How We Got Fred Wilson, Benchmark and Index to Invest $94M | Why Robinhood's Strategy is Wrong

1. 0:00 – 1:31

   Intro

   1. PEPaul Erlanger0:00

      We gave non-founders a percentage of the company that usually founders get. For the first eight months to building, no one on our team took any pay. And it was mostly 'cause

   2. HSHarry Stebbings0:10

      Today we have Paul Erlanger, Co-Founder and CEO of FOMO on the show. Now FOMO is a wild story. Despite the company being a wild success today, they only have 17 team members, no internal hierarchy, and they have no one-on-one meetings.

   3. PEPaul Erlanger0:26

      One thing that I discovered, if you're trying to raise another round, wait to announce your last round.

   4. HSHarry Stebbings0:31

      I love non-obvious stories. And when you unpack this one, there are so many gems to uncover.

   5. PEPaul Erlanger0:36

      Everything is about momentum.

   6. HSHarry Stebbings0:39

      Ready to go? [upbeat music] Paul, I am so excited for this, dude. I wanna start with one that I'm always fascinated by, which is are you more motivated by the thrill of winning or the fear of losing?

   7. PEPaul Erlanger1:01

      This is gonna be a hard take, but I don't really, I don't think I'm driven by either too much. I think it's more of, like, doing the thing for the pleasure of actually doing the thing. Like, me and my co-founder talk about this all the time, where I think the biggest fear is losing what we have now. I think, like, every day waking up, going to the office, getting to work with an incredible team, and building what we're building. I think, one, specifically because of what we're building, but also just getting to work on something really cool, like an interesting problem with amazing people, I think that's what actually

2. 1:31 – 2:37

   What Is fomo

   1. PEPaul Erlanger1:31

      motivates us.

   2. HSHarry Stebbings1:32

      I think it's important to set context. For those that don't know what FOMO is, how would you describe FOMO in 30 seconds?

   3. PEPaul Erlanger1:39

      Yeah. FOMO's a mobile trading app. Right now it's mostly on-chain assets, meaning, like, on-chain native assets, Bitcoin, Ethereum, attention-based assets, et cetera. Um, but we're soon gonna launch globally, um, access to equities and, uh, perpetuals, uh, non-US obviously. We'll kind of work with the government there as, as that comes. But the goal is to be able to give global access to, uh, markets, to individuals that don't have that access. It's also social, so you could see what your friends are holding in real time, follow them. I know everyone's wanted, like, a real time Nancy Pelosi stock tracker. So maybe if she trades on FOMO we could finally get one.

   4. HSHarry Stebbings2:17

      I think that'd be an interesting addition to the angel round [laughs] .

   5. PEPaul Erlanger2:19

      Yeah [laughs] .

   6. HSHarry Stebbings2:19

      Um, speaking of interesting additions to angel round, when we think about early rounds, you did an only angel round, yeah, in the early days. No institutions. And you had 140 angels. Why did you decide to do this, and how would that inform how you advise

3. 2:37 – 4:22

   Why Paul Did an Angel-Only Round With 140 Investors

   1. HSHarry Stebbings2:37

      founders?

   2. PEPaul Erlanger2:38

      It was pretty intuitive to us. So I think if you're running a B2B business, you hire a big sales team. And it's not an easy job, but it's a lot of outbound repetitive. When you're starting a consumer product, it's a very different problem space because there's a lot of great products that just never get off the ground. So we knew we need to start this, solve this cold start problem. Like, get people on the app. So when we raised the initial round, it ... The goal was to create distribution. And we think that our best users should have some ownership in the product. And early on what we were able to do is get people motivated by allowing them to invest in the product and create as large of a distribution channel as possible. And not all those people are traders. Like, there are definitely builders in the industry, and we've been able to leverage tons of them as we continue to build. But I think that initial round was really core to the success, success of FOMO.

   3. HSHarry Stebbings3:28

      Who is the single best angel?

   4. PEPaul Erlanger3:30

      There's this angel investor named Aaron Harris. He's ex-YC. You know Aaron?

   5. HSHarry Stebbings3:35

      Yeah, I had him on the show years and years ago.

   6. PEPaul Erlanger3:37

      Aaron is an incredible angel investor. Um, he is an incredible partner. Um, he understands financing really well. And I think that when you're financing for a business, it is one of the most important decisions you make because a small change in a term sheet could completely change the trajectory of your company. So I think having him there in our court to really help us work through some of that as first time founders was really helpful.

   7. HSHarry Stebbings4:03

      That's so funny. I ... Uh, he was, like, one of the first 15 guests I ever had on the show.

   8. PEPaul Erlanger4:06

      Wow.

   9. HSHarry Stebbings4:06

      He was a YC partner at the time. Can I ask you, when you reflect back on that journey, if you were to advise a consumer founder on how to scale to your first 1,000 users. I love Kevin Kelly's essay A Thousand True Fans. If you were advising on first 1,000 users, what would your biggest advice

4. 4:22 – 6:01

   How to Scale to Your First 1,000 Users

   1. HSHarry Stebbings4:22

      be?

   2. PEPaul Erlanger4:23

      Talk to them. You need to keep iterating until you have 10 people, 100 people, 1,000 people using it. And when you have 10 people using it, get the feedback from them, and then iterate on that feedback. And then 100 people. And this is actually one of the big, largest competitive advantages for our company, is in the on-chain and crypto industry specifically, the users are very passionate about using the products. So we have Telegram channels with a lot of the top traders on FOMO. And when we put out our web app, for example, we did it a week prior and we gave early access. The web app probably became twice as good just in that week because we were able to get early feedback from people who were actually passionate. And these people were just users of the product. We didn't pay them. There's no other strings attached. But they just loved it. So I think that the most important thing is just getting user feedback, um, and iterating on it.

