The MoneyPot
Welcome to The Moneypot, the podcast from Money20/20.
Money Changed. Know more!
The MoneyPot
Inside the Marqeta Acquisition: A Heart-to-Heart with Power's Co-founder, Randy Fernando
Strap in for a riveting conversation with Randy Fernando, co-founder of Power, a company that has recently been acquired by Marqeta for a whopping $275 million! Randy, a trailblazer in the Fintech industry, has some compelling insights to share. His journey with Power is far from over, and we get an exclusive look into its inception, its growth, and what lies ahead post-acquisition. Not only that, Randy also talks about his experiences from the Money 2020 conference, an event that played a pivotal role in connecting him with investors and shaping his entrepreneurial journey.
We dive deeper into the nitty-gritty of startup acquisitions. If you're curious about what makes an acquisition successful, listen in as we dissect the importance of cultural fit, team dynamics, and trust. How does one keep the team motivated and involved after an acquisition? Randy shares his strategies, drawn from personal experiences and lessons learned. And lastly, we also touch upon the often overlooked responsibilities of being a founder, the challenges that come with it, and the importance of maturity in navigating the business landscape. This episode is a treasure trove of wisdom and inspiration - all from the entrepreneurial trenches. We guarantee you'll walk away with a fresh perspective on acquisitions and the fintech industry!
Guest, Randy Fernando, VP of Product, Marqeta
Hosts: Micky Tesfaye, Content Lead, EU
Sheryl Chen, Head of Content, Asia
Follow us on LinkedIn
Welcome to the Money Pot. I am Mickey Tesfaye and I am your host. Today we are live at Money 2020 here in Las Vegas and I'm very excited to bring you this episode on in tech exit and when those exits, necessarily an ending. To talk through this fantastic and interesting subject, I'm joined by my wonderful colleague and co-host, cheryl Chen, head of content for Money 2020 Asia. Hello, cheryl.
Sheryl Chen:Hi Mickey. How are you doing? I'm good. How are you?
Micky Tesfaye:Excited, as you know, because I'm a big FinTech nerd and I've got one of the most interesting folks in the FinTech game joining us here for this conversation. Welcome, randy from Marqeta. How are you doing, randy?
Randy Fernando:Doing. Great Thanks for having me.
Micky Tesfaye:No worries, it's our pleasure. How has it been so far for you Money 2020?
Randy Fernando:It's been a marathon but it's been fun, with a lot of great people sharing the story about Marqeta Credit. It's been fun so far.
Micky Tesfaye:How are your?
Randy Fernando:feet Soiling sore, that's.
Micky Tesfaye:I feel like the way you know you've had a good time at Money 2020 is how much your body is falling apart. The more you're hurting, the better your time. But I guess the reason you would have been so busy here is because you've got a fantastic and fascinating story. You are the co-founder of a company called Power, which you subsequently sold to Marqeta in January of this year was reported $275 million and, if I am correct in remembering, it was actually Marqeta's first ever acquisition in the space. So maybe to start us off and to learn a bit about you and your background, do you want to give us a bit of background and context into power and what you folks were doing with that?
Randy Fernando:Absolutely so. The last 15 years of my life has really been dedicated to building in fintech and financial services. Over the years, I've started companies. I've also had the opportunity to work at some really successful direct-to-consumer fintechs as well. So I led a product at a company called Acorns, another company called Aslo, and then I actually had a consumer fintech previously as well called Vault, and during that time we had a lot of success but also felt the pain that comes with innovating in financial services, and that was really the inspiration behind Power.
Randy Fernando:I believe in this shift towards embedded finance and non-traditional finance companies leveraging the power of fintech as a part of their product experiences, and, as great as that sounds, it's really difficult to pull off. And so I thought, okay, if I believe in this shift that's occurring, how can I help facilitate that shift? And so Power was effectively a platform that would enable any company the ability to launch their own branded embedded credit card directly within their existing apps and ecosystems, and that was the inspiration behind it. I actually had the opportunity to work on a credit card at a previous startup and it was painful, and when I looked at the landscape and the different partners we could leverage and vendors, there wasn't really a clear option for us as to who we could go with, and that's when the idea for Power was born. We thought wouldn't it be great if we could bring to market a platform that could be or serve as an all-in-one I mean? So that's what we did.
Micky Tesfaye:You've got such an interesting story. I feel like Randy you're like in my head now. You are the archetype of a serial founder. When I hear the term, I just think of you. Power is what you're. Third, or also exit I can't even keep count now On that subject. Today we're talking about this broad idea that an exit from a startup it doesn't necessarily mean that founder's journey with that startup is over, and given your current position as someone in marketer now you can really speak to that quite a bit, I feel like. So maybe I want to start by asking you, when you think about an exit and when it's not an ending, how do you think about that? What makes you think about continuing with your company that you've built, such as Power, but within this bigger institution you've joined now, as opposed to letting it go completely?
