The agility of startups and the role of investors with QED Partner Laura Bock

QED's Head of Early Stage Investing Bill Cilluffo sat down with Laura Bock, an alumna of Princeton and a former management consultant at Oliver Wyman, to hear her unique story and gain her insights into the financial services industry. 

Laura opens up the hood of startup culture and how it's changing the face of investment. She shares her thoughts on the agility of startups and the instrumental role of investors and advisors in this dynamic space.. Laura's insights on founder assessment shed light on the key qualities to look for, making this episode a treasure trove for any budding entrepreneur.

Wrapping up, we delve into Laura's experience in the fintech industry and the lessons she has learned since joining as a principal. From the regulatory risks involved in investing in highly regulated industries to the delicate balance between optimism and realism, Laura's advice is practical and grounded in reality. If you're fascinated by the world of fintech and venture capital, this episode promises to be an enlightening journey.

Chapters

• 0:08 Exploring FinTech and Venture Capital
• 13:46 Investment and Founder Assessment in Startups
• 22:46 Assessing Founders and Discussing Portfolio Companies
• 34:17 Lessons From a Fintech Specialist

Transcript

Bill Cilluffo:

You are listening to the Fintech Thought Leaders podcast from QED investors, your deep dive into the world of venture capital and financial services with today's digital disruptors. QED is a global venture capital firm focused on investing in fintech companies all the way from pre-seed to IPO Fintech Thought Leaders brings together the most talented entrepreneurs tackling today's biggest problems. If you're looking to learn more about what motivates our founders and team members to succeed, you're in the right place.

Hello, and welcome to the Fintech Thought Leaders podcast. I'm Bill Cilluffo, the head of Early Stage Investments at QED Investors. Today on the podcast, I'm excited to be joined by colleague and QED partner Laura Bock. Laura, welcome to the podcast.

Laura Bock:

Thanks, Bill. Thanks so much for having me. Excited to chat today.

Bill Cilluffo:

Awesome. Awesome. So there's so much I want to chat about regarding what you're seeing in fintech today. But before we dive in, can you just give the listeners a little brief summary about your background and how you came to QED?

Laura Bock:

Yeah, of course. A little bit about me, I grew up in the suburbs of Boston. I was the oldest of four kids. For college, actually the joke is I disappointed everyone by not going to my parents and grandparents alma mater of Cornell and going to Princeton instead, but they'll be okay.

Bill Cilluffo:

You picked the rival school. How dare you.

Laura Bock:

I know. But yeah, in college I captained the Frisbee team and I spent a lot of time locked up in various science labs. So I actually chose Princeton because of a nerdy course that they had there called integrated science, which was meant to take a quantitative and computational view to the natural sciences. I always loved biology but didn't love all the rote memorization, so I felt like that was a good fit for me.

But then after spending a bunch of time in the lab, I realized pipetting and waiting months and months for results to analyze was not the exact style that I liked. So I decided to do what many of the peers I had in college that had no idea what to do did and went into consulting in New York, spent five years at a firm called Oliver Wyman, which specialized in financial services. I had barely taken an econ course, so I had no idea that I would want to focus in that area, but it ended up being really interesting and kind of a good launching point to stick in that industry. But after some period of time, realized I didn't want to be in consulting forever, and I was actually interested in trying to get into fintech, which is when I originally came across QED team through a mentor who had previously worked with Nigel and connected me in the hopes that Nigel could tell me which fintech might be a winner. And so that's when I actually started at the firm, as you know, as an intern.

Bill Cilluffo:

That's an awesome history. So I'm going to dive into some of the academics in a minute, but the Frisbee thing is probably by far the most interesting thing. I lived in Toronto with Capital One for five years and we had an office ultimate team, and it was a blast. I had never played before, and I'm not sure I've played since, but I had one hell of a five years. How did you get into frisbee?

Laura Bock:

I feel like any athlete that's not good enough to play college sports ends up trying to find a club team. And the Frisbee team recruited me and was a little bit better organized than the lacrosse team and the soccer team. So took me a while to figure out how to throw the disc, but once I figured that out, had a blast.

