David Passavant is the CEO of Numo, a subsidiary company of PNC Bank. Numo is tasked with funding innovative technologies that can meaningfully move PNC’s business forward.
In this conversation, Aaron interviews David about what life is life running a corporate-backed financial technology incubator in Pittsburgh and how David found his way into the role.
David has been the CEO of Numo for 2.5 years and has recently launched its first two products. Great episode for anyone interested in corporate innovation strategies and careers.
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David’s Challenge; Be an original thinker.
Connect with David
If you liked this interview, check out episode 356 with Toni Murphy where we discuss negotiating a large enterprise as you build your career. You might also like this interview with Joe Lubin, the co-founder of Ethereum, on the future of cryptocurrency and financial technologies.
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Watson: I'm so excited to speak with you. Thank you for coming on Going Deep with Aaron Watson.
Passavant: Thanks Aaron, happy to be here.
Watson: Let's start off for folks that don't know what Numo is, and maybe have never really been in an environment where they're a part of something that's a part of a much larger structure the way that Numo is. Can you just contextualize for people a little bit about where we're sitting right now and what you guys are up to?
Passavant: Sure. So we are in the Numo offices. Numo is a subsidiary company of PNC bank, which is a big, big bank. We're about the six largest bank in the country. And it's a form of an incubator. I don't know if an incubator is the right word to describe what we are, but it's a take on an incubator and it's a very unique kind of incubator.
Watson: Yeah. So one of the things that's really interesting and wouldn't necessarily be apparent from the audio that we might be listening to, or even the video that they're watching is-- and this is not uncommon in other larger organizations-- is PNC. I don't know how many buildings you guys have downtown, five, six something, and they're all around one another.
And there's a lot of action going down the headquarters of the bank. And this office is out in East Liberty, which is near alpha lab and other kind of startup things that are going on, but this is a way for you to have the room and the levity to experiment and to do things that are required in a startup type of environment that don't fly in a large bureaucratic organization.
Passavant: Yeah, I think that's true. You know, in many ways the location is further down on my list. It's important, there's no doubt about it, but like the location of the office was -- I had other considerations that were actually much higher in terms of setting us up to be successful, believe it or not. I mean, I think a lot of times companies go down this sort of path of we're going to create some innovation. We're going to create a group that's going to have a foosball table and an office and another place, right. So I thought it was important to be physically separated, but that was actually probably like fourth or fifth on my list of stuff that I cared was at the top.
Well, what I thought essential was the structure of how we're connected to the parent company. And that goes into everything from how we recruit to how we are compensated to how we pick what we work on to how equity works. I mean, those things were way more important to me.
Watson: And I won't ask you to divulge something that you can't, but are there examples of how it might be done wrong? Or maybe you spoke with someone else who did something similar in a similar context and it kind of, we were led astray because an incentive was incorrect or some sort of the basic fundamentals.
Passavant: That's a great question because there are very few large companies out there right now that are not banging the innovation drone, like saying like, you know, we gotta be more innovative, we got to reinvent ourselves. I think where there's some very common mistakes, a lot of people chase the "we're going to bring in an outsider who did something cool in another industry, pay them a lot of money", again, put them in a building with the foosball table. And then, kind of just let them create, right. What ends up happening is that, usually the interest in that fades over. Usually it kind of goes along with the macro economic cycle, right? Like the economy turns and all of a sudden you start to chop stuff that's low hanging fruit. And usually those teams kind of go away. They don't have a clear mandate. They're just almost like a little pet project. So that happens a lot.
The other thing that happens is you'll say, I want to have an innovation team, but then you'll just kind of use them as like another it team or like another product team that maybe has some talent that you couldn't get in. And then usually the talent won't stay if you do that. So, you have to be really clear about the mandate, of what are they expected to accomplish, this sort of external team? And then how's it-- what's the structure, how are they going to be connected to the parent company?
Watson: Gotcha, yeah. So I want to kind of go to your story a little bit, because you progressed through-- before being the head of Numo, you were a leader in innovation within PNC. And to make that transition, I think, I'm sure there are plenty of listeners out there who are in a corporate environment. They're aspiring to, you know, maybe stay within an organization, but find a place where they can flex their creative muscle and do more of this type of work. Okay. So talk a little bit about how you set yourself up to be in this position within PNCs context, right?
Passavant: You know my case was unique. I don't know that it would apply directly to other folks, but that's how every story is. Right. So, yeah. The way that I set myself up to kind of pitch Numo and to be here is basically put in the time at PNC to get to know the business and the people that run it really well.