Randy Fernando:Yeah, it's a good question. I think of it as a new chapter. I kind of highlighted my journey to this point and it's been a series of steps to get to this point, and the way that I look at this new opportunity at Marqeta is one in which we get to continue building against that vision that we created years ago at Power, and really the beauty of Marqeta is the fact that we get to accelerate that vision overnight, working with one of the most well-known and reputable brands in the FinTech market, company that is global and responsible for driving disruptive innovation across card issuance for over a decade. The idea that we can have that brand, that respected name and that foundation to help us write yet another successful story in credit that's what makes me really excited about this next chapter and the fact that there's just so much synergy behind what we were building at Power and how Marqeta thought about embracing credit in their future.
Sheryl Chen:Yeah, so if I can just jump in, randy, before we were on air you talked about your long history of money 2020. And then can you tell us a bit more about how this Mercata deal came to be at money 2020?
Randy Fernando:Absolutely so. We talked about money 2020 being a marathon, right? I'm someone that typically doesn't go to a ton of events or go on tour with speaking engagements, so I'm pretty selective with where I spend my time. As you know, power was around for a couple of years before we were acquired. Money 2020 was the only event that we actively attended. You heard it here fast folks. You heard it here there's a plug.
Sheryl Chen:He's selective, but he chose us.
Randy Fernando:I'm going to be looking for a sponsorship after this, but in our first year, we went to money 2020 and we actually met the lead investor that led our last round of capital. Wow, that was year one. In year two, on Wednesday, just before I was about to head to the airport, my last meeting of the day was with Simon, who became CEO of Marqeta, and, as they say, the rest is history. We met here and we talked about the future of embedded finance and the role that credit will play and ultimately, a few months later, we're now part of Marqeta.
Micky Tesfaye:Well, folks, that's a wrap, then this podcast is over. You heard it, but actually you know that's as much as we're joking around the kind of sit and just how wonderful it is. You can say that money 2020, you had the experience. I want to ask you more concretely, around the piece that you talked about, with the culture, the synergy, when you're talking and thinking about your company and thinking about positioning it for an exit, other mental modes, ways of thinking that you leverage to help you think about the kind of folks you want to work with, the kind of expectations you want to set for folks you are going to collaborate with, whether that's through partnerships, acquisitions or something along those lines. Yeah, what are the things that you look for to let you know this is the kind of company that shares my values and my goals over a long period of time.
Randy Fernando:Yeah, it's a pretty profound paradigm shift as a founder. One day you're founder and CEO and then the next day you're your employee of a much larger org and that shift mentally is not easy. But I think you focus on some of the things that I mentioned earlier the longer term strategy and the opportunity to continue working on that journey with the support of a much larger org. I think that ultimately comes down to a few things. I think, culturally, you got to make sure that it's a good fit between the startup and the acquirer. I think being really mindful of team the team that got you here and then the team that's going to continue building as a part of this new entity, the team that is at their acquirer. Ultimately, in my mind, having been through this a couple of times, there's a number of reasons why startup acquisitions are successful or not successful.
Randy Fernando:I think one of the most important components is team. Is the startup that's being acquired. Are they open to this new world that they're going to be entering into? And then the company that existed previously. How welcoming are they to this new company that's joining them to continue building? I think the second thing is trust. So you learn a lot about the acquirer, through the negotiation, through the diligence process, trying to articulate on both sides what's really important. I think the last thing that I'll call out is the plan or the strategy for what this new world is going to look like. It's really important to align on those milestones or major points going into an acquisition and then, as you continue to build, having that trust, again to reflect on the strategy and where you might need to adjust. It's a new partnership, it's a new relationship, and so trust needs to be at the core of any healthy relationship, including an M&A.
Micky Tesfaye:I think why I find what you're saying so interesting to me is because across the past 18 months lots of the conversation has been around the idea that we'd see a big wave of M&A coming to be, and I know we have seen some, but we've also actually seen some big divorces. We've seen some MNAs or collaborations have not come to fruition and often my mind, I think, has been thinking often about this subject and I think what you're saying makes sense to me because few often it seems like the focus is on the quantifiable right, the synergies around operational efficiencies or the scale that you might get by joining these two parties together, but sounds to me like actually the most fundamental piece is the unquantifiable right, the culture, the trust, just alignment in terms of just folks being able to be on the same page and same wavelength. Is that how you would view some of this?
