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“You have to invest into change. You cannot invest into stasis.
“From an ego perspective, I love being right. From a financial perspective, I love being right at the right time."
"You have to be willing to embrace a level of physical, emotional, financial, psychological, spiritual pain and keep going. Just keep fucking going."
"It's not that, like, Generative AI is not cool. As a Dweeb, it's fucking cool as hell. I got it. But then the question is: 'How the fuck are you gonna make a dime?'"
Honored two years in a row as a top tech podcast by The Webby Awards, CRAFTED. is show about great products and the people who make them. Featuring incredible founders, innovators, and makers that reveal how they've built game-changing products — and how you can, too.
What trade-offs did they make? What experiments did they run? And what was the moment when they knew they were on to something BIG?
Hosted by Dan Blumberg, an entrepreneur, product leader, and public radio host with chops as both a technologist and as a public radio host. Dan has founded startups and led product releases and growth initiatives at LinkedIn, The New York Times, and as a consultant to big banks and startups. Before getting into tech, Dan produced and guest hosted WNYC's Morning Edition, the most listened to show on the country's largest NPR station.
Listen to CRAFTED. to find out what it *really* takes to build great products and companies.
Financial services is fucking massive. So large. Yet people loathe it. People hate their banks. They hate their insurance company.
Daniel Kimerling:They hate their brokerage. And, ultimately, I think what we believe is that that status quo that equilibrium cannot stand.
Dan Blumberg:That's Daniel Kimmerling. He's the founder of Deciens Capital, one of the OG's of Fintech. Before he got into venture capital, he founded Standard Treasury, which was the very first banking as a service company. On this episode of Crafted, Dan shares how he identified the We'll also discuss why timing is everything.
Daniel Kimerling:From an ego perspective, I love being right. From a financial perspective, I love being right at the right time.
Dan Blumberg:What he looks for when choosing which start
Daniel Kimerling:ups to back. You have to invest into change. You cannot invest into stasis.
Dan Blumberg:And why tectonic shifts are not always moneymakers for startups.
Daniel Kimerling:It's not that, like, generative AI is not cool. As a Dweeb, it's fucking cool as hell. I got it. But then the question is, how the fuck are you gonna make a dime?
Dan Blumberg:Welcome to Crafted, a show about great products and the people who make them. I'm Dan Blumberg. I'm a product and growth leader, and Crafted is my main gig now. I'm here to bring you stories of founders, makers, and innovators that reveal how they built game changing products and how you can too. You can check out past episodes, including those with the founders of Lattice, Gusto, Move, Monte Carlo, and more at modernproductminds.com/crafted.
Dan Blumberg:You can also sign up for the Crafted newsletter to get show updates and even more insights on building incredible products. Crafted is sponsored by Artiom, a next generation software development consultancy that combines elite human craftsmanship and artificial intelligence. See how Artium can help you build your future at artium.ai. What was it that first drew you to tech?
Daniel Kimerling:Well, I've always been a nerd, and I think like a lot of people of my generation, the second renaissance of Steve Jobs was very inspiring. But then I didn't think I was gonna go into tech, Dan. You know, where I grew up in New Jersey, a career in tech was not really a thing. If you were a smart Jewish kid from Central Jersey in the nineties, doctor or lawyer, that would those were the real options. And I was good at science, but I wasn't really good at science.
Daniel Kimerling:So I guess I was gonna go be a lawyer.
Dan Blumberg:But after getting burned out while simultaneously masters at University of Chicago, Dan decided to take a year off, and a funny thing happened.
Daniel Kimerling:And I remember reading this article in a printed version of Wired Magazine Yeah. About Mike Arrington and TechCrunch. And I recall them saying that Mike Arrington was the new Silicon Valley Kingmaker. I'd never heard of a blog before. I'd never read TechCrunch.
