Barney Hussey-Yeo in conversation with John Collison

Transcript

Thanks for being here. Thanks for having me. So, Clio, you guys are pretty familiar with, a phenom in the consumer financial advice space, 400 million in ARR. As of last month? Yes. Unicorn and really rapidly growing one of the top AI startups and based right here in Shoreditch. But before you started Clio, I want to go back to your prior career. Yeah. You were a poker shark. Is that right? A shark, a fish. I played at university. I funded my university career through playing online poker. I only know what I've seen in Rounders and Molly's Game. So, how does actually making, professionally playing poker work? This was back before you had GTO and The Solvers. So, it's all online and you play on multiple sites and you play four to six hours a day, heads up. And actually, really interestingly, I've just built an AI agent that now plays for me and earns rake back. So, I make about, I shouldn't say this publicly, but I earn about 200K every year now just through my little agent that plays and barely beats the low stakes. But yeah, I used to play low mid stakes, heads up, and it was quite profitable. [SPEAKER_00] And how, so, GTO is game theory optimal, which is doing the exact right thing that the probability tables would tell you that you should do, right? And you didn't have that in 2012, 13, 14 when I was playing. Really? It was invented that recently? [SPEAKER_00] Only 2016, 17, you had The Solvers and we actually learned how you could beat The Game. It's still right at the edge. You can probably beat The GTO Solvers. But it's basically a solved game, which means online play is dead now. But you should play tournaments. You should go play a live tournament. They're always fun. No, because I'll be playing against your boss, probably. [SPEAKER_00] Yeah, don't play online against me. You're going to get rid of it. [SPEAKER_00] Yeah, that's very interesting. The Solvers, a lot of these things are discovered later than one would think. Like Black-Scholes is a relatively recent invention for valuing financial options. And I hadn't realized that GTO is such a recent invention in poker. [SPEAKER_00] Well, you don't want to tell people if you've got an edge, right? [SPEAKER_00] Yeah. [SPEAKER_00] So, there's probably all these things in hedge funds where you could have a massive economic benefit to GDP, which is not yet. No, but they keep it secret. [SPEAKER_01] Exactly. [SPEAKER_01] Yeah, this happened in cycling as well, in pro-cycling, where people used to inflate their tires up really high, you know, 120 PSI or something like that. And then one Tour de France team figured out that actually everyone was over-inflating their tires, and you don't need to over-inflate your tires. And they kept it as a secret from everyone for a long time. Anyway, there's still plenty of room for new inventions is what we're taking away here. But we are not here to talk about pro-cycling or pro-poker. We're here to talk about Clio. So, maybe just to orient people who aren't familiar or aren't using the product, what does it do? How did you guys get here? Yeah, well, we started in 2016, so it was an AI assistant for your money, which was weird in 2016, and now is the thing to be building. Because AI was not as hot in 2016. [SPEAKER_01] Yeah, building an AI system was completely weird. Natural language processing was barely working. But it was the really big research output at the time. So I did my master's in machine learning, and we'd just gone from the vision era of beating AlexNet, and then NLP became the thing all my professors were interested in. So I'd worked at FinTech as a data scientist, and I had this fascination with machine learning, and knew it was going in that direction. So the thesis was, everyone's decisions are wildly unoptimized, and your financial life is the most stressful and important thing in your life. So how could you make a billion people make better decisions every day, or make decisions on their behalf? And how could you change the economy, the world, everyone's life through doing that? [SPEAKER_01] GTO for your financial life, if you will. GTO, yeah, I don't think it would sell. But maybe to you, John. Yeah, for the, just free idea for the magazine article, you know, for the opening paragraph on Clio. Okay, but that's interesting, right? Because you were founded in 2016. That's before, it was obviously before ChatGPT, but that's, before LLMs. GTO for your financial life, two years before the Transformer. GTO for your financial life, but even back then, if you had the Meta Lab we were just talking about, they were really focused on it, and they were pushing out a bunch of good work. It was just intent classification back in the day. Then you had two years later, it was the Transformer, then you had BERT. Everyone then in computer science knew this was going to be a thing, and then everyone else just woke up when 3.5 dropped, but you could see it, right? [SPEAKER_01] But so what, I mean, I presume today you're heavily LLM-based. [SPEAKER_01] Yeah. [SPEAKER_01] Just how did this work? How were you providing the financial advice? The user input some data, and then what? [SPEAKER_01] It started with regexes. We had a lot of regexes to start with, but then it was just traditional supervised learning, right? So you had intent classification and entity classification. It's a bit nerdy, but intent is what you say in a sentence. So it was big, multi-class supervised learning, and then you had, and we still do, had the recommender systems and reinforcement learning to push you information at the right time. So you've gone from a supervised learning world to an LLM-based world, and that completely changed our architecture and our products, actually. Yep. How, the conceit of Clio is that you should have personalized financial advice. How personalized does financial advice actually need to be? Because, you know, there's a view that you could say you should have the right savings rate, and then you should invest in a low-fee index fund, and you shouldn't buy financial products. It's, you know, you shouldn't eat foods that are advertised on TV, because the good foods don't have an ad budget. And similarly, you shouldn't buy financial products that are aggressively sold. You should buy a low-fee index fund, and then you shouldn't have a home country bias. You shouldn't buy the FTSE 100. You should buy the MSCI World. Does financial advice actually need to be? Because there's a view that you could say you should have the right savings rate, and then you should invest in a low-fee index fund, and you shouldn't buy financial products. It's like you shouldn't eat foods that are advertised on TV, like the good foods don't have an ad budget. And similarly, you shouldn't buy financial products that are aggressively sold. You should buy a low-fee index fund, and then you shouldn't have a home country bias. You shouldn't buy the FTSE 100. You should buy the MSCI World Index. Is that not enough financial advice for everyone? Showing how out of touch you are, John, with the real consumer and the normal humans on the street. Your life is your money. You spend it, and it's the most stressful thing for the majority of people in their life. You spend so much boring admin time thinking about how you make financial decisions. From where are you going to live? Where's that mortgage? Where's that rent going to be? How big should that be? Every single thing you do every day is a financial decision in reality. You make all these transactions every single day. Lots of them on Stripe. But imagine if you had a world where everyone was making rational, sensible, more optimized decisions. If you think about how much money