Latin America's Global Bank

Aaron Epstein 0:00 [upbeat music] I am excited to welcome Fernando from ARQ, fresh off of $70 million Series B co-led by Sequoia and Founders Fund. So Fernando, thank you so much for joining.

Fernando Terrés 0:14 Thank you for having me.

Aaron Epstein 0:15 Yeah, it's awesome, uh, to have you here. We worked together five years ago, um, in Summer '21 in one of the COVID batches. The app was-- or your product was called Dollar App at the time.

Fernando Terrés 0:25 Yeah.

Aaron Epstein 0:25 Now you have rebranded to ARQ. Um, why don't you tell us a little bit about what ARQ does and the current state of the business?

Fernando Terrés 0:31 Of course. So ARQ provides global accounts for people in Latin America, where there's a massive, um, demand for dollar-denominated financial services. Uh, so you can imagine people who want to spend internationally, people who want to work for a company in the States while they live from a country in Latin America and get paid in dollars, uh, people who just want to have access to a global capital, uh, market system. So we use stablecoins to build that infrastructure and provide that, uh, service to the customers.

Aaron Epstein 0:56 Yeah. I feel like here in the US, we're so insulated from a lot of, uh, cross-border currency, uh, issues, and maybe, um, for people that are not as familiar with the problem, like, why is that such a big problem in Latin America and, and other places in the

Aaron Epstein 1:09 world?

Fernando Terrés 1:09 So perhaps, like, I can give you some examples of customer personas and how they interact with us-

Aaron Epstein 1:15 Yeah

Fernando Terrés 1:15 ... and compared to how they did it before.

Aaron Epstein 1:16 Yeah.

Fernando Terrés 1:17 So imagine you're someone from, let's say, Brazil, and you're used to traveling. Um, and, and where you travel, you want to shop, uh, and, and buy things. Just because you are not having a proper access to the US banking system, you may have to go through a horrible spread on every single FX transaction. So what should cost you, uh, 100 will actually end up costing you 102, 104, 105.

Aaron Epstein 1:38 Mm-hmm.

Fernando Terrés 1:39 Uh, so that would be one example. Another one is, if you think about it, there's many people who work for US companies remotely, um, and, and they need to get paid through, you know, direct deposit. And turns out that if you look at the remittance system, it's built for a percentage fee, uh, system, which is fine if you're sending a small transaction, but if you are receiving, like, I don't know, $5,000 per month in salary, like, 1% of that is real money.

Aaron Epstein 2:00 Yeah.

Fernando Terrés 2:01 Another good example would be people who want to be able to invest in stocks, ETFs in the States. Uh, that is not to be taken for granted. So im-imagine if every time you need to invest in a, in a, in a stock in the States, you need to send a remittance, uh, you need to wait for whichever, three to five days for it to settle, and, and, and you're late to buying Dip, right? So, so all of these inefficiencies are kind of the problem that we're trying to solve when we started the company.

Aaron Epstein 2:23 Yeah.

Fernando Terrés 2:23 In, in, in time, we actually, what we ended up realizing is that the opportunity was bigger. It was not so much only on the global financial side of the equation, but rather building a product for the top, let's say, 20, 30% of the pyramid, right?

Aaron Epstein 2:34 Yeah.

Fernando Terrés 2:34 It's kind of funny because if you look at, at fintech across the last few decades, most of the opportunity has been focused around democratizing access to FX-

Aaron Epstein 2:43 Mm-hmm

Fernando Terrés 2:43 ... access to, uh, investments, access to credit. Um, but no one has gone, "Hey, if we were to build a product for the mass affluent demographic," right? Not, not necessarily the top 0.1% of the pyramid, but rather top 30 in terms of wealth.

Aaron Epstein 2:57 Yeah.

Fernando Terrés 2:57 How would it look like, right?

Aaron Epstein 2:58 Mm-hmm.

Fernando Terrés 2:59 Uh, and so it turns out that the global class is having needs on cross-border banking, but there's so much more beyond that, that, that we need to tackle, right?

Aaron Epstein 3:07 Yeah. So obviously a huge problem, um, and you guys are taking a unique approach, but go back to the early days and, um, tell us more about your journey to actually starting ARQ.

Fernando Terrés 3:16 When I was in uni and as-- at some point I, I, I fell in the rabbit hole of, uh, YouTube, uh, and found these videos of, uh, the YC Startup School, you know? And like, um, v-very old school videos of, of YC, which makes it kind of funny to be here today, no? And, um, I remember being like, "Man, like these people, they're explaining in plain English, in very simple terms, uh, how to build a company that transcends, that impacts humanity." And I was like, "Man, it c- it just cannot be that simple, no?" Like, uh-

Aaron Epstein 3:40 Too good to be true.

Fernando Terrés 3:41 Yeah, I was like, "There's no universal-- They must be full of shit. Like, it cannot be true. No, I should go to consulting now, where people actually know." Um, which is k-kind of funny to be here today, right? And, but, but anyway, like, uh, I, I spent a couple of years in consulting, and then eventually I was like, "Look, like, I, I need to see how are these people who are actually changing the world." I, I, I got the courage to, to quit and join what back then was a very promising startup called Revolut.

Aaron Epstein 4:02 Mm-hmm.

Fernando Terrés 4:03 Which was, um, you know, a London-based, uh, fintech. Uh, it was like, I think it was like Series D. It was 2019.

Aaron Epstein 4:09 Mm-hmm.

Fernando Terrés 4:10 It's kind of funny because in reality it was like pretty early stage in many things when it comes to operating, right? So I spent some time in, in the growth team, then moved over to what we call the special projects, focused on making the company, uh, profitable, and eventually became the general manager of crypto. And it's kind of funny because I, I wasn't this sort of like expert in crypto, right?

Aaron Epstein 4:26 Mm-hmm.

Fernando Terrés 4:26 So, so my job was, yeah, on the one hand, like operating the business, but also figuring out what was crypto, right? And, and building my sort of mental model of the industry, which eventually became something like sort of two orthogonal axis, one being the asset class, right? Like Bitcoin, ETH, and then also like more like casino part of the equation. Um, but sort of orthogonal to it was the infrastructure.

Aaron Epstein 4:46 Mm-hmm.

Fernando Terrés 4:47 And for someone who has spent some time on payments, I was like, "Whoa, we're comparing a local-first system with a global-first system. We're comparing, you know, trust the counterparty and tedious reconciliations with, you know, an immutable ledger, uh, bank holidays and, and which are manual processes with a, you know, 24/7 fully automated system." So I was like, with the commission, there was gonna be a platform shift, you know?

Aaron Epstein 5:07 Mm-hmm.

Fernando Terrés 5:07 It's kind of funny because with Michael, founder Alvaro, like we had been working together since, uh, you know, consulting at BCG. And with Zach, like-

Aaron Epstein 5:13 Oh, so you met before Revolut, then?

Fernando Terrés 5:14 I guess we've been working together for a like, like, uh-

Aaron Epstein 5:16 Okay

Fernando Terrés 5:16 ... so we, we've been suffering each other for long enough already, no? [laughs] And, and also with Zach, um, with, who I met in, in, in Revolut, my, my co-founder and CPO.

Aaron Epstein 5:23 Yeah.

Fernando Terrés 5:24 We had been like in parallel brainstorming ideas on, on starting something. Like we, we had the, the idea of, of becoming entrepreneurs like for, for quite some time, no? And, um, so, so when, when, you know, there was this conviction around the, the platform shift on, on, on blockchain, again, not so much as an asset class, rather as an infrastructure-

Aaron Epstein 5:38 Mm-hmm

Fernando Terrés 5:38 ... for banks to be operating on at, at scale. My brain snapped back to when I was in, in consulting in Latin America, and I knew that all my colleagues were, you know, traveling with plenty of cash in the suitcase when they were going to the States. W-which, you know, my, my first reaction was like, "What the hell?" Like, who would be traveling with 10 grand of cash in the suitcase or whichever, no? And turns out that, um- You know, access to dollar is something that you may take for granted in the States, um, but, but it's something that in many parts of the world is a luxury.

