$350M Fintech Founder Steps Down as CEO to Rebuild With AI

you said publicly that the competitor you're most scared of AI native version of yourself starting today with nothing to protect so when did that realization land from end of last year early into start of this year where I think like a lot of other co founders that we we noticed that the quality of the AI tooling got so much better that for me was a big sort of push that like I have to make a decision on how much time I'm gonna spend back on the tools so I started making a concerted effort to you know clear my calendar a little bit more and have more time doing that and then started to be able to see just how much you could get done and how much you can essentially build with less resources and and that sort of then started to constantly have me thinking about what if this was the first year that I founded the company it wasn't 10 years ago and what how different would that first three six 12 24 months of of getting the company off the ground look like and that was where I think it's a hit me and just like I know personally I would have been able to go a lot further with a lot less when you think about the approach to make and that more AI native so you took quite a drastic approach stepping down as CEO focusing now on product development why the decision and what do you think are core fundamentals that LED you to make that decision yeah I think there's three things for me that stand out the first one is is the company itself and then what does it mean to be the CEO of that particular company so I'd say like the first thing straight away is that I don't necessarily think that has to be the approach for everybody but I think being the CEO of indebted requires a lot of the other non technical components of being a CEO so the nature of the type of business they are and the reporting structure etcetera so that's one part I think the the second is the stage of where the company's at you know um partly maybe it was an sentimental but it's 10 years since starting the company and invariably I start thinking about two things which is what is the right sort of path to make sure that the business has an ability to continue on with or without Josh one thing I didn't realize when you said press on this journey is that you always think of like there being a clear start and a clear end now I'm so confident on the ability for the business to compound over the long time long term that I have to think about a world where the business exists without even me in it and whether that's me because I want to go do something else or whatever it means because literally I'm not here anymore I I want to be able to see this idea that the company could go on for you know decades or centuries and so therefore you start to think a little bit differently and so therefore you start to think a little bit differently and so that has definitely caused me to just start thinking about how do I decouple you know the need for for being myself and then the third part is I think the challenge is incredibly hard um I think the inventing the AI component into the product roadmap I think we've done an incredibly good job of that but I I am concerned on how difficult it will be to rebuild things that have been around for 10 years um everyone's talking about tech debt and organizational debt and I think it's gonna be a really hard challenge and I need to better give absolutely everything I have in order to know if I can do this and there's only I don't and there's only I don't I don't want to get to a position in three years time I didn't work but I only gave it like 50% of my time I did it part time I did it part time yeah as a whole there's this whole gigantic rhetoric of SaaS apocalypse SaaS is dead I think there's elements where you can look at one particular product and we can say okay well maybe you don't need that product in the world and I absolutely there's examples of that but I think putting every single size application into a bag and going this whole thing is crap I think it's just insane because obviously they're the best companies that have ever existed over the last you know decades that being said one of the things that is where I put my time and focus on is what these organizations these AI native organizations fundamentally look like and why is it that they're able to achieve things at such a fast period of time and and what what's the nature of that and one of the things that just sticks with me a lot is that the companies themselves will look so different in terms of how they're constructed um less people yes but less people also and different types of people doing different types of roles and constructed in certain sort of ways and I think one of the things that the market at as a whole is looking at and saying is well these companies have far fewer people in order to get to these incredible revenue milestones and they're doing them faster than we've ever seen before tech debt is quite a big hurdle to overcome when you think about that on like a practical sense do you think tech debt is actually something that is that difficult or is are people blowing it out of proportion hmm but I think there's org org debt organizational debt and that's the one that I freak out about um systems and processes that exist outside and around the product um that you know you haven't looked at from a technology lens um you take any part of the organization whether it's accounts payable or recruitment and chances are it's a fairly it's definitely probably not AI native it's potentially tech enabled at its best using some sort of software platform or SaaS platform but you haven't had the opportunity to throw engineers at that and say okay what's the way that we're gonna do this and scale and make that work really differently and again I go back to my hypothesis is that these AI native businesses have started from one person to 50 they haven't probably gone and reached for the same no HR system that that indebted and most of the other companies use and they haven't approached it in the same way and we can now look and see that they've been able to attract incredible talent and do it very quickly um whilst remaining incredibly lean and fast and I think the tech debt piece is a real thing but I think it's it can be overcome we haven't yet seen real