goes towards consumer credit or paying on interest when it doesn't need to, you could really change not just the top 1% of people that get financial advice. It's the 99% that actually need the financial advice. The people that are living one month, two month, three month savings. If they can have a better life and make better decisions, and you can do it for them, you shouldn't have to think about finance, right? It should just happen on your behalf. You need credit. It should just ask. It should go get it for you. If you have wealth, then it should just go get the best return. It should be tax free. There should be a world where you don't manage your money by looking at a balance and a list of transactions. And that's coming very soon, right? Where are you generally trying to steer people? Like I can imagine there's avoiding bad financial products, like the classic one of borrowing on a credit card. There's the maybe price comparison where if you're getting a mortgage, you can get somehow better rates here versus there. There's tax efficiencies. But just like... [SPEAKER_00] It's actually your life. You think about most of the consumers in the U.S. It's 60% of Americans have less than $400 of savings. It's how they spend their money every single day. How much do they earn? What's their income volatility? How much are they spending on rent, mortgages, subscriptions? What are they actually doing with their financial life? And you can really help someone just by laying it out to them, making better decisions for them. And then on the products, they are wildly unoptimized, especially at the lower end. They're paying incredibly high interest rates. They are not getting any returns on savings. Most people don't have investments when they just sit in a cash ISA in the U.K. It's crazy the amount of GDP growth and the amount of financial wealth you could be creating people that's left on the table. So I just think there's trillions and trillions of good that you can do for society and humans, but also just the economy as well. If you have this thing moving effectively through the system, you can dramatically increase GDP growth. How do you advise people spending? I mean, there's the meme online of the millennials with their avocado toast. Is it like you're trying to reduce the amount of avocado toast consumed? Or how do you actually steer people usefully in an actionable way on spending? Do you know what was funny back in the day? Because it wasn't as intelligent, we had to really rely on humor. So we had 30 female comedians on staff. Cleo was a female agent. So we had these female comedians. And they wrote every single line of copy, both what we pushed and what we responded with. And we found that humor and money actually go together weirdly well, which no financial institution spoke to with all your lawyers and your executives. Bankers generally not known for their humor. Yeah. So that was a real unlock for us in terms of engagement. And there's a roast mode in Cleo that makes fun of you for your spending. I don't know what it would make fun of you. Maybe the cheeky pints, John. But it roasts you for what you've done over the weekend at the bar, whatever it is. And people really like that. And it's a way to engage them in simple, actionable financial advice. And increasingly, it's just taking action on their behalf. It's moving accounts. It's moving money. It's getting them the best credit, whatever that is at that time for that user. [SPEAKER_01] Do you have a way of measuring how Cleo is steering people's financial health? Yeah. [SPEAKER_01] Yeah, we have measured. I'm actually really surprised that you probably do internally. But there is, we have constructed a view of financial health for every individual at Cleo. There's a score, 0 to 100, and all these variables and all these features. So we know whether you're leveling up your financial health or you're degrading it based on your actions that you do. So actually, the objective function of the recommender system, it used to just be engagement. So it was like, can we make you click this button? And it was fun. But now it is financial health and engagement. So we're optimizing for, did this bit of advice, did this action lead to in two months, three months time, their financial health getting better? And then spending less than they earn, which is the core primitive. [SPEAKER_01] Spending less? Spending less than they earn. [SPEAKER_01] Oh, yeah. It's the core primitive of every human in that low to middle income, right? Yes. Yes. Who do you compete with? Is this substituting for existing products? Is this just a new thing? [SPEAKER_00] Yeah, well, think about how people make financial decisions today. It's a vibe-based optimization game for most people. Maybe it's a fag packet and a napkin, but the vast majority of consumers don't budget. They don't think about their money in a very rational way, or they do it in a very late way. There's only a really specific number of nerds, probably everyone in this room, actually, that will have an Excel, an Opti... I'm sorry, I shouldn't make fun of all the audience. But have this set of advice that they'll construct themselves. So we're really in the advice game for people that don't have advice. And I think there's going to be loads of avenues like this. Maybe it's a fag packet and a napkin, but the vast majority of consumers don't budget. They don't think about their money in a very rational way, or they do it in a very late way. [SPEAKER_00] There's only a really specific number of nerds, probably everyone in this room, actually, that will have an Excel, an Opti... [SPEAKER_00] I'm sorry, I shouldn't make fun of all the audience. [SPEAKER_00] But have this set of advice that they'll construct themselves. [SPEAKER_00] So we're really in the advice game for people that don't have advice. [SPEAKER_00] And I think there's going to be loads of avenues like this. [SPEAKER_00] Imagine health, right? [SPEAKER_00] We all make terrible decisions for our health all the time. We've all got a whoop now. [SPEAKER_00] We're all getting into it. But there's going to be all these big verticals in your life, whether it's education or health or finance, where your decisions are wildly optimized today, and they're just going to be so much more thought through. Imagine how you deploy capital in people at Stripe. [SPEAKER_00] There's probably an army of nerds thinking about how you deploy that versus your strategy and where your goals are going. Imagine if you do that for every human, for every decision they ever have to make. [SPEAKER_00] So you think you go broad and beyond financial advice into... [SPEAKER_00] There's a lot to do in financial advice. [SPEAKER_00] Big time. [SPEAKER_00] So we're going to nail that first. [SPEAKER_00] And I think you're going to have these four or five agents that go really deeply vertical in these big, specific areas of your life. [SPEAKER_00] And I don't think they're going to be the frontier model companies, actually. [SPEAKER_00] I think they're going to be companies that are focused all on health. [SPEAKER_00] They go all the way to the MRI and the blood test, and they have a whole stack of advice. [SPEAKER_00] So I'm bullish on that, and I'm less bullish on OpenAI being the interface for everyone, for everything. [SPEAKER_00] Do you see that competition dynamic with users where anyone who's building AI tools, there's always the... [SPEAKER_00] Anyone who's building specific vertical AI tools, there's always the dynamic where people might just take a bunch of financial statements or connect their bank account to Claude and start asking questions. [SPEAKER_00] Do you practically see that behavior where an alternative to using Clio is wiring