Jacob Gibson is the Founding Partner at Better Tomorrow Ventures, a Silicon Valley based venture capital firm investing in the future of Fintech. Before getting into investing, Jacob was co-founder and COO at NerdWallet. He helped develop a world-class team working to build the massively successful personal finance company. Gibson considers in depth risk analysis and unique insights key to forming an investment thesis.
Jacob Gibson is the Founding Partner at Better Tomorrow Ventures, a Silicon Valley based venture capital firm investing in the future of Fintech. Before getting into investing, Jacob was co-founder and COO at NerdWallet. He helped develop a world-class team working to build the massively successful personal finance company. Gibson considers in depth risk analysis and unique insights key to forming an investment thesis.
Jake Gibson: [00:00:00] I was really impressed with you, Don. I thought that he was very thoughtful about his approach. Like he had some early traction, it was a cool product, but thanks to my NerdWallet experience, I was very opposed to the PFM space as a whole and refused and basically refused to make any bets in the space.
It talked to you on a couple of times, really liked him, but just kept coming back to , look, dude, I just, I can't do it. Can't bring myself to get comfortable with this model. And she'll disagreed with me and she'll make the investment anyway, , and ended up doing our accelerator and has at every step of the way, proved me wrong.
Gopi Rangan: You are listening to the sure shot entrepreneur, a podcast for founders with ambitious ideas, venture capital investors and other early believers tell [00:01:00] you relatable, insightful, and authentic stories to help you realize your vision. Welcome to the shore shot. Entrepreneur today's guest is Jake Gibson founding partner at better tomorrow ventures better.
Tomorrow ventures is a FinTech focused venture capital firm based in the Silicon Valley. Jake welcome to the show shot entrepreneur. Thanks for having me tell us about yourself, starting with how you started your career in financial services.
Jake Gibson: Yeah, for sure. I grown up thinking that I was going to get into tech and had a computer in front of me at a young age.
I was on the internet at a young age. I was building computers. When I was single digits back when you really just had to stick a few pieces together in a box. And so I always thought I was coding and everything like that, and always thought that I was going to get into tech, but then I got to college.
I went to MIT. With the intention of studying computer science and then the internet bubble burst. Right after I started college, I watched all the [00:02:00] upperclassmen basically fail to get jobs to career fair. The tech companies stopped coming to the career fairs. And at the same time, I had this interest I'd always had this interest in just money and financial markets and got seduced by Sloan the business school there at MIT too. And ended up just switching from computer science to studying math and and finance. Did that naturally when you studied math and quantitative finance at a school MIT, I ended up on a trading floor after I graduated and I traded interest rate derivatives at JP Morgan for about six, six and a half years, depending on how you count it.
I was a prop trader for a while there, before the financial crisis happened and all the prop traders went away. And then I was on the sell side swaps desk for a little over a year after the financial crisis before decided to just pull the rip cord and get out of there. I knew a couple of years into wall street that I made the wrong choice and really wanted to.
Switch gears back to thinking more about [00:03:00] tech. And it was taking the GMAT, taking the GRE, thinking about how am I going to get out of wall street? How am I going to find my way to Silicon Valley? Meanwhile, reading tech crunch on the trading floor every day on my new iPhone and having to read about friends of mine from MIT who had gone on to start these amazing businesses Dropbox while I was.
Trudging away a salary man on a, on a trading floor. Early 2010, I just had enough and I left and I moved to California and didn't really know what I was going to do. My thought process at the time was just. I'm not going to figure it out on a trading floor. I don't really want to go to business school.
So instead I'm just going to move. I'm going to start building, that's going to force me to learn. It's going to force me to meet people. And then when I inevitably fail at that, at least I will have built a network and builds a skill set that could help me find a job somewhere else. Maybe I could go knock on Drew's door and there's something for me, a Dropbox who the hell knows.
So that was my view. Thankfully, I had a friend Tim that I'd known since middle school is a lot smarter than me and was working on this idea for NerdWallet. I grabbed [00:04:00] onto his coattails and rode that for a few years. And NerdWallet did quite well. Thankfully, mostly thanks to Tim.
