Ashley Paston is a Principal at New York-based Bain Capital Ventures and focuses on FinTech. She looks for founders who can zoom in and out of a pain point, offer a unique solution, and explain how to build a successful company out of the idea. She gives insightful perspectives on FinTech trends and opportunities.
Ashley Paston is a Principal at New York-based Bain Capital Ventures and focuses on FinTech. She looks for founders who can zoom in and out of a pain point, offer a unique solution, and explain how to build a successful company out of the idea. She gives insightful perspectives on FinTech trends and opportunities.
Ashley Paston: [00:00:00] The most spectacular founders that we talk with are those who can go from 3000 foot view and be like, this is the overall market, and this is the way the market is moving. And then within a snap can go down into the one foot level and just say like, this number is working this way because of X, Y, Z. And then just jump right back up to the 3000 foot view.
Those are the best founders. And I think knowing your numbers really helps exemplify that you're able to do that.
Gopi Rangan: You are listening to the sure shot entrepreneur podcast, for founders with ambitious ideas, venture capital investors and other early believers tell you relatable, insightful, and authentic stories to help you realize your vision. Welcome to the sure shot entrepreneur today's guest is [00:01:00] Ashley Paston. She's a principal at Bain capital ventures based in New York.
A lot of her investments are focused on FinTech. We're going to talk about what she looks for in entrepreneurs. What are trends in FinTech and how she helps her portfolio companies? Ashley, welcome to the short shot entrepreneur.
Ashley Paston: Thank you so much for having me.
Gopi Rangan: Tell me about yourself, starting with your childhood, where you grew up.
Ashley Paston: So I grew up in New York, so have not strayed too far across the years. And I was raised by two parents who were both in finance, my mom, who was in sales and trading, and my dad who ran our family owned insurance business. And I really love watching him own this business, or they took over from my great great-grandfather.
So we have a family insurance business. It was appointed by travelers in 1905 has been passed down through the years and every single night we would talk about what was happening in the business, how he thought about the business. And I grew up fascinated with how to run your own entity. Ended up [00:02:00] going to Wharton for my undergraduate to study business and finance.
And then coming out of that, I spent two summers in investment banking at Blackstone and Morgan Stanley, and then ended up at McKinsey. And while there I pretty naturally gravitated towards all things, financial services, given that I had grown up hearing so much about it from seeing my mom work on her Bloomberg all day and hearing my dad talk about insurance.
Most of my work at McKinsey was. Working with banks, pension funds, asset managers, and insurance companies. And then after about two years at McKinsey, I wanted to think more about what are the up and coming technologies that are either helping and enabling me as incumbents or going up against them.
Pivoted over to the world of ventures. So that was about three or so years ago. And I've been at Bain ever since focusing pretty much exclusively on FinTech. And the way that we think about FinTech and Bain is payments, lending, investing, and insurance. All of my time is spent across those four categories, branching [00:03:00] from early stage to seed stage up until pre IPO level.
Gopi Rangan: How did you get into venture capital? You grew up in a household where finance was talked about very frequently, which is already very unusual. Sometimes talking about money is not comfortable for many family members, but you already had that advantage, but how did you get into venture capital?
Ashley Paston:
Yeah, it's a funny story. I did those two summers in banking, as I mentioned, and I realized I was interested in something a bit different. So in my senior year, I was reaching out to over a hundred venture capital private equity consulting startup. Like you name it if it was on Penn link at the time, or if it wasn't.
I had reached out to just try and understand what different occupations entailed and ones I could potentially be interested in. And across that journey, I obviously made relationships with quite a few folks. And after I had spent about two years at Bain, one of those folks who I had met two years prior and built a relationship where they actually, he at the [00:04:00] time was looking for an analyst.
I didn't want to move across the country at the time. I suggested a friend who ended up taking the job, who he loved. I stay at top of mind. When this person became a partner of Bain, he had reached out to me and asked if I would be interested in joining the world of venture, which was pretty lucky, I would say in many senses.
But what I would say is that I didn't really know too much about venture. When I came into it, I at, in, it was almost like you did consulting private equity or banking. And most of those had less, I would say a social component. When I came to venture, I was very surprised at how outward bound and social have a job.