Daniel Kimerling:I'd never heard of TechCrunch, and couple weeks or whatever later, Mike wrote a post being like, I need help. If you're like a young whippersnapper, email me. And I did, and he called me up a couple weeks later, and he was like, I don't know if you can be in Atherton on Monday, you got the job. That's how I got into tech. Very simple.
Dan Blumberg:Awesome.
Daniel Kimerling:No brilliant insight or, like, grand strategic plan. I thought I'd do it for a little bit, go to law school, but when you are with shit, or I could just do cool shit, and writing about cool shit is not nearly as cool as doing cool shit. And that I think really planted the seed.
Dan Blumberg:That's awesome.
Daniel Kimerling:You know, like where I grew up, the idea that a kid would like raise 1,000,000 of dollars and start companies and like one of the greatest things that y Combinator has ever done, and you know I'm a YCOM, I did YC in 2013, is that it created an acceptable alternative career trajectory for a certain kind of person. People went to Stanford or Cow, they knew what it was to start startups. Right. For people who from back east or maybe abroad, that wasn't in the lexicon and YC kind of created a bit of a finishing school where it became socially acceptable and I give PG a lot of credit. And I think one of the reasons why you see or the startup ecosystem will be very vibrant for many years to come is because there is this alternative career trajectory.
Dan Blumberg:Fast forward to 2008, and Dan met Jeff Lawson, the cofounder of Twilio.
Daniel Kimerling:And that was a pretty mind blowing conversation for me.
Dan Blumberg:Thanks to APIs that Twilio built, it was easy for product makers to add phone calls or text messages to their applications. Side note, it's thanks to Twilio's APIs and the presence of one of their developer evangelists at a hackathon in 2011 that I was able to co found and quickly build Seen Near Me, an app that alerted you via text message if you checked in, remember Foursquare check ins, if you checked in near the site of a famous movie shoot. Anyway, Dan Kemmerling saw very early on that embedding was going to be big, and then he met John and Patrick Collison, the cofounders of Stripe.
Daniel Kimerling:They're just they're next level. And I had seen what they were doing with credit card acceptance, what what you would call merchant acquiring. And I was like, there's so much more that banks do beyond the purview of Stripe. Stripe is incredible, but it's kind of always circa 2,008, 9, 10. It was very focused on merchant acquiring.
Daniel Kimerling:And I was like, there's so much more that banks can do. We should go start what we would now call a banking as a service business. Like, Twilio is a telephony as a service business. Yep. And there were companies like Parse, which were infrastructure as a service businesses.
Daniel Kimerling:There will have to be a banking as a service business. And that was ultimately the seed behind standard treasury.
Dan Blumberg:Can you give an example of how in sounds like it's 2014 or so, like someone would have been using the APIs that you built with Standard treasury? Like what would be the service the end user would get and what were the players that were involved?
Daniel Kimerling:Yeah. Well, Dan, let's just say you wanted to build an app such that people could list houses to rent. And to do that, you would need to collect a form of payment when somebody makes a reservation. You would need to escrow that payment, and then when the stay was complete that escrow would have to be completed, and if there's like a cross border dimension there would have to be some FX in there and so on and so forth. And so while the app might be about helping people list their home for for rent, really what this is is like a complex financial plumbing problem.
Daniel Kimerling:And so you needed a similarly powerful set of APIs that allow developers to build these apps and create the workflows and experiences they want. And what you kind of come to see is that to some degree everything is a financial plumbing problem. You know, one of our beliefs at Desian's is that financial services is actually way larger and more important than people think because it is one of the critical underlying enabling technologies of modernity. And so once everyone has one of these and they're used to, like, basically doing everything on their smartphone in these app environments, App developers need powerful financial tools like they needed powerful telephony tools. Yeah.
Daniel Kimerling:And so that's why, you know, closing that circle.
Dan Blumberg:Yep. I I met with someone at Mastercard recently who who can use the analogy that like Uber couldn't exist without the financial tools that we're talking about right now.
