Benedetta Arese Lucini (00:00:00):
We got in contact with a Corporate VC of a big Italian bank who decided to invest. It took very long. I think between the time we decided we got the term sheet and the time we got the money, it was like six to nine months, something crazy. And actually people ask me all the time, why do you start a company again? And I'm like, I don't know, but I feel like I can do it. I feel like I have that positive thinking where actually all the things that went wrong will teach me to get it right. It would go well. We actually tried to really split decision-making and manage the company in the different areas, which actually helped with the growth, but when things get hard, you need one decision-maker. I believe this really strongly. So I still believe the 50/50 rule that a lot of VCs try to push is not the best because I really do think that no matter what the decision is, there has to be somebody deciding when things get bad. Italian taxi drivers were pretty tough. I went through different tough times. We had, like, security. It was like a movie, but it was a bit crazy.

Previous guests (00:01:21):
That's product market fit. Product market fit. Product Market Fit. I called it the product market fit question. Product Market Fit. Product market fit, product market fit, product market fit. I mean, the name of the show is product market fit.

Pablo Strugo (00:01:33):
Do you think the product market fit show has product market fit? Because if you do, then there's something you just have to do. You have to take out your phone, you have to leave the show five stars. It lets us reach more founders and it lets us get better guests. Thank you. Well, Benedetta, excited to have you here on the show.

Benedetta Arese Lucini (00:01:48):
Thank you Pablo. Great to have you to be here because I follow your show all the time.

Pablo Strugo (00:01:54):
That's great to hear and you respond, I mean, the reason you came on, I mean, I posted about this, I've done quite a few now like failed founder journeys, right? Like people who like me frankly started a startup, got some amount of traction, but ultimately it didn't work out. And you reached out and I mean, your story is pretty incredible. Like you got you had a kind of a saving and investment app, that you grew to like half a million users, half a million revenue, $10 million raised and still, you know, things didn't work out. So I'm curious to find out all the ins and outs of that and what really happened. Maybe just for starters like take give some context like when did you start what was the business and when did you start it, with who, just all that stuff so we have some idea of what what's going on here.

Benedetta Arese Lucini (00:02:35):
Sure, so I actually started my career the traditional way. So in the big banks and then moved to startups, when I joined Uber. It was a startup, it was like a series A company. It was one of the first companies.

Pablo Strugo (00:02:49):
What year is this?

Benedetta Arese Lucini (00:02:50):
2012 I joined.

Pablo Strugo (00:02:55):
Wow.

Benedetta Arese Lucini (00:02:55):
Beginning 2013. So they had only 10 cities in the world when I joined. And so, it was a real startup and I saw the growth and I spent there over three years and managed. Got to the point where I was co-managing Europe. And.

Pablo Strugo (00:03:12):
Did you start in the Bay Area or were you already in Europe when you started with Uber?

Benedetta Arese Lucini (00:03:15):
I was actually recruited to launch Milan, which was one of the first cities in Europe after Paris and London because they're the like fashion cities. So in the beginning it was all like about the, you know, higher end, luxury driver, so that kind of industry worked very well. And it was an incredible experience. It really you know, you really saw what it meant to bring a company from a very early on to sort of then have like processes in place and hiring people from the beginning where you have no processes and you just have to find ways to do things. And then when you're like hiring people and creating teams and you have to find ways to...

Pablo Strugo (00:03:58):
And you were the GM at first. Like GM in Milan, was that the role?

Benedetta Arese Lucini (00:04:01):
Milan, and then I became a regional general manager for Europe. So I did Milan and then Italy and then I got a few other countries along the way.

Pablo Strugo (00:04:10):
How do you? Why do you leave by the way? I'm always curious when you're in that kind of a rocket ship. What makes you not, just kind of stay there for as long as possible?

Benedetta Arese Lucini (00:04:18):
Because companies change and I think the role changes a lot. And I think also in founder world, very few founders are able to move between being a great founder at Seed and a great founder at Series B and C. And maybe this is also sometimes why companies fail. And this is given. It's the conversation, but even in Uber, you know, when I love. When it's like you're building things, you're fixing things, you're like taking down fires. And when it's more about like one to ones and managing people and creating processes, it's less of like what I like to do. And so, I think I wasn't the right person anymore. We went from being like five in Europe to when I left, we were a thousand.

Pablo Strugo (00:05:04):
Wow.

Benedetta Arese Lucini (00:05:05):
So it's a really different company.

Pablo Strugo (00:05:06):
That's crazy.

Benedetta Arese Lucini (00:05:07):
Yeah. So yeah, and I think now when it's a public company, it's even a different job again. So.

Pablo Strugo (00:05:13):
And did you leave Uber to start this company?