After a few years, when NerdWallet had outgrown me and my abilities, I helped him hire less people to replace me and really set up the executive team for the next wave of growth. That's when I stepped away, I led to led to where I am today and we can that's when we get into the investing stuff that I think you'll really want to you want to dig in more.
Gopi Rangan: You started as a math major and then switched to the business side. You were a trader at a bank and then came to Silicon Valley with a blank sheet of paper. You tried to write the next chapter of your career. Then you created not wallet with Tim. And then after all of that, you made a bunch of angel investments as well.
And now you decided to start better tomorrow ventures...
Jake Gibson: When I left JP Morgan and decided to work on NerdWallet with Tim, , that was basically me saying , I have this vision of, of what I want to do in the future, but anybody else's standards, I'm not [00:05:00] qualified.
I'm not an engineer. Nobody in the tech industry will hire me. So I'm just going to go do my own thing to learn how to be qualified. And that became thankfully, that became NerdWallet. When I left NerdWallet, I did the same thing. I was like, I want to do investing. I don't know enough about it and no venture fund is going to hire me because I don't know any venture funds, NerdWallet never raised any venture capital.
I'm just going to start angel investing and helping founders figure it out as I go and learn as I go. I did that for a long time. My thought process there similar to how I figured if I work on building a business, I'll learn enough about building businesses that another business will hire me.
I thought that , I will start angel investing and learn enough about investing. Then maybe I can go join a venture firm, but I didn't know if joining a venture firm was the right thing. I might decide to start a company. I might decide to join a company. I might decide to keep angel investing.
I might decide to start a venture fund. I didn't know, but I figured that angel investing similarly would be that. Forcing function to meet a bunch of people, to learn a bunch, and then put me in the best position. And I spent more than five [00:06:00] years doing that. Full-time to just create as much surface area of opportunity as possible for myself.
And then ultimately along the way, realized that, , angel investing is fun and I'm loving, the things that I love about it. I'm loving meeting founders. I'm loving, helping founders. I'm loving watching these companies develop and having a front row seat. I joke sometimes that investing in Silicon Valley is basically illegal insider trading.
It's pretty cool to have direct access to the executive teams and have a very small thumb on the scale in terms of helping them think about strategy and recruiting and all this other stuff. And I found that much more interesting than just putting all my money into the S and P or something that.
That was the thing that I loved about it. The thing that I didn't love about it was that as an angel investor, I'm just such a tiny part of any one of these stories. Financially speaking, I'm never going to move the needle for any of these companies. And even operationally speaking, .
Once they go on and raise much money and they have a board and stuff that. I'm just such a small part of the, the overall trajectory. I wanted to have more impact and I wanted to have more leverage on my own time and on my own capital and just on the [00:07:00] types of businesses that I love working with.
I joined on with Schiele, my current partner, when he was building the 500 FinTech accelerator at 500 startups and part-time helps him build that. Over the next few years and really enjoyed working with him, enjoyed continued to work with those founders, but doing it in a bit of a more scaled up fashion.
We raised money from outside LPs, all this other stuff, there was more accountability to all of it and a bit more of that leverage that I was looking for. But then Sheila and I decided that we wanted to keep doing that together. We just didn't want to do it at 500. So we took everything that we learned and the networks that we'd built and everything and institutionalized that into BTV.
So. Short answer is I wanted to have more leverage and have more influence and be able to play a bigger part in the growth stories of many of these startups.
Gopi Rangan: How is your view of better tomorrow ventures, different from other FinTech firms? Do you have a different thesis, different focus?
Jake Gibson: I don't know that our view is that different. I would say that [00:08:00] at least not today. So a little bit of history here when we decided to start BTV we first started talking about it back in 2017. We didn't actually pull the trigger until 2019, but back in those days there weren't a lot of. Early stage funds focus on FinTech.
There were a handful who were focused on FinTech, but tended to write small checks behind other leads. And then there were larger generalist funds. That did not focus on FinTech. What we found with 500 FinTech and when my own angel investing was , we thought that people were pouring way too much money into opportunities in the FinTech that we didn't think deserved the amount of capital they were getting.