   3. HSHarry Stebbings5:12

      I have a product too, which is the show itself. And my challenge is user feedback varies. Some people love some things, and some people hate the same thing. How do you determine when a user is right and you should ingest it and make changes versus when you should stick to your core product roadmap or thesis and ignore their feedback?

   4. PEPaul Erlanger5:31

      Yeah. I think you just have to be super epistemically modest. Because sometimes a user doesn't even know what's actually best for them. When you get feedback from a user, you really need to, like, listen to your instinct on what the fundamental product experience is and your intuition, and then see if that fits in your larger vision. And honestly, I think that certain product additions could potentially kill the product, like that one. So ones like that, that actually have this large potential outcome, you need to be very

5. 6:01 – 10:06

   Why the Financial Super App Theory Is Wrong

   1. PEPaul Erlanger6:01

      thoughtful in implementing.

   2. HSHarry Stebbings6:02

      Why do you not agree with the financial super app theory, then? You know, if you have a-

   3. PEPaul Erlanger6:06

      Yeah

   4. HSHarry Stebbings6:06

      ... Revolut or a Robinhood or a NewBank or any of these big providers where it's like the bundled provider is the one that wins. And, you know, I, I trade on Revolut today. Um, I- Why is that the wrong approach and actually you need a trading app?

   5. PEPaul Erlanger6:20

      Because everything app means not intentional. It means let's just throw everything in there for the user to access. What is the glue between these things? And at FOMO, we think it's the social graph. We think that you can express a thesis, "I think that the Strait of Hormuz is gonna close." Well, I can buy oil on hyper liquid perps. I could short US equities that are reliant on oil. I could buy the prediction market that the strait's gonna close. And I can express my opinion on all these different things. And the reason these different market types exist is to you express conviction on a belief, whereas all these other apps are just everything super apps, and there's no intentionality behind why all those things have to exist in the same place.

   6. HSHarry Stebbings6:59

      Do you compete with a Kalshi then?

   7. PEPaul Erlanger7:02

      Yeah, I mean, we haven't integrated prediction markets yet, and I'm not sure exactly where it fits in on our roadmap. I think it's very interesting there. I think our first version of the product would be built on something like a Polymarket and Kalshi. Those are, are, are great businesses, and I think that there's a lot in flux around the regulation of these businesses. So we want to watch and see what happens, um, and then move from there. But I think it's really important because, um, listen, public markets have been how retail gets access to, to capital, and we talked about this, and we were talking about Shopify and how amazing that was that retail investors got private scale returns in the public markets when it launched at, what, 2 billion and is where it is now. And I think this, this is becoming earlier and earlier, right? If you have perps that are pre-IPO and then you have prediction markets at w- from a year ago-

   8. HSHarry Stebbings7:56

      Just sorry, sorry, just so w- people understand.

   9. PEPaul Erlanger7:58

      Yeah

   10. HSHarry Stebbings7:58

       ... what is a perp that is pre- pre-IPO?

   11. PEPaul Erlanger8:00

       Yeah. So [laughs] taking a step back, what a perp is, is you're spacing a, a bet... You're placing a bet on a price, basically. So I think-

   12. HSHarry Stebbings8:09

       I think SpaceX will go up.

   13. PEPaul Erlanger8:10

       Will go up.

   14. HSHarry Stebbings8:10

       Do you think it will go down?

   15. PEPaul Erlanger8:11

       Exactly. And instead of me selling you SpaceX stock, I just bet you that SpaceX will go down. You're betting me it's gonna go up, and then we trade money. Um, so what you can do is you have a price on the exchange that people just agree. Like, you're like, "I think SpaceX should be this much. I think I'm willing to sell this much at that price." So I will sell you that much at that price, and then we're betting on it going up and down as a side bet, and you actually don't need the transfer of the underlying asset because of that, 'cause it's synthetic. Um, and what's beautiful about that is you can trade these things without necessarily having that underlying price. So what we saw with Cerebras is when that IPO happened, the hyper liquid price started to converge to that price at IPO, right? And there were people, there were pictures of people on the New York Stock Exchange with the hyper liquid UI up and, and people looking at those markets, and I think that's really cool and interesting. But with pre-IPO, with prediction markets, retail gets access to these markets earlier and earlier.

   16. HSHarry Stebbings9:10

       Can I ask you, when you look at Robinhood's day, who provide or want to provide a lot in terms of trading capabilities, do you think they were wrong to go so broad so quickly?

   17. PEPaul Erlanger9:21

       I think a lot of people that are on Robinhood would've never been on a brokerage otherwise. Um, I see some criticism of, like, do I wanna have my retirement account in the same place as I can trade prediction markets and sports bet? And I think that they can do better tooling for users to self-guard against some of those products. But I understand why they horizontally scaled. They grew their business, and they were able to saturate the US market, but they weren't able to go global. And I think this is why they're focused on on-chain assets 'cause on-chain is global from day one. And if they could tokenize equities and a lot of the stocks that are existing on Robinhood, then they could give global access to these assets. I think that as they go global, they could be less focused on horizontally scaling all these products and really

6. 10:06 – 12:06

   Are Public Markets Just a Casino Now?