Bill Cilluffo:

I'm not sure I'm buying the part about not as athletic, because having played ultimate, that might be the best workout I've ever had in my life, playing a game of ultimate. That's a pretty awesome game.

Laura Bock:

Also why I don't do it anymore.

Bill Cilluffo:

Fair enough. Fair enough. No, that's good. So you had this interest coming out of Wyman and thinking about fintech. And I think we bamboozled Wyman into letting us have you for a little while, and thankfully that lasted. But how did you think about the idea of going down the investing route eventually versus your original goal, which is, hey, let me learn about fintech, and then let me go into a fintech? What kind of caused you to gravitate toward that?

Laura Bock:

Yeah, I think what investing fulfilled was some similarities to consulting and the things that I really liked, which is being able to look across a full industry, being able to do deep dives and kind of learn about a specific problem area or a specific type of the market in detail, but not necessarily need to go fully into one idea for many, many years at a time. So I really, really liked that. And then it turned out I like investing a lot better than consulting, given both the working model between investors and portfolio companies being a little bit more on the same team, a little bit more substance over style. So it's been a good landing spot for me, I think.

Bill Cilluffo:

That's great. That's great. Specifically, you chose, coming out of engineering, to join this financial consulting firm, and as you said, hadn't even taken an econ class. What caused you to I guess, have enough confidence to sort of take that leap? And was that a difficult choice for you?

Laura Bock:

My parents were going to kill me if I did not get a job, so I think in some ways, it was not a difficult choice. At 22, I remember thinking some of these consulting projects with retail stores, thinking about how to organize a grocery store, with airlines and healthcare firms, those sound kind of more interesting. But after a couple years and a first handful of projects, I think I had underestimated how interesting financial services can be, the broader role it plays in the economy, how intersectional it is, how it underpins so much. So even though it wouldn't have been my first choice at 22, I think I'm fairly happy with where I ended up.

Bill Cilluffo:

That's great. I also assume Peter Carroll was quite persuasive.

Laura Bock:

Yeah, exactly. Exactly.

Bill Cilluffo:

No, that's great. So you talked about the intersection of financial services with so many other places in the economy. Can you expand more on that, and both what you see the power in that and why it so excites you?

Laura Bock:

Yeah, I think that we're hearing a lot of this in the startup ecosystem of every company, every startup is a fintech. And I think the meaning behind that is every industry touches, moves and interacts with money in some way. And so I think that it's just such an essential underlying force for the economy in that sense. You can't really escape it. And so doing that aspect of a business well, I think is just essential.

Bill Cilluffo:

Yeah. Just some editorial on my duration of QED, it's fascinating to see how the world's kind of evolved to where financial services and the rest of the economy were quite separate. Obviously one tends to power the other, but it's fun to see the convergence of... You look at many of QED's more recent investments in the so-called embedded fintech area, how the same company is really building both of these things at the same time, not in every instance, but it's interesting to see that explicit convergence in addition to the kind of implicit convergence that you're talking about there.

So let me go back to the period as an intern, and we absolutely appreciate our partnership with Oliver Wyman, had a great relationship for a long time. I've had two of you as interns, but none of you went back to Wyman. That program didn't quite last, but we're thrilled to have you here, and it's been a great match. But I wonder if you could talk a little bit about your first year at QED. And what were some of your biggest learnings and takeaways from your first taste of venture?

Laura Bock:

Yeah, I remember knowing very little about venture before coming to QED, so it was drinking out of a fire hose. I think I definitely spend more time than people might've realized Googling very basic things about how venture works. So I remember some of that, but I think a couple things stick out. One was I got to meet nearly a hundred founders probably, if not more, in that first year. And that was really interesting, to just understand how... As a consultant, I worked with the leadership teams of huge financial institutions., so they were driving these huge billion dollar P&Ls, but they also were really held back by legacy techs, low moving hierarchical orgs. They didn't want to make any misstep because they had so much at risk. So to jump into startups that really had nothing to lose, maybe some investor money, maybe their own time, it was really refreshing to see how they were willing to take risks, move quickly, make one decision, then change their mind after testing something in days and weeks.

