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How Model ML Is Building the AI Operating System For Finance

Model ML (W24) is building the AI operating system for financial services, used by the largest banks, asset managers, and consulting firms in the world.

Gustaf AlströmerhostChaz Englanderguest

Nov 11, 202643mWatch on YouTube

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45 min read · 8,799 words

0:00 – 2:09
Nine to nine, seven days a week
1. GAGustaf Alströmer
  Who's the co-founder and CEO. Model ML is his third YC company. Um, he started at Model ML with his brother Arnie, and they previously both founded, um, two other YC companies, um, Fat Llama in 2017 and then Fancy in 2020, both of which they sold. Um, we just spoke right before here, and you were telling me that the intensity of this company is like nothing you remember or have seen from those two previous companies. [chuckles]
2. CEChaz Englander
  Yeah, I, I don't know what it is about the, um, the AI era, but it's definitely, uh, turned up a notch. I mean, for our first year, uh, we worked nine, nine, seven in the office. That's nine to nine, seven days a week.
3. GAGustaf Alströmer
  It seems like-- So it's been speaking quite a bit in the last year that, um, you were in Winter '24, um, which is two and a half years ago. Think that when you look back in a couple of years, it will probably feel like December of 2026 was, like, the most intense, i-interesting period, where, like, there's just so much happening right now, like an enormous amount happening at the company.
4. CEChaz Englander
  Yeah. So, uh, and for context, uh, we're basically building the AI operating system for financial services. And, you know, I, I remind the team constantly that these agent harnesses couldn't interact with Excel and, you know, until February this year. So really kind of everything pre-February was sort of useless, to be honest with you. So yeah, and if you think about the procurement cycles of our customers being the largest banks and asset managers and consulting firms globally, they take six, 12 months to procure anyway. So yeah, it's kind of winner takes all in December.
5. GAGustaf Alströmer
  Tell me a bit more about the company. Where are you right now? And just, uh, if you can't share traction, just like kinda like employees, sort of like, um, customers, um-
6. CEChaz Englander
  Yeah. So for context, we came out of stealth mode last February, so the business really is only eighteen months old. We were maybe five to ten people when we came out of stealth mode. We're two hundred people today. We've raised, uh, there or thereabouts, over a hundred and fifty million. You know, the business has eight offices now, so pretty much all the kinda top financial hubs. And, you know, we're adding probably twenty people a week at the moment.
2:09 – 4:43
Starting Fat Lama
1. GAGustaf Alströmer
  Wow. Okay. I have a lot more questions. Um, but before we get there, maybe just step a bit back. So, um, imagine yourself being in this audience. Um, you were recently sort of out of school, and then at some point you said, "I'm gonna start Fat Llama." What was going through your head as you were starting that company?
2. CEChaz Englander
  [laughs] So-
3. GAGustaf Alströmer
  Why did you start that company?
4. CEChaz Englander
  Yeah. So, um, I built all the companies with my, uh, younger brother, Arnie, and, you know, we just had kind of this, this kind of English brothers dream to build a consumer software business-
5. GAGustaf Alströmer
  Right
6. CEChaz Englander
  ... I suppose. I think-- I, I was working at a corporate. I studied accounting and finance. I still write production code. I always remind everyone, but I, but I did study accounting and finance and was a self-taught engineer. And I think it was just that element of, like, creativity that we found so interesting. This kind of like-- And I think particularly in the Bay Area, there's this, like, limitless type mentality. Um, I'd say, by the way, as we were discussing, sorry, on this note, you know, if any-- if people here are either in a job or just graduated or similar, and they are thinking of starting a startup, which clearly you are if you're here, I said to Gustaf before, I was like, "It's only a matter of time." Right? You know, a-across the three companies, I've hired probably hundreds, maybe even more of people in corporates or in other roles. Um, and I'm always having this debate with them as to whether they actually wanna move into a startup or do a startup. And I've never seen anyone U-turn from that thought. So once the thought is in your head, it's now just a matter of time.
7. GAGustaf Alströmer
  Was there a specific thing that inspired you to start the company?
8. CEChaz Englander
  Um-
9. GAGustaf Alströmer
  For, for me, it was TechCrunch. I was just reading TechCrunch about all the other startups.
10. CEChaz Englander
  Yeah, I think, like, I listened to... Well, f- you probably don't know this, but really funny story. So I was obsessed with, like, the YC podcast. Do you remember when it was Kat Manalac and Aaron Harris?
11. GAGustaf Alströmer
  Yeah.
12. CEChaz Englander
  And, and, uh, I'd listen to, like, every single episode. And then when we got an interview, this was back in the day, I don't know whether you-- Does everyone still fly out for the interviews?
13. GAGustaf Alströmer
  Um, about half.
14. CEChaz Englander
  Yeah. So-
15. GAGustaf Alströmer
  If you're in the US, you fly out.
16. CEChaz Englander
  So everyone, everyone, like, had to fly out to the interview. And, um, so Arnie and I, like, we flew out. You know, we, we had the interview, but to me, I was, like, meeting celebrities. And I met Aaron Harris and was, like, shaking and shook Aaron's hand, and Michael Seibel as well. And then I was-- We were in the cab on the way back to the airport, like, just certain that we hadn't gone o- got on. And, uh, and Aaron Harris called me on Skype, uh, on my phone. That was how long ago? I mean, it's 2017. I mean, not that long ago. But yeah, and I remember, like, shaking while he was telling me, "You got on." And for us, that's all we wanted to do. We were just obsessed with startups.
4:43 – 6:55
"You're still doing full-time entrepreneurship?"
1. GAGustaf Alströmer
  And what did your friends say when you started the company? Like-
2. CEChaz Englander