Aaron Epstein 6:03 Mm-hmm.

Fernando Terrés 6:03 And, and that's like a perfect insertion point, uh, to build on a platform shift, no? By, by starting with, with, with that need, no? But it's kind of funny because we were not really that aware of, of the whole situation. In fact, um, you know, with the first investment from YC, we just grabbed a flight to, to Mexico City.

Aaron Epstein 6:18 Mm-hmm.

Fernando Terrés 6:18 And I remember, um, I- I'm gonna sound like a not, not the smartest person here, right? But, uh, we went to a shopping mall and started to stop people asking, "Do you want to buy digital dollars?"

Aaron Epstein 6:27 Right.

Fernando Terrés 6:27 And so people were like a bit scared of us, like what are these-

Aaron Epstein 6:30 [laughs]

Fernando Terrés 6:30 ... two up to no's. Anyway, but, uh, funny story, right?

Aaron Epstein 6:32 Did you sell any?

Fernando Terrés 6:33 Uh, well, we, we didn't have anything to sell, right? Like, uh, we were trying to, right? But-

Aaron Epstein 6:37 Yeah

Fernando Terrés 6:37 ... uh, but like preempting, like we didn't have the product yet.

Aaron Epstein 6:40 Right.

Fernando Terrés 6:40 Um, but, uh, but what we did learn there is, is kind of funny because you only learn these things like the tough way, is that it was not only about access to the dollar, but the utility of it. Why did people want it, and what is the job to be done of dollar, no?

Aaron Epstein 6:52 Mm-hmm.

Fernando Terrés 6:53 And you see that people wanted to travel and spend internationally, uh, people want to receive, uh, transfers. So it was more of what is the actual use case, what

Fernando Terrés 7:00 is the actual need, you know?

Aaron Epstein 7:01 Okay, so you got this idea, um, from seeing all the infrastructure that you were building as part of Revolut, and then tying that back to your own personal experience.

Fernando Terrés 7:08 That's right.

Aaron Epstein 7:08 Um, what convinced you that this was actually gonna stick and actually gonna work? Like did you know this during the batch when-

Fernando Terrés 7:15 Yeah

Aaron Epstein 7:15 ... when you were so early and you were interviewing these people and trying to figure it out, or did that come much later?

Fernando Terrés 7:20 I, I just knew it was a massive problem.

Aaron Epstein 7:21 Mm-hmm.

Fernando Terrés 7:22 Um, I knew that it was worth solving because I had seen what people were doing. When you see people doing weird stuff around a big problem, there, there's always something there.

Aaron Epstein 7:30 Yeah.

Fernando Terrés 7:31 But we were completely clueless. No, I, I think like maybe, I think like every founder has their own story, but we were not like so hyper-rational and, "Oh yeah, this is what we'll do, this..." It was more like the FAFO sort-

Aaron Epstein 7:40 Mm-hmm

Fernando Terrés 7:40 ... sort of framework, no, where we knew that there was something-

Aaron Epstein 7:43 Yeah

Fernando Terrés 7:43 ... and, and that if we spent enough time understanding it and, and going to a root cause of, of what customers need, we'd be able to solve a massive problem, you know?

Aaron Epstein 7:49 And do you remember, what was your focus during the batch? You were obviously very early. I remember you're trying to build the first version of the product.

Fernando Terrés 7:55 Yeah.

Aaron Epstein 7:55 And, and even going live is-

Fernando Terrés 7:56 Right

Aaron Epstein 7:56 ... you know, a big challenge for a product like yours.

Fernando Terrés 7:58 Yeah. Initially we were thinking that it would be like more store of value side of the equation. Um, and, and, and again, like, uh, eventually what we realized is, is, is, is more the utility component, no?

Aaron Epstein 8:09 Mm-hmm.

Fernando Terrés 8:09 Um, and that was game changer because once we realized that, and, and, you know, we got the courage, no, to, hey, like, uh, this is what we need to build, this is where we, where we're headed, and then reverse engineer all the steps to get there-

Aaron Epstein 8:20 Mm-hmm

Fernando Terrés 8:20 ... uh, made our life way easier. No, but you think about it, building a, a fintech product is not something that straightforward, which is like very painful to be in the cave building that for a few months, you know?

Aaron Epstein 8:30 Right.

Fernando Terrés 8:30 Because you cannot get so much customer feedback, and if you ship an MVP that is half-baked, you're gonna get a signal that may not be the best, uh, representation of, of where the product should be going, you know?

Aaron Epstein 8:40 Yeah. Do you remember how long it took you to actually get live with your first, uh, users?

Fernando Terrés 8:44 I mean, the, the, the first part was only access to store of value, was like-

Aaron Epstein 8:47 Yeah

Fernando Terrés 8:47 ... pretty, pretty straightforward.

Aaron Epstein 8:48 Yeah.

Fernando Terrés 8:48 Um, but again, like the feedback was like, look, we, we need to do things with, with these, um, digital dollars, right?

Aaron Epstein 8:54 Yeah.

Fernando Terrés 8:55 Um, w- which, you know, so again, it sucks, no? You go through all of these ups and downs, no? But, but I think like, look, if, if you're doing a proper truth-seeking exercise, you get that and, and, and you, you ultimately learn what you're gonna do, right?

Aaron Epstein 9:07 Yeah.

Fernando Terrés 9:07 So I think like, um, it was like a bit less than a year to, to have like the, the first version of the product, which included, um, uh, virtual, uh, account details in the States, an international card-

Aaron Epstein 9:18 Yeah

Fernando Terrés 9:18 ... and then the, the store of value component, no?

Aaron Epstein 9:20 Mm-hmm.

Fernando Terrés 9:20 Um, and, and that was like, uh, the, the, the one when we were like, "Okay, this is, this is working." I remember, um, a call we had, maybe you recall, I, I think I was with my co-founder, Alvaro, in Buenos Aires.

Aaron Epstein 9:30 Mm-hmm.

Fernando Terrés 9:31 And we're like very, very worried like, because we see like, like everything was compounding month after month, but it's not hockey stick. I'm like, "Oh, how this product market feel like?" And you were like, "No, guys, this product market fit."

Aaron Epstein 9:42 Yeah.

Fernando Terrés 9:42 And we're like still with this like sort of imposter syndrome of-

Aaron Epstein 9:44 Yeah

Fernando Terrés 9:45 ... what the hell is going on, you know?

Aaron Epstein 9:46 Right. And now it has continued.

Fernando Terrés 9:48 It has continued.

Aaron Epstein 9:49 [laughs]

Fernando Terrés 9:49 And, and, and again, like that's how it works, right? Like you keep doing like all those tough things mon- month after month, pushing yourself to be better, no?

Aaron Epstein 9:54 Yeah.

Fernando Terrés 9:55 And, and eventually you, you get

Fernando Terrés 9:57 there.

Aaron Epstein 9:57 Yeah. And talk a little bit, I'm sure there's a lot of people that are watching this that, um, feel that imposter syndrome themselves. They see a video like this of, you know, a successful founder building a successful company, and I think maybe what's special about you is you would probably respond to that and say, "We've, we're not successful yet. We have not done anything yet." But, you know, to, I think a lot of the people watching, um, they probably aspire to be in the position that you're in and have the company that you have built to this point. Um, how do you overcome that imposter syndrome and-

Fernando Terrés 10:24 Yeah

Aaron Epstein 10:24 ... and be able to find the confidence in yourself that actually, you know, you can do this just like anybody else has?