up the relevant data to an LLM? [SPEAKER_00] Well, you can connect your plan account now to ChatGPT and ask questions, right? [SPEAKER_00] But I would bet a huge amount of money they get very little engagement, and it becomes a side project that goes nowhere in reality for that business. Because to engage people with financial advice, it's got to be proactive, and it's got to be agentic. Yes. So people don't wake up and go, oh, how much did I spend on... Yes. Is it just a boring thing to think about? So it has to be this agent that's always on, always pushing information. If you think about all the frontier model companies, it's a very reactive thing. It's replacing Google search for most people today. [SPEAKER_01] You have something in your head that you want to research, you want to go into, but there's so much space in the product cycle for it to become a proactive, intelligent, always-on agentic thing. [SPEAKER_01] Yes. [SPEAKER_01] And that's going to require a lot of effort and a lot of training data and a lot of understanding of what you need to say to a user at what time that's going to work. [SPEAKER_01] It feels to me that we're early in personalization. When you're saying it'll be very personalized, it's just... I mean, if you look at how OpenClaw works underneath the hood, it's this static model and then a bunch of flat files that it's writing notes to itself. It's like the movie Memento where he's writing on his hand. And that's the only memory he has. That's basically the AI models today. And I'm curious, just for your experience trying to build personalized products, where the current AI technology is just fundamentally a bit resistant to personalization. I've never thought... There's definitely a meta point here. We just have text, right? And how does the human store memory? And when are we going to get to a different form factor for that? But in reality, and what we've been doing, you can build a knowledge base of every single human, like their financial aspirations, their financial health, their financial goals, every conversation they've ever had. So you remember Carpathie did that thing a few months ago where it's like, oh, I do this thing recursively with LMs. We've been doing that for years. [SPEAKER_00] That is such a powerful way to build a structured knowledge... [SPEAKER_00] I was also giving you a bit of shit for Stripe not being intelligent enough. [SPEAKER_00] And they should be that knowledge base at Stripe. [SPEAKER_00] They should be every single card connected to every single user, who this user is, how much income they have, where they spend. [SPEAKER_00] So we've built that over time for every user. And then we have a recommender system that is thinking from the knowledge base. There's all of these opportunities for us to say things to users. What is the thing that's going to move the objective function the most, [SPEAKER_01] that's going to move that financial health, deliver that information, take that action on the back end? [SPEAKER_01] So I think text works as long as it's stored in a thoughtful, clear schema and database. [SPEAKER_01] One thing we were talking about backstage is the concept of personality in AI is interesting. [SPEAKER_01] I think at the beginning of the field, when people were first introducing LLMs, people might not have predicted that personality would be such a big thing. But we're talking about the new anthropic model Fable and what its personality is like. Or famously, GPT-4-0 had this very controversial personality where some people found it too sycophantic. [SPEAKER_00] For some people, I guess they really liked how sycophantic it was. [SPEAKER_00] And they were annoyed when they tried to take it away from them. [SPEAKER_00] And I get the impression that, for you guys, the personality of Clio and how it interacts with you is a big part of the differentiation. [SPEAKER_00] So what goes into getting the personality right? [SPEAKER_00] And, for example, do you need to tune it for different users? [SPEAKER_00] Do you try to figure out what personality people want? Is it just what it is? How do you build that? Have you moved beyond the army of comedians? Or is that still how you engineer the personality? I think this is one of the biggest things at Frontier Labs. Maybe they don't need to. And I get the impression that, for you guys, the personality of Clio and how it interacts with you is a big part of the differentiation. And so what goes into getting the personality right? And, for example, do you need to tune it for different users? Do you try to figure out what personality people want? Is it just what it is? How do you build that? Have you moved beyond the army of comedians? Or is that still how you engineer the personality? I think this is one of the biggest things at Frontier Labs. Maybe they don't need to. Maybe they should be boring and it should be a generic, not even personalized thing and they should just be for the essence of intelligence. But I think for any brand or any company doing this, the personality and personalization to the user dramatically changes engagement. It dramatically changes what a user does. [SPEAKER_01] So being funny, being concise, writing well, all of these things move our MAUs. It moves our revenue. So we've known from the first three to six months of building this business that the brand, the personality, and the tone of voice mattered a lot. So it's been a linear supervised learning with one tone of voice. And then since LLMs, it is now a much more personalized tone of voice based on your income, your financial health, where you live. You're in Boston. You're in San Francisco. I don't know how it talks. I want to make fun of John, but I shouldn't make fun of John in front of a 15-minute group. But it will talk to you however it thinks you want to be spoken to, and you can craft that as well. But the general learning is that finance for a lot of people is a high-stakes topic. [SPEAKER_01] It's maybe they're nervous about it. It's a bit of a schlep. And so you're trying to make it more approachable is the fundamental personality. I think all these great companies take the inverse. It's like Stripe. The payments industry is completely archaic and complicated. I've got to go through enterprise sales to do anything in payments. Let's do the opposite. Let's make it really simple, dev-friendly. It's going to be a one-click thing. It's the exact same with Monzo. It was really bad UX to do anything with a bank. And they just made it simpler, more transparent, less opaque. And we've gone, okay, it's really complicated financial advice. We're going to make it really simple. It's really boring. We're going to make it really fun. And we've just taken the inverse position, which is such an obvious thing to say, but I think, how many founders do you see actually take that? So I think it's worked for us. It's product contrarianism or product differentiation. Yeah, it's like – and you always want it in the most extreme form, generally. What is the biggest pain point of your incumbent? And what am I going to do? I'm just going to go incredibly hard at their biggest pain point and make it the most delightful experience. So it's a hack for building a first product, right? Yes. How is the landscape of financial products that you advise people on changing? Borrowing is presumably changing somewhat at an industry level due to the emergence of BNPLs and things like this. Is the mortgage industry changing and how people are getting those here? Yeah, I'm curious how you think about that. [SPEAKER_00] There's only so many primitives with money, as you definitely know, right? You can borrow. You can spend. There's just only a finite set of things you can do. So all of the