Everett Cook, Rho — Founder Story

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The challenge in building something that is counterintuitive is that it’s counterintuitive. Not everybody is going to get it. But if it’s easy, you’re probably doing something that a bunch of other people are going to do or are already doing, and there may not be a big upside.

As an 18-year-old first-time concert producer operating out of a dorm room, Everett Cook not only pulled together the first hip-hop concert at Lincoln Center in New York but also managed to convince Jay Z to perform at the concert after a chance encounter with the artist.

That moxie would come in handy after Cook transitioned from an established career on Wall Street to challenging the industry of 100-year-old commercial banks and credit card companies with Rho.

That bet paid off. Rho, the company Cook co-founded with business partner Alex Wheldon, has rapidly established itself and continues to build its reputation as the premier cash and spend management platform for high-performance businesses, having raised over $100 million to date and serving thousands of customers today.

Then again, if an attribute like determination can be inherited, Cook was well prepared for whatever challenges lay ahead — and you’re about to learn why.

Q: Where did you grow up?

I grew up in New York City.

Q: Your parents worked in finance. Talk about your mother. She had a really interesting back story.

She was one of the first female traders to work on Wall Street.

Q: When was that?

In the early seventies, maybe 1972.

Q: How did she wind up getting the job?

She was a very strong-willed person. She became the second female on the floor of the New York Stock Exchange straight out of college. But when she was passed over for a promotion she had been promised, she walked around the corner from the exchange to Goldman Sachs on Broad Street during a lunch break and tried to see if anyone would meet with her.

Q: Considering the era, that must not have been easy.

The receptionist immediately asked which secretarial job she was applying for. My mom replied, “No, I’m a trader. I want to talk to someone in the equities group.” And the receptionist said, “Well, I don’t know if that’s possible.” While they were talking, Robert Rubin, former secretary of the US Treasury, happened to be passing by. At the time, he was running equities and asked what she was doing there. She spoke with him about what she wanted to do. He must have been impressed with her initiative because he ended up hiring her a week or two later. Among her colleagues, she was affectionately known as the “girl trader” back then because there was only one at the firm for quite a while.

It was this sense of not accepting the status quo and not taking no for an answer that has motivated and guided me since I was young. My mother died about ten years ago, but she made a big impact on everyone around her during the time she was with us. She was a huge inspiration to me both growing up and now.

Q: What about your father?

My dad was an entrepreneur and did a few things independently before he started a small private equity fund. He was more of an operator type and focused mostly on helping his management teams build strong organizations and processes. So, I learned a lot from him in terms of how to build lasting organizations and management teams. A lot of the companies that we work with today and build for are similar to the companies my dad worked with at his fund, and hopefully, we make things a little easier for people like him and his colleagues.

Q: Something must have clicked because you started your first business, a web hosting company, when you were only 14.

Yeah. A few things interested me for as long as I can remember: technology, financial markets, and building things.

Q: No baseball or football for you?

I was a terrible athlete. So, when I was 14, a friend and I started a web hosting company. He managed to get his hands on a server, and I think we charged $5 a month. We only had a few customers, but it was cool. It sort of demystified the process of starting something.

Q: After that, you started a concert company at 18.

Yes. Growing up in New York City, I loved going to hip-hop concerts but wondered why there weren’t more at the time. When I was 18, a friend and I started a company to produce the first hip-hop concert at Lincoln Center, and we convinced Jay Z and The Roots to perform.

Q: Whoa. Hold up. You convinced Jay Z to perform at the show you produced?

I was invited to a party by a friend’s sister, who was a DJ for his record label. So, I went to the party and saw Jay Z standing by himself in a corner. My friend’s sister pushed me to go talk with him. I was like, “Jay is like God, but OK.” So, I did. Here’s this 18-year-old kid talking to the biggest hip-hop artist in the world about a concert that we’re producing in a few weeks and how it would be a great moment for him and his fans.

Q: How did he react?

He looked me up and down and said, “Nah.” I said, “OK, thanks; it’s been great,” and handed him my business card in case he changed his mind. And then I got a call three days later from Jay Z’s publicist who said he changed his mind and he was going to do it — but we couldn’t promote his appearance. He’d just show up at the beginning and play the whole set as a surprise. He didn’t charge us a fee or anything; he did it out of love. When he walked out, the place exploded — it was the best feeling in the world to have helped make that moment happen.

Q: Great anecdote. So, fast forward a bit. After graduating from college, you worked in banking. How long did you plan to do that?

I thought I was going to go to Wall Street for only two or three years and then start a company. I ended up being there for ten years because I loved it. I found markets fascinating and gravitated towards global macro investing in particular. Macro is like a puzzle that you’re constantly trying to solve in a game that you can never beat. But you keep getting slightly better and better, and it’s endlessly complex and challenging. It’s, in my opinion, the most difficult style of investing, but also the most interesting. I was lucky to be able to work for several extremely talented fund managers and learn as much as I could from them.

Q: At what point did you decide it was time to strike out on your own?

I never forgot how it felt when I was 18 to make something out of nothing. And even if I did everything perfectly and the fund made a lot of money, and the partners were happy, it was never the same. It never felt as rewarding as actually building something and bringing it to fruition. So, I never lost that feeling. Instead of trying to find a trade or a derivative or a company to bet on, you’re making that thing. And that, frankly, is more exciting to me.

