How I Invest with David Weisburd - E363: How Nigel Morris Built QED into a Fintech Powerhouse

Episode Date: May 6, 2026

What if the real edge in venture capital isn’t picking companies—but helping them survive long enough to matter? In this episode, I sit down with Nigel Morris, Managing Partner at QED Investors and Co-Founder of Capital One, to discuss how fintech innovation actually happens and why most investors misunderstand the role of venture capital. Nigel explains why incumbents struggle to innovate despite massive advantages, how QED built one of the most successful fintech franchises by combining operating experience with investing, and why venture is not stock picking but hands-on company building. We also explore founder psychology, power laws, and how culture and talent ultimately determine outcomes more than strategy or capital.

So Nigel, tell me the story about how you started Capital One. Well, first of all, it's a long, long time ago, and you can see how old and gray I am. So some of my recollections might be a bit hazy. But Rich Fairbank and I were strategy consultants. So we were out there proselytizing that we could do the credit card business differently using what we called our information-based strategy. And David, we talked to all of the bigbacks. And they either said we're doing it. We're already doing it.

And they weren't. And some of them still aren't now, 30 years later. And some of them said, well, it can be done, but I'm not sure if YouTube clowns can do it. Because what has you ever done? You've been strategy consultants all your life. How could you possibly pull this off? And then there was a little bank in Richmond, Virginia, called Cigna Bank. It was a combination of Bank of Virginia, a Maryland bank and a D.C. bank.

And the CEO there, a chat called Rick Dean. I remember him because he had an index finger that seemed to be it was like a foot long. And he said to me, okay, we're going to take a chance on you two. You better not mess it up. And Cigna hired us as consultants first. made out the strategy, and then they took us out of our prestigious consulting jobs to actually try to be executors and operators and build what became Capital One. Was that crazy to start Capital One?

It was madness. The Annex and City and JPM would look at this little thing in Signate Bank in Richmond and say, are you serious? Can you guys really make a difference? It's the same framing that it's how you had with Newbeck in Brazil. Are you serious? Somebody that you have entrenched incredibly capable competitors with brand and scale and data and talent, experience and regulatory access. And it feels that you're in a massively concentrated position and very hard to dislodge. But from tiny acorns, fantastic oak trees can grow. And that's what I so much believe in that, David.

And Rich and I were so much believers that we could change the face of credit card business, democratize it, price it better. turbo charge it. And we had this vision that it really could be pulled off. But was it crazy? Yeah, I think it was kind of crazy. And we look back on it now and it seems so obvious. And now with the acquisition of Discover,

which I think is a capstone in Rich Fairbanks career, I think it's pure magic. Capital One is the biggest credit card company in the world. And it didn't exist. You know, when Rich and I were running around and I was in my middle and late 20s, how can you deal with crazy? If we look at the QEDs made 200 investments now over nearly 20 years, probably invested more in fintech than just about anybody.

And I often say to the entrepreneurs, I say there must be something, there's something wrong with all of you. Because on a statistical basis, you shouldn't do what you're doing. The probability of you failing is much higher than the probability of you being successful. But you still do it. You could go and work for a big bank and make a good salary. And you wouldn't have your spouse or loved one talking to you about how you're going to pay for the mortgage or put the kids into private school. or go on the nice holiday in New Yorker. But you really believe that you can pull it off.

And that's the power of entrepreneurs and that's the energy that excites me and keeps me doing what I'm doing at this age is being able to tap into other people's energy sources. I feel like I'm a bit of a vampire in that way. But I just love feeling that energy of spirit and optimism and creation and passion. That's really special.

But if I look at QED business, you mentioned 200 investments, one of the most prolific fintech investors ever. But the throughput is really, in 1994, you started Capital One, this crazy project. It ended up being the largest credit card company in the world. And you just keep on doing that with new founders, maybe not to the same degree of success every single time. But that's what you're looking for.

You're looking to recreate Capital One in your investments. By being a consultant to the incumbents, I understood how they thought. I understand what their restrictions were. I understood how capable they were. But I wouldn't, back to being crazy, I don't think we would have had the audacity to try to build capital and if we didn't have some sense of the landscape and who we were competing with.

And what's really clear to me is that the incumbents are really good at protecting their franchises, managing the corpus, not making a mistake. Sadly, often the people who end up running large financial institutions, are the people, not that have created much, but the people who haven't made a mistake. And the cultures are about not making a mistake. The culture of entrepreneurism and fintech is about creating

and finding those geometric returns. and getting to escape velocity. And the cultures are so different, but the incumbents can learn so much from watching this Darwinism in real time. I call it the Galapagos Islands effect. Because as an incumbent, it's very hard for me to innovate. And at the margin, I have in front of me

Darwinism going on where hundreds and thousands of tiny little organisms are fighting to reproduce, fighting for oxygen. And it's there in front of you. You can, but get your telescope out. You can get your video recorder. You can watch it in a living color. It wants to talk to you because you have assets that are really valuable to fintech.

And or you can go to school on it. You can watch it happen. You can figure out who of them you should want to partner with, David. Who do you want to invest in? And ultimately, potentially, who do you want to buy? Because the innovation engine, the innovation muscle is not in too many of the incumbents. It's an anathema. So, yeah, I think this is so powerful to put together fintechs and incumbents.

But yes, we're looking for those explosive opportunities where we can, as QED, bend the odds of probability of success. Look, we've made, you know, we have these deep operating backgrounds. I've got scars all over my back from the ridiculous mistakes that I've made over these years. And if I can help a young entrepreneur, you know, half my age and twice as clever, so I can help that person not make the same mistakes I made, That's an incredible, to be blessed to be able to do that. FinTech is really hard. It has all the same characteristics of investing in that you have to scale and get the culture right and get the right investors around the table and understand your vertical and horizontal profitability.

