Founders & Funders Friday 🚀
#2: Jannick Malling co-founder and co-CEO of Public
Happy Friday! 🙋♂️
Welcome back to Founders & Funders - a new series from The Fintech Ledger!
In this bi-weekly edition I interview Founders - to get insight into their building journey, and Funders, to get a sense of where fintech and web3 markets are moving. The main edition of TFL will continue to be published weekly on Sunday.
I love talking to people and hearing their unique stories. I hope you do too!
Without further ado, let’s get to it.
For today’s F&Fs Friday I had the privilege of speaking to Jannick Malling, the co-founder and co-CEO of Public, the investing platform that allows people to invest in stocks, ETFs, treasuries, crypto, art, collectibles, and more – all in one place.
The Danish entrepreneur has a natural drive for making a difference. At the age of 17, he joined Saxo Bank. Two years later, he helped build the fintech company CFH Group, which was eventually sold to Playtech (LON: PTEC) for more than DKK 800 million. As part of CFH Group he also launched the spin-off company Tradable, the world’s first open API trading platform.
In 2018, he founded Public, which has gone on to raise over $300 million from investors such as Accel, Lakestar, Tiger Global, Will Smith (Dreamers VC), other prolific investors like Maria Sharapova, Tony Hawk in addition to NFL stars J.J. Watt, Bobby Wagner, and more.
Public is on a mission to make the public markets work for all people. The fintech went from founding to unicorn in less than 3 years, and has been one of the fastest growing financial services apps in America, boasting more than 3 million members since its 2019 launch.
2023 will be a defining year, as this is the year Public has ventured beyond stocks and crypto investing into other asset-classes such as alternatives and fixed income products, and has taken the first steps in its international expansion.
This was a fun conversation.
Let’s get to it.
Ryan: Jannick, thanks again for taking the time to speak today. I've been following Public for a while and I'm super interested in learning more about the company and your journey.
Jannick: Thanks for having me.
Ryan: So you started Public in 2019. Can you give a brief overview for the uninitiated who might not be familiar?
Jannick: Yeah, of course. Public is an investing platform where you can invest in equities, treasuries, crypto and even alternative assets - all in one place. We also do a lot of work to give people as much context around the markets as possible, which means there's an embedded community where you can see what other people are investing in and why. We've got live shows that run multiple times a day reacting to breaking news in the markets, so it's a sort of a high context experience. When we started in 2019, we were focused exclusively on the equity space. Back then, we were the first to do real time fractional equities trading and from there, we built out the business one asset class at the time.
Ryan: On that point, Public has a reputation for shipping products and features at an incredible clip. In the last couple of years, you've added NFT tokens, art, real estate, cryptocurrencies and more. As an entrepreneur, how do you view the importance of speed in delivering new products to the ultimate success of the business?
Jannick: I think it's highly correlated. When you're running a startup, you're an underdog by definition and the one thing that you can probably do better than anyone else is over index on speed - without sacrificing the quality of experience of course. And so that's something that I think we have become fortunate to be sort of known for - having very high product shipping velocity. And I think it's something we were very thoughtful about embedding into the culture from day one. Because, like I said, I think it's ultimately a competitive advantage. Moreover, it executes in a few ways. There's the high level kind of roadmap, which is all the big product announcements that get media attention and PR, the things like new asset classes. But then there's also the low level of improving day to day. So pick a metric, and improve it 1,2,3,4,5% - week over week - and let those sort of improvements compound. Compounding works in product in the same way it does in investing. In our business, I think you need to do both at a very high speed without sacrificing quality in order to build a sort of prime option for people to invest with.
Ryan: Good point. In this case, good business strategy relies on the same concept of what makes for good investing. I’d like to go back a little bit, before your Public experience. Previously, you co- founded Tradable, an API platform that allowed developers to build financial apps and connect to brokerages all over the world. You were also a founding member and the Head of Product at CFH group, a capital markets holding company (that later incubated Tradeable). How did those experiences prepare you for your current role?
“Nobody cares.”
Jannick’s first and best mentor, his mother
Jannick: I think they taught me something different. So at CFH I was Head of Product, and that was my first time really being part of building something from the ground up. And then when we built Tradable from the ground up again, on a foundation of the previous company, we were doing good amounts of revenue and were in a healthier place. And so, you know, all those lessons that you get in those early days of just how you need a crazy level of drive, like literally nothing is handed to you. My mom, my first and best mentor, used to have this great slogan “nobody cares,” which is so true. Today, Public is a little more known. But in the early days, if we took a position or made a decision, nobody cared. And so it's a little bit more you need to be willing to just take a crazy amount of shots on goal, knowing that you're gonna have a really bad rate of efficiency in the early days. And I think that requires a level of resilience that you learn as you go through the experience.
Ryan: So, no one cares and no one is going to give you anything. A truism for sure. Now, you've talked a lot about how these earlier experiences shaped you for your current role. That said, there's nothing like being a first time CEO. Was there anything that surprised you about the position?