innovation is useful, but it's slow and it's guided by regulators. I think BNPL is a great example of credit cards with this really bad thing for all these years. So we're doing something better and something different. But it's not that interesting, in my opinion, generally. Hopefully, the biggest thing will be stablecoins and how do we transact and how do we move away from those rails? But I don't find building – we build a lot of financial products, so I shouldn't say this because all my teams work on them. I find them constrained and slightly boring because of the limited number of primitives. But I think the intelligence and the advice – if I was building Stripe, I would be like the intelligence, what I can give consumers from that would be the most important thing. But I guess that's also my wonk. [SPEAKER_00] Well, it's not just a limited number of primitives, right? It's also all these products are heavily regulated and so they end up in certain streams. But, for example, do you see different – should people be consuming a lot of BNPL or a little? Like, what's – [SPEAKER_00] This shouldn't be maximizing – what happens generally for consumers is they'll take a credit card out and they will max the limit and then they will stay at a max limit paying the minimums for 10 years. It's probably the most inefficient form of credit the vast majority of society has. So BNPL is a better way to pay over an actual time period and make it more like a termed product. For a fixed amount of borrowing, though if you just use it to borrow more, presumably that's bad. This has been my whole raison d'etre for a long period of time. Credit is such an important part of the economy and people's lives, but it is used so poorly by so many people. [SPEAKER_00] and then they will stay in a max limit [SPEAKER_00] paying the minimums for 10 years. [SPEAKER_00] It's probably the most inefficient form of credit [SPEAKER_00] the vast majority of society has. [SPEAKER_00] So BNPL is a better way to pay over an actual time period and make it more like a termed product. For a fixed amount of borrowing, though if you just use it to borrow more, presumably that's bad. This has been my whole raison d'etre for a long period of time. Credit is such an important part of the economy [SPEAKER_01] in people's lives, [SPEAKER_01] but it is used so poorly by so many people. [SPEAKER_01] And this is why I think the intelligence is the answer, right? [SPEAKER_01] It helps make people make better decisions [SPEAKER_01] about how much credit they consume, [SPEAKER_01] how much they spend. [SPEAKER_01] If you just provide financial advice [SPEAKER_01] or provide financial products without the advice, [SPEAKER_01] I don't want to bash Robin Hood, [SPEAKER_01] but you end up just selling products [SPEAKER_01] and trying to get the most margin [SPEAKER_01] and it leads you down this way of, [SPEAKER_01] ooh, let's do day trading, or let's do... None of these things are bad, right? And they can be used in the right way. I do think you need some sort of... You can't be purely revenue maximizing, is your view? 100%. I think it just leads to bad outcomes for consumers and bad outcomes for the business as a whole. So I think that... I think the intelligence and the decision-making and helping users do it for them is just so critical for everything. If you were in charge of regulating financial products in the UK, what would you change? Where do I start with the UK and its regulators? Innovation is good. Creative destruction is good. It's how you move every industry in the world along. It's what we've seen for the last 100 years. Creative destruction is what drives better outcomes for consumers, what drives better outcomes for businesses. So you need to enable creative destruction. You need to have a level of risk-taking to allow upstarts to take on incumbents. And all too often in the UK, [SPEAKER_00] it's, please come to our sandbox and let's work together for two years when a venture funding cycle is actually 18 months. And it actually... Them trying to be helpful normally constrains a company. I've seen so many of these little angel investments I've done [SPEAKER_01] that have tried to engage the FCA, but it's just taken so long to get there that they've run out of money and not been able to prove product market fit. So if you're a founder doing it, I actually do think you need to take some risk early on. I'm sure Stripe took some risk with its early clients and how it built the business. Don't want to get you in trouble, John. But taking some risk in this sector at the start is a way to build something that the incumbents aren't going to do as well. And you think there's not enough risk-seeking behavior in the UK or it's not enabled in the right way? Well, it's... Go back to the Federalist Papers, right? You have checks and balances. You have state and federal. It's probably the... Read those Federalists. [SPEAKER_01] They're great insight [SPEAKER_01] on how you should run a company and run a country. And we need more of that in the UK. Let's see, the Prime Minister has so much power. Number 10 has so much power. The regulators have complete control of yes or no across 60, 70 million consumers. It doesn't happen in the US. [SPEAKER_00] We have the cause. We have the regulators. We have state. There's all these checks and balances which make America and capitalism work, [SPEAKER_01] which is why I love building in America [SPEAKER_01] and why all my users are in America, [SPEAKER_01] because it's actually a better place to do business, [SPEAKER_01] and it leads to more rational outcomes. You get, obviously, dramatic polarization and fights and all these things, but the checks and balances of the US institutions is why America is winning versus Europe. So moving beyond financial regulation and more broadly to the business climate, you think more embrace of creative destruction is the answer? Yeah, if I was going to really synthesize it, it's we've got to go from a culture of trying to conserve our legacy and our past and the greatness of Britain and Ireland to a place where we go, we're actually all stagnating. We're all declining. We actually don't have much to protect at the moment. We actually need to take some risk. We need to go from a very conservative risk-off mindset to we're going to build, and we're going to build great stuff, and we're going to take some risk, and we're going to deploy capital, all these pension funds, all these ISAs, [SPEAKER_00] all these institutions that could be doing productive things in society. [SPEAKER_01] You need to move from a mode of conservatism [SPEAKER_01] to risk on creative destruction. [SPEAKER_01] Does that filter down into how you think about [SPEAKER_01] how people should invest, [SPEAKER_01] both at the individual level and at the institutional level? [SPEAKER_01] If you could tune how people are investing, [SPEAKER_01] what encouragement would you give? I think the individual is a largely solved problem, even if people aren't doing it. The solved problem is the World Index Fund, right, and that's investing in the S&P 500. Maybe it's just getting a little bit tech-heavy when Stripe goes public at some stage, but that's an almost solved problem if you had people making rational decisions there, and Clio could dramatically help that. I think the new fund that they've set up with Gerstner and the baby accounts or whatever, the Trump account. [SPEAKER_00] What encouragement would you give? [SPEAKER_00] I think the individual is a largely solved problem, even if people aren't doing it. The solved problem is the World Index Fund, right, and that's investing in the S&P 500. Maybe it's just getting a little bit tech-heavy when Stripe goes public at some