He founded a banking app for kids 10 years ago, grew to 2M customers & exited—in one of the biggest fintech M&A deals ever. | Dean Brauer, Founder of GoHenry

It was “really slow in the first couple of years...really, really slow.” GoHenry was an app and debit card for kids to help parents teach their kids about money. Dean started over a decade ago in 2012, when mobile was just truly taking off. 

And yet, it took multiple years to get off the ground. Once he found the right channels and repeatable growth, he and his team started pouring fuel on the fire. In total, they raised over $100M. 

He ultimately grew to 2 million paying customers. Earlier this year, they were acquired for an undisclosed sum in what is one of the bigger fintech M&A deals of the last few years.

Here's how it happened.

Why you should listen: 

• Why even with millions of paying users, Dean speaks with a handful of customers one-on-one every week.
• Why timing is so important and how to spot trends early-on based on small things happening around you.
• How finding the right channels is key for consumer startups. 
• Why Focus and clarity are key to maintaining a successful business.

Keywords
GoHenry, startup, acquisition, product market fit, customer feedback, financial education, kids debit card, scaling, marketing strategy, entrepreneurship

Timestamps:
(00:00:00) Intro
(00:1:34) The Beginning of GoHenry
(00:5:57) Why I talk to users every week
(00:11:22) You Grow by Learning Faster than Your Competitors
(00:26:50) V1 of GoHenry
(00:35:26) Getting to 10,000 Customers
(00:38:33) Conversion Rates from Social Media
(00:41:51) Getting Acquired
(00:50:59) Finding Product Market Fit
(00:51:33) One Piece of Advice

Chapters

• 1:34 The Beginning of GoHenry
• 5:57 Why I talk to users every week
• 11:22 You Grow by Learning Faster than Your Competitors
• 26:50 V1 of GoHenry
• 35:26 Getting to 10,000 Customers
• 38:33 Conversion Rates from Social Media
• 41:51 Getting Acquired
• 50:59 Finding Product Market Fit
• 51:33 One Piece of Advice

Transcript

Pablo Srugo (00:00)

 I just finished talking with Dean, one of the co-founders of GoHenry. GoHenry just got acquired in one of the biggest FinTech &A deals ever by a company called Acorns, which is worth over $2 billion.

Go Henry launched like 10 years ago and it was one of the first like debit card for kids that helped parents manage their kids money and help kids learn about money and how to use it, how to spend it.

It was a paid subscription, so the parents had to pay per kid per month and they grew to over two million customers and raised over $100 million.

So today we talk about how it all started, how Dean and his team got through those first few years and what it feels like to go through a massive acquisition after building a startup for over 10 years.

Dean, welcome to the show.

Dean Brauer (0:58)

Thanks for having me. 

Pablo Srugo (0:59)

GoHenry, as far as I understand it, in the way you describe it to me, it's all about making kids smart with money, which I find is one of those ideas that, and I know this was a while ago, so you'll take us through when it all started. It's one of those ideas that not only makes sense, it's also net positive, right? The impact is clear, but not an easy one to truly get off the ground and then create an actual business behind. I'm curious to dive into that and maybe to start like, where did the idea kind of come from? Like what's the context? What time are we talking about? 

Dean Brauer (1:34) 

The business launched in 2012. And I think you're right. Like when you think about, you know, our mission, which is to help every kid be smart with money, that could grow from a product perspective into a lot of different areas. It started in 2012 and we founded the business in the UK. My co-founder who is the CEO of GoHenry today, she's a mom and I wasn't a parent at the time, the idea started with a group of friends and parents. Louise, my co -founder was on a soccer field, we call it a football pitch in the UK and just talking to a whole bunch of parents around frictions at that time of managing money with their kids. And what that looked like was giving your kids a credit card to go buy songs on iTunes or stream video games and having no oversight or control over that experience. If you worked back from that, you found that the frustration around parents and the insights were, well, my kids have no understanding in a digital age of the value of money. If it's not passing through their hands tactically, how are they going to learn about this? I don't want to be the bank of mom and dad forever for their obsession around streaming and downloading, You know, tons of stuff on iTunes. And if you get to remind everyone like in 2010, 2011, tons of news stories around “child spends $800 in iTunes parents upset.”

Pablo Srugo (3:14)

Well, that's an important thing right there, right? It's just like the importance of timing. I think about 2012, like that's right after, you know, iPhone's kind of like 2007, 2008 is kind of the app store. And then, you know, by the time, even if I remember, because I remember looking at this through the Snapchat story, like 2012 was still a time where few like teens had a smartphone, like they might've had a flip phone and these sorts of things. They're just like, it's that transitioning period but it's starting to happen. i think about a third of teens, if I remember correctly, maybe 60 % or so of university students had an actual smartphone. But it's funny you say that, right? Like I'm a kid from the nineties and I'm like, I don't have a credit card as a kid. And it's true. Like I, know what, I just needed cash. Like they just gave me 10 bucks, 20 bucks, whatever. And that was my thing. But then once you're, once you have that smartphone and most of these things that transition to like all these digital experiences, there's a new problem that emerges and it feels like 2012, 2013, 2011 maybe, but It's a tight window when that starts to be important enough that it matters, but not too late that there's already a kind of-