Jannick: The thing that I really have going for me at Public is that I have an equal co-founder and co-CEO Leif Abraham. So the first time around in that CEO role you’re sort of stuck between the board and the rest of the C level suite. And that gets very, very lonely and I think it's been a completely different, much better experience having Leif there. So when you debate decisions with somebody else, and you have a sounding board, someone you can talk to about anything, you tend to really weed out a lot of those shots on goal that we're not going to go in, which means your efficiency goes up to the right. That's how you can think about it. And that definitely was and is the case for us. We were both sort of second time founders at the time, which is important, but not in the way most people think. I think about the second time founder stuff it's less about, you did something that worked and now you have the blueprint. It’s about what not to do. There's a bunch of landmines that you're just not going to walk right into, in everything from legal to product to raising money - the fact that we have two of those sets of experiences, I think it's a huge component.
Ryan: That’s a really interesting point that I had not considered. You share the CEO duties with your co-founder, a model that we're seeing much more of these days, and how important that setup is to be able to kind of touch things, bounce things off of each other. Can you expand a little bit about what your specific responsibilities and skill sets are that you focus on versus versus Leif and more about why this arrangement works for the two of you?
Jannick: Yeah, absolutely. We actually took a fairly simple approach. I focus on product and design. I've always been a designer, so that sort of came natural to me and Leif focuses on marketing, branding, and growth, where he has a long standing track record, winning awards for his work (Leif is a former “Top 10 Minds in Digital” by Adweek). So we had these two distinct sets of responsibilities from the start. And then, we have this one set of responsibilities which we do together, call it the “CEO stuff.” That’s literally what we had on the whiteboard. And that's investor relations. And it's PR and recruiting, and it's the things that you always hear are the most important for a CEO to do. Now, here's what I think is the big difference if you're one versus two. If you're just a singular CEO, you will very quickly get to the point where the CEO stuff takes up 150% of your time, which means that you become pretty detached from product and growth very early on. So you are forced to make a bunch of C level hires, but C-level hires are the hardest to do right, and many of them actually don't work out. So it's a huge risk component for the business and I don't think people talk enough about this. You can use recruiters, you can do all the vetting but it’s still at best a 50-50 success rate. With C-level, you’re naturally inclined to give them more time, because you want to give them a long leash to be successful but sometimes are forced to pull the plug. So, the distinct advantage of being co-CEOs is we can delay hiring our next C level hires for longer. Like before our C round, it was basically just us two co- CEOs, CTO, and CIO. And that was also very important for the culture because it means everybody was just like a doer up until that point, and when we brought in the C-level hires we over-indexed on people who were also doers. To this day, we don't have a chief product officer. We don't have a chief marketing officer, because we live in it and continue to spend time deeply integrated in those functions, while still being able to cover the CEO duties.
Ryan: I've seen a lot of companies hire the C- level too early and have it backfire on them, especially in the early stages. I think every company is different, but it seems like you took a thoughtful approach here and it’s helped foster that culture of ownership.
Jannick: That’s right. There is another piece, which is the most important thing I actually think that a CEO can do in the early days is not the press and the investor relations stuff. It's what I would call product growth. And product growth is like the joint function of what Leif and I do, so we would still spend a lot of time together in meetings several times a day if we just focus on product growth. Because we have this thesis that product market fit (PMF) is one thing, but channel product market fit or go to market product market fit is really what actually matters.
Ryan: As someone who specializes in BD and scaling, I couldn’t agree more. I want to come back to a topic you brought up earlier, which is the social aspect of the platform and the work that Public is doing on financial literacy. So this ability to follow not only your friends, but also domain experts, I think makes it much more approachable and fun which in turn will bring a lot more people into the community. Community is a very important component to any learning path, whether it be investing or entrepreneurship. So, for you, what have been some of the community aspects you’ve drawn on to learn, whether it be books, mentors, other entrepreneurs, philosophers, what have you?
Jannick: Yes, good question. I think it’s interesting, first of all, how you break down learning. One thing is reading a book - and there are several that have been impactful to me- like Zero to One (by Peter Thiel) or The Hard Thing About Hard Things (by Ben Horowitz). But at the same time, they're all the same books that everybody else reads. And so that's just like the first mile. To get the full force of the book, you need to sit there and analyze it, discuss it with other people, right? That's why book clubs exist. As for business mentors, in my previous company, there was a guy named Henrik Werdelin, who is both a business and life mentor. He’s the one who brought Leif and I together. He's the founder of BarkBox and has a venture development firm in New York called Prehype, a real early New York tech scene kind of guy. He’s been a huge thought partner and mentor to me and Leif, in every sense of the world. I think it's hugely important to have both mentors, who can kind of give advice, and then have a peer-set where you can just sit and talk about stuff and figure stuff out together. I think both of those dynamics are incredibly important when it comes to learning anything.
I remember back 10-15 years ago, Henrik ran this out of an office in Chinatown (NY), and ultimately what came out of there was not just Public, but Ro, the men's health care company. Saman (Saman Rahmanian - CPO) and Z (Zachariah Reitano - CEO) are part of that group. So they're friends of ours, managed by BarkBox obviously, and so it's always been like a good community there for us.