stage, but that's an almost solved problem if you had people making rational decisions there, and Clio could dramatically help that. I think the new fund that they've set up with Gerstner and the baby accounts or whatever, the Trump account. It's always the Trump account, isn't it? That's a good thing, and get people investing from their age. But on an institutional level, there's a dramatic difference between the U.S. and the U.K. and all of Europe. You look at our pension capital, which should be the big pool of capital going into creative destruction. Tiny, tiny, tiny, tiny fraction in the U.K. goes towards venture capital. I've got British VCs and the tier one European VCs. It's like the California pension funds are actually the LPs into those VCs. So I'm not returning to the British state any GDP growth. It's all going back to California. And if you don't want a world which is completely bipolar, where you can either build tech in China or you can build tech in the U.S., it's really bad for Europe if we don't have this creative destruction and ability to deploy institutional capital in a different way. It's an interesting point that there's a lot of U.S., I mean, it's not universal, but a lot of U.S., Canadian pension systems [SPEAKER_01] are a little bit in Australia, yeah, are invested in venture in a big way and much less so in the U.K. and Europe broadly. And it's worked. If you look at Canadian pension funds, if you look at Australia, I would love to be an Australian pensioner. Yeah, there was a news article about famously one of these pension funds that bought a lot of SpaceX a few years back. And as you can imagine, they're feeling quite good this week. You run a very scaled consumer AI product. I'm curious to talk about that. Well, actually, first off, how do you make money? We make money through subscriptions and financial products. So we've got cards, we've got lending products, buy now, pay later, and wage access. We've got wealth products, we've got stocks and shares. So the financial products make money, the subscription makes money, value occurring, and it's a freemium model. What advice do you have for people who are building AI products that they sell to consumers? Like, what have you learned about willingness to pay, what works well, acquisition, [SPEAKER_01] this new space that's only existed over the past few years? I don't know if I did it the right way. I spent the first four years of the business, maybe this is Zerp, just doing MAUs. It was build a great product, just get MAUs. Not focused on revenue, just focused on revenue. No revenue. And everyone was saying, financial health, no revenue, this is great. That worked up until I got to the growth funds, and then they were saying, where's your revenue? So I don't know if I'd advise that, but I would, you know. I would probably go back and do the same thing, of just try and build a product that people are using and like, and then integrate the monetization afterwards. The inverse of this, though, is just make sure there is one core primitive, like Stripe, where you are taking a margin on something, [SPEAKER_01] or there is just one thing, tokens, whatever it is, [SPEAKER_01] and build that from day one. I wouldn't do anything in the middle, which is being half-hearted on the monetization strategy. Like, it's either baked into the product 100% from day one, or you just completely forget it and get consumers. On the consumer side, I think it works, probably to just get consumers first, then monetize, but I know, what do you think? Well, I'm curious, on the consumer side of things, it seems like many businesses decide that they're going to be one or the other, where they're going to sell on a usage basis, [SPEAKER_01] you know, a normal grocery store, just charging markup on what you buy, or in the U.S., Costco has this famous model where they basically make no money on the actual things you buy there, and then they just sell a $100 a year subscription, it's probably gone up, a subscription, membership subscription, and that is where they make all the money that Costco makes, and they've decided that they're not going to bother making money on anything you buy in the store, they're just a subscription business. And do you guys just view it as both, or are you in the business of selling subscriptions, or are you in the business of selling financial products? Or is it just both? It's probably gone up, a subscription, membership subscription, and that is where they make all the money that Costco makes, and they've decided that they're not going to bother making money on anything you buy in the store, they're just a subscription business. And do you guys just view it as both, or are you in the business of selling subscriptions, or are you in the business of selling financial products? Or is it just both? We are in both, but I think the interesting thing there is subscription has been the dominant form factor to monetize because of payment rails as well, right? Because it's actually hard to do microtransactions or lots of transactions and transactions fail, so having a recurring monthly thing and making this a phenomenon for the masses works really well for software businesses. But I can definitely see a world in the future where you have stable coins, there's no friction, the payment rails actually work, there's no cost. Yes. [SPEAKER_01] Then you move way more to the Chinese model, right? For self-improvement products, I feel like there's also sometimes a sunk cost dynamic in consumer psychology where people say, I am going to buy a gym membership and I am going to get in shape and now that I've spent this money on the gym membership, I have to use it because I'll feel bad if I spent the money and didn't. Is there any of that dynamic with Clio where people are investing in their own financial health? [SPEAKER_01] I think there's all this behavioral theory in all of subscriptions. Like we just added a third tier because that works and we got this middle tier and just because we have three, people will pick the middle. It just—there's all this weird behavioral stuff with payments and subscriptions that you have to optimize and learn about. So, yeah, humans are irrational actors and I think you have to learn where they're irrational to help them but also to build a business. Yeah, you guys are weaponizing people's irrationality for good rather than for evil. It's not right that in the press, but thanks, John. Harnessing. Yes, there you go. Yeah, there we go. Better. We're just workshopping here. Speaking of people's irrationality, you know, people in poker talk about this idea of going on tilt where people may mostly have a very solid betting strategy and then they just break at a certain point and they start making irrational decisions, maybe after a losing streak or something. Does that also happen in behavior you see in the app and you're trying to get people back on the straight and narrow? It's human psychology and it's the biggest thing, right? Money is such a personal, emotive, psychological thing. People will lose a job. People will have a breakup. We have all these user research interviews where you see someone go completely on tilt and do things that are slightly irrational. So, yeah, we're definitely trying to help in those circumstances, but humans are humans in a way as well. [SPEAKER_00] But there's all these interesting mechanisms and features that we build around that. You started Clio before the current wave of AI, but you're still a small and fast-growing company. How AI native is Clio in how it actually works? What ways of working do you guys have that we should be borrowing from you guys or people in the audience should be borrowing? [SPEAKER_00] Well, my day-to-day