cases of people overcoming or people getting through sort of the old debt and that's the part that's troubling me before we go any further for someone who is listening that has not heard of indebted um what do you guys do yes I think of us as an AI enabled debt collection business um which is definitely not the sexiest industries by far um but it's a fundamental part of the ecosystem of how credit is extended started the business 10 years ago with a belief that technology could transform that and in do so in three ways the first is it has always been and still is largely a human and analog process people on the phones chasing people to pay their bills and we thought that's got to be able to digitized the second is it's a very unsophisticated process and we thought at the time machine learning represented the biggest opportunity and now we think AI is the next level to that and the third is it's a very ugly C industry to be honest like part of that is honestly because there's never been this idea of customer experience right like you don't think of it as the same way you or I would if we went to like a really good hotel right in insert name like Four Seasons you don't go ah I'm getting the same type of experience that four Seasons I am with the collection company um but why not right like why can't you be respectful and treat people with empathy and provide a really good user experience and so those are the three things that we thought about and you know somehow if we fail forward into a business that think is has done a really good job that we have a long way to go but we help millions of people every year I go through that process in a far better way than they have before talk to me a little bit about that so obviously debt collection carries this very specific reputation right so being very aggressive dehumanizing and in some cases slightly violent what were some of the changes in software that you were able to do to create a more positive experience for both parties so one of the things I think it's helpful for you to understand is that someone is technically in collections from the moment they're one day overdue there's a lot of reasons why that could happen um so potentially there wasn't money in an account or a card was declined or I was just travelling or I was busy building a company and I forgot to pay my bills which ironically happens more than you'd expect and um so that in itself means that this idea that the human that is in that process is some type of archetype of a person who doesn't want to pay their bills or um is incapable I think is one of the first things and so how do you identify people into that sort of quadrant we look at it in sort of these two accesses which is what is that person's capability to pay like I actually have the money I want to pay it I want to have the money rather and then the second access is their willingness to pay so I do want it so in the top right hand corner you have Josh has money to pay his 30 dollar Bill and wants to pay it that user experience is then very different so if the way that I have to pay it is print a barcode and go to Australia Post and scan and give cash wow that is a hard process right yup you know capability or willingness but you haven't necessarily made it easy versus an SMS with a link and I double tap it with Apple Pay while I'm walking down the stairs to grab a water that's a totally different experience and so we can change that and then you gotta identify people you know on the other spectrum which is maybe they have a willingness but they don't have a capability maybe they haven't been paid on time or there's a mismanagement of funds and things like that and so as a core what technology allows us to do is to understand where we think people are on that quadrant and as we engage with them even if they don't realise it they're giving us signals as to where they may be on that quadrant and we can use that to change how we engage with them and so one of the examples I'll give you is let's say in Australia for a traditional bank if you haven't paid after 90 days they can cancel the lawsuit well what happens if you're in Europe during that 90 day period and the only way they were contacting you was via a phone and you have a different SIM they didn't email you and they send you physical mail to your address in Sydney hypothesis would be we need to sue this person because they're absolutely not going to pay but they could theoretically be sitting in a villa in Italy having a great time enjoying a holiday and be like oh I didn't know and so if you flip that and think about emails text messages phone calls etc happening during that process if you know the phone is not ringing the SMS is not being clicked the emails are not being opened it allows you to draw a very different conclusion as to maybe what that person is aware of and therefore how you should engage with them I think I might have landed in one of your debt collection pool one point cause I sometimes oh really well then you know it's working so that's good and I'm so curious since you mentioned the idea of like calling so I think traditional debt collection is very focused around like calling and making sure you're reaching people via cell do you see voice AI playing a big role into the evolution of the company one of the biggest yeah we're spending a ton of time in this area now um I think it's the final frontier for technology to own 95% of the collection stack um I'm very bullish on it one of the things that was so unprepared early on in the in the journey of business was this idea that you have to test people if they call them get them to pay and what turns out is that people really don't want to have a conversation about this but there are a percentage of people that need to have a conversation for whatever reason and I always use this analogy but ideally when I book an airplane flight I do not want to speak to somebody right I want to go on to the app or the Emirates app make a booking and whatever if you have to call it's usually from a very bad reason right planes been cancelled last minute someone's lost my baggage I can't do it through the app I always ask myself would I prefer to get a call have an AI agent answer me within one 1 dial solve the entire problem and have me off the phone for 5 in 5 minutes or the experience