Itai Damti, CEO & Co-Founder of Unit – The Future of Software-Driven Fintechs, Solving Atomic-Level Problems, Founder Mistakes and Successes
Miguel Armaza sits down with Itai Damti, CEO & Co-Founder of Unit, one of the leading banking-as-a-service and embedded finance providers in the US.
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I sit down with Itai Damti, CEO & Co-Founder of Unit, one of the leading banking-as-a-service and embedded finance providers in the US. Launched in 2019, Unit is backed by Accel, Better Tomorrow Ventures, Insight, Flourish Ventures, and many more.
Itai is also a serial entrepreneur, having previously co-founded two companies in the financial industry back in Tel Aviv and Hong Kong.
In this episode, we discuss:
Learning from successes and failures of building companies around the world
“Being a founder is a grind everywhere, not just in one place. It's not for everyone.”
Itai has built companies in multiple continents and believes that while the US has a unique ecosystem with a deep talent pool and sophisticated capital, the knowledge required for scaling a company has become more accessible globally through free online content (much like this podcast) and accelerators like Y Combinator, 500 Startups, etc. These accelerator programs have tapped into international talent and startup communities worldwide, making the world much "flatter" for founders seeking to build a company outside of Silicon Valley or the US.
Some of the key lessons Itai has learned along the way include:
Prioritize execution and de-risking: Efficient execution and de-risking is key to build a successful company. Learn from your mistakes and make them less costly in the future.
Foster strong partnerships: Unit has many partners, but they work the closest with their bank partners. Itai advises entrepreneurs to maintain strong relationships with key partners and understand the importance of collaboration within the ecosystem.
Practice empathy and understand risk asymmetry: Entrepreneurs should be empathetic to their partners' and clients' perspectives, risk profiles, and needs. Understanding the risk asymmetry between banks and tech founders, for example, can help forge stronger relationships.
Adapt to changing environments: Being adaptable to different market conditions is a non-negotiable for founders. Whether it's a bull market, a bear market, or a quieter ecosystem with less hype and dollars.
Optimize hiring processes: Make better-calibrated hires and set up team functions as early as possible to ensure the company's growth and success.
Establish a suitable work culture: Determining the right work culture for your company is essential for fostering productivity and collaboration.
Embracing "atomic" problem-solving and why this is incredibly important in product and company management
“I keep nudging people towards what's the one-week version of what they're working on? What's the one-day version of what they're working on? What's the 10-minute version of what they're working on?”
In Itai’s experience, growth at a startup feels like a constant state of failure, and precision is a key principle that can set a company apart and should be embraced by company leaders. It involves focusing on atomic problems and implementing atomic solutions to avoid big projects and only prioritize incremental improvements.
What fintech founders should keep in mind when partnering with banks and financial institutions
“Founders tend to forget that banks have a different risk profile than they do. Tech founders want to grow, they want to take risk... And banks think about the world in downside terms - they think about capped upside and unlimited downside.”
Many fintech companies want to work with or sell to banks. Whether you’re working with a small community bank or a large-cap financial institution, you should always remember that bankers see the world very differently than startup founders:
Be patient and have backups, as banks can be easily get distracted and the momentum of relationships may change.
Practice empathy and understand the risk asymmetry between tech founders and banks, as banks have a different risk profile and think about capped upside, but unlimited downside.
Signaling is very powerful with banks, as it gives credibility to your efforts. Think about signaling when it comes to company hires, clients, and media appearances.
Fundraising lessons and why you should not ignore investor feedback… and a lot more!
“What I've learned is that the reasons a company gets rejected by VCs are typically the reasons why your company might fail. It's an obvious statement, but there's signal in every one of these conversations.”
Entrepreneurs should take feedback from investors seriously, even if they are rejected. Investors' concerns often highlight the risks that could lead to a company's failure and learning from these interactions can help company leaders address the concerns accordingly to build a sustainable business that can withstand market fluctuations and competition. Because at the end of the day, it doesn’t really matter who invests in you, all that matters is whether you can build a valuable company that stands the test of time. Itai reminds us of Ben Graham’s quote: “In the short term, the market is a voting machine. But in the long term, it's a weighing machine.”
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Miguel Armaza is Co-Founder & Managing General Partner of Gilgamesh Ventures, a seed-stage investment fund focused on fintech in the Americas. He also hosts and writes the Fintech Leaders podcast and newsletter.