the brutal reality of the marketplace. You could be the brightest human on earth If you're trying to ride a crippled horse, it's going to go nowhere. And so the first is just thinking through this space itself, like, is there value to be had here? What's the competitive dynamic of this space? Like, will you just get muscled out? Like talk to me about the horse and the race you're trying to run.
Even if your view, even if I disagree with however you're designing your V1 or your initial product. Like, do I just believe you're in the universe or a good worse? And now I know a lot of people will say like team first or whatever attraction first I'm very much alike thesis driven space, first sort of person.
And secondly team, like, are you going to run through walls to iterate when it's not working or when you get data and you get like, and you find a new competitive entrant, like what's your DNA. Like you are gonna, like, I've had to run through a good joint amount of walls. Titan almost died I think like two times in our early history.
And then from there from like an early stage basis, that's all I look for. And later stages about show me the traction. So the i. e. Demonstrate to me, the data you've collected that your thesis about the future of the world is right. Because ultimately, like if you're running, if you're attempting to start the business, it's a bet on a future state of the world, like I am saying, the future of the world should be like X and I'm going to be the one to create that future.
So by the time you should have data saying, “Hey, just be, have humility. Like just show me the data.” And so like Marc Andreessen, Andreessen encourages the best or on our cap table. What he usually says is as you get later and later stage. Your,investor deck should have less words and more numbers it's like, do, I even need to explain my business, look at the unit economics and the dollars in and dollars out.
You almost like don't even want to care. And so that's at least how I think about it. When I see, like, I see a lot of really great entrepreneurs, um, starting companies. And so I just try to push them. Are you starting it on the right horse? If the wrong.
Watson: I take that. Can you talk about either of the near death experiences?
Percoco: They both had to do it very, very early on when no one believed that we should exist. Believe it or not. There was a world pre-Robinhood success. And we were that's when we were starting Titan, when still Robinhood was like, oh, like, I think I might've heard of it, remind me again, what that does. That was like the state of Robinhood brand in, uh, in American society.
And we were like, oh, like, it makes total sense. Robinhood had succeed. There's only like three use cases everyone's focused on passive Robinhood is trying to democratize self-directed brokerage someone will next go after fidelity, which is the biggest prize in the room. And I like walked into a hundred different DC conversations and they laughed me out of the room every time they said like, wait, like isn't everyone just going to put their money in like an optimized ETF, that's zero fee? And I said, It takes a very rudimentary understanding of capital markets to know like society would break down. If there was no one to actually determine the price of stocks, every IPO would be priced the same, like that just cannot exist. No one, yeah. We just got rejected a lot. And I said–
Watson: another way, cause that's an important idea that I don't think everyone grass either if a hundred percent of the shares that were transacted in, in markets for equities were all in index funds there's no price discovery because the index funds basically look in a very rudimentary way and say, “Hey, you know, the price of Ford went up. The price of GM went down.” And so we just need to reallocate our index fund, reflect that price change. We're not making some sort of a concerted vision on both of their respective EV strategies over the next five years. And what that could mean for future cash flows.
Percoco: In a capitalist society and what people, everyone forgets is even with their hard earned savings. It is a vote almost like in a courtroom where the companies are the one coming up in your judge and jury, does this company deserve my money or not? That one is doing exceptionally well.
I'll give you my money very cheaply. That company is really struggling. If you I'm going to give you money, you're gonna have to pay me a really high interest. Because you're clearly doing bad things with it. That's how capital markets work. And that's how literally capital flows from like places that have it to places that need it boasts. It's why, like, why, like India is receiving a lot of venture capital investment. Basically Indian society is saying, “Hey, we're ready for a lot of capital. It's really quickly growing. You can make a ton of money.” Hence, a lot of capital flows into India. If the world was just one passive ETF, forget literally everything I just described.
It's just you spray all of your money evenly across all the good and all the bad and it forever just indexes to that. You give one chip to good company, one chip to bad, one ship to good one ship to bad capital markets break. So it was what ultimately gave us courage to just be like, we think everyone is wrong.
But I said that humbly, I said, like, we think everyone's wrong, so let's go ship a product to market and see what happens. And then ultimately it worked, but it did create a, take a little bit degree of courage to actually go through that phase.
Watson: Word. Well, that's awesome. Um, before we wrap up, I wouldn't be a proper podcast host if I didn't at least mention crypto.
Cause I feel like that's like almost the cost of doing business in the podcast world. Um, so one of the offerings that you guys are also introducing is associated with cryptocurrency and we're kind of in something of a, uh, Short bull cycle here, um, over the last couple of months, basically since the Bitcoin having.
So can you just talk about where that, where you as a company kind of think that makes sense in the context of a modern portfolio, because another, you know, Relic of the past is a 60-40 allocation. You've got your bonds, you've got your ex equities. You're good to go. And we're living in a bit of a different world.