Dean Brauer (4:12)

Yeah, that we missed the opportunity. Exactly. And, you know, we were in the UK and so we had Scandinavia on our doorstep at that stage. Scandinavia was really advanced in cashless payments, right? So it was way ahead of the US and the, and the innovation in like card and chip technology, cashless payments really happened in Europe and then came to North America, right? It wasn't this West coast thing that moved East. London, England was like a perfect environment because you had parents who typically, you know, have similar behaviors as a North American parent. They're leaning into technology and, you know, speaking to all these parents, the insight and it really born out of like our own families and what we want to provide for our families was that, you just tracked it back to like, how do kids get money? Kids get money through allowance. Is allowance going to be cash-based forever? No. Are there lots of frictions with the cash -based method of allowance? Yes. How are my kids gonna transact in the world? Likely over the next 10 years, they're going to move to a hundred percent cashless payments. And the need for a card and the need for children to be able to spend using a debit card and spend safely with the oversight of their parents just became really obvious. And I didn't have children at the time, but it was also very clear to me was how do you help your kids understand the value of money? And how do you give your kids independence and freedom to start to learn about money and do that in a way that feels right for their age, can grow over time, and you feel safe as a parent? And so in our earliest, you know, talking like going into product market fit and starting to think of like, ground zero for a product. I'm a huge believer in, I think there's a lot of methodologies around research and validating learnings for product market fit. But in the earliest of stages, customer development work through direct interaction and feedback with your end user is so, so, so, so valuable. we'd pick up the phone in the earliest stages. We had ourselves as users and a problem in our own families. We had the schools that our children were in and they were kind of the age for the product. And then we just got on the phone and started talking to tons and tons and tons of parents. And what we quickly found was - 

Pablo Srugo (6:52) 

How many do you think? I know it's a long time ago, but we're talking about 10, we're talking about 100, we're 

Dean Brauer (6:55) 

No, no, I can tell you that from my experience, for me personally, for nine years, of the 12 years building the business, I had a workflow in constantly speaking to customers on the phone, always. So I basically would like, you know, it started with just email some people call some people in your network. Then as you're building the customer base, I built a workflow that was like, would send out an email. Hey, I'm the co -founder. I always want to hear from our customers. If you want to book time in my calendar, you know, book 15 minutes would love to hear from you and just constantly speaking to customers. My method was that in the earliest days, we would kind of come up with like 10 to 12 questions and we wouldn't really change the questions until we started hearing the same thing over and over again. And it was very clear what the themes were. It was just became really clear, like you pitched the business.

Pablo Srugo (7:55) 

 And how many, like, just to put a number on it, like in those early periods where you were just doing research, how many people do you think you’ve talk to? And then once it was more like a steady state in this kind of workflow you had, how many calls were you doing a week -ish? 

Dean Brauer (8:06) 

Yeah, good question. In the earliest days, I remember speaking to me and one of our other co -founders. We did 25 each, so we got to 50. And it was like the themes were really emerging. We were starting to hear a lot of the same answers back. And then I would do-depending on other responsibilities in the business, what we were getting set up for,- I'd do anywhere from like two a week to 15 a week, depending on the problem that was in front of us. And in truth, there was two things happening. One, I wanted to always hear qualitative feedback. Two, I would feel really energized after every phone call. So it was also just a source for me of staying close to the customer. and staying close to our problems, staying close to our customer experience to, you know, give myself the energy to build and provide value back to the business and the teams.

Pablo Srugo (9:08) 

I love that, man. And I must admit, after a hundred or so interviews, I've obviously heard a lot of, -, staying close to customers, a common theme, but it's more like hacks. you know, Dara from Uber will go and Uber eats pickup for like a day randomly, but I hadn't heard of it as part of a workflow every week. And I'm sure there's exceptions and stuff, but like, Generally speaking, every week you're talking to a couple of customers. Actually, there's maybe one other person that heard, but it's not common. And yet it makes perfect sense. 

Dean Brauer (9:35) 

And look, and the truth is we did our own customer support, and we still do to this day. We're dealing with two of the most emotional subjects of your life as a parent in a way, your children and money. And we take those two things together. So we've always done our own customer support. So I guess the business was scaling. We always used customer support as one other input into it. I wasn't always structuring those insights back to product managers and using it in a systematic way. So it really would oscillate between like sources of inspiration and passion for me and then feedback for the business. I just think there's no downside in doing this. And obviously as you scale and your business like Uber, that's gonna become harder and harder for the key executives to be able to do. And it certainly became harder and harder for myself as we scaled and got bigger and bigger, but amazing source of inspiration. And to bring it back to like early stage product market fit, you know, one of the great definitions of product market fit is essentially like, it's super clear from the outside when you get it, you know, customers are buying your product. You can make it fast. You're seeing usage grow willingness to pay is high, not through research, but through actually people giving you their payment. And the kind of, like once I heard someone talk about it as like the struggle indicators is clear because when the business is achieving product market fit, the struggles within the company like start to alleviate, you know, and you feel a real sigh of relief. And I think it also impacts the culture of a company, but clearly.

