This article is part of Fintech Leaders, a newsletter with 80,000+ builders, entrepreneurs, investors, regulators, and students of financial services. I invite you to share and sign up. If you enjoy this conversation, please consider leaving a review on Apple, Spotify, or Youtube.
[Original air date, November 19, 2024] I travel to Alexandria, Virginia for an in-person interview with a fintech legend - Nigel Morris, Co-Founder of QED and Capital One.
QED is a global fintech venture capital firm that has backed numerous amazing companies, including Credit Karma, Nubank, Mission Lane, Avant, SoFi, and Klarna. They currently have over $4.0 billion in AUM.
Prior to QED, Nigel co-founded Capital One in 1994. The bank today is amongst the 10 largest banks in the US with almost $500 billion in assets. They are also one of the most innovative financial institutions that have inspired countless of entrepreneurs worldwide.
In this episode, we discuss:
Building Capital One and the principles and innovations that shaped the success of the bank
“I jokingly say that in those days, I didn't know the difference between a letter of credit and a line of credit, and I used to get assets and liabilities mixed up. And I still do.”
A Fanatical Focus on Unit Economics and Scientific Methodology Transformed Capital One into a Data-Driven Powerhouse.
Nigel Morris attributes Capital One's success to an unwavering emphasis on unit economics and a scientific approach to business decisions from day one. Drawing from actuarial analysis and his consulting background, Morris emphasized calculating the net present value per customer—a more precise metric than conventional ratios like LTV to CAC. This focus allowed the bank to evaluate ideas based on their real economic value at a unit level. Additionally, the company embraced a rigorous hypothesis-driven methodology in Karl Popper style, aiming to disprove assumptions rather than merely seeking confirmation. This approach led to groundbreaking practices like risk-based pricing, teaser rates, and opening credit access to near-prime and subprime customers. By conducting thousands of real-time A/B tests, Capital One operated as a "giant experimental laboratory," constantly refining its strategies based on data-driven insights.
Intentional Culture as the Secret Sauce Behind Capital One's Success
Beyond analytics and strategy, company culture was crucial in building Capital One with a strong foundation. Nigel reminds us that culture doesn't just happen; it must be intentionally crafted and embodied by leadership every single day. Clearly defining what the company culture is and isn't becomes terribly important, and leaders must provide tangible examples to bring it to life. This intentionality can prevent dissonance within the organization, so the culture scales effectively as the company grows. As many of us know, the culture of an organization is a direct projection of its founders, which places significant responsibility on leaders to always embody these values. Companies that truly focus on culture, Nigel says, is what truly differentiates amazing companies.
Nigel started investing in venture capital 17 years ago – what has he learned about backing great founders?
“I still think like and act like an operator, and I just sometimes, if you show me a transcript of a board meeting, I can tell you where people are in the cap table.”
Tenacity and Resilience Are Far More Important Than Pure Brilliance in Founders
While intelligence and a passion for making a difference are important, the true hallmark of a great founder is tenacity. Nigel is looking for entrepreneurs who can confront failure head-on, think strategically about setbacks, and have the grit to try again. Over the years, he’s observed many high-achieving individuals who've sailed through elite schools and careers without really experiencing failure – they don’t really tend to make great founders. Instead, he values those with an "energizer bunny" spirit who can power through challenges and possess an innate drive to reach the next level despite obstacles.
He also believes in founders who are self-aware enough to recognize their strengths and build teams that complement their skills. He finds powerful synergy in co-founding arrangements where one person is strategic, extroverted, and passionate about solving problems, while the other is technical and analytical, building the capabilities behind the vision. This combination creates a "gestalt of capability" greater than the sum of its parts. Finally, Nigel looks for founders who are open to learning from experienced investors like QED. Rather than just seeking funds, ideal founders value the hands-on partnership and are eager to absorb insights from past successes and failures to enhance their own journey.