So I was at PNC for three-ish years, running a kind of a group there before I pitched the idea for Numo. And I was just incredibly fortunate that the bank was willing to listen and kind of give me this opportunity. So I think my answer would be, if you want to have credibility inside of a large organization, you put in the time to really understand the leadership, understand the business, understand the sort of, you know, the power dynamics inside the company. It's just essential. That way you earn the credibility and you earn the right to kind of have a stage for your idea.
Watson: And there's another kind of trope within entrepreneurial, I don't know, wisdom or truisms that get passed around, which is like, well, I had the newbie mine. That's why I succeeded because I knew nothing and I just threw myself into some unexplored industry. And yet basically what you're articulating is not only were you within the context of the bank, but you steeped yourself in it before making that jump. And I think that's actually a much more common.
Watson: A pattern for actually finding where the next wave is gonna be.
Passavant: So I think it's a real interesting insight. I think actually both things are true. So I came into banking with no banking experience. So in that sense, I did have that newbie mind. I'd been in healthcare. I'd been in consumer products. I'd been in telecom. Like we've kind of been all over the place. So. That was one of the reasons PNC brought me in is to shake things up.
But when I got in, I went deep in with the company, right. And with the industry. So I think both things are actually true in this case. This is one of those where it's not-- there's no formula where it's not just, you know, bring a totally different mindset and you'll be successful. That's not the case. So I would say it was that combination of having a different background combined with then putting in the effort to learn. You know, the large company is what helped me earn credibility.
Watson: Yeah. And how much of a pre-planning went on? So like, you know, where you sit right now with Numo and I'm sure you have goals and aspirations in places you see yourself going in the future, but at some point you were picturing being right where you are right now. What was the timescale that, when you walked into PNC day one, was that the aspiration or when did you start to recognize that that was an opportunity that you wanted to see?
Passavant: Was it an aspiration? Absolutely not. So there was no way that I said when I joined PNC, I'm going to pitch a concept for a spinoff incubator, that's going to create startups from inside the bank as a separate company. That was not the case. I wish I could say that it was, but it wasn't.
This idea started to emerge as I was kind of tasked with, "be the innovation guy inside the bank." And there are so many models for doing that over time. I found that at PNC, I thought there was an appetite for trying something that it was somewhat disconnected from the bank. And so over time I literally just was like a clean sheet of paper and said, how could I take the stuff that was awesome about the startups that I was fortunate to be a part of and actually apply that model inside of a large company, quote unquote.
So the idea sort of happened very organically over conversations with people and just kind of, you know, experiencing some of the struggles of trying to quote innovate from inside of a large company. It was very organic over years and, even taking it a step further back, positioning yourself as the innovation person.
Watson: So you were brought in with that context, you spent your time at PNC doing a similar type of work. For folks, even just looking to get into that direction, not necessarily like running the whole outfit, but being a part of that type of organization, what background, or what type of resources did you study or pull in to start to position yourself in that vein?
Passavant: So, you know, again, it's hard because there was no deliberate "I'm going to study this person or this company". And then I've always felt that at each point in my career, take the next most interesting door that's open. And in my career that just led me to being a consultant at a large company to start. And then. Going off and being a part of some interesting startups and then going and get a business degree and then going and working in healthcare for a little bit. And it, each one of those, I was adding like some weapons to kind of my toolkit, right. And each one gave me a different perspective.
I emerged from that, with, I can look at this problem from a startup perspective or from a consultant perspective or from a large company perspective. So I just kind of, I'd like to say it with some like deliberate path, but it really wasn't each door that I took was because that was the most interesting next door.
Watson: Well, I think that's really helpful because I think that there's either a pressure or an aspiration to over-engineer the entirety of the thing when you're early on. And, It's almost like a breath of fresh air, like, okay. The next step will reveal itself when you take one more step.
Passavant: I think that's right. And what I would say is what you shouldn't worry about, how do I architect what my career is going to look like seven moves down the line. It's just not possible. I don't think --maybe is for some people, but-
Watson: A very select few.
Passavant: -Yeah and most people, I think that reach some success, if you look back you're like, it was a combination of luck, people looking out for me, me just working hard, you know, those are the things that matter. But what does really matter and has always mattered to me is who I work with.
So this is something that I, if you want something to obsess over, if you will, is being inspired and challenged by the people that you're around. That will open up so many doors for you in the future. It's kind of a cliche. I don't know how to say it, but when I look at the things that supercharged my career, it was those times when I was around people that I just loved working with.
And then they go on to do interesting things, they pull you along with them. So that is, I wouldn't worry about what does my career look like six months from now, but I would ask myself, "Man. When I look at who I spending my days with, are those people, am I learning from them? Are they challenging me?" That is essential.