There was no project to figure out how to implement it. The time cycle was so, so quick. And I think that was really exciting to see.The other thing that I remember is back then, you remember, we were all holed up in Virginia, down in HQ in the basement, and that's how we did our IC process. Mondays, we'd have companies come to Virginia. And I remember hearing the pitch, and then listening to what everyone had to say. I thought those, especially that first year or two was really formative. And how do you think about a business? How do you learn from prior experiences in market companies that had done really well or hadn't done really well, that pattern matching, what to look out for, I think that was super interesting for me early on.

Bill Cilluffo:

Yeah. I guess you've spent close to the same amount of time in venture as consulting at this point. Probably not exactly, but not too far off. Both industries are known for their fast learning curves, right? People get attracted by consulting. You get to see so many problems and so many projects and learn so much. And you just articulated something that I feel very much of, when you go meet a hundred founders in a short period of time and see so many businesses. How would you compare and contrast the learning opportunities in consulting and venture?

Laura Bock:

Yeah, I think they're both, whatever they call them. It's like dog years. You get to kind of parallel sequence like many learning curves on top of each other because I'm looking across a dozen companies that I'm directly working with, but really, it's tenfold that if you take all of QEDs portfolio. So I think that's really interesting. One thing about investing that is a unique advantage, because both of these industries, you're able to do well if you can tap into a lot of information and see across the marketplace. But one thing that's interesting is in investing versus consulting is you have the checkbook, right? You're not asking someone to pay you a million dollars for a project. And so that's a huge accelerant, just because people will freely want to share you what their thesis on the way the financial services world will be reshaped is and why that will work. And so you get to do a lot of learning just by listening.

Bill Cilluffo:

That makes a lot of sense. I've certainly learned over time that being able to write those checks is a great entree to everyone wanting to talk to you, but it's also stunning how much of a sales business it is because also a hundred other firms that have checkbooks. And so that was one of the things that kind of surprised me, and I would imagine actually pretty helpful, coming from consulting, being used to that environment.

Laura Bock:

That's definitely the case. Most companies have multiple offers, and the best companies, except for some non-consensus bets, will have even more. And so you have to have more than just the capital. And I think at QED, we try to make sure that we're delivering against that.

Bill Cilluffo:

Makes sense. Makes sense. I've heard you say before, I think the term that venture is a high conviction sport. Can you kind of expand on that and how you think about it?

Laura Bock:

Yeah. I think when I have said that, we come across, like I said, hundreds, if not thousands of companies a year. We do deeper diligence on a fraction of those. Then we ultimately invest in a handful, right? And so I think getting to a yes is a big part of the job. It's only a portion of our job. But I think in a world of limited data where it is part of your job to think through what the future will look like and how a company will fit into that scheme, it does require a lot of conviction, given there's a lot of embedded risk at. And most of the stages that we're investing, I focus on C through series B. I think it's different for everyone, but for me it's not necessarily a gut feeling.

It's more of that feeling that you kind of can't shake a company, right? You have a conversation, and you find yourself thinking more and more about it. As you go deeper, hopefully you get more excited. You're going to uncover risks or potential blockers, roadblocks. But I think when you feel that high degree of conviction, when you uncover that and you bring it to a founder and you talk about it, you feel better, not worse. So I think that's why I feel that way.

Bill Cilluffo:

You've been the lead person at QED on a fairly substantial number of investments at this point. As you look back over that period, do you feel like your process for getting the conviction has changed? Do you feel like... There's always a process. Nobody's ever at a hundred percent on anything. Maybe that does happen, but there's always a risk. There's always a blocker. So at some level, it's always, at the end of the day, a judgment call, kind of, when do you get there? When you look back, do you feel like the feeling in your stomach is always the same, or do you find that, hey, maybe that one was different than this other and what can I learn from it? Has that process for you of reaching conviction changed much over time, or do you feel like it's been pretty consistent?

Laura Bock:

Yeah. I'm sure it's changed. I think that with every company, the thing that you end up needing to really dig deeply into is a little bit different. So in that way, the highest risk area of a deal is never exactly the same. But I do feel like hopefully with some repetitions, and also making mistakes, and hopefully making good investments, you start to kind of tune, this is something that I thought would work, but has been rockier, and so let me feed that back in to my next investment. Or this is a founder that is doing really well, and it's driven by X, Y, and Z, and so let me look for more of that. So I think that some repetitions definitely help. Seeing things, making an investment, and then following it for multiple years is sort of the best learning you can have, unlike consulting. You're burned for mistakes.