Benedetta Arese Lucini (00:05:16):
Yeah, well, actually I left and then I was like, sort of, I need a break. I didn’t know what I wanted to do. It was intense. Like, there’s a lot of stories. It’s actually — some of the stories of Italy are in the book about Uber, you know, Super Pumped — and Italian taxi drivers were pretty tough. (context: Super Pumped is a book by Mike Isaac about the rise of Uber, including its controversial global expansion.) So like, I went through different tough times. We had like security. It was like a movie, but it was a bit crazy. So then I was like, okay, I need a break. I thought I would be a VC, so I kind of put my foot and toe in there. And then I realized I wasn’t ready to do the investment. I really wanted to start my own company. And that’s when I started thinking about what I wanted to do. I have a background in finance, I’ve always loved regulated industries — that’s why I really liked Uber as well. And so I decided to start a fintech, and I was approached by my other co-founders to start together.

Pablo Strugo (00:06:21):
How did you know them?

Benedetta Arese Lucini (00:06:22):
We just knew each other from like, you know, startup communities. The US is different, but like Italy is such a small startup community that if you're in startups, you pretty know everybody in startups. We're still like a very small crowd. It's still a job that like your parents think you're unemployed when you say you're a startup founder.

Pablo Strugo (00:06:47):
And what year is this?

Benedetta Arese Lucini (00:06:48):
This is 2015/2016.

Pablo Strugo (00:06:51):
Did they come to you with like an idea like, Hey, do you want to come with us and build this or is just like they're starting to play around trying to figure out what to build and driving you to figure it out with them sort of thing?

Benedetta Arese Lucini (00:07:00):
Yeah, so I was already exploring things in finance and Fintech. I really thought it was a place that it was going to start to grow a lot, especially with the, you know, starting advent of apps. The idea was always to find things where you could democratize an industry that is really hard for people to understand. I've always found finance really easy, so for me it was really exciting to be able to talk about stuff that people generally find complicated, right? When you talk about, like I read a statistic that people don't understand percentages, you know, so like.

Pablo Strugo (00:07:36):
That's surprising. What percent of people?

Benedetta Arese Lucini (00:07:39):
I don't know. There's like, and then something like 30% of Italians have really basic knowledge of like finance. And so they get sold really bad products or they get all into these like saving accounts, which, you know, at the time are very low interest rates. So it's not a great way, to invest your money. So I was like, why don't I find something around this world? And that's how we came to think about the problem. We saw a little bit what was happening in the US, which is generally a faster market for many technologies and yeah, and so we thought let's try and do something around wealth, wealth management in a bit of a different way.

Pablo Strugo (00:08:28):
How many co-founders were you?

Benedetta Arese Lucini (00:08:29):
We were four, which, so we started as three. one person was a product designer, one person was more on the like marketing side, I was more on a business side, and then we got a CTO, so we had we were four. I think it's a lot of cooks in the kitchen as they say. But yeah, that's how we started. We thought it would go well. We actually tried to really split decision making and manage the company in the different areas, which actually helped with the growth, but when things get hard, you need one decision maker. I believe this, really strongly. So I still believe the 50/50 rule. That a lot of VCs try to push is not the best, because I really do think that no matter what the decision is. There has to be somebody deciding when things get back.

Pablo Strugo (00:09:33):
But did you have like, were you the CEO or who was the CEO who ultimately made the final decisions?

Benedetta Arese Lucini (00:09:38):
So I was the CEO, but I had the same equity as other people.

Pablo Strugo (00:09:41):
I see.

Benedetta Arese Lucini (00:09:42):
So nobody had majority because when you split a company by four. Nobody had the majority. And as we grew and we got more money, the our largest investor wanted us to be like actually make a decision as one. So we couldn't like actually separate. So that made it really complicated. And that's when I started getting really interested also when I do angel investing in making sure like cap tables and contracts with investors are very clear because when they are not, like, you know, gets really messy.

Pablo Strugo (00:10:19):
So back to the idea. Like what exactly, what businesses do you see exactly in the US that you want to like emulate?

Benedetta Arese Lucini (00:10:27):
So there was Acorns, which was just starting, and then when we started, we saw there was another one called Stash — Stash Invest. I don’t know if they’re still around.(context: Acorns and Stash are U.S.-based fintech apps that help users automatically invest small amounts of money, often by rounding up purchases or enabling micro-investing.) The idea that we really liked, and that we had in our head, was that we wanted to do like the micro-saving, micro-investing. So the idea you could actually invest one euro without even thinking about it. And at the time, like, fractional investing in ETFs was really new. So we had to like think about how to do it. And then the idea was not only of just having traditional ETFs, but also having ETFs that followed certain themes — and that’s what also Stash Invest was doing in the US. We didn’t know they were doing it when we thought about it, but yeah, we kind of came up with the same idea.

Pablo Strugo (00:11:16):
And what what's the step what's the first step like with an idea like that that has to go, you know, consumer has to ultimately get the millions of users, like how much do you focus on the product versus let's say fundraising versus just launching an MVP, what's step one?

Benedetta Arese Lucini (00:11:29):
So I must say like actually the first investment we got was like a pre-seed on a deck. We got it really fast. So I never thought fundraising was hard from that moment. Actually fundraising is really hard, but at that point we got like a, you know, like I don't remember, it was like about $800,000 or a million, off a deck.