But it has some unique and very specific skill sets that are quite rarefied. How do you manage fraud, particularly in developing countries, particularly in consumer businesses, fraud is a big issue. Any fool can lend money. The challenge is getting people to pay you back. And the gestation period to figuring out who you don't want to lend to is often measured in quarters or years because you actually have to lend money to people that you didn't want to lend money to to figure out how to screen them out when you go forward.

You have to understand AML and KYC in a very complex regulatory environment. You have to understand the psychology of regulators. You have to understand asset liability management if you're building two sides to a bank ballot sheet. And we've seen that with SVB and other entities if you get treasury wrong. You have to understand the cyber risk, and particularly in the regulatory climate we're in now. So all these things are in the own ways, very specific and complex areas. And as QED and in our ecosystem, we have resident expertise in all of those places. So we can bring them to bear on the passion and energy of the entrepreneur and say,

watch out for this and have you thought about that. And here's how this works. And this is what will happen if you do that. and we can help manage the decision tree, if you like, of how a company evolves and grows. I think that to many of our portfolio companies is differentiated. And if we can bend the odds of probability just a little bit by that specific IP we have, I think that's terrific.

Everybody's aware of Clayton Crensinson's Innovator's dilemma where the incumbents are disrupted by the new entrance, blockbuster, disrupted by Netflix, Kodak, disrupted by digital photography. In fintech specifically, because it is idiosyncratic, what are the other factors at play that allows incumbents to be more entrenched and more difficult to disrupt? The incumbents have a lot of assets. They can access to Fed window. They can access low-cost, durable deposits.

They have profitability. They have deep data sets. If we look at JPM Chase, Amex, Capital One, they now have over 100 million customers. And they have a walled gardener of proprietary data. that nobody else has. That's incredibly powerful. They've got brand. People know who they are.

They might not be loved. Their net promoter scores are invariably not terribly high, but they're trusted. FDIC insurance. They're able to cross-sell against their customer base, that most of them do it really badly. You know, we watch NewBank and SoFi, who have really developed the muscle of how to offer multiple products to your customers. So it's just click to get, Revolut, too. So they have tremendous assets.

And so much of the, back to my point about two plus two equals five in combination with fintech is if you unleash some of the next generation capability that the fintechs have against this franchise that the incumbents have, there's enormous value that can be created. It really is an interesting jigsaw puzzle, David, where the banks, the incumbents cover what the fintechs have and the fintech cover what the banks have. What do the banks not have, if you like? They don't have the verve and the passion. Sadly, in many places, they don't have the talent.

They don't have the analytical dexterity. And they don't work backwards from the customer's needs. They work forwards from their needs and the branch infrastructure in retail that they have. So many of the banks, the business model is, I've got all these branches and I've got all these products. How can I get you to come into my branches so I can sell you stuff? That's not a durable model in 2006. Why have they not grasped this lifetime value of a customer? It's the mindset that exists in the incumbent.

If I'm sitting on top of, if I'm CEO of my bank, I'm going to be rewarded by reducing my costs by a few single digit percent each year, which I can do, often by rationalizing my branch infrastructure, for example, and increasing my revenue by a bit more than inflation. That's my goal. That's my mindset. And if I can get the chance to buy somebody who looks like me in an analogous geography, and I can buy that, and then I can smush the two together and get the benefits of scale, I'll look like a rock star. And I think that's the classic mindset in the United States. As an artifact of the state structure that we had here, we've got 4,500 banks. The end game that we've seen in Canada, Australia, UK is five to 10 banks with 80% market share. That's where we're headed. Now, it won't happen in my lifetime, and it might not happen in yours, but we're moving in that direction aggressively.

Because of that 4,500, I put it to you that 4,450 of them are subscale and don't have a comparative advantage. It's very interesting to talk to the boards of and the senior management of regional banks in the United States. I always enjoy doing it. And I say, so what is your comparative advantage? What do you do that do really well and that is special? And it's a really challenging question for them because they don't have much awareness of what's happening in fintech land and what's happening. with the big regionals and the money centers. But you often get things back like we really are plugged in

and we really support our community. And that's a very powerful thing. But it's not comparative advantage that will allow you to be able to scale and eke out returns on equity more than your competition. Fast forward a decade after you started Capital One, you started QED. And for the first five funds,

you made a very unusual decision to only invest your own money. What was downstream of that? help you as a venture capitalist? I wake up in my middle 40s. I'm at Capital One. We've been growing now for 10, 11 years. We grew our earnings at, I know, 26% compound, I think, per year each year.

We had the market cap had grown dramatically. Capital One was now in every consumer and small business product in the United States. We'd taken Capital One to Canada, the UK, France, Italy, Spain, South Africa. And we'd done that over 10 years. And it'd been absolutely glorious. And I learned so much. I feel incredibly blessed that I'd had the chance to do that. But I woke up in my middle 40s and I said, you know, I'm just not sure if I want to keep doing this.

My learning was going down. And I felt like the regulatory climate was becoming more austere. And the special source, the verve that was quintessentially, a capital one, I worried that we wouldn't be able to keep it going. There's something about big company that is antithetical to entrepreneurism. And fighting, I felt like I was fighting every day to get the best of, bigness and smallness in the same organization. And it was really hard work. So I moved off stage.

I went back to the UK. I joined some boards. I felt like I'd been narrow and deep for a long time. I joined The Economist, which I still read today. London Business School that had been so important to me in my career, National Geographic, Ideas 42, which is a behavioral economic think tank based here in Washington and in New York. And Brookings, the political platform here.

in Washington. And I thought that it might be done. But what we found is is that we were getting inbound from people who had been part of the capital on diaspora in some way with business ideas. I was myself in Karibu Honig

and Fred Brutman, there were the three of us together, listening to people coming and knocking on our door and saying, would you help us in some way? And we started in a very modest way of applying the heuristics, the frameworks that we had learned about in Capital One and the experiences we had and began to invest our own money without a clear vision of where it was going to go per se because we felt like these were really cool companies that were doing really interesting things and we could at the margin add value in a way that many other VCs couldn't because of our experience. Very quickly we found Credit Karma.

