If you want to get an outsized win, you’ve got to take a look from a different perspective. How do you get inputs that can help you decide to decide better?
If you want to get an outsized win, you’ve got to take a look from a different perspective. How do you get inputs that can help you decide to decide better?
Christian Duffus, Founder and CEO of Fonbnk, joins Scott as co-host on this episode of Founders Focus talking about examining your business with diverse thinking and taking advantage of the unexpected. Christian is a successful fintech founder with 3 fintech exits under his belt.
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Scott Case 0:00
Welcome to Founders Focus, a podcast made for founders by founders. I'm Scott Case, CEO and co founder of Upside, and I created Founders Focus to help share free resources and actionable advice. Together, we're building a community for business leaders, entrepreneurs and founders to come together to tackle today's challenges. This podcast is powered by my awesome team at Upside. Please visit foundersfocus.com to join the live video sessions or to catch up on past topics.
Scott Case 0:28
And I'm absolutely thrilled to introduce you to our co host Christian Duffus. And he's the founder and CEO of Fonbnk. And I'm going to turn it over to Chris to tell us a little bit about himself, about what he's working on now, and then we'll dive in. So welcome, Chris.
Christian Duffus 0:48
Hey, thanks, Scott. I'm Chris Duffus. And obviously, I'm founder of Fonbnk. But I wanted to share a little bit about my broader background because I think that'll give you some context or I wanted to share some context as we talk about this topic today. I'm an immigrant. I was born in Kingston, Jamaica, and my parents and I came to the US when I was a young child, and moved to West Lafayette, Indiana of all places. My dad was an engineer and wanted to get his Ph.D. And my parents actually had met at Purdue University and so it seemed like a natural place to go back to, and then from there we actually ended up going to Florida. And along the way, I matriculated back up to New York after college and became an investment banker at Goldman Sachs. So I think I can do pretty much everything because of that. That's kind of a joke. But what was really interesting about that experience is A) it taught me a lot of fundamentals about business. But I was there for the dawn of the internet. I remember going into work and there was this buzz about this new company called Netscape that was about to go public. And we knew that day that the world had changed. And along the way, a lot of our business mix had changed to more tech companies, and I saw the sort of young entrepreneurs and founders and engineers come through. And it hit me that, like, I really liked what I was doing at Goldman and learned a lot, but I wanted to build things. And ultimately, I wanted to be like these folks that were coming through the office. And so from there, I had a unique opportunity to work for the family office of John Kluge, who at the time was one of the richest guys in the country before the tech boom and what it is today. But he made his money in wireless telecommunications, which has sort of stayed with me as part of my sort of core areas of expertise. But along the way, you know, through business school, I went to the Darden School at UVA, I actually got involved in the payments space, and ultimately ended up building and selling three companies. My most recent one called leaf college savings, which we sold to SoFi back in the fall of 2019. And now it's their SoFi at work platform. And then sort of finally, along the way, both in my experience in terms of FinTech and telecommunications, I sort of fell in love with this thing called the blockchain and cryptocurrencies, and have been sort of really fascinated with that. And that sort of brought me sort of full circle where I am today with Fonbnk, where we have essentially combined sort of telecommunications and payments utilizing the blockchain.
Scott Case 4:05
That's awesome. And I picked up on your joke about being an investment banker means you can do anything. What do you think was most, not just being inspired but was there something about the types of companies that were emerging that was particularly either fascinating to you or exciting to you that had you want to go down a path to actually start your first company because it sounds like you transitioned from more of the investor side of the equation into Alright now I'm going to take the leap. Was there an idea or a problem or a moment in time that inspired you? What gave you the courage to say, Okay, I'm ready to actually go do this now?