   1. PEPaul Erlanger10:06

      capturing a larger market.

   2. HSHarry Stebbings10:07

      Do you worry about the casinoization of public markets? And what I mean by that is just, like, a detachment from reality because of social media, because of retail exuberance. And businesses were based on core fundamentals. Now, GameStop is a good example.

   3. PEPaul Erlanger10:25

      Exactly.

   4. HSHarry Stebbings10:26

      But social media and movements can drive such price swings that it just becomes a fucking Wild West and a casino. Do you worry that now the public markets is just a Wild West and a casino?

   5. PEPaul Erlanger10:39

      Yeah. I think casino is kind of a derogatory way to view it. I think somewhat, it's somewhat empowering, right? Like, hedge funds have determined the value of stocks for the longest time, and this group, WallStreetBets, saw a bunch of shorts on this stock and was like, "Screw the hedge funds. We're going to have to have them cover call the shorts, and the, the price is gonna skyrocket." It was kind of cool to see a group of retail investors coalesce and be able to kind of fight back against the institutions. And I think this is a really cool corollary to FOMO because FOMO is a public network, whereas you had to be on WallStreetBets on Reddit. In FOMO, everything happens on real time, so people in retail can coordinate there. And I do think that attention drives a lot of things. I think whether it's sports cards or... Like, everything is speculative to a degree, right? Like, why are you buying diamond rings? It's because we've kind of agreed as a society that this is worth this value. Why are you buying gold? Most financial assets are speculative. And yeah, I, I, I understand the, the view that, the view on fundamentals and when you're buying business, you're buying the cash flow in that business. But most people, when they buy a stock, they're not looking to get dividends. They're looking to just sell at a higher price. So in that framing, kind of everything becomes speculative, and I'm not gonna take a normative view of whether that's good or bad.

   6. HSHarry Stebbings11:58

      Going back to the story, when you had the angel round and we got to the thousand true fans, what's your biggest advice to founders on product market

7. 12:06 – 14:15

   Ship Fast vs Ship Perfect

   1. HSHarry Stebbings12:06

      fit?

   2. PEPaul Erlanger12:07

      I think you have to stay humble because at any moment you could lose it. And I think that it's everything is about momentum. So when you have momentum, instead of, like, taking the gas off the pedal and be like, "Okay," like, "this is working," it's like, no, you need to double down 10 times harder. And every day we come in and we're like, "Listen, we need to ship these features today or else we're gonna lose everything we have now." And I guess it's somewhat of a, a, a fear mindset, but it's really just like Trying to continue to keep pressure on so we continue moving forward, 'cause once you lose momentum, the boulder just starts rolling down the hill. You know? You need to keep pushing it up.

   3. HSHarry Stebbings12:42

      One of the biggest mistakes I think I see with founders is, like, they're terrified of launching and not having any adoption.

   4. PEPaul Erlanger12:48

      Yeah.

   5. HSHarry Stebbings12:48

      And so they make it a more diluted and diluted message for more and more people. It doesn't mean anything to anyone. And then they launch and it's like it's the most mid product ever because they tried to make it so bland for everyone.

   6. PEPaul Erlanger12:59

      100%. And actually Chetan had a really good point here, because there's this balance I've always tried to find between shipping fast and doing things perfect, perfectly. And I'm, I've been a perfectionist, and I'm like this detail, everything needs to look perfect, and now I'm like we have 50, 60,000 daily active users. Um, we need this to be perfect from day one or else we're gonna lose that user base. And Chetan was pushing us, like, "Well, what if you shipped faster? Just, like, think through this. Let's steal me on that side." And I was like, "Well, look at Apple. Everyone envies that company. They always ship perfect feature products." And then we were talking about how lithium ion batteries exploded, how the first iPhone, like, was glitching out all the time. And I think looking back, you look through hindsight with rose-colored glasses, but actually most companies don't ship perfect products. And you have to find this balance between shipping something, and I think a good framing is the one you're using, that a specific user base might want to adopt and it could grow from there rather than just building something for everyone and something that what you think meets this bar of perfection.

   7. HSHarry Stebbings14:02

      And I think now you have to ship faster than ever.

   8. PEPaul Erlanger14:04

      Exactly. Because you can.

   9. HSHarry Stebbings14:06

      Yeah.

   10. PEPaul Erlanger14:06

       And everyone else is.

   11. HSHarry Stebbings14:07

       Okay. And so then tell me, we, we s- have these kind of product market fit moments and we see these strategic inflection points. How does Benchmark come into

8. 14:15 – 26:22

   How Chase Supported fomo at the Inflection Point

   1. HSHarry Stebbings14:15

      the fray?

   2. PEPaul Erlanger14:16

      Yeah. So we did this angel round. Um, we were making some money. Um, most of our team was not taking any pay. So, like, for the first s- eight months to building, no one on our team took any pay. And it was mostly 'cause most of us are senior engineers, and we were taking a bet on the company, and that was really important to us.

   3. HSHarry Stebbings14:36

      Most of you are not taking any pay.

   4. PEPaul Erlanger14:37

      Yeah.

   5. HSHarry Stebbings14:38

      Everyone will be going, "What? Slaves. Slaves."

   6. PEPaul Erlanger14:40

      Yeah.

   7. HSHarry Stebbings14:41

      You have a very generous ownership program. Can you just talk to me about that and how you think about giving employees a lot more equity?