It wasn't expecting it to be much more of a desk job, but that's actually been my favorite part of the job since joining very lucky that I've landed at Bain. And I'm very fortunate for those hundreds of cold and bounds probably prepared me very well for the job today. Also as a side note,
Gopi Rangan: Venture is a different kind of industry.
Everybody has a serendipitous story of how they fell into venture. Yours is as well, very [00:05:00] similar. Now you stayed in touch with the partner and then eventually when the right opportunity and the time came, you joined the, you already mentioned that the favorite part of venture is that it's outbound and you're talking to people, but what do you really like about venture?
Why is it exciting for you?
Ashley Paston: Yeah. I just think there are so few jobs where you're paid to learn about new topics and themes. You're interested in. Small example was I was really fascinated by title insurance, which is quite a random space, quite candidly. And I just went out. I met every single player.
I learned deeply about title insurance laws on a state by state basis and became a true expert in an area I thought was quite fascinating. There are very few jobs that are just like, Go out, talk to the smartest, best, most exciting people learning about areas that are fascinating to you and come back with what you think.
And there's something so special about that. And on the other hand, it's like I get to talk to people who live and breathe topics that I find fascinating [00:06:00] and are so much more knowledgeable than me and can teach me things I would have never thought about or looked at problems the way I never would have done.
And you really just get so smart by talking to people who have more deeply intertwined with industry that you find to be quite compelling.
Gopi Rangan: Yeah, this is a very unusual career. You get to work with some of the brightest minds and they teach you about how the world can be. If their ideas came true.
It's like watching a movie and I love watching that movie again and again. Exactly. Exactly. You mentioned that four areas you focus on in FinTech. What are those four areas and what do you look for in entrepreneurs when you meet them?
Ashley Paston: Yeah. So the four areas, we spend time in our payments, lending, investing and insurance very naturally given.
My background, I spent a great deal of time and insurance and also work on payments quite a bit as well. And when we think about founders and what we're looking for, the thing, [00:07:00] especially on the early side is this underlying passion and understanding of the market. Someone who comes into a market, they don't really understand and say, this is a big market incumbents.
Aren't cutting. It is much less interesting than someone, whether they come into the market for the first time or have been in the market for decades. But someone who says, listen, I talked to a hundred customers, their top three pain points are a, B and C pinpoint a is being served by XYZ player. But pinpoint B is not being addressed historically.
It hasn't been addressed for. ABC reason. And here's why our approach acknowledges those barriers and will overcome them. And this will become a big business of the future. Like that is hearing that story. Having the founder understand deeply the pain point of their end consumers and how they will specifically address those.
It's just so magical to watch a founder paint that story for you. And it's exciting to hop on board with them as they build from that idea into a [00:08:00] company.
Gopi Rangan: We've co-invested in a few companies we invested in high Marley and my angel investment group invested in Phoenix. What stages do you like to invest in companies?
What is the time when it's right for an entrepreneur to come to meet you?
Ashley Paston: There's nothing that's too early. I would say in my time at Bain, I have invested everywhere from seed to that is as small as two 50 K check up until series F deal, where we would just let go cardless and late last year, their series F round.
. Never too early. I think ideally we like to catch founders as, as early as possible, but really I'm pretty stage agnostic. And the reason is that I spent all of my time thinking about where payments is moving or wealth management is moving, where insurance is moving. And I just want to find the best founder in the world and back them, whatever stage that may be.
Obviously it's better to find them at the early stages, but if you can't get in there, keep trying to get into back those founders along their journey and just [00:09:00] be along for the ride with them. Yeah, it's
Gopi Rangan: more important to find the founders and convince them to accept you as an investor. This is an unusual asset class where the asset chooses the investor.
Ashley Paston: Now that's a very good point. Very true.
Gopi Rangan: I'll give an example of a company that you made investment, and maybe we pick a high Marley as an example. How did you meet the entrepreneur? What questions did you ask them? What were you looking for and what got you excited?
Ashley Paston: Yeah, that is a great question. So, as I mentioned, we had been spend a lot of time in insurance in our previous funds.