Like an obsession with product market fit in its early days is key in the startup world for everybody. I also believe that as the business is scaling, product market fit is equally important through every stage of growth because the market changes around you, your competitors set changes around you, customers' unarticulated and articulated needs change. Particularly like we were really pioneering a space when we first launched, it was “I can't believe you're giving debit cards to kids!” And then by the time you get to like 2017, 2018, it's so obvious the whole world is going cashless that it becomes apparent to like, you know, beyond the early adopters. And then it becomes commonplace for your customers. And all of sudden this innovative thing is just like part of everyday life. Well, what's the second act for the company and what's the third act for the company? And how do we, you know, I think product ultimately solves everything within the company back to what I just said, you know, a minute ago, which is you use it to go find new markets. It helps you reduce your CAC and it strengthens, you know, brand proposition and value prop overall. like I'm constantly thinking about each stage of the company, you know, what's the next act? What's the next version of product market fit? what's the methodology we're going to now use to validate. And from those early days, in when I was talking about speaking with customers, it really evolved by the time we get to scale where we are going from phone calls and what we believe we need to make, based on the insights of the phone calls, but also our own vision and passion for solving this problem to really different research methods, like from max -diff methods to conjoined analysis and the pros and cons of that, different pricing perception methodologies. So willingness to pay and understanding willingness to pay, surveys, focus groups, and the benefits and drawbacks of each of those methods. And I think you're constantly balancing this need for insights, but I fundamentally feel at every stage you grow through learning faster than your competitors and you really have to protect the team from too much research in product market fit and actually shipping stuff fast and getting real learnings. A key example of this is like,I think pricing is a really interesting area. It takes a long time to get to your perfect price point, build your gross margins. We all know that, but people could spend a lot of time in pricing research and customers on a keyboard or in focus groups or in surveys and as sophisticated as the methodology and the analysis could be, willingness to pay ultimately comes down in his best seen in launching something, looking at your conversion rates and looking at your billing rates and the true willingness to pay, because that's where rubber hits the road. Employing methods like when you're looking at conjoined analysis or max-diff, for those of the listeners that have used these methods, the trade -offs are, you know, conjoin is really good for understanding trade -offs between like features -

Pablo Srugo (14:46) 

Walk us through those actually, walk us through the analysis. Like what, what are they? What do they measure?

Dean Brauer (14:49)

Yeah. So basically all of it is about understanding feature importance and appeal, and then trying to understand what people would pay for it in its simplest way. And then there's just different ways to run the research and structure the surveys so that when you're looking at the analysis, you kind of want to sometimes rank feature importance. MaxDiff is really straightforward way to do that. And then Conjoin is a good way to understand trade -offs between features and bundles, right? And then like, of course you're going to run surveys and focus groups. I found straightforward surveys for...value proposition definition and really unearthing like the appeals and barriers to converting someone, super useful. And the source of that for me was that these surveys end up being voice of customer and you take voice of customer and you construct your messages around voice of customer. from top of funnel advertising into landing page into actual you know, copy in your funnel and your early month on book processes. Amazing. Conjoint, when we're trying to understand like new bundles, the next set of like big features with heavy and engine vesting resources, you know, investing a lot of entry sources becomes like a lengthy process and it's helpful to, you know, make bigger bets. But the end of the day, in my experience, like, The speaking to customers, eating your own dog food and bringing people something that they might not always articulate to you usually doesn't belly flop. And it comes down to the speed of execution. And the tension once you're moving into execution, I've always found is another way I would think about product is like when you're crafting the product. So, you I'm sure you're, you're speaking to your portfolio all the time. everyone, no matter what size of company is constrained through resources that are available to them, prioritization, focus within the company. And often I got to this place with product, which was when we're thinking about what we're crafting and how long we want to spend crafting it outside of like, you know, the real technical constraints of like, you know, it takes an hour to fly from Toronto to New York. Can't do that in less time. I would think about, are we an Apple? Like are we Apple? Are we a premium product that generates a premium price point? And that means we can't ever launch anything half ass. It has to be perfect. It has to be high end. And it's just going to take the time it takes to get to that level versus are we like, is this feature like a booking .com or Amazon thing? It has to work. It's friction free. We need friction free. has to work. But really like speed to market is way more important than premium craft because we have lots of testing and learning and that's crucial. Another way to think about like executing towards your product market fit and particularly in the early, early days to help break up the roadmap and like decide where you get to tell the wider team like product needs more time, it's just going to take more time because the craft needs to be there. So in our example, like as a story, again, we're dealing, we're a new brand, we're in financial services. 