  You know, I have this, like, vivid memory of a friend of mine. We were with a group of friends, and he said in front of the whole group, right, um, "Hey, Chaz, what are you doing?" And I think he'd gone and worked for some, like, bank or something, as if to say, "I'm in a cool job, and what are you doing?" And he was like, "You still like full-time entrepreneurship?" Kind of taking the piss. I really wanna go back to him now and just be like, "How are you getting on?" [laughs] You know what I mean? Like, like, it was... I remember thinking like, I don't know whether we can swear here, but what an asshole, like, at the time. And, like, even now, like, there is definitely less so now. I think there was more of, like, a thing in 2017 where people celebrated, like, being an entrepreneur less. I mean, certainly in, in London. Um, and so I think now everyone can see, like, this is the way forward, particularly as the barriers to entry of starting a business is so much lower. Um, but yeah, I'd say my friends on the whole were confused.
3. GAGustaf Alströmer
  Confused?
4. CEChaz Englander
  Yeah, confused why I was starting a business and not staying in a corporate job.
5. GAGustaf Alströmer
  And it's-- If, if friends are sort of making fun of you and you're confused, how do you stay, like, focused on, like, this is what I wanna do?
6. CEChaz Englander
  I mean, like the, um- You know, this is the third time we're doing this, and we're, we're not now obviously financially motivated in any way. Um, frankly, we'll give away all our equity. It's nothing about the money. It, you know... And but we still did that first year working nine, nine, seven. Like, so there's gotta be, there's gotta be, like, something else. I think, like, w- number one, I would say, like, we're just... So my mom was a professional ultra-marathon runner. I don't know if you know this. My dad was a professional rugby player, and we're four boys, and so, um, we are, like, hyper-competitive. Like, when we were kids, like, everything was a competition, like what we would eat, our grades at school, everything. So there's definitely, like, a love of the, the adrenaline and the competition. But equally, there's just this love of learning. Like, you just, you just don't learn, you know...
6:55 – 8:38
The first month at YC
1. CEChaz Englander
  I, I... We've hired so many people, like Harvard MBAs, and c- people coming out of tier one investment banks, and, like, Stanford grads and Oxford grads, and blah, blah, blah, and everyone always says they learn more in their first two weeks at Model ML than they've done in, like, all of their education, all of their career because you just have this freedom to, like, learn by failing, which you just don't in other sort of environments.
2. GAGustaf Alströmer
  Yeah. Um, do you remember, like, something about the first month at YC with Fat Llama? Like, you arrive in San Francisco, in, in Mountain View. Uh, what did you have at the time? Like, what did you have when you s- so, like, first month of YC?
3. CEChaz Englander
  So we were building a consumer marketplace app that allowed people to, to rent items from other people nearby. That's how we got to know each other, uh, uh, during that time.
4. GAGustaf Alströmer
  I just joined YC. Like, I think-
5. CEChaz Englander
  Right
6. GAGustaf Alströmer
  ... that was, like, a few months after you-
7. CEChaz Englander
  Yeah. Yeah
8. GAGustaf Alströmer
  ... had done YC.
9. CEChaz Englander
  And also, like, y- you didn't realize it at the time, but Airbnb was like... We idolized Airbnb. Like, we, we wanted to be like the next Airbnb, and obviously Gustaf worked at Airbnb, so I idolized you. I was like, "Oh, my God, this is amazing." Um, what I, what I, what I remember, I think f- the first thing is, um... And we often get asked, like, "Why did you go back on YC for a third time? Like, you didn't have to. Why'd you do that?" It's like, when you surround yourself with other people that are thinking the same, and doing the same, and going through the same, you, you definitely take yourself to, like, another level and, and it's, and it's such a feeling of, you know, many of... We were talking about the batch. Many of my now best friends are on that batch, right? Like, everyone is fighting for each other, and by the way, that, that lasts forever. Like, like, genuinely, the folks that were in the 2017 batch, it lasts forever. You kinda, like, protect each other.
8:38 – 9:56
Why founders become lifelong friends
1. CEChaz Englander
  Um-
2. GAGustaf Alströmer
  And I- I'm curious 'cause this happened to me too. Like, I went to some of their weddings. Like, why do you think that is the case? Why do you become best friends with other startup founders who are all miserable at the same time? [laughs]
3. CEChaz Englander
  Well, [laughs] in some respects, I know I'm supposed to be, like, selling the startup dream here in the sense of like it's great. But, like, on the one hand, it is just the most rewarding thing that you can do, in my opinion, with your life, t- to the point, by the way, if anyone ever leaves one of our companies to go and start another company, we never sell against. We shake their hand, ask if we can invest, and that's it. It's like, that's what everyone should be doing s- you know, but it is... It's hard. There is, you know, there is kind of... In our view, there's two types of startups. There are ones that are, like, genuinely, um, working and building to win, and then there are, like, these, like, lifestyle startups, right? But to win, you know, particularly when you get product market fit, uh, you've just gotta move like hell. The, you know, the only way to describe it is if you, if you wanna win, you just have to move faster than anyone else. It's as simple as that.
4. GAGustaf Alströmer
  We're mostly here talking about Model ML 'cause it's, it's so exciting right now. But were there specific things that you learned [clears throat] or things that you wanted... You're taking away from Fat Llama experience that you're like, "When we start up this new company, we're gonna do it this way because I learned that"?
9:56 – 11:29
What he took from Fat Lama
1. CEChaz Englander
  Yeah. More high level and then more, like, quite tactically. So I think one of the things that startups does to you is you just get, like, so ridiculously emotionally resilient. You know, it's crazy. It's like, like, genuinely something could be on fire, and I wouldn't even panic. You know? It's just like, "Oh, something's on fire. That's completely okay." Um, which probably isn't great in my personal life necessarily-
2. GAGustaf Alströmer
  [laughs]
3. CEChaz Englander