We've invested in SquareTrade, which solves Allstate. We've invested in true emotion and Corvus. And there are really two vectors now of insurance as I see it anyway. And one is this direct to consumer path, Allah lemonade, and route. And the other is. Technology that is enabling the carriers to best serve their end policy holders.
We've spent a lot of [00:10:00] time thinking about technology, serving carriers, whether that be for claims, for underwriting, for sales and marketing, for policy admin. And as I've talked to several carriers on that side, like claims over and over again comes off as a massive pain point. . We had done a lot of work in this space and, and met Mike who was absolutely phenomenal deep industry expert to say the least.
We're really entranced by him when we met him and the rest of the team. And then why we were excited for hi Marley, maybe a quick, quick primer on the company. They primarily as a technology that helps manage the entire claims process. So from SNOL to disbursement, and the way to think about that is you get in an accident.
God forbid, knock on wood. And, uh, I'm Marley enables the policy holder to texts and information about the accident and then allows for seamless text communication between the loss adjuster and the policy holder. So, whereas before there would be a lot of phone tag, a lot of inefficiency, the policy holder can [00:11:00] now just take the picture of her driver's license or texts.
What time is best to call and you saved so much time and cost in that process. And the reason we were excited is as I talked about those two vectors of insurance, the lemonades of the world, and then the enablers of the world, there's increased expectations from carriers. From their end policy holders.
So if you're an end consumer using lemonade, the claims processes under two minutes, it's phenomenal. Now those expectations have transported over to carriers and they need technology to help them do so and create delightful experiences for their end consumers. Or the second tailwind made us excited was COVID the world of a loss adjuster, driving out to the home of someone to check out tiling that may have been broken or checking out a car.
Then they have a bumper dented in like that. Didn't happen as much in COVID. There was this forced digitization that high Marley really benefited from yeah, with insurance.
Gopi Rangan: A lot of the focus is on the front end, which is customer facing [00:12:00] how to sell insurance policies, how to distribute insurance policies, how to engage with the customer, how to help agents and brokers interface with customers so they can bring more policies.
That's the main focus. And even that it's still not fully well done yet. Claims is an afterthought. Claims is often seen as a cost center, not designed like a product should be designed. That's a fresh person. Yeah. The time Arlie brings and it's truly modernizing and assurance with this infrastructure, the tools that they're bringing.
I invested around the same time that you did as well. And I saw the opportunity there and how the founding team was thinking about it. And I was very, very impressed. When you meet entrepreneurs, how long does it take for you to go from the first meeting to say, I'm ready. I want to make it before COVID or after COVID....
Gopi Rangan: or COVID the normal world, how it was when you were able to meet people in person?
Ashley Paston: I would say before COVID the process was just longer. It was more, [00:13:00] you find an interesting company, let's say they're based in SF or in Boston, or, you know, Harley's based and you say, all right, like I'm going to be out there in two weeks. We'll come, we'll have coffee, we'll lunch. Like you get to deeply know the founder and coordinate around that schedule that now.
There's no office visit. It's not like I'll be in Boston in two weeks. Let's get lunch or get coffee and doors. Maybe that's coming back a little bit. Now that folks are more vaccinated, but especially in the hydrocodone, that, that really wasn't a thing. And I would say things like that slowed down investment process and probably in a good way of like, you get to truly deeply know the person you're signing on board with for the next decade.
So it did before COVID. The process is longer. You'd have the first meeting you'd be interested. You may be with fly out or happen to be in that state where the person was, and you'd go for lunch and get to know them. You'd get data, you'd digest it. There would be a lot of back and forth as you met more of a team members, hopefully in person and can get to a term sheet.
And in two or three weeks, I would [00:14:00] say. That process is just consolidated because there's no day of flying to XYZ state to go meet the team and it's just become quicker. And that, like, you have a first meeting and you like them, you get data and you just try and run it into staff as possible, which could be as long as a week or up to three weeks.
But I would say that process is certainly consolidated throughout COVID.
Gopi Rangan: There are things that you're going to do differently now that you've learned a few things during COVID times.