We found remitling. We found Flywire. We found New Bank. all in that period where we were investing our own money. And it was Mardlef. And we were right at the wave of Fintech. We were doing Fintech before Fintech even had a label. We found just we were having so much fun

and we were creating so many interesting opportunities. And then that was the first four or five funds, depending on how you classify it. But by the time of the fifth fund, it was clear to us that Fintech was a thing. maybe it's 15 to 20% of all venture dollars were going into fintech, and we had seen so many successes now coming out of the grant. And we didn't have the powder ourselves to be able to prosecute all the ideas that we saw.

I mean, in some ways, venture capital is a marketplace of raise money from our LP friends and deploy that money in a sensible way that can create acceptable returns. The opportunity was bigger than our ability to be able to fund it. So we stood on the banks of the proverbial rubicon and said, you know, will we take on other people's money? That was a real question for me because I've been an entrepreneur with Capital One and hadn't really had a boss for a long time. And then investing our own money, if we screwed up, it was down to us. And then you start to believe that then you look to bring LPs to the table where you're bringing other people's money and people who are counting on you. So it wasn't an easy decision.

but I was compelled by just the wind roaring at our back and the opportunities that existed in fintech and how many more companies we could invest in and how many more opportunities could be created and how many more lives of small businesses and individuals could be changed around the world. It was that that brought us to becoming more of an institutional fund, if you like. Expert calls have always been one of the most powerful ways to build conviction,

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Obviously, hindsight is 2020. Going back to before you cross the Rubicon, knowing everything you know today, was it a mistake to take outside capital? It's a good question. If we know our Roman history, once you do cross it, you can't go back, right? Because you declare, isn't it?

Yeah, you declare war on Rome. I'm at peace with it. I think that, We could have been a very successful boutique family office, and we probably would have been doing what we are doing now, but on a much smaller and much more modest scale. I think it would have been an easier job than it is now. I think I would have spent more time.

I would be spending more time with my grandchildren. I probably would be faster at riding my bike up big hills, which I love to do. But I think that the scope of what we've been able to pull post Rubicon makes me comfortable with the decision in that. You know, we have made 200 investments. We have a terrific team of investment professionals and support. We've got a wonderful group of very Starwatt supporting LPs. And we've been able to make the difference in the lives of so many people.

We would not have been able to do those things. And, you know, in the frosty and kind of way, you can only go down one path at a time. I do think about it sometimes, and I do say to myself, look, you know, did we make the right call? Because managing the LP ecosystem and the responsibility that you feel, I never take lightly. I'm seeing now people of my vintage, candidly, David, who are now retiring. My business school chums are, you know, sitting on the beach reading novels. And I do think about the commitment that I've made. when I crossed that Rubicon and what the other road could have been.

But Net Net, look, I'm energized back to me being a vampire again. I'm energized by just so much talent and so much passion and being able to have that on a broader scale where probably we're the largest boutique, you know, FinTech VC on the planet, if not one of the biggest. And we're friends with all the others because they do great work. And yeah, yeah. I'm good with it, NetNet.

A lot of LPs believe in this axiom sizes the enemy of returns, and yet some of the best franchises have actually been able to scale capital and generate more alpha than they were sub-scale. What are the positive aspects of scaling your A-UM? It's a great question. The data, the research does support that,

as you get bigger, you regress to a mean. And I think that it's pretty clear that that's the case. So you're fighting against a bit of gravity there. Now, I think it's true, that, the small venture firms that do get the opportunity to get to scale may not be, their success, may be more luck than judgment. So when they get a winner, when they're small, and they're able to trade off that winner in order to be able to raise more capital, then they find that actually, it was much more

luck than judgment. Systematically and durably being able to find great companies and get return is really what two ideas about. So about, I know, five years ago, David, in our growth, we achieve what I call threshold scale. And it's on four dimensions. Threshold scale is that we are in the stages we want to be in. We'll start things.

We started Mission Lane. We started ClearScore. We started Caribou and many others. So our sweet spot is A. We will go into B and C. We have a growth fund. So we're in the stages we want to be in. We're in the verticals we want to be.

And we know some payments. We're very deep in lending. We know crypto. We know embedded finance. We know banking as a sir. So we are in the wealth management. We're in the verticals we want to be. And we are by nature, we are substantially more thin than we are tech.

That's the second dimension. The third dimension is that we're in the geographies we want to be in. In that we're half of our investments are in the US. Of course, we're in Latin America. In Europe, we have one or two investments in Africa, so Middle East and in Asia. And this is an important dimension for me. And I had such a good time taking capital when I'm into the geographies we mentioned earlier.

And I believe that if a business model works in the U.S., it can be geo-arbitraged into another geography. The null hypothesis is it'll work somewhere else. People are a lot more the same, and their needs are a lot more the same than they're different. Geo-arbitraged. You guys are famous for this. How do you implement that?

Give me maybe an example. We came across earned wage access, I don't know, six, seven years ago as a model. Earned wage access, the focus is on the 40% or so of Americans and Brits. that get paid hourly, earn their money hourly, but get paid monthly or fortnightly. And often this population is living month to month. So if something happens during the course of the months, they find themselves going to payday

lenders or suffering incredible dislocation in their lives. Earned waste access just basically said, look, I've earned this money. I'm partway through the month. With an app, I can go and look at how much money I've earned, and I can draw it out for an equivalent of an ATM fee. So that was the model. So in that, we started wage stream in the UK, now called Stream, which is a dominant player in the UK.