Why Nigel is still very bullish about the future of fintech
“When we invested in Nubank or seven, eight years ago, we didn't fully internalize how big an opportunity Brazil would be, and then coming out of Brazil, how big an opportunity Mexico would be.”
Nigel Morris remains highly bullish about the future of fintech, an industry he reminds us is still in its early stages. Despite the global financial services sector being a $14 trillion market, fintechs account for just 2-3% of revenues—meaning 97% of financial service revenues are still untouched by fintech firms. He believes we're only in "chapter two" of this revolution, with enormous opportunities ahead. Perhaps some of the biggest opportunities and potential will come from developing markets like Brazil, Mexico, India, Nigeria, and the Middle East. These regions offer progressive regulatory climates focused on inclusion, allowing fintech companies to reach underserved populations, provide them with essential financial products, and drive significant growth for the companies.
What makes an effective board meeting
“I have a two-by-two box that I ask the CEOs of my portfolio companies… it’s a one-pager that says: (1) what's going really well, (2) what's not going well, (3) what's keeping you up at night, which might be different to what's not going well, and (4) What decisions do we have to make today.”
Proactive Preparation and Clear Communication Elevate Board Meetings
Effective board meetings hinge on meticulous preparation and transparent communication from CEOs. Nigel advocates for a concise one-page summary outlining what's going well, what's not going well, what's keeping the CEO up at night—which might differ from immediate problems—and what critical decisions need to be made. The result of this simple 2x2, can not only demonstrate the CEO's command over their business, but also sets the agenda for discussion. It’s also important for company leaders to engage board members individually before meetings to discuss potentially controversial topics – the more surprises you can reduce, the more constructive conversation you’ll have during the actual meeting. Nigel also warns that as companies mature and get bigger, board meetings can often devolve into mere formalities, becoming box-ticking exercises rather than strategic discussions. This is dangerous and management should not avoid key issues to simply keep the board "out of the way,". Once this happens, it can lead to ineffective governance and bad consequences.
A day in the life of Nigel… and a lot more!
“If you've got 150 active companies, every day, one of them will have a crisis, and every day, one of them will have a huge opportunity, and being called into that really suits the sort of ADD that's in my nature.”
Nigel Morris's day is anything but predictable. As the Managing Partner of QED, a fund with 150+ active companies, he shares that "the way it starts is not how it ends." Each day brings new crises and opportunities for portfolio companies—some companies soar like "rocket ships," while others plunge into "the dungeons" overnight. This volatility requires a readiness from investors to dive into issues as they arise. He shares that he thrives in this unstructured environment. His schedule is filled with sharp, energy-infused meetings, board sessions, and nurturing the QED ecosystem. He shares that the intensity and unpredictability of VC, far outpaces his life as a public company leader back in his Capital One days, which fuels his passion for the industry.
Despite a demanding schedule, Nigel is an avid cycler and is deeply committed to his personal health. For the last seven years, he has climbed over a million feet a year in cycling. Most of the time, he utilizes a stationary bike with simulations to conquer virtual climbs like Alpe d'Huez and Mont Ventoux for at least an hour daily, pushing 250 watts at a 7% slope to reach over 3,000 feet each day. This regimen allows him to maintain his physical fitness and "keep up with people of your age." The man is made of steel!
The Unfiltered Q&A: Nigel on Building QED and Capital One
The following section is the unfiltered account of how it all happened: data-driven banking, lessons for entrepreneurs, venture capital reflections, and why we’re only in “chapter two” of the fintech revolution.
Miguel Armaza: What shaped you in your 20s and 30s, before you co-founded Capital One?
Nigel Morris: I have to take a little half step back on that. I grew up in a very working class family from Snowdonia in North Wales. My mother was from there—English was her second language. She never really was that great at English. Welsh was her first language.
Not only did nobody from my family ever go to university, but I didn’t know anybody that had ever gone to university. It was complete anathema to me. I was lucky enough to sit an exam at the age of 11 and go into a decent school, and then I found that there was inside of me a pulse and energy around curiosity of learning things.