   8. PEPaul Erlanger14:50

      Yeah. We capitalize the founding team extremely well. Um, I think this is gonna become more and more true as-

   9. HSHarry Stebbings14:56

      When you say extremely well, I'm so sorry to be a dick, but, like, what does that actually mean? So many founders listen. Like, should I give everyone 1% each?

   10. PEPaul Erlanger15:03

       Yeah. I think... Well, it's, it's hard. Like, everyone, it, it depends who, but, like, yes, top performers 100%. In fact, more than, more than that, right? I think we gave non-founders a percentage of the company that usually founders get, and it was mostly this core group of original people that didn't take any, any pay. And I think what's really important here is all those people feel like owners of the business. Because if those 5 to 7 to 10 people build this business for the next 10 years, there's literally nothing stopping us.

   11. HSHarry Stebbings15:37

       Mm.

   12. PEPaul Erlanger15:37

       And we talked about this and work-life balance and how do you push your team to work harder. And our team is, is senior enough and also has enough ownership where they feel like FOMO is theirs.

   13. HSHarry Stebbings15:48

       So if you basically give 5 to 7, uh, 2 to 3% each-

   14. PEPaul Erlanger15:52

       Yeah

   15. HSHarry Stebbings15:52

       ... then they're so bought in that you get kind of extended founder team.

   16. PEPaul Erlanger15:56

       Exactly.

   17. HSHarry Stebbings15:57

       Okay. Get you totally. So we haven't been paid for eight months. Cool. Sorry. Please continue.

   18. PEPaul Erlanger16:02

       Yeah. And it wasn't necessarily just the pay. I think that was fine, but we saw Robinhood and Coinbase, and those are both very volatile businesses. Like, you've seen their stock price movement. It's because financial markets are volatile, right? You have, like, the short and long-term debt cycle, and we were taking a big risk in starting a company, and we were starting to feel like we found product market fit. But why are we gonna take the risk of a sudden market ch- turn just wiping us out? And we were 5 to 10 years focused. So at first, we were like, let's not take any venture capital. We'll do this angel round. We'll just build and find product market fit. And then when Benchmark kind of came around, we were more open to the idea to take money-

   19. HSHarry Stebbings16:44

       How did they p-

   20. PEPaul Erlanger16:44

       ... to protect the downside.

   21. HSHarry Stebbings16:45

       How did they come around? Like, they slide into your DMs?

   22. PEPaul Erlanger16:48

       So no. Um, so for the Series B, that was all inbound, but the Series A, we actually did run a process 'cause we were like, we should raise money here. And the Benchmark intro came from Aaron. So going back to the most helpful angel. One thing that we discussed earlier that is kind of funny is Sai and I didn't really know the venture game, and we're, we're just builders, right? And we didn't really know who Benchmark was. I had heard some stuff about how they invested in Uber, but I didn't understand, uh, kind of like the tiers of VCs or anything like that. So when we met with Chetan, it was just a very natural conversation, and out of all the conversations we had, he got it instantly. Like, he had this deep intuition about what we were building. We had very high conviction on what we were building. So to find someone else who has the same vision and conviction off the bat as us, who doesn't historically do deals in our industry, um, it was, yeah, just an amazing conversation.

   23. HSHarry Stebbings17:44

       How was the partnership meeting?

   24. PEPaul Erlanger17:46

       Yeah, the story is we met with Chetan on Friday. We ended up talking with the whole partnership that following Monday. And a funny story from that is we were talking with the entire partnership, and we were going through the pitch deck. And I remember Peter Fenton was actually on his phone most of it, and I was, like, kind of bummed out 'cause I was like, damn, he's not interested. He's focusing on other things. He's doing emails. And I remember as soon as we finished the pitch, the first thing he said to us, he just goes, "Guys, I love the app. I've been on it the entire time." And that was kind of this, like, deep breath moment where we're like, okay, he sees the vision like we do. They love it. And it just really felt like a natural fit.

   25. HSHarry Stebbings18:22

       Did Benchmark offer the highest price?

   26. PEPaul Erlanger18:25

       I think it was close, but not exactly the highest.

   27. HSHarry Stebbings18:28

       Do you think VCs can king make? And what I mean by that is when you have a benchmark behind you, do you see a needle moving trajectory change?

   28. PEPaul Erlanger18:36

       Well, yeah, I definitely think Benchmark being on our side helped us in that sense, but that's not the reason we did it. B- mostly 'cause we were naive to that, right? Which is kind of a funny set of, uh, circumstances. But yeah, definitely I think that there are some venture funds that their strategy is just to follow on companies like Benchmark, et cetera. And we had a lot of inbounds, and the partners we ended up working with were not those partners. I think there were, like, very intrinsic reasons why we worked with the partners we did for our Series B.

   29. HSHarry Stebbings19:04

       Mm.

   30. PEPaul Erlanger19:05

       But, um, yeah, I think a lot of people just kind of follow investment. And this is a little bit of a separate topic, but one thing that I discovered was if you're trying to raise another round, wait to announce your last round. 'Cause as soon as [laughs] you announce a round, you get tons of inbound from other investors, and it takes up time to kind of tell them, "No, we're not raising right now." So in the future, that's kind of a note to self that if you really wanna raise capital in the near future, you can just wait to announce your round until you're ready.
9. 26:22 – 29:07

   Will 20% of Dev Salaries Go to Tokens?

   1. PEPaul Erlanger26:22

      sense to limit it.