  ... but, like, at work it's like, it's, it becomes, like, an asset for sure. So I think, like, the first thing is, is you just become so resilient as a person. You don't get flustered, and you can feel this in the world, right? I feel like my friends now come to me, uh, with problems because, you know, as my mom always says, "If you want a problem solved, go to someone that's really busy." It's kind of the same theory. So I think you just become, like, emotionally resilient. There's another thing, and it's probably less relevant here, but just something really tactical that I wish someone explained to me, which was when you scale a company quickly, y- you... Because you are adding, um, so many heads so quickly, um, you need to make sure that the communication lines are very, very clear. Because what happens is, you know, we've gone from ten people to 200 in nine months, so the veterans, the veterans of the company have been here, like, four weeks. Like, no jokes, right? And so you have people on day one going and asking someone else some random question, and they've been here four weeks. So you need to just be really clear of, like, this is where to go to with information, be that a question or new information a- about a certain topic.
4. GAGustaf Alströmer
  Um,
11:29 – 14:05
The idea they'd been building for themselves
1. GAGustaf Alströmer
  you applied to YC with Model ML in end of 2023. What was it that had changed that made you and Arne decide that we should do this and we should start this company, specifically this company, which when I saw that, I'm like, "Oh, this is a pretty good idea"?
2. CEChaz Englander
  Yeah.
3. GAGustaf Alströmer
  But, like, I'm, I'm really curious what you had seen. Um, it- it's, like, an obviously good idea-
4. CEChaz Englander
  Yeah
5. GAGustaf Alströmer
  ... but it wasn't anyone doing it. [laughs]
6. CEChaz Englander
  Yeah. So- [laughs] So, um, after we sold the second company, Arnie stayed on, uh, at GoPath. They acquired us for three years, and we then started a kind of a small family office and set up. So some of the money we made from that exit we pooled together, and we were kind of investing our own capital. Um, and we were kind of maybe writing a bit of software, but we kind of got into this concept of like, well, look at what's going on with LLMs. If we applied that to our life, that would be really cool. So there was never-- The first couple of years of doing this, we never thought about, like, putting this into production. It was something that we were kind of doing for ourselves, to be honest with you. And then by the end of 2024, I thought it became quite clear that we should do this. But Arnie, and I don't know whether anyone in the audience is like... I am not a non-technical founder. It's just that Arnie studied CS and I didn't, so Arnie is deemed as the technical founder, which really annoys me, but that's the way it is. So if you guys are, like, a non-technical founder and have, like, a technical founder in mind, there's definitely this concept of the non-technical people, like, constantly pitching the technical person for the next idea.
7. GAGustaf Alströmer
  [chuckles]
8. CEChaz Englander
  So I did this with Arnie for, like, three years-
9. GAGustaf Alströmer
  [chuckles]
10. CEChaz Englander
  ... where, like, I, like, I was so bored of, like, basically investing. It was rubbish. But I was pitching him on these, like, new ideas, and the idea that he picked was actually what we were working on for ourselves, so it was staring us in the face. It's like we were using it. We're building it for ourselves. Why don't we just do that? And, yeah, to your point, it was very clear where these systems were, where they were heading, um, and we had to start it straight away.
11. GAGustaf Alströmer
  And you'd gone through some diligence situation where you learn of the pain that you could help solve.
12. CEChaz Englander
  Exa-exactly. Like, so again, for context, a lot of what we do is kind of automate things like a due diligence process, I think kind of M&A work or investment banking type work, et cetera. Um, and we'd gone through that ourselves through two transactions, and it was so painful. And looking back on it now, like, the type of work that we were doing, like typing out answers to questions, which I know actually sounds pretty normal, but, like, when you have a bank of questions and you're typing out answers, it's so ridiculous. Like, the-- We don't type out the answers.
13. GAGustaf Alströmer
  Yeah.
14. CEChaz Englander
  The model amount does everything.
15. GAGustaf Alströmer
  Um,
14:05 – 16:25
What the product actually does
1. GAGustaf Alströmer
  if you think of, like, the most sort of, like, the things that you guys build for financial professionals, what are a couple of examples of the most impressive things that when you, you, you see them use it, you're like... They are just like, "I can't live without that"? What are some of those tools that you've built for, for these people?
2. CEChaz Englander
  Okay. So first of all, these systems a year ago, I don't think just think in finance, I think in other verticals, were kind of like point solutions. So, like, you would go to one of these tools to, like, do this one thing or this one thing. Beginning of the year, they were already more workflow or use case-orientated. So to your point, like, what is your best use case? Now they are much more like a digital twin of, like, the end user than they are kinda like a workflow automation tool, right? So the, the, the usage and the product correlates. You know, these, these numbers are obscene. It's like sixty percent of all our users are using the product every single day, right? The reason I answer it like that is because the breadth of the, the breadth of the use cases is so incredibly vast, right? However, to answer your question to some of the cooler stuff. So I was with this MD at a bank the other day, and he monitors thousands of companies. Uh, he was monitoring for what's called take private situations, but monitors thousands of companies across lots of, um, qualitative and quantitative metrics. Quantitative metrics being like, what is your revenue? And qualitative, think like a management team change. And the way this has been done for decades is they will have junior people, like, updating these columns in this massive Excel file. Now, one the, one of these things gets what's called triggered or signaled, for example, a management team change, someone will go off and do some Excel modeling work to see whether this is an interesting company based on the numbers. If the numbers add up, then they go and put a pitch deck together, the marketing materials, and then they go and pitch that to an investor, right? That entire thing, so as in the agent monitors the companies, does the LBO, the modeling work, also builds the fifty-five page pitch deck, and then will not just email the MD, will then say, "Here is who you should pitch to." The entire thing is automated. This is probably, like, a team of ten people full-time, and it's now all automatic in some of the highest paid work in banking.