is dramatic. Since probably January, February, I spend my time completely differently. Oh, please do tell. [SPEAKER_01] Give us the before-after. [SPEAKER_01] Yeah, well, the before was 500 people and you'd have all these division leaders and you'd talk to the division leaders and you'd farm for information and give them your opinions and you'd have the pre-reads and the way of getting information in a company February, I've, I spend my time completely differently. Oh, please do tell. [SPEAKER_01] Give us the before-after. [SPEAKER_01] Yeah, well, the before was 500 people and you'd have all these division leaders and you'd talk to the division leaders and you'd go farm for information and give them your opinions and you'd have the pre-reads and the way of getting information in a company was to talk to all of these leaders and then give them your feedback and do that. You don't need to do that in an organization. I think one of the interesting things that you probably won't want to talk about is how you can understand what is happening in your organization day-to-day. You know their Slack messages. You know Notion docs. You know every single PR. You know what is built. So I understand if software is the output of all these companies, I know what we're shipping in a really visceral, clear way [SPEAKER_01] which I didn't know before LLMs. And just very practically, how are you synthesizing all this information across the company? [SPEAKER_00] Are you using a third-party tool? Do you guys build internal tools? [SPEAKER_00] How are you scouring the Slack channels and ingesting all the docs? That workflow that Carpathie described is what I use for so much stuff. I just have LLMs that go over every PR and it summarizes what that PR does and it grades it and it tells me what's going on in that PR and it just builds a knowledge base by going over all these things. Goes over all the Slack messages and all the channels, builds up a knowledge base of what is happening. [SPEAKER_00] So you take lots of disparate information across your entire org. Yes. You build it up into a higher level. And it's assembling a captain's log, like it's going around the organization with its clipboards taking notes. On this dramatic scale that you could never have done. And then you're querying the log. Well, you get humans also to input into that log. Their pre-reads, their dashboards that they're making, everything they do, all goes into logs and becomes more synthesized and aggregated over time. Are you doing that? I mean, I'm not doing specifically that, but I think one of the interesting things [SPEAKER_01] that all organizations are focused on right now is consumer AI tools are phenomenally useful and they are trained on the corpus of information that's out there and they have web search tools and everything. [SPEAKER_01] And the companies are trying to internally open up the data, but not too open, you know what I mean, with all their permissions and security tools and everything. And so I feel like that is the thing [SPEAKER_01] that all organizations are reckoning with right now. [SPEAKER_01] But it's really, as you say, I mean, does it drive your internal leaders up the wall? The fact that you are now going straight to the source for information? My engineering managers hate me. Honestly, I know who's shipping. I know who is the highest velocity, highest code quality. I know which teams, because it's a collection of engineers, are actually doing great work. Where before, I had this view filtered through all these leaders that had all their different biases and all these different incentive structures. You can actually get really rational, clear thought from these LLMs and build it up with context. [SPEAKER_00] So, yeah, I think the middle layer has, probably at Clio, definitely hates me, but I think orgs have just become way flatter because of this and it's just become, it's going to become a much more efficient organizational flow and information flow. Do you think the average number of people that a manager [SPEAKER_00] at Clio manages will be different in two years' time versus currently? [SPEAKER_00] Yeah. [SPEAKER_00] I've never been a massive believer of you have to do way flatter because of this and it's just become, yeah, it's going to become a much more efficient organizational flow and information flow. Do you think the average number of people that a manager [SPEAKER_00] at Clio manages will be different in two years' time versus currently? Yeah. I've never been a massive believer of you have to do a one-to-one with every single one of your directs every day. Yeah, but when you say becoming flatter, do you think that will show up in the numbers? I really hope you're going to have less middle managers and I think orgs are going to definitely become flatter. The only reason I'm caveating myself is you do need to give junior people [SPEAKER_00] advice and time [SPEAKER_00] and grow [SPEAKER_00] and develop these people. [SPEAKER_00] So I think [SPEAKER_00] there's always going to be [SPEAKER_00] that need for nurturing and maybe it's done in a different way, but I think those layers and layers of people and people and people, it's probably [SPEAKER_01] half the Stripe [SPEAKER_01] team [SPEAKER_01] fall into that category [SPEAKER_01] in the room, [SPEAKER_01] but I think [SPEAKER_01] that has to [SPEAKER_01] change [SPEAKER_01] and maybe [SPEAKER_01] we just get to do more stuff, [SPEAKER_01] right? [SPEAKER_01] Instead of [SPEAKER_01] more hierarchical [SPEAKER_01] fewer business units, [SPEAKER_01] maybe you just have [SPEAKER_01] way, way, way more bets, [SPEAKER_01] way, way more business units [SPEAKER_01] and it becomes much more agentic and much flatter. I think you plausibly have that because you can have more impact from a small number of people. [SPEAKER_01] I think the thing [SPEAKER_01] people have been [SPEAKER_01] wondering as well [SPEAKER_01] that I think is very interesting is when you talk about junior people, do you end up with more of an apprenticeship model because it's different if you have one senior person with eight junior people then it's maybe a classic org chart view whereas if you have one senior person with one junior person then you can do much more of a traditional knowledge transmission [SPEAKER_00] apprenticeship model. [SPEAKER_00] I think the inverse [SPEAKER_00] is one person [SPEAKER_00] with [SPEAKER_00] I hire all these grads [SPEAKER_00] from UCL and Cambridge that have done their machine learning masters. They are so they are fully AI-pilled. They've been doing it from [SPEAKER_01] their A-levels, [SPEAKER_01] right? [SPEAKER_01] It's crazy [SPEAKER_01] how good they are [SPEAKER_01] with these tools. [SPEAKER_01] So I think you're going to want more junior people that have had the learning experience in LLMs from these institutions and are really pilled. And then they are [SPEAKER_01] just dramatically [SPEAKER_01] they're managing [SPEAKER_01] a fleet of agents [SPEAKER_01] to do things. [SPEAKER_01] So in software you want more and more software, right? But you want it directed at the right things. So you need great tastemakers that can run lots and lots [SPEAKER_00] of these parallel agents [SPEAKER_00] and recursion just more and more and more tokens. So you want as many people, I think, as possible at a lower level with good taste to run as many agents as possible. I like the idea that I can take 2,000 bets next year instead of the 10 that I took last year. Yes. That's the world I would love to live in. Be cool. We'll see. Last question. What's your most contrarian AI take at the moment? I'm very AI-pilled, so it's hard to be absolutely contrarian at the moment. [SPEAKER_00] I think the [SPEAKER_00] SaaS