OBSERVATIONS FROM THE FINTECH SNARK TANK
The war for talent in the fintech space raises a provocative question: Should fintech startups hire executives (and other employees) from traditional banks?
If you think the answer is a simple “no way” or “of course they should” you’re overlooking the nuances in the question.
Alex Johnson, author of the Fintech Takes newsletter, lit the fuse to a Twitter debate recently with the following tweet:
It’s not that simple, however. Some people disagreed with Johnson:
“A blanket ban is a bit over the top, but most traditional bankers have the wrong mindset for a crypto startup. It might be disturbing for bankers to realize nobody wants them, but people who are successful in banks wouldn’t fit in the crypto culture anyway.”
—Marc van der Chijs
“A very small % of these people are actually ready for startup land. Many challenges re: culture, comp expectations, title/reporting/seniority issues, lifestyle expectations, being scrappy, etc.”
—Justin Overdorff
Frank Rotman, founding partner of QED Investors—and a former banker himself—weighed in with his own thread and commented:
“Banker Perspective: Fintechs don’t realize how the machinery works. They don’t appreciate how to navigate building products and delivering services in a highly regulated world. They should appreciate how many landmines could be avoided if they just hired experienced people.
Fintech Perspective: People trained in the traditional banking ecosystem won’t survive our environment. They take too long to make decisions and almost uniformly err on the side of minimizing risk vs. managing risk. Bankers aren’t ready for fintech land. Speed is life.”
Great Thread, Stupid Debate
Good points on both sides of the argument. But whether or not fintech startups should hire bankers is the wrong question to consider. The right questions are:
1) When is the right time for a startup to hire people who are more experienced, more comfortable, and quite frankly, better at working in—and creating—a more structured environment?
Too many startups (fintech or otherwise) wait too long to transition from a “move fast and break things” approach to a process-oriented, self-sustaining environment.
Ironically, I’ve met a few founders on the other side of the spectrum—those who want to move to a more structured environment too soon in their startup’s evolution.
Overdorff is spot on when he says few bankers are ready for startups. But just as banks want to work with fintechs to help instill a more entrepreneurial culture, a fintech startup might be at a point where it needs bankers to evolve its culture.
2) What kind of person is the startup looking for?
As Keith Rabois, general partner at Founders Fund, explains, “the process of interviewing an executive is vastly different than interviewing individual contributors.“
Hiring a banker for an individual contributor role might be a no-brainer. I know three former bankers working for fintech startups who have done well there—mostly due to the fact that their role is to build bank partnership/distribution channels.
Hiring a banker for a more general, executive level position at a startup isn’t as easy a decision, however. Rabois suggests evaluating candidates on the extent to which they:
- Create or protect value. Does the startup need someone better at value-creating or value-protecting?
- Think like an owner. Do they own their mistakes? Are they up at night thinking about what they would do if they were CEO?
- Are capable of strategic thinking. Can they keep your entire business equation in their head and come up with new levers you hadn’t thought of ?
- Fill management gaps. Do they diversify your leadership team’s style and background?
- Attract talent. Can they bring on people even better than themselves?
3) Why is the banker looking for a job in a fintech startup?
Quick story:
Some years ago, when I was working for a big technology analyst firm on a team that did research for CIOs on how to manage IT, we received the resume of a candidate with impeccable credentials.
This individual was been the CIO of a major Wall Street firm. We had no doubt he could have opened doors for us in financial services firms.
During the interview process, we asked why he was entertaining a move to a technology analyst firm like ours. His response:
“I’m at the point in my career when I want to downshift a bit, and start giving back to others some of the lessons I’ve learned throughout my career.”
That was the end of that process.
As we were working 60-70 hour weeks, the last thing we wanted was a colleague who wanted to “downshift.” In addition, having worked for one company for the majority of his career, his “life lessons” were too narrowly focused on his experience with one company.
As our CEO concluded, “he should be one of our clients—not one of us.”
The tough reality for many bankers looking for positions in fintech startups is that they’re looking there for the wrong reasons.
Perhaps they’ve been laid off because of downsizing or a merger, or maybe they’re trying to escape a no-growth environment. Whatever the reason, in many cases, they’re the wrong reasons for looking for a job in a fintech startup.
The bottom line on the question regarding the hiring of bankers by fintech startups is that there’s no simple answer. Rotman summed it up well, however, when he tweeted:
“The Venn diagram of 1) traditional banker experience; 2) willingness to jump to a startup; and 3) will thrive at a startup has very little overlap. That’s the challenge.”
That’s very true—but the bankers in the overlap of the Venn diagram could be worth their weight in Bitcoin at the right fintech.