Pablo Strugo (00:11:53):
Oh wow, okay.

Benedetta Arese Lucini (00:11:53):
In 2016, it wasn't like the bubbles of now, right?

Pablo Strugo (00:11:57):
That's right. And in Europe, right? So it was just also

Benedetta Arese Lucini (00:12:00):
And in Italy, which is a tiny market, right? So,

Pablo Strugo (00:12:04):
Who was that from? Was that just an Angel or was that a VC?

Benedetta Arese Lucini (00:12:07):
No, they were mostly like micro VCs, let's say and Angels, yeah. My this micro VC who did like a lead ticket and then we closed with a few Angels.

Pablo Strugo (00:12:21):
Was that based a lot on your background, I mean, I don't know what your co-founder's backgrounds were. Was that based a lot on your background with Uber or what was the kind of thesis behind that round?

Benedetta Arese Lucini (00:12:28):
Yeah, definitely, but backgrounds of both my other co-founders had started another company before, so, you know, that kind of created a bit of credibility in Italy. So, yeah, definitely it was mostly on background than idea. I think, because at the time we had nothing, and actually we spent, and this is something that I really like, that we spent a month kind of testing what we wanted to do by making people, like, could because the idea was actually that you could every time that you spent money, you could like actually, you know, round it up and save a part of it. And we started doing this with people sending us bank accounts, and we would round it up by hand and then do the movements. So really, manually, there was no app. It was, and that's a really good way of testing products. I always think there's no reason why sometimes a non-technical founder wants to start something and they're like, oh no, I need to find, like, straight away a technical founder. And I think it's important to find technical people along the way, but you can test your idea. Anyway possible.

Pablo Strugo (00:13:37):
And today. How'd you do that actually? Yeah, how did you do that because especially with I mean with B2B it's a bit easier, but with consumer. Like how did you get a consumer to decide to send you? Did you know them or these were just random people sending you, you know?

Benedetta Arese Lucini (00:13:48):
Yeah, we put our LinkedIn out and said, you want to try this, be our beta tester. And then we would say, "Send us your bank statement for a month and we'll tell you how much you saved." And like, "Do you think you it's like something you would use that at all?" So this was like the way, I mean, today you can do like an app or something no coding, right? So it's a different time, but at the time it was more about just creating like a community around what we, you were trying to do. And we spent a lot of time and actually I think this was our best success was the community and content based community driven acquisition that we did. So we really spent very little on of that $10 million, which was a problem. We spent a little very little on marketing because we had to and then we'll get into it why, but like we spent a lot of time thinking about how to acquire customers very cheaply and this was through community building and it started from the really beginning when we didn't even have a product.

Pablo Strugo (00:14:52):
What did you like, tell me more about community building. I mean it's kind of a buzz word, you know, I mean like everybody especially on consumer wants to build a community. It's not really clear what that means or how you do it. What did you do especially in those early, well I mean with money you can do a lot of things, but like in those early days, what did you do around community building that you think paid off later?

Benedetta Arese Lucini (00:15:08):
So a lot of it was about driving content around financial education, right? So making really we started using Instagram to do like lives around tell like ask me anything about finances and we would answer and people and we would be there to answer. We always put our own face behind the app, so it wasn't like you're talking to an app, but it was always us behind it. So we tried to make sure that you used our experience or brought in people who had experience that could talk to our users. And we found that very often, you know, in finance there's these like pictures of the people in suits and that are like financial advisors and nobody really resonates with them. So we tried and make like content by, you know, a similar person who was like, "Hey, I never saved before. I always struggle, I get to the end of my month without a money in my bank account and this is how I'm doing it." And this kind of content really worked very well in driving people towards the community. We had a Facebook community where people would give us feedback on the product. And I, it's funny because this is like nearly 10 years ago and now there's so many tools to do all this kind of stuff. But at the time it was like Facebook community, a lot of Instagram videos, live videos and really, really excellent customer support. So really being careful about having customer support as founders, we always did customer support. I never stopped doing customer support in my in my companies and I think it's really, really important. First of all, for the founder to know what's going on, but also to give a sense to your users that that there's real people behind the app.

Pablo Strugo (00:16:53):
And then on, you know, so you're doing this community building stuff. Obviously in the background consistently, and then walk me through kind of the evolution of the product. Like the first one is just that test. How long did you run that test for? And what exactly were you trying? What were you trying to get out of it? And what did you end up getting out of that initial kind of like, you know, not even MVP, almost like pre MVP phase?

Benedetta Arese Lucini (00:17:12):
So we wanted to understand really how much money we could make people save. So like how much should the rounding up be? Should it just be up to the Euro? Up to the 5 euro, up to the 10, like how much could we actually take away from people and what kind of user was our first user, right? So how much did they really have on their bank account? What they were like? How would they use the product? And we really started with a saving product first. First of all because of regulation, you need to be regulated to do an investment product instead of a saving product is non-regulated. And secondly because it was an easier acquisition model, but very hard revenue generating model. So it's very hard to ask people to help them to save and then you charge them for it, so.