Meanwhile, the things that we thought were most interesting, it was really hard to get people to commit to because they didn't understand it. It , one of the prototypical examples is we've actually company out of the accelerator called India. You probably know quite a bit about it. SAS workflow software for wholesale commercial, well [00:09:00] insurance brokers.
And you said those words to your average VC, and they looked at you you were speaking Greek. Part of our thesis when we started BTV was , we need to be that early stage capital. Somebody has to step up and lead these rounds with conviction who actually understands their business models.
What set us apart and sets us apart. If you look around at a lot of the early stage funds, there aren't very many teams and there might only be one or two where the partners have backgrounds in financial services have built FinTech companies and have invested in FinTech companies. And for our part, we, for you, there were the most active investors in early stage FinTech.
We've backed probably something 120 or 130 FinTech companies. I guess we've seen a lot of it play out and we were there for a lot of the development of the FinTech ecosystem as a whole over the past decade. That makes us unique.
Gopi Rangan: This is a really interesting time to focus on [00:10:00] FinTech because that sector is blowing up and the trends are very, very strong.
And both of you started in FinTech way before it was cool. How is FinTech different today compared to when you started looking at FinTech?
Jake Gibson: Oh man. Yeah. So I mentioned that when we were starting to put together plans for this fund, we felt like there wasn't enough capital chasing these early stage FinTech companies or supporting these early stage FinTech companies between the time we started raising the fund.
And when we closed the fund, that whole idea just went right out the window. Now, thanks to. Well, FinTech has really matured. I would say the exit pipelines have just totally blown open IPO's of a bunch of notable companies. We've seen the, a bunch of, a lot of massive M and a that really kick-started to these things like credit karma going into it.
And then plaid initially going to be signed before that got scrapped. Once we started seeing these blockbuster exits one after another FinTech really started to heat up and then COVID hit. And [00:11:00] COVID just accelerated everything by years. We see Stripe go to the moon, Robin hood, go to the moon, you name it chime.
Then the existing players like square and PayPal and stuff were just having banner years. . What happened was all of a sudden, everybody wakes up to the opportunity and the FinTech space, and everybody starts chasing those same opportunities that we're going after. We still think there's a bunch of money chasing ideas that don't make any sense.
It seems if you can, we joke that you can write FinTech infrastructure on a napkin and somebody will give you a $5 million seed round without really understanding what it is that you do. But the fact of the matter is it's just gotten a lot more competitive over the last year or so. And the space that we play.
And funny enough, it's not really the early stage capital that we're generally competing with. It's the later stage capital coming down and trying to plant their flags as early as possible, trying to get as much of that FinTech exposure as possible that we're bumping up against the most. So there's just the amount of capital has changed considerably.
We also heard this [00:12:00] morning from a friend of ours that there. Are probably 15 to 20 micro VC funds, single GP VC funds out there right now trying to raise FinTech specific vehicles. So it was just a very different world than how we started out.
Gopi Rangan: Yeah, a lot of things have changed and there's a lot more focus on FinTech now.
And there are many interesting trends as well. No banks infrastructure for FinTech lending, lots of these teams. How do you split work with Sheila? What are things that do you focus on and how does she'll spend his time? How do you compliment
Jake Gibson: each other? The flippant answer. And the easiest answer is that Sheila, the face of VTV, you will find him on Twitter.
You will find him on clubhouse. He is very active. He has a very large following. He does three clubhouse shows a week and has invitations to do something like five more, all focused on FinTech. So God bless him. She'll gets to be the face of VTV [00:13:00] and do all the brand building and networking and.
Before COVID he was also the one that spent all this time on an airplane, traveling around the world, networking and helping us build our deal flow internationally. So he's always been the public facing side of us. Meanwhile, I'm much more of the operational side of things, keeping the wheels on the bus.
And then and then I have a family, two kids. So I don't, I don't spend quite as much time on airplanes as he does. So generally speaking, in terms of just fund operations, that's how we tend to split things. Deal flow was, , we both been at this long enough that we both have quite a bit of deal flow and overlapping, but also significantly different networks in terms of where the deal flow comes from and stuff.