16:25 – 17:45
How it changes the work
1. GAGustaf Alströmer
  And, and how, how has that changed your customers? Like, do they do a lot more deals? Do they just do more of everything or do you just have fewer people? Like, how do, how does it change?
2. CEChaz Englander
  On, on the one side, the positive thing is, um, I'm not sure whether anyone here is, is working in finance, but, like, historically, you have some of the smartest people in the world working regularly until two or three AM doing ridiculous tasks. And when I say ridiculous, I literally mean ordering logos in a slide at two AM in alphabetical order. Like, like, like ridiculous. So on the one hand, there are a lot of these tasks that, you know, really no human needs to do or should do. You know, there is this concept, well, how do we learn? Well, once you've reordered logos for the hundredth time at two AM, you probably don't need to do it again. The other thing is, so that just means the junior people are spending more time in the value add strategic tasks, which I think is only a good thing. And yeah, to your point, look, in our world as opposed to maybe other categories, the more AI they use, the more money they make, at, at least for now. Now, I wouldn't say this if I was sat in front of an investor maybe, so maybe this is off the record. Maybe that maths breaks at some point, but then that will be, uh, that will-- the industry will restructure more so than anything else.
17:45 – 19:31
Why February changed everything
1. GAGustaf Alströmer
  Diana talked, talked, talked earlier about how model improvements... Like, you wanna go where, where model improvements makes your company better. Like, how has the model changed and the capabilities, like, from, like, January '24 until today? Like, like-
2. CEChaz Englander
  Yeah
3. GAGustaf Alströmer
  ... what are, like, things that weren't possible then that are possible now?
4. CEChaz Englander
  I mean, it's not even Jan '24. It's like, it's, it's February or March of this year. Basically, like- These agent harnesses couldn't work with numbers properly or in Excel until February of this year. So kind of everything that we said or built beforehand was just like useless, right? But we're kind of riding this wave, and I'd, I'd encourage everyone to think about-- I know that Sam speaks about it a lot, but, like, just this concept of, like, betting on the models improving. But I also think there's another dynamic that's probably worth noting is, like, maybe separating the open source world and the closed source world because if you can do things with open source models now and run them on your own GPUs, that unlocks a whole 'nother category of things that you probably wouldn't do because of cost that you now might do. And so what that looks like in, in our situation at the moment is we are-- we can see that the closed source models, there was a lot of concentration in Anthropic in terms of performance. It's now pretty evenly split really in our world across Anthropic, OpenAI, and Google. And the open source models are now incredibly performant. So you put those two things together, everyone wants to consume artificial intelligence, we were just discussing a second ago, through a model-agnostic agent harness. So end of last year it was like, "Well, I don't wanna start a startup because, you know, Claude's are just gonna do it." That's just, like, not true. Like, and if anything, our customers have the largest, uh, budgets, some of the largest tech budgets globally, if you think about what Goldman's and JP Morgan are spending on technology. So the opportunity at the moment is
19:31 – 20:29
Why banks won't bet on one model
1. CEChaz Englander
  just vast.
2. GAGustaf Alströmer
  It's too risky for a big bank to say, "We're just gonna bet on one model," because maybe a few months later, they're just not the best one anymore.
3. CEChaz Englander
  I mean, completely. Like, you know, all organizations have to be ahead of their competition, and the only way to do that in, in this new world is you need to make sure the best model is in the hands of your end users at all time, and that's multidimensional. Best is accuracy, it's latency, and cost. So it's effectively 3D, if not more. Um, and to do that, you need to consume AI through these model-agnostic agent harnesses. There is just like-- no one can doubt that. Like there is, there's no one that can say that that statement is untrue. It is fundamentally very clear now.
4. GAGustaf Alströmer
  Uh, you've fundraised a few times already for Mo- ML. Could you talk me through the concerns that investors had and how that sort of changed over time and maybe what they are now? But what were they in the beginning and, and, and were any of them turn out to be not true?
5. CEChaz Englander
  So,
20:29 – 22:38
What investors are actually betting on
1. CEChaz Englander
  and again, like I hope there's no like potential shareholders in the room, but like my, my general view on fundraising is certainly in the early days you're betting just on the person all the way up until like, you know, if we go and raise half a billion, maybe slightly before that point, but maybe up-- we raised seventy-five million in our series A in the last year, so if we take that raise, people are still betting on the people, right? And so, like the way to think about that, if you're sat, you know, on the other side of the fence, is this person just gonna work hard as hell? Sounds obvious, but like sometimes it's not clear. Like I'll be honest, it's just not, it's not clear. And it's like if I'm gonna make a bet, are they gonna work hard as hell? Because that's something that you can see or can control. And the second thing is just like the level of ambition. And by the way, I think we got this a lot from YC and like being the bear, it's like I think people in Europe, but even worse in, in London, dare I say. I'm from London, so I can kinda say that. It's like, it's like if someone comes in the room now and says, "I wanna build a..." Because Arnie and I have invested in, I don't know, a hundred startups now. "I wanna build a billion-dollar company." You're like, "Bye." It's like a billion-- no, like even ten billion, even a hundred billion is not enough now. It's like you need to be building a trillion-dollar company. And so work hard, ensure you're working hard, and then just make sure your level of ambition is like ridiculously high. Some of the best entrepreneurs that I know, we talk about like Max at Agora, for example, it's like so ambitious it's deluded. Like wouldn't you agree? It's like, it's like-- so like the average person, it's like this person's completely deluded. It's like that's where you need to be, I think when you're raising money, whether that's a hundred K, a million, a hundred million, it's like the same thing.
2. GAGustaf Alströmer
  Are there things that turn out to be wrong, though? The investors were like-- they were like, "I believe that Model will take everything," or like things that you've proven them wrong. 'Cause I'm sure every single fundraise, every great company get nos, and every time, uh, every great company get nos. Um, and investors are just sure about something, this is the reason, but in the end they're not super sure. Like what were some of those things that came
22:38 – 24:44
"19 out of 20 will say no"
1. GAGustaf Alströmer
  up?
2. CEChaz Englander
  So really importantly on the nos, everyone gets nos.
3. GAGustaf Alströmer
  Everyone gets nos.
4. CEChaz Englander
  And I wish people told me this.
5. GAGustaf Alströmer
  Yeah.
6. CEChaz Englander
  Because I'll tell, tell you what I've done now, right? So we now, as you grow, you bring other people into the fundraise. You don't just do it as a founder. You have like a whole team working on the fundraise. I had to sit them down and be like, "Guys, this is gonna feel like we're gonna fail," because I think it's so shocking you get a no and you're immediate like, "We're dying." You bring these people in, they've never been through this before. They're like, "Oh my God, we're gonna lose to our competitor," or like, "Our company's over. They say we're shit because our margin's bad," or they say, "We have the wrong management team," or, "We're focusing on the wrong geography" or et cetera. It's like, no. And by the way, I don't think like the nos are like fifty percent. I think you should be thinking more like nineteen out of twenty is kind of the number of the norm.
7. GAGustaf Alströmer
  Yeah.
8. CEChaz Englander
  Some are like way more. And there is this odd misconception of like getting a no means you're a shit company. It's complete rubbish. Look, there's been loads of things that they were wrong about, but you also should learn a lot. One of the things that I do is all investors give you feedback, okay? And that first version of the feedback is normally always complete bullshit because they wanna be nice. They wanna maybe invest in your next round. They don't want you telling your buddies that like-
9. GAGustaf Alströmer
  They don't tell you the truth.
10. CEChaz Englander
  They never tell you the truth. I've got it down to a fine art of basically like bullying them, like literally pinning them down to tell me like the truth. And by the way, again, Europe's even worse. Everyone gets like really awkward. Everyone's like, "Oh my God, I'm gonna tell him that I spoke to that person that he met when he was twenty and he said he was like whatever." Make them say it, and it, it, it is uncomfortable for sure, but like what I've learned in fundraisers is the quicker you can get the feedback, the quicker you can change and the quicker you can adapt, and you've gotta bring it out of people.
11. GAGustaf Alströmer
  Talk to me about the things that you, the hard problems or the things that gets people excited to work on at ModelN right now. Like, people that join a company today, what are they working on? Um, what are the sort of like the most exciting technologies or the most exciting things to work into?
24:44 – 27:42
Why this couldn't come from inside a bank
1. CEChaz Englander
  So first of all, um, you know, we've, we've got an office in New York, about 15,000 square foot, an office in, in London, similar. Just walking onto the floor, you know, as the lift doors open and I walk out onto the floor, and I'm sure... I think everyone feels the same. It's just like the most incredible feeling. But I don't just think at our company. I think that building companies now is like how you would dream of building companies. It feels like you're working with a group of school and university friends, and there is scientific breakthroughs like every hour. It's like, you know, if you had to like build a picturesque business, that's how it feels. It's just, it's so rewarding.
2. GAGustaf Alströmer
  Um, why do you think that this idea could not come from inside one of your customers? So like a lot of your customers have software engineers. A lot of them probably knows how to use the, the, the models. But somehow there is-- it took a startup or a few startups to basically build everything that all the financial industry is using. Maybe there's one or two exceptions, but same is true for law. Seems to be, seems to be true for accounting. It's almost every single category where like we know AI is gonna have this big transformation. It's never seemed to be happening from inside.
3. CEChaz Englander
  Yeah. I think, um, I thought about this a lot. I suppose the first thing is startups, scale-ups, whatever you wanna call them, we have the luxury of learning by failing. Something that Arnie and I are really big on is like, you know, you particularly if you hire people out of corporates, they don't understand that you can fuck up basically. Um, and you can at startups within reason, like we have regulated customers, so it is within reason, but for the most part, you can make a mistake, say something wrong in an email or a sales call. So I think that naturally means that we can iterate faster.
4. GAGustaf Alströmer
  Mm-hmm.
5. CEChaz Englander