Pablo Strugo (00:18:00):
Yeah, what is even the business model for? Is there a business model for a saving product?

Benedetta Arese Lucini (00:18:03):
Very hard one, so initially, honestly, this is also one of the issues, is and it was also a different time, but at that time you always thought about, like, I'm going to get a lot of users, and then I'll figure out the revenue stream later once I have users. On a saving product, is very hard. There's some companies who tried it with the, you know, you pay like a monthly subscription for the use of it, but it doesn't really work because it's, you know, you're trying to help them save. If you make them spend to save, it goes away. So you can make money on the investment products, right? So every company that has a wealth management products makes a piece of a fee on helping you invest. And that's the basic AUM model, so assets under management model. So you take a very small percentage of the assets that people have with you, and generally they don't even notice if you're making them make money because it's just a little percentage of whatever money they're making.

Pablo Strugo (00:19:09):
Now, in a sense, you already have like a road map, right? From these companies that are doing it in the US. To what extent can you just do what, like, look at what they did and just replicate it? And how much do you really need to test against your potential like different market? 

Benedetta Arese Lucini (00:19:22):
First of all, there’s regulation. The US has the advantage that with one regulation, you have 300 million people. And in Europe, every single country has its own regulation, and even if there’s a concept called Passporting, so you’re regulated in one country and you move to the other, you can’t do that completely. (context: Passporting is an EU mechanism that allows financial services firms licensed in one member state to operate across others without needing separate licenses.) You still have to have branches and change the way you communicate. There’s all these different rules. So unfortunately, Europe is not a unified market, especially for regulated companies, and this is something that startups in Fintech found out a bit the hard way. So they were trying to replicate American companies and then you’re like, okay, actually my market is just 60 million people, not like 300 million.

Pablo Strugo (00:20:07):
So the business models don't really translate because the TAM is just not big enough.

Benedetta Arese Lucini (00:20:11):
Yeah, correct. It takes a lot more costs to get the same time. And that's the first thing. Secondly, the there's a higher aversion to investing in Europe than there I would when I say Europe, I say like, let's say continental Southern Europe compared to the US. Like in Europe, most of the money is sitting in bank accounts. In the UK, the there's like trillion pounds sitting in bank accounts. In Italy, it's something like 3 trillion euros sitting in bank accounts. People don't invest and in fact, there's a lot of statistics that show that we are way less wealthy than Americans because actually Americans, first of all, have a really successful, let's say market. So if you just put your money in the S&P, it goes up and down, but over time it did very well. And instead, if you look at European markets, they don't go anywhere. And then Europeans are not really used to investing and taking risks. So there's a very low an aversion to risk taking. So this is the two things that didn't translate so well, I would say.

Pablo Strugo (00:21:25):
And so what do you end up deciding, like I'm curious when you do decide to launch an app, how much after that pre-seed round you launch something and what is kind of the first version of the app?

Benedetta Arese Lucini (00:21:35):
No, we launched it quite quickly and we had a first version of the app that just did saving very simply. You could choose and because we had a designer as like our one of our co-founders, I think one of we always led by design and it was really easy to use and so we tried to fit only one product inside it. We had this idea that you could save money also by doing things that were not financial to make it easier, so you didn't have to link bank accounts and all this kind of stuff. So you could save every time you did like 10,000 steps because it was really easy to link other like good behaviors and like other apps to our app. So we decided to do this and it was pretty. 

Pablo Strugo (00:22:21):
So others would be paying for that, like for that behavior?

Benedetta Arese Lucini (00:22:23):
No, so we would take it out of your bank account, but if you're you behaved well, you kind of compensated yourself. It wasn't like a transaction where we had to read bank accounts, which some people weren't really comfortable with at the beginning. So we said, okay, let's say that you save every time you post on Facebook or post on Instagram or every time you run 5k or whatever it was that were like things that we could track of other apps pretty easy through APIs. And so it was an easy way to start. And yeah, and that's what we started initially.

Benedetta Arese Lucini (00:23:00):
And how did that go? How do you launch the initial product? What does traction look like in those early days?

Benedetta Arese Lucini (00:23:07):
We did a waiting list kind of model. So we sort of copied a little bit from a lot of markets. The waiting list did really well. The first day we had thousands of downloads, which was really exciting. We launched first only on iOS, then had Android a few months later. So the classical good initial testing and launch of an app. Still no revenue. We just thought, OK, let's grow and get in the next round.

Pablo Strugo (00:23:37):
Which, by the way, like, I mean, you can make fun of it, but in a sense, it does make sense for like it has to kind of work at scale. Otherwise, you're not going to make money helping, you know, a few thousand people invest no matter what. So you kind of have to get mass marketer.

Benedetta Arese Lucini (00:23:49):
Yeah, for sure. And that's like, I mean, B2C Fintech is big around that. Like there's still like a ton of these very well-funded companies that still don't make any profits, you know.

