Everett Cook of Rho, the all-in-one digital bank for startups

Everett Cook of Rho - Podcast Transcript

Scott:	Hey, it’s Scott Orn at Kruze Consulting, and welcome to another episode of Founders & Friends. And before we start the podcast, let’s give a quick shout out to Rippling. Rippling is the new, cool payroll tool that we see a lot of startups using. Rippling is great for your traditional HR and payroll. They integrate very nicely. But guess what? They did another thing. They integrate into your IT infrastructure. They make it really easy, when you hire someone, to spin up all the web services and their computer, which sounds like not a huge deal, but actually, we did this study at Kruze. We spend $420 on average just getting a new employee’s computer up and running, and their web servers up and running. It’s actually a really big deal, it saves a lot of money. And the dogs are eating the dog food. We see a lot of startups coming into Kruze now using Rippling. Please check out Rippling. Great service. We love it. I think we have a podcast with Parker Conrad. You can hear it from his own words, but we’re seeing them take market share, so shout out to Rippling. And now, to another awesome podcast at Kruze Consulting’s Founders & Friends.
Singer:	(singing). It’s Kruze Consulting’s Founders & Friends, with your host, Scotty Orn.
Scott:	Welcome to Founders & Friends podcast with Scott Orn at Kruze Consulting. And today my very special guest is Everett Cook of Rho. Welcome, Everett.
Everett:	Hey, Scott.
Scott:	Great to have you on the podcast, been an admirer for a long time. And maybe you can start off the podcast by just retracing your career, and tell everyone how you had the idea for Rho.
Everett:	Yeah. Thanks. It’s great to be here. Yeah, we started Rho about two years ago, myself and my co-founder, Alex Wheldon. Prior to starting Rho, I was working in the hedge fund industry as a portfolio manager, and Alex was chief product officer at a pretty large European tech company. And we sat down to dinner at one point and just had this idea that the commercial banking industry was this very large, static industry. And me, with my macro, hedge fund guy hat on, was looking at this as a market opportunity, and saying, “Look, this is one of the places that tech hasn’t really penetrated yet. People have tried in various ways, but it hasn’t ever gotten there.” And Alex just opened up. And he was like, “You don’t understand. I have to use this every day at my companies, in these companies that I’ve helped grow, or I’ve started as an entrepreneur. And I have this problem, I have this problem, I have this problem.” We can go into them in a sec, but there were all these tactile problems that we felt nobody had really solved yet. And a long dinner turned into a long evening. And the next day, we basically got up and started building. And it’s been nonstop since then.
Scott:	That’s really amazing. And you’re right, commercial banking has not changed very much for a very long time. And kind of worse, all the big banks are such an oligopoly that the rate … The services are so bad, and the internet connections, and … you know.
Everett:	Yeah.
Scott:	There’s so much opportunity here, it’s really amazing.
Everett:	It’s probably the biggest example of an industry, and a really big and important industry, that has grown primarily by acquisition, as opposed to innovation. So, we came at it with a fresh perspective, really oriented around the customer and around the user, and trying to understand, how do we solve problems for our customer? Not how do deploy a trillion-dollar balance sheet? Like one of the top five banks or something like that. And when you look at the problems from that lens, you end up operating and thinking much more like a technology company than a bank. And that’s how we operate every day. And you start to become very customer-centric, and try to basically improve the outcomes for the people that you’re serving.
Scott:	I think we got connected because you were thinking about being a Kruze client a while back, but I was also excited about what you were doing because I’m, like everyone at Kruze, a super, power user of bank software. And there’s nothing worse than not being able to get into bank accounts, or being locked out, or things aren’t working, or can’t get customer service. There’re 20 things that can really screw us up. And in a way, we have such a strong incentive to be alongside our clients on getting good banking services, because we’re a fixed fee organization. If we get hung up on a bunch of problems, or the interface sucks, or whatever’s going on, it’s costing us time and money we can never recover.
Everett:	Totally.
Scott:	It just destroys our profit margin. We connected pretty well, because I was like, “Oh my gosh, you’re solving these problems that we feel all the time. This is super exciting. Go do it, bro.”
