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I sat down with Trisha Kothari, CEO/Co-Founder of Unit21, a company at the forefront of the fight against financial crimes. Founded in 2018, Unit21 has raised close to $100M from Google, ICONIQ Capital, Tiger Global, Core Innovation, and a number of great angel investors.
In this episode, we discuss:
Finding Unit21’s initial design partners and how they eventually landed Coinbase and Intuit as their first and second customers
“When you get a rejection, you have to notice the quality of the rejection. If the rejection is something like, ‘Yeah, this is not really important for me’, then that's a different type of rejection, versus: ‘Yeah, I don't want to be your first customer on it’. And we had the latter type of rejection, which meant that there was actually a need, but the risk level was too high for people to be the extreme early adopters.”
Breaking into a Risk-Averse Market. Unit21 initially found it challenging to secure its first clients because it operates in the risk space, an area where failure could mean job loss for the employees implementing a new risk-management platform or even legal repercussions for the company. Firms were hesitant to become early adopters due to the associated high-risk levels. The company eventually got a foothold by working with Coinbase, taking over one component of their investigations still being managed via Google Sheets. Gaining Coinbase as a client was a significant turning point, helping Unit21 secure further partnerships with Intuit, which boosted their market recognition.
Learning from Rejection. The process taught Trisha the importance of understanding the quality of rejection. Unit21 was not being turned down because its product was unimportant; rather, companies were hesitant to be the first to take a risk on a new product. This distinction was a crucial learning point for navigating challenges in the early stages of the startup.
Founder-led sales and common mistakes on building an enterprise sales team
“For the first million in revenue, it was primarily me [leading sales], but I had had some support from a Business Development Representative (BDR), who is now one of the incredible sales individuals at the company today. And that was a really great way for me to train people.”
Hiring for Sales. Trisha warns against the common mistake of hiring an experienced VP of Sales too early. Instead, startups should look for an optimistic, hands-on individual who can help scale from a handful to a larger number of customers. When looking to hire, consider the stage at which potential candidates have operated in previous companies. Success in a well-established company doesn't necessarily translate to success in an early-stage startup. A candidate who has experience building something from the ground up may be better suited for the initial phases of a startup.
What she learned about fraud and company building as a young engineer and product manager at Max Levchin’s Affirm
Building Affirm's Infrastructure. Trisha started as one of the first engineers at Affirm, building core parts of the original infrastructure, including the ledger and risk-related systems. She later transitioned into product management, focusing on risk and identity projects. Affirm's strong foundation in risk management and operations, led by Max Levchin's expertise, set a precedent for how FinTech companies could handle risk, even before it was common practice. This early exposure gave Trisha valuable insights into the challenges and opportunities in the anti-fraud space.
Her experience at Affirm taught her that fraudsters are incredibly creative and constantly devise new ways to exploit business models. Fraudsters have tactics that are often unexpected, calling for constant innovation in fraud prevention. Moreover, fraud is often not an isolated act, but a coordinated effort by organized groups. These fraud rings are responsible for significant financial losses, highlighting the need for robust and collaborative defense systems. These learnings, coupled with the difficulty of prioritizing operations within an in-house engineering team, inspired her to found Unit21, a company aimed at offering more efficient and agile fraud detection and prevention solutions.
How financial fraudsters are creative, coordinated, and quick… and a lot more!
“Fraudsters are some of the most creative people in this industry, and generally, in the world. They’re really business owners or entrepreneurs, and they have ways to attack business models for every other company in a very interesting and creative way...”
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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.
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