In my teenage years, while other people were off supporting Manchester City, I was reading Freud and Jung and some philosophy, and I really thought that I’d end up being a clinical psychologist. That was always where I was heading. I loved the idea of what makes people tick and how do you understand human behavior in a scientific way.
I went off to study psychology undergrad, thinking it was a precursor to clinical psychology. But I got to my second or third year and started to realize that there wasn’t very much real empirical justification for a lot of the theories we were understanding about Freud and Jung. I rejected it wholeheartedly and became a rabid empiricist with a view that goes back to Skinner and Thorndike—if it can’t be measured, it doesn’t exist.
I retreated into applied math and stats, where I felt very comfortable, because you have an answer and the answer is “quod erat demonstrandum,” where you can use QED, and you can come up with an answer and reverse engineer the equations.
So back to the 20s—what was driving me was I felt like I’d been in a dark, long tunnel without the exposures that I would have really loved to have had. As I went to university and started to really engage with the world, I just found it absolutely fantastic and amazing that there were all these things to explore. Even now, as I sit here in my middle 60s, that energy around curiosity and learning is still what drives me the most.
Getting some level of financial freedom was important, but I never started off as a businessman. There wasn’t ever the Financial Times or The Economist or The Wall Street Journal in the house. My father was a military man and a Daily Mail reader, and I would tantalize him and annoy him when I got into my teens by bringing home The Guardian and starting to talk about different types of politics. It’s that insatiable appetite to learn and be part of learning that really drives me.
Miguel Armaza: How did that analytical approach translate into Capital One’s DNA and culture?
Nigel Morris: Rich Fairbank and I started the banking practice at Strategic Planning Associates when we were there. We’re talking now 1985-86, when specialists were starting to emerge in consulting. We started to learn about banking, and I jokingly say that in those days, I didn’t know the difference between a letter of credit and a line of credit, and I used to get assets and liabilities mixed up. I still do.
But we were going to school in a very first principles way on how banking works and where money is made. I reference often a book by a McKinsey partner called Lowell Bryant called “Breaking Up the Bank.” What he basically did—and this is part of what we did as consultants—was take all the businesses that are in banking, break them into their constituent parts, allocate not only overhead to them, which would often be done, but then allocate economic capital. Not regulatory capital. Economic capital—how much economic capital would you need? And then look at where the shareholder value accretion is occurring.
We worked for Chase and Citi, Wells Fargo, Chemical Bank, a whole bunch of the mainstream banks. Time and time again, you would find that economic rents above the cost of capital were being made in unsecured credit. Unsecured credit was growing and going through a renaissance where, on the one hand, you had Fair Isaac starting to collect 300 variables on every consumer, and that data was very predictive actuarially in terms of who will pay back and who won’t. And relational databases were emerging, so you could now amass large data sets and attack that data on a batch basis with SAS and SPSS type packages.
So much of the root of what became Capital One and its DNA goes way back to those SBA days and the training I had prior to coming into consulting. This fanatical focus on unit economics comes out of our background in understanding actuarial analysis. When I was at SBA, we did work for several insurance companies, talking to actuaries about how they did what they did. I spend a dollar today, I will get these returns back, I use an appropriate discount rate, and I can come up with a net present value of the customer—which to me is the holy grail, the lingua franca of how you evaluate different ideas. Not LTV to CAC, not other ratios that people use as shorthand. NPV is the real McCoy, and that’s how you should do it.
The second thing we applied was the scientific methodology of developing hypotheses through observation and through past hypotheses, and then testing those hypotheses out. In classic Karl Popper language, you would look to try to disprove the hypothesis. Today, all too often, in a world of advanced AI, people just throw a lot of spaghetti against the wall and see what sticks. We were very hypothesis driven.