Ashley Paston: Yeah. In the beginning of COVID, I would say thinking back to April or may we kind of paused a bit because we weren't sure.
Had a really understand and evaluate and deeply connect with founders at the early stage, specifically over zoom like that. It just before POBID the thought of investing in someone without meeting them in person was quasi hurdle. And now we have so many, I mean, we do [00:15:00] dozens of zooms a week to get to know founders.
I think going forward, maybe that in-person piece while, while definitely nice. And I certainly prefer to do it. It just becomes. A little bit less necessary because we have been better at recognizing what makes an extremely qualified and incredible founder that we want to work with. Maybe going forward, even once we go back to normal, I don't think the world of zoom and the thought of giving a term sheet without being a founder is totally out of the question.
The way that that would have sounded like a ludicrous comment back into 2019.
Gopi Rangan: Yeah, I've made a few investments where I've never met the founders. It's really difficult, especially now a year ago when this whole pandemic, how was your first one? Difficult? I actually failed at a few. The challenge was that the opinion about the investment needs to be formed by me.
I need to form that opinion. I cannot outsource that. So what I tried to do in April may was to ask for other people's opinion about the founders. I would ask [00:16:00] their ex colleagues. I would ask their earlier investors, angel investors who have invested in the company, or I would ask them to introduce me to some of their friends.
That didn't really cut it for me. I was asking them questions and it was kind of secondhand information. I got some perspectives, but it was very difficult for me to form an opinion and stand by it. So I struggled, I passed on a few opportunities. It didn't work. And I learned from that experience, that it is really, really important for me to form that opinion independently.
By myself. I have to spend time with the entrepreneur. I always had this philosophy that we, as investors have to meet entrepreneurs where they are, it's preposterous to expect them to come and meet investors where we are. We truly want to serve entrepreneurs. We have to think about them and not make them move to where we are.
So although I live in the Silicon valley, I'm always invested all over outside Silicon valley very easily, but this time it was very difficult because. I was going a hundred percent remote and never meeting the entrepreneur. And that was quite difficult. So after spending a lot of time with entrepreneurs, [00:17:00] I've realized that it can be done, but I have to take the responsibility to form the opinion by myself, by spending time with them researching them, not delegating that opinion, formation to other people.
Ashley Paston: That's so interesting. And do you, like, how do you get to know them intimately and deeply if it's not in person, because historically we would go out for a long dinner with the founder, but I get to know them well over a meal. Right. I think zoom we're at 30 minute back to back sessions, like how did you grow to form that opinion for yourself?
Gopi Rangan: Hey, this is turning into a podcast about I'm happy to answer. So along the way, in my journey, he has a venture capital investor. I learned something. I learned that it's not about the market size. It's not about the unit economics, all of those things. Only. Those are the topics that I focused on in conversations when I met founders and I would.
Debate about a challenge, them poke holes in their ideas, on how they want to build a business. That was the main [00:18:00] focus of a lot of my discussions. And then later I would think about how I can help them. I would expect that they would need to pass through the first few checks that I have, and then come to a point where, okay, now, You are deserving of my help.
I will grant you your wish and tell me what you want. I mean, that's the attitude I had and it was wrong. Now I flip it. I start with the question of, can I help them? If this is a topic that I can help, then it makes sense for me to dig deeper. So when I go in with that approach, the question is about what are you thinking about today?
Like, what's the challenge. What are some topics that keep you up at night? Is there something I can do to change that for you? Most of the time I'm useless, but at least it's good to know that I'm useless in certain areas. And if the problem cannot be solved by a brilliant entrepreneur, it's very likely no one can solve it.
So getting that out of the way to know where I can be useful and where I cannot be useful is very helpful. So that is much more effective in my conversations now, remotely, because I can be [00:19:00] more open, more vulnerable. And I tell them that, look, this is not an area I know. Or maybe we try this, I have this person that we can talk to.
Why don't you have a chat with this person? Who's an expert in XYZ. So that has been very useful for me. Putting the question of what can I do to help them first and then try to figure out whether this is a business I want.
Ashley Paston: It makes complete sense. It's what we try to do as well,
Gopi Rangan: too many pre partner folks, a lot of entrepreneurs think that they should talk to their partner.