  And the second part is almost certainly down to culture. So if you look at where AI startups are disrupting large businesses, and you're seeing these acquisitions, more often than not, they're trying to buy the team and the culture, and they'll actually try and buy the team and culture and keep it really separate. Because you can't build this like... So you can't change an organization from a nine-to-fiver to like nine, nine, seven, even in a subgroup of people. You just can't do it. And so I think it's this culture that is just so difficult to replicate. And big part of that as well comes from, to a certain extent, like fear. Like, you know, you know, like, um, you have this con- sort of debate, Arnie and I and my brother constantly about like, when is like fear too much fear? You know, this like e-existential threat of a startup dying. It's like a real motivation. Certainly is to me. I mean, I still act like we're gonna die tomorrow, you know? And I think like it just-- you can just move so much faster, get so much better out of people, be so much more creative, which also enables you to hire a different type of person that you just can't get at a corporate.
27:42 – 29:30
Why failed founders get hired
1. GAGustaf Alströmer
  This is an interesting... This is a trend that we've noticed in YC a lot. So, um, you would think that you start a company in YC and you work on it, and then you fail, and two years later you're like, "Oh shit, I lost two years of my career," or, "I lost two years in my sort of like my trajectory." Um, but then there's a ton of YC companies who's like, "I'm dying to buy your company. [chuckles] Come and work here." And they literally like, I, I think Rippling and Stripe and a few others have been just like extremely active and direct in saying, "We want to acquire failed YC founders." And the reason is the one you described, is that even a YC company who's large with thousands of employees are struggling to keep the fire going.
2. CEChaz Englander
  Mm.
3. GAGustaf Alströmer
  Struggling to keep the fire going. And YC founders who failed with their idea, um, they were excellent, but they're just like, were maybe unlucky or just like didn't move fast enough for whatever reason. They are hot commodity inside these big companies.
4. CEChaz Englander
  Yeah. And, and the thing is, is like I constantly have this debate with people that like either are graduates and they've got an offer from some like ridiculous like finance job paying a ridiculous amount, or they're at a corporate being paid a lot of money already or a larger business paying, paying a lot of money. And I'm like, it's ridiculous that you wouldn't either start a business or go and work for a scale-up because you can revert that decision as well. So it's kinda like a no-brainer 'cause like think about it, like you leave, you go and work for someone or a startup or build your own. You're gonna learn more in that first month, two years, than you're gonna do in your whole career. Win. Think of it like an MBA on steroids, right? And even if it doesn't work out, yes, you can be acquired, but like you're gonna be hired back 'cause you're actually now a better person than you were when you left anyway, regardless of whether you're at like Google DeepMind or State Street or Goldman's, like doesn't really make a difference. It's like, like I genuinely believe that when you think about the equation like that, it's just like a no-brainer.
29:30 – 31:03
Advice for London founders
1. GAGustaf Alströmer
  Yeah. Um, just specific advice to founders here in London, starting their companies here in London. Like people here in the audience who's gonna start, already started or starting tomorrow.
2. CEChaz Englander
  Just be more ambitious. I say that because I think England specifically, Europe sometimes like our version of great is very different to the US's version of great, and we have the talent here. That's the thing. It's not a talent thing. It's almost like we feel like we don't have the right to go for it all. And so my view is the fact that you're even here, assuming you're considering starting the business, it's only a matter of time now. Just mark my word, whether that means you're starting today or in five years, you're starting a business or going to, or going to work for a scale-up or a startup, that's for sure. Don't overthink it, and just be ambitious. I think like, you know, it sounds really cheesy, and I'm not a cheesy person, but you only get kind of a certain amount of time in like the peak of your career, and particularly when you're young You can just YOLO it constantly. And it only gets harder as well, so it's like if there's any a time in your-- from an age respective, it's now. And also just like there is so much opportunity. The hardest thing I feel that Arnie and I find is we just wanna do everything. There's so many things we see, so many opportunities that we spot, so many startup ideas. We just wanna work on all of them because there's just-- the whole world is being turned on its head. You know, all of these big businesses are being disrupted. It's like the only time that's ever happened in history. And so just get out and get it.
31:03 – 33:50
What the world looks like in five years
1. GAGustaf Alströmer
  What, what will the world look like in five years when your vision and dream have fully played out? Maybe it'll take more than five years, I'm not sure.
2. CEChaz Englander
  No, no, I think that, um, the humans will just do less of the doing. So I think like in our world that means things like human judgment, human relationships, the value of your internal data, like all of these, the value of those three things will go through the roof, which I think broadly speaking is like a, is like a good thing. Um, and I think in general just the work will be more high value and more enjoyable, but you will have these agents, not one, many of them, going off and just doing things for you. So like the example is, if someone in an investor process sends me due diligence questions, I'm getting quite specific here but bear with me, it's ridiculous right now that you like download that, you like go to Excel, you open up a p- a Excel extension, you run some AI, it fills in the questions, you download, you put it to me. It's ridiculous. That whole thing will be taken care of. Like your agents would just do like everything like that. Like-
3. GAGustaf Alströmer
  It will listen to your email and just like act proactively.
4. CEChaz Englander
  It will build your to-do list. It will listen to your Slack messages, your phone call, everything. It'll be in your calls everywhere, and it will know what it can do, know what it can proactively draft, and also know what it needs to bring to you in terms of information.
5. GAGustaf Alströmer
  All right, let's do some questions. Who has a question? Uh, a mic will be coming around. But let's start here, and I'll repeat your question. Yeah, right there.