Q: Stay with your Wall Street experience for a moment. What kind of skills rubbed off from doing the kind of trading you did?

Sometimes we would push over a hundred million dollars into a trade that I had originated. That was terrifying the first few times it happened. I remember not sleeping at all when we had a lot of risk, initially. You’d wake up and be up or down a million or so each morning on something you were responsible for. But over time, you get more used to the volatility. I think it forces an extreme degree of emotional discipline about risk. You learn not to get too excited about your wins, which helps you stay level about your losses and be objective about what’s happening. You’re constantly asking yourself if the facts have actually changed or if it’s just noise and trying to separate the two.

Q: When you came up with the idea for Rho, what did you think was wrong with banking that needed fixing? And how did you get people to believe that you could compete successfully with the largest banks in the world?

The challenge in building something that is counterintuitive is that it’s counterintuitive. Not everybody is going to get it. But if it’s easy, you’re probably doing something that a bunch of other people are going to do or are already doing, and there may not be a big upside. When we started Rho in 2018, it was tough for people to get their head around the idea as we were one of the first to try to do what we were doing, which was building digital banking and spending products for “real” businesses, not consumers or entry-level companies, which was the consensus trade at the time in fintech.

Q: Did people ask why you thought you could do this more effectively than the big, established banks?

All the time. Or they would say that Amazon or other big tech companies would come in and do this better than us. We had to prove ourselves in the market every day.

Q: How hard was that first year?

It was very difficult. There wasn’t a lot of infrastructure in place in the market. We had to build a lot of stuff ourselves. And we had to gain customer trust, one customer and one relationship at a time.

Q: Did you ever reach a point where you thought this was not meant to be?

No. We never felt like it wasn’t going to happen. That might have been just stubbornness, but we always believed we just had to keep pushing, and we’d get there. I do think there were points where we were thrown curveballs by the market or other things. But we always believed this was the direction the market would take and that technology-driven companies were going to fundamentally reshape the way financial services are delivered to companies.

Q: Speaking of scale, it can be a double-edged sword, particularly for a young company. How fast do you need to build up your size to succeed in this business?

Growth is crucial to every startup. It’s why we exist. But there’s a good but sustainable scale, and there’s a quick but unsustainable scale. We always try to opt for the former because we believe we’re building a “forever” business and don’t want to ever put that in jeopardy for the sake of fleeting short-term gains.

Q: Unsustainable as in “watch out; we’re flying too close to the sun?”

Yeah. There are several things that break when it becomes unsustainable. You could be giving away a dollar for 90 cents and not realizing it. Or you could be signing up a bunch of customers, but you haven’t invested enough time into your product yet, so they may churn out fast and set you back. There are all kinds of traps, so you want to make sure that when you’re scaling, you’re scaling in a way that always adds to the long-term value of the business.

Q: How do you factor that into your approach to growing the company from the startup phase?

We’ve always been focused on maximizing long-term value for our customers and shareholders. It means you need to walk a little bit before you run. We spent the better part of the first two years doing that, continuing to build infrastructure, continuing to build our product, and listening to our customers day in and day out.

Q: And which customers were you targeting?

We think about our core customer as the CFO. We build products for teams, but we know that the CFO is the person who is most negatively impacted when they have a bad experience with another platform or another provider. They are fundamentally responsible inside the organization for putting in good systems and practices. We think about those companies with about 30 to 500 employees. When we started out, that was very aspirational, and most of our companies contained a couple of folks. Today, we are building solutions that truly support complex organizations and companies.

Q: Where did the company name come from?

Rho is the change in the price of an option when interest rates change. And for us, it’s a little bit of a metaphor for how we improve the trajectory of our client’s businesses and lives.

Q: From the outside, entrepreneurship seems glamorous. Does it feel this way from the inside?

It’s certainly way less glamorous than it seems, but no less rewarding. I always think about myself as working for our team, our customers, and our investors, not the other way round.

Q: What changed for the company in the last couple of years?

Pre-Covid, we were a little ahead of the curve being a hybrid work organization. The pandemic forced us to get good at the things that make remote work possible. You really need to get good at asynchronous communication and documentation and have consistent, regular check-ins and things like that. A lot of the things that other companies struggled with at the time — we just rolled through; one day, we closed our office, but we picked up the next day and kept going.

Then, there was a big tailwind. We always got the question about why someone would ever use a digital platform when there was a bank branch around the corner. That question suddenly disappeared. And even as the world has reemerged, that question has never come back. We brought forward so many years of innovation and changes in customer habits through a digital native world. So, net-net, we were a beneficiary of the move to digital though it was not without its challenges.

Q: What about you? What did you learn from the experience as a manager?

You’re not expected to have all the answers as a CEO. You’re expected to be all-in, to be thoughtful, and to be clear and honest with your team at all times — but not pretend that you have a crystal ball because nobody does.

Q: Last few questions. What’s your favorite book?

The Inner Game of Tennis, by W. Timothy Gallwey — which I read a few times when I was a trader. It was about the psychology of peak performance and how to lean into your intuition a bit.

Q: Who is the one person who’s had the most impact on your professional career?

My business partner at Rho, Alex Wheldon, was a serial entrepreneur before I met him. Alex partnered with me on Rho despite it being my first time starting a business, and I’ve learned more from him than anyone to date.