What are the core components of an enduring fintech company in 2024? “Fintech” is such a widely accepted term in industry these days that it’s easy for any one company to get lost in the noise. The industry has certainly taken its fair share of bumps as it continues to mature and for most fintech companies today it probably feels harder than ever to cut through the noise. Noise is a product of competition and Ben Verschuere, the Co-Founder & CIO of Treasure, is no stranger to the latter. Having worked for nearly a decade in public markets, competition was a constant for Ben and his team. Today, in the world of fintech, Treasure is an embedded treasury management company that gives any company the type of treasury management skills accessible to only the largest of Fortune 500 companies. In this interview, Ben and I talk a little about the changing dynamics within public and private markets, building efficient distribution, and about the inner workings of Treasure in general.
Ben, great to have you on. Could you tell us a little bit about yourself and your background?
Thanks for the invite, Dez. Excited to be talking with you today. So my background– originally I'm from Belgium, born and raised there, and then went for grad school in the US. After a short stint in London where I worked for big banks, I moved back to the US, where I worked 10 years for Peter Thiel’s hedge fund and family office.
When I was working with Peter, I was very much focused on fixed income securities and managing a large portfolio for him and that's what paved the way towards what we've been building at Treasure. I saw first-hand how fixed income securities can be very, very valuable as a cash management tool, but can look very, very complex to outside people. My background basically helped me deepen my expertise in that part of the financial market and was a good foundation for building Treasure right after.
What was the founding moment for Treasure? Are you building it on your own? Do you have co-founders? How did you guys come together?
Yeah, a co-founder. The interesting foundation for Treasure was after I had worked with Peter, I was personally doing some investing in fintech and I met Sam– the founder and CEO of Treasure– and I looked at the potential of the company, their background in fixed income securities, and within a few weeks Sam and I had multiple discussions and it made so much sense for us to partner. Sam has deep experience in building and scaling companies from zero to a hundred plus employees. I have a lot of experience on the fixed income side, so it was a really good union. We joined forces, now, close to four years ago.
How did your experience as an investor now inform your experience as a founder? What did you take from the latter that you're applying to the former?
Yeah, there are two cases on the investment side. One is investing directly in the markets, which is something I've been doing for the last 15 years. So I think by participating in the market, you have a deep understanding of how the market can move from rational to becoming less rational. All those markets have big cycles and at the end of the day, a lot of time those markets are based on expectations, which are far from being absolute because we constantly go through different shifts in expectations. And that's what's, in my mind, driving boom and bust cycles.
We saw a big boom, for example, in VC in 2021. Post-Covid stimulus, markets got very, very stretched, and now it's back to a type of reality where capital is becoming little more scarce. The same thing happened in '08 when you had a huge scarcity of capital. It's like the pendulum is currently swinging in between both oversupply of capital, under supply of capital, and that's what basically drives cycles.
The second is that you have to be cognizant that typically what is being hyped today is not likely to last for a very long time, and markets go through cycles, so you have to be persistent and consistent.
So one obviously huge moment for your business was the crisis and collapse of SVB. Could you rewind us to the March, April timeframe? How did that impact your business and how did it change your perspective or how you communicated what Treasure does to the market?
Yeah, great question. A lot of people were surprised by the banking turmoil last year, but rewinding to '08 and '09, there was also a big banking crisis. As I mentioned, those banking crises happen every 10 years or so because of stress in the system.
Today at Treasure, we’re providing corporate-grade cash management using best practices we learned from working at large hedge funds, and as a manager, marrying that with technology and packaging it so that any type of business can have their money as well managed as, for example, Apple or Microsoft.
If you look at those large corporations, they're able to make a meaningful amount of revenue from their finances– so we’re providing the same service to businesses. What we saw in the SVB banking crisis was a basic lack of confidence in a bank that triggered a bank run. On our side, we saw a huge inflow from prior SVB customers– businesses that understood that above $250,000, their cash wasn’t insured by the FDIC.
Luckily for those SVB customers, all their cash was fully guaranteed by the government, but that’s not always the case. This is why we've built Treasure– to help businesses safeguard their capital and also optimize it.
So what's the perfect use case for Treasure? If you had to create your ICP and put them in front of you today, who would they be?
Given the service that we provide, our ICP is pretty broad for the platform that we have built. So our customers range from small businesses to the more advanced, mid-size companies with between $250K and $40 million. So it's pretty broad and the basic idea is to seamlessly connect your bank account to our platform so we can provide you with a safe and optimized way to warehouse the cash that you have above $250K, always under your own name, in your own account that you have full control of.
And what are the durations of some of these products? I imagine tons of entrepreneurs out there, whether they're venture-backed, bootstrapped, or mid-market companies, have different kinds of timing and needs for cash.
The beauty of what we've built is that we provide full liquidity on different types of allocation that we carry on our platform. We've built four different types of allocation that we are actively managing in-house. All those allocations have full liquidity, so you can get your cash within 3-4 business days, but we have different types of buckets in terms of potential yield.