Daniel Kimerling:Connecting buyers and sellers requires actually a surprising amount of financial infrastructure. (zero twenty five:fifty
Dan Blumberg:six) Yeah. I'm interested with standard Treasury. You had absolutely the right insight. Api driven banking is going to be huge. You were very early.
Dan Blumberg:It was the very first banking as a service company. I'm curious, what did that experience teach you and how do you apply those lessons today about the right technology and the right time? And as an investor today, how do you apply those lessons?
Daniel Kimerling:Well, I I certainly from an ego perspective, I love being right. From a financial perspective, I love being right at the right time. Being right at the wrong time from an economic perspective is indistinguishable from being wrong. Yep. And so you're always looking for some kind of catalyst.
Daniel Kimerling:Right? So like a core theory we have with Desjens is that you have to invest into change. You cannot invest into stasis. So if we look at our portfolio, pretty much every single investment we have made has as a core theory something that is changing about the background that the company we invest in operates in. I'll just give an easy example.
Daniel Kimerling:We have a company called Beat Bread. Beat Bread finances musicians and works with musicians, and the core macro change which is happening is that there's Spotify economic necessity of record labels because I don't know the economic necessity of record labels because I don't know about you, Dan, but I don't get most of my music at Tower Records and, you know.
Dan Blumberg:I was more of an HMV guy back in the day. But, yeah, I I very, very, very well taken point.
Daniel Kimerling:Yeah. And that's, like, a very easy example, but you wanna invest into change. So that's like one thing. The second thing is if you're uncertain about the timing, operate in a maximally conservative posture. So in a world where timing is uncertain, spend as little as possible, so you can survive as long as possible, till you are confident that the timing is right.
Daniel Kimerling:You know, if you're too early, spending a lot of money is not gonna help you. Gartner has this whole idea of the adoption curve. Mhmm. And, I will butcher Gartner's language, but there's, like, the extreme early adopters, the early adopters, the middle early adopters, the mid adopters, etcetera. And Standard Treasury really found the niche in the, like, extreme early adopters.
Daniel Kimerling:But to go from extreme early adopters to early adopters, you know, might have taken a couple years, and we were not capitalized, and we didn't operate in a way that would have given us sufficient longevity to go after that. And in different industries and at different times, the willingness to be early or late in that cycle changes. You know, I can't say that the banking industry is known for being the most assertive early early adopters, you know, bleeding edge adopters. So
Dan Blumberg:Yeah. That sounds familiar with the experience I had working and innovating inside of some big banks. Can you share the the origin story of Deciens and the types of companies types of stages that you invest in?
Daniel Kimerling:Yeah. So the second question is actually quite straightforward. Deciens invest in financial services businesses of which Fintech is one subcategory and we do so at the earliest stages and we hope to be a fulsome partner to them over their entire life cycle. You know what I would say about why I started Deciens God only knows that we don't need more fucking venture capitalists on this planet. I mean, there's so many VCs and a lot of good ones, but we need more more entrepreneurs as a society.
Daniel Kimerling:But what I saw with Desjens was really 2 things. The first is many of the people I looked up to had started small firms that could work with entrepreneurs like on day 1. And, you know, they could write that, like, 1,000,000 to $3,000,000 check that you need to get going. But, ultimately, their funds had grown, and in venture capital, there's a kind of what I would call industrial logic. You need to deploy a certain number of dollars per year into a certain number of companies in order to kind of stay on plan.
Daniel Kimerling:And if you have a $100,000,000 fund, which is kind of the size of our funds, then you need to be writing 4 ish checks a year into $3,000,000. Mhmm. If you have an $800,000,000 fund, you know, it's just 8 times more. Are you gonna write 32 checks a year? That's a lot.