Pablo Strugo (00:24:03):
And what were you seeing in terms of behavior, usage, retention, word of mouth? Like what did that look like?

Benedetta Arese Lucini (00:24:10):
So we were lucky, we got quite a bit of press, so free word of mouth and et cetera. And the retention part was really interesting because people saved recurringly, right? So they've just put like a, and they forget about it.

Pablo Strugo (00:24:25):
It was on autopilot, right?

Benedetta Arese Lucini (00:24:26):
Yeah, it's autopilot. So those things work really well. And we had these cohorts where we would show how much people were saving and every month it was increasing and that was really good. Our cohorts were really working very well. But again, we had no idea how to make money out of these people. And so like we had to raise again. And when we decided to start fundraising, we got in contact with a corporate VC of a big Italian bank who decided to invest. It took very long. I think between the time we decided we got the term sheet and the time we got the money, it was like six to nine months. Something crazy.

Pablo Strugo (00:25:08):
Oh my God. How did you survive that time?

Benedetta Arese Lucini (00:25:11):
I know you get very, very good at like not burning money.

Pablo Strugo (00:25:16):
How many employees were you then?

Benedetta Arese Lucini (00:25:18):
No, when we raised that, we were probably 10/12, something like that. At the peak, we were 60. In the end, we were 60 employees. But yeah.

Pablo Strugo (00:25:30):
And that was what, by the way? How big was that? Was that a seed round? How big was it?

Benedetta Arese Lucini (00:25:34):
Yeah, it was $2 million, $2/3 million, $3 million. Yeah, like a seed. Yeah, $2/3 million seed round. And then we did two crowdfunding rounds, which did really well. So on this thing, we had quite a bit of users. And we did crowdfunding, which was really popular at the time. And B2C does really well generally in crowdfunding. And so we actually did a first crowdfunding where we raised like a million in like an hour or something like that. A year later, we had this idea to do the crowdfunding directly in our app to make it even faster. So we partnered with a crowdfunding platform and did an API.

Pablo Strugo (00:26:16):
And those crowdfunding was, like, they were buying like saves or equity. It wasn't like a Kickstarter where they were buying some product or something like that.

Benedetta Arese Lucini (00:26:23):
No, exactly. It's like, yeah, equity. They would come into the equity with like, sort of common. Like a special type of shares that would be put together for all this.

Pablo Strugo (00:26:36):
And so how much did you raise in crowdfunding across those two rounds?

Benedetta Arese Lucini (00:26:39):
Like probably, we raised the first time one and a half, $2 million. And then the second one, about the same. Yeah, we raised really well on crowdfunding. And it's also great marketing because you're always online. People are talking about you. It's like a great marketing tool. But it also creates a lot of problems in the long term. We were contacted by the investment arm of the same like banking group, which was a different company, but still in the same group. And they invested like another $4 million. So that is about $10 million. So they invested about another $4 million.

Pablo Strugo (00:27:18):
So this bank did like two rounds?

Benedetta Arese Lucini (00:27:20):
Yeah. So first it was the bank and then it was their investment company. The company that does the wealth management company. They're part of the same group. They're two different companies.

Pablo Strugo (00:27:31):
Over what period that $9 million, like the first pre-seed round happened like 2016, but then over what period did all that other $9 million come in?

Benedetta Arese Lucini (00:27:39):
Up until 2020.

Pablo Strugo (00:27:40):
So like over a three-year period, you're kind of raising like $2 million here, $4 million there, this sort of thing?

Benedetta Arese Lucini (00:27:44):
Yes. And then 2020, we were going to close a extension of the round I was talking about with the investment company. COVID hit. So actually, during the time of fundraising, we got all in lockdown. And so obviously fundraising became very complicated. And we were like, okay, now let's count how much money we have in our bank and see what we can do about how long it's going to last. We don't know, right? Like, so I don't know if you. It's really difficult to think about it now because we kind of mostly forgot about it. But at the beginning, we had no idea what was going to happen. And obviously, with our largest investor being a bank, they were like, oh, my God, all our branches are closed. All our employees have like, you know, they have like 100,000 employees in Italy. They didn't know what would happen. All the banking branches, they didn't know what would happen, etc. So it was a difficult time, of course, for us.

Pablo Strugo (00:28:56):
I'm really worried because, listen, like you've been listening for like, what, 10, 20, 30 minutes now. Clearly you like it. And the thing is, the next episode is way better and you're going to miss it. You're going to miss it because you're not following the show. So take your phone out and hit that follow button.

And what did the situation look like? Were you at peak like with 60 employees? And what was your runway?