Christian Duffus 4:51
You bring up a really good question. There were a lot of inspirational aspects in terms of how I arrived at my current venture, but in terms of how I decided to and when I decided to be an entrepreneur, just candidly it was a crazy year for me in 2011. And this is sort of how I transitioned sort of being a principal executive to a founder entrepreneur with my idea and having the courage to sort of strike out on my own. I got a divorce in 2011, I got audited by the IRS for two years, and then this company I had been working on for a long time, it totally blew up. And then to make matters worse, my dad passed away. As I think about being an entrepreneur, I had this idea for leaf college saving, and I knew my dad would have wanted me to pursue it. It is one of the things I sort of pitched him, and he just thought, this is this phenomenal idea about helping American families afford higher education. And I sort of surmised through that process that, what's the worst thing that could happen in this? Sure, it might go under, but I would have helped maybe 10s of 1000s of families get access to college that they may not otherwise had that opportunity to, and then now that the platform is part of SoFi, it has a home in perpetuity to make that sort of social mission a reality in perpetuity.
Scott Case 7:02
I'm really glad that you shared that, and we're gonna talk about blockchain and technology in a moment, but I think making that choice to take that leap is a difficult one. And it's interesting to me how often some kind of traumatic disruptive life event kind of pushes, you know, if not, now, when? Did you sort of feel that because it's funny with a series of disasters, you're like, well how bad could it be?
Christian Duffus 7:39
That pretty much was my thought process. And it was one of those things where I thought about, like, I needed some control in some element of my life, and whether it was going to the gym every day or at least controlling the time that I'd go to the gym to, you know, hey, I have this idea, these are the sort of the little steps that I could take to make it a reality.
Scott Case 8:05
Yeah, that's great. And thank you for sharing that. One of the things that comes up a lot when I'm doing one on ones with founders, and we have a lot of folks who have a side hustle or an idea that they want to go and their day job is something else, and getting the courage to say now's the time is often difficult. And I think again, it's a pattern of oftentimes people think of it coming from a position of strength but my experience is that it's almost always coming from a position of things have been disrupted in some way and that's driving it there. So thanks for sharing that.
Scott Case 8:37
I'm going to combine two things here. One of the questions came in the chat around integrating kind of credit and payment blockchain wallets with Fonbnk. And before we go there, phone payments, particularly in the developing world have been around for a long time, right? The notion of using your mobile phone to trade minutes, etc. Could you just talk a little bit about kind of the state of the art, as it was let's say five, six years ago, and then what Fonbnk is bringing to it from a why the blockchain becomes a powerful tool in that mix. And then we can kind of dive into some of the other elements.
Christian Duffus 9:21
Sure. So you know what's happened and in terms of payments, innovation is really around the concept of like open banking. And what I mean by that are like, the ability now to companies like plaid that can mine this data out of your bank account with your permission most of the time that shows how much money is in your account, transaction data so that people might be able to interpret it as well as banks enabling third parties, like a Venmo or some of these Neo banks, to sort of use their rails, so to speak, and provide sort of this new front end on top of it to do sort of better customer engagement activity, right? But I would still kind of describe it as like the old Fred Flintstone car in that hey, there's this moving vehicle, but you open up the hood and there's like a dinosaur pedaling, right. And so, one of the epiphanies I had around sort of the blockchain is you now have this sort of capability to if you combine the best practices of open banking to actually convert that data into an asset in its own and make it immutable, so that you can essentially leverage what's there in an over the top way, but without having to build out a new set of infrastructure. But also converting things that might not ordinarily be in the financial system, like mobile airtime credit, into a broader ecosystem. And actually stepping back for a second what I might even describe it as one of the epiphany that I've had with the blockchain is just a whole reinterpretation or reevaluation of actually what money is. And I think about generationally, I sort of pose this question to everybody, like how much actual cash you have on you at this very moment. And in this sort of period of this pandemic, how many times you've been to the ATM to collect cash to make payments? And the answer is probably less than the number of fingers on your hand. And, that's probably the case for money as well. And so money has been totally abstracted now. And so things like a Starbucks card, there's actually a secondary market for that or your frequent flyer miles, there's a secondary market for that, or, or even like vacation, accrued vacation time? Well, what if you could like, stitch all this together? And, you know, while each of these different silos of value or your life energy is not necessarily technically money, it can actually be used as a form of currency, if it's sort of strung together in this seamless fabric of commerce, and that sort of what I think is, is new with what the blockchain can do that ordinarily sort of siloed repositories of value could not.