Bill Cilluffo:

Right. Right.

Laura Bock:

You can't just collect a check and go on your way.

Bill Cilluffo:

Yeah, the multiple year thing, I think, is fascinating, right? It's one of, I find, both rewarding and challenging things at the same time. As you make an investment, you don't really know if it's going to work for eight or 10 years. You get obviously plenty of interim data, but the world changes, as we all saw the boom of '21 and the bust of '22. And how you go through those, you don't really know. And you're only making a couple investments a year, so it's not like there's a ton of data points. And I find that a challenge. On the flip side, I find just really rewarding, right? You start meeting a company when they're at the seed stage. And maybe you invest then, maybe you invest at the A, but then you see them go public someday, and it's kind of just a fascinating journey that, again, you probably don't really see in consulting.

You do get to see as an operator, but you probably only get to see once. Whereas here, you do get multiple data points. It's kind of a interesting situation to live in, I think. So here's a question for you, changing gears a little bit. You talked about how intrigued you were when you first started to work with startups on speed, how quickly they made decisions, how quickly they implemented things, how quickly they changed their mind. There's an aspect of this which is almost like, how do you build the plane while you're flying it, right? It's not like you can do a project for strategy and do a project for implementation. How do you think about engaging in that process when you're not the operator? You have a very much vested interest, you want to help, you have the ability to help, but how do you think about engaging in that building process?

Laura Bock:

I think startups win because they can move fast and they aren't tied or locked into a specific way of doing thing or overly committed to a plan. And I think that's true in many aspects of company building, whether it's product, and they build something, then they get feedback, then they iterate. So I think one thing that we can do as investors and advisors is try to help founders kind of see through the noise, not be too tied to their baby, their product, but to really actively and honestly kind of listen to the feedback they're getting and interpret that through a less biased lens. I think the same thing on iterating is true for financial planning, which is something that we lean in on all the time. Everyone says that financial plans are just an expression of a strategy and that most of our companies don't actually perfectly hit them, and I think that's okay because a good plan has an implicit series of kind if thens where, okay, if you're beating the plan, then maybe you can reinvest, or maybe you can hit the gas a little harder.

If you're not, maybe you need to pull back. And so I think helping founders kind of read the data and the signal that they're getting in and adjust and real time is one area in which I think all of us like to plug in.

Bill Cilluffo:

That makes a lot of sense. One thing you said earlier when we were discussing getting to conviction was that you don't necessarily feel it as a gut feel process. You try to go get as much data as you can and try to think as rationally about the business. But I think we all know in this business, a part of the assessment is the business, and a big part of the assessment is the founder and the team. How do you think about assessing the founder? And how have you learned on what to look for and what some common traits might be? That part, I'm still figuring out. How do you know when a founder's great or not? I know that there's plenty that have been incredibly impressed with that have turned out to be incredibly impressive. There's lots of people in this industry that sound really impressive and don't get it done. There's plenty that are the other way, right? And you sort of meet, and like, oh, I'm not totally sure, and turn to be incredible executors. I'd just love to hear your journey on thinking about the founder element of making investment decisions

Laura Bock:

As a firm, and for myself, if you were to list non-negotiables and doing deals, amazing product, big market, working unit economics, founder might even be the top of the list, especially at the earliest stages. The founder's vision and the way they're going to go after the market is one of the most important assets a company has. And many companies might really evolve in that very quickly. So that's kind of the one constant early on. I think in terms of traits that I look for, the real answer is there's a lot of different things, and different founders might spike in different areas. Just to name a couple, one is intellectual honesty and openness. And so I think I and a lot of QED's are pretty allergic to overly salesy founders. So I think founders rightfully skew optimistic and confident, and that's super helpful as they're reaching for the sky.