We have rain here in the United States. Actually, Stream is also in the United States. We have Refine with the Y in India, which is the dominant player in India with this model. We have Minu in Mexico. So we took that idea and said, ah, now where would this potentially work in other geography? Before we get back to the show, quick invitation for the allocators in our audience. On Thursday, May 14th, I'm gathering an exclusive group of allocators in New York City for dinner to discuss the evolving landscape of private markets and the DPI crisis. How are savvy allocators navigating the liquidity crunch?

If you're an institutional allocator, RIA, or family office, this dinner is for you. Space is limited, so please go to Weisford Capital.com slash events right now to secure your seat at the table. That's W-E-I-S-B-U-R-D as in David, Capital.com slash events. Before we get back to show, quick invitation for the allocators in our audience. On Thursday, May 14th, I'm gathering an exclusive group of allocators

in New York City for dinner to discuss the evolving landscape of private markets and the DPI crisis. How are savvy allocators navigating the liquidity crunch? If you're an institutional allocator, RIA, or family office, this dinner is for you. Space is limited, so please go to Weisford,

Capital.com slash events right now to secure your seat at the table. That's W-E-I-S-B-U-R-D, as in David, Capital.com slash events. Before we get back to the show, quick invitation for the allocators in our audience. On Thursday, May 14th, I'm gathering an exclusive group of allocators in New York City for dinner to discuss the evolving landscape of private markets and the DPI crisis. How are savvy allocators navigating the liquidity crunch? If you're an institutional allocator, RIA, or family office, this dinner is for you. Space is limited, so please go to Weisford Capital.com slash events right now

to secure your seat at the table. That's W-E-I-S-B-U-R-D, as in David, Capital.com slash events. And can we find entrepreneurs that are either thinking about it or we can talk into leading the building out of those businesses. So we aggressively look to expand the idea if we're convinced that it can work in a core geography

and then into other geographies. And then the cross-learning is really incredible where we can have two or three CEOs who are not competing with each other because they're in very different geos, who can actually learn from each other in a very kind of a specialized ecosystem. It goes back kind of full circle

to what you were talking about, the regulatory capture, the idiosyncratic regulations in every single geography, which keeps these, I guess, multi-country banks from scaling in the same way that a social media company might. That's right.

So I think that, you know, yes, regulation is different, payment rails are different. There are some cultural differences. But by and large, people have the same needs around financial services. And I think that you can always look for reasons not to do something. And we tend to look for reasons to do something, which is the raison d'être of venture in its very essence.

But yeah. So we believe in that, in the geo-arbitrage concept. We're not slavish to it. I mean, there are certain geographies where there are clear limits based on a justical market or the cultural issues. But so that was the third dimension. So we talked about stage, we talked about vertical, and we talked about geography. The fourth one is in some ways the most powerful, often the one most overlooked.

And that is that you can only do the deals that you see. And if all of the deals go to Sand Hill Road first, and they're cherry-picked by these wonderful, powerful, deeply embedded generalists, A-16, Sequoia, benchmark, then you will, I get adversely select, adversely, in terms of the deals that you can do. So much about what we do as a leadership team is to be promiscuous in the market, to talk to lots of people, to be putting out thought pieces. And this is really designed to say, look, we're available, we are friendly to the ecosystem, we have a belief that fintech can change the world. And if you are, if you're a young or a young entrepreneur who wants to be part of that,

Come talk to us. There's very few businesses that come across the transom now that I haven't seen, we haven't seen a version of somewhere else. So 20 years and all those geographies and 200 investments and 31 unicorns that we've invested in, I equip that we've seen a parallel or a metaphor or an analogy of any business that comes to the table, pretty much. And with that, we can be really valuable to the ecosystem and say, look, watch out for this and think about this.

Or have you thought about teaming up with this person? and here's an investor that really likes that space. So being friendly to the ecosystem builds our brand, and it allows us not to be adversely selected. You know, we used to joke in the credit card business, David, that I'd rather be, have positive selection customers applying for a credit card and have an average metal detector versus a fantastic metal detector, but adverse selected customers coming to me.

So I'm not sure if our metal detector is average, but it's really critical, I believe, as a specialist and not of an entity of massive scale compared with the Sand Hill Road cohorts to be able to get people wanting to come and work with you. And implicit of what you're saying is that you need a minimum viable fund size in order to be a credible lead

that would head on high compete with these large Sandhill Road firms. I hadn't thought about it. I'm going back to my operations research. You're minimum efficient plant size, right? Interesting because you could say, okay, size is enemy of return, sure, but if you don't have a critical amount fund size, you're not going to get the next new bang, the next so-fi. So it's all fine and dandy if you have a small size fund,

but if you don't get into the generational companies, it's not really useful. You put it better than I did. I think that's right. And then you have the small sample problem that if you don't get to a certain scale, and, you know, you might, you've got to have enough N, enough investments in order to get some kind of distribution to get, you know, several of them giving you three to five to seven X,

and one or two that are going to give you geometric outcomes. Yeah, that's right. You mentioned a couple questions back, survivorship bias, this idea that if you have 100 emerging managers, you do a coin flip, 25 of them will have a 5x fund. This triggers a lot of people in industry, but I've never seen a study that shows the average emerging manager outperforms, the average emerged manager.

It all seems to be about picking the right managers. Now, you could have a philosophical debate, whether there's scale in alpha in specific managers. I do believe that's the case. but the survivorship bias is a big thing. And if you're really trying to smooth out your returns, sometimes having more shots on gold could be the way to solve that.

So that's quite right. We were really in a fortunate position in that we were doing fintech before fintech existed. We were really the only game in town at the early stages that we were competing with the generalists. And traffic came to us because of our diaspora. So we didn't have a brand at the beginning, but we were in the right place at the right time.

