As part of my series about the “How to Navigate and Succeed in the Modern World of Finance”, I had the pleasure of interviewing Sandeep Todi.
Sandeep Todi is the co-founder and Chief Business Officer at Truly Financial, an online banking service for startups and SMBs. With 30+ years of experience in building financial software and launching a few products earlier, Sandeep launched Truly Financial in 2021 with a vision to provide global banking to smaller businesses who’ve always been short-changed by large banks. With a team spread across the US, Canada and Asia, they aim to be the first alternative to global banking for the millions of SMBs across the world.
Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
Truly Financial is my newest venture which has been built off the experience of solving B2B payment problems. I first ventured into fintech with my co-founder due to personal experiences and facing huge friction in cross-border business payments.
We realized that small and medium-sized businesses (SMBs) have always been given the short straw in the banking system and they end up paying high bank fees, facing constant delays, and experiencing bad customer service. We created Truly Financial so that SMBs can manage banking, corporate spending, and payments — all with a single banking service.
At the start of my career I was a programmer, I built financial software for SMBs. After a few years of building larger enterprise software, I’m back to building software for SMBs — and this time it’s Truly Financial.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
The story is not particularly funny, in fact, I thought I was about to lose my job. But there is a big takeaway from this that I’d like to share.
Let me take you back to the beginning of my career when I was a few years into programming and had a quasi-managerial role. I was happy to roll up my sleeves and do anything to continue learning. One of the tasks I was given at that time was to install a Novell Netware server, which came with a keycard that goes into the server for security purposes (Novell’s hack for preventing piracy in those days!). I ended up damaging the card beyond retrieval as I put it into the wrong slot. Hardware components weren’t very forgiving in those times.
In those days, these devices were very expensive. My CEO reacted very calmly and just went ahead and ordered a new card. He only said that I should try not to damage the next one! Not only did he trust me with the first one (which I damaged), but he also trusted me with the replacement.
This has stayed with me for life. I thought I’d lose my job. Instead, he taught me a life lesson — you must learn to pass on trust and authority to your employees. A good leader understands the value in giving their team growth and upskill opportunities.
Is there a particular book that you read, or podcast you listened to that really helped you in your career? Can you explain?
The one that stands out to me above all is Reid Hoffman’s podcast, Masters of Scale. It focuses on how to create disproportionate outcomes and is very informative in how it applies simple principles to problems regarding growth and scaling. It reminds me how we must make our processes or initiatives to be inherently scalable by design because if not, it’s not worth doing it. In our quest to be innovative, we sometimes lose sight of what could hinder our progress as you start scaling. There is also the Knowledge Project by Shane Parrish and How I Built This by Guy Raz. They both uncover first principles while bringing forward learnings from people they interview on their podcasts.
Are you working on any exciting new projects now? How do you think that will help people?
My family comes from a small business background where they sold construction and building materials to contractors and realty companies. I’ve seen the struggles of SMBs first hand. When I started my first job, purely by coincidence, I had to build financial software for SMBs. In many ways, I guess you could say that a “small business” mindset runs through my veins.
Currently at Truly Financial we are creating the first-ever neobank that helps SMBs do business globally — with banking, cards and payments that work together and helps founders and remote teams get work done faster and at significantly lower cost. For example, the Truly Financial Visa card is available to remote teams, wherever they may live across the globe. This is something that a local bank would never be able to offer.
This is a big first for the financial services industry because banks have been siloed in each country, and international banking services have been out of reach for SMBs. We’re building some really cool technology, and partnerships with financial institutions in each country. This enables us to offer local banking to customers in their own country while giving them the ability to do business globally. In our vision, banking services for SMB needs to be re-imagined because these businesses are growing and going global. Their needs are very different from that of a large enterprise, as they buy, sell and hire teams wherever their business takes them.
Thank you for that. Let’s now shift to the central focus of our discussion. Extensive research suggests that “purpose-driven businesses” are more successful in many areas. When you started your company what was your vision, your purpose?
Our vision is to enable small businesses equitable access to financial services so they can grow and compete on an equal footing. When 99% of American businesses are small businesses, it seems ludicrous that they do not have the same treatment as large enterprises when it comes to business banking.
Smaller businesses deserve respect and should be acknowledged and rewarded for their contributions to the economy, to the lives of the people they employ, and to the markets which they help keep competitive. I am not anti-large-business but, if you have anyone in your family who has owned a small business or worked for SMBs, you’ll know that SMBs have huge potential but are often held back by the very systems that should support them. Our purpose is to make it possible for them to stand tall.
Do you have a “number one principle” that guides you through the ups and downs of running a business?