Scott Case 13:14
So when you describe the problem that Fonbnk solves, what's the elevator pitch? Here's the problem and then what's the Fonbnk solution?
Christian Duffus 13:26
Sure. The vast majority of human beings are sort of unlocked from progress and their potential because they can't participate in this 21st century digital economy, whether it's access to the Internet, and as a result, financial inclusion. And one of the things that sort of hit me and got me into Fonbnk actually, it started as a wager with my brother in law. He came back from Kenya and he had $100 leftover on his safari comm sim. And he bet me that I couldn't resell it back to some airtime agent in Kenya. Well, odds were in his favor given that we're both in northwest Washington DC at the time going into the Thanksgiving holiday, but as the entrepreneur and brother in law didn't want to be given an opportunity to make fun of me in front of the family, so I hustled and over the course of a weekend, took out Facebook ads, found some prospective buyers in Nairobi, got them into a whatsapp group and used his SIM card and mobile phone to sell out the airtime. Well over a year later, we have over 600 mobile carriers on track to transact a few million dollars in revenue and have 10s of 1000s of users all across Sub Saharan Africa leveraging our current platform. The significance of that is now our solution can sort of essentially enfranchise people digitally financially, by sort of tapping into probably one of the broadest networks in the world that's sort of organically already seamless and accessible to every ilk of mankind on this planet. And it's sort of the mobile telephony network. People don't realize this, but there's like 8 billion active SIM cards in operation today, enough for every man, woman and child on this planet, many people have multiples. And all a SIM card is is like a little debit card or store value card. Well, now with our solution, we literally in an over the top way without permission can link all those together in the form of a payment network using the blockchain.
Scott Case 16:10
Be nice if I unmuted myself, it's my first time. I want to dive down not so much in the technical details of blockchain, but more about how investors and observers often have bias against new technology or discoveries, and how do you avoid the pitfalls of that? It was easy to dismiss Bitcoin and even the concept of blockchain 7, 8, 9, 10 years ago, but it's obviously emerged as to being a meaningful part of the global financial system. It's small, but it's still like, it's not going anywhere. So how do you avoid the bias of sort of the new, particularly if it's technology that is difficult to understand? I think blockchain and crypto are conceptually difficult, it's based on a deep set of mathematical underpinnings. What do you do to keep your mind open to those things? And how do you do that? And what are the things you see others kind of dropping the ball on?
Christian Duffus 17:21
Well, I've always sort of seen the world as a bit of an outsider, and given my upbringing, I've had to force myself to probably be a little bit more engaged in the process. I think you can't be all things to all people or understand all things. So there's sort of these lanes that you have to have. But, for me, part of it's like passion. And, after I'd sold my first company, payments was definitely something that I had a passion for, and, as such, there was this discovery process that I developed a discipline around to understand whether it's like who all the different ecosystem players are, how these platforms are architected, you know, it's like, literally, if anybody pitched me on some type of FinTech idea, I could probably sort of unpack it and share a perspective on how you might build it, and who you might partner with to go to market. I think the challenge for going to market and having potential raise money, and I got lucky that I have a swath of former investors and colleagues who believe in me, and the vision, like many of us a lot of these ideas don't just develop in a vacuum, they are based on sort of shared experiences that I've had, we've had in the past.
Christian Duffus 19:17
How not to get caught in this trap, have an open mind. Actually one of the first books I ever read on investing that sort of addressed this is like, the Peter Lynch, a random walk on Wall Street. And he's like, buy what you know, and the way I sort of describe it from him was a lot of times these things are just like in your face. Like if your kids are all wearing the same shoes and petitioning you to go out like, Hey, Dad, Mom, please, I want to buy this. Well, you might want to look into it, right? Is it a potential investment or opportunity? But then I go back to like, I like to sort of unpack things and be objective and look at objective data sets to do that. And, I always sort of caution myself against that whole sunk cost fallacy, where just because I invested in something before doesn't mean that it's worth something today.