A combination of this fanatical focus on unit economics and then real A/B testing—we did thousands and thousands of tests in real time. I once described Capital One as a giant experimental laboratory, like agar jelly in real time. Any conventional wisdom you would test to see where it worked and where it didn’t work, and where the conventional wisdom would start to break down.
That learning led to breakthroughs in terms of risk-based pricing. If you and I went to the same insurance company to get insurance on our car, we would get different prices. You’re younger than I am, therefore more risky. You drive around in that beautiful red Maserati I see outside, and I’m driving around in an SUV—we would get different pricing. We understand that. But in credit cards at that time in 1980, everybody got the same price: $20 fee, 19.8% annual percentage rate.
The second breakthrough was the ability to put together teaser rates—I’ll give you a lower rate for a period of time—and balance transfer apparatus so I could move your balances across. That led to us being able to attract positively selected customers on a giant scale. The third one was opening up the near-prime and subprime space. Half of America today can’t get access to a credit card from the mainstream banks, and they couldn’t in 1988 even.
Those three big breakthroughs allowed us to scale at Signet Bank, which led to the spin-off of Capital One. If I would add to the DNA that is Capital One—and now the Capital One diaspora spread all over the planet, which I’m very proud of—it’s that relentless focus on getting the analytics right and being insatiably curious, and then figuring out how to mobilize those insights with technology, with product, with scaling.
BCG and McKinsey and Oliver Wyman and Bain would go and tell American Express and Citi and Chase and Bank of America how to do what Capital One did. But very few of them were able to do it, not because they didn’t have lots of clever people. It comes down to the culture and the people that you hire and the way you manage those people. That is where the secret sauce is. The old adage that culture eats strategy for breakfast.
Miguel Armaza: What have you learned about how to build intentional culture?
Nigel Morris: You have to be very intentional, because cultures will form whether or not you like it or not, and cultures will be driven by what you say in part, but much more by what you do. So being very clear about what your culture is and what your culture is not. I’ve seen so many cultural statements over the years that are just so motherhood and apple pie and so obvious that they are inactionable.
Being really clear—one of the things I try to work with our young CEOs who are building culture for the first time is to say what it is and say what it is not, and then give vignettes and examples that bring it to life. And then when you look at that and you stare at it, say to yourself: Can I—am I going to embody that? Because if you say that the culture is XYZ and then you don’t live up to it, it causes dissonance within the organization. The organization will never, never really adhere, and certainly won’t scale. That’s a good challenge.
So back to your earlier point—in a sense, the culture of an organization is a manifestation, a projection, of the human beings that founded it. And that’s a big weight on your shoulder to be the embodiment of the culture, because you’re constantly looking at yourself and what you do every day. So am I living up to that? Am I real? You do 360s on yourself and those things, but often if you become a founder, a co-founder of something, and it scales massively, very quickly you can become isolated, and very quickly you can become detached from your humble, scrappy, trying-to-stay-alive roots.
Miguel Armaza: Why are you still bullish about fintech, and where do you see the biggest opportunities?
Nigel Morris: A year and a half ago, we did a fundraise into a pretty austere, miserable market environment. One of the questions we were getting was: where are we in this fintech journey? Are we in chapter two, just at the beginning of a series of revolutions? Are we in chapter eight, and the low-hanging fruit has already been taken down, now it’s advantaging incumbents?
We worked with our friends at BCG to do a study, and we just revitalized and refreshed that study. It was attempting to answer that question: when are we? I point to two pieces of data that allowed me to be able to sleep at night. I do have a dog in the race, so I’m looking for confirming evidence to some extent.
One: the size of financial services worldwide is about $14 trillion on a worldwide economy that’s about $105 trillion, so somewhere around 15% is financial services. Some geographies are more, India for example, some a bit less. Where it’s less is because it hasn’t evolved yet. Net-net, 20% of the world is financial services, insurance and banking.
When we add up all of the revenues from all of the fintechs, you get to between 2% and 3% penetration. That is, 97% of financial service revenues are not fintech. So that would suggest to me that it’s hard to believe that this thing has run its course.