Pablo Srugo (18:37)

And what did you hear by the way? I'm curious, like going back to that time, like in those early days, like, because here's one of the challenges, like when you do those early validation calls, right? You talk about doing 25, you're co -founder to 25. In B2B it's a lot simpler because you just, everything's a little bit more defined. You have more, you have a cleaner way of setting up those calls to get, know, these kinds of businesses that are this size, that size, that size, and also asking more pointed questions around pricing. But with consumers, I find it's really easy to get false positives because they're just very likely to be like, it sounds like a great idea. Yeah, I would love that. And it means nothing. Like what did you hear in those calls that gave you confidence that this was a real problem and that what you were looking to build would get real pulled?

Dean Brauer (19:19)

Good question. So I'm going to start with the false positive. I found in consumer doing pricing work through surveys and asking customers what something should cost was a decent indicator of willingness to pay in price point. But like they know they're in a focus group. They know they're replying to a survey and everyone's going to say, I want it cheaper and better and faster, you know? So I think that is in-field work and through actually putting a price point in front of people and seeing if they pay and what happens to your conversion rates in real time is more powerful. From a qualitative insights perspective, I remember very interesting moments. So first was like, how did I pick, we didn't have any customers, how are you gonna pick who you wanna speak to? So I would use demographics. So the first thing is you have to have children six to 18. I prefer if your children are six to 12, but I'll take six to 18. Second, I want a broad spectrum of the country. like, I'm not gonna hit everybody, but London and the South of England is different than Manchester and Liverpool. And it's different than a rural area to an urban area. So I try to slice it like that. And then, household income from, you know, we had a sense of what we wanted to charge for the product. We had a sense of the charging model. I wanted to find as I believed it was a broad based product, you know, a mass brand, could be a mass brand. So I wanted to find both ends of the spectrum. And I'll tell you the biggest insights are still really with me today. One was it was really clear that parents, once you start talking about allowance to them, about allowance and their allowance regime, a cash-based method of allowance had so much friction. You forget to pay your children. It almost was like, what we were hearing was almost like a negative source of tension in the family. was like, you're trying to do something good, but you always forget. Then your children are bothering you. You can't systemize. You know, one week you're like, okay, do some chores and I'll give you the rest. The next week it was like, no chores. Then it was like, actually here's some money. And then the kids would come to you and they'd be like, you owe me X and you'd say, I paid you. So it was really clear like mobile and digital would solve that. Second, really good insights around where their fears were. You know, what did it mean to not have an understanding of how their kids were spending money while balancing giving your kids freedom and independence, not understanding how much other kids were getting, you know, because people want to give what their friends are getting, you know, their kids friends are getting. And then like, as we were building in phase one, and we actually had a product to show people and they could use it. Things that we never realized but became super clear was just this sense of getting a notification every time your kid spends telling you as a parent, your child,you know, Jim or Steve has just spent $9 at McDonald's. He now has $32 available to spend. Gave parents this such an amazing peace of mind because Kids are often spending Monday to Friday after school and as they become like 10, 11, 12, they have more independence. They go to Starbucks, they go to McDonald's, they go to the grocery store and convenience store. there was like knowing how much your kids spent and how much was left and then knowing they got to the place was like 

Pablo Srugo (23:16)

That's right. Yeah, that's what I was thinking. It was actually less about the money and more about understanding their behavior a little bit, like a little glimpse.

Dean Brauer (23:23)

And then like the safety element of like, they got there. I know, you know, they didn't call me. And, then the last thing, and all of this carried through, like how we thought about product messaging brand was maybe if you spoke to some skeptics early and you said we were, we knew we needed to be a subscription based business and we didn't do any research around that. I'll talk to you about that in a sec. Cause it's an interesting story. One thing really interesting about speaking to different demographics was that it became really clear to me that we could build, and this ended up proving true, a mass brand with a customer base that socio-demographically was on, I'm gonna use the two extremes, high needs, low resource families to families with more means and resources and everything in between. And what I realized through talking to many, many customers was the tie that binds every parent was they all wanted to help their children understand the value of money. And it just played out differently in their family. And then on the higher needs, lower resource families, what was becoming clear was by doing this, they really perceived themselves as being a smarter parent than maybe their parents were because no one ever taught them about credit card debt. They have to learn it the hard way through tens and thousands of dollars of bad debt that saddled them for decades. And they would just say, Dean, at the end of the day, if I pay you for this product and all I get is that my parents never, my children never suffer from the credit card debt that I did, it's of value to me. And then interestingly, you would hear different things like, “actually your subscription saves me money”. That's interesting. I remember talking to a teacher in Texas about this. So tell me about that. And she said, well, you know, I go to the shopping mall with my daughter on a Saturday and like, till she had to GoHenry card, you know, up until that point, we'd go into the mall. I had a hard time saying no to her. And so we'd leave and I'd spend like $175 on stuff she didn't really need. And the second I gave her her own card and said, you have this amount of money to spend when it's gone, it's gone, but you can go make your own choice. That $175 trip took me down to $40.