HENRIK WERDELIN IS AN ENTREPRENEUR AND AUTHOR BEST KNOWN FOR CO-FOUNDING BARK / BARKBOX (NYSE Listed $BARK), - AS WELL AS STARTING PREHYPE, A VENTURE BUILDING RESEARCH AND DEVELOPMENT GROUP HEADQUARTERED IN NEW YORK.
Ryan: Coming back to a topic you touched on at the outset, which was your decision to effectively stop the controversial practice of payment for order flow. Can you maybe run through with me your thinking on that decision and how you think it's played out for you?
Jannick: Yeah, absolutely. So since our very first pitch deck, we sort of had an a note on the business model slide that said, “we're not huge fans of payment for order flow,” but it just comes built in by default, especially if you're in the zero commission space. It was illegal in the UK where my old company was based. I think it's illegal in Canada and Australia as well. But it was almost a necessary evil when we launched, and we kind of punted on the decision to think more about how we replaced that because we were more focused on product and growth and product market fit at the time. Then, seeming overnight, it just came to the forefront. The literacy around this topic exploded. And so we decided that that would be the moment where we would take a public position, no pun intended, and we abandoned that mechanism. At the same time, we had played around with this idea of tipping, because we had a lot of people in the community who were sharing investments, wins or losses, and we're sort of indicating that they'd actually be happy to pay to support fair and transparent markets, to know that their their orders are basically going directly to an exchange and not to some dark pool. Looking back at it now, it was an important decision for us. For one, we're able to align our incentives with our customers in a way that just nobody else in the space really can. Because we're not incentivized to help you trade as much as possible, which is where you’re led in the payment for order flow business. And then secondly, it ended up modeling our business in a totally different way. We derive much more revenue from streams that are less impacted by market volatility, which is something that I think a lot of players in the space have struggled with, having revenue models that are very, very dependent on volatility, where Public is a little bit more recurring in nature and more stable. As we look back, it actually helped us a lot to just point our compass in a different direction.
Ryan: It's definitely a bold move and appears to have been the right one. Coming back to today, we're obviously in a different environment with interest rates being much different than they were just over a year ago. Public has raised a little over $300 million to date. With your most recent D round coming in 2021, which was a very different fundraising environment. How do you think the current environment has changed your business and fundraising strategy? Or the types of products that you're thinking about bringing to market?
Jannick: Product wise, it’s definitely played a piece in launching the treasuries business because, you know, fixed income had been in a dark decade and was seen as pretty attractive with low rates. When we started to see rates rise, we saw the opportunity and a lot of retail investors sort of opened their eyes to the space. Not just single stocks anymore, and it kind of elevates the community to have more of a macro point of view and debate, which has been super helpful and healthy for the community as well. As far as our fundraising ability, we were fortunate to raise when we did. I think we actually raised four times in two and a half years, with our last round being in March 2021. So we raised a lot of money upfront so that we could have a long period where we didn't have to raise and we could just focus on building out the business. It's really hard for anybody ever to just go, you know, from zero to 100 in revenues, but you can over time. And that’s what we’re doing, with a diversified business model that is less volatile, and less unless subject to implied volatility in the markets. And this keeps sort of going. Compounding in the right direction.
Ryan: You recently announced Alpha, a project to enhance the investing experience with artificial intelligence powered by Open AI is Chat GPT-4. Your investors can start a conversation with Alpha’s research assistant to access real time and historical information on thousands stocks, ETFs, crypto and more. I know it's super early but obviously something that has gained quite a bit of interest. Anything that you can share early learnings on this product and how you think it might evolve?
Jannick: First off - conversation, debate and discussion has always been core to how we think about learning at Public - that’s why we build out the social community. I think at the time we thought this would be people interacting with other people, but we’ve since revisited that assumption and see that AI has an important place for that research component, which is how we came to the realization that this should be a research assistant built into the product. It is quite early and the learnings week over week are many. That said, the thing that I am most excited about long term is not just the singular benefit as a research tool but the role that it can play in a social setting as well. The potential there is pretty limitless.
Ryan: Agreed. Sort of a self driving money sidekick. Jannick, thanks again for taking the time to speak with me today. Any last thoughts you want to share before we wrap it up?
Jannick: Likewise thank you. I had fun. We’re excited about some new projects we’re working on across new asset classes, AI enhancements and even new markets - so make sure you head to public.com to follow us and stay up to date.
More here: https://public.com
Alas all good things must come to an end. If you enjoyed Founders & Funders Friday, please hit “like” button, or leave a comment below.
Psst: I’d love to hear from you. The best place to find me is on Twitter or LinkedIn!
Don’t forget - if you enjoyed this newsletter please share it with a friend (or two!)- remember, sharing is caring!
Disclaimers: All content and views expressed here are the author’s and guests personal opinions and do not reflect the views of any of their employers or employees. The author does not guarantee the accuracy or completeness of the information provided on this page. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on this Site constitutes a solicitation, recommendation, endorsement, or offer by TFL or any third-party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.