Daniel Kimerling:Or are you gonna just write bigger every time you do an investment, are you gonna write a bigger check? And therefore because you're writing a bigger check, you have to move later stage. And so the industrial logic of venture capital suggests that if you really want to do early stage, you have to stay small and you have to really fight the temptation to grow. And so that was, like, one of the reasons I started Desyen's is I saw many of my friends, peers, mentors, 1 generation ahead of me getting much larger very quickly, and therefore structurally positioning themselves out of the early stage game. 2nd, I loved the people who invested in Standard Treasury.
Daniel Kimerling:Some of them are still very good friends of mine, and they're investors in our funds, co investors with us and so on. But I always felt like while the people cared about me, my team and our mission, we were relatively small fries economically to them. Like, we were not economically important to them. And as a entrepreneur, I want our success to really be important to the people who invest in us. And part of the theory of Deciens is that every company has to be important to us.
Daniel Kimerling:We're a small fund. We don't invest in that many deals. So each and every company really matters. Each and every founder really matters. I want it to really matter to us economically, personally, emotionally, and so on.
Daniel Kimerling:And so a big thing with Desyens is that has to be our core ethos, and the incentives have to be aligned.
Dan Blumberg:What are the characteristics that you look for in an early founding team or whether it's sector based? What what do you look for when deciding whether to make an investment?
Daniel Kimerling:Yeah. So we're 7 years into Deciens and we've seen on average 900 deals a year and on average we do 3 or 4 And that's a very chaotic process. And to manage that chaos, we've had to create a framework. And within that framework, there are kinda like 3 big components. There's the team, the opportunity, and the deal.
Daniel Kimerling:You were asking specifically about the team, so it's maybe start there. What we're really looking for are 3 core kind of like sociological phenomena in these themes. 1st is we're looking for people who have insane levels of fortitude and resilience. I can't tell you that every startup will work, but I can tell you that every startup is gonna suck. And so you have to just, like, be willing to embrace a level of physical, emotional, financial, psychological, spiritual pain and keep going.
Daniel Kimerling:Just keep fucking going day after day after day, year after year after year. And most people don't have that. And so what you're really looking for are people that do have it and you're looking for people that have a track record of doing it. The second is we're looking for what we would call variant perspective. There are a lot of problems in the world, and I think many of the biggest problems are actually quite well known.
Daniel Kimerling:It's not the problems that are novel, It's the solutions that are novel. So we're looking for people that have non obvious or what we call Variant perspective on solutions to enduring problems. The 3rd piece of the puzzle is we're looking for people that have accomplished a lot relative to the resources they have. Doing a lot with a lot of resources is great, But what we're looking for are people that like, I don't know if your audience has watched MacGyver. They're like, you know, the old school television show.
Daniel Kimerling:Yeah. But we're looking for people like MacGyver who with just, like, basically, chewing gum, duct tape, and 2 nickels, you know, can make something happen.
Dan Blumberg:Yeah. And I'm sure you're looking for that even more now in this market than you might have been a few years ago.
Daniel Kimerling:Yeah. For sure. I think what I would just say is part of having this MacGyver like capacity to do something with nothing embedded in that is a high degree of adaptability. You know, a couple of years ago, existential financing risk was caused by not growing fast enough. And so you saw, like, lots of companies, like, doing everything they could to grow as fast as possible so they could mitigate existential financing risk.
Daniel Kimerling:Right now, existential financing risk comes from being unprofitable. And so therefore, you know, the people that will survive going from one era to the next are those that are most adaptable. And you know this MacGyver like quality being able to do a lot with a little being able to survive no matter, you know, and push and keep going. These are all kind of around this concept of adaptability.
Dan Blumberg:Yeah. I wanna ask you about the technology of the moment of generative AI and all things AI. You have a post on your site, a Decien's site in which you write the behavior of a lot of venture capitalists towards the LLM space baffles us. We've seen VCs beg founders to take their money without a clear understanding of how real the innovations are, whether a specific technology will be impactful and and how they will monetize. And that their justification is that AI is the next platform and it's, you know, it's just gonna be huge and but they don't do a lot of stress testing.