Fernando Terrés 10:29 Yeah. It's k- kind of interesting, no, because if you reflect on it, maybe here in Bay Area it's kind of very normalized because everyone knows many people who, uh, you know, have gone through a startup, have started their own startup and, and been successful. Um, but that's not something that you can take for granted in many parts of the world, where-

Aaron Epstein 10:44 Mm-hmm

Fernando Terrés 10:44 ... where we don't have like so many, uh, cases of successful entrepreneurship in technology that are close to us, right? But, but I, I guess like there's sort of two answers I could give. One answer is there's something a bit positive in always feeling that you're u- under threat and, and you're fighting for survival, you know?

Aaron Epstein 11:00 Yeah.

Fernando Terrés 11:00 And, and, you know, day to day, like feeling almost like you're the caveman and there's a lion waiting for you outside.

Aaron Epstein 11:04 Yeah.

Fernando Terrés 11:04 Um, that, that, you know, always helps you to reset expectations.

Aaron Epstein 11:09 Yeah.

Fernando Terrés 11:09 And all the time have these like sort of survival experience.

Aaron Epstein 11:11 Yeah.

Fernando Terrés 11:12 That I'm not sure if it's intentional or rather like a, you know, a kinda like the, the, the result of years or decades, no, since I

Fernando Terrés 11:19 was a kid, right?

Aaron Epstein 11:19 Yeah. Where does that come from for you? 'Cause I, I think that is actually a quality of some of the best founders-

Fernando Terrés 11:24 Mm

Aaron Epstein 11:24 ... is they're just perpetually never satisfied.

Fernando Terrés 11:26 Mm.

Aaron Epstein 11:26 'Cause human nature is, I don't know, you guys have grown to more than 10 billion-

Fernando Terrés 11:29 Mm

Aaron Epstein 11:30 ... annualized volume.

Fernando Terrés 11:31 Yeah.

Aaron Epstein 11:31 And I think a lot of people would be like, "Wow, we're doing really good. Maybe we can chill out." You know? Like that's like the natural human instinct-

Fernando Terrés 11:38 Yeah

Aaron Epstein 11:38 ... I think. But also the people that get to that level-

Fernando Terrés 11:41 Mm

Aaron Epstein 11:41 ... don't operate that way, and I see that in you. And yeah, I'm curious, like-

Fernando Terrés 11:46 It's, it's got-

Aaron Epstein 11:46 ... how do you find that in yourself?

Fernando Terrés 11:47 It's an interesting reflection. Like, um, we, we've gone like through all these, you know, stages and-

Aaron Epstein 11:52 Yeah

Fernando Terrés 11:53 ... w- we've never really celebrated milestones.

Aaron Epstein 11:55 Yeah.

Fernando Terrés 11:56 But, and, and, and, you know, we're happy about it, but we've never thrown a party.

Aaron Epstein 11:58 Yep.

Fernando Terrés 11:59 And it's interesting because if you think about it, the reason why we're happy when these things happen, when these things, um, uh- Come to be true. It's not so much that we got there, but hey, if we got here, where are we gonna be in 12, 24, 36 months?

Aaron Epstein 12:11 Mm-hmm.

Fernando Terrés 12:12 Um, and it's like, it's like an interesting dynamic. You know, it's, it's hard to tell where it comes from. I think probably my sort of intuition would be being comfortable with enduring pain.

Aaron Epstein 12:21 Mm-hmm.

Fernando Terrés 12:22 Because at the end of the day, like, ah, look, like, e- every week as a founder you need to reset the bar and say, "Look, all of these things that we did great last week, they no longer matter. We're not going to discuss them. We're going to discuss the two, three things where we need to do better."

Aaron Epstein 12:35 Yep.

Fernando Terrés 12:36 And, and you really need to do that every

Fernando Terrés 12:38 week. You need to build a culture that enforces everyone is doing it this way.

Aaron Epstein 12:41 Yeah.

Fernando Terrés 12:42 Right? And, and, and the moment you get satisfied, right, like, uh, you no longer think in this way and you're no longer gonna keep compounding.

Aaron Epstein 12:47 Yep.

Fernando Terrés 12:47 Um, a- and it's kind of interesting because, you know, I have this, like, sort of, sort of theory that, you know, companies get as far as they want eventually, and everyone who stops growing at this exponential pace at some point it's because they decided not to, no?

Aaron Epstein 12:59 Yep.

Fernando Terrés 12:59 Which, um, may, might be, like, an oversimplified narrative, right? Um-

Aaron Epstein 13:04 I think it's true

Fernando Terrés 13:04 ... but, um-

Aaron Epstein 13:05 There is a component to that because, um, you know, companies I think are only as ambitious as the founders, right?

Fernando Terrés 13:10 Mm.

Aaron Epstein 13:11 And so you have that sense of urgency, and you're perpetually never satisfied, and always looking at what is the future next thing that we're gonna go towards.

Fernando Terrés 13:18 Yeah.

Aaron Epstein 13:18 And how do you drive that amongst the rest of your team to make sure that everybody else operates that way? You mentioned the culture. Like, how do you-

Fernando Terrés 13:24 Right

Aaron Epstein 13:24 ... create that in the culture o- of the team?

Fernando Terrés 13:26 You know, it's, it's kind of funny, like, we, we, not so long ago we did, like, the first culture exercise.

Aaron Epstein 13:31 Mm-hmm.

Fernando Terrés 13:32 And, um, you know, when we were doing it we were thinking of culture first, like, you know, the, the temptation is to think about it as the, you know, who you would want to be.

Aaron Epstein 13:39 Yeah.

Fernando Terrés 13:39 But at the end of the day, like, p- people converge with who they are.

Aaron Epstein 13:42 Yeah.

Fernando Terrés 13:42 So if you do that, like, uh, you're, you're gonna get to something that is, is not really aligned with how people behave.

Aaron Epstein 13:46 Yeah.

Fernando Terrés 13:47 So instead what do we do, like, the most senior people in the organization who've been already for some time and, and they, they know how we operate, right? And we ask them, "Hey, what are the no negotiables?"

Aaron Epstein 13:54 Mm-hmm.

Fernando Terrés 13:54 It's kind of funny because what we did is the three of us, the founders, like, like, for the first part of the session we couldn't really speak.

Aaron Epstein 13:59 Yeah.

Fernando Terrés 14:00 And you had to sit there and listen to everyone saying-

Aaron Epstein 14:02 Right

Fernando Terrés 14:02 ... what are the no negotiables.

Aaron Epstein 14:03 Right.

Fernando Terrés 14:04 And eventually we landed with these four traits that you know if, if, if someone doesn't really, you know, live by those four traits-

Aaron Epstein 14:10 Uh-huh

Fernando Terrés 14:10 ... it's like throw 'em out of the window, you know?

Aaron Epstein 14:12 Mm-hmm. [laughs]

Fernando Terrés 14:12 And I think it's one of the most beautiful things that has happened to me in the company because I was like, whoa, like, without me speaking these people are saying exactly the, the-

Aaron Epstein 14:19 Right

Fernando Terrés 14:19 ... the right things, no? Choosing unreasonable, uh, ambition. W- which has, like, two interesting components. The first one is the idea of unreasonable ambition, and then the second one is choosing, right?

Aaron Epstein 14:29 Mm-hmm.

Fernando Terrés 14:29 But let, let me start with the first one. You, you think about it, every company eventually when you scale, like, maybe in the early days not so much, it's sort of a model, right? Like, an, an sort of FP&A model where you input resources, you output more resources, right? But if you operate in that fashion you're never going to compound exponentially. So part of the job of the founder is to think on how do you add some entropy to that model-

Aaron Epstein 14:48 Mm-hmm

Fernando Terrés 14:49 ... to go to a direction where the only way for you to achieve it is to transform who you are.

Aaron Epstein 14:54 Mm-hmm.

Fernando Terrés 14:54 Right? And, and if you set a very rational objective for you-

Aaron Epstein 14:57 Yeah

Fernando Terrés 14:58 ... you, you're never forcing yourself to change who you are.