So we have a cash allocation sitting with an FDIC-insured partner that we have negotiated a great deal with on behalf of our customer. We have a managed money market allocation where we track more than 500 money market funds and constantly reallocate to the highest-yielding one so that the end user doesn't need to do that– we are constantly optimizing the cash for them. We have a managed treasury allocation where we constantly track the shape of the yield curve and reallocate to take advantage of yield enhancement strategies– that's also fully liquid. And we have a managed income allocation with more than a thousand fixed income mutual funds and ETFs– again, constantly tracking the best performing one.
We can package any type of allocation towards a portfolio tailored toward any type of needs. That's very much the premise of what we're doing: Bringing sophisticated cash management and making that available to businesses without compromise on safety or liquidity.
The allocation management process, is that automated or done by a team internally?
Everything is automated. So I come from a quant background; all of our allocations are run by our quant investment team, and we've built in-house algorithms that we deploy in-market on a daily basis. We remove any type of guesswork– from signing, to implementation, to trading, everything is done in an automated manner.
Right. So we were talking before this interview about how you started out being Direct-to Business, but now you're opening up an API. Could you tell us a little bit more about that new product?
Yeah, actually it's super exciting. Our embedded yield, or embedded treasury, product makes treasury management available on any type of platform– so fintech companies, payment companies, or banks can embed corporate-grade treasury management in their product.
I'm a strong believer that the future is embedded finance. I think all of us see that on the consumer side where we have a bunch of different wallets like Starbucks, Zelle, PayPal. On the business side, I think that it’s just starting, and there's a huge need for businesses to safely warehouse their cash.
I call this “Embedded Finance 2.0”; the first version was custody done via banks, and we've seen that with a lot of Banking-as-a-Service platforms and partners. The next step is very much embedding any type of securities custody, and cash management is obviously a big subset of that. So that is very exciting. I think we're very much the first one to provide an actively managed treasury management solution that’s embeddable on platforms, and it’s great to be a trailblazer and build what is the future of fintech.
So for the vertical SaaS platforms out there, for the fintech platforms out there, how long do you think it would take for them to get Treasure implemented?
The short answer is that it varies, but I'm pretty sure that if those platforms have a very competent engineering team, they embed our APIs, consume them, and make those available to end users in a matter of a few weeks.
Thinking about the structure of both incentives and existing business models: Let's say I'm Squire, the vertical SaaS and fintech platform for barbershops. There’s a clear opportunity where barbers probably sit on a good amount of cash, but what's Squire's incentive to embed Treasure?
In my mind, it's a “win-win-win” if you’re a fintech company trying to expand the product and build a deeper relationship with your customer. That’s very much where Treasure comes into play: You spend a fair amount of CAC on acquiring those customers, and now that they're on your platform you can start to provide them with a wider set of tools. They have access to professional cash management through Treasure, so don't need to go to their bank in order to do that. They have a much better service on that side.
These other services not only are going to be providing the fintech more revenue, but are also more sticky to customers, right? That's a great value add. And then for Treasure, it's the ability to service new customers. I see it as a win all around for the people using the product, and that's what makes me super excited about this new product.
When you step back, is the vision for Treasure to go deeper in fixed income securities, adjacent treasury management, cash management solutions, or how do you think about the vision of expanding the surface area of the product?
I'm a strong believer that you build a moat by building expertise in a field. And as we've seen often in fintech companies, if you only focus on the UI, what you're doing can very, very quickly become commoditized, which is a big issue. We've seen that with neobanks, we've seen that with Buy now, Pay later, in a way. These are great products to use for the end user, nothing wrong about it, but as a business, the question is “What is your moat, exactly, and how defendable is that moat?”
In my mind, building deep and profound expertise in the field and sharing that expertise back to the customer as something very, very much tailored to their needs– that is how you capture a real market and that's how you defend the model that you have built.
Right, right. Talk to us a little bit about Treasure’s growth trajectory. When did you guys launch, and you don't have to be too detailed, but what's the stage and size of the business today?
Yeah, so we've launched. I joined some four years ago, and we spent a fair amount of time on building the infrastructure and the compliance required to build on top of it. Just a side note on that– I'm a strong believer that if you're building a fintech company, you should be using compliance to your advantage, and understanding compliance actually helps you build products faster and more confidently. I've seen a lot of fintech companies that try to avoid looking at compliance. In my mind it's a mistake because you just build on a shaky foundation and you're going to face the consequences later on. We are like an RIA, from the get go we have been registered with the SEC. So that's the first thing: Understanding compliance very well.
We opened to the public last year and very, very quickly have seen a large amount of growth. To give you an idea, just this year alone, we've already doubled the number of customers that we service to close to 300, close to half a billion under the management, and are now very, very excited about our API solution. I think within the next year we're going to see a multiple of that AUM. So that's pretty exciting.
And how do you guys monetize Treasure?