   2. HSHarry Stebbings26:23

      For me, the core question on, on AI bluntly as an industry is... and it is determined by one question, which is at what percent of developer salaries will we see spent on tokens? Right now, you know, if you look at Mark Benioff, he said they spent three hundred million on Anthropic. That's about three point eight percent of developer salaries spent on tokens. If it stays there, paying a trillion dollars for OpenAI and Anthropic is grossly overvalued. If it goes to twenty percent, which is what many think it is, twenty percent of dev salaries go to tokens, they're five trillion dollar companies.

   3. PEPaul Erlanger26:57

      Yeah.

   4. HSHarry Stebbings26:57

      Can you feasibly see yourself spending twenty percent of dev salaries on tokens?

   5. PEPaul Erlanger27:01

      Definitely, yeah. I mean, it depends on the price of the tokens. I, I hope that there's a race to the bottom, and these major models are kind of commoditized, and they get cheaper, um, and there's not, like, I don't know, uh, price collusion, you know? [chuckles]

   6. HSHarry Stebbings27:17

      Sure.

   7. PEPaul Erlanger27:18

      But yeah. So hopefully they get cheaper with time. Energy gets cheaper, um, compute gets cheaper, and then these things get cheaper. But at the current state, absolutely. I think twenty percent is definitely within reason.

   8. HSHarry Stebbings27:30

      Going back to what we said there about, like, hey, you just have, like, the really great people. In terms of, like, design to eng ratios, does that change in this new world?

   9. PEPaul Erlanger27:41

      Right now, we only have one designer. But yeah, I do think that design becomes more and more important, right? Especially for, like, some of these bigger businesses that do have a lot more mid-level engineers and doing tasks that AI can kind of take over pretty easily.

   10. HSHarry Stebbings27:54

       If design becomes more and more important, do we double down on Figma, and that is the stage where art and creativity is k- like, fundamentally performed? Or to your point earlier, do we move to a world of speed and iterations where we just prototype it and we use other tooling, Replit and Lovable and you name it, to get fast product out the door?

   11. PEPaul Erlanger28:16

       I think it's somewhere in between, but mostly the latter actually. I think Figma has a huge advantage here because humans want some control. So for example, on FOMO, we could just be an LLM, you execute trades, et cetera. Maybe in the future we have an interface that allows you to do that, but I still wanna go to Harry's profile, see in this beautiful view everywhere you've traded and be able to track that through a graphical user interface. Someone on Figma will be like, "I want this design." It generates you the graphic, the vector file, and then you could still manipulate it and do whatever you want, and I think that's really important to have the hybrid because humans still wanna feel like they're in control. So with Lovable it's much harder because they haven't built the human-centric software. I think it's much easier to add the LLM on top, especially as it becomes commoditized by all these major models.

   12. HSHarry Stebbings29:04

       Why have we not had a big social company since

10. 29:07 – 31:05

    Why There's Been No Big Social Company Since Snap

    1. HSHarry Stebbings29:07

       Snap?

    2. PEPaul Erlanger29:07

       It's really hard. Consumer is so difficult. Some small mistakes could be pretty existential. Like for example, Clubhouse. That started to take off. That was doing really well. Everyone was using it during COVID, and they had a very core user base that loved them. But then they started bringing on all these celebrities, and it overshadowed the core user base that actually would love the product with people that don't really care about the product.

    3. HSHarry Stebbings29:33

       I remember when it was, like, Marc Andreessen just sharing wisdom on a Sunday evening.

    4. PEPaul Erlanger29:36

       Exactly.

    5. HSHarry Stebbings29:37

       And it was the most amazing behind-the-scenes, like, fascinating lesson-

    6. PEPaul Erlanger29:43

       Exactly

    7. HSHarry Stebbings29:43

       ... from the be- And it was so spontaneous and cool. What do you learn from that?

    8. PEPaul Erlanger29:48

       That it's very important to find native creators to your platform. So instead of going out and bringing on all these creators from other platforms, they already established that. Like Logan Paul, he got big on Vine, right, for the first time, and I think when there is a new social platform, there is a outsized strategic advantage for creators to build an audience on that platform early because they'll be known as the creator of that platform. So I'm not trying to get LeBron James to trade on FOMO. I want these native creators.

    9. HSHarry Stebbings30:19

       It's so interesting to hear. It's like, um, Charli D'Amelio, I think, you know, obviously-

    10. PEPaul Erlanger30:24

        On TikTok, yeah

    11. HSHarry Stebbings30:24

        ... on TikTok where it's like the lesson there is you have to make internal champions, and you can't bring an Instagram star to TikTok and say, like, "Hey, parlay your audience." Really, really interesting.

    12. PEPaul Erlanger30:37

        Exactly.

    13. HSHarry Stebbings30:38

        BeReal was another one that I was in. Is there any lessons for you from BeReal? 'Cause that too had the Clubhouse hype cycle that didn't sustain.

    14. PEPaul Erlanger30:48

        I think it didn't-- I think BeReal didn't have the feedback loop. It required people to do something every day, and people don't want to have to do something every single day. And I think as soon as you lose that, you lose momentum very quickly.

    15. HSHarry Stebbings31:02

        Is there a way to synthetically create momentum within

11. 31:05 – 32:41

    How to Build Momentum & Viral Loops Into a Product

    1. HSHarry Stebbings31:05

       a user journey?