Dan Blumberg:Paraphrasing a bit. I'd love if you could share more about what the irrational behavior that you see and and how you approach that space and others in a way that may be different from from other DCs out there.
Daniel Kimerling:So there's a quite old book called a brief history of financial euphoria which talks about the fact that humans are able to go from one form of speculative excess to another form of speculative excess almost instantaneously without any regard for the fact that, like, it's self evidently economically destructive. And I think VC is as a industry, we succumb to that phenomena. Obviously, with someone the other day who said that there's no more powerful force than VCs feeling FOMO, feeling the fear of missing out. And and I get it. Right?
Daniel Kimerling:Like, if you think that the job of a venture capitalist is to deploy capital so that they can raise more capital, then deploying into the flavor of the week with, you know, buzzy marketing messages makes total sense. Right? Because it is something that they can then market to their clients and raise bigger funds around. I totally get it. It's totally economically rational.
Daniel Kimerling:I think we have this perspective that ultimately our careers and the success or failure of the firm will be governed not by our ability to raise capital, but by our ability to return capital, and it's a lot harder to return capital. And, you know, just with this LLM example, in that piece, we talk about the fact that we think a lot of the foundational models and underlying critical technologies, the economics will either be dissipated through paying the NVIDIA's and hyperscale data center providers, so the Google, Microsoft, and Amazons of the world, or the innovations will be in the open source community and that that will ultimately erode the ability of solution providers to charge commensurate amounts for their solutions. And so a big question. It's not that like generative AI is not cool, as a dweeb, it's fucking cool as hell, I got it. But then the question is, how the fuck are you gonna make a dime on it?
Daniel Kimerling:And that's really the question I think a lot of people don't really have a good answer to. They don't even have a good theory. And, you know, there are, like, all these claims around how large OpenAI is, but then the question is, are they just paying NVIDIA all that money? Right? And ultimately, a big problem with this whole class of problems is that I think they're gonna be quite low margin business.
Dan Blumberg:So when you founded Standard Treasury, it was based on an observation that APIs were gonna be really big and they're gonna be huge businesses built on embedded and and embedded lots of things. And and that insight, you know, led you to found the company. And I'm I'm interested. What insights do you have today? What observations are you making that you're you're placing bets on the future companies?
Dan Blumberg:What what are you optimistic about that you see coming around the bend?
Daniel Kimerling:I'm extremely optimistic about a lot of things our portfolio is doing, of course. You know, what VC doesn't wanna talk about their own book? You know, for all of our snark and cynicism around AI, there is some really cool stuff happening. Just we have to figure out how to make money doing it. Yeah.
Daniel Kimerling:I think right now what I'm most interested in is looking at what is the future of venture capital itself. And for any of your listeners who haven't, I strongly recommend the book Power Law by Sebastian Mallaby, and it kind of is the best history of venture capital in the United States. And that has really inspired me to think about what is the boom bust nature of venture capital itself and how does deciens have a deeper, better, more fulsome understanding of that cyclical nature and build interesting venture capital businesses around it. So I think that's a lot of what we've been working on the last 6 to 12 months.
Dan Blumberg:And are are there particular technological changes or societal changes or tea leaves that you're reading now as you envision what financial services might look like, you know, several years into the future?
Daniel Kimerling:You know, Dan, financial services is fucking massive. So large. Yet people loathe it. People hate their banks. They hate their insurance company.
Daniel Kimerling:They hate their brokerage, you know, whatever it may be. Yeah. And, ultimately, I think what we believe is that that status quo that equilibrium cannot stand. We cannot have such a large industry in which people hate it, and entrepreneurs will always be looking to create new, surprising, and delightful solutions. And I think where the biggest opportunities are is in places where traditional financial institutions simply do not serve their constituency as well.
Daniel Kimerling:And as much as I do deeply appreciate the large money center banks, they really serve a very median audience. And we have a number of companies in our portfolio that are attempts to identify the opportunities that are far outside of that middle lane. And thankfully, because of the power of the internet, the search and distribution costs for those opportunities is way lower than it would have been in a analog era.
Dan Blumberg:Got it. The personalization of, you know, financial services for?
Daniel Kimerling:For podcasters
Dan Blumberg:who work with us about. There are there and there certainly are tools for creators, capital c creators. God help me. I think I'm one of them now. So exactly.
Dan Blumberg:Yes. A mutual friend of ours tells me that you have an uncanny ability to help people and to help make connections and that you do it in a in a really genuine way. And I'm interested to hear how you do it. Is there is there a method to helping others that you think maybe others can learn from?
Daniel Kimerling:I don't know who this mutual friend is, but whomever it is, they're very kind. I think that there are just like really three things. 1st is an ethos of giving first. If you give first, I'm confident, I don't know if it's karma or whatever, but I'm confident that if I give first, it will come back to me in spades. Maybe not tomorrow, but in the fullness of time.
Daniel Kimerling:2nd is I try and study more about other problems than the problems I work on. Just as an example, I do financial services venture capital, but I read very widely and I try and learn very widely about the world people history culture and so on and I think that that helps me try and find connections which are maybe not obvious or not as obvious to others. And then I think the third thing is that I'm insanely OCD about my inbox and about my kind of record keeping system, which is to say that I do not go to sleep ever without a 0 inbox. Every day, before I go to sleep, I go through all of the calls, all of the texts, all of the meetings, and I do all of my follow-up before the end of the day, every day. And my wife knows it.
Daniel Kimerling:She knows I simply will not go to bed if I've not done all of my follow ups. And I think that that creates a kind of I don't know if it's a culture a system but it's just how I've been for years whether I am more helpful to people or not I don't know. But I think it creates an impression that and I'm not perfect. I I can't say that I've never dropped an email or whatever. And and if somebody's listening and they emailed me and I didn't respond, please forgive me.
Daniel Kimerling:But I want people to get back to me, so I wanna get back to to people, and I think that creates the right ethos.
Dan Blumberg:Yeah. And I'm I'm sure it also I mean, there's there's the old ad that time kills all deals. Right? So I'm I'm sure that just the the rapid iteration of of of keeping a conversation going also has its own sort of more times at bat benefit. For sure.
Daniel Kimerling:And I I think about all the people who helped me. You know, I, we as a firm stand on the shoulders of giants. We all people stand on their forefathers and foremothers, and I never wanna forget that. And you know this job, my job as a venture capitalist, is fucking insanely privileged. It's got to be one of the most privileged jobs out there, and I never want to abuse that privilege.
Daniel Kimerling:And I think helping others is one of a number of ways in which we try and and, you know, as I mentioned before, we do we see like, I don't know, 900 ish deals a year and we do like 3 or 4. And that means for most people we're not gonna give them money, but that doesn't mean we can't send an email, make a connection, try and be a a good human about it. Yeah. Even if it means that we can't write very capable people checks.
Dan Blumberg:Dan, thank you so much. I I really appreciate all the things you've shared today. This is really fascinating.
Daniel Kimerling:Of course. It's my pleasure. Thank you so much, Tim.
Dan Blumberg:That's Daniel Kimmerlein, and this is Crafted, a show about great products and the people who make them. I'm Dan Blumberg, and it would mean a lot if you could share this episode with a friend. And sign up for the Crafted newsletter so you never miss an episode, and we'll get even more insights on how to build great products and great teams. Subscribe at modernproductminds.com/crafted. You can also see the show archive there.
Dan Blumberg:Crafted is sponsored by Artium, a next generation software development consultancy that combines elite human craftsmanship and artificial intelligence. See how Artiom can help you build your future at artium.ai.
Daniel Kimerling:You have to be willing to embrace a level of physical, emotional, financial, psychological pain and just keep fucking going.