They should get to the partner, the partners, the decision maker. They are often reluctant to spend more and more time with pre partner folks. How do you manage that?
Ashley Paston: That's a really phenomenal question. If I was the entrepreneur, I think it's just better to know more. If a team, the more people you meet, the more people you have rallied for you and in your corner supporting you throughout the investment process.
I would say one at a time and not the partners won't make [00:20:00] time. They always will. I would say that we partner live we'll have more flexibility. The second is hiring. So, whereas I would say partners and pre burners alike could be very helpful at top tier the, bring a CTO or.
COO many of the folks in my cohort specifically are the exact spec of an engineer that you'd be trying to hire or a go to market person you're trying to hire. And those are folks that I know throughout my network that I may perhaps just have tighter connections with or different connections with and a partner, which will ultimately be useful for the end entrepreneur.
Third is having someone to help spitball with, right? Like it's always just another person to test your ideas and shoot around with. I'm thinking about. Go into market and this way, or I'm trying to turn on this channel. How have you seen other companies or portfolio do it before? And having someone else to just throw around ideas with is always more helpful in my opinion.
Anyway, ultimately when we bring deals forward at the end, and I'm sure this is similar to other funds is like, it's just so much more exciting. Every single [00:21:00] person on the investment team is really pumped about that company and that entrepreneur.
The more people we can loop in, even earlier, the better this, it just rallies us, us troops together. As we, as we bring things forward and investment committee.
Gopi Rangan: Yeah. I've found that new associates and principals are exceptionally knowledgeable, that doesn't get covered in tech crunch. They give you read tech crunch, and if you try to read all this stuff and the news articles you scratch, maybe the top 1% of the surface on what's really happening, the associates and the principals are the ones that are feet on the ground, pounding the pavement, meeting entrepreneurs, understanding who's really doing what, and that can be extremely valuable.
When you're trying to build a network and get to the right type of investors for the business as an entrepreneur. So I've found it incredibly valuable to spend time with associates and principals.
What tips would you give to an entrepreneur before they come to meet you?
What can they do to prepare themselves?
Ashley Paston: I would say, [00:22:00] help me get on the journey with you to understand the vision you're painting and what the world looks like. If your company succeeds there's times where founders just assume that you understand exactly what the vision looks like, but being able to paint out this is act one of the company.
This is act three. Like this is what the company is going to take over the world, or be a really important company. And painting that vision is just, I get very excited by a compelling vision, especially in FinTech. Being able to do so I would say is, is incredibly important. The second is maybe not as necessary, but we publish a lot of things.
We're interested in like embedded FinTech and title insurance as an example, or B2B marketplaces. Knowing that could be helpful coming into a meeting. That being said, like, I don't ever want to be too prescriptive about ideas we're looking for, because sometimes you get trapped in this box of like, do I like this?
Because I thought it was a good idea before I met the founder. Because many times, like the founder has a better idea and then we're totally shocked and have thought about the thesis in the wrong way and then can alter and adopt [00:23:00] that way. I would say, just be authentically you and be passionate about what you're working on.
Gopi Rangan: This definitely helps. Are there some common mistakes that entrepreneur makes, during that pitch or during their initial meetings?
Ashley Paston: I just wanna say first and foremost, like it is so hard to be a founder. I can't even imagine how difficult it is. I would say mistakes is such a harsh word in that, like they're living and breathing this company every single day.
So I don't think anyone's doing anything wrong at any given point. The most spectacular founders that we talk with are those who can go from 3000 foot view and be like, this is the overall market, and this is the way the market is moving.
And then you can go down into the one foot level and just say, this number is working this way because of X, Y, Z. And then just jump right back up to 3000 foot view. Those are the best founders. And I think knowing your numbers really helps exemplify that you're able to do that.
Gopi Rangan: I want to double click more on something that we talked a little [00:24:00] earlier about FinTech in general.
What are some hot trends do you see happening today in FinTech? What are you interested in tracking today? You could use examples of some of your portfolio companies to show what's happening.
Ashley Paston: Maybe just a touch on what we talked about earlier with high Marley and your response around distribution and the focus there.