Randy Fernando:Absolutely. I mean, you think about the type of persona that decides hey, you know what I'm going to be a founder right, there's certain qualities that founders possess that are unique, maybe, and typically successful founders that have a few different qualities that I'm happy to kind of chime on. But, as you think about outside of that founding group, you also have the founding team, and these team members can work at large corporates, more stable companies, but they decide to take this risk and, in the sleep of faith, into joining you on this journey, and so as you move through an MNA and they now enter this new world with a much larger organization, you know things change, and so it's important to try to keep things as consistent as possible while navigating a transition like that.
Sheryl Chen:So, if I can just jump in here, so you talked about how you managed to pivot from a CEO to an employee, right. But I just wanted to take a quick step back because you know how VCs they always say that their value at is priming the startup for success, priming the startup for an exit or potential M∓ap;am;A, right? So, as much as I love the story, the fairy tale story, of how you came to Money 2020, you were right place, right time. You saw Marqeta. But how did you, as a founder, set yourself up for success, for a potential MNA? I'm sure there were, like, certain steps that you took along the way, right.
Randy Fernando:Yes, but if I'm being truthful with both of my companies, I was not building or planning for an acquisition. I actually think that's really important. We were building for the long term and, you know, with two successful exits, I think that's important to call out. I think that you know, in terms of how we prepared ourselves, though we were a small team and we were early on in our journey, we tried to operate with as much maturity as we possibly could, whether that be our team structure, how we thought about hiring, operationally kind of like, how we handled compliance, how we handled any kind of legal issues, how we handled our finances. Really kind of top to bottom, we tried to be as mature as possible. Again, me and my co-founder, we had come from larger companies and so we had that muscle and we tried to leverage all the good from those experiences and implemented those learnings into the foundation of what became power. I learned a lot through my first startup, the hard way, and it's those lessons and those tribulations that ultimately, I think, really contributed to our success of power.
Sheryl Chen:So what is one of the toughest challenges that you face as a founder?
Randy Fernando:So when I started my first company, I had never worked for a startup, never worked in, you know, never written the line of code, and so I was figuring things out along the way and fundraising was incredibly difficult that first time. And I think you have this idea when you go out to start your first company, to be a founder. That is a bit naive, it's not glamorous, it's far from glamorous. I remember one instance where my first company I started I call them in Portland. I'm from Portland, oregon originally, and you know the LPs or the investors. There's not a vibrant venture community necessarily in Portland relative to New York or Miami or the Bay.
Randy Fernando:And I decided to try my hand in San Francisco. I'm Sand Hill Road, and because we were operating on a shoestring budget, we were bootstrapping. You know, I didn't have a ton of money to rent an apartment, airbnb, hotels, and so I knew someone that was living in San Francisco. I had met him like once or twice and I had mentioned to him over beers that I was planning to go down to San Francisco to go fundraise and he said, hey, I've got an apartment. If you want you can, you know, you can crash on my place, no problem. And I said, sure, and if you know anything about me, that I would never do this.
Randy Fernando:I'm a very private guy, you know. I like to have my space, but I didn't have another option. I knew I had to go down to San Francisco and do this. I showed up and it was a studio apartment that he lived in, and so there, you know, it was a bit odd, and the only place for me to crash for the night was in the walk-in closet, and so he had just enough room to put an air mattress in the walk-in closet, and that's where I would sleep. Every night. I'd basically go out to cafes Copacafé, the Cremory in San Francisco I'd go meet with investors all day, I'd come back home, roll into the closet and I rinse and repeat the next day.
Micky Tesfaye:Netflix. Your next series is they Are Ready From the Closet to a $275 billion exit. I mean, it writes itself, doesn't it? I love that story actually so hilarious, and I think it's actually a really powerful story there, because often being a founder is idolized, isn't it? It's like this idea that the challenges and the trials and the tribulations always wonderful. They're not, and often, I guess, it's challenging and lonely journey as well. And I guess my question to you is how does that experience of being a founder and having gone through that and then going into becoming a CEO, an employee within a company, right? How does that influence the way you think about culture within a company and the way that you think about the teams you manage and how you relate to them and they relate to you? You have that unique position of having both being the most responsible person for the entire company and your whole folks, and now you're senior person with an even bigger organization. So you've got that kind of. How does that influence some of your thinking about leadership and the way you operate now?