Christian Duffus 20:50
And the same is true for investing, prior performance is not indicative of future result. What I might even say, this is sort of my new line for the week, I was listening to some sort of podcast, but it resonated with me, if you were born in the 70s 80s 90s, like, all the science fiction that you ever watched growing up is actually now coming to fruition, or at least all the movies and TV shows occurred in like 2020 plus or minus a few years. And the 2020 that we experienced was literally this sort of dystopian sci fi like event in everything that happened. And so I take that as sort of the future is now. And a lot of these business models that might have been far fetched prior to 2020, now are thriving. And even the cohort of people that are using them, like my mother who's 75 years old uses online food delivery services, buying on Amazon all the time, loves Netflix. So you've seen this whole sort of crossing this sort of chasm, to use a phrase, into the future, which is now.
Scott Case 22:27
So there's a driving element there around curiosity, right? Stay curious, dig in on things, try to understand them. Because if you don't understand them, then you can't see how they play in, and to your point about invest in what you know or what you understand, you've got to be able to understand it. It also sounds to me like, there's a lot of things that are happening right now are I guess defined or thought through back in the past, and we're sort of living through this.
Scott Case 23:06
So how do you look a little bit backwards to see what those trend lines were to understand, hey, here's how we got here, both through science fiction and reality. What I'm curious about is as you look forward, have you found yourself kind of bucking the trend? Taking the counter intuitive position? My guess is that as a technology person, you could have built Fonbnk without the blockchain, right? Your insight was, hey, there's all this stored value on all these SIM cards, you hacked your way through using Whatsapp to get there, you could have built some other solutions set that would have been acceptable. And you probably may have met some resistance in using the blockchain instead of using some other technology. Like, how did you come to the comfortable place to say, you know what, we're gonna do it this way anyway?
Christian Duffus 24:04
Part of it is, and this is sort of another tenant I have and I guess you develop as an entrepreneur in building your business, I feel as if I'm an exceptional business development person, right? I can get to anybody in the world and concoct any type of deal with an organization. The problem is having professionally done this with banks, governments, telcos in the past, they're some of the most difficult organizations to do business with it just from a timing standpoint, even if they want to buy it from you. But you also have a relatively concentrated group of people that can say no to you. And so a lot of the paths to market and product in a traditional sense required us to go through directly through the telco, and nine out of 10 times they're gonna say no. And so we needed a way in which we could sort of work around the homogeny of the global telco oligarchy.
Scott Case 25:26
So all those people are saying no. First off, you got to be persistent. How did you break through ultimately?
Christian Duffus 25:37
Oh, like I said, I mean, this business is not predicated on acceptance by them, other than the fact that they have a service, right? If you look at WhatsApp and any of the messenger platforms, or even like YouTube, most of the businesses now are predicated in terms of the over the top business, like Whatsapp is a perfect example in that. It's actually sort of an inspiration as to why I went down this path. I wanted to learn about their infrastructure after I saw that they got bought by Facebook a couple years ago. And I'm like, man, they must have this huge voice over IP infrastructure, I wonder where they're hosting that and so forth. And then I was digging into the 8k and like they've outsourced all that to Twilio. And they had like 50 people in that whole entire company and most of them were engineers, but I've had engineering teams bigger than that at prior companies with a whole lot less value that was created. And so I was like, Oh, wow. And so you also have to think about, when you're architecting your platform, and this is where things like the blockchain are actually really interesting, especially in FinTech, but you can't burn the candle at both ends. If you're gonna have to acquire customers, you can't have to build this whole wholly integrated stack behind it.
Scott Case 27:22
So we talked a little bit about kind of the technology choices and avoiding bias around that, as you sort of proceed. There's a lot once you're into building the business of a bazillion decisions that you need to make. And where do you think founders get balled up in making decisions oftentimes with little information? And what strategies have you used to overcome them? Or what recommendations do you have when that happens? Because as founders, we're faced with hundreds, if not 1000s of decisions -- some big some small every day, and where do you think people get stuck? And what advice do you have to overcome it?
