Bonus Episode: Andy Taylor, Founder & CEO of Douugh

Bryce Leske: [00:01:27] Welcome to the Equity Mates Summer Series of 2020, brought to you by Super Hero over 12 episodes, we're going to be deep diving into some of Australia's largest and most well known companies as selected by you, the Equity Mates community. These are some special bonus episodes that we've got where we are going to be asking some of the harder questions to the CEOs of some of the companies that we've been diving into. So stay tuned for those. But to kick it all off, I am joined by my equity buddy Ren. How are you going? [00:01:56][29.4]

Alec Renehan: [00:01:57] I'm very good Bryce very excited for this bonus episode and this interview. I think we're going to get out a lot out of it. It's an interesting company we're going to be speaking about and it's had a phenomenal listing on the ASX. So I'm excited to get stuck in. [00:02:12][15.4]

Bryce Leske: [00:02:12] So without further ado, we are incredibly honored to welcome Andy Taylor, the founder and CEO of Dough to Equity Mates. Andy, welcome. [00:02:20][7.7]

Andy Taylor: [00:02:21] Hi, thanks for having me. [00:02:22][1.1]

Bryce Leske: [00:02:22] So, Andy, DDO has been a hot company in our community of Light. You've just listed. And as Alex said, it's been a pretty phenomenal result, I guess, especially if you were lucky enough to get through the equities sort of pre-IPO. Some of our community members have done very well for themselves. A little bit of background on Andy. Andy's a serial entrepreneur in technology. Before founding DA, he co-founded Society One, which is Australia's first peer-to-peer Linda in 2007, co-founded Unity ID in 2009, and founded Your Tango in 2012. In 2015, Andy was nominated for a Wise Entrepreneur of the Year award, and in 2016 he founded DDO, a company on a mission to democratize banking and make the world financially healthier, which we have spoken about in the episode. They're taking AI Ifirst approach to helping people spend wisely, pay off debt, save more and build wealth. So some pretty important financial literacy, I guess, mission there. So, Andy, we're looking forward to cracking into a bit more about dough and asking you, as I said, some of the tricky questions. [00:03:34][72.3]

Alec Renehan: [00:03:37] So Andy would love to start by hearing about your company in your own words and how you think about the company and what you think. I guess it's sort of mission and what you want to achieve with dough. So to start off with what is dough? [00:03:50][13.1]

Andy Taylor: [00:03:50] Yeah, well, look, we really view ourselves as the purpose driven fintech business. We're trying to actually disrupt the business model of banking as well as the customer experience of banking. So we're coming at it from two angles. And this is where I guess the misconceptions sometimes come in. We're certainly not a major bank in the sense that we've gone to become a licensed deposit taking institution and immobile, focused in terms of a better banking offering for us. The problem that we've always come back to that we're trying to solve here is how do we help people better manage their money and which financially helps it? And for us, the problem of stems from the business model of banking, which is predominately designed to pay you as little as possible for your deposits. On the other side and make a rather large margin. And it's not conducive to actually it's fostering positive behaviors on money management or spending. And, you know, this sort of problem we've looked at now, it goes back 10 years. We looked at society one which was, you know, technology is coming to mediate the banks. It's empowering people. It's providing transparency and a level of control that people have never had. And now people have access to so much information that they're very intelligent compared to how they were, you know, 20, 30 years ago. So we think banks have lost their way. And that was really highlighted by the royal commission, I think lately. And we've got a very I guess, the same view of where banking is going, which for us is it's going to become fully autonomous and how people manage their money in the future. I think this whole notion of Internet banking or self-service banking is going to disappear. And we are really focused on building that next engagement model, which is all about artificial intelligence and making better decisions for you and helping you change your behavior around how you spend your money. [00:05:57][126.7]

Bryce Leske: [00:05:59] So what was the journey to actually founding DOE? Was this an idea that has always been in the back of your mind or as you've gone through founding many of the companies that we spoke about? Was there a light bulb moment? What was sort of that journey to get to, I guess, the IPO? [00:06:15][16.6]