But they also need to be able to, kind of as I said, objectively look at the business, brainstorm about what could kill the company and rationally evaluate what's working, what's not. So having this kind of grounding intellectual honesty, I think is really important, and it also makes founders much easier to collaborate with, work with problem solve with. So that's probably top of my list. I think other ones I might mention, founder market fit. Especially in certain industries, just being in an expert, knowing how to navigate it is especially critical. Take healthcare for example, I don't think I'd want to invest in a healthcare fintech company without someone that had a deep background in the space, given all the nuance. Shared vision, right? We want to be aligned with our founders and think about building businesses the same way. It can be really painful when you diverge too much on that dimension.

Bill Cilluffo:

We're actually, as an industry, seeing that come to bear in a pretty big way. In 2021, I don't know what the data says, but the average deal feels like it took three days to get done. And I always wondered, these things are eight to 10 year marriages. It seems like a little bit longer courtship would benefit everybody. So that was the one trend of '21 I never could understand, is if a company knew they were going to get eight term sheets, why not take the time to figure out the person they like best? And we're actually seeing in the industry, a fair amount of examples where that lack of shared vision is kind of causing some harm. And it's not a surprise, right? If you spend six months getting to know each other, it's much more likely you're going to be aligned on where the company should go than if it's three days. So it's interesting to hear that you mentioned that one. And I think we're seeing the opposite end of when that doesn't go well across many, many examples in the industry today.

Laura Bock:

Yeah, no, a hundred percent vision, and also just whether you like working together. And that's from both directions. I'm surprised that people were putting term sheets down after 30 minute conversations.

Bill Cilluffo:

Yeah, no kidding. So Laura, you've got a number of really wonderful companies in the portfolio of deals that you've led. I wonder... Not to ask you to pick amongst children, so to speak, but are there a couple that you'd maybe highlight that have you particularly excited at the moment?

Laura Bock:

I feel lucky to feel super excited about the companies that I've been lucky to invest in. So maybe the first one I'll talk about is collective. So this is the first deal that I got super excited about. I think it was maybe one year into being part of the team, I advocated for us to make an investment here. At the time, I was pursuing a theme around financial tools for freelancers and gigsters. So I think when many people think about financial services, they think about their bank, their investment manager, their advisor. But in reality, our employers are actually maybe the primary supplier of financial tools. You think about income smoothing, tax calculation withholding healthcare benefits, retirement savings, all of these other things. And I think this is actually the most apparent for people that have ventured out by themselves and tried to be a freelancer or a gig worker.

And so four or five years ago did a deep dive on many of the companies building in this space. So any company trying to help build financial tools to support this new and quickly growing class of non W-2 workers, and we came across collective. And so it was the most exciting company that we saw in the space, and we co-led a seed round for it. I think it was in 2019. Their goal is to essentially be the all-in-one online back office for what they call businesses of one, or people that are working, whether it's in marketing or engineering, graphic design, law, any of these things. They kind of need someone to help them navigate their paperwork, their bookkeeping, their taxes, and collective can be that platform.

Bill Cilluffo:

And there aren't too many more better friends of QED than Hooman. So multiple time QED portfolio CEO, prior Fintech Thought Leaders Podcast guest. Back to the how do you assess the founder. It's rare when you get to assess the founder, "Hey, I invested in their last company," but that's always a nice aspect when you can find it, right?

Laura Bock:

Yeah, Hooman's fantastic, and I think we feel lucky to have been able to back him twice, to back him as I think a 20 something year old with his first company when he was in Virginia, and now his second company after a stint as an investor himself.

Bill Cilluffo:

Yeah. And if I'm not mistaken, they've just recently announced a pretty sizable fundraise, so kudos to them.

Laura Bock:

Yeah, they're on a tear, so very excited to see what happens there.

Bill Cilluffo:

That's awesome. Hey, I know another really interesting company in your portfolio is Wildfire. Got to put them pretty high on the list of top performing companies in the whole QED portfolio. I think if I look at their numbers, it was something like 40x revenue growth since we first invested in them. I might not be exactly right on that, but it's something similar to that. Obviously you got conviction in Wildfire pretty early in their journey. I wonder if you can talk about what about their story... Obviously looking back as now a quite successful company, but you were able to get the conviction before much of that data existed. I wonder if you can talk about that journey.