And, and we're going to divide a Cocker on the on the investment side of things.
Gopi Rangan: What's the best way to reach you for an entrepreneur?
Jake Gibson: Probably Twitter. I am also, I'm relatively active on Twitter, not as active issue, but that is my. It was the only social media. I get a lot of LinkedIn messages.
I don't read them. I do read all of my Twitter, DMS. I don't respond to all of them, [00:14:00] but I do read them all.
Gopi Rangan: Do you prefer personal introduction from someone in your network or are you open to cold calls and emails? Tweets? How do you respond to those?
Jake Gibson: I read it all. We get a bunch of cold emails, cold DIA, my DMS are open, so I get a bunch of cold DRMS I'll just, just bandwidth wise.
This is one of the things that people maybe misunderstand, or maybe just don't fully grasp about the VC life is I get a bunch of warm intros and I also get a bunch of cold inbound. And in terms of triaging my time and triaging my various inboxes, the warm intros. Tend to take precedence.
I do read everything though. I'm just not going to respond to all of the cold inbound stuff, because I just don't have the time for that. But I have made at least one investment off of a blind outreach. It's not something that I proactively avoid doing. I read it all. It's just that can't respond to it all.
Gopi Rangan:
So there's a preference for warm [00:15:00] introductions, but you read all the messages, although you may not respond to all of them. That's good for entrepreneurs to know. Can we pick an example of a startup? How did you meet the entrepreneur? What was the context? What did you see in them when you first met them?
What were the questions you asked them?
Jake Gibson: That's a good question. Every company is different. Every relationship. Is different. Albert could be a good example here, which is an investment we made out of the 500 FinTech accelerator. The founder of Albert had previously built a company in the FinTech space and left that company and was working on his next idea.
This was. Back in. I want to say 2016, 2017. I don't remember the exact timeframe. We're right around the early days of the five-year FinTech accelerator. And he wanted to start a business that was effectively a PFM. So help a personal finance manager to help with budgeting and keeping, , keeping track of all your accounts and stuff like that.
And I was really impressed with you, Don. I thought that he was very thoughtful about his approach. He had some early traction. [00:16:00] It was a cool product, but thanks to my NerdWallet experience, I was very opposed to the PFM space as a whole and refused and basically refused to make any bets in the space.
It talked to you, not a couple of times really liked him, but just kept coming back to , look, dude, I just, I can't do it. Can't bring myself to get comfortable with this model and she'll disagreed with me. And she'll make the investment anyway, , and ended up doing our accelerator and has at every step of the way, proved me wrong.
It turns out that he was able to build an incredible team. They were able to just execute, execute, execute. They figured out a business model that was fundamentally different than any of the other PFMs that were out there. And I was not in the minority like it, they had a hard time raising their seed and their series.
I. But once they raise that series a, it was just off to the races and they've gone on to raise a bunch more money from top tier investors since then. [00:17:00] I don't know exactly what they've announced, but the company is going strong. And it's funny because in the early days, right after we made the investment, I still just kept thinking to myself , This company is going to plateau at some point, customer acquisition is going to be such a hard thing as it is, but most PFMs, and that's typically how they go.
They end up plateauing at some point. So I kept trying to get my co-founder to buy them. I was , these guys are executing on product much faster than NerdWallet, but we have the marketing muscle, so we should team up and. NerdWallet. Hadn't quite got its feet under it in terms of M and a. So we weren't really in a position to do that.
Now. I like to reach out to Tim every now and then to be like, yeah, you missed your shot. Albert's too big. Now NerdWallet can't afford them. Also rubbing it in my own face that I could have made that investment. And I didn't.
Gopi Rangan: This is a great story as an investor. I watch out for why I say yes and why I say no, especially areas where I'm really familiar.
I worry, whether am I saying no, [00:18:00] because of PTSD, I'm too familiar with it. And all the various possibilities for failure really scare me or am I. Saying no, because of good reasons. And I always doubt myself, but it looks that was similar for you as well. So what do you do now as a result, if an entrepreneur comes to you with an area that you are really familiar, should, would you pass it to shield for first look or are you now more?