I would say the future of insurance distribution is really interesting, and that includes many backers of tools that are helping agents or just embedded insurance plays. And specifically within embedded insurance today, insurance is sold. It's not bought. And it's much more intuitive for consumers to buy insurance or the software they're already using.
And that's true for a few reasons. So imagine a merchant is cross-selling insurance. So if your Airbnb or your Tesla, as an example, cross-selling an auto insurance policy. It makes so much sense for Tesla to do that. Like first and foremost, there's no CAC. You've already acquired the customer too. It's a [00:25:00] more enjoyable customer experience because now this Tesla owner doesn't have to go separately and buy car insurance.
Third, you have all this enriched data. Which enables you to even better price this product further delighting the customer. And lastly, you're monetizing off of the insurance because you're likely an agent or an MGA. It makes complete sense from the consumer side, complete sense from the merchant side.
So we've been spending a lot of time on this space in different vectors of this. When I say different vectors, I mean, there's the MGA as a service company is like sure. And boost and tint who are enabling software companies to become insurance companies. And then you have vertical, specific investors.
So companies in the extended warranty space. For embedding warranties into eCommerce platforms, such as extended Mulberry and Clyde. And the same thing goes on SMB insurance, such as AP INTEGO, which sold to next. Spending a lot of time on embedded insurance and the future of distribution and where that's evolving, [00:26:00]
Gopi Rangan: What's happening in the PropTech space in real estate?
Ashley Paston: We've been investment in smart run, which is a smart home automation platform. And I would say this actually goes back to the embedded insurance and embedded FinTech thesis that we have of smart rent, which embeds or sells you a hardware piece. You control your thermostat and your lights and unlock and lock your door.
As example, the tenants living in a smart rent apartment who uses this app every single day to turn on their lights, to turn on their thermostat, to lock their door. Why would you not pay rent through that app? Or why would you not pay insurance? So that app, we will see this even more intertwinement of prop tech and FinTech over time.
Gopi Rangan: This is very interesting. You touched on two very interesting trends here. One on insurance and the other one on real estate. I remember reading reports that the percentage of digital transformation that has happened in different industries, real estate is like [00:27:00] less than 2%. So there are lots of new solutions like smart rent and others coming through.
I invested in a company called kangaroo that is helping families be safer at home. They're building smart home solutions and providing insurance solutions on top of that. So it's very interesting to see these new trends.
Ashley Paston: Yeah. So fascinating.
Gopi Rangan: I'll ask you about your community involvement. Is there a nonprofit organization you are passionate about and which one?
Ashley Paston: Yeah, there are few, but I would say one that's worth highlighting here is NAMI, which is national Alliance for mental illness. Mental illness is something that's not really spoken about that much. I was at their gala and someone said at the grand speech was that 10 years ago, when someone said they had cancer, it was whispered.
And no one really talked about it. And now it's, it's kind of. Yeah, people talk about it more openly and there's more understanding of it. And I think mental illness is not there yet. And people still talk about mental illness and hush tones [00:28:00] and aren't as vocal about it. And I think it's something that shouldn't be talked about and should be celebrated and should be worked towards more folks embracing.
And especially, this is true for entrepreneurs like. Being an entrepreneur is a really, really lonely job. 50% of entrepreneurs suffer from some sort of mental illness. And this is a cause that's very important to me. If anybody is interested in getting more involved, please let me know. I'm happy to mental illness is a very icky topic.
Gopi Rangan:
People don't really mention that it's okay to talk about catching a cold or falling sick, like no more serious illnesses like cancer, even that has become okay. But it's not okay to express that, you know, today I'm not feeling well. I don't know why or the opportunity to express your emotions and even more difficult things, uh, that are more complicated than that.
We don't talk about it. And I'm glad that you're bringing light to this topic, but I'm feeling very upbeat today. After this conversation, you've talked about many real life [00:29:00] examples, authentic stories about how you evaluate startups and what you look for in entrepreneurs. Thank you so much for sharing your thoughts and insights.
Thank you for listening to the shore shot entrepreneur. I hope you enjoy 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.