    2. PEPaul Erlanger31:06

       Absolutely. So for example, one of the most important things on FOMO are the share cards. So when you-- If I go to Harry's positions, I can see all of your positions and share any of your positions in these beautiful share cards on any other social media platform or your fumbles. So let's say you sold too early and then the price rockets, then I could see how much you missed out on. And what this does is it creates this feedback loop where I can fully publicly share your things on other platforms, and then people wanna see that in real time, so then they come to FOMO. And then you're building this growth feedback mechanism within the app, that every single time there's a top person that's having a top trade, whether it be this guy Ice Man, who turned, he turned 10K to two and a half million dollars overnight in one night on FOMO. There's another guy, Remus, he turned, I think it was $300 into one and a half million in a month. And then these are being publicly shared on other social media platforms, and then it is driving attention to our platform.

    3. HSHarry Stebbings32:01

       Why aren't you also a media company? And w- And the reason I say that is because if you were to do amazing shorts with each of-- Maybe they don't want it, and they wanna stay anonymized. But if you were to do amazing shorts on turning $300 into a million dollars, I mean, that is the most viral crack content for TikTok influencers.

    4. PEPaul Erlanger32:21

       You have a great intuition. I think that we're building a huge media arm at FOMO. Right now, it's external to the product. So we're doubling down on content creators. We're doing tons of partnerships with streamers. We're trying to do, like, a lot of the clipping content, et cetera. And we wanna become one of the largest media b- like, media businesses

12. 32:41 – 38:57

    Why fomo Is Becoming a Media Company

    1. PEPaul Erlanger32:41

       for a tech company in the world. But-

    2. HSHarry Stebbings32:42

       You mentioned Clippers there when we were talking about media. It is a new form of media. It is a dominant form of media. How have you approached that first?

    3. PEPaul Erlanger32:52

       It's kind of a game you have to play because of how attention works on these social media platforms now.

    4. HSHarry Stebbings32:57

       How do you budget for it? How do you work with UGC? What does that actually look like?

    5. PEPaul Erlanger33:02

       So we actually have this all in-house. We have these creator managers. They're fully in-house, and we manage a group of, of 30 to 40 creators. We're constantly getting rid of the bad ones, adding new ones, and doubling down on them.

    6. HSHarry Stebbings33:13

       What makes a bad creator? What makes a good creator?

    7. PEPaul Erlanger33:16

       It's honestly a numbers game. It's just based on their impressions. So, like, when you're building a product, it's a lot about intuition, what your users will like. When it comes to, like, growth, especially on these platforms, it's just based on metrics, like impre- how many impressions they're driving, how many conversions they're driving, et cetera. And the ones that the cost, like the, whatever, the CPM or the CAC based on the, uh, the, the, the acquisition cost versus the, the lifetime value of the user, if that ratio isn't right, then you'll just kinda churn out that creator.

    8. HSHarry Stebbings33:44

       How do you determine acquisition cost? Is it on a per download basis, or is it on a per funds insta- like, uh, deposited basis?

    9. PEPaul Erlanger33:51

       It's revenue to us, right? So it's someone who has to deposit and trade. So depositing's free. If you trade, um, and then we take the total amount, uh, that we earn on any given month, I guess, from people who trade from those channels that are directly attributed, and then how much it costs us to get those users.

    10. HSHarry Stebbings34:08

        Do you see commonalities in, uh, in, uh, talent that works and that, that, that doesn't?

    11. PEPaul Erlanger34:15

        Absolutely. And this is the most important lesson that I've learned. Early on, you create a form of content, or you find a creator that has a form of content, and they're working, and you're like, "Okay, now figure out the next thing that works." That is completely wrong. What you wanna do is continue to iterate on that and make it better and better and better until it works better and better and better, and then replicate and just have that type of content being replicated. So this is something that we're still building out the muscle for, but it's like users are more likely to convert if this is the type of font, if this is the color of the font, if this is the placement of the font, if it's this person talking versus this person talking. And you figure out these things, and you kinda just double down on what works.

    12. HSHarry Stebbings34:55

        Any reflections now from UGC building this Clipper content management system that other founders should know if they're thinking about it?

    13. PEPaul Erlanger35:04

        So, so I guess there's two things here. One, you need to make sure that you're a- the lifetime value of the user is actually worth it. But two, you don't always have to go for the lowest hanging fruit. And this is a journey that we're on now, where you have someone whose lifetime value might be, let's say, $30, and you're only spending 80 cents on them. But then there's another user that you actually need to spend $3 on because they need to see it 10 times instead of two times to actually convert. So you should actually start to increase your CAC even if the LTV stays the same to capture a larger and larger audience, as long as the CAC is lower than the LTV.

    14. HSHarry Stebbings35:44

        Does CAC go up or down over time? Some peop-

    15. PEPaul Erlanger35:46

        Up, definitely. Well, I guess, I guess it's-- I guess there's opposing forces, right? The for- the force that makes it go down is that you get better at the game and you iterate, but the force that makes it go up is that each incremental user, usually you get the lowest hanging fruit, right, to convert. So each incremental user is harder to convert, so they cost more to convert.

    16. HSHarry Stebbings36:09

        And then also it goes down because of, like, brand proliferation.

    17. PEPaul Erlanger36:13

        Yes.

    18. HSHarry Stebbings36:13

        Which is, like, when you just become the default provider or the number one.

    19. PEPaul Erlanger36:17

        Yeah.

    20. HSHarry Stebbings36:17

        Inherently, you just get people because you are the number one, and, you know, w- we're an investor in the, uh, this business, our wallets, and, like, they're on the side of shirts, like football shirts.