Everett:	Yeah, here we are.
Scott:	Good for you.
Everett:	Yeah, we met a while back. Again, I said this earlier, but I wish we had an opportunity to work together then. We find that accounting firms like you guys, and internal CFOs as well, are our biggest champions and our biggest stakeholders. Because those are the people that are spending the majority of their day managing this stuff. And so when we get in front of a firm like Kruze, generally … And it seems like you guys had this experience as well. That “aha” moment happens really fast, where it’s like, “Wow, this shaves hours off my time. It makes my work flow so much easier. And I can spend that time helping out my clients with value-added advice, as opposed to doing something that is just repetitive and manual.
Scott:	It’s so true. So true. And I know you have a very team-centric approach, and team-centric culture. Maybe talk about that a little bit. And I bring that up because, again, we are part of the team for all these startups. And that’s something that separates us. We think like that. But that’s why I like how you approach the world and approach problem solving for startups.
Everett:	Yeah. Look, we think about our mission as helping teams work better together with money. And that is really what we’re about. We realized very early on that the world doesn’t need another checking account. You can do better on banking services, and we deliver best in class with regards to that. But the real problem isn’t that. It isn’t that it’s hard to open a checking account, or the UI is not great here or there. Those are all iterative fixes that you can do. But what’s really important, and what really unlocks value in organizations is helping people work better together. Historically, the bank account, and in general, just the finance stack has been this silo, that has been either stuck across the bank account in one place, and a bunch of fintech products stacked on top with really no communication, no connectivity, and no visibility. Or just a total lockbox, that was handled by a CFO or controller or accountant, that nobody really had visibility into except for senior management, at the end of the month or quarter. And our view is, look, let’s bring that out into the open. Do it safely and in a permissioned way, but ultimately help people get on with their lives and perform their jobs. Be a tool to help people get their jobs done, as opposed to an impediment and something that slows them down. That’s how we think about it at Rho.
Scott:	Yeah. I can’t agree more. I have an interesting observation on this, in that there’s two times of controller, accounting, CFOs. There’s the kind that like to be locked in a room, and no one ever talks to them, and they do their thing. And then there’s the people who are participants in the business, and who are helping the company grow in different ways, and providing feedback, and things like that. And we, because we hire a lot of accountants, we can tell now, very … We don’t want the people who want to be locked in a room and siloed. I think one of the reasons people like that … Not very many people are like that, but a lot of people are, is because they have a lot of control, and there’s not a lot of scrutiny. That’s why I really connect with your team’s approach to this, because like, we want to have an open dialogue. We want to be transparent. And oftentimes, I’ll find, I know this, finance professionals and accountants and CFOs often understand the business at such an in-depth, a visceral level, because they can visualize very easily money moving back and forth and how the different segments of the business are contributing or not contributing. Having them in the room during those conversations can be really helpful, and having them connected to the rest of the organization through technology is really, really incredible, too.
Everett:	Totally.
Scott:	So, I share your same beliefs.
Everett:	From our perspective, we’re not telling companies how to run their business. They can elect to be very transparent or very closed. We personally believe that transparency is better almost always, but the point is is you can set your own destiny as a company, and Rho helps you do that.
Scott:	Yeah. There’s one little thing you mentioned, about how UI doesn’t add that much value, but I would slightly disagree on that. I’ve experienced the Rho UI.
Everett:	Yeah. No, maybe that’s probably an understatement. Yeah. We spend a lot of time on UI. UI is very important.
Scott:	Yeah. I was going to say, you guys … It’s beautiful. It’s beautiful. It’s easy to look at. It’s easy to navigate. It’s easy for people. It’s a fun experience. It’s an easy experience. And I’m talking to someone who logs into 20 banking systems a month, and oh my God, cringes-
Everett:	You’ve got to be one of the first people to call a banking system fun, so that’s awesome. But we hear that from some of our clients. Look, from our perspective, it’s incredibly important to us. We have a fantastic product team, led by my partner, Alex. And then Tom Treadway, who’s our head of design, who came from designing at IDEO and Apple. So, we were extremely design-centric, and we think that intuitive UX is part of what helps you get on with your day. My point was that it doesn’t stop there. That is one place. That is the first step that you go to. But really, the power comes from unlocking the team. And that is a combination of things. Yeah.