Benedetta Arese Lucini (00:29:17):
At the time, we had very few months of runway, like four or five, because we were raising. And what happened was that we managed to get a couple of different. COVID grants, like they were not grants, but they were mostly like, you know, debts, instruments that various governments had that they tried to help startups and small companies sort of survive. So we managed to get a couple of those. And then we said, OK, we have a 12 month runway. And then the decision became very hard. And I have to say, like, when you look back at it, it always feels like you had obviously had did a lot of wrong stuff. But when you think about doing in the time, it's really hard when COVID just hit. You're like, how can I get my employees to work? We got the list of employees and we were like, how many should we keep and which ones are important? But then it was really hard to say, okay, now in this period where they are home alone, maybe away from home in a different city, they're stuck in their house, you even fire them, it's going to be really tough. And so we procrastinated and thought like it was going to go away and we were going to find funding. And so we started only putting people in sort of a one day a week less. So they got 20% less salary and one day a week less. And that was our initial, you know, cutting costs move. Probably wasn't fast enough because it didn't like get our runway much longer. And at that point, we weren't doing much marketing. So it doesn't help because you're not growing much. as much, so you're not as attractive for VCs. And so that's kind of the place where you're at. You're a bit stuck. And that's where we were thinking about it. And so the thing is, failure doesn't happen between one day and the next. It happens over a long time. And actually, you know, we talked about this, but it happens even after, like once a company is sold or shut down, it doesn't happen in a day. It happens in a very long time. So between that March 2020 and July 2021 was a whole period of time where we had to fight fires and shut down and it took a long time. And sometimes you can do it a bit faster, but not that fast. And so that's how it's hard because you're like failing every day.

Pablo Strugo (00:32:01):
What did you end up doing? Like you had 60, you cut down to 80% of those 60s time. And then when did you decide, okay, this is not sustainable. We need to go to, what did you do? Did you go to 30 or 20 or 10? Like what did you end up doing?

Benedetta Arese Lucini (00:32:15):
So that was, I think we should have actually cut really early on. In hindsight and probably those people would have found jobs pretty quickly because they're talented you know it's like talent it's good talent so it's not that it's that hard or we could have supported them in the in in the time to find jobs even though you were a bit like it was hard because nobody could go anywhere but what we did was that we realized after a few months that we couldn't like after the summer. We realized our runway wasn't getting better. And so we were like, okay, we have to have a different plan. So we sat down with a board and we were like, we need to sell. So we started going to a lot of other companies and trying to sell ourselves, which is very hard when you're like trying to get a decent price, but you're the one saying I'm selling myself, you know?

Pablo Strugo (00:33:11):
That's right. Yes.

Benedetta Arese Lucini (00:33:13):
It's very complicated. So you try and do something where you're selling the people or you're selling the users, etc. While we were keeping the business existing, right? Because otherwise we had no asset to sell. So you have to keep the business running. And on the other side, try and sell yourself. And we tried that for some months. And one of the issues we had was because we were partnered with one bank. A lot of other banks were like, no, we're not going to take you. You have the legacy structure of this other bank who's like our competitor. So it became really hard to unwind all the technology developed to sort of integrate with this one bank. So one of the things that I learned, I would say is never have like one supplier or one like infrastructure where you cannot take yourself out of it because it can become really complicated.

Pablo Strugo (00:34:10):
Did you end up selling the business?

Benedetta Arese Lucini (00:34:12):
Yeah, we ended up selling. We decided to get a sort of a liquidator, it's called here, like a company that helps you do a whole assessment of your assets and your liabilities. And then they try and sell off the assets of the company. So actually, you don't sell the company, but you sell the assets of the company.

Pablo Strugo (00:34:35):
And in your case, your main asset was what? Was the user? The user base? The app?

Benedetta Arese Lucini (00:34:39):
Users, the app, employees, users, app, and also for financial companies is the actual license. So, and we tried to sell them all separately first, which actually could have been a better outcome, but it's really complicated to do it in a separate ways because selling users, you need to find somebody who's already regulated to use, like to. So in the end, we bundled it all up and did like sort of a auction. So like a closed auction. So we found like 10 buyers and we said, okay, everybody send the price and we chose.

Pablo Strugo (00:35:14):
And who bought it ultimately? Like what kind of a business?

Benedetta Arese Lucini (00:35:17):
Ultimately, it was a brokerage company and they had a private equity fund sponsor and they thought it would be really good to combine the app with the brokering. So they already had all the investment products and they could use our app to make better use of getting to B2C customers, more retail customers in an easier way. Plus they gained all our users.

Pablo Strugo (00:35:42):
And how much was it sold for?

Benedetta Arese Lucini (00:35:45):
I don't think I can say. It's very little.

Pablo Strugo (00:35:47):
But it was less than the total money raised, I would assume.

Benedetta Arese Lucini (00:35:50):
Less than the money raised. I cannot disclose. Yeah, so the investors also got nothing because it was an asset sale. So you actually take the money and just pay the creditors. So the first people who get paid are all the people who gave us the loans and everything. And any creditors. So the employees, obviously, if they have any unpaid salaries and stuff, all your suppliers, et cetera. And so managing also the communication to all the investors, considering we had thousands. Even though in CapTable they're one line, there's a lot of people who many of them were also our users. So that kind of community that is lovey-dovey, love your brand, making sure that they still love you and understand what's happening is really tough because it's always retail. So it's a very complicated process.  Communication to manage in the same time when the, obviously the buyer didn't want us to discredit the brand because they still wanted to have the clients. So it was tough because then they were communicating like, Oh, we have this new, like, Oval is relaunching and dah, dah, dah. And on the other side, the investors were like, "What are you talking about?"