Aaron Epstein 15:00 Yep. You see this a lot with the, the goal setting during the YC batch.

Fernando Terrés 15:03 Right.

Aaron Epstein 15:03 A lot of times the instinct is, "Well, I'm talking to this many customers, and if I close this many..." They kind of project forward-

Fernando Terrés 15:10 Correct

Aaron Epstein 15:10 ... on the path they're already on rather than picking something that is extremely ambitious-

Fernando Terrés 15:14 Yeah

Aaron Epstein 15:15 ... and they're unlikely to hit, and then it forces a flip in their brain that goes, "Oh God, I just committed to that thing. How am I possibly gonna do that?" And they have to start thinking outside of the current box to figure out how to get there.

Fernando Terrés 15:26 But, but here you go to the second part, which is the most beautiful, and which is choosing.

Aaron Epstein 15:28 Yeah.

Fernando Terrés 15:29 Like, this is not something that comes natural to people.

Aaron Epstein 15:31 Yeah.

Fernando Terrés 15:31 It's a choice. And, and, and, and this vow is about the need to renew every week.

Aaron Epstein 15:35 Mm-hmm.

Fernando Terrés 15:36 And if at every point in time you stop choosing unreasonable ambition, you're cooked.

Aaron Epstein 15:41 Yeah.

Fernando Terrés 15:41 Um, and you become like a sort of FP&A company that sets a target that is reasonable to grow-

Aaron Epstein 15:47 Yeah

Fernando Terrés 15:47 ... and which are 10% year over year, no?

Aaron Epstein 15:49 Yeah.

Fernando Terrés 15:49 And, and, and, and you're no longer gonna be a company that is transforming who you are, you know?

Aaron Epstein 15:53 Yeah. What are, um, some tactical ways that you kinda drive that and permeate that throughout the company? Like, how do you manage the goals of the company-

Fernando Terrés 16:01 Mm

Aaron Epstein 16:01 ... or, you know, different teams within the company?

Fernando Terrés 16:04 Like, there, there's two components. Like, the, the first one, which is m- maybe, like, a bit of a cliche, but it's hiring for culture.

Aaron Epstein 16:09 Uh-huh.

Fernando Terrés 16:09 Right? Like, uh, and, and, and you know, like, we're still, like, uh, relatively small in the, in the grand scheme of things. Like, uh, but, um, it's kind of like a humbling experience when you hire people that are way better than you at specific things.

Aaron Epstein 16:21 Mm-hmm.

Fernando Terrés 16:21 And, and, and, and you need to absorb this knowledge, you need to absorb these things that improve the way you think about operating and, and cascading across the whole organization, right? So, so part of it is, like, that is very important, is the, the, the hiring for culture-

Aaron Epstein 16:36 Mm-hmm

Fernando Terrés 16:36 ... um, piece. But then again, we try to be extremely output oriented. So basically, and maybe, like, there's many companies that have been successful in being, like, input oriented companies, but what we try to do is we set a north star for the company. Uh, like, one metric that we define as success criteria.

Aaron Epstein 16:52 Mm-hmm.

Fernando Terrés 16:52 Um, and then we try to cascade it down into different things that if they are all true, like, it ties up to, to, to the main north star-

Aaron Epstein 17:01 Yeah

Fernando Terrés 17:01 ... of the company, no?

Aaron Epstein 17:01 What's your north star metric for the company?

Fernando Terrés 17:03 So we're looking at core MAU.

Aaron Epstein 17:04 Uh-huh.

Fernando Terrés 17:05 Which is people who are engaged with us to a level that is, um, representative of a deep relationship.

Aaron Epstein 17:10 Uh-huh.

Fernando Terrés 17:10 Right? Um, and again, like you-

Aaron Epstein 17:11 So not just signed up one time-

Fernando Terrés 17:13 Correct

Aaron Epstein 17:13 ... but, like, actively using-

Fernando Terrés 17:14 Correct

Aaron Epstein 17:14 ... the product in meaningful ways.

Fernando Terrés 17:15 Correct. A- and then we cascade that into all the components that need to be true-

Aaron Epstein 17:18 Yeah

Fernando Terrés 17:18 ... for that metric to go up. No, you have, hey, the, the growth component, uh, the, the breakdown to every single one of the, of the products, no?

Aaron Epstein 17:26 Yeah.

Fernando Terrés 17:27 Um, and then w- we try to make sure we have this hardcore orientation around your number. So actually o- one of our values is also, um, own your number. I, I think we have observed that accountability very often matters more than specific knowledge.

Aaron Epstein 17:40 Mm.

Fernando Terrés 17:40 You know? So, so, like, in, in the conventional way of structuring an organization there's, like, more, like, function led. You have all these weird situation in which the end-to-end, uh, process is not owned by anyone.

Aaron Epstein 17:51 Yeah.

Fernando Terrés 17:51 Whereas if what you do is, like, hey, you own the end-to-end number. Um, people actually figure out.

Aaron Epstein 17:57 Yeah.

Fernando Terrés 17:57 Especially great people, you know?

Aaron Epstein 17:58 Yep.

Fernando Terrés 17:59 Um, so we try to make sure everyone has their own number.

Aaron Epstein 18:01 Mm-hmm.

Fernando Terrés 18:01 And they have to figure out, you know?

Aaron Epstein 18:02 So every single person in the company has a number?

Fernando Terrés 18:04 So a- again, we're getting there.

Aaron Epstein 18:06 Yeah.

Fernando Terrés 18:06 I mean, when you're getting started, like, uh, it doesn't really make sense.

Aaron Epstein 18:08 Yeah.

Fernando Terrés 18:09 Uh, but, but slowly we're, we're, we're moving into, into that direction. Or sometimes, like, hey, this team has this number.

Aaron Epstein 18:14 Yep.

Fernando Terrés 18:14 Uh, but, but then eventually you go cascading it down, no?

Aaron Epstein 18:16 Yeah.

Fernando Terrés 18:16 Sometimes it- it's not a number. It's like, uh, hey, you need to deliver this feature by this date, right?

Aaron Epstein 18:20 Mm-hmm.

Fernando Terrés 18:21 It's more like a binary, uh, type of outcome.

Aaron Epstein 18:23 Right.

Fernando Terrés 18:23 But we try to make sure that everyone has accountability, um, wh- which is, like, the, the beautiful part because then eventually every small part of the company is, per se, a startup.

Aaron Epstein 18:31 Yeah.

Fernando Terrés 18:31 Right? Uh, and it creates this compounding, uh, element where, you know, you have, like, all these small group of people that are working on, uh, you know, multiple product lines, uh, multiple businesses, right? And, and each of them treat it as their own child to, to, to an extent,

Fernando Terrés 18:44 right?

Aaron Epstein 18:44 Right. That, maybe that kind of leads me into you started as Dollar App.

Fernando Terrés 18:47 Mm-hmm.

Aaron Epstein 18:47 Then you rebrand- rebranded recently as ARQ. Um, talk about what went into that and, and maybe how the company has evolved to, to make that necessary to happen now.

Fernando Terrés 18:56 You know, I, I was thinking before another, the story of when we, you know, with, with the 125K from YC-

Aaron Epstein 19:01 Right

Fernando Terrés 19:01 ... we went to Mexico to-

Aaron Epstein 19:02 Right

Fernando Terrés 19:02 ... people wanted dollars.

Aaron Epstein 19:03 Yeah.

Fernando Terrés 19:03 And, and, and again, like we didn't really understand fully, um, all the nuances around it, but that had, like, two problems. The first one is that it became pretty self-limiting, right?

Aaron Epstein 19:12 Mm-hmm.

Fernando Terrés 19:12 You know, how do you tell your friend that the best way for you to, you know, uh, invest in, in US stocks is Dollar App? Or the best way for you to, you know, um, save in Brazilian reais is, is, is Dollar App? Like, shouldn't it be Real App, right?