Percoco: Yeah I know. We very much are. What's key from a portfolio standpoint, i. e. where does Aaron put his wealth that he accrues is you need to make sure, like you have it in the right places to accrue the most wealth possible on a risk adjusted basis. And to, we feel the wrong debate is being had on crypto.
People are currently having the debate, which is, will crypto exist or not? The right debate is at what percent allocations your crypto be in your portfolio adjusting for this risk, and so where we shake out is we think crypto has a really high potentially for quality growth with incredible diversification across other asset classes.
Like despite all of this crypto hype. Crypto is still early and it's could provide what we say called venture capital asymmetric returns in addition to your equities are your stocks. And it could be one of the most, compelling long-term secular growth trends in the tech space. And so now the question is, okay, like what percent of your portfolio should you have in it?
And then if it's like, okay, I should have X percent, usually most people will say anywhere between one to 5%, which of the assets should I pick? One, could say, screw the judge and jury concept I'm just going to get the whole courtroom. I am just going to spray all my assets across whatever their index weight is.
Others try to be more smart, which is what we're trying to do instead of you know, everyone just buys a lot of Bitcoin. We're actually much more excited about Ethereum than we aren't Bitcoin. Ethereum is- Bitcoin was meant to be a digital currency. I mean, there's a few other applications. If furious has meant to be the operating system by which people build other crypto applications in particular in the finance sector.
So for us, it's why we launch our Titan crypto product to do this discernment of judge and jury on behalf of the cryptos space. We know it's complex. We know people are wondering all these ups and downs, which should I do. So we felt it was super right to have an expert in the room.
Watson: Right on. That's why you guys have a business.
People can hire the investment team from Titan. Joe has been awesome. I want to ask the standard last two questions that we always do before I do that. Anything else you were hoping to share today that I just didn't give you the chance to
Percoco: no, you covered it all. Honestly, this was super fun combo.
Watson: Right on. Well, if people want to learn more, what digital coordinates can we provide for people to find out more about you?
Percoco: We just bought titan.com in the spring. So go to titan.com.
Watson: I'm sure that that was not a small purchase.
Percoco: No comment you can go to, you can go to titan.com. You can follow us on Twitter.
If you want to follow me personally, you go to my Instagram handle or my Twitter handle. So yeah, but titan.com, if you want to check us out,
Watson: I bet you got a distinct last name. Joe, Joe is probably hard to come by by Percoco you probably heard
Percoco: Coco. It means Peachtree and Italian. So J P as in Peter, E R C O.
Yeah, Joe Percoco.
Watson: Beautiful. Well, we'll link all of that in the show notes for this episode, it is in the app where you're probably listening to this right now, or @goingdeeperthereand.com slash podcast for every single episode of the show. Before we let you go, Joe, I want to give you the mic one final time to issue an actionable personal challenge to the audience.
Percoco: Great question. I think what I'll share is what I did with our leadership team this morning, which was. I asked them, what is your personal KPI for the week and similar to home as a business? How you have KPIs? Like what is revenue growth? What, like how many employees are we hiring? Everyone should have personal KPIs.
Mine is like number of weekday workout. I do at a normal time of day. Like not like trying to squeeze it in at 7:00 AM or 10:00 PM. And the goal is to, to like a five day work week. So I would challenge the audience to think about like, what is your personal KPI? And. And are you tracking on it
Watson: and those numbers being tied to whether it's your health or your mental health, how good you feel if that has some sort of connection to your productivity, stuff like that all works together.
I used to be very good about that. I have a two and a half week old. Um, so, thank you. So all my KPIs are how frequently are feedings happening and–
Percoco: are you sleeping more than three hours.
Watson: Exactly. I try not to think about the hours slept
Percoco:. Congratulations. That's awesome.
Watson: Thank you. Thank you. Um, well this has been awesome.
Congratulations on all the success associated with Titan, excited to see you guys continue to grow and impact people from an investing standpoint. And we didn't even mention all the cool investors. You mentioned Andreessen Horowitz, Kevin Durant, Odell Beckham will Smith, all these cool characters. Uh, it was a pleasure to talk with you and have you on the show.
Percoco: Yeah. Thanks so much for having me on Aaron this is special.
Watson: We just went deep with Joe Percoco hope we're not there has a fantastic day.
Everyone. Thank you so much for listening to the end of my conversation with Joe. If you found it insightful, then I would definitely encourage you to check out a different FinTech startup philosophy that we discussed with Andy Rachleff a couple of years ago when he introduced his service wealth front, which is much more focused on those index funds and a slightly different model for retirement.
Investing, investing is difficult. These decisions. I empathize with the challenge of trying to make sense of it dearly, but hopefully these interviews will help you gain a little bit more perspective, have your money, do a little bit more work for you and be a learning process along the way.
Percoco: Thanks for listening.
Connect with Aaron on Twitter and Instagram at Aaron Watson 59.
Find links and information referenced in each episode.