6. SPSpeaker
  Yeah. So my question was, you talk about, you know, AI being, the, the, the Model ML being able to have access to everything. Do you not see the dangers in that? And do you-- what are you doing as a company to make sure that you're making it safe?
7. CEChaz Englander
  So in our world, like info sec, it's called info sec and compliance or security. It's like we work with regulated businesses. So I, I don't-- There's not a higher bar for regulation. I'd actually say this is easier in many, many other verticals. Number one, we, quite technical here, we deploy into the infrastructure of our customers a lot of the time. So when I say, like that's our application code, that's the storage, that can-- the compute, everything can be ran within the infrastructure of our customers. And then what you can and cannot connect into, um, is all managed by the customer. So it's, it's all very controlled. And remember, I always remind everyone, in an agent harness, you can trace everything. So it's like imagine the human's thought process if you could store every log of how you go from A to B in your brain, you can do that with an agent harness. So from like a traceability standpoint as well, if anything, it's like more secure for, for organizations because they can see how the agent went from A to B, and they can then control what they can and can't do.
33:50 – 37:03
Q&A: hiring for culture
1. CEChaz Englander
  You can't do that as much with humans.
2. SPSpeaker
  And I was wondering, um, what is your number one tip for hiring? Because when it comes to hiring, I feel like there's an issue there with like balancing talent, because when you're looking for people with that culture of wanting to move quickly and wanting to ship really quickly, they might either be founders themselves, um, and then when you're going to look for other people who aren't necessarily like that, they might not have that will to necessarily move as quickly as you need. So what is your process for hiring? Do you sort of find people, motivate them, and then, you know, when they go out, you know, it's like obviously go out and do great things, or what is your process around all of that?
3. CEChaz Englander
  So any-- And I'm not sure I'm good at giving advice, but any advice that I do give to startups is I always caveat with you're just gonna have to do what you're gonna have to do. You know what really pisses me off is where I hear people say things like, "What you want from an investor is this." It's like, well, I don't have any investors, you know, when you're starting out. It's like, "I want investors, but no one's investing." So it's like it's so idealistic to say like these are the things that you want, right? I want the perfect person. I want to pick this investor. Well, of course, everyone does. So caveat, like, u- ultimately, you can only do what you can do. On the people side, definitely, definitely optimize for culture way more so than anything else in the early days. Like think of it as, um, you know, someone who's now become a different, it's a guy called Noel Quinn, he was HSBC CEO, and I remember him saying to me, it's like the highest performing teams are the ones that operate like school and university friends. So as you're building that initial team, think of that more so than like, "I need this person from like this background. I need like this person from this background." It's like in the early days, everyone's gonna kind of be doing everything anyway. So you're much better off optimizing towards people that you know, trust, really wanna spend like a, a serious amount of time with, more so than anything else, in my opinion.
4. SPSpeaker
  Do you think what you are doing right now is ambitious enough?
5. CEChaz Englander
  It's funny you say that, like that's what my mom says to me. She says, "I'm not sure I can handle you starting another company." Um, I, I do have other interests, I will say, but this for Arnie and I, this is our life's work for sure. Like you, I think as founders, like when you know, you know. Like when you're in this seat, you know, and you feel this level of product market fit, it's very rare that that will ever happen in your life. Because remember, it's-- finding product market fit, it's timing, it's people, it's market. It's like all of these things that have to line up at the perfect time, and when you've got that, you've got to just pursue that for a very long time. I'm also personally very Uh, interested in what's going on in robotics. As crazy as it sounds, I would also like to go to the moon and to Mars, so I'm interested in rockets to a certain extent. So yeah, I have other interests, but I think, like, uh, in answer to your question, I'm not gonna turn around to my mom and tell her I'm building another company, basically.
6. GAGustaf Alströmer
  Uh, all right, on, on this side. Uh, right there. Yep. Right there.
7. SPSpeaker
  Um,
37:03 – 40:05
Q&A: convincing people to join
1. SPSpeaker
  I'm gonna ask a question on hiring as well. [clears throat] So you mentioned [chuckles] that, uh, your friends, when you were chatting with them, they had this mindset of, uh, "Oh, you're an entrepreneur," and they're almost kind of giving you shit. So how has that influenced your approach to hiring, especially in London, um, right? Like, um, it's less a question of who are you looking for, but how do you convince people to join you, especially as an early-stage startup?
2. CEChaz Englander
  I think it's like everything that we've spoken about today. Like, I think there, like... You know, there's two, there's two routes now in the world. Like, you're gonna build the future or watch other people build the future. I just-- I don't think anyone can deny that. Um, and frankly, if people can't see that, maybe you're not gonna be able to convince them. It's, like, so obvious to people like you and I, I'm sure, but to some people it's just not, and you need to find people, uh, that can think like that, see that as you do. Um, so yeah, I think... Look, and, and, and at the end of the day, like, you as a founder, you're constantly selling. You're selling to customers, you're selling to teammates, you're selling to your, your investors and your cap table. When I say selling, I don't mean selling as in they're buying from you. I just mean that, like, it is your job to make sure that people buy into you and the company constantly. And so, like, if people aren't buying into you now, well, you just need to get better and just keep doing it. And a lot of the time in the early days, it's a bit of a numbers game. Just keep pushing and learning. Um, but I'll, I'll just say, like, people should see, you know, you're probably building the future.