Pablo Strugo (00:37:13):
They've all sold their money. It's not easy. So walk me through something. So I get all the logistical part of it. And obviously, COVID happened. Fundraising got hard. There is an element of just kind of running out of cash, running out of time. But let's talk maybe a bit more just about the business itself. I mean, fundamentally, you did have, like you said, half a million users, half a million in revenue, or so at peak. Something was working, and yet, you know, as much as COVID was painful, you know, if things were truly working, generally speaking, you can find a way to fundraise. And frankly, the market came back, and all that stuff kind of came back in late 2020, early 21. What was happening in the actual business? Like, what do you think wasn't fully clicking?

Benedetta Arese Lucini (00:37:53):
Yeah, so I think that after the app was really working well, when we got the large banking partner, we spent most of the money developing the product instead of developing users. So we spent a lot of the money integrating with the big bank because we thought, okay, now they're going to use us to their users, and it's going to be great. And instead it was like two years of hiring a lot of developers and to get us on top of their banking infrastructure, which banks' infrastructure is like so old-fashioned, and I mean that's why also new banks exist, but they can't change those systems, so when you put yourself on top, you have to create a lot of technology to make sure the legacy, you know, the legacy technology worked with your really fast technology. So things they would send us, banks have this thing in Italy where they shut down for certain hours of the day. Yeah. They still like turn off something.

Pablo Strugo (00:39:03):
For maintenance or for what?

Benedetta Arese Lucini (00:39:05):
No, just every night. They have like a few hours when they're off. And like, you know, if somebody did a payment, we wouldn't see it for a few hours for some weird reason. And they still do this.

Pablo Strugo (00:39:18):
And what motivated you? So it sounds like you went deep on this idea of a partnership, which I get the allure. Like a lot of times, the big, in your case, a bank, but a big enterprise partnership. You know, they just have access to so much demand, so many potential users. They are like, was that kind of the thinking, like, okay, let's do this because that's the best way to go to market versus what we've been doing so far?

Benedetta Arese Lucini (00:39:37):
Yeah. I thought, you know, we got to like. At the time, we had like maybe 50,000/100,000 users. What if we had 20 million, right? Or the bank was really scared because there were all these new banks sort of popping up. And I was like, we can be their new bank. It could actually be a great exit strategy, right? And it happened that a few banks in like, Spain actually bought apps that they had invested in. So it could have been a really successful if you want outcome, not maybe a billion-dollar company, but still like a good exit. Right where you raise 10, and you sell for like 100 or something like this. 

Pablo Strugo (00:40:14):
And through that that makes sense but then through that let's say two-year period as you're realizing just how hard that is do you I assume you had discussions about maybe we should just abandon this strategy go back to what we were doing like how did that work its way out like how did those discussions play out internally

Benedetta Arese Lucini (00:40:29):
Yeah, so we had a lot of this discussion about, like, why the hell did we get into this mess? But the problem is when you get the money from your partner, then you're kind of tied, right? So like the money is tied to the partner. And so they make also decisions. They had board seats. Like it's very hard to get out of it completely. We tried to reverse when we decided we would sell to make it easier to sell the company. And reversing was like, you know, a six-month project. So like you don't have the time to like reverse. Sometimes you're stuck in like a pie. And as you say, the allure of the big enterprises is always really, you know, enduring. That's why they did all these CVCs where they invest and then they tell you they do all these things with you. And then one of the hardest parts is making sure you always have your kind of sponsor inside the big organization. Because until you have it, I feel like things are slow, but they go on. As soon as that person leaves, moves, goes to some other job, then you have nobody who's going to follow you. And for these companies, big companies, even if they put like to the complex, you know, they put maybe six million into us. For them, six million is 

Pablo Strugo (00:41:54):
Nothing.

Benedetta Arese Lucini (00:41:55):
Nothing. So for them, it's so much easier to just say, let's get rid of six million than have to deal with it.

Pablo Strugo (00:42:03):
Do you think if you wouldn't have taken any of the bank money that things would have played out differently, that it would have worked out?

Benedetta Arese Lucini (00:42:09):
So it is actually a really tough business model. But I do think 2021 was a great year for, well, like looking back for all these like FinTechs. So maybe we could have had like some exits that wouldn't have been, you know, we weren't, I think, it would have been very hard for us to be a profitable company without some kind of exit beforehand. And I don't say just because I talk about myself, but I learned about the industry while I was in it, right? You realize how hard it is. You look at all the other companies and they're still struggling to be profitable. So it's really hard. Also with much larger markets than EUN, etc. So It's a very difficult business model to get to work. And I think the tech side of it doesn't justify the multiples that wealth managers have to have like 10 times those multiples.