I always like to start with the question “why”. I keep reminding myself and my team to not lose sight of the “why” either. Whether we’re building something new, entering into a new partnership, or hiring a new team member, keeping the “why” in sight can help you achieve your goals and avoid costly mistakes.
Lead generation is one of the most important aspects of any business. Can you share some of the strategies you use to generate good, qualified leads?
We study our customer personas along with their interests and habits in detail. We talk to them directly to figure out what problems they are facing with banking and payments and then funnel all of this information into a comprehensive strategy that spans our communication, marketing, and customer services. For lead generation, we use a combination of channels depending on the client. For example, to attract e-commerce business owners, we use high-intent keywords, SEO, and social media promotions. We also work very closely with accountants and other services to have them refer their clients.
We build lead generation into our software as well. For example, one Truly Financial customer could refer their supplier, which would mean they’d make supplier payments for free. This benefits the buyer (our customer) and the supplier (a new customer), as they get faster payments at a much lower cost.
The important thing to remember is that every lead generation channel behaves differently and requires different skills sets from the sales and marketing team. Some customers don’t want to hear a sales pitch; others need more hand-holding before they decide to open an account. Overall, these days, customers don’t want to be sold to — so the best bet is to gently nudge prospective customers through educating them about new-age banking at many touchpoints along the customer journey.
If a fellow business leader would ask you for advice about whether to bootstrap or to look for VC capital, how would you help them weigh the pros and cons of that decision?
Most businesses can grow by rapidly increasing revenue, a model more commonly known as “bootstrapping”. The business owner usually provides the initial capital or raises short term debt from friends and family to get started. When a business is able to grow based on initial investments, generate sufficient cash flow to pay for expenses and have a reasonable surplus to invest in growth, it makes sense to bootstrap. Growth capital for expansion like a working capital loan or other long-term development loans would be available from several lenders.
For disruptive businesses where the growth curve is not linear, it makes sense to seek venture funding or risk capital. Technology-driven businesses or ones that challenge the status quo, often need larger sums of money upfront to prove the business model before generating meaningful revenue. It’s hard for these businesses to invest in growth based on sales revenue or attract debt capital from traditional investors who have a lower risk appetite.
If the business would not generate sufficient revenues in the initial years and also does not have tangible assets which a traditional lender can finance, risk capital or venture funding becomes the best avenue. However, it is not easy by any stretch, since venture investors look for certain signals before they agree to invest. Primarily, these signals are about building conviction in the investment and would be based on factors like:
- Track record of the founder in their previous businesses.
- Quality of the team they have put together.
- Initial growth metrics.
- Vision, target demographic and total addressable market or TAM.
Initially, angel investors take a larger leap of faith and are not as concerned about metrics and performance, as they would be about the capability of the founder and conviction in their vision. At later stages of funding the business track record and growth potential become critical to be able to raise additional capital.
It’s important to remember that when you raise venture capital, you are giving away a part of your company, permanently. That growth capital should be valuable enough to give your startup the wind beneath the wings else you may end up giving up too much for too little. Value of the growth capital stems not just from the money but is greatly enhanced by the connections that a good investor can bring to the table and open doors for accelerated growth opportunities.
What measure do you use to determine the value of a company? What advice would you give to other leaders about how to get an optimal evaluation of their business?
Traditional businesses are valued based on revenue multiples or discounted cash flow. This is a good measure when the business growth can be accurately determined based on current revenue while factoring in future multiples from historical track records.
Most technology businesses experience extremely high growth during their initial years, and past revenue may not be an accurate indication of their true potential. This is why most economists and traditional investors or lenders shy away from high-growth startups because they do not fit the traditional mould. These tech-driven companies are usually valued by a multiple of their growth rate, the strength of their team, clarity of vision for growth, and the ability to anticipate future competition.
Whichever model a business fits into, it’s always advantageous to have a 409A valuation done by an independent appraiser. The 409A establishes a fair market value of the business and is useful when driving decisions for potential new investors or determining employee stock options, etc.
What would you advise to a founder who initially went through years of successive growth, but has now reached a standstill? From your experience do you have any general advice about how to boost growth and “restart their engines”?
Hockey stick growth is a tough act to follow, but that’s what is expected from any startup that’s disrupting the old way of doing things. This can take a huge toll on founders and leadership teams as they constantly face uncertainty, even in the shadow of success. Initial growth triggers don’t always work as well in later stages — startups need to constantly reinvent themselves to find new opportunities to keep raising the growth trajectory.
The key is to actively look for new growth triggers. This could be an opportunity to enter a new market, create extensions of your product that make it more useful for customers, find upsell opportunities, get media exposure, or give a team member a new challenge. They don’t necessarily need to drain time or money.