3. SPSpeaker
  Um, m-many of us are probably thinking about AI startups and how to leverage AI, AI's ability to automate, you know, human work. And so I just was curious to get your opinion on h-how to balance these, these two paths, I think. One is to basically build a product that you sell to existing companies that helps them become more efficient, or you just vertically integrate yourself and compete directly against those, uh, companies. Uh, 'cause, yeah, even in, in your case, Model ML, maybe it's a bit harder 'cause these are huge banks, but you could have also just decided to, to build your own and compete against them.
4. CEChaz Englander
  I'll let Gustaf answer the YC answer. What I would say though is, like, I find it very difficult to give people a view or advice because I think it depends on the scenario. But the one bit of general advice that I've seen and learnt from YC is just start. Start both. Start something. It's very rare that you will end up where you think you, you... or where you start, so just start.
5. SPSpeaker
  Hi. Um, you've said a lot of things about ambition and just making sure you keep going. Um, my question would be about knowing when it's time to stop and to pivot. Like, how do you know that it's time to stop pushing and it's probably time to explore something else?
40:05 – 41:52
Q&A: when to persevere and when to pivot
1. CEChaz Englander
  Another thing that I've thought about a lot. I think, um, so... And I've got, I've got a quite, an interesting sort of view on this because so first company took two and a half years to find product market fit. Second company was instant. This company was B2B. It's slightly different. And so I've kind of experienced both sides of the coin. The, the kind of conclusion that I've landed on is, um, you, you want to persevere, but you don't want to blindly persevere. And so I know that's, like, very difficult to be specific on your example, but what I mean by that is, like, if you are being honest with yourself and you deeply know and believe that people want what you are building, and a large TAM and other things that make it eligible for product market fit or ticks the product market fit box, rather, then persevere at all costs. Like, literally at all costs. And, and by the way, the number one attribute in Ani and I's opinion of a great founder is perseverance.
2. SPSpeaker
  So I had a question. Basically, you were saying, you know, nine, nine, uh, seven days a week, and let's say you do that and, or even more, and, and you still feel like it's not enough because you know something's gonna take, let's say, two weeks to build or so on, but then you want it done in the next hour, and then you see, I don't know, like, Instinct AI or something growing and other companies growing so, so, so fast. And even doing everything, and let's say you're confident that you're doing enough and you're happy with what you're doing, but you still feel all that pressure. Uh, how have you coped with, you know, the pressures in early days and especially when stuff is new, let's say? I mean, coming from research, you came from corporate, right? Uh, it's a new world, uh, that you're dealing with.
3. GAGustaf Alströmer
  Yeah,
41:52 – 43:44
Q&A: coping with the pressure
1. GAGustaf Alströmer
  I have an answer. My answer is you should not be on social media too much.
2. SPSpeaker
  [laughs]
3. GAGustaf Alströmer
  I think social media actually hurts your brain, and it... Unfortunately, we all have to do that for different reasons. We have to, like, promote YC. You have to hire your employees and your customers. We all have to do this, but we then turn into just, like, massive amount of information about our companies and the competition and the other launches and all of this stuff that's actually not that important. Uh, and it actually just, like, detoxing social media, I-- in my experience at least, helps you stay focused.
4. CEChaz Englander
  Yeah, I mean, I only have LinkedIn, and I don't manage my LinkedIn anymore, so, like, [chuckles] I'm not on social media for that exact reason. Um, also by the way, just on the competition point, it comes up a lot. Like, "Hey, we've got big competition." Competition's a great thing. We discussed this just before. Competition is A, it c- it can be fun if you frame it in the right way, and B, means you have a market. Like, like, honestly, and I'm sure you'd agree with this, if you don't have competition, you probably don't have a business. Like, but within reason, but, like, like, there is exceptions to the rule there, but, like, competition is a great thing. And we, like, we have one or two main competitors. We actually only have one. We have one or two. We love it. Like, like, the, the, the culture at the company is, like, us versus competition. It's like a sports team. It's just, it's amazing. Like, so you can embrace that in the right way, but you don't want to over-obsess over a competition. Like, the, you know, that means you've got a good market. You just focus on being them, but being them in your own way.
5. GAGustaf Alströmer
  It's important. Like, it's, it's, uh... The, the-- We didn't really have competition at Airbnb. Um, you certainly have it. I think it just, like, really grounds you and sort of, like, it focuses the team. It's really actually a good thing. Um, Chas, thank you so much. This is awesome.
6. CEChaz Englander
  Thank you so much for having me. [audience applauding]

Episode duration: 43:44

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iOS

Nine to nine, seven days a week

Starting Fat Lama

"You're still doing full-time entrepreneurship?"

The first month at YC

Why founders become lifelong friends

What he took from Fat Lama

The idea they'd been building for themselves

What the product actually does

How it changes the work

Why February changed everything

Why banks won't bet on one model

What investors are actually betting on

"19 out of 20 will say no"

Why this couldn't come from inside a bank

Why failed founders get hired

Advice for London founders

What the world looks like in five years

Q&A: hiring for culture

Q&A: convincing people to join

Q&A: when to persevere and when to pivot

Q&A: coping with the pressure

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