Pablo Srugo (25:59)

I love that. And those are the kind of the stories you tend to only get by, talking to customers because it's not something you could, I mean, you could maybe logic your way to it, but you probably wouldn't. And that's just one of many, many, many stories that I'm sure you heard. And that's why I still want to stay close to customers because you might be delivering value in ways that you didn't really fully appreciate. 

Dean Brauer (26:23)

Yeah. And then you understand that. And that goes into a top-of-funnel message to test. it just is input into driving up conversion rates and figuring out your creatives.

Pablo Srugo (26:36)

 And by the way, the other question I have on those early days is, even was, just even to set context, what was V1? because you're in the payment space. you've got, there's a lot you could do here, but like, what do you hone in as, okay, this is the first kind of value we'll deliver on. And this is the feature set we need to do that.

Dean Brauer (26:54) 

Yeah. Look, V1, like every, you know, business you look at your V1 and you're like, my God, I can't believe that was V1. Right? That was just, V1 was a web-based app with core features. that really only just got better, but it was the spending controls. So like how much money your child could spend, where the card could be used, not through merchants, but could it be used at retail, in store? 

Pablo Srugo (27:30)

And it was your card, by the way? was like a debit card.

Dean Brauer (27:32) 

Yeah. It was a debit card that, yeah. 

Pablo Srugo (27:33)

How did you do that back then, like payments in 2012?

Dean Brauer (27:36) 

Yeah. So the really like the big first step in our business was-, you have an issuing bank on the backend who is your, they're a partner of yours and they sponsor you. They handle all the regulations. We own the customer. We have to do our own fraud and compliance. We build the brand, we build the product, but we have an issuing bank on the backend that gives us an e -money license and sponsors us. And once you get that, you can go to a card manufacturer like Visa. you know, a Visa and MasterCard card manufacturer and start to print cards and issue cards. And then you have a relationship with your issuing bank. And, you know, that's just the normal setup of a NEO bank today. 

Pablo Srugo (28:21) 

And how did you manage to get that done in 2012? And from what I understand with no funding, right? Because like the first three years was fully bootstrapped, at least if my understanding and the crunchbase data is correct. 

Dean Brauer (28:37)

Yeah, we had enough of a story. And that was a key partner in the truest sense of believing our vision and believing that we were the right people to go execute and build a big business. So they invested in us in the early days in the sense of allowing us to build out the product and get into market and then build revenue before they got paid. And then they believed in us that we'd built the volume and that it ended up being a good business line. It's a business line to these small issuing banks. And then the payment processor, you just work with, there's a lot of them now. Stripe is obviously the most famous, but there's tons of payment processors and people like Adyen and Stripe to work with, FIS and all these folks. And then the first version of the product was like, there's a whole bunch up to us. We weren't in financial services that we had to figure out. but the core feature was a debit card, allowance transfers, and spending controls. And then very quickly, like as you say in 2012, and if you think about it, we start building in 2011, it's really like, are you mobile only or are you web app and mobile? And we chose to go web app first because we thought the administration didn't need to happen like on a mobile phone and that the child and parent through, you know, a browser could log into their account, administer the money the child could spend. And then very quickly we built a mobile app and then mobile took over. And the things that I think we had done well was, from all these insights in our own families and speaking to customers, I think we got the feature set done well. I think we had a bit of, I know we had a bit of learning on integrations into payment processors and people like Adyen, KYC and doing EKYC. And there's like many different configurations so that could impact your conversion rate. And it just became very clear that in our business, product meant mobile, product meant moving money as seamlessly as possible and as reliably as possible, having amazing customer support. that product always meant, you know, not just feature sets, but also funnel and onboarding customers, which is super key in a regulated business. 

Pablo Srugo (31:17)

And back then, you said you launched a subscription model. Like what was the pricing back then? 

Dean Brauer (31:20)

The pricing was a dollar, a pound 95. 

Pablo Srugo (31:27) 

A month?

Dean Brauer (31:28)

Yeah.

Pablo Srugo (31:29)

And how do you go to market? Like what's, what are the channels that work to get the first hundred, like the first thousand customers? 

Dean Brauer (31:36)

First is,I just want to make a comment to round out what we were talking about earlier on pricing. It was really clear that subscription would allow us to do right by customers. Meaning that if we're, if the parent is paying us a fee, we could continue to invest in the product, but that we never have to nudge and drive a child to spend more than they should to get more interchange on our card spend. Interchange is the revenue that you get from the debit network and the merchant. So if you have subscription, not only do you have this like great recurring revenue business model, but like it truly allows us to be great actors and build the right kind of product. 

Pablo Srugo (32:19) 

To be clear, does that mean you gave up interchange completely or you just didn't take that much?