Pablo Strugo (00:43:10):
Let me ask this maybe final question. I remember when I think back to my startup, which also didn't work out, you know, you start off with almost pure excitement with just a little bit of fear. And then, you know, if it's really going that way, you kind of go down this sliding scale and all of a sudden you realize like you're more negative than positive on the potential. Like when did that trip over for you? When you look back, when do you remember feeling like, yeah, you know what? I don't think this is going to, I don't think this is going to work out.

Benedetta Arese Lucini (00:43:41):
Do you know that actually, I think I'm the most optimistic person in the world. And I think that it actually felt harder in the beginning than later because I'm the kind of person who feels energized by fixing things. So I was like, "We're going to fix this. We're going to fix it. We're going to find a way." There's going to be a way. There's money going to come in. Somebody is going to buy us. And whenever we had, like, a call, or like, something progressing or due diligence and whatever. And you would be like, OK, yeah, it's happening. Right. So you always felt there was a way. And you're kind of like, I'm not going to let my baby, you know, not succeed. And so I never hit the point. The hardest point was letting go of employees. That's where you say, OK, something went wrong. Right. But other than that, I always thought there was a chance. That we would make it. I really did. Like, because of crowdfunding, I had a lot of friends who invested also in, you know, in the startup, which makes it even harder. Because when you have, when you just have, like, VCs, like they know the game, you know, they know what they're doing. When you have a big enterprise company, they don't care if they lose that money. For them, it doesn't mean anything. But when you have your customers and your friends invested in your company, you always think in your head that it's going to work out. And actually, people ask me all the time, why did you start company again? And I'm like, I don't know, but I feel like I can do it. Like, I feel like I have that positive thinking where actually all the things that went wrong will teach me to get it right. And, you know, Travis, when I met him the first time, he told me that it was his third company and his first two had failed. And he said, you know, in the US, it's not a problem. In Europe, saying you failed is like saying, you know, saying you do a startup is like saying you're unemployed. Saying you failed is like saying you're, you know, nobody wants to be with you. Right. So it's like really tough as like something to talk about. But I've always tried to normalize it because, in my point of view, it actually helps me believe that it gets me one step closer to being successful.

Pablo Strugo (00:46:06):
I think that's the way you have to think about it. And it's interesting to hear you say that because obviously this idea that you kind of never thought you would really fail and you never wanted to, you were never like kind of just throwing in the towel. I've heard that many times from founders, where it ultimately worked out, and it's kind of easier for them to say. So it's interesting to hear from you. So, final question, if you had to, you know, and I heard you mentioned you kind of do angel investing. So obviously you meet with a lot of founders, like what's some of the most common, and taking everything that you've learned, like what's some of the most common piece of advice you find yourself giving early-stage founders?

Benedetta Arese Lucini (00:46:38):
So the most common piece of advice I give is to not think that the next money check is going to be there. So one of the first things angels like people do, and it's generally, I've just invested in them, is they're like, start hiring like five people, and they start like spending on marketing a lot. And they just start using the money. And especially in Europe, where there's way less money than the US. I think actually founders are really good at being smart about money. But then as soon as they raise. They kind of forget all about that and then start spending it really fast. And the first thing I usually do is I sit with the founder, and I actually talk, send your. One of your podcasts, about one of the founders.


Pablo Strugo (00:47:26):
That's Awesome

Pablo Strugo (00:47:28):
Four million. And then he waited, and he hired only 12 employees. And then he stayed there until he found the product market fit. And I tell the same. It's like you're raising in seed. You have no idea what you are going to do and where you're going to go. So just wait to spend the money. I know there's this idea that VCs want you to raise again in 18 months, but you know, make yourself arrive to those 18 months where you know what you're doing with your company. And so that's the first advice I give. And the second one is when you raise money, just make sure you raise it from people who you think can help you along the way. Because money now, especially, is easier to find than people think. And so maybe be patient also with who you're raising money. Because sometimes you'll get on your cap table people that will destroy your life. And I have so many examples of even smaller shareholders that make founder's life, so difficult, so you know now I'm like, people tell me. Why aren't you raising yet? I'm always very slow at raising money for these two reasons: one, because I like to be thoughtful about how I use my money, and number two is because I really want to have people on my cap table that I believe can help me along the way. and I want to be able to say to them, I need help, and we can build something better.

Pablo Strugo (00:48:56):
Well, thank you so much. Let's stop it there. Thanks so much for coming on the show and sharing your story so candidly. I'm sure it'll be very helpful for founders to listen.

Benedetta Arese Lucini (00:49:05):
Thank you so much for having me. I will share it along as well.

Pablo Strugo (00:49:10):
Wow, what an episode. You're probably in awe. You're in absolute shock. You're like, that helped me so much. So guess what? Now it's your turn to help someone else. Share the episode in the WhatsApp group you have with founders. Share it on that Slack channel. Send it to your founder friends and help them out. Trust me, they will love you for it.