Aaron Epstein 19:25 Right. Right.

Fernando Terrés 19:26 Um, so it bec- it became, like, pretty self-limiting. Then the other component, which I think in, in hindsight might be the most interesting, right? I- if you think about our old brand, right? Like, it was in a big chunk articulated around financial inclusion, right? Like, you cannot have dollars. Now you, you can have, like, a pseudo dollar, right? So the name is Dollar App, right?

Aaron Epstein 19:44 Mm-hmm.

Fernando Terrés 19:44 If you go to our old website, the tagline used to be something like, "The world has borders, your finances don't have to."

Aaron Epstein 19:50 Mm-hmm.

Fernando Terrés 19:50 So we are a Latin American company that includes you in the US, right? What is kind of funny is that if you look at our customers, it's mostly top 30% of the pyramid in terms of wealth, as I was saying before, right?

Aaron Epstein 20:00 Mm-hmm. Yeah.

Fernando Terrés 20:00 So it's people who travel, who have, like, a global lifestyle, uh, who work for an international company, who like to invest. These people, they don't want to be included.

Aaron Epstein 20:07 Mm-hmm.

Fernando Terrés 20:07 So it was, like, a brand that was completely misaligned who, with who was our customers.

Aaron Epstein 20:11 Yeah.

Fernando Terrés 20:12 Um, so anyway, like, uh, that was kind of the, the, the story, no? Like, I think, like, at some point you need to, uh, start becoming really good at, at marketing and at distribution at scale.

Aaron Epstein 20:20 Mm-hmm.

Fernando Terrés 20:20 And if you don't have a good brand for that, uh, y- you're gonna be in a, in a really poor position at scale.

Aaron Epstein 20:25 Yeah. I mean, that was obviously a big milestone with, with the branding, um, and change. But what are some of the other milestones, um, along the way that you've hit? Or what have been some of the inflection points that have, have gotten you to this point? You mentioned earlier you're at over 10 billion in, in annualized volume, which is, like, a crazy number to think about.

Fernando Terrés 20:42 Yeah.

Aaron Epstein 20:42 Um, what were some of the milestones that stand out to you along the way to get there?

Fernando Terrés 20:46 I mean, like, uh, this is kind of funny because, uh, again, like back to my point from before, we don't really, you know, we, we-

Aaron Epstein 20:51 Right

Fernando Terrés 20:51 ... we don't celebrate much.

Aaron Epstein 20:52 Nothing stands out.

Fernando Terrés 20:53 Right. No, but, but actually I'm thinking more of the emotional ones.

Aaron Epstein 20:55 Yeah.

Fernando Terrés 20:56 I remember one in the early days that, you know, maybe people who are right on the batch can probably reflect on this. I was sending manually an email campaign, you know?

Aaron Epstein 21:02 Yeah.

Fernando Terrés 21:02 Which we've, we've all done that, like, downloaded-

Aaron Epstein 21:05 Yeah

Fernando Terrés 21:05 ... a CSV, right? And, um, I remember I saw an email and I was like, whoa, this rings a bell. And it's like a, like, first name, last name of, of a friend of mine from uni that I hadn't spoken to in years.

Aaron Epstein 21:16 Huh.

Fernando Terrés 21:16 And I went to, to his LinkedIn, and I see that he's living in Mexico City. And I was like, what the hell? And I was like... And, and I, so I, I DM him on LinkedIn.

Aaron Epstein 21:25 Mm-hmm.

Fernando Terrés 21:25 I was like, "Hey man, are you living in Mexico City?" And he's like, "Oh yeah, I moved here from Spain," blah, blah, blah. And I was like, "Whoa, and you're using Dollar App" And he's like, "What the hell?" Like, I didn't even have it in my LinkedIn back then, right?

Aaron Epstein 21:35 Yeah.

Fernando Terrés 21:35 And he's like, "What the hell? How do you know that?"

Aaron Epstein 21:37 [laughs]

Fernando Terrés 21:37 It's like, "Let's go for a beer tomorrow and I can tell you more," no?

Aaron Epstein 21:39 Yeah.

Fernando Terrés 21:40 And I think, like, it's all these, like, inflection points that make you realize, whoa, there's real value, give you the confidence, no? But, but, but not so much I would argue on the, on the, you know, um, numbers component, which we-

Aaron Epstein 21:51 Yeah

Fernando Terrés 21:51 ... we throw a party because we got here.

Aaron Epstein 21:53 Yeah.

Fernando Terrés 21:53 But, right, these, like, you know, s- sort of situation in which everyone's all the time thinking about the future in-

Aaron Epstein 21:59 Mm-hmm

Fernando Terrés 21:59 ... in the company. And everyone is using... Like, no one is using the real production app. We're all on TestFlight-

Aaron Epstein 22:03 Mm-hmm

Fernando Terrés 22:03 ... with the, with the version of the app that has not yet been released. So like-

Aaron Epstein 22:06 Right. You're always living in the future.

Fernando Terrés 22:07 Well, intentionally, right?

Aaron Epstein 22:08 Yeah. How do you keep that bar high? How do you vet people throughout the hiring process for those core values that are so important to you?

Fernando Terrés 22:16 Hmm.

Aaron Epstein 22:16 Where if you let the wrong people in, then it's never gonna work out.

Fernando Terrés 22:19 Like, there's two type of companies, companies that try to maintain the talent bar-

Aaron Epstein 22:22 Mm-hmm

Fernando Terrés 22:23 ... and then companies that say, hey, this is the worst the talent bar is ever gonna be.

Aaron Epstein 22:26 Mm-hmm.

Fernando Terrés 22:26 And they try to just improve it, no? And, and this is, like, sort of question you always ask, like, hey, is this person better than 50% of the organization?

Aaron Epstein 22:32 Mm-hmm.

Fernando Terrés 22:33 Uh, when you're hiring, no? So, so anyway, going more through the process, the way we do it is we define the things that correlate with people being successful-

Aaron Epstein 22:41 Mm-hmm

Fernando Terrés 22:42 ... for every single role in the organization, uh, and we make sure that we test them.

Aaron Epstein 22:46 What are those things-

Fernando Terrés 22:47 So-

Aaron Epstein 22:47 ... for you guys?

Fernando Terrés 22:47 Yeah. Depends a bit on the role. Um, in, in the case of engineering, for example, you need to do a live coding session.

Aaron Epstein 22:53 Mm-hmm.

Fernando Terrés 22:53 Uh, in the case of journalists, you know, like, people, like, who work in strategy and operations, in, in product, uh, we, we focus a lot on problem solving.

Aaron Epstein 23:00 Mm-hmm.

Fernando Terrés 23:00 And one thing that is kind of interesting is that, um, if you look at the world of corporate or even big tech, very often problem solving is focused more on the solution part. I think in a startup or in a fast-changing environment, it's much more the problem statement.

Aaron Epstein 23:14 Mm-hmm.

Fernando Terrés 23:15 And, and then the truth is that if you really understand a problem well and you're able to go deep into the root cause, like, a, a monkey can build a solution, you know? But, but what is very, very complex is understanding deeply a, a problem statement, you know?

Aaron Epstein 23:27 Mm-hmm.

Fernando Terrés 23:27 So we often look for people who are exceptional at understanding what is exactly the root cause of the problem statement, who are very analytical, no? Um, and are willing to go dirty and keep asking why iteratively until they really, really understand the problem statement, you know?

Aaron Epstein 23:39 Mm-hmm.

Fernando Terrés 23:39 Which is very rare because people are not trained to operate in this fashion.

Aaron Epstein 23:42 Yeah.

Fernando Terrés 23:43 And, and, and we think, like, that's a pretty good predictor of success in the,

Fernando Terrés 23:47 in, in the company. And of course the cultural component, no? That something funny you can do is just, like, ask people to tell, tell you their story, you know?