Dean Brauer (32:22) 

No, it's- in Europe, it's kind of gone due to regulation anyway. In the U S it's still,you know, someone like Chime will make a huge amount of money on interchange, but in the UK it was negligible. So we knew the business couldn't work anyway on interchange, but you had a market where in the UK, banking is highly subsidized by the government. So everyone in the country gets a free checking and saving account. You could withdraw money from an ATM for free. So if you're a member of Lloyd's bank, a big UK bank like RBC, you could go to Barclays, which is like CIBC and withdraw money from their ATMs and it's free. So there's this real culture of “banking should be free”. You couldn't get a debit card for your child till they were 11. So that created a lot of white space for us, but from a customer perception, it was a barrier because it was like, well, I could wait till my kid's 11 to get a free card, but obviously didn't get all the features we got. So subscription was like, really just everyone would have told us it was the wrong thing to do to build scale, but it was the right thing to do. We knew it was the right thing to do. 

Pablo Srugo (33:33) 

Because you're competing in a way against free or free soon. That's why it was so tough. Yeah, okay. 

Dean Brauer (33:38) 

Free soon. Cash is free, but cash has a lot of problems. So it's like, you know, do you want to pay for masterclass and LinkedIn learning instead of doing YouTube? Cash is like YouTube. 

Pablo Srugo (33:51) 

But it does, it seems like a big educational piece, especially because the category doesn't exist yet. And you're trying to get people to understand that, well, the value is not the card. The value is the notifications. The value is the control. Like that's why you're paying, but that's not easy to do as a startup, right? 

Dean Brauer (34:05)

Not easy at all. We always had customers who would pay. It took us a bit to figure out the channel mix. Understanding unit economics and channel mix was not obvious to everyone out the gate. 

Pablo Srugo (34:23)

But it was always, you say channel mix, it was always digital, right? It was always either what is social media or Google ads or these sort of things. 

Dean Brauer (34:28)

Exactly. so at first we were also really, really bootstrapped. So PR was super important early to get the message out and educate the customer, educate the media, you know, it was innovative and it was, it was super helpful for us. We would try, parent networks, you know, at this time there was a lot of blogging and parent networks. It was also straddling, you know, we were straddling like Facebook wasn't kind of ad tech where, where it is today. You also have to remember that. So TV was still dominant, yeah, and search was interesting because we had to create demand in search because we were pioneering the category. So you needed to tell the funnel to drive search interest. There was not like,you know, it took a long time for me to see mass interest on a kid's debit card in search or allowance and pocket money. 

Pablo Srugo (35:28)

And yeah, like, do you remember, I'm curious, like what was that ramp like, like, do you remember how long it took to get to like a thousand customers and then 10 ,000 customers? Was it kind of a slow thing for first or? 

Dean Brauer (35:39)

Really slow in the first couple of years, really, really slow. Lots of questionings around, you know, market fit and product and right channels. We used that time to continue to strengthen the product and then Around 2014, we started to really see repeatable growth. And for many, many, many, many, many years, Facebook was like TV. I mean, it just was incredible at finding our audience and converting them. 

Pablo Srugo (36:19)

Was that a big part of, because you're exploring Facebook in the early days of, I mean, Facebook's 2004, but you know, by the time it becomes like a real kind of advertising platform and then the saturation, like we're talking very different levels today versus 10 years ago when we were doing this, like how much of your early growth was just that finding that right channel and, for example, and like how the tailwind that Facebook was. 

Dean Brauer (36:42) 

So important, so important. So it's a very good point. And that's why sometimes when talking about product market fit, actually refer to it as product market and channel fit. “Channel fit, yeah”. Because like every business is the same. You live and die by your distribution and your sales. And of course we need to build quality products and we need to like, you know, bring customers something that sometimes they haven't imagined for themselves. But that was one of the single biggest opportunities for us which was the business succeeded because mobile. you could build a bank on a mobile phone, you could do it with a CapEx that was reasonable through your partner network like I spoke about issuing banks and processing. And then the last thing was Facebook. And so once Facebook started working for us in its early days, I mean, it really, you didn't even.

ever need to think of TV, you need it to match your Facebook and your Google spend. So your demand generation into capturing the demand lower funnel and really like a big recipe was and I would encourage from the earliest days to build this DNA in the company, but really understanding the relationship between your and a consumer business. It's obvious. I know it's obvious what I'm gonna say. Your demand generation at your top of funnel and your channel choice into your funnel. your landing pages, conversion rates, and funnel is its whole own marketing and product area. And you can't silo the marketing team from the product managers as you get into landing pages and funnels and voice of customer and lots of AB testing and really using voice of customer messaging, just key.

Pablo Srugo (38:35)

 And do you remember on that point, the specific numbers? I mean, I'm curious, like You say Facebook was working like how well, was it, know, what's the ROAS on, you know, back then or the conversion rate or whatever it is that you looked at.

Dean Brauer (38:49)

I'm going to throw out numbers that are probably not accurate just because it was so long ago, but to give you an order of, you know, a sense of what it was. At that stage, I can give you a few facts. Facebook could generate like easily a four to six XLTV to catch. Okay? And I can also tell you from that period to where we are now, the cost of advertising has gone up so much. The CPM has gone up so much. All the venture dollars pile in, all the consumer companies are using the same channels. Who really won in this last 10 years? Like Google and Facebook, obviously. Everyone funneling. 