apocalypse, Frontier Labs dominating everything, every tweet is [SPEAKER_01] they've just destroyed [SPEAKER_01] X industry Be cool. We'll see. Last question. What's your most contrarian AI take at the moment? I'm very AI-pilled, so it's hard to be absolutely contrarian at the moment. I think the SaaS apocalypse, Frontier Labs dominating everything, every tweet is, [SPEAKER_01] they've just destroyed X industry with their little wrapper. [SPEAKER_01] There's so much work that goes into building a great business like Stripe or anyone else. [SPEAKER_01] There's so much that you need to know. [SPEAKER_01] How much have you learned about payments that no one in the world needs to do? [SPEAKER_01] No one should have to learn. [SPEAKER_01] It is awful. [SPEAKER_01] Too much. [SPEAKER_01] Way too much. [SPEAKER_01] But there's so much of that and so much craft that goes into building a great consumer, business-to-business or business-to-consumer product, that you're going to have, you're still going to have great software companies that are completely vertical and really, really deep. And this idea that someone wrote a prompt and they've just got a frontier model and it's going to kill everything is wildly overblown and investors are just the silliest, most irrational people I've ever met in my life and I can't believe they have all this capital. So they are over-extrapolating from the... They have no idea what's going on. They don't have any technical knowledge at all and they are in a world they don't understand so they're in a world of we're going to sit on the fence and just put money into the frontier labs and Stripe apparently and that's all they're going to do. But I think that rationality will play out in a couple of years and you'll see valuations, multiples. The economy is driven by software. It has been for the last 30 years. [SPEAKER_00] We want more software companies. [SPEAKER_00] That is where GDP growth is going to come from. [SPEAKER_00] We want more creative destruction. That is what AI is going to lead to. The abundance is not a contrarian take but I'm pro-abundance. That's a good note to end on. You heard it here. Lots more creative destruction to come and the story is not yet written and it's not just a small number of firms. They'll be shipping everything useful. With that, that brings our programming for Tour London to a close. So thank you all for coming this year and we are going to roll into a reception which we are having out in the expo hall and we can't wait to see you guys next year. Thanks, Barney. Thanks, Luke. [SPEAKER_01] Thanks for being back. probably to just get consumers first, then monetize, but I know, what do you think? Well, I'm curious, like, on the consumer side of things, it seems like many businesses decide that they're going to be one or the other, where they're going to sell on a usage basis, like, you know, a normal grocery store, just like charging markup on what you buy, or in the U.S., you know, Costco has this famous model where they basically make no money on the actual things you buy there, and then they just sell a $100 a year subscription, it's probably gone up, a subscription, membership subscription, and that is where they make all the money that Costco makes, and they've decided that they're not going to bother making money on anything you buy in the store, they're just kind of a subscription business. And do you guys just view it as both, or are you in the business of selling subscriptions, or are you in the business of selling financial products? Or it is just both? We are in both, but I think, you know, the interesting thing there is subscription has been the dominant form factor to monetize because of payment rails as well, right? Because it's actually hard to do microtransactions or lots of transactions and transactions fail, so having a recurring monthly thing and making this a kind of phenomenon for the masses works really well for software businesses. But I can definitely see a world in the future where, like, you know, you have stable coins, there's no friction, the payment rails actually work, there's no cost. Yes. Then you move way more to the Chinese model, right? For self-improvement products, I feel like there's also sometimes a kind of using the sunk cost dynamic in consumer psychology where, you know, people say, I am going to buy a gym membership and I am going to get in shape and now that I've spent this money on the gym membership, I have to use it because I'll feel bad if I, you know, spent the money and didn't. Is there any of that dynamic with Clio where people are investing in their own financial health? I think every, there's like all this kind of behavioral theory in all of subscriptions like we just added a third tier because that, you know, that just works and we got this middle tier and just because we have three, people will pick the middle, like, it just, there's all this kind of weird behavioral stuff with payments and subscriptions that you have to optimize and learn about. So, yeah, humans are kind of irrational actors and I think you kind of got to learn where they're irrational to help them but also to build a business. Yeah, you guys are kind of like duolingo or something, right? You're like weaponizing people's irrationality for good rather than for evil. It's not right, that in the press, but thanks, John. Harnessing. Yes, there you go. Yeah, there we go. Better. We're just workshopping here. Speaking of people's irrationality, you know, people in poker talk about this idea of going on tilt where, you know, people, you know, may mostly have a very solid betting strategy and then they just, they break at a certain point and they start making irrational decisions, you know, maybe after a losing streak or something. Does that also happen in behavior you see in the app and you're trying to kind of get people back on the straight and narrow? It's human psychology and it's the biggest thing, right? Like, money is such a personal, such an emotive, such a, you know, psychological thing. People will lose a job. People will have a breakup. Like, we have all these user research interviews where you see someone, you know, go completely on tilt and, you know, do things that are, you know, slightly irrational there. So, yeah, we're definitely trying to help in those circumstances, but it's, yeah, that humans are humans in a way as well. But there's all these interesting mechanisms and features that we build around that. You started Clio before the current wave AI, but you're still a kind of small and fast-growing company. How AI native is Clio in how it actually works? What ways of working do you guys have that we should be borrowing from you guys or people in the audience should be borrowing? Well, my day-to-day is dramatic. Like, since probably January, February, I've, I spend my time completely differently. Oh, please do tell. Give us the before-after. Yeah, well, the before was 500 people and you'd have all these division leaders and you'd talk to the division leaders and you'd go farm for information and give them your opinions and you'd have the pre-reads and the way of getting information in a company was to talk to all of these leaders and then give them your feedback and do that. You don't need to do that in an organization. I think one of the interesting things that you probably won't want to talk about is, like, how you can understand what is happening in your organization day-to-day. You know their Slack messages. You know Notion docs. You know every single PR. You know what is built. So I understand if software is the output of all these companies, I know what we're shipping in a really visceral, clear way which I didn't know before LLMs. And just very practically, how are you synthesizing all this information across the company? Like, are you using a third-party tool? Do you guys build internal tools? Like, how are you scouring the Slack channels and kind of ingesting all the docs? That workflow that Carpathie described is what I use for so much stuff. I just have LLMs that go over, you know, say every PR and it summarizes what that PR does and it grades it and it tells me what's going on in that PR and it just builds a knowledge base by going over all these things. Goes over all the Slack messages and all the channels, builds up a knowledge base of what is happening. So you take lots of disparate information across your entire org. Yes. You build it up into a higher level. And it's assembling a sort of captain's log, like it's going around the organization with its clipboards taking notes. On like this dramatic scale that you could never have done. And then you're querying the log. Well, you get humans also to input into that log. Their pre-reads, their dashboards that they're making, everything they do, all goes into logs and becomes more synthesized and aggregated over time. Are you doing that? I mean, I'm not doing specifically that, but I think one of the interesting things that all organizations are focused on right now is like consumer AI tools are phenomenally useful and they are trained on the kind of corpus of information that's out there and they have web search tools and everything. And the companies are trying to internally open up the data, but not too open, you know what I mean, with all their permissions and security tools and everything. And so I feel like that is the thing that all organizations are reckoning with right now. But it's really, as you say, I mean, does it drive your internal leaders up the wall? The fact that you are now going straight to the source for information? My engineering managers hate me. Like, honestly, like, I know. I know who's shipping. I know, like, who is the highest velocity, highest code quality. I know which teams, because it's a collection of engineers, are actually doing great work. Where before, I had this kind of, it was this weird view filtered through all these leaders that had all their different biases and all these different incentive structures. You can actually get really rational, clear thought from these LLMs and build it up with context. So, yeah, it's like, I think the middle layer has, probably at Clio, definitely hates me, but I think orgs have just become way flatter because of this and it's just become, yeah, it's going to become a much more efficient organizational flow and information flow. Do you think the average number of people that a manager at Clio manages will be different in two years' time versus currently? Yeah. I've never been a massive believer of, like, you have to do a one-to-one with every single one of your directs every day. Yeah, but when you say becoming flatter, like, do you think that will show up in the numbers? I really hope you're going to have less middle managers and I think orgs are going to definitely become flatter. The only reason I'm caveating myself is, like, you do need to give junior people advice and time and grow and develop these people. So I think there's always going to be that need for nurturing and maybe it's done in a different way, but I think those layers and layers of people and people and people, it's probably half the Stripe team fall into that category in the room, but I think that has to change and maybe we just get to do more stuff, right? Instead of, like, more hierarchical fewer business units, maybe you just have way, way, way more bets, way, way more business units and it becomes much more agentic and much flatter. I think you plausibly, yeah, have that because you can have more impact from a small number of people. I think the thing people have been wondering as well that I think is very interesting is when you talk about junior people, do you end up with more of an apprenticeship model because it's different if you have, like, one senior person with eight junior people then it's maybe kind of a classic org chart view whereas if you have one senior person with one junior person then you can do much more of a traditional kind of knowledge transmission apprenticeship model. I think the inverse is like one person with, like, like, I'm so, I hire all these grads from, like, UCL and Cambridge that have done their machine learning masters. They are so, they are, like, fully AI-pilled. They've been doing it from, like, their A-levels, right? Like, it's crazy how good they are with these tools. So I think you're going to want more junior people that have had the learning experience in LLMs from these institutions and are really pilled. And then they are just dramatically, you know, they're managing a fleet of agents to do things. So, like, in software you want more and more software, right? But you want it directed at the right things. So you need great tastemakers that can run lots and lots of these parallel agents and recursion just more and more and more tokens. So you want as many people, I think, as possible at a lower level with good taste to run as many agents as possible. I like the idea that I can take 2,000 bets next year instead of, like, the 10 that I took last year. Yes. That's the world I would love to live in. Be cool. We'll see. Last question. What's your most contrarian AI take at the moment? I'm very AI-pilled, so it's hard to be, like, absolutely contrarian at the moment. I think the SaaS apocalypse, like, Frontier Labs dominating everything, every tweet is, like, they've just destroyed X industry with their little wrapper. There's so much work that goes into building a great business like Stripe or like anyone else. Like, there's so much that you need to know. How much have you learned about payments that no one in the world needs to do? No one should have to learn. Ever. Like, it is awful. Too much. Way too much. But there's so much of that and so much craft that goes into building a great consumer, business-to-business or business-to-consumer product, that you're going to have, you're still going to have great software companies that are, like, completely vertical and really, really deep. And this kind of idea that someone wrote a prompt and they've just got a frontier model and it's going to kill everything is wildly overblown and investors are just, the silliest, most irrational people I've ever met in my life and I can't believe they have all this capital. So they are kind of over-extrapolating from the... They have no idea what's going on. They don't have any technical knowledge at all and they are. They are in a world of they don't understand so they're in a world of we're going to sit on the fence and just put money into the frontier labs and stripe apparently and that's all they're going to do. But yeah, I think that rationality will play out in a couple of years and you'll see valuations, multiples. The economy is driven by software. It has been for the last 30 years. We want more software companies. That is where GDP growth is going to come from. We want more creative destruction. That is what AI is going to lead to. The abundance is not a contrarian take but I'm pro-abundance. No, that's a good note to end on. You heard it here. Lots more creative destruction to come and the story is not yet written and it's not just a small number of firms. They'll be shipping everything useful. With that, that brings our programming for Tour London to a close. So thank you all for coming this year and we are going to roll into a reception which we are having out in the expo hall and we can't wait to see you guys next year. Thanks, Barney. Thanks, Luke. Thanks for being back.