Scott:	I love it. I love it. And maybe you can talk about the kind of companies you work with. What teams do you enable?
Everett:	Yeah. When we think about the companies we work with, we work with midsize companies for the most part. It’s hard to define midsize. The best way we’ve tried to define it, internally, and we think about it, is once a company has a CFO. That might be external CFO like Kruze, or it might be an internal CFO. But once that company has someone who is fully dedicated to their finances, that’s when we think they benefit the most from this. We take smaller companies, and we take much larger companies. We have a large concentration in venture-backed startups and e-commerce companies. And the main thing that our companies have in common is that they’re all growing fast. We work with more traditional businesses as well. Generally, professional services type of companies, a lot of marketing agencies, people like that. But the one common denominator through all of them is they’re growing and scaling. And as they grow and scale, they need to be able to make sure their finance stack can do it with them.
Scott:	Hey, it’s Scott Orn at Kruze Consulting. And before we get back to the podcast, quick shout out to ChartHop. ChartHop is one of my favorite new SaaS tools on the market. And basically, what ChartHop does is it puts your org chart in the cloud. And I always like to say it brings transparency to your organization. Everyone in your organization can see who they report to. They can see the full org chart of the company, and how their group relates to other groups. It also has a lot of information on the individuals in the company. You can click on the ChartHop profile, and just get where people live, their experience, Slack handles, all this kind of stuff. And it’s just a really great tool. The other thing is ChartHop has started doing some cool stuff around compensation and budgeting planning. You can actually start seeing what the cost structure of the company will look like during a certain scenario. So, I’m loving ChartHop, check it out, ChartHop.com. We use it at Kruze. We really like it, and I can’t recommend it enough. All right, back to the podcast. By working with a fast-growing company, it sounds like there’s … I kind of know this, too. There’s a pressure of that at Kruze, when the system isn’t seamless, and isn’t easy to use. So, you guys come in, and do you see a lot of companies switching over to you, to Rho?
Everett:	Yeah.
Scott:	In that situation?
Everett:	Yeah. Companies are almost always switching over. Sometimes we’re the first account, but not that often. It’s generally when they hit a point where they’re like, “Okay, it’s not just me anymore. I have a team of people that work for me, or work with me, and partners and investors, and we need to do this right. And not only need to do this right, we need to do it together. I can’t just be a one-person shop.” And that’s generally when they realize that, look, they’ve outgrown their checking account. They might also be, at that point, incurring a ton of fees. And generally, just working with a lot of other fintech products that don’t work well together. We are able to come in and basically help them simplify their finance stack and, again, work better together.
Scott:	Yep. I like it. And I do think, especially those investments in UI you have made, I have a feeling, you are going to be signing up a bigger and bigger percentage of small companies, like startups. Because I know our client base is a two or three-person startup, that’s how they come to us. Or they come in at series A. But a lot come at just the seed stage level. And I know we’re pretty excited about Rho, so by definition, when we’re sending client … There’s going to be a lot of positive pressure. Like, “Hey, why waste your time working with a not-so-great bank to start, when you’re going to switch anyways. Just do it right from the first thing.” So [crosstalk]
Everett:	Yeah. We couldn’t agree more.
Scott:	Yeah, for making it that way.
Everett:	Yeah. We have an incredibly talented team. They all work extremely hard, and wake up every day and go to bed every night just thinking about this. Thinking about, “How do we make banking better? How do we make the finance stack better?” It’s really interesting. It’s a really interesting problem to solve. And that’s why I think everybody’s excited about it that’s on the Rho team. We all see the scale of how much there is to solve and how much room for improvement there is. It’s extremely motivating to all of us.