Christian Duffus 28:14
I'll give a plug to my business school, the Darden School at UVA, I think there's a couple people on the groove for that. Have a framework. How are you going to decide to make your decision? Because I think that's really, really important. People say things like, buy low, sell high, or some type of sort of decision criteria. One things I actually like to do when I'm thinking about some of these paths, create sort of a decision tree. People are notoriously bad at making decisions, especially evaluating them relative to other options that they might have. And the simple sort of process of creating this tree and describing probabilities of certain outcomes, and then maybe going away talking about it and coming back and reassessing those and thoughtfully sort of role playing that out, I think is really important in running your business. For me, it's somewhat innate as I think about this every day, these types of things at least, like this type of framework every day.
Christian Duffus 28:49
I think I mentioned before, because one of my sort of legacies from being a banker and having done this analysis so much, I can essentially create this DCF analysis all the time. And to me the power of like a DCF analysis is that it's all your present value of future cash flows, discounted back to today. But you also have to do this type of scenario planning incumbent in that and like, Okay, what are the costs associated with that, where are you going get the revenue, what's the margin on these things? And I can sort of see in my head, kind of like a Queen's Gambit type of thing, how these things play out.
Christian Duffus 30:32
I think for a lot of entrepreneurs, especially for something new, and to be honest, like you don't know what you don't know in a new venture, right? Unless you've done it a million times before, but even still, they're still unknown unknown. And I think as an entrepreneur, you want to spend your time of there's known knowns, you have to get that. There are unknown known, well, that's actually where you spend most of your time. And then there's unknown unknowns, and that's sort of the general risk of newness and the future, which nobody can really assess. And I think the frameworks help with those known unknowns. No one's gonna make a perfect decision, but how you can make sort of better decisions. And if you roleplay out each of those different scenarios, and you don't need to be an MBA or investment banker or a futurist to do that, you just need to actually be thoughtful about what those different scenarios look like and how you might manage them.
Scott Case 31:53
I also find that by using a framework where you force probabilities, it allows you to talk about the problem with other people that you often need to bring along, when you're making a decision where you've sort of made this decision to be able to say, look, I think there's a 60% chance of A, there's a 30% chance of B and there's a 10% chance of C and that doesn't mean that C is not gonna happen, but it just means that we might not want to spend a lot of our time and energy trying to deal with taking the risk out of C right now. Let's figure out how we deliver against A and B, whether they're negative outcomes or positive outcomes doesn't really matter.
Scott Case 32:32
And so what I find with a lot of entrepreneurs is they either blow out all the options way too far, right? So there's just too many choices and you got to whittle it down or group them or collect them, or they try to play too many moves ahead. And the challenge with most entrepreneurial endeavors is that your planning horizon is usually pretty short, you've got some big dream, right? That's out in the North Star way out there. And then you've got like, this week, it's like, Okay, I've got a bunch of decisions I need to make this week.
Scott Case 33:05
And the other thing that I see is, there's a cost to new information. And I think a lot of entrepreneurs forget that. Well, if I wait another week, what was the cost of waiting a week? What new information did you get? And did it actually tell you anything that was going to change the difference between now A's 55 and B's 45? Did that actually change your decision frame? Probably not. And so that's the other element in that decision tree exercise is, What's the cost of new information that might lead you in one direction or another? And will it actually move the needle in some material or meaningful way?
Christian Duffus 33:43
So in that sort of Decision Sciences analysis, there's this other term called the value of perfect information. And if you're doing this, if you assess the sort of expected value, either literally or metaphorically, well, you should be willing to pay, let's say the value is 100, you should theoretically be willing to pay up to 99 to get that perfect information, because then you can just repeat that over and over again. And so how I addressed that in my business today, is I do a lot of testing. And I think probably the fault of many entrepreneurs is that they actually don't test out the concepts. And before we even code anything, we'll do sort of manual MVP. Which might even start out as like basic surveys, where you sort of figure out sort of relative value assessment. And you could do this subjectively online, doing digital advertising like Facebook, it's really easy to run these things on and literally might cost you $5. And so, there's an investment in time and maybe a little bit of money, but I think it's really important to get the sort of data set, whether it's just to give you confidence. But you can either bring people along saying, hey, Scott, like, here's this one fringe scenario that you were very concerned about, we just did the test, and we have a couple 100 people responding that that wasn't even an issue. But also sort of various stakeholders. And this is how you sort of objectively can bring them along within that sort of set a framework.