And we had some powder. So we had the chance to build a track record on our own time and with our own money. And that put us in a privileged position where we didn't have to run the gauntlet of what you just talked about. I know you're British, so you're probably going to deny this, but you're in some ways a branding genius. And I wonder when you build QED, how much of your success was based on just being the first person that somebody thinks of in FinTech, like this overly simplistic reason of being one of those first calls? Branding genius.

certainly not. You know, I was in the room, though, when what's in your wallet came up. I didn't think of it, but I remember being blown away by what's in your wallet and then advocating, you know, the Visigoths and the Vikings running around and that whole building of the brand that became Capital One. In the very early days of Capital One, there were two things that catalyzed it. Looking back, one was the asset back market that allowed us to be able to source money to be able to lend it. without having branches.

And that was a one-sided bank, if you like. And that was very critical because we were only good at one side of the belt sheet. Since then, of course, Capital One has expanded dramatically. The second thing is that we could use Visa and MasterCard's brand name. We didn't have to build a brand ourselves. And watching your wallet was designed to get above what I call the Visa MasterCard threshold, where if you stop somebody in the street and you say, what credit card team have, they would say Capital One rather than Visa.

People actually think that the credit card issue is Visa or Master. the card if they don't know the name of Amex or JP or Capital One. So getting above that threshold was really critical and that gave us permission to be able to then build out all the other product sets. Anyway, so that's what's in your wallet. But I can't claim any part of me thought of that. With QED, I want the brand to stand for friendly, experienced, insightful, honest, high integrity and play the full 90 minutes.

You said, I am British, it's right? and I've seen my football teams go down, you know, I've seen my team be, you know, three or four nil up in 30 minutes and then go and lose five, four at the end. My team is, I've got two teams actually. I've got Tottenham Hotspur, which is my family team, which are fighting to get, not to be relegated at the moment,

from the premiership. And then a couple of years ago, I made an industrial in Swansea City. My family's wealth, and invest in a Welsh team was really, really important. They're in the division below the championship. And they just actually have been working with Snoot Dog and Martha Stewart. And they've been getting some good publicity as a result of that.

But, yeah, Swansea City is my second team. Where was I going with football? We have operating experience. I see this so often where the second board meeting, the company that you thought was doing so well misses their numbers. Happens a lot. I don't know. I don't know what it would be statistically.

And then in the third board meeting, the partner from the VC firm that did the deal doesn't turn up anymore. And they've got somebody who's fresh hour. business school. And I'm like, okay, so this VC firm has written this company off. Now, is that probably a good decision in terms of allocation of resources? Might be. Sometimes companies spontaneously recover. I mean, and it's really hard to predict it. But that's something that we're very careful not to do. Now, you have to be able to be intentional that where you allocate your resources, and it's a lot easier to turn a 4x into a 5x than it is to turn a 0x into a 1x.

That's absolutely true. But if you make a commitment and you invest in somebody's business and part of your storyline, your brand, your integrity is that you're going to bring this intelligence and resource and experience to the table, that diaspora, then you live up to it. So we play the full 90 minutes. So that's what I want QED's brand to stand for. We've done something, I think we've done it three times, maybe four, where we've actually

360D, QED, where we've had an independent, entity, reach out to our portfolio companies and our LPs, by the way, and say, what did QED tell you they were going to do when they invested? And did they live up to it? And what can they do better? And what if a family member or a close friend was starting a company in FinTech land, would you recommend QED? So a net promoter score, if you like. So we try to hold ourselves to that standard. And I think it's a critical part of my four-dimension scale threshold of stage, vertical, geo, and brand. Yeah, I would say you not only play the full 90 minutes,

you play the season or the multiple seasons, you're playing these long-term games. Yeah, you know, and if you get relegated, am I still there for you? We try. Look, as an operator, Dave, you know, if I'm CEO and I've got five business units, and there'll always be a distribution of one or two, one's doing really well, and three are doing okay,

and one's not performing. As a CEO, where do you spend your time? you spend your time on the one that's not working because the one that's doing well he doesn't need your help and the she's off making it all happen so you spend your time on the one that's not working and there's a tendency, I think I still

have it in my DNA, want to protect myself from failing rather than pouring gasoline or petrol on the fire of something that's already working and I have to check myself in terms of my autonomic reaction to go and try and fix things

What part of that is long-term compounding a brand and what part of that is, I guess, ego preservation. I can see, as an operator, I think I can see what's wrong. And I think I can say, if I were running this company, this is what I would do and I could fix it. And a number of my partners often say, Nigel, you're not CEO of this company. You can't put the time in to go and run it.

So not, it's less ego and it's less about financial compounding. And it's more, I can see how to fix it. and if only I could get my hands on the steering wheel, I could fix it. And so then it's about sitting down with the CEO, the founding team, and say, look, here's what I would do if I were in your shoes. And that's a conversation I often have is this is what I would do if I were you. Now, you don't have to do this. I can't hold you to account.

I'm not your boss. But listen to what I have to say. It's based on experience and based on data that I've been able to pull together over my life. and the very least, try some of it. And if it doesn't work, very few decisions are irrevocable. But what you must not do is sit on your hands and hope. So that's often, it's often that the company that's not doing well, it's not that they're doing the wrong thing.

They're not doing anything. And they keep trying to do the wrong thing and hope that, as Einstein said, that it'll leave to a different outcome. You guys have incubated some of the top brands in the world, what I would call the Venture Studio model. and sometimes you come with ideas, sometimes entrepreneurs come with ideas to you. There's this purest view of entrepreneurship

that if it's not something that's burning within the entrepreneur's heart, then they don't have what it takes to get it to completion. How do you balance that purest view with this very procedural view of just connecting the talent with opportunity? Well, it's actually, it's much more exciting and catalytic than a procedural process.

If I look at, if I look at Peter and Port who are running stream in the UK. I look at Justin Bersini, who's running Clearscore in the UK. As examples, I look at now Brandon Black, who's running Mission Lane in the US. I mean, they are full of passion and energy about building these businesses. Were we part of putting them together and laying out the opportunity? Yes. Do they entirely own it?