Aaron Epstein 23:53 Yeah.

Fernando Terrés 23:53 And, and you can see if they were, you know, uh, back, back to the sort of point on the, on the values, no? Like- Were those people choosing unreasonable, uh, ambition? Uh, are those people solving the real problem, like the point I was saying before? Are these people owning their number?

Aaron Epstein 24:06 Mm-hmm.

Fernando Terrés 24:07 Are these people raising the bar to themselves and to others constantly?

Aaron Epstein 24:09 Yeah.

Fernando Terrés 24:10 So, so you can, you can get those things if you ask someone to tell you their story, you know?

Aaron Epstein 24:13 Yep. You're live in a number of countries now-

Fernando Terrés 24:15 Mm-hmm

Aaron Epstein 24:15 ... right? Is it four?

Fernando Terrés 24:17 Four already, yeah.

Aaron Epstein 24:18 Yeah. Four countries. I know that's always something that is a challenge for founders, is figuring out, especially, you know, if you're location-based or you have multiple different types of customers, how do you expand to each of those? Um, like go into a new market-

Fernando Terrés 24:31 Yeah

Aaron Epstein 24:31 ... um, figure out how to roll out. What's the playbook for all of that?

Fernando Terrés 24:34 Yeah.

Aaron Epstein 24:34 What have you found in expanding to all these different countries and actually making it work in each one?

Fernando Terrés 24:39 Yeah. It's a discussion that we, I've been having since the very, very early days with, um, uh, one of our first investors, Hernán Kazak, no, that, you know, invested right, right at the end of the batch, no?

Aaron Epstein 24:48 Yeah.

Fernando Terrés 24:49 And, uh, and he's been sitting in the board since then, in, in the company, and he, he has like these two success stories that he's seen. One is Mercado Libre-

Aaron Epstein 24:55 Yeah

Fernando Terrés 24:55 ... which he was a co-founder, and then NuBank, that they, they were like one of the first investors, if not the first investors actually.

Aaron Epstein 25:00 Yeah.

Fernando Terrés 25:00 And, um, and it's two very different stories, no? One that was, you know, doing many, many things in parallel, one that was like very, very focused on-

Aaron Epstein 25:07 Uh-huh

Fernando Terrés 25:08 ... on, on the key bets, no? And both were wildly successful, no? So, so it, it's hard to say like this is the right model, this is the wrong model or, or vice versa, no? So again, go back to people, you know, tend to behave in a way that ties up to who they are. So in our case, the way we try to approach it, uh, is we try to do more things than, than, you know, than, than, uh, NuBank in this case, no? It was like super focused surgically on credit in Brazil for a very long time.

Aaron Epstein 25:34 Mm-hmm.

Fernando Terrés 25:34 But we try to have the market pull from us, no? So we try to do, hey, what is the minimum we need to do to, to, you know, get something out of the door and test that the market wants it and how customers behave with it, and then double down. No, there's sometimes that you, you know that there's something there, and you need to be way more top down than bottom up-

Aaron Epstein 25:51 Mm-hmm

Fernando Terrés 25:51 ... when it comes to it, right? And, and you know, like actually going back to the point in the early days, we knew that people wanted access to, uh, a dollar-denominated financial system, right?

Aaron Epstein 25:59 Yeah.

Fernando Terrés 25:59 And, and you know, if, if we had gone like, "Oh, people don't want the, the, you know, store of value side of the equation," you can give up, no? But, but you know that there's something there, so you need to keep d- keep going there. So you need to apply those two, those two mindsets, no?

Aaron Epstein 26:11 Do you ... Like, you know, you're expanding to Brazil-

Fernando Terrés 26:13 Mm-hmm

Aaron Epstein 26:13 ... right?

Fernando Terrés 26:14 Yeah.

Aaron Epstein 26:14 Um, which you launched. Um, do you send a small team in there to kinda be the team that's gonna go in and launch this? Do you take your, your current, uh, you know, larger organization and-

Fernando Terrés 26:25 Mm-hmm

Aaron Epstein 26:25 ... and have everybody focus on that? What, what's the use of resources to be able to make sure that it's successful out of the gate?

Fernando Terrés 26:30 If you look at what we do, it's kind of interesting. We have the demand side and then the infrastructure, right? So if you look at the demand side, it's kind of interesting because our target customer, it's very similar in all the markets. It's always people who want to travel, who have a global lifestyle, who want to invest, right? So it's not that different-

Aaron Epstein 26:46 Mm-hmm

Fernando Terrés 26:47 ... when you compare like our customers in Mexico from our customers in Brazil and Argentina.

Aaron Epstein 26:50 Yeah.

Fernando Terrés 26:50 You have some local flavors-

Aaron Epstein 26:52 Yeah

Fernando Terrés 26:52 ... um, but roughly speaking, it's, it's very similar in, in terms of, of the needs that we, that we solve for them. But if you look at the infrastructure from a regulatory side, uh, from a payment side, it does change a lot. So, so a big part of the work is putting in place that infrastructure. And then eventually also we have the component of cracking the go-to-market.

Aaron Epstein 27:13 Mm-hmm.

Fernando Terrés 27:13 Um, that, that can be a bit different in every, in every market. But the good thing is that our customer type is more or less the same.

Aaron Epstein 27:19 Mm-hmm.

Fernando Terrés 27:21 And I, I go back to this point that accountability is what matters most. So what we always try to do is have one person that is accountable for that specific one, no?

Aaron Epstein 27:28 Yep.

Fernando Terrés 27:29 So in the case of Brazil, we, we hired Leo, who, who's our general manager leading the, the, the country, and he had to figure out the whole thing, you know?

Aaron Epstein 27:35 Yeah.

Fernando Terrés 27:35 Uh-

Aaron Epstein 27:35 So you bring in the general manager.

Fernando Terrés 27:37 Oh.

Aaron Epstein 27:37 They're, they're the responsible person.

Fernando Terrés 27:38 Nowadays, yes. Back in the day for Argentina, I, I, I went there [laughs]

Aaron Epstein 27:41 It was you, right

Fernando Terrés 27:42 ... I, I figured out how to buy an animal license that we, you know, like, uh, we found like a good deal.

Aaron Epstein 27:46 Yeah.

Fernando Terrés 27:46 And then like, uh, build the integration with, with the engineering team and, and, and launch, you know? Like, uh, but, but effectively like one person needs to have that as a success metric-

Aaron Epstein 27:55 Mm-hmm

Fernando Terrés 27:56 ... and live and die for

Fernando Terrés 27:57 it, you know?

Aaron Epstein 27:57 Yep. You don't like to celebrate the highs-

Fernando Terrés 27:59 No

Aaron Epstein 27:59 ... but I'm sure the lows stick with you. [laughs] Um, what's something that, like any kinda tough moments? I think from the outside it looks like you've just been on this-

Fernando Terrés 28:07 Mm

Aaron Epstein 28:07 ... this amazing rocket ship.

Fernando Terrés 28:09 Mm.

Aaron Epstein 28:09 Um, what have been some of the, the challenging moments that stand out to you over the years?

Fernando Terrés 28:13 It's interesting. I'm not sure if we really dwell so much on the bad moment. Uh, to be fair, like if you do that, like, uh, building a startup is gonna be a nightmare, no? You need to have like thick skin to-

Aaron Epstein 28:23 Yeah. Yeah

Fernando Terrés 28:23 ... to, to an extent. But there's been like so many moment. I, I, I, I... that I would like very, very tough. I remember, again, like we're in the bunch in, in, in '21.

Aaron Epstein 28:29 Mm-hmm.

Fernando Terrés 28:30 It was like a pretty good moment in, in the market, right? It was good for crypto.

Aaron Epstein 28:34 Yeah.

Fernando Terrés 28:34 It was good for Latin America.