Scott:	It’s fun to wake up with a tough problem to work on every day. You talked about enabling teams, and then early on in the conversation, you also talked about how a lot of financial applications or financial data is siloed. I agree with you, and I’m excited that that’s changing. Can you talk about your perspective on that, and how Rho is doing that?
Everett:	Yeah. If you go back in history, before fintech was a thing, generally, all of this was somewhat paper-based, or spreadsheets, or the like. Generally, you had a relationship bank that did most of your stuff. And then, over the past 10 years, basically, you had all these siloed solutions. You had a solution for foreign exchange and global payments. And so, you stopped using your bank for that, and you started using some other company for that. You had a better bill pay solution, so you stopped using your bank’s bill pay solution and you started using that. Or you stopped putting checks in the mail. You started using accounts payable and other products, and gradually, one of those products was better, in terms of on its own. But all of a sudden, companies ended up with this stack of like 10 things, to do what they were doing before, kind of in simple way. And none of them talk to each other very well. They’re all connected by the bank account, but the bank account doesn’t talk to anybody. It’s just a receptacle for money. You have different user permissions. You have different roles. And there’s no continuity across the system. It’s also incredibly expensive to maintain, if you add up all the costs. Our view is, look, let’s simplify that. This stuff started at the bank. It should end at the bank. And the technology is good enough, and we can build a team that is capable enough to be able to build all this in. And when it all works together, it’s much better.
Scott:	I love it. Yeah. You gave the history so well. There was this giant unbundling, because everyone wanted best of breed. QuickBooks is the connective tissue, still. But you had to be integrated with the QuickBooks, and you’re right, the bank systems became, quote unquote, dumb systems. They didn’t have the functionality you need, and that’s why you went best of breed.
Everett:	But it’s the hub. It should have been the smartest part of the system.
Scott:	Yeah. But it was because there weren’t great technologists working … Or the technologists that were doing that, like your point, they were working on merger integration instead of UI stuff. Right?
Everett:	Right, or trading or something like that.
Scott:	I worked in investment banking. My company was bought by Chase, which then merged with JP Morgan, all in a three-year period. I’ve lived that. But I think it’s really exciting that it can be … Like what Rho’s doing is making the bank the smart hub again, and building a lot of this functionality. Because you and I have talked about this offline, but there’s a lot of complaints about Bill.com or other software applications, that our clients just don’t really want to learn, that aren’t that intuitive, and do cost money. Building some of this functionality is really, really exciting to accountants. You know?
Everett:	Yeah. We’re a really fast-moving product team. We obviously have to balance speed with safety, because we’re in an industry where there’s zero tolerance for error, but our product continues to evolve really quickly. Companies that are on the platform see improvements all the time, and we’re constantly shipping new product. We’re really excited for what we’re going to share with our users over the next few months and beyond. But yeah, our view is, ultimately, all those functions are going to live in Rho. We have a long journey ahead of us. So far, it’s been great. And even the things we built today are already adding a tremendous amount of value to our users.
Scott:	What’s the customer reaction? Do people stop you when they’re coming in, or are you doing focus groups, or how does the end user, the client or the startup founder, how did they react to Rho?
Everett:	It’s really interesting. I think that it depends on their role, because most people are used to great software. Most software applications are very good now. Whether you’re doing task management, team management, stuff like that, it’s pretty good. Engineers and product designers have done a great job over the past 10 years. And then you get to banking and finance stack, and it generally feels like you’re going back in time. It’s really interesting when we show Rho to companies and CEOs, and they’re generally like, “That looks great.” But they generally don’t spend that much time managing those tools. And then we show it to people that are more finance-oriented, that spend their lives in these tools, and they’re blown away. And it’s like, “Oh my God, I’ve been waiting for this for so long.” That’s who we talk to. It’s unfortunate that that’s the bar, but we’re trying to push way above it.
Scott:	You’re describing my situation. A week ago, I got to see behind the curtain, some of the stuff that you’re showing off in a month or two, and I was blown away. You can probably hear it in my enthusiasm, oh my gosh, this is stuff that we’ve wanted for a very long time, and you built it. So, kudos to you and the team. It’s super exciting.