Scott Case 35:37
Awesome. Well, we're at the end of time. One of our Founders Focus members asked 862 questions, and if you're open to it, I'd love to send them to you. And perhaps you could draft some quick responses and we could post them to the community.
Christian Duffus 35:54
Yeah, I'd love to.
Scott Case 35:56
We'll take care of that. I have two questions to round out and you can sort of do them lightning speed. So one is what are the biggest, let's say change in either a habit or a mindset that you made in the transition from being in banking and on one side of the table to being an entrepreneur? Is there something that you observe in yourself that said, I used to think this way and now I think this way?
Christian Duffus 36:25
I think it's like an action orientation. I was at lunch a couple years ago with a friend. And, we hadn't seen him in a while. And we're this big group. And he made a comment, and I didn't really know how to pick it up first. But he said something to the effect of like, Chris can start a new venture faster than anybody that I know. And I think it hit me and I had to think about it, like, oh wow, that's a compliment. But I think a lot of that sort of a learned muscle memory or skill in that when I was a banker I'd create great presentations. I could create Excel spreadsheets when you printed them were like an inch thick. But that doesn't necessarily mean that it's a great business or that my assumptions were tested in a market driven way. And so now I think that's the bias for action.
Scott Case 37:41
I'm just going to hold up a sign that I have, it says, Now is good. And that now is good is that bias for action. That is, hey, look, we could wait a long time or we could go now and what's in the way of that. And so I think that's an important part of it. There's also the counter to it, which is, you still need to be thoughtful, and what I find is that the more you practice it, you can run through the same decision process, you can run the same experiment, but you could do the experiment in an hour instead of in a month, right? Still do the process.
Scott Case 38:19
The last one is, it's a yin yang problem, which is, oftentimes disruption creates opportunities for some and despair for others. And I'm going to reframe it a little bit. Do you see those opportunities or even what you're doing with Fonbnk as sort of a zero sum game or are you in the abundance camp? Does somebody have to lose in order for you to win?
Christian Duffus 38:56
I am a capitalist and a bit of an economic Darwinist in the process. That said, and I have read a lot of science fiction books along the way, and what I mean by that is this is not a Soylent Green type issue. But, I do think you can be thoughtful in terms of how you build your business and who your stakeholders are. One of things that I thought about leaf college savings, and the thing that I saw in the future was this lack of investment in education. And ultimately, I envisioned a future where you might have companies that sponsor the college savings for children in their communities, so that ultimately if they want middle class consumers that can afford their premium product, they have to invest in them to develop them to have those types of opportunities where they can make jobs or get jobs to continue that sort of life cycle. So, I guess the short answer is it is not zero sum, but there needs to be thought about the people that aren't beneficiaries of that success where they land because, I forget the philosopher who said this, but no man or woman is an island. And it's because of these externalities, like, Sure you can be a maximalist for profit today, but you may not have customers tomorrow, and so you're sort of heading towards a cliff. And I don't think any rational business person, if you take a long term perspective, I think you do have to care about everything beyond your company and your community.
Scott Case 41:16
Yeah I think the collective stakeholder model is really important to understand, and they’re not all equal weight necessarily, but they need to be part of your overall equation. Chris, this was excellent, thank you so much for meeting with us.
Scott Case 41:30
Thanks for tuning in to this episode of Founders Focus. What did you think? You got any feedback for us? Got a topic that you'd like us to discuss, or maybe a future co host? We'd love to hear from you. Just hit me up on LinkedIn at T Scott Case. And join us at foundersfocus.com to stay up to date with the latest episodes. And join us live every week at our Founders Focus sessions. Hope to see you there.