Watson: So now that you're in a position of leadership, what have you learned about attracting people like that to join your organization?
Passavant: You know, I think people want to be inspired. I think that people want to work for something they believe in and with people that they believe in. And so I think that this is the beauty of a startup, right?
So. Startups are phenomenal because people rally around a thing, a cause, a concept, and in some ways, I want to say it doesn't matter what you're working on. It does, but you can find people rallying around a cause almost no matter what it is. Right?
Passavant: And so that's what we're trying to do here is find specific product ideas that people can rally around and get excited about. That's the magic in a startup, right? This is like, I'm willing to sleep at my desk because this is awesome. Right?
Passavant: And yeah. That is hard to find. It's hard to find a large companies and it's hard to find in the world in general.
Watson: The going deep podcast is underwritten by Piper, creative shooting, editing and publishing quality content is overwhelming. We make it easy so you can save time, build your brand and grow faster. Say firstname.lastname@example.org. Question.
And once again, people can't tell from the audio or the video here, but there is a massive FinTech landscape bore, and it has all these different sections, payments, finance, insurance, all these different directions that one could go. And so as an incubator of these kinds of FinTech startups, how do you go about picking a focus or picking a direction to allocate the resources that you have under your steed when it's such an expansive landscape with so many directions you could possibly go?
Passavant: Yeah the world is huge. Yep. This is something we've had to figure out. So we very intentionally have a carte blanche, so we can go after any of this stuff as long as it's related to FinTech. So that was intentional. We didn't say, we're going to focus on crypto. We're going to focus on whatever payments. We have figured out a methodology, a rubric that we use to evaluate different ideas and it's, you know, state secrets.
So I can't share it, but, yeah. We have found a way to measure ideas that come through our funnel relative to and against the unique model that we have. Right. So I don't-- the model that I use is not what just a VC would use to evaluate an idea. It's different because I'm part of and backed by a large bank. So that's what makes me unique. And so I have to make sure that I pick ideas that maximize that value. See what I mean?
Watson: And to a degree-- so there's the incubation happening-- is there any mechanism by which. entrepreneurs who might have their own thing, you know, I'm just going to like paint a prototypical picture:
Female, 35 has been in a PNC for a while, went out to start her own FinTech thing. And now, because she has some context as well, lassos back, comes to Numo and says, Hey, will you help me kind of bring this thing to full speed? Or is it people who are within Numo looking around and generating from solely within the organization?
Passavant: Both. So both things happen. The difference is, if you're coming from the outside, our equity model is just very different. So PNC owns the majority of the equity and what we create which is okay, given the advantages that come along with that. So the access to talk to PNCs experts, PNCs clients, PNC as a distribution channel, sometimes even PNC as a customer for our products. That is, those are all advantages that like a typical entrepreneur just wouldn't have.
So PNC owns majority of the equity. So oftentimes entrepreneurs, who've got an idea and want to go forward on their own and own most of it themselves, that's terrific that could have a phenomenal payoff, but obviously it has a high failure rate as well. So, I will always talk to those people, but our model is fairly unique. And I think that it's obviously it's not for everyone.
Watson: But certain instances, like we're talking about cousins, not completely different entities in the sense that oftentimes when a startup is looking at the VC or the angel that they might invest in, there's certain ones that they just need the funds and they don't particularly care where it comes from.
Right. But then there's highly viable organizations with multiple opportunities and a lot of upside, and partially the calculation of who comes in as part of their cap table, who comes in as part of their investor base is, "What other doors can you open for us? Who can you connect us to?" And so in that ways that it is a cousin of some of those other mechanisms.
Passavant: I think you're right. So this gets back your very first question. What is Numo? So-- and I call this an incubator, another term we use is a build incubator. And what I mean by that is we don't take investments.
And so I'm not like an alpha lab or an Ascen der, you know, or a Y Combinator. We build ideas ourselves, we find our ideas and we build them all in house with our team of engineers, designers, and product folks. So what that means is if there's a company out there that kind of just needs some capital and once PNC has a strategic investor, that we don't do that through Numo.
Passavant: So this would be more, somebody maybe has an idea. And they come in and say, this hasn't happened by the way, our ideas that we have, that we're working on, have all come from us internally or from the bank directly, which is cool. But there is a chance to talk to that person.
So you can come into our model. Here's what the cap table would look like. Here are the resources and assets you're going to get, but it is not like us. We then sort of have control of the company if you will. So that's the sort of trade-off.
Watson: Does PNC have a different mechanism for what you articulated before of like the strategic investor, but in a context of something else, that's like a different way of the business.