What are the most common finance mistakes you have seen other businesses make? What should one keep in mind to avoid that?
Every business has its unique financial needs, and the CEO has to understand very clearly how revenue growth and cash flow cycles affect the business’ ability to execute and scale. For e-commerce stores, the cost of carrying inventory and returns could be the biggest things to watch out for. Alternatively, a manufacturing company has to monitor how fast inventory moves through their distributors’ sales channels while SaaS businesses have to account for recurring revenue and churn.
Often, entrepreneurs who start a new business are not familiar with the financial planning unique to each business model, especially if they have worked in different industries or have no prior experience as a business owner.
It’s smart to work with an experienced financial advisor who can help you think through and manage business finances. When planning a major expansion or growth strategy, advisors with prior experience in managing growth-stage companies are instrumental — this could even be your CPA, as many accountants are increasingly offering advisory services to their clients.
Ok, here is the main question of our discussion. Based on your experience and success, what are the five most important things one should know in order to succeed in the modern finance industry? Please share a story or an example for each.
The financial services industry is evolving at a mind boggling rate. Fintech has altered the dynamics for traditional institutions, regulators and consumers alike. Success is built on not just innovation but the ability to peer into the future and get a sense of where it is headed. The rapid innovation in fintech means you have to be ahead of the curve else the shifting sands can make you lose your way without realizing it. Innovation is not confined to just your product but the way you do business. I like to look at this as 5 things that must constantly be on a fintech founders’ radar — customer experience, breakthrough opportunities, depth of leadership, unit economics, and changing regulations. I will touch upon a few of them here…
Customer experience is like a patio umbrella — it brings everyone at the table into its kind shadows. For a company, this means combining product and customer service into one holistic experience. Increasingly, customers expect a consumer-product experience from B2B software and it is no different when it comes to financial services. Poor and cumbersome banking interfaces is a lament I never cease to hear. Financial services are causing self-inflicted pain when they think that their product’s benefits or savings outweigh the ease of use. Combine a good product experience with exceptional customer service delivery, and customers will rave about the company and in turn attract more customers. For example, the experience of online account application with Truly Financial takes no more than 20 minutes compared to 60+ minutes taken by other neobanks. When we decided to improve our metrics for customer onboarding this turned out to be a distinct advantage for us.
Breakthrough opportunities are hard to plan for. The best you can do is to design your organization in a way that gives you an early peek into those opportunities. This could be as simple as testing something customers don’t expect is possible to determine the opportunity, or anticipating changes in technology that can become a game changer. Sometimes you just need to seize the initiative and jump in early. Remember AI powered chatbots that took 2+ years to start delivering on their promise? Those that adopted it early are now doing a much better job than late adopters.
Depth of leadership — every business has its own complexities and fintech especially has more than its fair share. Scalable leadership teams in each operational area can have a disproportionate impact on the speed of execution vis-a-vis competitors. E.g., if you have lack of capable and mature regulatory experts inhouse, it ultimately throws off customers who can see through the lack of expertise. Moreover, this does not go well with bank partners and regulators who may perceive your fintech to be incapable of running a dependable service. These are core skills that cannot be outsourced and building these early-on is critical.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
The peer pressure can be immense, especially as you see innovation happening all around you. Take time out for yourself, unplug once in a while, do that road trip, and, if you haven’t tried it yet, treat yourself to some yoga or meditation. Most importantly, take a vacation (or at least a mini-vacation). It not only gives you a break but also creates an opportunity for the business to run for a few days without your immediate presence, and that’s a good thing.
The fintech industry is not very old when you compare it with other technology verticals. It’s also the fastest-growing due to the sheer amount of change and new business models that are emerging. Just like any fast-growing sector, the need to grow exponentially characterizes the fintech industry, but it’s important to take care of oneself, both physical and mental health, and your family.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
It’s been my dream to create a community of thinkers and doers that believe in the environment and by carrying out actions that support their beliefs, they can inspire others to do the same. As cities get more crowded (pre-pandemic at least!), and we have new generations to hand this world to, taking care of our environment, the planet place we call home, is the single more important responsibility of every human being. Our lifestyles, consumption habits and consumerism have created a false sense of what nature and life is all about and it is my wish to help people take deliberate steps towards shaping a better future for Earth.
How can our readers follow you online?
I’m always available on Twitter @sandeeptodi (DMs are open) and on LinkedIn. Do mention that you read this on Authority Mag, so it doesn’t get lost in the shuffle.
This was very inspiring. Thank you so much for joining us!