Pablo Srugo (39:36)

That's right. Do remember the payback back then, like Fordax, LTV to CAG, what kind of payback? A couple months or was it longer? 

Dean Brauer (39:42) 

Our payback was what you would expect for a SaaS business at that time. Yeah, for sure. For sure. So it took longer. It took a few months to get it back. yeah, yeah, yeah. You know, we operate within the kind of bounds of like what a consumer SaaS business should. Now it takes you time to get to that payback period. It took time to get that LTV to CAC ratio. But once you find that channel and you're really focused on like advertising, knowing that in a consumer business, but B2B is the same, B2B is the same, like messaging matters, your creative matters. And then the interesting thing was also just thinking about year on year, once you have the marketing spend to look at your year on year spend and the CPM cost increase, that needs to be like fed back to the team to understand the baseline conversion rate improvements you need to gain just due to the cost of your marketing increasing, right? So if your Facebook spend is gonna increase, if Facebook's costs are gonna increase 12 % year on year, right, just to pull a number out, your conversion rate needs to improve 12 % year on year. That's where you're starting from next year, right? And so as much time as you spend on product market fit, understanding the channels, being able to have a systematic method and the methodology is important in the company to be able to build repeatable engines of growth and continuously test new channels and find the best channel mix. So obviously your data and your analytics are hugely important and all that just ends up feeding together. 

Pablo Srugo (41:29) 

And you know, Dean, I want to, I want to make sure we have some time because you ultimately, you know, you raised like $125 million or so you exited at eight core as it was a successful exit. I know the amounts are not disclosed, but you can get a sense that it was, you know, it was, it was a big exit. So I want to talk about that, but maybe just before, like I'm curious to get it, you know, as much as you can, numbers on those early years, like just the ramp of whether it's revenue or users, like how long did it take? I know we said, you know, it was really slow until the channel worked and then it was a lot faster. So like, what did that look like, what did that translate? Whether, you know, again, whether it's revenue or numbers, whatever you can share to give kind of a picture. Yeah, we, that would translate into what you want to see in your early stage business. It's-, you'd have a comment on this, but as an operator, either give me like a double, double, triple, triple, or triple, triple, double, double, but I want to see a four year period, five year period of high double digit and triple digit growth. And we certainly achieve that, you know, we certainly achieve that. And that was giving us the sense of like, look, obviously on small bases, that percentage could be really high and not mean much, but when you're actually building the base and you have a high base and you constantly are able to grow at such high growth- 

Pablo Srugo (42:50) 

So you were able to double slash triple at like the million dollar plus mark you were consistently through that. 

Dean Brauer (42:55) 

Yeah, like in those early days, I'm gonna say early up to let's just call the period of 2014 to 2018, there were years where we were top 10 fastest growing EU business and we were getting definitely high double digit and triple digit. 

Pablo Srugo (43:14) 

And so walk me through, you know, the acquisition in terms of like more than anything, how it started, how that partnership even began. Having spoken to a few founders about it and having gone through a failed acquisition myself, but I went through the entire process all the way till it didn't work. In your case, it didn't work. Like there's so much emotions that happened in that final period where it's almost there, but not there yet. And then, you know, in your case, when it does happen, what that, what that feels like. So I'm curious to just dive into that for a few minutes. 

Dean Brauer (43:47) 

I'm sure Pablo, when you're advising all your companies and you're sitting on boards, one of the most important things you're probably looking for in your CEOs or someone else on the management team, that's a founder is their ability to get the best deals done in the market, whether that's through sales and B2B and the best clients, or it's the best partnerships and strategic partnerships all the way to fundraising. And if you have a leader and founders on a team who can't raise money, it's obviously a huge problem if they're not able to go to the market and tell the story and raise money. I would say that your M&A is, in my experience, and I'd like you to react to this, but in my experience, the M&A process is very similar to your fundraising process. And those two things are really similar to closing like the biggest whale in the market as a B2B, you know? My feelings towards this are that I think when you're building a company and you're doing fundraising and you're doing M&A, I always say you're like burning your caloric burn is like 2X what it is in your normal operations. You're just, it's like really a lot of work. it's a very hard thing to do and you have to, you know, just be routine oriented. And I found that the good old saying of what your grandparents probably tell you, which is like, it's not done until it's done, right? And-

Pablo Srugo (45:30) 

but was there like a, did you already have a relationship with this company? Like there was already a partnership or how did they come in? 

Dean Brauer (45:36) 

Yeah. So really just from being in the market and you know,I met the CEO. We obviously had a whole team working on it, but it really just started from being in the market and being in the US market, being in the UK market, having done fundraising and just having our name out there. And it started as a really casual, but very good conversation. So you start talking and In our case, we cared a lot about who we're gonna do deals with. We care a lot about our customers and the intent of it has to be the right intent for who is the best custodian of this wonderful thing we've created. So it starts from those conversations. And I think for early stage founders and particularly ones who are doing it for the first time, I think just know that you're gonna build a muscle in fundraising that's gonna be, and you're gonna build a muscle, particularly for your portfolio companies who are doing big B2B deals, know, seven figure deals. That muscle is the same muscle you're gonna use on your exit one day. And I feel the most important thing is that you're able to understand how you segregate the business from these activities. Right? You have to run your business and operate day to day, month to month, like this is never happening. And you have to make decisions like it's never happening. You can't, like to engineer it, I think is, is a really difficult thing. And I think your team needs to be shielded from the intensity of big deal making fundraising. 

Pablo Srugo (47:35) 

I think so because I think it can be very distracting. And I think to your point, like a lot of these, in some cases they start off as partnerships, they start off as different relationships. And in some cases, a bit more serendipity, but not serendipity in the sense that you're out there building a great business that's doing really well, that's getting a lot of, that's raising money, that's getting a lot of PR, it's getting a lot of attention. And then sometimes these kinds of things come inbound and then actually making it happen, closing it and closing it on good terms, that's the sort of thing you're talking about, which is all those muscles you would have developed in things that are similar like closing enterprises or fundraising. So let me ask one kind of final question before we do the two kind of canned questions that we end with, because as a founder, exiting your company in a sense, and I don't mean to say it's like, it's kind of the goal. I mean, I know it kind of isn't because you want to build this long -term enduring company, but like in many ways it is. It's certainly an end to a story. And so you having, you know, having gone there, having been on the other side, like I just want to ask that one question, which is the day that it closed or the week after whatever it is, like, what did that feel like, you know, after a decade or so of building a business and then it happens, right? The exit is actually, you know, real.

Dean Brauer (48:49)

It's really exciting. It's really exciting, obviously, but you're also very tired. It's like everybody's very tired and very excited to get back to the day to day operations. to develop the question even more is like the day after is obviously excitement. You definitely feel like you've achieved a good goal and you've brought a lot of people together in a shared way with shared ambition and shared values to achieve something. But overall, I think it's just another milestone in the life of the business and your career. You know how perpetual company building is. It just, does not stop. There are so many milestones. And I think all of us who are in a visionary space, visionary thinkers, we're mostly looking forward and we're using our rear view mirror to just understand the tripwires we went through and try to not do them again. But I think it's really exciting. I was excited for a team. I was excited for everyone who supported us for so long when no one would talk to us when we were nothing, you know? And ultimately I felt this incredible feeling of like, this is the right platform to continue to build for our customers and build out the product set. And that like the company is just gonna continue to go with at a scale that like… at times is sometimes hard to imagine and feel, you know, you go through these peaks and drops and, now when I look at it, like, I just feel like it's just forever within me, the experience I went through, and I'm really grateful for it. And it just shows you like, hard things are hard and do the work. And usually things like when you do the work, they work out to like, maybe not, you know, maybe not to like your biggest fantasies. But they also don't burn into your biggest fears. It's like really when you have a good product, you found that product market fit, you run the business, you're making good decisions, spending wisely, using your cash wisely. Usually these things work out. 

Pablo Srugo (51:08) 

I'll ask the last two questions that are really just kind of rapid fire that we always end with. The first one is, when did you feel like you had true product market fit?

Dean Brauer (51:16) 

 When the channel started being repeatable and scalable. And it was quite clear that we were attracting people at a volume we had never seen before. So it's kind of like what I was saying at the beginning, from the outside, it's really clear from the outside. yeah, that moment was amazing. It was a really good feeling. 

Pablo Srugo (51:39) 

And then the last question is if you could go back 12 years ago with one piece of advice or some piece of advice for your younger self, what might that be?

Dean Brauer (51:49)

12 years ago, a piece of advice for myself is: focus and clarity for the company is focus and clarity for you and continue to worry about the things that are in your control. Everything else is not worth your attention. 

Pablo Srugo (52:07)

Awesome. Well, Dean, thanks so much for spending the time with us.

Dean Brauer (52:10)

 Yeah, no worries. Thanks for having me. It's great.

Pablo Srugo (52:12)

If you listen to this episode and the show and you like it, I have a huge favor to ask for you. Well, it's actually a really small favor, but it has a huge impact. But whichever app you're listening to this episode on, take it out, go to a product market fit show and leave a review. Please. It's going to help. It's not just going to help me to be clear. It's going to help other founders discover the show because the algorithms, whether it's Spotify, whether it's Apple, whether it's any other podcast player, one of the big things they look at is frequency of reviews. It's quantity of reviews. The reality is if all of you listening right now left reviews, we would have thousands of reviews. So please take literally a minute, even if you're just writing “great podcast” or “I love this podcast”, whatever it is, just write a few words. Obviously the longer the better, the more detailed the better, but write anything, leave five stars and you will be helping me. But most importantly, many other founders just like you discover the show. Thank you.