Laura Bock:

I actually remember agonizing a bit over Wildfire. Kind of early on, Jordan and Sean, the founders, their vision very much so resonated with me. By the time, like you said, they had not a ton of traction. They had just kind of figured out that the financial services could be a vertical. And maybe just to take a step back, what they do is they provide white label infrastructure to help any service in which a consumer starts the shopping journey, monetize on people buying stuff. At the time, they were working mainly with companies like Microsoft and Verizon, and we saw this massive potential in the team, as well saw a massive potential in financial services, but those conversations were only just starting. So yeah, I remember chatting with the guys and they're like, "We're forecasting 10x growth in six months and it's locked in." Most of the time when people say that, it's not actually locked in. And so I remember spending the time to talk to potential customers and just getting overwhelmingly positive feedback and getting comfortable that it wasn't actually too good to be true. So I'm very excited about that.

Bill Cilluffo:

They're also one of a few companies in the QED portfolio that have relationships with other QED portfolio companies, which is always, from a selfish standpoint, nice to see as they help each other try to succeed.

Laura Bock:

Yeah, no, a hundred percent.

Bill Cilluffo:

Yeah. So just diving in a couple more wildfire examples, and then we'll move on. We had very close to that team as well. Had a chance to speak with Sean about you as we were doing research for this podcast, and he said one of the things that he absolutely loves about you as an investor there is that you end almost every conversation saying, "What else can I do for you?" and just your orientation on doing anything to kind of help the company. What do you think causes you to stand out so much in that area? It's something that I think we generally pride ourselves at QED on, is trying to help companies as much as we can, but I think you, even among that high bar, stand out in that area. Just love to hear your own thoughts on the subject.

Laura Bock:

It's funny, Sean was in New York last week, and he told me he said that. And I told him that that's something that VCs get made fun of for, which he thought was funny. But no, I think asking how we can help, for me it's important for a couple of reasons. First, one of my favorite parts of the job is trying to work with portfolio companies. So any opportunity to do that, I think is fun. We're obviously very incentivized to do anything in our power to make our companies succeed. So there's that. But more selfishly, I think you kind of talked about this and alluded to it, companies have a lot of choices. And I think we make promises, along with the capital that we invest, that we will be there and that we will support them. And so I think it's really important that we fulfill on those promises.

Bill Cilluffo:

Yeah, no, that makes tons of sense. Well, let me jump into a couple sectors, having dove into a couple specific companies. At times, you've looked at a number of direct to consumer companies. I think I've heard you say, "Hey, if I've used the product myself or something, I want to use myself, I get interested in that." Is that what initially drew you to that area, or are there other reasons why you've, at various times, kind of looked at the direct to consumer sector?

Laura Bock:

Yeah, I think that I have spent a bunch of time looking here. Haven't actually invested in any companies, given some of the unique challenges of the space. But I think that when you think about it's easy to be very curious about companies that help people manage their financial lives better because I think there's a long way to go. Even though there's been huge leap forwards, even think like ATMs, online banking, mobile banking, robo-advisors, online training, omnichannel, there's still so much that can be done to make the way people manage their money easier and less full of effort. And so I think in the future, I expect someday that we'll get to a more self-driving financial services. We're not quite seeing it. We're getting more and more pitches on it, which is fun. But I think that it's a myth that people want to log into a bunch of different portals and meticulously track things and figure out what the next best move is. People actually want someone to do that for them, tell them what to do, or actually literally go and do it.

And so I think it'll be really exciting. And I think the underlying technology is getting better, so that is not such a far off distant thing.

Bill Cilluffo:

Yeah. It's funny in venture, how things kind of cycle through various patterns and how hot the direct to consumer space was a couple of years ago. Honestly, how cold it is today, it certainly doesn't seem like the last wave has solved every consumer problem out there. And so I have a feeling that we're going to see a rise at some point of opportunities come out. And maybe generative AI is that catalyst, maybe it's something else, but I don't think we've seen the end of that space by any stretch. What are you most focused on today in terms of sector or any particular thesis that you have?

Laura Bock:

I think you're right that there are kind of swings back and forth between different types of businesses. I think that one thing I'm really interested in is kind of the next gen of enabling infrastructure to help drive some of these innovations and financial services. So I think for me what that means, we've seen the kind of costs and time to launch new software products come down dramatically with AWS and other things. And I think that we have seen, and we'll continue to see the hurdles to launch a financial services product lesson. And so I've been looking at a ton of platforms that help with that, platforms like Spin Wheel, like Wildfire, [inaudible], CoverForce that enable companies to tap into APIs to launch debt management products, rewards and loyalty financing, connectivity within HR data systems, insurance. I think this will spread across all of financial services and help push forward what's possible in terms of consumer and business experiences.

Bill Cilluffo:

Makes a lot of sense. Let me ask you a quick question about insurance. I know insuretech doesn't necessarily have the best reputation in the market. I know there's been a number of high profile companies that haven't quite delivered, but I know that we've also seen a number of really interesting next gen insuretech companies. I don't know whether you call it insuretech 2.0 or whatever. And I know insuretech is an area you've spent some amount of time in. Where do you see this going? And is this scenario you see being exciting going forward?

Laura Bock:

What draws me to insuretech is that the profit pools are massive. The relative amount of venture dollars and exits has been, relatively speaking, much smaller than in payments lending banking. The buying process for insurance is difficult. The products are hard to understand. As a person or a business, you're like, what coverage is right for me? What's the best price? And then at the same time, carriers are struggling with compressing margins. So I think there's a lot of opportunity for improvements across the board, but I do think the first iteration of insuretech has, not uniformly, but largely under-delivered. And I think this was true for the first generation of lending businesses, I believe, as well as some other categories. And so I think that the next generation could be better, and we're actively looking at a number of those.

I think that they certainly will try to manage risks better. I think there are opportunities to attack less optimized parts of the ecosystem, including commercial insurance. And I also think the one kind of sub theme I'm interested about is companies that don't ignore gloss over the important role of brokers. Most of insurance is bought through brokers, and I think that will continue to be true. So those are some of the spots I'm interested in.

Bill Cilluffo:

The example of lending is an interesting one, right? The initial wave of fintech when the name was coined coming out of the financial crisis, where it was largely taking offline businesses and moving them online. And again, there was a time and a place for that, and it was an important step. But I think then, you saw a wave of much more innovative products. And how do we build products that take into account that you have a phone, as opposed to taking the old products and just letting you access it through a phone? I kind of wonder if there's something happening around the generative AI that's just getting started where the first wave is, "Hey, how do I take generative AI to make me more efficient at what I'm already doing?" And then there's another wave that'll come someday around, "Oh hey, I can build things that I couldn't have built without it." How do you do that?

So it's interesting to see how these technologies first kind of improve what's already there. And then the second wave, I think oftentimes is much more interesting around, how do I really take advantage of something new and build something that couldn't exist before? Well, let me move into the last section here and talk a little bit about probably the favorite subject to dive into, I would guess. We heard Wildfire talk about something they really appreciated about you as an investor, that you're always trying to help, in particular business development, and helping them do anything you can to find connections. How would you describe your own superpower? What do you think that, among the investment world, Laura Bock is the best at, or at least among the best at something?

Laura Bock:

That's a tough question. No, I tell the founders that I work with that I may not be the most experienced investor on their cap table, but I promise a couple things. And one is that I'll be super approachable and even keeled. So I think as a investor advisor, you want your founders to be able to come to you with good news, with bad news, anything in between, and to be balanced and not reactive. I think that I talk to founders a lot who have to manage the reactions and emotions of their investors, and I think that's super counterproductive. I think secondly, I won't BS when I don't know something, and I'll hustle to find the answers. And so I think whether that's help with fundraising BD talent, there's not an ask that a founder should feel like they can't make.

Bill Cilluffo:

That's pretty helpful, because it's also pretty hard for founders to anticipate everything they're going to need help in, right? We always recommend to founders of, "Hey, find investors that have different skill sets and things you'll need." But nobody's ever perfect at predicting both. So having someone passionate about jumping into whatever area they need help in is a huge asset. For what it's worth, we also had the chance to ask Hooman from collective this question. He picked yet another aspect of you that he appreciates, which is the ability to have a very strong grasp of the whole fintech landscape, and the ability to translate that to help the specific problem that they're trying to solve. And so one thing we pride ourselves in is being a fintech specialist and how that kind of helps us get some of that knowledge. And I know, Laura, you're among the best at QED at really diving into the whole landscape and using that to help make great decisions. If I were to flip to the other side, what's one thing that you would love to be better at, or one thing that you're personally working on?

Laura Bock:

Yeah. I think that there are a bunch of things that I'm always working to be better. And as someone that's newer to the venture world, relatively speaking, I think I feel like I'm trying to soak in everything I can learn about how to build successful lasting generational companies, and then traps to avoid. So I think it's fun, kind of like we talked about earlier, that we get to look across dozens of companies at once and kind of quickly add to the memory bank different best practices and things to avoid. I think another thing I'm working on is actually public speaking. So I get nervous public speaking. I don't like it, so I'm trying to do it more. I'm actually giving a speech at a friend's wedding on Saturday, so I'll get some practice there. But I think that's one thing that I think I could make strides in.

Bill Cilluffo:

Well, don't watch Wedding Crashers. They'll teach you what not to do. So that's fantastic. I'm sure you're going to do a wonderful job at doing that. So look, you've had a great run at QED so far. I'm super excited about what comes next. You've gotten many, many things right, but everybody gets stuff wrong. The batting average in this industry is not that high. Most startups fail. There's a lot more failure in this industry among founders, among venture, et cetera. What's one mistake that you feel like you've made over your history of QED that you said, "Wow, that really was a mistake. But you know what, I learned something great from that, and that was really able to kind of help me in the future"?

Laura Bock:

I think one that kind comes to mind as a big learning is not to discount regulatory risk. I think especially in these highly regulated industries, financial services being one of them, the rules can change quickly, sometimes unexpectedly, and then can kind of completely change how a business is able to operate. And so I think you can be aware of the market risk and the technical risk, but if you underwrite the risk of this changing regulation, things can kind of move on you quickly. So making sure that that's a huge part of the diligence process, and that even when you're advising a company, you're constantly having feelers into how things can change and how the company would adapt, given different changes, is something that I'm trying to do a lot to a bigger degree moving forward.

Bill Cilluffo:

No, that's a great one. And I think in the boom over the last handful of years, as so many people rushed into financial services that had great technical ideas and great innovative ideas, et cetera, just seeing how many companies kind of ran into regulatory walls, even how experienced operators ran into regulatory walls, I think that's a fantastic lesson, investing in these highly regulated industries. So last main question. We like to end this podcast. Hopefully we have a bunch of prospective entrepreneurs listening. Based on your experience of meeting hundreds and hundreds of entrepreneurs investing in a much smaller number, but getting to know them so well, what's one piece of advice that you might give to prospective entrepreneurs?

Laura Bock:

Yeah, I think I've alluded to this a little bit, but I think one of the key skill sets is learning how to balance kind of optimism and realism. So you need optimism when you're motivating your team, when you're selling your product to customers, when you're fundraising for your company, when you're attracting new talent, but you also really need that healthy dose of realism around what's working, what's not so that you can make the right decisions. So I think kind of getting that right and tuning that where appropriate is one big piece of advice for me.

Bill Cilluffo:

That's a great one that's really, really hard to do. The best founders, to your point, are absolutely able to somehow balance that. It is something I know I struggle with, but finding ways of dealing with that's critical. So for Laura, as we wrap up today, for someone looking to pitch you on their idea, anything they should keep in mind? And how would they best get in contact with you?

Laura Bock:

Yeah. We have a bunch of money to deploy, so I would say they should absolutely reach out. They can find me on a website. My email is lauraqedinvestors.com. And I think like the rest of the team, we're always excited to hear from entrepreneurs looking to pitch us on their new ideas and financial services, so reach out.

Bill Cilluffo:

Perfect. Well, thanks so much for joining me today, Laura. And thanks to everyone for listening.

This has been the Fintech Thought Leaders podcast, your window into the world of venture capital and financial services. With today's digital disruptors. QED is proud To provide the best fintech advice you can get. To learn more or to read the full show notes from today's episode, check out qedinvestors.com, and be sure to also follow QED on Twitter and LinkedIn at QED Investors. Thanks for listening.