Everett:	Thanks.
Scott:	We don’t want to break any news here. You’ve got some new products going in October, November? Or what’s the timeline here?
Everett:	Yeah. We’ve got some new stuff. Probably by the time this comes out, check our website, and we should have some really exciting announcements for everybody out there.
Scott:	I love it. And we’ve just got a couple more minutes left, so we’ll wrap up in a second, but you said you worked at a macro hedge fund. When you look back on that experience and that pivot, are there any words of encouragement you can give other people who are thinking about doing that pivot, to going in the startup world? Any thoughts?
Everett:	Yeah. It’s always case-specific, but from my perspective, it didn’t feel like a pivot, especially building a company. As an investor, there are a couple of things that I learned from working for some great investors that really matter. One is making excellent, ex-ante, positive expected value decisions every single day. And that just accrues. And you focus less on the scoreboard. Score matters. Score matters a lot, but there’s things you can control and things you can’t control. And if you try to make the best decisions under the scope that you can control, ultimately, over time, you end up with great outcomes. The other is really … Investing is problem solving. The great thing about public markets is you have this constant feedback loop, that you can really … You know very quickly if you’re right or wrong, and you can try to understand why. It kind of forces this really disciplined decision-making around reducing complex problems into a couple of simple things that actually really matter. Because generally, if you’re looking at an investment, or a business, or a public market or something like that, there’s only a couple of things that matter. There’s a lot of data, but like two or three of them are actually what really count. Those kinds of things, for me, are very similar. It’s what I do every single day, as a founder. You’re trying to think about, how do you see the world differently than everybody else? And how do you like push that edge, and express that opinion in a differentiated way? It’s not that different. In general, nothing is impossible. And I think that’s the other thing. I think a lot of people feel siloed or stuck. “I’ve done this for X amount of time, and therefore, that’s all I can do.” And that’s just simply not true. It’s generally a mindset more than anything else. If you’re a smart person, and I’m sure everybody listening to this is, and certainly people coming from the industry that I was in, generally full of smart people, you just have to start. You just put one foot in front of the other, and you just keep going.
Scott:	Yeah. I love that. That’s really beautiful. And there’s one thing I want to add on there, which we were talking about the continuous feedback in the public markets. The cool thing about startups, especially when you hit commercialization, where Rho is, is you start getting continuous feedback-
Everett:	Yeah. It’s very similar.
Scott:	From your customers and your team. It’s really rewarding. I love working with startups, like you, and it’s really rewarding for me, and it’s really validating for me to see people like you and the Rho team, changing the world of banking, and making our life easier, our client’s life easier, and, by the way, makes it so much more efficient on a dollar basis. Some of the money that would have been wasted on needless software, needless accounting processes, can be automated and go back into the pockets of the companies.
Everett:	Yeah, that’s right.
Scott:	And they can spend money, and reinvest that money again, which is really cool.
Everett:	Yeah. Money and time, right? That’s what it’s all about. From our perspective, I love the fact that you love our UI, Scott. We don’t want our companies to be spending their days on our UI. We want them to be out there doing what they do best, and putting more of that money back into the business, so it can go to what they do best. What’s really empowering for me is waking up every day and seeing the companies that are on Rho, and what they’re doing. It’s incredible, and it’s awesome. We’re really proud and grateful and humbled every day, to be powering some of the most amazing companies out there.
Scott:	I love it. Well, Everett, thanks so much for coming by. Can you tell everyone how they can reach out, or how they can become a Rho customer if they’re interested?
Everett:	Yeah. Yes. You can go to R-H-O, the H is silent, Rho.co. And check us out. Or drop us an email at bank@rho.co. And we’d love to talk to you.
Scott:	Awesome. I love it. Please give my best to your tech team, and all the product managers, and all the designers, and everyone who makes the whole package work so well.
Everett:	Thanks, Scott. Great being here.
Scott:	All right, buddy.
Singer:	(singing). It’s Kruze Consulting’s Founders & Friends, with your host, Scotty Orn.

Everett Cook of Rho, the all-in-one digital bank for startups

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