Passavant: We do. We do it. Yeah, we've announced a few of them. We do it pretty rarely, but we do a few a year, investments in tech startups. It's usually for strategic reasons, we're going to be a customer of the company. And so we just kind of come along and own a very small piece of it, but that's it, we don't have like a corporate venture fund that we do big investments with at this point. We have in the past, we don't right now.
Watson: Yeah. So. Numo is just over two years old about. And, can you kind of paint a picture for us in terms of getting this off the ground and the kind of progress that has been made now in less than three years, of some of the things you have been working on? I know some stuff is still a hush-hush, can you paint a little picture for what's happened?
Passavant: What's happened so far. I've always viewed, proving out Numo would be kind of in stages. And the first stage was, could I structure this company in a way with the parent that I felt good about, meaning it would actually be able to function like a startup and create startups. And that took a long time, as you can imagine, you know, PNC is a very, in a lot of ways, very conservative, large company. So--
Watson: Many financial institutions are.
Passavant: --yeah, they are. You kind of have to be actually, if you're a regulated financial institution, it's very important that you're very careful with what you do, right. So that took a while. I love where we ended up. I'm really excited about it.
The next challenge for me was could I hire core talent that like bought this model and that I was really excited about. And I am an extremely methodical hirer. So it took me about a year to get the core team in place of like five, six people. So that was just very, very methodical. And I'm ecstatic about the talent that we have now, which is awesome.
The next question for me was then can we find projects? Can we have product ideas that I'm excited about? And the answer to that has also been, yes, we have two products that we've launched and a third one that we're writing code on right now. And I can talk about them a little bit if we want to, but--
Watson: Yeah, absolutely.
Passavant: Yeah. So that's awesome. Then, then the next question will be, can I make those, can we make those products successful and that's coming.
Watson: So what have you launched so far?
Passavant: So very first product is-- and actually we haven't talked about it much publically yet, so here you go--is essentially a bank account for the gig economy, a bank account for people that are in 10 99 income. The product will be called Indi, I N D I, and it's a digital sort of mobile bank account.
And, as you might know, what are--what would you think are the biggest paying points for people that are in 10 99 income?
Watson: It's just very irregular. And they usually probably want that money cleared very, very quickly. They don't want to wait for--
Passavant: so that's it. So there are really three that we focus on. One is this lumpy income, because you don't get paid every other Friday, like a W2 does. But the second then is taxes. So you have to you know, control your own taxes. Right? You've got to decide how much you're going to save and keep yourself disciplined to save it. So we help with that with this app.
And then third is expenses. So a lot of independent workers, you can deduct a lot of expenses. And so this app has a way to. It's an app with a physical card, and so you use the card and when you use the card, you get a real-time alert that says, Hey, you spent, you know, 20 bucks at the Chevron down the street, you know, swipe left to categorize this as a deductible expense for your 10 99 work. And then we'll track that for you
Watson: Right on.
Passavant: So it's a great product. We're just launching it now as sort of an internal pilot. And then later this summer it'll be available more generally.
Watson: Very cool.
Watson: Interesting. You used mobile there a couple of times. And one of the things that I just read a couple of weeks ago, and I was thinking about this interview when I read it, was John Dick, the CEO and founder of CivicScience, a local sort, actually just right down the street.
Passavant: Yeah, PNCs a customer.
Watson: And, he has quote basically says, it's over. Mobile banking should not just be called banking because the acceleration of adoption of consumers that use retail banking primarily through a mobile device is just, I think it's over 36% based off of the thing that I'm reading right now. So that has to be the kind of core consideration that informs every product decision that you might be making.
Passavant: Yeah, that's right. That's right. And yeah, we built mobile first for Indi. That was the, you know, that's our assumed based use case.
Watson: Yeah. A hundred percent. So the last question that I have here, that's kind of come up for me, you're talking about being in PNC, a naturally conservative organization and you kind of laid out this process of, we had to figure out were the incentives right, then were the people right, and then we incubate the ideas and simultaneously we're talking about a career where you kind of take one step and then you figure out what the next step may be.
Watson: I'm really curious about what you've learned about navigating this organization that has that conservative instinct, because the flip side of, you know, wanting to over-engineer a career and see every step in place.
Watson: Well, that doesn't make a ton of sense. That actually is what happens in a lot of financial projections. Like if I have a bond, i have a fairly confident idea of what's going to be up with that bond, 10, 20, 30 years down the road. So, what were the conversations like, as you were articulating the structure of well, we'll figure that out, but we still have to figure out like these three other steps along the way. How was that negotiated within the context of PNC?