Two: I touched on net promoter scores earlier as a measure of product-market fit. Yes, people can criticize the methodology, and I’m inclined to watch net promoter scores through time with a constant methodology with a constant company as the best way to see if you’re making progress. But also just by virtue of measuring it—what gets measured gets done, right?
If you look at the net promoter scores that are published by the incumbents, often they’re 5 and 10 and 15, whereas you look at the net promoter scores of the fintechs and they’re 70, 80, and 90. That’s a huge difference. Now, part of it is because people rate digital distribution higher than branch-based distribution. That accounts for some of it, but not all of it. And these are the incumbents that show their net promoter scores. Watch out for entities that don’t—one, don’t measure it, or even worse, measure it but don’t talk about it. Very few of the banks will talk about their net promoter scores or their journey.
Back to what chapter are we in? I firmly believe we’re in chapter two now. Banks constantly confuse loyalty and inertia. It’s very different. You can have lots of stickiness, particularly in a non-open banking world where people can’t be bothered or it’s too difficult to switch, and particularly to bring your historic data over to a new provider. So they stick around and people assume—incumbents assume—that’s because they’re dearly loved, but yet they’ll have a net promoter score that’s 12.
You mentioned Nubank. The public data they’ve talked about is that their net promoter scores are in the 90s, certainly in Mexico. I don’t know how many of our listeners are thinking that their own net promoter scores are, but I know how herculeanly difficult it is to get to a net promoter score that starts with an eight, let alone a nine. These are incredible net promoter scores.
So what do I think the future chapters are going to be? I think the geographic expansion of inclusion across the developing world is massive. When we invested in Nubank seven or eight years ago, we didn’t fully internalize how big an opportunity Brazil would be, and then coming out of Brazil, how big an opportunity Mexico would be, and how financial services has taken hold there, and how the regulatory climate, particularly in Brazil and partly mumbled on India, is so progressive and so supportive of allowing financial service companies to enter and be able to get traction.
That speaks to a regulatory body that is, yes, focused on the fidelity of the system and indeed focusing on making sure that products are good as they face off to consumers, but also focused on inclusion. How do we get half or 70% or 80% of our population to have products in their hands that help them learn, help them grow, give them flexibility, give them power in the hegemonic relationship with incumbents? And at the same time, actually, we can track it and tax it, which is on everybody’s mind.
We look at Nigeria with its huge population and its educational system. We look at India, where we’ve made several investments that have gone blisteringly well, with an economy that’s on a very different cycle to that of the West—high GDP growth, positive regulatory climate, and talent. The quality of talent and depth of talent that’s unrecognizable anywhere else in the world. I think that’s really exciting. And then now into the Middle East, where we are investing. Half of QED investments are done overseas under the leadership of Bill Cilluffo. Frank Rotman focuses on the early stage domestically.
I think the opportunities to be able to move to real-time payments is incredibly powerful. We have not yet seen major mass market wealth management businesses emerge. We’ve seen stock trading. We haven’t seen mass market wealth management. That will come.
And then on top of all that, not necessarily as a third chapter but more of a galvanizer across the board, is leveraging AI to be able to improve the economics. I can’t profess to say I can judge one AI algorithm over another. I don’t think that’s where the leverage is, to be really honest with you. I think it’s very clear that big tech is going to end up developing the best algorithms. They’ve got the scientists and they’ve got the data, and they’re moving at a geometric rate.
But you can see how companies can use AI to make customer contact be much more efficient and effective, and we’re seeing that work in real time. I went through an example with one of our portfolio companies where they basically took all the human text, plugged it into an off-the-shelf AI machine, and within five weeks they were coming back with betas where this thing—where the AI—was answering questions. You can have a human in the loop, so people can talk to a human if they need to, and you can have humans deal with difficult questions, and the AI will learn.