Andy Taylor: [00:06:17] And it's never-ending with hindsight against she reflects. And I think it's taken me a lot of. Crystalize, I guess, my purpose and what I really want to do, I think early on was society when it was in the midst of the Web 2.0 boom, we came at it from a credit card consolidation point of view. And how to solve that problem was certainly the idea and the notion there was if the power of the community can facilitate the transaction, why do banks need to exist? This is why social lending, which then became peer to peer lending, sort of came from, which is if I need to borrow some money to consolidate my debt, I'd rather have the crowd provide me with that funding and I can get a price based on my data set. And that sort of spurred it on for me. And I think where the lending came earlier with society, one was we were kind of bottom of the funnel in terms of how we're trying to solve that problem. You know, we you can't ask for a personal loan. We gave you a price based on your credit score, but typically we never really saw you again. You know, there was no longer engagement. And where I got quite passionate was if we're really going to solve this problem, we need to be top of that funnel. And for me, that was always at the bank account level. When the salary comes in, we need to be the ones. How can you provision and distribute that money and making the right decisions, if that makes sense? [00:07:38][80.6]

Alec Renehan: [00:07:38] Yeah. Yeah, it does. It does. Now, I think an important distinction we should establish at the top in the media, though, is often described as a neo bank. However, as you've mentioned, that's probably not the most appropriate description. So I guess maybe can you explain how you're both similar? And then what are the key differences between dough and some of the other neo banks that are sort of popping up in the Australian market? [00:08:04][26.0]

Andy Taylor: [00:08:05] Yeah, it's a great question. It's popped up a lot recently. And I think the problem with the definition that bank in different markets is quite vague. And Wikipedia's definition last night, and ultimately it's a digital based platform, is offering transactional banking services. So from that sense, we are mean. I think the key difference with us, though, here is that we're not in Idei we're not sitting here saying your funds are being held by. It's very clear that the funds to help the bank's sponsorship model, where the bank is the custodian sitting behind this platform and other trustmark, if you like, said the government guarantee comes from the banks. We have partnered with the hold your funds. So, you know, we're very focused on actually saying we're more of a financial lummus platform and where we're going and ultimately we're assess business and how are we going to monetize because we sit on top of the banking infrastructure, which, let's be honest, is pretty commodities these days. The bank gives us a bank account and a debit card proposition, but ultimately we're building the technology around that. And so it's a very important distinction because the new bank model is very much a mobile focused approach to self-service banking and taking deposits and paying interest on that money. [00:09:25][79.5]

Bryce Leske: [00:09:27] So let's move to the going public and the IPO process. We have done a number of episodes this year sort of deep diving into the various processes that companies go through, be it a two year process, a two month process to IPO, and have also spoken to some CIOs who have gone through it. And it's always such an interesting journey. You guys iPod in October of 2010 and 20 this year, very recently. What was that process like? [00:09:57][29.9]

Andy Taylor: [00:09:59] It was a journey and it was definitely one for the book. I think, you know, we started conversations last year on this and we ended up going the reverse takeover route because we thought it would be an easier path being that we were at a stage where at finding a technology company that had a good balance sheet and presented an opportunity. But I think obviously it had an impact on this as well. That process was drawn on a bit longer than we'd hoped. But look, it's obviously been a great outcome in the end. But certainly it's a journey to especially at a stage. [00:10:45][45.6]

Alec Renehan: [00:10:46] So most companies that list will go on a bit of a road show and try and sell their shares to, you know, the top end of town, the investment banks and the like. You took a little bit of a different approach and raise capital through equities, which is I guess, a crowd funded venture capital platform. Why why did you decide to go that route and how did you find it? [00:11:11][25.8]

Andy Taylor: [00:11:13] Yeah, really, really great, actually. Look, we've always been big believers in crowd funding. We want our customers to become shareholders and vice versa and I think what our customers see is that they're buying into the vision we're trying to create. So early on, we did an initial pre IPO rather than Equity Mates really well, got strong support and it was important for us to maintain the support going into the IPO. So, you know, what equity crowdfunding gives you is a marketing platform, but a strong, supportive retail base of investors. Before the man we just completed this week, we stopped to bring in more institutional investors into that table. [00:11:53][40.1]

Bryce Leske: [00:11:54] So and you mentioned a reverse takeover there. So for members of the community who probably wouldn't be aware of what that means and the difference between a traditional IPO, how are you able to just explain what actually happened? [00:12:10][15.7]