    21. PEPaul Erlanger36:27

        Yeah.

    22. HSHarry Stebbings36:28

        And so, like, brand marketing comes into play. Brand marketing is a very difficult one to understand.

    23. PEPaul Erlanger36:34

        Brand marketing is actually one of the hardest things because you don't see the direct benefit. It's so important, but it's not like-- You don't really even know what the CAC is. Right?

    24. HSHarry Stebbings36:43

        You, you-

    25. PEPaul Erlanger36:43

        And you could spend infinite amounts of money and not even see conversion and

    26. HSHarry Stebbings36:48

        You try attribution by-

    27. PEPaul Erlanger36:50

        Yeah

    28. HSHarry Stebbings36:50

        ... looking at, uh, kinda like hyperlocal search results, by looking at conversions on a per-account basis and whether that was, like, in the vicinity of North London where Arsenal played-

    29. PEPaul Erlanger36:59

        Exactly

    30. HSHarry Stebbings36:59

        ... at a certain time of the game. But it's really fricking hard. The thing I say actually on brand marketing is look for immortal assets. And what I mean by immortal assets is, like, if you sponsor a podcast, make sure that the podcast has it in perpetuity. Like, if you sponsored an episode that we did with Bill Gurley, it still gets thousands and thousands of plays per month, even though it was recorded three years ago. That's quite valuable. If it's a billboard, and in two weeks it's gone, it's not that valuable.
13. 38:57 – 44:50

    How Index & USV Led the Series B

    1. HSHarry Stebbings38:57

       come about?

    2. PEPaul Erlanger38:58

       Yeah. So we weren't in a position where we necessarily needed to raise capital, and we were pretty opportunistic about it. I think after the A, um, we got some inbound, and we took some time. We didn't really talk to investors. We were just building products. And, um, we were talking with USV for actually a few months. We really liked Fred. We spent a lot of time with Fred. He, he's incredible. He has a r- Talk about VCs not being focused on the product, but Fred actually has a really good product intuition. Uh, I think it's very rare for a VC, and just the conversations with him and-

    3. HSHarry Stebbings39:30

       Well, like, this is, like, the combination of two of his biggest passions in decentralized networks and then-

    4. PEPaul Erlanger39:35

       Exactly

    5. HSHarry Stebbings39:35

       ... network effects.

    6. PEPaul Erlanger39:36

       Exactly.

    7. HSHarry Stebbings39:36

       Like, this is, like, right in the mesh.

    8. PEPaul Erlanger39:38

       So I think it was actually the w- one of the other times besides the Chaithany conversation where there was this aha moment. But we didn't get to speak with Fred during the Series A. So I think right at-

    9. HSHarry Stebbings39:50

       Why not?

    10. PEPaul Erlanger39:50

        I, I don't exactly know. I think Fred was traveling, and the times just didn't match up. But, um, but it worked out now, right?

    11. HSHarry Stebbings39:58

        No, this is what I fucking hate about my job, though, which is, like, a holiday like that, I'm j- I'm not saying it was Fred, but, like, a holiday in general can lead to, like, hundreds of millions of dollars lost.

    12. PEPaul Erlanger40:08

        It's all opportunity cost.

    13. HSHarry Stebbings40:09

        Yeah.

    14. PEPaul Erlanger40:10

        It's all opportunity cost.

    15. HSHarry Stebbings40:10

        Yeah, yeah. No, I know.

    16. PEPaul Erlanger40:11

        Yeah.

    17. HSHarry Stebbings40:11

        And I'm not... But, like... Okay. And so you meet him for this round.

    18. PEPaul Erlanger40:15

        So he comes, he comes to the office. We're building a relationship with him. He's, he was actually super helpful on a few things even when he wasn't an investor, and we just really appreciate that. And then we got inbound from some other investors. And I remember the first time we talked with Index Ventures, um, they were just amazing partners. I think Benchmark doesn't really have as many resources. Like, these multi-stage funds have so many resources for founders. The Series A announcement, we did all the PR in-house. Like, we didn't have anyone, any help with anything. And I think having know the history of Index being very involved in Robinhood and USV ver- being very involved in Coinbase, and then even aside from the fact just Julia being s- Julia and Jan being such amazing partners, and the same with Fred, um, at USV. We were opportunistic and thought it was time to do the round. It was really great timing for us. I think the capital is gonna be high leverage for us to-

    19. HSHarry Stebbings41:10

        How, how big's the round?

    20. PEPaul Erlanger41:12

        It's... We're, we're raising 75 million.

    21. HSHarry Stebbings41:14

        75 million. How much did Index do?

    22. PEPaul Erlanger41:16

        Index did 55.

    23. HSHarry Stebbings41:18

        55, and then USV do?

    24. PEPaul Erlanger41:19

        15.

    25. HSHarry Stebbings41:20

        15. Okay. And the price?

    26. PEPaul Erlanger41:24

        The price is 550 million.

    27. HSHarry Stebbings41:26

        Okay.

    28. PEPaul Erlanger41:27

        Post-money.

    29. HSHarry Stebbings41:28

        Did you come to them with, like, a this is the round size and this is the price? Did you kinda come to it together?

    30. PEPaul Erlanger41:32

        There was an early conversation far before the term sheet where we discussed what price range would make sense for us. I think we weren't looking to do a round, right? So they were like, "What price would be interesting to you?" And we said a number, and I think that kinda helped anchor the conversation. And yeah, when they were open ears to that, I think that, yeah, that anchored the conversation in a way where we had a great conversation from there.
14. 44:50 – 46:37

    Why Europe Is Winning in Fintech While the US Falls Behind

    1. HSHarry Stebbings44:50

       that Europe has?