One dramatic change and productivity gain that’s coming: in the days of Capital One, I used to glibly say we sell the right product to the right customer at the right time at the right price. And there was some truth in that because we were doing direct marketing. But you know what? We didn’t have 5,000 variations, 50,000 variations of text that we had in our letter. Now you can target the individual pitch to n equals one, and that means that CAC will go down, cost to acquire, and all things being equal, economics will be better.
The third category is in writing code. We’re seeing open source coding support systems. Five years ago, if you were a coder coming out of the top schools, you were demanding huge salaries and they were massively in need. Now we’re seeing these engines that support writing code where 80% of the code could be written immediately, and then you can have a human being look over it and make it better. So we’re seeing that as a productivity game which opens up all kinds of universes.
I really believe that venture is on the frontier edge of seeing the third chapter start to occur in real time. And I have no doubt that we’re very early on in this book. I just hope that I stay around long enough to be able to see the epilogue.
Miguel Armaza: What have you learned about what makes great founders after 17 years in venture capital?
Nigel Morris: Frank and I and Kara Nortman began this journey managing our own money post-Capital One, when the handle of fintech didn’t even exist. We were applying frameworks and heuristics from Capital One days to early-stage companies. At that time we found Credit Karma, for example, which was a big breakthrough.
We’re not your orthodox VC by any means. I still think like and act like an operator. Sometimes if you show me a transcript of a board meeting, I can tell you where people are in the cap table. I’m all about helping young, talented, capable people who are half my age and twice as smart—entrepreneurs—build companies. If we can help them build companies and change the probability of success all in all just by a little bit, then that’s our job. And if we do that well, there are plenty of spoils to go around.
What have I learned? If I look back over the years, I think it would be obvious to say the odds of success of any young, talented entrepreneur that sits opposite you when they pitch you is small. Is it one in 10? Is it one in 20? Is it one in five? Who knows? It depends on where they are in their journey. Have they done it before? But it’s low odds.
Now they don’t believe that, because if they believed that, they wouldn’t be sitting there—they’d go do something else. They’ve got to be possessed. So you want to look for people who are possessed.
I have my own demons on my own shoulder. I’m looking for people that are not just brilliant, not just obsessed with making a difference, not just obsessed with the product, but have the ability when it fails, when it doesn’t work, to think in terms of decision trees, to dust themselves off and go at it again. That is really important. So you’re looking for some notion of tenacity.
Candidly, people who have gone to great high schools and then cruised into Ivy League schools and all that and ended up with distinctions, and then went to Goldman Sachs—these are now the elite of our world. Many of them have never seen or touched failure. So you’re looking for people that can power through that, that they have some kind of Energizer Bunny in them that will take them to the next level.
Two: you want people that can build team around them, and that can find people—know enough of what they are, what their superpowers are, and look to augment their superpowers with skills and competencies that create a gestalt of capability beyond what they are.
I love finding two people as co-founders: one who’s more strategy and extroverted and more passionate about a vision of solving a problem, and then somebody who’s more technical and analytical who can build the capability behind the person who steps out in front. That is usually a really powerful combination. Then you’re looking to see if they can get along, and not only get along in their existing framework, but can they get along six months from now? Two years from now? How long do they have the flexibility in their own personality to be able to grow together?
If I look at Rich Fairbank and I—we grew up in strategy consulting, then at Signet Bank, then at Capital One. If you total the number of years, it’s something like 18 years we worked together. We went through very different stages in our career and our evolution, from when I was basically in my middle 20s up until my middle 40s. Frank Rotman and I have worked together since he came out of grad school. He and I have worked together for 32 years. So you’re looking for relationships that can stand the test at different stages. I think that’s really powerful.
I look for people that listen. We’ve made 200 investments now over 17 years, and very seldom do you see a business that is truly magnificently unique. We’ve seen parallels, we’ve seen analogs, we’ve seen versions. It may be a unique combination in a different geography, but we’ve seen these.