Jake Gibson: Open-minded, we definitely try to cross check things with each other to get that gut check and that second opinion. What I missed in this one though, was just. A founder with a massive chip on his shoulder, which can be a really good thing. It can be a bad thing, but it can also be a really good thing.
And if I had really picked up on that and been honest with myself about what I was seeing, when I was talking to you, not about this idea, maybe I would have , come away from it a bit differently. We have seen that some of our best performing companies were the result of pivots, but if you have the right team in place, And they have the right hustle.
They have that right chip on [00:19:00] their shoulders. They can really make magic happen regardless of what they end up building. I'm much more aware of that now. I don't think Albert is the only one that I missed. It's definitely not the only one that I missed.
Gopi Rangan: What do you look for in entrepreneurs? What are some things that really appealed to you?
Jake Gibson: In addition to all the normal things that we look for? That's a very hard question to answer. I have found because to be honest with you, . And this is another thing that it's hard for a lot of founders to fully understand about the VC job. So much of this is subjective. We don't have a chart where we're scoring people on a one to a 10 based on certain personality or, or certain background or whatever.
That's not really how it works. The things that we tend to look for are very soft. , did you win me over to this grand vision of what you're trying to build? So much of building a startup is storytelling. And so much of building a startup is sales. At the end of the day, hiring is sales your initial BizDev and actual [00:20:00] sales, getting your first customers onboard is all, , it's.
Requires a lot of charisma and it requires a lot of passion and storytelling and all this stuff. And fundraising is fundamentally a function of storytelling. You really want a founder that just wins you over to this view of the world that you maybe were not aware of before. Those are the ones where the, where you just come away so much more impressed.
And then beyond that, there's this the hand wavy, really soft stuff, but then beyond that, we're talking to founders in the FinTech space. There's a good chance that we know quite a bit about the market they're going after the customers for their product, other approaches to that same problem.
We might've seen a handful of other companies that were doing something similar or at least in the same space, whatever. We generally have pretty good information and pretty good coverage of the financial services space in terms of understanding the strategy. What we want to see is that the founder knows something that we don't.
Or the founder has some insight [00:21:00] into the market. That's going to set them in our eyes. We're not always right, obviously, but in our eyes is going to set them apart from what can quickly become a very crowded field. There has to be something about the product or the distribution, or just the business model where there's some unique insight.
And when we push on that and we asked the question, question the assumptions and everything. We want to hear that the founder has actually thought through and mapped out the risks and has a good sense of how to go about tackling those risks. I guess one of the canonical ways that I've tried to explain this in the past is , you'll talk to fi consumer FinTech is very hard.
It's mostly very hard because consumers don't care about finance. Secondly, because cost of acquisition is incredibly difficult cost of acquisition and making the unit economics work is incredibly difficult. We get pitched ideas all the time where somebody comes to us with this beautiful screenshots of what a product could look like and here's the functionality on and so forth.
Okay, but how are you going to acquire customers? What's the distribution wedge here?[00:22:00] , Oh, Facebook ads, Google ads. If that is your answer, you haven't thought about it, right. You haven't realized how hard it is. Or every time somebody comes to us and tells us that, , their CAC is only a dollar, but chimes, CAC is whatever.
Or some other PFM app or some neobank or whatever, their CAC is X dollars, but ours is only one or $2 or $5, whatever. It just tells me that you don't actually. You haven't fully thought through and you don't fully understand. What you're getting into
Gopi Rangan: as a VC. This is what I live for. I love listening to that story from an entrepreneur who describes the vision of the future.
And if the world were the way they wanted it to be how beautiful it would be. It's so nice to hear that story. Some people are truly gifted in the art of storytelling and some others are not, but that's what I live for. So it's really nice to know. Hear that story day in, day out with these entrepreneurs.
Are there some pitfalls that entrepreneurs make when they try to tell that story to you? Is that a tip or two that you can give to [00:23:00] entrepreneurs? Like don't do that.
Jake Gibson: Yeah. Most of the, most of the advice that goes around, that's like, don't do that. I don't think it comes from a very good place. There's this long standing Twitter debate and.
VC Twitter about , whether you should send a PDF or a doc send. And I frankly don't think it matters one way or the other. And there's other things, , people say , don't include. Certain things in your deck that I don't think really matter. One of those things is , don't include in a potential exit slide.
And I agree with that, but nobody really does that anyway. So I don't know how helpful that advice is.
Gopi Rangan: I used to see that long time ago now, 10 plus years ago, but these days entrepreneurs don't do that unless they come from private equity. Yeah.
Jake Gibson: Yeah. The biggest, don't do that have to do with the cold inbound that we were talking about before .
It's hard to go through and read all of your LinkedIn messages or Twitter, DMS, or whatever. And everybody's trying to get your attention or trying to pitch you something. But half of these things are clearly just forum emails, where the person didn't put any thought whatsoever into who was [00:24:00] on the receiving end and we'll get pitched things that are just way outside of anything we would ever invest in.
If you spent two seconds, Researching who we were, you would know that, or , don't send me an inbound pitch, referring to my fond as better ventures. There is a better ventures. We are not, it, there is a tomorrow ventures. We are not at so, , little things like that, like spell my name, right?
Spell my fund name. Right. Pitch me a FinTech company. Don't pitch me some random thing. That's way outside of, of what I do and don't message me and just say , Hey, I'd like to get some of your time. Or , Hey, I'd like to grab coffee or jump on a call, provide some context. , why would I just say yes to that blindly?
Gopi Rangan: So don't send a calendar invite unless you were asked to...
Jake Gibson: that's a new thing that has been popping up is clicking on people's Calendly links and and putting meetings on their calendar that they didn't sign up for.
Gopi Rangan: Yeah, I want to switch to the next segment of this podcast and ask you about your community involvement.
Is there a nonprofit organization you are passionate about? [00:25:00]
Jake Gibson: Yeah. So I've been close with the team at GiveWell for a long time. Now I met them back in my New York days when they had first left Bridgewater. And I thought the idea was really interesting. Give, well, their whole model is basically to try to quantify to the extent possible how to have the most.
Impact per dollar, which is something , I think a lot about leverage and optionality and things like that, just generally speaking. This appealed to me and how you take that model and apply it to philanthropy and how you, and some of the underlying tenants of this or that every human life has worth the same value.
So if you could spend $25 to get somebody vaccinated in Sub-Saharan Africa and save a child's life . That's much more impactful than if it costs you $25,000 to do the same thing in America. I fundamentally, I really believe that when they first started it, it was taking this whole Bridgewater.
Approach to rational thinking and quantifying everything and applying it to philanthropy. When I left [00:26:00] NerdWallet and was looking for things to do, I re-engaged with them and ended up joining their board actually as well as supporting them financially. . It quickly became clear that I was not a fit for a nonprofit board, but I've stayed close to the guys ever since.
And or let's say close to the team there ever since and continue to support them year in and year out. A lot of their programs. I tend to just give money to the umbrella organization, but what they do is they go through and they evaluate other nonprofits every year and come up with here's where we think.
The most impact for your dollar can go it's going to be health-related vaccines, malaria nets, deworming treatments and stuff like that. Where it's more quantifiable. One of their shortcomings. Is that it's hard to do hard to quantify things that have more of a longitudinal or more qualitative impact such as education.
So I also give money to other organizations that skew more towards the areas that give, well, it doesn't quite cover as well, but I've always been a big fan of GiveWell in their just approach to [00:27:00] having the maximum impact. Well,
Gopi Rangan: Jake, this is incredible. Thank you very much for sharing so many good stories.
And the last one about the nonprofit organization, you've shared a lot of wisdom from your experience as an entrepreneur, and now as a new fund manager at better tomorrow ventures. Thank you very much. And I look forward to sharing your wisdom with the world.
Jake Gibson: Yeah, of course. Thank you.
Gopi Rangan: Thank you for listening to the shore shot entrepreneur. I hope you enjoyed listening to real life stories about early believers, supporting ambitious entrepreneurs. Please subscribe to the podcast and post a review. Your comments will help other entrepreneurs find this podcast. I look forward to catching you at the next episode.