Passavant: That's a good question. And a hard question to answer. I think that what I'd say is I needed to provide enough detail around what would we be? What we'd be working on, the kind of the metrics I would use to measure success for Numo. Like what would we be expected to deliver for PNC and PNC shareholders? I had to deliver enough detail there that it sort of passed the sniff test, if you will. But remember, I was sort of trading on the currency that I built over three years of running projects and other things inside the bank. You know what I mean?
So ultimately I think that people will talk about this a lot, but at high enough levels in an organization, decisions are ultimately gut decisions. And so I think that's ultimately what I had earned credibility because I, you know, I'd had budgets and I'd managed them well, and I'd had projects and done them, rather than outsourcing stuff to consultants, we'd do it ourselves, those kinds of things I'd done.
So I'd earned the credibility to pitch something that was a little more out there.
Watson: Yeah. To me, that's one of the most interesting things that I'm only recently learning, even with my own decision making, which is how much of it has to be off of gut and how much of the process of growing in whatever career arc you may be going is developing that gut to make those decisions about what the next step may be, or make those decisions about what the next project may be. And it's really tricky how you even cultivate that aspect of yourself.
Passavant: Your gut is the accumulation of your experiences, plus your education, plus all the people that are around you over time. Right? There's no substitute for just going down the path right, repeatedly. And then that is your gut, right? Eventually that creates your gut and over time, your gut gets pretty smart. Hopefully a hundred percent.
Watson: Yeah, this has been awesome. David, I've really enjoyed speaking with you. Before we ask our standard last two questions and sign off, anything else that you were hoping to share today that I didn't give you a chance to?
Passavant: No, that's it. I mean, I'm really excited about what we're doing here. We're just starting to talk about Numo. We've been really quiet about it. I spent a lot of my-- I grew up in Pittsburgh and then moved away for a long time and then came back for grad school and then decided to stay. I'm really excited about tech and Pittsburgh. I think over the next 10 and 20 years, Pittsburgh's going to be a phenomenal place.
It already is, but it's going to be an even more phenomenal place to be a technologist as Google continues to grow as Uber grows. And then Duolingo is doing really well. As those companies start to throw off talent who are ready for the next thing, it's just going to be this next wave in Pittsburgh. I hope Numo can be a part of that by creating two, three, four, five spinoff companies that grow to be big. So that's my main, that's my mission right now, you know, I'm excited about it.
Watson: Your excitement certainly comes through in your energy and your voice. I'm excited to continue to follow along with it for folks that want to do so as well, what digital coordinates can we provide them if they want to learn more?
Passavant: Yeah, sure. So Numo is at numo.com, N U M O dot com. We've got social media presence as well. You can find it all there. And then, you know, all of our coordinates are there, so you can get in touch. If you've got an idea that you want to pitch, we have some events coming up. We are actually just about eight weeks away from moving into a new office, which we'll be right down in the heart of East Liberty. Really excited about being even more part of that community. It's an awesome 1890s building that we're renovating and it's going to be great. So w'll have a couple of open houses there.
Watson: And you'll be closer to Choolah too.
Passavant: Choolah is already takes a lot of my paycheck each month, so even more yeah. In a couple of weeks.
Watson: Right, right on. We're going to link all that in the show notes, found in the podcast app, or you're probably listening to this right now, and also available at goingdeepwithaaron.com slash podcast. Yep. But as we do at the end of each conversation, Dave, I want to give you the mic one more time to issue an actionable personal challenge for the audience.
Passavant: Right. So my personal challenge is to be an original thinker. So this is something that I've learned over my time and something that I screen for now, and people that I hire. In school, and in work often, we kind of teach you to apply a methodology or an algorithm or recite facts. And that's all great. Like you can gain base level of knowledge at that.
But ultimately, you know, what I think allows you to tread new ground or those things that strike you as wrong or different in the world. And you, rather than running away from that, you sort of embrace your original thoughts to that area. So I just would encourage people that, you know, if you're doing your job and you feel like, it doesn't seem right, and I think maybe there's a better way to do it, or you see a problem in a totally unrelated field that you're like, why hasn't it been solved yet? I mean, don't run away from that, embrace that because that's probably a business idea or something that will help you bring something new into the world. So be an original thinker.
Watson: I love it. I'm tremendously curious how you screen for that, when you're bringing people in.
Passavant: Yeah. So the way we screen is we actually try to do work with folks. I think it's almost impossible to screen for that on a resume or just a conversation like this. We give someone a problem and we work through it together and that's where their brain comes out.
Watson: Becomes apparent through action.
Watson: Right on. David, thank you so much for coming on the podcast. I really enjoyed speaking with you.
Passavant: My pleasure, same.
Watson: We just went deep with David Passavant. Hope everyone out there has a fantastic day.