So you’re looking for people that are listening to QED when we say, “Ah, we’ve seen that before and that didn’t work because of this, and we saw that and that did work. Now how do you combine that with this?” If they are thinking so linearly that they’re going, “Yeah, just give me the money,” that is a pretty big red flag.
Maybe it’s a process of self-selection. I want the people that would say, “You know what, I think these QED guys are going to challenge me in ways that others won’t, because of their experience and expertise and because it’s their model.”
Venture is not stock picking. It’s not “here, Miguel, here’s a bunch of money, we really love you, we love your idea, here’s 100 units of money, will you come back please with 300 or 400 and we’ll all be happy—bring it back 1,000.” Venture is not that way. It’s hands-on, and it’s helping make the recipe and then helping cook the meal. I want people that are willing to share that journey in a way that’s productive and capable and beneficial to both entities.
Miguel Armaza: What have you learned about what makes an effective board meeting?
Nigel Morris: I have a 2x2 box that I have with my portfolio companies where I ask the CEO—on top of the often 70-page deck that’s sent out with lines and boxes and graphs—for a one-pager that says: What’s going really well? What’s not going well? What are you really—what’s keeping you up at night, which might be different to what’s not going well? And what decisions do we have to make today?
A good CEO can do that off the top of their head. If that takes a CEO two days to write down—it’s just bullet points, I don’t care about whether it’s in Dylan Thomas prose—if you can’t do that as a CEO, you’re not on top of your business. You should carry that around in your head all the time.
Make sure you get the material out in advance. Where there’s things that are controversial, I would love you to talk to some of the board members in advance and know which of the board members are going to have an issue. So: “Miguel, I think I’m going to want to talk about this pivot that I’m going to make, and I know that you’re going to find this really interesting or controversial. Let’s have a conversation about that. Let’s frame that in advance.”
To the extent that it’s not a surprise when you go into the boardroom—you can have all kinds of non-sequiturs that can occur in a boardroom if people are surprised. So take the surprise out of it, and then be willing in the boardroom to have really constructive conversation, not for it to be a box-ticking exercise.
I often say to my CEOs: What is it that you really want to get out of today? Which should be in that fourth box—what decisions do we have to make today? But what’s important to you for us to help you drive your business over the next two to three months?
I think the good boards are with people who’ve got different perspectives from different experiences and are willing to authentically put them on the table and offer counsel and advice.
One of the dangers that occur, sadly, is as companies become later stage, board meetings become less and less pivotal. They become more and more readouts. And management is like, “This board meeting in two weeks, I’m just going to write the deck that is not controversial, that is not where the key issues are, because I just want to keep the board out of the way so I can run my business.”
That increasingly occurs, and it’s partly for a number of reasons. One, that the founders don’t really trust the board process or the board. And candidly, a lot of the people that are in the boardroom as companies become more and more mature add less value. You will hear advice like, “I think you should really focus on increasing your revenue and decreasing your costs,” and it’s not terribly actionable because you’ve got very clever people around the boardroom who haven’t ever really run a business before.
It’s really important that management and the CEO gets the best out of their board and board members, and that requires an authentic, engaged, intentional coming to terms with what are the key issues and how to help navigate them, and genuinely for the CEO to look for help and assistance in that process.
I call it the Ghostbusters effect. I want QED, my partners and my friends at QED—I want them to be the call. I want the founders to call them when they’re in a pickle. “I just won this deal, I’ve beat my budget, my revenue is soaring, I’ve got this term sheet”—founders beautifully communicate when that happens. But when they’re staring at a fork in the road or they’ve got a crisis, be it a people crisis, a compliance crisis, funding—who do they call?
We aim to be the best advice you can get. So I want my partners to be the ones that get the call because, candidly, as operators, I think with the best intentions we can help founders navigate those ups and downs.
Miguel Armaza: How does your typical day look?
Nigel Morris: The only thing I know about my day is that the way it starts is not the way I planned it to be—is not how it ends. If you’ve got 150 active companies, every day one of them will have a crisis, and every day one of them will have a huge opportunity. And being called into that really suits, I think, the sort of ADD that’s in my nature. So I think that happens.