Aaron Epstein 28:36 Yeah.

Fernando Terrés 28:36 It was good for fintech, no?

Aaron Epstein 28:37 Yeah.

Fernando Terrés 28:37 So we are like a cool kid in the playground.

Aaron Epstein 28:39 Mm-hmm.

Fernando Terrés 28:40 And man, you remember what happened, right?

Aaron Epstein 28:41 Yeah.

Fernando Terrés 28:41 Like, uh, like crypto was suddenly a, you know, red flag. Latin America was suddenly a red flag. Fintech was suddenly a red flag, no?

Aaron Epstein 28:48 Red flag, yeah.

Fernando Terrés 28:49 And, uh, like it's, it's, it's non-obvious moment, you know?

Aaron Epstein 28:52 Yep.

Fernando Terrés 28:53 But a kind of interesting thing is that at the end of the day, the, the, the interesting take is that all these things are not so much a m- point of what is the current reality, but rather what is your time horizon?

Aaron Epstein 29:04 Mm-hmm.

Fernando Terrés 29:05 And you're very long term minded. The fundamentals of the opportunity, uh, the, the quality of the team didn't really change, you know?

Aaron Epstein 29:11 Mm-hmm.

Fernando Terrés 29:12 But it's always hard in a world in which you're fighting for survival to remember that you're playing a multi-decade game, you know?

Aaron Epstein 29:19 Right.

Fernando Terrés 29:19 And, and, and where you are today is actually like almost meaningless compared with where you, you're gonna be and, and you wanna be in, in two, three decades from now, you know?

Aaron Epstein 29:27 Yeah.

Fernando Terrés 29:27 So, so it's very hard, no? Because you need to all the time be putting yourself into the context of, hey, like, uh, when you're in a low, uh, things are not that bad.

Aaron Epstein 29:34 Yeah.

Fernando Terrés 29:35 And in, in three years from now, uh, we'll have forgotten this. In three decades from now, look, like the only thing that matters is the fundamentals,

Fernando Terrés 29:42 right?

Aaron Epstein 29:42 Yep. So what is the future for ARQ then the next five to 10 years?

Fernando Terrés 29:46 We're just starting to scratch the surface when it comes to building a product fit for the, for the mass affluent, um, demographic. One, one of our new products, for example, is, is, is pretty cool. Uh, we're starting to release, um, slowly is the prestige card. Uh, so basically we've rethought how credit cards work.

Aaron Epstein 30:01 Mm.

Fernando Terrés 30:01 Um, and, and effectively what we realized is that, um, in many cases, credit cards have a relatively low, uh, credit line and very high APRs.

Aaron Epstein 30:11 Mm-hmm.

Fernando Terrés 30:12 And it's kind of interesting because if you look, if you look at how the, you know- Uh, the, the people who are in a private bank relationship, uh, manage their finances, they'll never borrow at 25, let alone 54% APR.

Aaron Epstein 30:22 Right.

Fernando Terrés 30:22 But they don't take margin, which is a, you know, maybe SOFR, like, which are Federal, uh, Reserve rate-

Aaron Epstein 30:29 Mm

Fernando Terrés 30:29 ... plus whichever 100 bips whatsoever, no? Uh, so we've built a credit card using that same logic.

Aaron Epstein 30:35 Mm.

Fernando Terrés 30:35 Uh, we design in a way that you will never be liquidated, right? Like, I don't know, we, we discount assets a lot, uh, for you to have a, a credit line. But still, like, you have, like, whichever 50K in S&P 500, you can get a 25K credit line.

Aaron Epstein 30:46 Mm.

Fernando Terrés 30:47 The r- rate if you, if you decide to, to finance your, your, your purchase is, like, 8%.

Aaron Epstein 30:52 Yeah.

Fernando Terrés 30:53 So instead of designing a credit card for people to have a heart attack when it comes to, to paying and, and otherwise I'm gonna get a, a 50% APR, which, which is common in many markets in which we operate-

Aaron Epstein 31:02 Yeah

Fernando Terrés 31:02 ... actually the smart thing to do is to, to, to finance your purchase, and then keep your money in the S&P compounding for the long run.

Aaron Epstein 31:08 Yeah.

Fernando Terrés 31:08 So anyway, like, that's just one example of, of the direction in which we, in which we wanna go.

Aaron Epstein 31:12 How are you guys using AI within the company right now?

Fernando Terrés 31:14 So when it comes to the CapEx piece, first and foremost, it's kind of obvious that more than 90% of the code that we produce is already done with, with AI.

Aaron Epstein 31:23 Mm-hmm.

Fernando Terrés 31:23 Which again, like, probably these days is, like, something that's almost for granted, right?

Aaron Epstein 31:27 [laughs]

Fernando Terrés 31:28 Um, beyond that, one thing that is also very interesting is that we have this tool called Backoffice where everyone builds, um, mini apps, right? So whenever we think of building a new process, doing a new marketing campaign, um, everyone's expected to be able to build those tools-

Aaron Epstein 31:41 Mm-hmm

Fernando Terrés 31:42 ... um, including non-technical people, right?

Aaron Epstein 31:43 Yeah.

Fernando Terrés 31:43 Um, pairing with engineers sometimes more autonomously, right? You know, in- instead of going and outsourcing things, build it in-house, uh, in a way that tailors very specifically to how we run the company, no?

Aaron Epstein 31:53 Mm-hmm.

Fernando Terrés 31:53 So those were, like, tools to, to invest capital in more, in more efficient ways, no? On the operating side, again, like, ki- kind of obvious, but there's so- sort of two things that are very interesting. One is building an, a support agent, and it's kind of interesting because it can already take a very meaningful chunk of, of the work-

Aaron Epstein 32:10 Mm-hmm

Fernando Terrés 32:10 ... and allows our human agents, uh, to be focused on the cases that matter the most, that are most complex, uh, instead of the, the parts of the, of, of support that are less relevant, right?

Aaron Epstein 32:20 Yeah. You've got millions of users to support as well, right?

Fernando Terrés 32:23 Right.

Aaron Epstein 32:23 So it's the thing that enables you to scale.

Fernando Terrés 32:24 Correct. And it, it's also very interesting when it comes to, to fin crime and all the AML part of the equation because not only it's more efficient, which is the, the, you know, the, the classic, um, train of thought, but also you can do things now that you could not do before.

Aaron Epstein 32:38 Yeah.

Fernando Terrés 32:38 So if you look at how traditionally you would think of the AML component, no? Because you cannot scan a huge number of transactions in real time, because it's impossible, even if you wanted to, to hire such a big team to do it, right? It's not a matter of efficiency, it's just, like, you cannot do it in real time.

Aaron Epstein 32:52 Yeah.

Fernando Terrés 32:53 You usually would go with a solution that maybe is like you apply limits on the accounts, and then when you hit that limit, then you go into a review, right? You have, like, a small team reviewing everything that was flagged by a machine learning model, right?

Aaron Epstein 33:04 Mm-hmm.

Fernando Terrés 33:04 And these days you can actually have the machine learning model a big team of agents that do the first pass, and that they, then they escalate to the humans who are actually managing the team of agents, right? And that's great, because then you don't need to be so restricted from the limit side of the equation because you do have the bandwidth to do all these checks.

Aaron Epstein 33:18 Yeah.

Fernando Terrés 33:19 And you have the, the external part of the, of the equation, no? That, um, we're, we're starting to, to build into it. Uh, one thing that makes me very excited, uh, of, of building in the, in the next few months, is the idea of creating a bot, a, you know, sort of private banker assistant for you, that you can forward, you know, a PDF, "Send this wire for me."

Aaron Epstein 33:38 Mm-hmm.

Fernando Terrés 33:38 "Send the wire to my friend." You know?

Aaron Epstein 33:39 Yeah.

Fernando Terrés 33:40 And then having, like, um, an approval mechanism similar to what you have, like, in 3D with, with credit cards in the app for transactions that are below a, a limit, no? So, so we, we always try to think of, of these two things and encourage it across the whole, um, organization.

Aaron Epstein 33:52 You recently rebranded from Dollar App to ARK. Uh, what was the motivation for doing that, a- and why did you pick the name ARK?

Fernando Terrés 33:59 When we started, we knew that, you know, there was a massive demand for, uh, dollar-denominated financial services in, in the region. Um, so, you know, the obvious thing was to name the company after that, right? And, and go with, with, with Dollar App. And the truth is that it worked in the early days, um, but now it has become very self-limiting. So if we launch, uh, investments in stocks and ETFs in the States, uh, how do you tell your friends that it's Dollar App, the right company for, for doing that, no? The right product. If you're going to, I don't know, uh, save in Brazilian reais, how do you tell your friends that it's Dollar App, the right app to do it, right? So it, it really didn't serve the purpose, um, anymore. The second one is more aligned on the brand, the ethos, and what it represented for customers. So if you look at our old brand, it used to be around financial inclusion, right? So, uh, you cannot have dollars, now you can have digital dollars, therefore Dollar App. If, if, if you go to our website, the tagline used to be something like, "The world has borders, your finances don't have to." Right? So it, it-- We were a Latin American company that would include you in the, in the US. But again, if you look at our, our customer, uh, profile, uh, related to what I, um, what we were speaking about before, um, it's people who are on the, you know, on the wealthier side of the equation. It's people who like to travel, uh, people who, you know, work for a company abroad, who work in finance and technology, who invest. That group of people, they don't want to be included. Uh, if I, if I try to tell you, "Hey, I'm going to include you," like, that might not resonate with you. So it's not only the name, but rather the ethos of the brand was off, was around financial inclusion, uh, instead of about the future and the excitement of, of a better financial life.

Aaron Epstein 35:33 Mm-hmm.

Fernando Terrés 35:34 And it's not so much running away from it, but rather where you're going.

Aaron Epstein 35:37 Yeah.

Fernando Terrés 35:38 So it, it, it was a, a funny exercise, no? And of course, like, uh, it took us a pretty long period of time, uh, because we knew we could blow it up, right?

Aaron Epstein 35:46 Mm-hmm.

Fernando Terrés 35:47 E- even coming up with a name was not that obvious, right?

Aaron Epstein 35:49 Yeah. It's hard, right? How did you come up with the name?

Fernando Terrés 35:51 The, the first thing that we thought is, "Hey, we need to have something that doesn't have already a very strong meaning."

Aaron Epstein 35:58 Mm-hmm.

Fernando Terrés 35:58 Um, because it's very hard for you to own that word if it's already in use. Like a very good example would be like water, no? Like, man, like, water already means something in your head. It's very hard for a company to say, you know, like, like, "We're water," no? And for people to think about you the first time they hear the word, right? So we wanted something that r- didn't really have, like, a strong usage, a strong meaning. Uh, so we could become the owners of the word.

Aaron Epstein 36:21 Mm-hmm.

Fernando Terrés 36:21 At the same time, we wanted something that could have positive connotations, right? And ARQ is a beautiful word because, uh, on the one hand, if you think about it in, in Portuguese and Spanish, it, it sounds like architecture. You're building your financial life. It also sounds very similar to arc connecting two dots or even the ark where you store, uh, your things, right?

Aaron Epstein 36:40 Mm-hmm.

Fernando Terrés 36:40 So you have, like, all these positive connotations in a lateral way. It's also short, it's punchy. Uh, you can even use it as a verb eventually. So it had-

Aaron Epstein 36:48 Wow

Fernando Terrés 36:48 ... all these beautiful things, no? But at the end of the day, like, our, our sort of conclusion was what mattered the most was not so much that it was a perfect name, but rather that it didn't have any of the, of the, of the problems of, of the old name when it comes to being self-limiting, to being hard to architect the right ethos around it. Um, so that's kind of the, the process,

Fernando Terrés 37:07 no?

Aaron Epstein 37:07 What kind of impact did YC have on you?

Fernando Terrés 37:09 Uh, the impact was, was massive. We wouldn't be here if it wasn't for YC.

Aaron Epstein 37:13 Looking back to the early days and thinking about yourself, you know, thinking about applying to YC and, and going through the batch, is there any advice that you wish somebody had given you or that you would like the, the next generation of founders coming up now to, to be thinking about?

Fernando Terrés 37:27 In the context of YC, there's two things that were super interesting. One, the first one is making us believe.

Aaron Epstein 37:32 Mm-hmm.

Fernando Terrés 37:33 Which, uh, I mean, we had a very, very rough idea. We knew that the opportunity was big and, and cle-

Aaron Epstein 37:39 Mm-hmm

Fernando Terrés 37:39 ... and that was, uh, pretty clear, I would say.

Aaron Epstein 37:40 Yeah.

Fernando Terrés 37:41 But, but still, like, uh, very often it's so non-obvious when you're in a good position in a great company like, like Revolut is, no? And, and we're in a very privileged spot and but we still didn't have the courage to do it. And I remember, like, getting the call from Dalton back then, like, uh, "Would love to invest." And I was like, "Man, these, these, these guys, they're so stupid. Why, why would they give us money," no? And that was, like, the first reaction. Like, a few hours later, I was like, "Whoa, these people, they know what they're doing. No, they have like... they've backed, like, some of the most impressive companies in history, right?"

Aaron Epstein 38:09 Yeah.

Fernando Terrés 38:09 So there, there, there is something, right? And then the other thing that had been, like, a constant. You know, you guys have this habit of slapping entrepreneurs in the face with truth. Like, ki- kind of back to what I was saying before with, uh, you know, the YC startup school videos, right?

Aaron Epstein 38:22 Yeah.

Fernando Terrés 38:22 I, I remember like, I know, like, all the lectures were, like, sort of, like, very obvious things, and that's what make them, like, so, so amazing, right? Because sometimes it's very hard to outline in very plain terms things that are obvious but are really, really important.

Aaron Epstein 38:37 Mm-hmm.

Fernando Terrés 38:37 Actually, I remember in, in, in another call we had, um, when like we were, like, so lost back then, no? And, and you said this thing like, uh, "Guys, what I like about the product is that it's obviously the best product out there." And, and again, like, it was like, whoa. We hadn't stopped and thought about it, you know?

Aaron Epstein 38:52 Yeah.

Fernando Terrés 38:52 And, and again, it's all, all these times when, you know, you have all this chaos around building a startup, no? That that clarity of thought is not to be taken for granted, you know?

Aaron Epstein 39:00 Mm-hmm.

Fernando Terrés 39:00 And, and all those pieces of advice of, that we received from you guys, again, I'll go, like, not so much in the direction of the specific advice, but rather helping get the clarity of thought, you know?

Aaron Epstein 39:10 Mm-hmm.

Fernando Terrés 39:11 And, and, and being able to find this clarity of thought is, is non-trivial. Eventually you, you manage yourself to, to be able to do it, no? But in the early days, like, uh, you, you, you guys were super helpful for, for that, no? From getting the courage to do it. From, hey, what are the fundamentals? And making sure you, you know the end direction which, in which you're going, no?

Aaron Epstein 39:27 Yep. And sounds like you, um, you've built a lot of belief in yourself over the years too-

Fernando Terrés 39:31 [laughs]

Aaron Epstein 39:31 ... which has been really amazing to see.

Fernando Terrés 39:33 Yeah.

Aaron Epstein 39:34 Very cool. Fernando, thank you so much for joining and sharing your story and, uh, giving us a peek behind how you've been building such an ambitious company.

Fernando Terrés 39:40 Thank you for having me, Aaron.

Aaron Epstein 39:41 Yeah.

Fernando Terrés 39:41 My pleasure. [upbeat music]