Andy Taylor: [00:12:12] Yes, a reverse takeover is recently quite a common approach to early stage companies looking to, you know, get liquidity on the ASX. So there are some really big examples of Archos whereby you effectively take over an existing listed company that typically has a solid balance sheet with some cash in the bank. And you rebrand that company, cheated by the back door, as they call it. So impalements is a good example of a company that sees that money back in the day. So it's not an uncommon way for companies to acquire. [00:12:54][41.8]

Alec Renehan: [00:12:55] So you sold shares via equities at three cents, was speaking on the 3rd of December, and your share price is currently twenty eight cents. So you have people that participated in that equities Ren has almost 10 back in, what, a couple of months. So you've probably got some very happy shareholders there. Two questions. First of all, do you regret pricing it at three cents to the price of India? And second question, what do you attribute the rapid share price growth to? [00:13:29][34.0]

Andy Taylor: [00:13:31] OK, so look, I mean, you know, hindsight's a wonderful thing, but no, look, look, I grew up in South and this is probably the experience talking now. But the worst thing you can do with some of the listings that you're seeing is overpriced and it takes a long, long time to recover. I think what's important for us is say, look, you know, we're a long term investment here. You know, we've got a grand ambition. We've got a fantastic foundation, but we need some patience to build that out over the next 12 months. So, look, we wanted to not take the mickey in terms of pricing, reflect the fact that where we are, where we are in terms of our growth cycle. And it's great that those people are back to selling on the upside side. And look, if they can hold the upside will hopefully be fantastic. So this is not a short term story. It's a long term investment story. [00:14:27][56.4]

Bryce Leske: [00:14:29] So we have spoken in the episode where we did a bit of a deep dove into DDO about what the future may hold and I guess what your broader mission is. And while we were doing that, you guys went into a trading halt and white on the back of an announcement. And it comes to light that you are now going to be playing in the buy now, pay later space, an area that is hot. [00:14:54][25.0]

Alec Renehan: [00:14:54] Very well. [00:14:55][0.4]

Bryce Leske: [00:14:57] Can you tell us anything more about what that is going to entail? [00:15:01][4.0]

Andy Taylor: [00:15:02] Yeah, and we've been running now and it for just over 12 months. And I think it is very clear for us with the data that we're seeing with customers was the need to replace and the credit card and that credit card debt, whilst we're trying to help people provision for the things they want to buy. I think it's very clear that life has gotten away, especially you to cope, whereby a responsible line of credit to help people pay emergency expenses and to have that space is needed and I think credit as a place and overall money management. So from our point of view, it wasn't a traditional approach to Bon Appetit. I really this is what we call an emergency fund, if you like. We call it a credit on the platform that if we do our job properly and help, you should never have to use it. But we do realize that life gets in the way and sometimes you need a bit of help to bridge the cash flow. And that's really what we're here to do. [00:16:02][59.7]

Alec Renehan: [00:16:03] Now, Andy, you mentioned there are responsible credit line, and I think the media have really picked up on that term and have used it to maybe contrast what you're trying to do with some of the traditional by now pilot companies. Do you think that some of the other Binalong highlighter companies are irresponsible? [00:16:23][19.9]

Andy Taylor: [00:16:25] No, definitely not, and we don't like to be quoted as bashing the sector. I'll be honest, there's always been that we see it as a credit products. Part of our mission here is that a lot of our customers don't have a credit score. And to get on that credit ladder, you know, we want to help them boost their credit score. So, you know, through repayments back of this product, we can actually get the transparency, what it means for boosting their credit score. But we think it's important for us on this platform to make sure that we're assessing in real time people's financial positions and only extending them the credit that they can actually afford. So that's that's really where we're coming from in terms of a responsible product. [00:17:08][43.0]

Bryce Leske: [00:17:10] So other than the data that's coming through for the Bonnar pilot Espace, I'd be interested to know if covid has brought to light any new trends in the way that customers are looking to manage their money or I guess use the platform. Has it been a net positive ferdo [00:17:26][16.3]

Andy Taylor: [00:17:28] like it has been, especially being that we're operating in the US, which, as you guys probably know, is quite a way behind Australia in terms of cashless payments and banking in general. So what we've seen is a big fast track towards digital contactless payments, which is really just shot in the arm. America needed to move away from cash. And we've obviously seen a big adoption of robo advisory and digital banking platforms as lockdown's of preventing people from going into branches. [00:17:55][27.7]

Bryce Leske: [00:17:57] I would say that we are a little bit behind America in some instances, but I couldn't believe when I traveled over there the amount of cash that was still going around and also no pay tap and go over there. So I just found it pretty phenomenal that they were so sorted of backward in that sense. [00:18:12][14.8]

Andy Taylor: [00:18:13] Yes, I think for us, being that, you know, the reason we started in the U.S. is that the interchange bearing on debit card transactions is very high compared to here. It's a big driver of our revenue model. So we're very fortunate. But you're right, in terms of open banking, there are a lot further ahead, you know, so it's quite an interesting dynamic over there compared to. [00:18:35][22.0]

Alec Renehan: [00:18:37] So, Andy, we mentioned the by now pilot of space, and there's obviously some big competitors and some smaller competitors in that space or moving into that space. But I'm interested in when you think about your core product, this software, as a service powered platform that helps people manage their money. How do you think about your competitors in that space? What do you think the landscape is like both in the U.S. where you're active and in Australia where you're soon to be active? And how do you think, though, is better? Or what do you think separates, though, from some of your competitors? [00:19:12][35.5]

Andy Taylor: [00:19:14] It's a really good question. So, you know, we view ourselves ultimately as building a world platform. And this is where our advisory is going to become a critical, very large component of the platform very soon. We flagged that in our prospectus. So when I look at the robo advisors that have traditionally been siloed, my statues of the swell, the icons, the battlements in the US well front, they focused on the funds under management model. So I guess democratize investing and give customers access to the ETF products of you here is that we needed to start the bank account to sell this before we introduced the wealth management platform. But being where interest rates are, where they are pretty close to zero, the investors are very hungry for yield in the space and putting them into managed portfolios that the balance, the risk weighted and making that super easy and plugged into the bank account is really what we're all about. And this is where the autopilot and the eye really takes over in terms of provisioning money and helping you get ahead. And we ultimately believe once we've got that final component built into the platform in the coming months, that's when we can start to justify a subscription into the platform. [00:20:27][72.6]

Bryce Leske: [00:20:28] Can you expand on the I guess because the way I understand it is that I was designed to learn over time and I guess make decisions? Does that mean that the technology will be tracking how customers are spending their money and give them suggestions on what they should be doing with it? Or is it know what's the sort of approach there? [00:20:49][21.3]

Andy Taylor: [00:20:51] Yeah, a view. We call it self driving money. And I think let's use intentionality about, you know, the customer analogy is good because we all know that cars will become fully autonomous in the next three to five years. And can we imagine a scenario where we jump in the car? There's no steering wheel. I look at money management the same way. It's it's ultimately to change customer behavior. And we've researched heavily on this. The wow moment for customers is if I could just have an app in my life that when I paid my money and it paid my bills for me, it provisioned what I can afford to say and then set up a budget and held me accountable to that budget that would change my life. And for us, that's the holy shit moment. That's the viral moment. If we can get people into that state, they're trusting us to manage their money and we're going to find that and reinforcing how well they're doing. And I think this is where banking apps have always gone wrong. That always shows where your money's going. But no one comes forward to say if you keep going like this, this is what you're going to achieve. And it's kind of akin to health and fitness. That's really how they do that beautifully. That whole customer experience gets transformed. So right now, we're just driving Insight's through connected accommodator. The first thing we get you to do when you sign up to get it's connected to a bank account that gives us up to two years worth of transactional data around you. And that's what we use to inform the machine learning model to then build and focus for you moving forward. So that's a nice, engaging experience on day one rather than a very cold switching message. But slowly now we'll be well, we'll be announcing the launch of our product in the coming weeks or that pilot. Now, if you turn it on when we'll start to sweep money for you and cover those expenses. So it's what I call the first level of autonomy, if you like, and with the goal to get to full autonomy in all areas. [00:22:55][124.1]

Alec Renehan: [00:22:56] Well, I like it. Self driving money. So I guess that makes you the the Elon Musk of finance, then? [00:23:01][5.2]

Andy Taylor: [00:23:03] I didn't say that, sir. [00:23:07][4.4]

Alec Renehan: [00:23:08] Andy, one one thing that we've sort of really learned and over the journey here at Equity Mates has been reinforced time and time again when we speak to CEOs or investors is the importance of people and culture and how the people leading businesses and the people working in businesses can really make the difference between a successful company and a not so successful company. So we'd love to understand a little bit about the people and culture at DDO and I guess too. Start with for you as CEO, do you have a leadership philosophy that you try and embody and try and apply to your work? [00:23:44][36.4]

Andy Taylor: [00:23:46] Yes, I do, and I think, again, it's the highest of experience, you know, the last 10 years from their point of view, being pretty tough to horrible. You know, I'd certainly say I've had to learn the hard lessons to get to where I am today. And I look at that now and say that's been a blessing, but they've been pretty hard lessons. So I think the key for me now from a leadership point of view is surrounding myself with highly competent, skilled people that understand their areas and just sitting back and empowering them to do the best job possible. And I think where I was guilty of this before was probably trying to do too much and being a little bit too controlling. And I really do think that's the key. It's, I think, good leaders to set the right vision and hold everyone accountable to that vision and let them go and do what they're good at. And I think the trick is we're where we're at right now. Obviously, disclosing this funding round is not scaling up too quickly on the people front that it becomes uncontrollable. But doing it methodically, being that we've got a really good core at the engineering level, on the level that we don't want to disrupt that too much, that it slows things down. And I think that's the challenges I experienced before. And I see out them when the mistakes are made is that you can grow too fast and that is detrimental to the culture. So but at the same time, you've really got to pull back great flavor, you know. [00:25:16][90.3]

Bryce Leske: [00:25:18] So if you could sort of sum up in a phrase or a sentence the type of culture that you're trying to build at dough, how would you sum that up [00:25:27][9.4]

Andy Taylor: [00:25:31] We said we'd be asking the tough questions. [00:25:32][1.3]

Andy Taylor: [00:25:35] Look, don't compromise Ren. I think we're going for it. We've got a pretty epic vision and we want to have a crack at it. We believe we've got a platform to do it. One of the things I reminded him constantly is just because something is done the way it's done doesn't mean it needs to be done the same way moving forward. Right. And back thinking is a classic and it's trying to get a team to think differently, go back to first principles and say we if we got a blank sheet of paper here, which we do, how would we redesign this into a top to bottom? And certainly I've seen and I don't think it's an Australian thing, but when any Americans are thinking this way, but it's it's trying to get out, you know, change the paradigm in terms of thinking it's OK to think big. That's what's really important for me with onboarding new people. Now, you know, we have the chance to do it. And if we're 10 years away and we did OK, would we regret it or not? Say we went for it and we took our customers feedback and we executed that. We weren't influenced by external forces. [00:26:43][67.7]

Bryce Leske: [00:26:44] So putting our investor caps on again, we love seeing obviously strong revenue growth in companies and recurring revenue and ideally eventually turning a profit. So I guess the question is where both now and in the future are you seeing the platform sort of generating revenue? And, yeah, maybe sort of talk us through how the platform is set up where you're making your money? [00:27:09][25.3]

Andy Taylor: [00:27:11] Yeah, sure. So, again, a big part of the reason why we started in the US was the foundation of interchange revenue on card transactions is really gives us the opportunity to build out this revenue story. And we've launched the platform now we launched a couple of weeks ago. The beautiful thing about the model is once we're onboard a customer, they pay them and deposit funds where the revenue away off of transactions is part of the point of sale. So that revenue profile now will build quite quickly as reliable customers. And, you know, certainly what we said to investors in the last round is a big chunk of the money is going out to growth happening and scaling up that customer base. And then ultimately, once we've got a product in a really good place for wealth management integrated, we will turn on that subscription and validate that SAS model. But we're fortunate that we have a lot of different revenue opportunities with the data we're collecting and how we build building services into that. And I think the by now a feature or the critical feature is a good example of how we can incrementally grow on the customer. [00:28:17][66.2]

Alec Renehan: [00:28:18] So any thinking about that future and thinking about what is in store for Dollars, if you think about the next 12 months, what are some of the key milestones or key steps, I guess, in the product pipeline that you really want to hit in this next 12 month period? [00:28:35][16.6]

Andy Taylor: [00:28:36] Yeah, or a product launch by Christmas is is the priority right now. That's the start of the automated journey and then the introduction of robo advisory or wealth management into the platform that really, from our point of view, finalizes the foundation. And then we bring the credit java into that relatively quickly. We've got a really strong value proposition, which I would say is better than what you see out there at the moment. And for us, it's, you know, with anything to do with banking. And I think you're seeing that within the banks locally as you've got to do the cleansing stuff. You've got to do the foundational stuff on banking. Right. This is time-consuming but necessary before you start to belittle the value add on top. So we've been building heavily now after three years. It's been a long journey on the bill, but we're quite a way ahead now to some of our peers that popped up around the same time. So getting those key features integrated into the platform is the priority. And that's why the bulk of the spend is going to building out that product engineering team that I'm. [00:29:42][65.5]

Bryce Leske: [00:29:43] So I guess the other big question if we're thinking about the next 12 months or even a little bit into the future, is what do you think the biggest risk for your business is right now? [00:29:52][9.5]

Andy Taylor: [00:29:55] And look, I think one thing we're very focused on internally is building very smart for engines and, you know, fraud is something that digitalize is is a thing is a big thing. And we've got to be on top of our game there and have done for the last 18 months, the bulk of the work has been building our own sort of machine learning support system to onboard customers and identify fraud for Athens. And we're in a really good space on that. So, look, that's certainly something that that's that's top of mind regulation. And look, I think in the US specifically open banking, where that's going is interesting, but I wouldn't call it a risk. I think the model that we're adopting at sitting on top of banks through a banking service model is now well understood. I think it's taken a bit of time to push through here, but it's coming. I think Westpac to move into banking as a service is good validation that of that model. So it's really it's very simple for us. We've just got to build a fantastic product that people want to tell their friends about. And the more viable and the more value we are, the more successful will be. So ultimately, we don't just want to be another banking app. We want to change people's lives and, you know, just using testing knowledge and gain the brand. And the proposition we're trying to build is very important to achieving that. It's a premium product. And if you use this, you won't be able to live without it. And that's what I call a true utility that's borrowed, but obviously very hard to achieve. So that's what we're focused on achieving. It's that it's that moment. [00:31:42][106.2]

Alec Renehan: [00:31:43] So, Andy, we want to say a massive thank you for giving us some of your time today. And joining us to talk about DDO, we have one final question. But before we do that, if people want to check out more about DDO or follow you online, are there any particular places they should go? [00:32:03][20.7]

Andy Taylor: [00:32:05] All the social channels, as usual. And obviously, we'd love you to come to the website and download the app for those Americans in the audience and come on board and give us some feedback. And it's really important. [00:32:19][13.6]

Alec Renehan: [00:32:20] Yeah, and I think for Australians, you have a wireless sign up on your website. So if Australians have had their interest piqued, they can sign up and be first to hear about it. But as I said, we did have one final question. And we're closing out all these interviews with the same question. If you think about your company in ten years' time, if you think about where you're trying to get down to, what would success look like in sort of 10 or maybe even 20 years' time? [00:32:50][30.3]

Andy Taylor: [00:32:51] So for me, guys, I think I'm at this stage of life and my entrepreneurial journey, and it sounds really corny, but that legacy is more important now than anything. And, you know, I truly believe we have the opportunity to build a truly global technology business and scale this to the heights. And that success, for me, seemed to be used in multiple countries, changing people's lives and a clear distinction of finance from the states for people to be using it versus not. And I think that's how we become successful. That's what's driving me. We've got a big mission. And we want to just fundamentally think banking is broken. The model hasn't changed. It's just various iterations of the same model. We want to change the model and change the game. So, you know, we're going to have a lot of fun, I'm sure, and it's going to be challenging. But that's what we're going to love it. [00:33:48][56.5]

Bryce Leske: [00:33:48] And we will very much appreciate your time today. It's been fascinating to get some insights straight from the mouth of the founder and CEO, something that I know a lot of our audience will take great value from. So all the best with the journey of dough. We're very much looking forward to seeing how not only it plays out on the share market, but also in terms of executing your mission and changing the lives of people in their financial well-being. So thank you for your time and I'm sure we'll keep in touch. [00:34:16][28.1]

Andy Taylor: [00:34:17] Thank you, guys, I really appreciate the opportunity. [00:34:17][0.0]

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