Absolutely. Do they see me or QED as a co-founder sometimes? Do I act like a co-founder sometimes? Yes. Am I emotionally connected to these companies? Yeah. But that's what makes it, if you don't emotionally care about these businesses,

you're not going to work your tail off to try to get them to be successful. There is a thin line there, unless I'm just completely off. There's a thin line between heralding the resources and being a thought partner and being a partner. What have you learned from those processes of how do you make sure that your co-founders are motivated?

Well, I think you dangle the idea, David. Here's an idea. We think it can work. We've seen it work over here. Here's how we might structure it. Is this exciting to you? And then you look for people to respond. You look for some kind of dynamic.

You look for a spark to say, absolutely, that could be brilliant. And then you want them to run with it. Then you want them to own it and take it. You were partly catalytic, but they're the owners of it every day. They're the ones who wake up every morning and drive it. You can spot mercenary mindset a mile off. You know, I think that's one thing that we have learned how to do, both as entrepreneurs and as the supporters of entrepreneurs.

We understand what it takes to be an entrepreneur and what it takes to build these companies out of the ground. And going back to your term earlier, you know, the madness of that and supporting the madness of it and making sure that, and looking after the people that are in that state of madness. You know, I do worry about, I worry about the mental health of our CEOs often as they go through this incredibly unstructured and almost violent fragility of building things out of the ground. It's really, you know, I'm often saying, are you sleeping okay? Because what you're going through is really hard.

And they feel such loyalty and responsibility to their teams, but they often don't know where the next dollar is coming from. And I'm really fearful that it could brown out. So this is a high wire act for a lot of entrepreneurs and understanding that the psychology of the entrepreneur, I think is really important. I have a bit of a paradoxical thesis on mental health and entrepreneurship, and one of my two masters is in psychology. And I actually don't think that entrepreneurs

and many of them go through depression, these ups and downs. I don't think necessarily that they're predisposed to depression or anxiety and all these things. I think the process itself instills this kind of, of depression in them. It's actually the opposite is a lot of them are overly optimistic and more optimistic and AKA less depressed than the average person, but anybody that goes through this gauntlet that is known as entrepreneurship that goes through years of uncertainty and failure and doubt, I think that could turn anybody into having mental health problems.

It sounds a bit like what did Seligman call it, learn helplessness, I think, if I remember my psychology. No, my instinct is that entrepreneurs are predisposed wanting to live in a state are capable of living in a state of ambiguity and unstructured environments. They're drawn to that. I think that that same moth to flame phenomenon that of being unstructured means that they can live with not knowing exactly what's going to happen and when, not draw your line under every topic. But I think the process then reinforces it, like you're saying,

and I think can lead because of who they are and where they are, often geographically and who they're mixing with and how they have financial resources, it can lead to them being drawn to behaviors that I think can be really destructive, such as drugs and alcohol and not sleeping and not looking after their families. They're essentially compensating for the chaos in their life. That's interesting. Is it? Yeah, perhaps it is.

But they're looking to, I don't know, it's almost they're looking to, immunize themselves from the chaos that's around that one. And often, you know, drugs and alcohol and other behaviors can be part of that. So I do worry about that sometimes. I think there's a predisposition toward those behaviors that exist in our entrepreneurs. Thankfully, I've never dealt with drugs, alcohol, all those things. But I do have this predisposition for unstructured. And I remember in the beginning of my career, I've only had a real job for three months

of my career. I was at Jeffries. And it was so obvious for me that it was not the right culture fit. Obviously, I love Jeffries. I love partnering with them. but I was just not a banker in my DNA. And I left. I've never thought twice about it.

At the time, people thought I was crazy. Probably people still think I'm crazy to. But to me, it was an obvious choice. I've never looked back. And I often think about why it was so easy for me, where for everybody else. And I think I just crave that unstructure and that growth so much more than the stability or the paycheck, that to me is obvious. The judgment around can this entrepreneur build something?

Does she have the passion and the energy to go the whole way? The reciprocal of the 90 minutes is that, you know, if this person gets a 10 million buyout at the A stage, is you going to take it when there's an opportunity to build something that could be generational? That's, that's, you're looking at the pathology that is underpinning the, the entrepreneur, and you want to see enough of it that the person is going to have the tenacity and the, the, the patients, the energy to keep the idea going to the point where it can be a, generational or meaningful company. And we've learned not to be more discerning about that. Just because you have the energy today, it doesn't mean that you're going to want to change the world per se. You might just want to get enough estate velocity

that you can get a few money. And that's a conversation that I often have. How important is this to you? Is this really burning inside of you? Do you need to build this? Do you need it to be absolutely fantastic for you to be at peace? Or are you going to veer off when and if there's a little bit of money dangled in front of you? And we've seen both.

So that's a test. If we commit to the 90 minutes, we really want to the extent possible to have the entrepreneurs to commit. There's another point I wanted to make a bit around this. And that is, I really, really love, and maybe it's because of my background with Rich Fairbank, who I had immense respect for Capital One Days, and I learned so much from and with him. And then with Karibu Honeig and Frank Rotman in the early QED days. is that I think two or three people that know each other, that trust each other, that will reinforce each other and complement each other, going through this period of unstructured and chaos is often really very powerful. So the idea of somebody who's more visionary, more extroverted, more fundraising, more vision, maybe more strategic, and there's somebody's more operational, more technology oriented, more buttoned up.

And I think that combination, two plus two equal five. So I like that when I see that gives me confidence. They have to know each other, April or I, and they have to trust each other, and they have to have the equivalence of kind of memorandums of understanding of how they're going to work together. And that's something I do a lot with them, where you have, you know,

that's often that partnership is still forming at the early stage, but when a company gets to B stage or C, and the founders start to be put on pedestals and people start talking about unicorn status, often that can lead to the relationship starting to change shape between the founders. I spend quite a bit of time with them thinking about how to work through that together so that they can continue to be creative to each other

and at the same time drive the performance of the company. Unicorn status, why could that create a riff between co-founders? Yeah, because what happened? Well, first of all, the company gets much bigger, and then the company can start to schism, so you have David's guys and Nigel's guys. People who work with David, the people with that, and then do what I call the mummy daddy thing,

where somebody comes to you and says, David, can you believe what Nigel's doing? Or somebody comes to me and says, you know, David's out of it. What's he thinking? So people try to build their own power by creating separation and schisms within an organization. And you see that starting to happen. So how do the two founders in this scenario, how do they create a common purpose and a common front? And behind closed doors, they can go at it hammer and tongs and they should.

And they should reverse positions and they should really examine everything. But when they're in the public square, they need to be together and they need to be really presenting as one. So, yes, at the parties, the company gets bigger, but partly because money in your pocket and a little bit of fame can change people. And I think that people start to get a bit too big for their britches. And they start to believe that they are omnipotent and that they start to be incredibly braggy and start to talk about numbers that are completely unrealistic because they've been

successful hitherto. You know, they draw that regression lines through the first two or three years and all of a sudden they're talking about being a hundred billion dollar company. There's a certain role I think we can, as a venture capitalist, we can play in terms of encouraging people to do more, but also be realistic. Nine out of ten of the people that I work with, David,

I don't have to kick them up the backside and say, you've got to do more. Very seldom. And mostly it's, you're trying to do too much. You're trying to do seven things. You need to do two or three of them really well. You've got to prioritize. these two or three you're going to do in the next 30 days.

Then you can look at the 90 days. Then you can look at the years. Then you can look at things you will put on the top of the list that you'll never do. But you've got to compartmentalize those because there's too many things to do. There's always too many things to do. The conversation is much more that at a strategic level than it is, we need you to grow more. You need to be more adventurous. Double and triple underline what you said about this thought experiment about whether the entrepreneur

will take that $10 million buyout. And a lot of people would think, well, why does that matter? The thing with venture capital is it's entirely driven by power laws. So another way, it's driven by the $10, $100 billion outcome. And any $10 and $100 billion company at some point will get that billion dollar offer. I remember early in my career in 2010, two years into my career, I got to meet Roger McNamee of Elevation in his office in Sandhill Road. And he sat me down and he said, this is the table that I sat down with Mark Zuckerberg when he got the billion dollar offer. and I persuaded him not to take the offer.

This is his side of the story. And I just thought about at the time, a billion dollars, minimal revenue, it had to be absolutely crazy. In fact, so much so that his entire team around him, Mark's team, basically everybody around him was pushing for him to take the offer. He ended up getting rid of a lot of those people

because he needed, to your point, missionaries, not mercenaries. But this hypothetical $1 billion offer is oftentimes not so as hypothetical as the company scales. and it goes back to if you do take your $10 billion outcome and cut it out to knees at the $1 billion outcome as a fund, that might be the difference between a 7x fund and a 2x fund very quickly. That's the mathematics of it.

It is a power law game, and the majority of the investments that you make are going to disappoint. That's just the arithmetic of this. And putting petrol on the fire of the ones that are winning and giving them more oxygen in terms of resource and in terms of capital is what you have to do. This is a real theme here, David, I think is often missed. VC, I've learned, is not stock picking.

It's not, here's team, here's Tam, looks like a good idea. David, here's some money. Here's a million dollars. Will you just bring me back $10 million, will you, please? It just does not work that way. And if it was that, I'm out because I really believe that we can bend the odds. I really love the process of helping navigate and grow companies through the, these evolutionary stages. And I love that it's really complicated and difficult, and most people

can't pull it off, which makes the challenge all the most more interesting. But this is not stock picking. This is hands-on day-to-day combat in helping people navigate. And there be the rapport that you have to build and the trust you have to build with the management team. And that's built over time, and it's built on, based on experience, and it's based on integrity. I call it the Ghostbusters effect. And it's like, you know, I get emails every morning. Nigel, I just beat my quarterly numbers. I said I was going to do X and I did 1.1X.

Isn't that fantastic? And I write a little note back doing, well done, well done, isn't that great? But when a founder is out of fork in the road and they can go left or right and they're not sure what to do, often driven by some kind of exogenous input, an offer to buy out the company, maybe, a sexual harassment case that's. where the CFO has got is in a pickle. Cyber problem, a meltdown of some kind, a regulator who's just turned up that morning

and is threatening to shut them down. Who do you call? Who's your first call? And certainly, I have that relationship in a number of really special places. And it's really important to me that that founder will give me a call and say, look, Nigel, what do you think I should do?

How should I think about this? And I think that's the difference between a deep experience bench and have been in this for a number of times and probably have faced that problem in the past and have some way of framing up that heuristic. You said something extremely interesting earlier, which is you know how to tell the difference between a mercenary and a missionary early on and you've built this competency over your career. How exactly do you know? You just know.

You can look at the background of people. Okay. So I remember in the UK. So we would recruit these bright young things to be analysts at Capital One. This was a strategic fulcrum of bringing together credit risk and analytics and the origination and management of customers. And, you know, in the Capital One days, many of them were people who were, in terms of number of laps around the track, were far junior than their counterparts at banks.

We had people in their middle 20s making hundreds of millions of dollar decisions because they were just so brilliant and competent. And, you know, we were joking the other day, the other day with somebody who ran this gauntlet. They went through 16 case interviews at Capital One to get a job. And to this day, I was in Mumbai last week and Singapore last week, Capital One diaspora people come up to me and say, you know, that was the great experience, the greatest experience of my life, I learned so much. I was around people who were just amazing people.

And, you know, the talent is so critical to any equation, getting the right people, positive selection, people, managing the culture, managing the ecosystem. That is so important to get companies to be able to scale. But while that's all good, you're really looking for people who have that talent, have that kind of conceptual capability. But you're looking for an X factor. You're looking for people who are going to be relentless.

And when we would recruit out of the top schools in the UK, so you've got two people. They both go through the case interviews. One of them went to a local public school using American terms and got their way into an OK university, but did brilliantly well. You've got another one who went to Eton or Harrow and then went to Oxbridge and did equally well. You put those two people in an interview process and the Harrow person will look better, will have more gravitas, be more articulate, be more presentable. The working class kid's going to be more disheveled. is going to be rougher.

Initially in their careers, the Harrow Boy will be better. He's just got more EQ, he's figured stuff out, he knows how to make connections, until there's a problem. Until he faces a mistake, until he faces failure.

The working class kid, he's failed all his life. The odds were always against him. He clawed his way to have the opportunity to be there. When it goes wrong, he dusts himself off, and he goes at it again.

You don't have to hold him. have to hold him in place. He doesn't need that safety net. So I just use that as a vignette of how you look for people who have faced failure or understand what failure looks like and then I knows how to power through it. And people who have led charmed lives who went to all, who went to you know, Exeter and over Taft and they got 1,600 on their SATs. And then they went and, you know, they went to Goldman Sachs for two years and there were superstars. And then they went to HBO. I mean, you know that pattern. Those people don't, they'd never look, they've led a charm like they'd never had to fail. Elizabeth Day does a podcast called How to Fail. She's actually

the wife of Justin Bucini who runs a clear score. And it's very interesting to have her unpack people, talk about what their failures have been, what they learned from their failures. But failing is really important. And somebody who turns up who's never failed is a, it can be a liability. Speaking of posh schools, you went to London Business School in 1985, one of the greatest schools in the world. If you could go back to 1985 as you were graduating London Business School, and you could give yourself one piece of timeless wisdom or advice for the rest of your career.

What would that one piece of timeless wisdom be? I went back last Christmas. I sat down and I wrote down the 10 people in my life that had palpably changed the direction of what I, the decisions I made and the blessings that I've had. And one of them was actually a professor at London Business School. And I went back on this, David. I encourage everybody's listening to this to think about whether or not this would be appropriate for them. And I realized that four of the ten aren't with us anymore.

And I regretted that I never sat down with those four and said, you know what, you may not even know who I am, but you were so pivotal and important and catalytic for me. and I owe you so much. And I'm going to the children of those people now and telling them what their mom or dad meant to me. And I think that's so important. You know, in the big circle of life,

I don't know how many people have made a difference in your life, but it's probably you can count them on two hands and making sure that you invest back in them and tell them how important they were because you may be important in other people's lives and reinforcing this process is really important. And so that was special to me. So this is going to sound really, really trite that in the end, the only comparative advantage,

the only comparative advantage is culture and people and how durable that is. And apart from a little bit of organizational behavior, we didn't learn that at business school. We learned capital asset pricing model and we learned, you know, Mogliaria Miller or whatever it was called. But you know what? With each passing year, I sort of, I feel like I realize how little I know and how every comes back to human beings leading and challenging and growing other human beings. If you hire the right people, they will build the monastery for you. And if you don't have the right people, all the structures, all the processes, all the strategy is meaningless.

Right. And let people self-select into the culture you have. Tell them what it's like. Tell them what it is. Show them what's under the cover. So you don't make errors. You mentioned Seligman earlier and he popularized this smile curve, which is as people, when people are young, happier when they're older. Have you become more happier as a person over your career and over your life? I'm not sure. I should. I know the smile curve. How do I think about it? I'm more at peace with myself of who I am and what I care about. And when I do conversations like this and I listen and I listen to myself talking about the opportunities I've had, I feel incredibly lucky and blessed and a little and an imposter at the same time.

I really, the imposter syndrome in me is not going away and it hasn't gone away. What am I happy? I'm happy because of my four children, which I adore, and I'm happy when I'm with my grandchildren, the five of them, that they were not around, you know, in past years, and they make me happy. They give me purpose. They give me raison d'etre.

Empirically, I should be happier, but I'm not sure if I really am in total. It's that trade-off between happiness, that productivity and wanting to change. I know you have this vision of changing a billion people through technology. That is people hate to realize that there's a friction, but there's a friction between total satisfaction, total happiness, and achievement.

Yeah, and I keep thinking to myself when I get, when and if I get to that billion, I'll be happy. But, you know, and I say this to my series. Are you still at 700 million? Have you made progress? Yeah, about seven. I need Nigeria, India, Pakistan. I need Indonesia.

I need these big, big populations to ignite. I throw that gormlet down. I was in India last week. I threw that gormlet down to a bunch of entrepreneurs. I said, you know, we've got to build something of ginormous magnitude to get me to my billion. So I want to happier.

Yeah, look, I'm more content than I, and more at peace that I didn't squander the years that I have. And I can point to things that were meaningful to me and important to me, and relationships that were really important to me. But very few of the people that I was really close to at Capital One are not still close to. And that, you know, people have cycled through QED. Very few of them, I'm not still close to. I always believe to measure a man or a woman by the longevity of their relationships.

If their best friend is somebody they met three weeks ago, watch out. and I've really loved the process of getting older and building things alongside people who've come on the journey with me. Going through the journey and dealing with the in that cauldron and the ups and downs of it builds a level of intimacy and rapport that is very special. Yeah. So I tend to collect people on the journey with me

and I'm very, very proud and happy about that. Speaking about one of these people, Alex Edelson, who's been on my podcast several times, is a huge fan of yours. Always sings your praises. So that's the reason why we connected and we jumped on this podcast. It all goes full circle.

Thank you, Nigel, so much. You're a legend. Thanks so much for taking a time to share your wisdom. Some of the most probing and interesting questions that I've ever had, David. Thank you very much for taking the time.