that you and I am familiar with when you have to call an airline which is like a 9 minute way period chaos is it no one's gonna do it right I think the same is gonna be true for debt collection and there's too much belief that the humans will overwhelmingly not want to have that conversation with AI agents and our early data suggests the complete opposite and so we're we're investing in a big way in that's definitely super exciting and I will say I always I also fall into the camp of I would love to talk to AI so at least I have one customer that's very happy with it um I want to understand like when you think about a new technology frontier like voice AI what's the choice between buying versus building internally we've done both ha um I think early on the the humble answers we just have no idea we just want to approach it let's do both like let's go market and find what's the best and then through that process let's learn let's also build and test and understand it what I've learnt over the last particularly 90 days to hundred 80 days that I've been very deep in this process recently is that voice AI is a multi layered system of complexity so things like text to speech we are not gonna be the best in the world at that there are phenomenal companies out of the valley doing incredible stuff raising awesome rounds let's use those products what is the right way to engage a customer for collections and be the best at negotiating those outcomes I think we have a proprietary dataset that allows us to be good at that and so I'd say it's built in our case but with a very big asterisk about it which is building using industry leading layers of the stack to help us do that I think voice AI at the cursory lens you would think it's super easy but I just had a conversation with someone also doing voice AI in the valley and the test and development and then all the interchanging and all the small little tweaks that they do is actually very meticulous to get to um to get an answer that sounds like a human so you guys have quite a unique pricing model for like a software stack you charge not on seats but charge on results from very early on why did you guys make the decision and what has that done in terms of helping the business grow I have I have so many mixed feelings about this one because it's been a huge challenge of a growing business so the industry as a whole operates on this contingency performance model generally speaking which means we take a percentage of the dollars we successfully recover and if we don't make we're not successful we don't get paid it makes 100% sense why the industry operates that way because it's basically just comes down to accounting standards that once accounts get to a certain age overdue in majority of the markets around the world global accounting standards require you to write those accounts off and so no good thinking CFO's is gonna go ah I should spend a dollar chasing an account I've lost $100 on right so I can spend a hundred alone had to write it off now I've lost $100 the stupidest thing would be to spend a dollar to go and get it because now you've lost $101 you're increasing your potential loss pool so that makes a lot of sense uh venture investors did not they did not think so in the early days of growing business and I understand why predictability recurring revenue etcetera so we spent a lot of time trying to make a different way um and it was that was a mistake big mistake and um you try push too far against the grain you try and get too creative you don't just accept the reality for what it is which is this is still a enormous multi hundred billion dollar you know cam of revenue and one thing I love about the LA I will now is also some CP's are no longer cool and everyone loves predictable so like so semi predictable the outcome based revenue um as we align with that in a really in a good way it's a very nice thing for a dedicated when we can say to a client we helped you recover $100 million last year and we kept 10 we gave you 90 and most of that was all written off that there's now $90 million in new revenue into your business and we got 10 million we took all the risk it's just such an easy way to align incentives and outcomes isn't it great when the tides turn back to your favor and I mean you are one of the biggest that collection software company in the world so maybe there is something to the pricing model itself so you scaled and that from a solo operator in 2016 to a global company with over 200 people across seven countries somewhere in there you transition from builder to CEO so when you went through this transition of being a CEO and having all these additional responsibilities on top of just building software what was that like did you enjoy the transition I I didn't enjoy the transition I think it's always I think one thing you have to lean into when you start a company and it starts to scale is you as an individual will need to change but I know one thing is true I love the early stage of building um I love the early days like as you recruit different people you find people are good for different parts um I think I can clearly scale cause I've been through the journey but I just have like a love for those early days like nostalgia when I think back back into those times and not to be you know against the reality was always hard I didn't have a lot of money no one had any cash there was there were tough days and um very very difficult difficult times but I I like to be in the engine room and see something come to life if you will um I remember the first collection like it was yesterday um and making the first $12 of revenue and being like that was the coolest um and it honestly it meant more I remember the first dollar and I also remember the first million dollars collected we have a video of myself and a few other teammates like for us at the time and we popped a bottle of Moët and like celebrated because we collected $1 million and today you fast forward and we make over $1 million a week in revenue was there ever any conflict or tension between like your builder side and your executive management side of things there has been was and is um in that I I lean into problems in a big way and I get a lot of self reward and satisfaction from solving complex problems um so I don't do well as an executive