    2. PEPaul Erlanger44:51

       Yeah, I think it's true. I mean, listen, because every country has different brokerage laws, Europe is a lot lar- like a lot larger in terms of, like, there's so many countries in Europe, and I think Revolut has been able to kind of saturate all of Europe at once and has been able to grow globally a lot faster than Robinhood. Robinhood has done a great job. I think they have a little over twenty million funded accounts in the United States, and we were discussing before how they've horizontally grown to other product categories. Their biggest move with on-chain, uh, tokenized equities is to be able to finally distribute these things globally, and I think it's really important. Look at Facebook. Look at WhatsApp. Like, all of these business, social businesses that really scaled are global from day one, and I think that's really, really important. Um, so I d- I don't know if it necessarily answers your question of Europe versus US, but I think the reason is your ability to saturate a larger group of people.

    3. HSHarry Stebbings45:46

       Are you a social company or are you a financial company?

    4. PEPaul Erlanger45:50

       We're a trading app first. I think that's really important, um, because the... what the social features do is they, at least right now in its current form, is they allow you to become a better trader by having transparency to what the best people are doing. So you could instantly discover, you could instantly get notified, you could follow people. But I do think over time, you wanna create momentum for people to use the app, maybe even if they're not trading. You don't wanna obfuscate what the app is good at. We have to always be the best trading app in the world because the top traders won't use us otherwise. However, over time, if you build these other social products, maybe the people who aren't necessarily trading every day can interact on the platform more. Um, so I'd say we're much heavier on the trading side today, but p- heading in the direction of becoming

15. 46:37 – 54:57

    Quick-Fire Round

    1. PEPaul Erlanger46:37

       more social.

    2. HSHarry Stebbings46:38

       Dude, I wanna do a quick-fire round with you. I could talk to you all day, but I say a short statement, and you give me your immediate thoughts. Does that sound okay?

    3. PEPaul Erlanger46:43

       Okay. Let's do it.

    4. HSHarry Stebbings46:44

       So what have you changed your mind on in the last 12 months?

    5. PEPaul Erlanger46:48

       How important social is on FOMO. I think we were doubling down the trading product and assumed that people will come to trade and then the social graph will grow from there. But you need to be very intentional about the social graph, and I think that's something that is very momentum based. And as soon as you start losing momentum there, people stop using the app, and then the whole thing can kind of unravel.

    6. HSHarry Stebbings47:06

       Revolut versus Robinhood.

    7. PEPaul Erlanger47:08

       I, uh, I'm a Robinhood user 'cause I'm in the US, so I'm gonna say Robinhood. But I do think Revolut is very well positioned. Um, honestly, it's really hard. Maybe Revolut. It's a close-- It's a-- That's a close one.

    8. HSHarry Stebbings47:22

       [laughs] That feels like your heart says Robinhood and your head is saying Revolut.

    9. PEPaul Erlanger47:25

       Yeah. I think that's right. Can we cut that one? No, I'm kidding. [laughs]

    10. HSHarry Stebbings47:27

        [laughs] What's your biggest advice to someone studying computer science at university today?

    11. PEPaul Erlanger47:33

        Use less AI.

    12. HSHarry Stebbings47:35

        Use less AI?

    13. PEPaul Erlanger47:36

        I think use less AI because you're gonna have AI at your disposal, and all of the best engineers today had to learn not using AI to become really, really good. And I think that when you're in practice in your job, you're gonna use AI. But I think this is with me, my r- this is a controversial take. I try to use AI for as little of my writing as possible 'cause I think if I use AI for all my writing, I'm not gonna be able to write anymore, and I'm not gonna be able to remember what is good writing. Um, I'm pretty scared of that, to be honest.

    14. HSHarry Stebbings48:06

        I agree with you, especially on social posts. I completely agree with you.

    15. PEPaul Erlanger48:09

        Yeah.

    16. HSHarry Stebbings48:09

        Some of my team were using, you know, ChatGPT for social posts, and I was just like, "It's shit." And I can tell. There's no humor, there's no personality, there's no texture to it. But I'm like with, with engineers and with coding, fuck, if I'm advising CS students, use it as much as fricking possible 'cause you're gonna get-

    17. PEPaul Erlanger48:26

        I'm not an engineer, so-

    18. HSHarry Stebbings48:27

        [laughs]

    19. PEPaul Erlanger48:27

        ... don't take my advice on that one.

    20. HSHarry Stebbings48:29

        Uh, tell me, uh, [laughs]

    21. PEPaul Erlanger48:31

        [laughs]

    22. HSHarry Stebbings48:32

        That, that, that's very funny. Um, what investor do you not have that you would most like to have?

    23. PEPaul Erlanger48:38

        Ribbit Capital.

    24. HSHarry Stebbings48:40

        Have you pitched them?

    25. PEPaul Erlanger48:41

        We spoke with them, yeah. I really like Mickey and the team. They're, they're great.

    26. HSHarry Stebbings48:45

        What sports team do you want to-

    27. PEPaul Erlanger48:46

        The New York Knicks.

    28. HSHarry Stebbings48:47

        Really?

    29. PEPaul Erlanger48:48

        Not even a question.

    30. HSHarry Stebbings48:50

        That's amazing

Episode duration: 55:08