Randy Fernando:In my mind, being a founder, it teaches you, it humbles you, right, you need to be flexible. I think you never get too high or get too low, because no two days are ever the same. I think another thing that you try to do is you focus on problem solving right and prioritizing, and I think those frameworks kind of carry over Once you go through a transition like this, again like there's new battles to face as a part of a larger company. I'm not worried about fundraising again in the next six months and making payroll. There's a new set of challenges but ultimately it's about having a plan, a strategy, prioritizing your time, making sure that you take care of your team, you're staying focused and, again, you don't get too high, you don't get too low and you try to keep your eyes on the prize. Ultimately, we came here to continue on our mission to build a best in class credit card issuer and we're excited to be a part of this much larger group of extremely talented professionals that are helping us kind of bring this thing to life.
Micky Tesfaye:I think there was a piece that you touched on. I want to kind of go back and press you a bit more on it. So I think, going back to being a lot of the conversation we've had, is the experience of being a founder, right? Your team. I want to talk a little bit about your team and how you view your responsibility to them and how that happens, right? So you had a team of folks at Power. Now, when you go into post acquisition right? How do you make sure that those folks who've done such a great job of getting power to this place that gets to feel like they're part coming along with you on this next part of the journey, right? What are the things you're doing to make sure that you don't lose that piece? Because I guess the challenge, maybe, when you're leading to some challenges, I feel like maybe that was something you were perhaps pressing on a little bit.
Randy Fernando:If you ask founders, quality they think they have. That has led to their success. I think many would say hard work, like working harder than everyone else, working harder than the competition, and I think that's accurate. But I'd actually take that a step further. I think if you can also put together a team of people that share that mindset and that drive and that work ethic, I think that's when exceptional things can happen, right. Ultimately, at the end of the day, you're one person, but if you can put together a group we used to say I want to put together a group of lunatics that are just so driven to turn this vision and make it into reality, it's a beautiful thing, and so, ultimately, when you go through something like this, you got to make sure that you continue investing in that team, because this is a new challenge for them as well.
Randy Fernando:I think it ultimately goes back to trust, like I mentioned earlier. Right, they're trusting you when you're building a startup. They're trusting you to make this decision to exit the company, and then they continue to kind of leverage that trust as we write the next chapter. I think that the other thing that I'll call out is that you got to make sure that you're listening to your team as well, right? Whether you're building a company from zero to one, whether you're building a company from zero to one or you're part of a large kind of fintech public company, listening to your team is extremely important, and continuing to empower them to do their best work. Ultimately, the pitch to the early team members at Power were to come, turn this vision into a reality and foster a place where you could do your best work. I think you could do that here as well, and so you know. It's been nine months now as a part of our marketa, but I'm pretty optimistic about you know what we've done and where we're going.
Micky Tesfaye:I love it.
Sheryl Chen:Yeah, so actually I just wanted to double-click on the team-building aspect, right? Because previously, when you were talking about how you were setting yourself up for success during this acquisition, you talked about culture first, culture and the team. So in an ideal world, the culture will be exactly the same, right? But we all know that that's not always the case. So marketa comes with your own culture. You at Power Finance came with your own culture with the way you built your team and run your team. So how did you fix that culture match? Or, like you know, do you navigate the cultural shift or any gaps?
Randy Fernando:Culture values, right, you try to assess as much as possible through the MNA, but you only can get a sense going through that process.
Randy Fernando:I think what I noticed going through the process with marketa was I genuinely enjoyed getting to know the various team members that we had access to respected them, I think. Number two I found that some of our values were very similar. At Power, we always talked about being kind of customer obsessed and, you know, making sure that the customer was at the center of everything that we do. I can confidently say that that is true at marketa as well. Right, we really want to make sure that the level of service that we provide them with and the platform and the product experience that they have is exceptional. And then, also, something that I noticed early on was that marketa would talk a lot about team, right, and talk about empowering folks and giving folks a path, and I thought that was important, right, because ultimately, folks that join startups are really ambitious, right. And so you got to make sure that, if you are going to go down a path like this, that they can continue to grow, and both personally and professionally.
Micky Tesfaye:Yeah, I think. I mean, after all, vcs have forced all the founders to be ambitious, haven't they Indeed, with that big addressable market. But I want to talk a bit about your experience, because so I think your earliest exit was vault, right when you exited to Acorns. So how is the Durandee that exited vault different to Durandee that sold to marketa? Right, like those conversations you were having, how were you feeling? Were you feeling the same as you were then? Were you feeling calm? And are you looking for different things now compared to your first experience?
Randy Fernando:So how much time do we have? You know my first acquisition, when we sold Acorns, I didn't know what to expect. It was almost like a culture shock overnight, and that was with a lot of synergy as well, the values, the culture being fairly consistent from vault to Acorns. But your mindset shift occurs overnight, right, you go from again being responsible for everything to being responsible over a very specific area, and so that's a shift for any founder.