working with other executives who are scared of using technology like just staring into the abyss and chewing glass yeah I'm definitely not the best engineer I'll be very clear on that my biggest still though I think is that I'm technical enough but I also have a good commercial acumen and so I think from a product perspective what that's allowed me to do is I'm not the engineer that pats myself on the back because I think the code is really cool I'm the one that pats myself on the back someone's paid us money for something that we built and that's the part that I can bring it'll always brought to the team and it's the balance between the executive side of I know my investors want to see X million ARR or whatever it is and how do I translate all that back and then I'm in front of a customer going well I just build them this I can get set number and then I can achieve set goal and so that that's where those two work well if the refounding journey works what does success look like two years from now all companies are factory and our job is to produce a widget and we should have a brand new factory and produce widgets at speeds that seem completely impossible to the business that we are today so and the reason I use that analogy is I don't want to get too caught up on revenue growth rate numbers and revenue per employee all which are important I have takeaways for all of them and I want us to hit them all but I want us to be able to go like whatever it is that we produce in the company let's say it's a line of code or product a higher a performance review I want us to think about it as well how long did it take us to do a performance review that process in the company for and today I'll be honest it feels a little bit like a conveyor belt bringing luggage out of the airport I wanna see it being like one of those high precision of things being stamped out of so that's how I want the company to be because I think if we are doing things like that it means we have mastered the automation component we could harness all of the brain power everybody in the company and say guys let's focus 100% on this problem and go solve that and that's the next unlock for the company I'm excited to see this uh factory come to life you can spin out widgets super quickly so in the past 10 years what do you think is your biggest regret in your founding journey something you wish that you knew something you wish you could avoid it my biggest regret was probably the times where you haven't trusted the instinct as much and even I had done businesses a couple businesses before that were successful and that it was a different level of scale and and and success in terms of where it is that you invariably doubt yourself quite a bit during the journey and you do it because you meet people that you overwhelmingly respect and then they say something and then they say something up at night like I got the idea wrong so example is like you mentioned on the pricing the amount of times that I met vcs where I was like oh my god that's this person you know they're on this verb they're investing in these companies and they go your pricing model sucks I would never invest in that company and then you go home and you're like you know what I should do I should do there right I'm just gonna convince an entire hundred seventy billion dollar machine just to just completely change overnight because Josh says so because this person says so but they haven't had you know they're gonna meet you in 20 minutes they need to understand the industry and you go down some stupid rabbit holes and you do some stuff that ultimately you get to where you are today and it's like it's the same freaking pricing model that it was when we started and I attempted to honestly rebuild that 15 times because of feedback from people I look back and I regret it because I wasted not only my time and emotional energy and things like that but it also causes you to make the wrong hire and you gotta get rid of that person and when you make the wrong hire you waste $1 million or $5 million and it's just I think for founders there's one thing that you definitely have over everybody else which is you spend more time on this thing it's your baby it's your child and so if I had to cumulatively add up the number of hours I spent on it there's one thing for sure no one will ever spend more time and so that doesn't mean you're perfect on it that means there's certain things about how the machine operates and your intuition on how the company should move forward but I think if you look at it you know in some sort of metric scale that new person that you meet for 15 minutes has spent 15 minutes and you spent 50,000 hours that's 50,000 hours in front of clients and customers and investors and pitching and things like that that sometimes you need to trust a little bit more and for me it's one of the worst moments of the dumbest decisions and things I've made because of those conflicts where it's not really a conflict on data it's a conflict on this person that said something and you're like I just think they're the best person I think trusting your instincts is really difficult especially starting out because you do suffer from a lot of self doubt especially when you haven't seen the fruits of your labor starts to manifest or the fruits of your decisions start to manifest okay Josh I feel like I've Learned a lot about the founding journey and I'm so excited to see the next version of indebted thank you I really appreciate it I have to think about a world where the business exists without even me in it this is probably one of the craziest stories I don't wanna get to a position in three years time and go I didn't work but I only gave it like ten years into building one of the biggest debt collection software company in the world then he stepped down as CEO to rebuild it from its core I remember the first collection and making the first like $12 of revenue and today we make over $1 million a week of revenue that new person that you meet for 15 minutes that's spent 15 minutes and you've spent 50,000 hours that sometimes you need to trust a little bit more valued at over yet he's taking a step back to rebuild from its core competitive in the era of AI my biggest regret was probably my name is Josh Foreman the founder of indebted and this is founder in motion