Monetization, very, very simple. We charge 35 basis points on the assets that we manage for the customers. It's very easy to understand for the end user, there are no large fees like those we typically see at banks. It's a very simple fee, fully aligned with the end user.
With AUM-based business models, particularly on the consumer side, one of my shorthands for understanding the business is CAC-to-LTV ratio, right? You think about it as what is your ARPU for a given consumer. How are you navigating that kind of dynamic where, yes, you can scale to the hundreds of millions of AUM, but you still have to efficiently acquire consumers.
Yeah, so I think that is the beauty. I think there is a big difference between B2C and B2B investing. B2C investing is very CAC-intensive. So you spend a large amount of money acquiring customers, which is I think very, very different on the business side, where you can rely a little bit less on sales and marketing and more on product-led growth. And that is even more true now with our API offering, where we are going to directly embed ourselves within platforms that already have acquired customers. So that's going to be improving our own CAC, but that's also going to be improving the businesses and the platform that we embed in by increasing the ARPU of the CAC that they've spent.
One of the things that me and my partner Adam Nelson think about a bunch is around businesses with this kind of go-to-market or product strategy that we actually call “negative CAC”. So it doesn't sound like you’re charging the businesses that would embed your API a fee, but they're a hundred percent bringing you customers, not a negative CAC, but basically a zero CAC because you don't have to go out and find them.
Exactly. Yeah.
A really interesting and efficient go-to-market motion, especially to your earlier point where there's so much of the underlying financial services infrastructure that has been built and is available, and these products are commodities. So if these products are commodities, you need to have better distribution relative to competition.
Yeah, ultimately a very, very efficient way of capturing customers and servicing them is putting yourself at the point of convenience. The closer that you can put yourself to the point of convenience, the less effort you're going to need to spend in order to acquire those customers. So that's why we've seen for so many different types of embedded products, how potent those types of customers are at acquiring end-customers. It's because they put themselves very, very close to the point of convenience.
It also makes things very easy for the user. Nobody wants to spend a lot of time and effort on tedious cash management processing; people want something convenient and easy to use, which makes sense. We're very, very happy to be able to provide that with our embedded yield API.
Right. What's it been like building in fintech in 2024? Investor sentiment on fintech has changed. How is that affecting you?
So you can always see there is a good and bad. Obviously capital is less accessible, which makes building a company a little bit more complex and challenging. At the same time, it goes back to what we discussed at the beginning. I think if you're going to be building a solid company, you need to be able to adapt through multiple business cycles. There are booms and busts, and being agile through those is very, very important. I see a lot of positive in what's happening on the fintech side in terms of the infrastructure and what can be built at the moment. I think there's a huge amount of opportunities.
Also, it’s really good to bring a little bit more discipline back to the market. I think now the type of people that you have in fintech are really, really committed to the field because they have deep interest and deep passion in what they're doing, as compared to people that might've joined the late party in 2021 because fintech was sexy and interesting.
It’s also probably the same thing on the VC side. There were a lot of people who were investing in fintech who didn't really have a strong sense of what was happening, or a necessarily strong fintech skillset. So I think both on the supply and demand sides of capital, things have moved probably in the right direction– you have smarter people deploying capital and I think also smarter people building companies. So on both sides, in my mind, it's a win.
In three words, how would you describe Treasure's culture early on? And as a leader, when you think about building culture, how do you think about that as maybe a bit more of an abstract process?
So, three words. One would be “curious”. The second one would be “passion”. And I guess I'll double down on curiosity, which is willingness to ask questions. I think it's very important. I think curiosity might be one of the strongest qualities that you might have as the founder, but also as somebody who's working in an early release stage company, because if you ask the right questions, then you have a better chance of understanding things and processing information.
In my mind, you can view startups more metaphysically as a way of processing information by providing products that the customers want. And they're really, really good at that. That's why they're much better than large corporations– they process information much faster. And I think a good skillset to have in order to process information is to have curiosity, because that will lead you to ask questions and then find information.
I think of the startup environment actually as a biological ecosystem as well. So you'd say your survival rate is dependent on your ability to process information and also ask the right questions. I really love that anecdote.
My last question for you is actually the question that I enjoy the most. I think it is the most important as well because in this media-rich environment it's never been easier to start a startup, but also probably never been harder to get to the outcome that people are looking for. So with your experience building Treasure over the past four years, and your experience as an investor, what would your advice be to other founders who are either currently building and/or thinking about starting a fintech company?
First thing which comes to mind is never stop building. I think in my mind, no matter what happens, I think what's very different if you work in a startup compared to a larger corporation is that the weather can change on an intraday basis based on what's happening. I think that's also very, very exciting. So yeah, it goes back to what I said, never stop building.
And because it’s survival of the fittest– back to your biology analogy about the startup ecosystem– by being resilient and keeping building, you get the opportunity to win and be ahead of the curve. So it's a relentless biological process.
Ben, thanks so much for coming to share the Treasure story.
Absolutely, Dez. Thank you for having me.
