Welcome to Breaking Banks. The number one… Did you know there are two Matt Harris’s in FinTech and both are legends? Don’t worry, both will make appearances on Killing It. But in this episode, we talked to Matt Harris, the junior, co-founder of Bloom Credit.

Starting a company is hard at any age, but Matt was 22 when he jumped on the rollercoaster. Raising money, finding product market fit, finding out you don’t have product market fit, scaling, the stressors take their toll. Matt wrestled with the psychological and physical toll of being a founder.

And the support to not only step away, but to walk away came from an unexpected source. Join Alex Johnson and I for this candid discussion with Matt, a veritable masterclass for startup founders and executives on the ability to be vulnerable with one of the toughest critics, yourself. Matt’s story is the latest for Killing It, a joint venture between Breaking Banks and Fintech Picks.

Thanks Matt for your vulnerability. Okay, so we have Matt Harris, one of the many Matt Harris’s that populate the Fintech ecosystem. One of, I think, Jason and I’s favorite Matt Harris’s, if I can speak for you, Jason.

And I guess Matt, to start, before we get too deep into some of the stuff we’re gonna spend most of our time, could you give just a little bit of background on yourself and kind of your start as an entrepreneur and starting Bloom? Yeah, totally. So as you alluded to, my name is Matt Harris. A lot of people know me as the founder of Bloom Credit.

Basically, what Bloom does really quickly is it’s an API for integrating into three credit bureaus, Equifax, Experian, TransUnion. Currently works with over 70 Fintechs, has raised over $20 million, all that good stuff, right? In terms of how I started in that, basically my journey with Bloom starts at, I’m working at one of the original marketplace lenders. And one of the things I noticed in that period of time was the degree to which a large percentage of the consumers that we were working with were getting declined.

Something like 10X the number of people we were declining at that time, that number would probably be closer to 15X today. So for one loan that is actually issued, 15 people were told no. And when you actually look into the, effectively the packets or like the loan docs of anyone who’s actually trying to do this, what you consistently find over and over again is the percentage of people who are just a little bit off is extremely high.

And so those people would call us and they’d be like, how do I get this loan and all those different things. And our response as that lender was kind of to be like, hey, like, good luck, figure it out. We can’t really tell you, we can’t open up what’s going on in your credit score, all those different things.

And they would get angry and they’d get upset with us. What happened as a result of that was that, we wound up approaching Credit Karma at the time and we’re like, hey, can you take these consumers off our hands and improve their credit scores and send them back to us? And what Credit Karma said was like, we don’t do that. Like we don’t, and not only that, but we don’t really know how to do that.

And we don’t know who repeatedly. So that conversation at this point happened probably over 10 years ago. And so we then go to the bureaus and we’re like, hey, we wanna take 25 times the data points that Credit Karma has, something that would be known as credit vision, if you are a bureau expert.

Yeah, sure. And then basically incorporate that into a credit building product, where we would be able to use the credit vision to get more accurate understanding of what was missing in your report. We go, we do that.

It takes us roughly two years to integrate with the bureaus. And then in addition to it taking so long to integrate with the bureaus, we ran into another big problem, which is that a lot of the underlying data underneath someone’s score was incorrect. So it doesn’t matter what data we give you in terms of like, you should fix this if someone fat fingered that a non-bank lender screwed it up and therefore like you actually have an incorrect report.

So like a lot of infrastructure companies before us, we tried to build like a really nice magical consumer experience. We found out that the underlying plumbing was broken. And then as a result of the plumbing being broken, realized that we needed to go fix the plumbing.

So Bloom now basically provides a translation layer to Metro2 reports. We basically don’t make errors. So I believe whereas 34% of credit reports of errors are done today, files that have been furnished by Bloom last I checked are at 0.07% error rate.

So that’s what Bloom does. That’s why we work with as many companies as we do. And that’s kind of the story of how I did that.

So you started, what was the journey like? So you left over, you know, from kind of what should have been a product you had. You went to go build this. What was that first part of the entrepreneurial journey like? I feel like you were just like, cool.

So you did this thing. How was eating glass? No. Like not pleasant.

Fixing data, consumer data that’s been entered wrong in highly regulated entities. That’s easy. That’s the easy part of this problem.

And actually- How fun was it? Was it super fun or like super, super fun? Did you enjoy when you ate that glass? Did that taste good? It didn’t taste good. I didn’t really like it, but- Was the glass on fire? So like, I’m probably a little bit of fun at it, but the truth is it was really a long and hard arduous process. Like the thing is, is when you’re working with, A, like you said, regulated data, and then B, the other thing being like really large corporations that have basically 100% market share and actually are incentivized not to change, you’re gonna end up in a position where you end up kind of dealing with major bureaucratic issues for years at a time.

Like I remember talking to Dan Rosen, who’s one of Bloom’s investors about this. And he was saying, he said something to me to the effect of like the number of people that he had worked with, who had spent so much time in the seed stage was really low. So basically we’re in like what is the seed stage of the business for five years, because we do two years on a business that doesn’t work, raise another round to then go pivot, and then we’re doing that for another two and a half years.

So the amount of like founder great in all those things, whereas most people evolve from that point, I never got beyond it. So there’s like a bunch of things that started to happen in my experience of the world, that ultimately led me to end up having to step away from the company, which is kind of culminated in that. And I’ve actually never said this publicly anywhere, but I’m happy to say it here is like, I started to get so burnt out that actually my therapist, after working with me for several years, diagnosed me with complex post-traumatic stress disorder.

That was caused by the company, it was exacerbated by it. So basically there’s all these stressors that are happening in the pressure cooker of actually running a business, that then caused my body to have such incredible changes that it was no longer possible for me to run it with kind of like a level head. So I ended up stepping away as a result of that.

I mean, that’s such a difficult choice because once you’ve been eating glass for so long, it becomes really hard to quit eating glass. So much of our identity becomes about being a glass eater. And it also feels like at some point I’ve taken so much pain, I can’t abandon it now.

Like I’ve just gotten good at this, or like it’s about to break out. That’s a really hard choice to even wrestle through. Like, how did you even begin to like process that? To kind of piggyback on some of your language, you learn to identify with pain.

Yeah. And by that really being is that like, I am actually not the company, but I start to think that I am. It’s like, if you were like, hey, Matt, how are you doing? I’d be like, Bloom is great.

It’s like, but I’m not Bloom. Bloom is something totally different. And so there’s this process of kind of devolving my identity away from the business and then being like, what’s left? Because for so many years, the way that most people knew me, because you also have to remember how young I founded the company at, I was 22.

Right. So like, I haven’t even explored myself as a person at this particular point in time. I’m like, was smart, figured out some FinTech things and was like a really aggressive networker in my early 20s to the point where I had enough of a network to raise VC cash.

And then all of a sudden I’m doing this thing and then that’s my life. And so one of the first stages of it was actually just getting comfortable with the idea that like, I am not the company. The next kind of stages beyond that were then ultimately getting over my desire to people please, which was that I took all this money from other people who have an expectation that I continue to run this business.

And even though I know it’s not the best thing for the business for me to keep running it, nor is it the best thing for me, there’s an expectation other people have of me that I keep doing this. And so it took me a really long time to kind of get comfortable with the idea that like, hey, I’m actually not gonna keep doing this anymore. And that even though some people may not understand why, it’s actually in the best interest of everyone involved.

I think the final thing was, and I don’t know if this is the type of thing you ever get over, but it was basically the fact that because so much of my identity and so much of what was going on in my life had been put behind this, I really cared about solving the problem. And so it was really hard for me to step away from the idea of like, what am I doing if I’m not doing this? Because this really matters. Like the idea that all of a sudden, if you look at the errors on people’s credit reports, 34% in general, but 80% of that 34% are black people in America.

So it’s like, this is incidentally a major lever of institutional racism that could actually just be fixed by simple translation. And it’s like, oh, and I’m gonna step away from that. What can I do that’s even remotely as impactful? So I guess maybe to summarize it, it’s like, how do you find your self-actualization as a person when you don’t use your venture-backed startup as the means by which you get there? And so those were kind of like the big things I had to get over.

And I’d say I’m still getting over some of them, but like, those were kind of the bigger hurdles if you’re talking about my experience of stepping away and why it was hard was like, each of those are such big existential challenges that have other people’s careers and stakes at hand, like other people’s actual savings, other like, you know, if we don’t do particularly well, what does that mean for like Slow Ventures IRR, like all those different things, right? And so I gave you a long-winded answer, but those are kind of like the three core components that I can think of. I’m sure there are more, and if we had more time, I’d probably do that, but you know, I’ll try to keep it as brief as I can. I’m not one who’s known for brevity.

Yeah, we’re dragging this out of Matt. We have like strapped down to a couch and we’re like extracting these insights. So no, I think that’s a really great way of putting it actually.

And the thing that makes me wonder kind of, not tactically, but like on a more detailed level is, can you, and I don’t mean to cause you to go back to too painful a time, but I’m really curious, like what were like the first days like after making that decision? Cause like you just did a really good job of articulating, like making this decision to let go of these things, maybe having some of those initial conversations with people at the company or investors, but like, I always feel like there’s this moment at some point after you’ve made a decision and you’ve sort of come to that decision and maybe done a couple of things that kind of solidify that decision where you have this moment maybe where you can take a deep breath and kind of go, oh, okay, like this is a whole new chapter. Like what was that moment like? Yeah, I mean, I think it’s really elongated is the answer to that. Like from the moment I decided to step away to the moment I’m not an operator within the business is about a year.

A year, yeah. Okay. Like the first conversations are really, there’s kind of two that happen that are like kind of the beginning of the conversation.

The first is like, we were, all infrastructure companies do this. In hindsight, it’s not even very surprising, but basically like one of the untold secrets of an infrastructure business is that you’re gonna go sell to a bunch of customers and then there’s gonna be somewhere between an 18 to a 36 month waiting period to create revenue. Right.

The question is how do you walk through the wilderness? And so that can be a little crazy making, but we were in our wilderness walking phase and moving slower than I wanted to. And I think there were a lot of things that I needed to take on as a founder that one of our board members, guy named Mark Goins, who probably is like the most to credit for getting me out of the business and the most like smooth way possible for also setting the business up for success ended up being, he and I had a conversation when he basically said to me, he was just like, hey, there’s all these things that need to be taken off. Be honest with me, do you wanna do them? And I was like, honestly, I don’t want to do them.

There’s a difference of if I would have, but I just didn’t want to. I was like, I really don’t wanna take on this other part of the company that needs to get some attention. And he’s like, if that’s the case, are you sure you wanna be doing this? And so- Such a good question, like such brutal, hard hitting.

And like the good news for Mark or like not for Mark, but the good news for me and having someone like Mark in my corner in that regard is like, I don’t know how much people who are listening know about Mark Goins, but Mark Goins has like been there, done that for forever. Like Mark sold Chipsoft to Intuit in 1992, which became TurboTax, right? Like has proceeded to be like, one of the basically founding members of Personal Capital and like all these other companies. He was on the board of Mint when it sold to Intuit, like all of these, he’s been around, right? So I think Mark probably knows, he’s never said this and I’m totally projecting and insinuating that he’s like, if I think this is the best thing, everyone will ultimately back me on this.

So if this isn’t what Matt wants, I need to be the one that has this conversation with him. So Mark ultimately says this to me. And at first I was a little shocked, but the reason it had been in my head is because probably a week before is the time I have my conversation with the therapist who basically goes like, hey, he opened it up very matter of factly and was like, I’m laughing because in hindsight, it’s funny to me.

He was just like, hey, so I’m gonna open up this session instead of you. Matt, you have complex post-traumatic stress disorder. If I could strap you down to a chair and keep you from showing up to that company ever again, I would, but I can’t.

So we’re gonna have this conversation. Which is funny and like kind of like, and it got my attention. So I’d been thinking, and then conversely, Mark kind of picks up on the same thing.

And it’s just clear that it’s like, I’m so burned out that I actually, the way I explain it now and the way I teach it now is, when you get burnt out, you get myopic in your view of things. And so what had started to happen is I was basically driving a car, but looking directly down at the hood, rather than 100 yards out because I’m constantly trying to deal with the most immediate threat. So I’m no longer planning six months a year down the road.

And so we’re just swerving out of the way of shit that’s gonna go poorly. And so in recognizing this and I’m not doing as good of a job, the next process now becomes about the transition. I don’t tell anyone on the team about this for probably five or six months.

I think we make the decision maybe in like January of 21. And I don’t think the team found out about it until May of 21. Because we start going through the process and we’re talking to all these different candidates and we’re figuring out who we work well with and who we don’t.

I’m having conversations with these people about what my role is. We waited a long time to tell the team. And then I think basically like what proceeds to happen from that point onward is we bring on the new CEO, there’s some transition changes and then I think it becomes pretty clear that like it’s, there’s a bunch of details that I probably am not gonna go into in the nature of like how this begins to occur.

But it starts to make sense that it’s like actually it’s gonna be way harder for me to keep doing this because I’m not in the state to do it. Like I no longer have it in the tank to keep trying to run this thing. And my attempts to do so, even if like things I was working on at the time were undoubtedly like things that were like on the roadmap of what Bloom should have been doing.

Like the very last thing I tried to launch was CRA as a service, which then two years later Plaid becomes a CRA. So it was, I could still do the thing where I could figure out the strategy, but my execution had become super haphazard because I wasn’t emotionally grounded in the process anymore. And actually what I needed was not like anything other than to reintroduce safety to my nervous system.

So I can’t really do the job anymore. So in January of 22, one year after the time that basically we decide that it’s like, hey, maybe it’s not best for Matt to step away. I like firmly don’t work at the company anymore.

Or actually let me rephrase that. I continue to be an advisor to the company, but I’m not a day-to-day member of the business. Got it.

What was the first thing you did, right? Like, so now you’re out and you know, I’ve just personally been going through this with the counselor, this idea of like, you can remove yourself from the stressor in your case, like the day-to-day and the stress of Bloom Credit, but it doesn’t remove the stress, right? Like in the analogy we’d been talking about is like, you have that near miss with the car accident, but it’s near miss and you’re out of nearly hitting the squirrel or something worse. It’s not like you’re less stressed the moment like that goes away. So like now you’re out, you still have the stress without the stressor.

What does Matt Harris go do? Basically for the first two weeks, I’m relatively okay because I’m still basically living my life in the context of a founder, but I don’t have anything on my schedule. Then after two weeks I get bored and then all of a sudden everything comes up. What I wound up doing was when I was in Denver, I have a very, very, very close friend named Jonathan Berry who is basically the way I would describe him is that no one in the world understands how the mind-body connection works better than Jonathan.

He works so incredibly well with people’s physiology to help them feel better about their mental health and just a bunch of different things by better understanding your movement, breathing and different things like that. He’s worked with everyone from like thing founders to NFL MVPs. And I luckily am like very good friends with this person.

So I step away and I’m like, I had basically gone to him and been like, I’m shot. I had developed like really severe OCD. I’m like, I know my nervous system’s out of check and I had, we’ll allude to this, but I had gotten coached training in advance.

I’m trying all the breath work stuff and doing all the meditation. I was like a huge health freak and none of it was working anymore. So I was like, I don’t know what to do.

What’s going on here? So basically I start working with Jonathan multiple hours a day every day for about six months straight doing different versions of like breathing and movement exercises at the highest level to describe them to ultimately reteach safety back to my nervous system. Like some examples of things I had started to do were, and by the way, like I suspect a lot of founders have different symptoms of this, but they’re hard to pick up on without someone else reflecting them. My knees had gotten super hyper extended.

So basically every step I’m taking, I’m not absorbing shock. That shock ends up in the system. So now all of a sudden it’s like, oh, like every step is more painful than it should be.

Something might be wrong here. Or another thing was that because I’d gotten so tight and stressed, I had actually started to try to use my shoulders to recruit oxygen, which is not the right thing to do to recruit oxygen. So now each breath is shallower than it had been previously.

So because I have so much tension in my body, now it’s like, I can’t get deep breaths, which sends the signal back to the brain being like, something’s wrong. We’re not breathing properly. And that’s where the constant anxiety is coming in.

So Jonathan kind of identifies and unwinds a lot of these patterns over a six month period. That’s what I do. And other than that, I literally don’t do anything else.

Like I fully went off the grid. I wasn’t seeing friends because I would try and I’d be like, I’m super stressed out. I’m sorry, I can’t.

Like I would end up like leaving bars or like whatever it was. It’s just, I wasn’t in a space where I could really interact with people in a manner that was like safe. Probably the most I did was I would go solo snowboarding on like a daily basis.

Sometimes I’d be okay. Sometimes I’d get to the top of the mountain and I’d have to chairlift down because I’m like, I’m way too stressed to even handle going down on my board to do something like this. So that’s kind of where it goes.

And then from that point onward, as I start to ground more, now some other opportunities point up. So what are those opportunities? Because I think the thing that folks might not know about what you’re doing now, but is really interesting to me is both applying things that you learned through that journey that you just walked us through. But also it ties back, I think, to what you were saying about stepping away from the problem, right? Because I think that’s the other thing that’s hard about this is that everyone I know who’s founded a startup, they do get sort of restless, right? Like they want to be fixing a problem.

They want to be helping. They want to be making the world a different place than it is. Like that’s a very strong motivator that I would guess that once you sort of got your nervous system back in check and it sort of regrounded yourself, there was probably a moment where you looked up and go, okay, so now what do I do? And can you walk us through that and what your answer to that was? What had started to happen, without going into a ton of detail on some of the things because they’re not my stories to share, I had thought I was actually gonna take way more time off the table.

So I had lined up a series of liquidity events through either startups I had holdings in that were like selling or different things like that and had lined up like different jobs with like one with the VC fund and one with like a major public company and like to do consulting just in case, right? So I have four jobs lined up or like things that are gonna keep me from having to work anytime soon. And I think it was May 12th, 2022 now. I have four phone calls over four hours and all of them go away, literally simultaneously, where it was like a million dollars of liquidity plus multiple job opportunities totally fall off the table.

So I’m kind of devastated. I’m like, I thought I wasn’t gonna have to go back and do this. And so I had to have this like kind of like rock bottom moment.

And I remember talking to Aaron Frank and I was like, Aaron, what do I do? And Aaron was like, well, I guess you started another company. And I was like, I would rather do anything else. And what proceeds to kind of happen is that I’m a big believer in like, and like this is a baseball analogy, but like take the picture given, which was that.

Yeah. At the time, a lot of founders, I just started as I got closer and closer to equilibrium. A lot of founders had been coming to me and the conversations I was having with them weren’t so much like as being an investor as much as it is.

I was just doing informal coaching without talking to them about it. Because the thing about being an investor that a lot of people don’t talk about and apologies, VCs, if this is, if I’m the first one who’s letting you know, this is that like my experience of doing investing is that sometimes it’s like being professionally gaslit. It’s like people are telling you a version of reality.

That’s never the truth. And I was like, I can’t help you if this isn’t having, if we’re not having a truthful conversation. So like it just felt so inauthentic.

And I noticed that the nature of the conversations I was having with founders between when Matt was a founder and then when Matt’s on the other side of the table were vastly different in a short amount of time, like weeks. So I was like, I didn’t change that much in these weeks. So it must actually be the position.

And what came to me was that like when I’m having these informal conversations with people where I’m not actually an equity holder in their business, they’re opening up to me way more and we’re actually getting more impact for them. The other side of that conversation is when I’m talking to them as an equity investor, they’re incentivized not to be honest with me because they want more money for me in the future, which means that if we’re having like existential thoughts about the nature of the business model, I’m the last person to find out. I think a study came out recently.

It was 72% of founders are experiencing mental health challenges. 81% of that group are not talking to anyone about it. And nine out of 10 are not honest with their investors.

So I’m like seeing this, this dynamic play out. And so as a result of a bunch of these founders coming to me and doing this informal coaching, I’d resisted it for a while. And I eventually was like, actually people are asking for me to do this.

This is probably the direction I should go in, especially in realizing that a lot of what caused my experience not to go well was actually, it wasn’t lack of understanding of the business model. It wasn’t like execution. It was my inability to understand the physiological dynamics that were happening with my body that would then actually make me more productive.

And so as a result, I realized that the problem I was most interested in was the fact that the founding journey is so incredibly important to changing different, like we can name like five things that have changed pretty rough or irreverent. I can’t use words. Can one of you complete the word I was looking for there? Irreparably.

Yeah, irreparably. Yeah. Before you become a founder, learn to pronounce words, friends.

But they’d been changed so much that it’s like, cool, like, you know, we now have overdraft fees or a thing of the past, right? Because someone challenged to actually go and be like, I’m actually not going to charge these or like we can come up with examples of how this works and how they make changes. So the journey is still incredibly important, but the data of what happens to people who take this journey is really drastic. Yeah, like the likelihood you are going to end up clinically abusing substances is three X higher than the general population.

The likelihood you’ll start exhibiting sociopathic traits is 12 X higher than the general population, which states that something about the journey is taking people who are relatively well adjusted prior to starting this journey and sending them down these bifurcated mental health paths. And so what I see my role as is simultaneously to be like, how can I be a reflector to help people understand what their path is, but also to kind of bring in a lot of these lessons of like, how do you more effectively manage yourself in the context of this journey to maximize productivity? Like I said to someone today, but it’s like mental health is important, but if you wanted to genuinely affect your mental health, you shouldn’t be a founder. The trick is how you metabolize what’s going on to be the most effective founder.

And so that’s what I see my role as. And this is so anti-hustle culture, grind culture that everyone wants to put out on social media. So I always have the same response to the hustle porn thing, which is it’s the one place where tech doesn’t want to be data driven.

It’s like a very, because the nature of how many hours your brain can work a week is so incredibly well studied. It’s not, there’s actually, there’s there’s no room for ambiguity here. What starts to happen when you work more than 50 hours a week is that your brain comes to the determination that you were under threat.

So the thing about your nervous system is that it doesn’t understand what time of day it is. And it doesn’t understand the context of your life. It operates independently of these things.

So it comes to a conclusion that I’m in danger, which thankfully it does, because we’re going to be happy when it does, when we actually are in danger. And then what it starts to do is it diverts the blood from your brain into your extremities. You literally don’t have the nutrients to think clearly anymore.

So now you start making wildly different decisions. And that’s where you start seeing a lot of this erratic founder behavior on Twitter and things like that is like you start to start having these effects. And so the thing that I always wonder is why is that the most effective way to run a company? Linear time does not equal linear output.

And so oftentimes when founders come to me and I’m doing the coaching thing, they’ll come to me and they’re like, I’m having this problem. The business is stuck. I can’t figure it out.

First question I always ask is how many hours a week are you working? Usually 90. And then you audit their calendar. Usually the amount of time someone is actually being productive in a 90 hour week is about 20 hours a week.

The trick is to get these numbers to be closer to full, what’s it called? Efficiency by making them work. I don’t want to say making, I don’t make anyone do anything, but by hinting at the degree to which they can optimize their schedule for more consistent routines, you often end up seeing the businesses grow, which is why more than half the companies in the coaching practice last year grew by over a hundred percent. So that’s really, really interesting.

One, it ties back to something you were saying before too about, and I guess I never really thought about this, but it is, you had a really interesting experience where it’s like on the one hand, you have investors and investors are great in the sense that a lot of them have been there before and like they are well positioned from an experience perspective to give you advice. But your problem is I don’t really feel like I can be honest with them because these are people’s money who I’ve taken. I might need more money in the future or introductions or help from them.

And it’s just that human nature to like show weakness to someone that you need to be dependent on, right? Like that vulnerability is extraordinarily hard. And I’m sure for all the experiences you’ve had that were, it sounds like positive with some of your investors. I’m sure there are tons of examples and you’ve probably heard some in your coaching practice where people have tried to be vulnerable with some of their investors and it was the wrong investor and it didn’t go very well.

And so on like the one hand, you have that. But then on the other hand, you have like actual mental health professionals who aren’t invested in the idea of like startup founding being a good idea who want to tie you to a chair and not let you go back to your job. So it does seem like, kind of to your point about the coaching thing, there is this need or this gap between someone who’s entirely focused on your mental health who would say, you know, go be a fisherman or go do something else because this is not a good job for you.

And people who understand the job but don’t necessarily have the position in someone’s life to give them that good advice. That’s actually, so there’s a couple, I’m really glad you brought this topic up because there’s a couple of elements that are worth unpacking here. The first, what is therapy versus what is coaching? Because this is a huge misconception in the market.

Yeah. Like you see, and like for some reason, it’s always people who were COOs of companies that went public that seemed to be the most anti-coach. I don’t know why.

I just can’t. But it’s just, it just seems to be the case. What is coaching? Coaching is the degree to which I can change the context of how you relate to your life.

Therapy is how do I more effectively integrate the content of your life. So for example, at least I’ll speak to my own experience. I started doing therapy pretty consistently, probably in August of 2019.

What starts to come up is like, you know, I’ll give like one example would be like, you know, my therapist starts to notice some like traumatic patterns in me. So one of the things about like how our bodies hold trauma is that it’s in the body and we often develop like what would be seen as a micro addiction to get rid or to kind of suppress that. So an example, if you know someone who bites their nails habitually, that’s what that’s about.

Where like for me, it was always rubbing my head like this. Right. So like therapist gets me to stop rubbing my head for a day or two.

And because I don’t have that crutch, all of a sudden I remember a super traumatic moment from my past, which if I’m honest, that’s probably the moment I stopped being able to be a CEO. Because in order to work through that, I need to actually work through that. So therapy is something that actually helps you heal those things.

But the thing is, is that the company is basically founded in your image as a founder. So whatever those dynamics are that weren’t working for you when you were younger or before are going to reflect themselves in the business. My job isn’t to help you heal that necessarily as much as it is to help you recognize the behavior set and kind of follow the logic line of why are you doing what you’re doing so you can make a different choice.

You might still have the inclination to do the thing that you need to go heal, but now you can be cognizant to change it. So a really common example would be like that you see in founders all the time. I don’t want to delegate.

I have a need to control. So all of a sudden, you’re talking to a founder, they’re super exhausted. And it’s like, here’s all the things I’m doing.

Why are you showing like a really great example non-technical CEO who shows up to technical stand up every day? Why are you doing that? My opinion on that is usually like you’re putting more pressure on the engineers because now the CEO’s showing up in every meeting. You can contribute. You have a lot of opportunity to spike the roadmap.

So why are you there? And when you actually hold that under scrutiny, most people can’t answer why they’re in the room. And then they’re like, what would you like to do with that time now that we can establish that you’re not actually using the time most productively? It’s like, well, if I were to really boost our revenue this year, I should go chase that big partnership. Got it.

How long is that going to take you? Probably a year. Cool. When do you need to start? Probably now.

Great. Now the time gets reoriented because we actually took some time to just ask, why are you doing what you’re doing? So coaching is a really big component of that where the point for what I’m attempting to do is I’m not, I’m, I basically never offer an opinion. If I do, it’s because something is like wildly detrimental.

Like I had a founder this past summer who was traveling all the time and wind up in the hospital and I offered an opinion. I was like, this is stressing your body out. Please stop.

I genuinely begged them. I was like, please do not travel anymore. This is killing you.

That’s where it needs to go for me to say what I think. Otherwise, what I want to do is I want to be nonjudgmental and reflective, reflective, sorry, so that they can start to forge their own brain path around why they are doing what they’re doing and change it. If you just tell someone what to do, hey, there’s a judgment in that.

Right. So if you’re like, if you’re like, Alex, you’re like, hey, I’m, I’m running FinTech takes this way. I’m like, I would do it differently.

I implicitly told you, I think what you’re doing is wrong. And now you defend yourself. Now I’m going to write wrong context.

Now we’re not actually connecting on the nature of the subject. And because I told you do it differently, there’s an element of like, I want you to accept that my idea is good. So the first thing that investors kind of don’t recognize in these relationships is that the nature of how they provide feedback is actually not helpful to the founder.

And not only that, but the other thing, and I think a lot of investors really hate this, but every founder I know is going to like snap and raise their hands as a result of this is that so much investor feedback is irrelevant. It’s kind of the equivalent of you sit courtside at the Knicks every week, but you’re never in the locker room. But because you sit courtside every week, you think you understand how to coach the basketball team.

You actually don’t. Like it’s a super different job. I haven’t been a full VC, but I’ve done enough of it where it’s like through commerce, for example, I’ve had to write a deal memo and run it through a process.

Way different conversation than running a company. And when I started doing those, one of the things I noticed really quickly was like founders would come to me with like, what do you think about doing this? And I’d put it through how I used to make those decisions as a founder. And I was like, oh my, I need like a week with you to understand how I make this decision.

There’s so much I don’t know. And so the second thing that happens here is you have a bunch of people who make a lot of money, who are ultimately successful at the thing they do, who then value their opinions really highly. My personal opinion, most people have awful opinions.

And maybe that opinion in and of itself is awful. So like I’m willing to be self-aware about that, but most people don’t have good opinions about stuff. And in reality, I actually think the founder knows best.

So the relationship between the investor and the founder sets up a really uncomfortable power dynamic at the beginning where the founder wants to be seen as coachable because if they’re not coachable and they don’t have a good relationship with the investor, again, they’re not getting more money from them. So what starts to happen in this is that the investor comes in with a bunch of irrelevant feedback and the founder has to take it on the chin and be like, cool, got it. I’ve been judged, all these different things.

Well, this conversation made me feel bad. I need to keep having this conversation because it’s important for me, but I’m going to put up my shield. I’m not going to bring my authentic self to this conversation because it’s ultimately hurtful for me to do, to tell you my actual strategy and to have you shit all over.

They might need to recognize that, but again, they need to recognize that for themselves. People do not learn things because you tell them, like you can tell an alcoholic not to drink, but that’s not going to be the thing that stops them. So like the action to work through why they’re drinking in the first place and get to the other side of that.

The other thing that tends to happen with a lot of these relationships, and this is kind of the third component of what you’re talking about, is I’ve yet to figure out the right way to address this. But what I would call is not every VC is codependent, but there is one codependent VC on every cap table. Real quick on codependency.

This is a crash course for everyone listening. Codependency is basically it comes from alcoholism and it’s a series of roles that people play in relationships where they’re playing off each other’s stuff, for lack of a better term. There are three roles that could show up in a codependent relationship, the victim, the villain, and the savior.

So let’s play out how this happens over and over and over again with founders and VCs. Founder comes in and goes to VC and says, Hi VC, super important person who has all this money. I have this idea, but without you, I can’t do it.

Can you please give me this money so I can go bring this cool vision into the world? I come to you as the victim. VC says, Sure, I’ll give you this money. I’m going to give you all this advice.

It’s going to be awesome. I’m going to mentor you. They come in as the savior.

Now, founder goes and tries to run a business. And as we can all attest to, when you’re trying to run a startup, things don’t go well. That is guaranteed.

I was going to say, are we going to, can we get into Yieldstreet a bit? Or no, or not Yieldstreet. First street. It’s like, so things happen.

And then the VCs come in and they’re like, what the hell? And so now they start to see be seen as victims to this conversation. So like one that happened to a client recently, I’m going to be as general as I can to protect confidentiality in all capacities. But it’s like.

There is a group of co-founders of which one of them had like a pretty traumatic event. And needed to step away from the business, like genuinely, it was the right thing for them. And I think is actually the right thing for the business and all these things.

The other founder of the business goes and informs the investors of what happened. The most common response they got was you should have told us sooner. This is like an actual thing with VCs who you would absolutely know who have billions of dollars under management.

So they went from being like, oh, I’m in your corner to these first time founders. I’m here to help you. And then the second something adverse happened, look at how you’re screwing with my business, right? That thing happens all the time.

And it’s enough to throw founders off of ever having that relationship again, because the thing that like, you know, a thing that a lot of founders will start saying to each other once they’ve been through it for enough time is VCs are not your friends. It’d be nice if they could be. But ultimately, and by the way, I don’t think that’s a bad thing.

Their commitment is to the equity in the business. Sometimes that means not being my friend. That’s OK.

But the codependent angle is coming in, pretending it’s not that and then finding out that it is. And so founders get burned on that often and then ultimately decide that, like, I’m going to pull away, which is actually negative to everyone involved. Because now VCs don’t operate with what’s it called? With honest information, founders isolate.

And the thing about isolating is, again, we’re pack animals. If I don’t have other people who can relate to my experience, all the things we talked about, about your nervous system, assuming you’re under threat, they come back. So much of like the coaching practice is how do I keep your effectively your vagus spirit and your amygdala in check? Right, right.

Which means keeping your relationships with all the people in your ecosystem in healthy balance. Yes. And also, which, sorry, I was going to say also includes keeping a healthy relationship with yourself.

Right. So like a founder who refuses to take care of themselves is ultimately going to end up in a position where they’re going to have really rough outcomes because they’re going to let the business trample them. Or a bunch of different things like that.

And so, like, oftentimes without, again, you can teach a founder how to not be burnt out. But the second something super traumatic shows up within the business, which is going to happen because these things are wrapped up in our emotions or identities. You’re going to revert back to those types of behaviors that weren’t working in the first place because you developed them to protect yourself.

Again, my job, like, I want to be also really clear. I feel like I should just explain this a couple of times. My job is not to work through that.

If that stuff comes up, I actually do refer people to a therapist. But the thing I try to do is to be like, how do I prevent you from making that same decision that didn’t work for you anyway? I don’t need to dig into what happened to get someone to make a different decision. I just get to help them recognize there’s another option.

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Learn more at AlloyLabs.com. Alloy Labs, banking unbound. I wish you had been coaching back in the Perk Street days, Matt. Like, I mean, 20V24 is the 10-year anniversary of like my crash landing.

And there are still parts of my identity wrapped up in Perk Street and things that you’re saying. I’m like, yeah, I’m still processing that. Oh yeah, the codependence piece.

Oh yeah, still processing that. And like, there’s parts of Bloom that I’m never going to get over. Like, there are mistakes I made in the past that I’m like, I wish I had done that differently.

And like, I don’t want to say I’ll never get over them. That’s what we call in the business of limiting belief. It’s more the degree to which they’re, because my identity is wrapped up in them and because I can see so clearly like what the empowered decision would be now, it’s hard to accept it.

And so like what we’re talking about is how to get to acceptance on that front. But also like, you know, to your point on that coaching thing, part of the reason I wanted to do this is because I realized I needed what I know now to have actually done it properly in the first place, which is that I worked with coaches and I worked with therapists. The coaches I worked with had not been founders.

And so it was really hard for them to relate to the journey I was on. Like even in the coach training program I was doing, they had me do this thing called the letter of accomplishment, which was basically like, here’s all of the parts of your life you could conceivably work within from dating to like community service to all of that stuff. And they basically have you do OKRs for every one of those things to show that like, you can kind of like create what you want.

And I kept trying to explain to them, I was like, hey, I have this business over here and this business has like a time bomb on it, which is our runway. And if I don’t get this result for this business, this thing dies. And the response was literally to be like, that’s a story.

And I’d be like, no, no, no, here’s the books. Like I’m not making this up and this isn’t a disempowered point of view. This is the nature of the business I set up on purpose.

And they couldn’t understand. They’d be like, why did you set it up to be unprofitable on purpose? It’s like, it’s a long story with a lot of like shit about venture capital. But like coaches couldn’t- Let me explain a J-curve to you.

Yeah, exactly. Do you understand the term IRR? So it was like, that was one component, right? And so that was one. And then the other thing being, you know, let’s go back to the relationship I have with my therapist who I still work with.

He did the right thing in pulling that out of me. That’s his job. It was the wrong timing.

It was hard for me once that kicks in for me to actually metabolize what’s coming up and the business at the same time. So now I’m getting increasingly agitated because it’s like I’m doing EMDR and doing founder stuff, and it’s really hard to do both. So what was available in terms of people who could A, understand what I needed, and then B, actually have the wherewithal to metabolize it, didn’t exist.

And so one of my core beliefs has been, this is a really hard journey, but it doesn’t have to be. Yeah, well, and it kind of, I mean, to sort of circle back to the center of what we tried to cover on this podcast, I think, I mean, we’re in an environment now where I think a lot of these things are coming to a head, right? Because you talked about like just picking on investors and VCs as an example. We were in a phase for a long time where zero interest rate environment, you had to be extraordinarily founder-friendly to even be able to get term sheets in.

It was really easy to raise money. And I’m imagining created a lot of those dynamics you’re talking about where, no, you know, I’m really good friends with my investors and they let me do whatever I want and everything is great. And then I’ve seen plenty of examples and I’ve talked to plenty of founders since the environment has changed.

And investors are responsive to the environment that they’re operating in, where suddenly those conversations are very different. And in a lot of cases, it’s not even that the business isn’t going well, it’s just that the incentives and the environment have changed. And as Jason and I have been talking to other founders, I mean, there are businesses struggling to raise more money.

There are businesses where they’re having to make a really hard pivot. There are businesses that are getting shut down and founders are having to go through that experience. So I guess I’d be curious, Matt, for your perspective on, in your coaching practice, what are you seeing in this current environment? And just broadly, what are the types of things you’re advising founders to think about or to reflect on? Well, the good news is about the nature of, again, the coaching is that I never give anyone advice.

Right, right. No opinions. No opinions, right.

And like very rarely. The two places I tend to have opinions are the nature of managing burnout, because it’s just the physiology of your body and we’re not changing. The second one being is the, I do have stronger opinions on fundraising because the manner in which I try to teach people to fundraise is again going back to physiology is that how do you use neuroscience to better explain to investors the nature of what your business is doing, which is basically people make decisions emotionally and subconsciously.

And that each investor is actually getting 15 pitches a day, which means that when the brain gets too much information, back to cortisol firing, we’re back to that burnout thing. And now you’re left with questions like, what’s the team of the business? And it’s like, like they’re out, they’re done. Like now you’re just having a really awkward conversation for the next 30 minutes.

So the good news, I would actually say again, maybe it’s tooting my own horn and I still don’t know how to empirically prove some of this stuff. I’ll say that is like my coaching practice actually hasn’t experienced that downturn. Like in the last year, six of the companies I’ve worked with have raised $43 million.

A lot of them are growing at like 100%. I think a big part of the reason for this is because the way I think about the coaching practices, it kind of runs in four phases. The first phase is you’re coming at me because there’s a burning on-fire problem.

I’m having a problem with my co-founder. We, our business started to backslide. Like I’ve had people who were like, we were doing 2 million AR last year and now we’re doing 1.5. What do I do? Different things like that.

So you’re coming at me with an on-fire problem. My first role is really to help you get back to equilibrium on whatever that problem is. The second role I play is, how do I raise your baselines? Which is, again, going back to the neuroscience of this is that your brain and your nervous system do not know what’s going on.

So if you get screamed at by an investor, it’s interpretation is I’m under threat. Right? And so now we get back to these components of I’m not thinking as clearly, I’m actually being way more myopic as we’re managing for a tiger in the room that doesn’t exist. If I can raise your emotional baselines, it actually is a resilience mechanism against this dynamic.

Because once we’re fighting the tiger in the room that doesn’t exist, we’re not making as clean and clear decisions. Because really your job as a founder is to be looking 100 yards down the road, not at the hood of the car. So I help them raise their baselines.

And that often looks like managing, it’s not even really rocket science. It’s like, how many hours a night are you sleeping? Four. Got it.

Here’s what happens to your brain when you do four hours of sleep a night. We’re gonna get you more. And the thing that happens every single time is so we basically do, I do what I call an energy audit, which is really simple.

How are you feeling on a scale of one to 10? And I do it every week. Founders usually start at three and end up at seven. The second they get to seven, within a week they’ve started to solve their own problems.

Because we brought blood flow back to the brain. So again, another principle being is like, I don’t need to solve the problem. I don’t need to give them advice.

They already know the answer to the question. That’s why they’re the one running this business. If I was meant to be the CEO of whatever business I’m coaching, I would be the CEO of that business.

So I need to just help them get out of their own way. The third thing within that is basically like I always say the CEO has effectively three jobs, but really four. Don’t run out of money, set the vision and the direction, have the right people in the right seats, and then what I call move the needle.

The next phase of the coaching practice is always about that. So it’s about like measuring what matters. So here’s an example of what a burnt out brain will do when trying to do goal setting.

Every single founder I work with who’s burnt out always tells me their number one goal is grow revenue. By what will you do to grow revenue is my next question. And then they’re like, uh.

Revenue is a byproduct of value. So a really good example of this would be from FinTech company Stripes. One metric they do is revenue over customer service inquiries.

They want to grow revenue by decreasing customer service inquiries every time. And so how do you actually create a governing principle about why you do what you do and what the value is? And then how do you make that simple for other people? So like a lot of founders will often come to me with like seven different goals within a year. Most companies can’t accomplish more than one thing a quarter.

So actually, how do you simplify it? And then how do you make sure those goals scale up? Sometimes that looks like OKRs. Sometimes that just looks like, you know, I do, again, a measuring what matters exercise where someone will come to you and they’ll be like, well, I don’t know how to manage my engineering team. It’s like, well, what do you want them to do? It’s like, well, I don’t want them to get bugs.

It’s like, well, why don’t you want them to get bugs? It’s like, well, when we have bugs, then we don’t complete the transaction. It’s like, well, and then what happens? It’s like, and then people churn. That’s like, cool.

So the thing you care about is churn. Not the bugs, because theoretically, they could have the buggiest code ever and it would still work. Talk to every single infrastructure provider ever.

And like also the non-infrastructure providers like FIS and whatever, it’s like, it’s like stuck and you can keep making money. So that’s not the problem, right? So you want to identify those things. And so I spent a lot of time trying to reflect and pull that out as much as I can.

And then also help them recognize how to manage their team within that construct. A lot of people don’t know how to do basic accountability. And so it’s like actually being able to hold someone accountable with a clear metric makes it a lot easier and objective.

So one of the things that happens is when I don’t have a clear metric to hold you accountable, it’s actually a lot harder because now we’re dealing with a static preference, which is I think it should look like this and you think it should look like this and we can’t find a common ground. But if the agreed upon metric is like we’re going to grow revenue by 50% or that we’re going to decrease churn by 25%, either you did or you did not hit that goal. So now I can come to you as a manager and be like, hey, what’s going on? What support do you need? Hey, it’s been two quarters.

You haven’t hit that goal. What’s going on? Hey, what are we doing? Things become easier. And so how do you actually use the management structure of the business to make things simple? Or another example would be like, how do you implement culture? Which is people think of culture as platitudes that go on a document rather than customs.

So if transparency is what you’re focused on, everyone sees it on every email. Patrick Collison’s email is right there every single time for everyone who works at Strip. That’s transparency.

Show it in a custom. Another example, people would be like, we’re solutions oriented. Great.

That should be followed up with a custom. Try to solve a problem three times before you bring it to a teammate or escalate it to a manager. So how do you actually do that stuff to make it easier on the CEO? And then after that, the analogy I create for this using NFL analogy, because we’re about to have the Super Bowl.

You want to get the business to a point where it gets four yard gains, no matter what. Every single play, you don’t want to have to think about how do I move the needle? How do I actually get this thing over? You just want to know that it’s like, I can hand the ball off the running back and everyone does their job and we get first downs consistently, no matter what. It’s always third and short.

Now you get to think about moving the needle, which is like, so once I get to this point they’ll give me their goal and I’m like, what’s your goal for the year? They’re like 3 million in revenue. Great. The next question I ask is, I’m going to triple that for you.

Your goal is now 9 or 10 million in revenue. Don’t tell the team that it’s your goal. How are you going to get there? And then you basically do what I call like a magic wand trick, which is like wave a magic wand and remove all your constraints.

How would this happen? It’s like, well, I guess I would need to go sell to this much larger client over here. Great. What do you need to do that? Well, I need to know that someone else can manage the sales team because that’s what’s taking up all of my time.

Got it. And now we can put in the structure in place so that the CEO can constantly be spending their time on moving the needle to get the business to that high growth point. And so that’s really what we’re doing within that structure is it’s just the same repeatable process.

Raise your baseline. Make sure you have the right people in the right seats with clear direction and then ultimately use your time for the most effective moves within the business. And I do that for people when they’re basically between 10 and 50 people.

When you get to 50 people, now it’s like, how do you like create calm structures that people floor below levels below you? And then that’s a problem. That’s not something I’m like interested in for lack of a better term. And so I have a bunch of market coaches that I ultimately refer people to when they’ve gotten to that point.

And I’m like, hey, you should work with this person now. They’re more apt to your problem. People who are like executives that companies like into it for like 20 years, right? Like stuff like that.

So I think I just gave you a really long winded answer, which seems to be the theme of my end of this conversation. So thank you guys for the patience with me. But that’s, I mean, it’s an absolute masterclass, Matt.

And appreciate the vulnerability for someone who’s like frantically scribbling down, you know, your four jobs as a CEO and then sitting and staring at it right now and going, God, I don’t think I can get there. I’m not getting the blood flow. And I’m the person getting those four hours of sleep, right? What do you, what would you say? Is there looking for an off-ramp either from the business or from the stress cycle that they’re caught on? What’s that step they should take? Slow down, always slow down.

Take a deep breath. Try to look around. Nothing needs to happen as fast as you think it does.

Until you can really create that, like, then you can’t start bringing that back because the reason you got there in the first place, like going back to your comment before Alex, I would say all those businesses died years in advance of when they actually did. It’s a series of compounding mistakes where it’s not that they were bad business models necessarily. It’s that the people who were involved could not get out of that, whatever myopic point of view was to change it fast enough.

And so slow down, try to do what you can to ultimately, you know, take things a little bit easier. And if you can try to find somebody who can help you think through your thinking. So I guess that’s really the easiest thing to do.

Yeah, absolutely. And I guess, I mean, that’s incredibly good advice. I know you don’t do opinions, but I’m going to ask you for one more, which is the focus of this podcast is, you know, dealing with failure and accepting failure.

And I guess not so much on the mechanics of running a business, but more on the emotional side, having gone through that yourself, whether the business failed or you feel like you failed or you have to step away or whatever it is that happens that’s sort of driving that emotion. What would be the one piece of advice if I forced you to give one on how would you sort of deal with the emotional side of this rollercoaster? Because I think everyone goes through those phases, whether they ultimately succeed or not. It’s really floofy, but accept what is.

Like the ability to actually accept where you are and what is going on, because ultimately, like acceptance is the fastest path through pretty much anything. Maybe if I were to give another one, I’d also recognize that like failure is not the end of the story. I think three of the companies in the top 10 of most valuable businesses on the planet at one point have 30 days of runway or less.

So much of what makes someone successful is luck. And so much of what makes someone unsuccessful is luck. It’s not personal.

So how much can you divest yourself from the nature of that? It’s really important. Absolutely. Now that’s a theme that’s come up multiple times in our conversations.

Matt Harris, we’ll let you go. Thank you so much for taking the time. You are our favorite Matt Harris of all the Matt Harris’s in FinTech and we appreciate it.

Is it because I don’t talk about World War II? That might have something to do with it. There’s a lot less Roman Empire talk. But apart from that, you’re incredibly vulnerable and authentic.

We really appreciate it. And we’ll talk to you soon. Thanks, guys.

Appreciate it. That’s it for another week of the world’s number one FinTech podcast and radio show, Breaking Banks. This episode was produced by our U.S.-based production team, including producer Lisbeth Severance, audio engineer Kevin Hirsham, with social media support from Carlo Navarra and Sylvie Johnson.

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