Randy Fernando:So, going through this acquisition, I kind of knew what that journey was going to look like, the first few months, the first year and ultimately for me that informed how I navigated the conversations pre-close.
Randy Fernando:So I tried to be as open and direct as possible with my expectations, my desires. You know I knew on behalf of the team I thought was what was going to be really important to them, and so I tried to be. I tried to articulate as much of that as possible through the process just to set the right expectations and again start to build that trust in the relationship. So I would say there hasn't been as much of a shock for this chapter for me. I think for me it's exciting because I feel like we're on the brink of doing something really special at Marqeta in the credit space, but Marqeta has been around for 13 years. We've dominated the debit and prepaid issuance space in the US for a long time. I mean, we work in 40 countries, so the idea that overnight I'd have the opportunity to work with this team, with the customers that Marqeta has on a global scale, sounds pitch-a-perfect to me.
Micky Tesfaye:I mean, I feel like that's the other side of ambition to you. You talked about ambition from founders. Sometimes ambition doesn't necessarily mean because you've exited, that journey is over. Is the company like Marqeta a bigger reach, bigger opportunity to increase and leverage the impact you had wanted to make?
Randy Fernando:So ultimately, it's about impact. You want to make an impact and we believe that Marqeta gives us an opportunity to make an even bigger impact in a shorter timeline, so that's special. It's not just about me or my co-founder. It's about our team at power and now the greater team at Marqeta and working together to rewrite the future credit issuance. It's pretty exciting.
Micky Tesfaye:You heard it here, guys, Before I shut it, I want to ask you one other thing, because one of the joys of working at Money 2020 is we get to meet so many fantastic folks who are building just so much amazing innovative solutions and products so many young founders. What advice would you give to young founders not just about acquisitions and end goals as an acquisition, just as a founder what advice would you give to founders who are trying to either raise more money, to build great companies, to find amazing partners, whatever it may be? What are the things that you would say, hey, this is what I really think would help you get to what you want to go to.
Randy Fernando:How much time do we have? I'll ask you again. So I'd say a few things For one know what you're really good at. I know your strengths, but also know your weaknesses. I try to when I meet with founders. I try to also highlight the importance of staying focused.
Randy Fernando:As a founder, it's really easy to get distracted.
Randy Fernando:It's really easy to have a customer maybe inform your strategy or your roadmap one off customer conversation.
Randy Fernando:I think it's really important to take the time up front to think about your vision, your strategy, your roadmap, your plan, and then really invest in bringing that to reality and getting data points to inform your thesis. Knowing your strengths, being focused, working hard, being relentless in the pursuit of this vision that you've created and then being true to yourself. Ultimately, at the end of the day, you're doing this, yes, because you believe that you're well-equipped to be a successful founder, but you also got a team of people both internally the team members, as well as investors and other advisors and stakeholders that are bested in the interest of the company and I think you've got to make sure that you continuously operate with the team first type of approach and I think if you do that, you build trust and again it goes back to. I could have never gotten to this point without my team I mean, whether it's Vault Power, I've had the privilege and the honor of working with some of the most intelligent, driven and talented minds in the industry, and that's why I'm here.
Micky Tesfaye:Start up, sarah, a little bit like children. Right, the parents might have them, but the village raises them.
Sheryl Chen:I think I feel like that would have been the best question to end on, and I feel very bad for ending this on a heavy note, but hindsight is 2020. So is there anything you would have done differently during the negotiation or transition phase of any of your startups? I think I broke, randy.
Randy Fernando:I didn't say you did. Honestly, I don't think I would have done anything differently. You know, nine months in, I feel really good about the decision that we made to join Marqeta. I think that we're just getting started. You know, ask me this again maybe in a year, but I think ultimately, this was a unique situation where it seems like everyone is is pleasantly satisfied with the outcome. Right Power team members are investors and hopefully Marqeta as well. You know, again, we're just getting started and there's a lot more work to be done, but as of today, I'm pretty happy with how things worked out.
Sheryl Chen:That's good, micky, do you have any last questions?
Micky Tesfaye:I have so many questions, I have no more times. We're going to have to do another one.
Randy Fernando:Happy to do it. This has been a pleasure.
Sheryl Chen:Thank you, and also thank you all so much for joining me. Thank you to all our listeners, both here at the show and our podcast audience. If you have any ideas for the show, write us at podcast at money2020.com. If you like the show, leave us a review on iTunes or Spotify. We love our fintech nerds. Thank you for joining us.