These are long days in venture. It’s really hard, and there’s an intensity about this that doesn’t exist in running a public company. This time of the year, in the middle of October, I’d be planning for next year’s numbers, and I would know that 87% of next year’s numbers are already in the bag, and all I need to do is get the 13% and put a bit on top of that, and I’m going to be home and dry.
These companies are fighting for oxygen all the time and are on a knife edge, and that means you have huge volatility. And with that, huge stress. We have companies that look like they were rocket ships today and tomorrow they’re down—they’re in the dungeons—and vice versa. We have companies that go from rags to riches to rags again. It’s a roller coaster.
So this is a very unstructured environment. What do I do? I get up in the morning and I usually hit the emails for an hour. I see what crises are going on. I try and get an hour in the gym. I come to work and I sit in meetings that are short and sharp as best I can, where I get to really get lots of nourishment and energy from my co-mates at QED. I’ve got board meetings all the time. I sit on a number of boards. And I spend my time looking after the ecosystem that is QED.
I try to look after myself as best I can because I’m getting old here, so I have to look after myself physically so I can keep up with people of your age. But there’s nothing more fun in the world.
As for the cycling—many years back I heard of a mountain biker that climbed a million feet a year. So I went through the mathematics of this. If you’ve got a million feet divided by 365 days a year, you have to climb a little more than 3,000 feet a day. Now it’s really hard to climb 3,000 feet a day when you live in Alexandria here.
So most of my biking is simulation on a machine where I can use software to pretend that I’m climbing Alpe d’Huez or Mont Ventoux or the Stelvio Pass. What I do is: I set out seven years ago to do a million feet a year, and I do that. If I’m pushing 250 watts at a 7% slope and I need to get to over 3,000 feet a day, it takes about an hour. So on average, I’ll cycle an hour a day. Nowhere near four hours a day. There’s just not enough hours in the day. I still need my seven hours of sleep.
Miguel Armaza: What’s your ultimate aspiration with QED?
Nigel Morris: I’ve been incredibly blessed in so many ways in life, and there’s so many things that I want to do and so many things that I want to achieve that I haven’t had a chance yet. I think the aspirations of where I can take, where we can take QED—I’ll leave you with one final thought. This is something that there’s an itch that I still haven’t entirely scratched.
I think fintech is a force for good in our society. It levels the playing field, empowers consumers and small businesses. It takes away the friction. It’s much more efficient. And it shakes up the incumbents to improve their game, which, candidly, many of them don’t take us as seriously as they might.
I would like to believe that before too long, QED can impact the lives of a billion people around the world. I’ve got Klarna, and I’ve got Credit Karma, and I’ve got Nubank, and I’ve got One Card, and I’ve got Clear Score, and I can add up these companies—Remitly—and the math is that I can get now over 400 million. That means I’ve got 500 to 600 million to go.
I can only get there, I believe, by India, Nigeria, Indonesia—huge countries that are now really embracing fintech—and maybe Brazil and Mexico. So that is really important to me.
So am I just getting started? Yes, because I’ve got a long way to go, and fintech can add so much value to our world.
Books Discussed:
"Breaking Up the Bank" by Lowell Bryant - A McKinsey partner who analyzed the constituent parts of banking businesses and where shareholder value was being created.
Works by Sigmund Freud and Carl Jung - Nigel mentions studying these philosophers and psychologists during his teenage years when he was considering a career in clinical psychology.
Works by B.F. Skinner and Edward Thorndike - Nigel discusses being influenced by these researchers and their empirical approach, which led him to reject some of the theories he was learning in psychology.
Want more podcast episodes? Join me and follow Fintech Leaders today on Apple, Spotify, or your favorite podcast app for weekly conversations with today’s global leaders that will dominate the 21st century in fintech, business, and beyond.
Previous Episodes You May Enjoy:
