Frank Rotman, co-founder of QED Investors, discusses his journey from Capital One to building a startup studio, offering insights on surviving hypergrowth.
Frank Rotman, co-founder of QED Investors, discusses his journey from Capital One to building a startup studio, offering insights on surviving hypergrowth and making business decisions. The episode touches on various aspects of entrepreneurship, including founder market fit and adapting to rapid growth.
starting a company, building a company, it it's not for everyone, and that's okay. For the people who it is for, it it's actually pretty magical. [music] All righty. Hello everyone and welcome to the Dealmaker Show. So, I got to tell you that I'm really excited about the guest that we have today. you know, not only an incredible operator, but then also investor and a friend, someone that I've known for many years now. And I think that the conversation today is going to be quite inspiring. I mean, he's had the opportunity to on investing on some of the biggest companies that you can think of when it comes to fintech. And now he's going at it again as a as a founder. But then also he's written a book that is going to be quite the guide for founders that are behind the trenches and that really want to know, you know, what it takes and what the journey looks like. So again, brace yourself
for a really inspiring conversation. And without further ado, let's welcome our guest today, Frank Rodman. Welcome to the show. >> Well, happy to be here. >> So originally born in Philly in the 70s. So give us a walk through memory lane. Frank, how was life growing up for you? >> Uh, growing up was great. I mean, uh, had a, uh, father who was a teacher, so I learned a lot from him. Uh, lessons about, you know, to constantly work hard and only take credit for the things that you actually did. Don't take credit for things other people did. So, it was a great great life growing up. Um, you know, Philadelphia in the 1970s was just a place to be that led me to other big great things. Now, one thing that is really remarkable is you went to the University of Virginia and you started to to get your feet wet in in everything related to AI. Obviously, back then it was you didn't
have the hype that you have today. Uh, which is crazy, but but how did you, you know, stumble upon all of this stuff that you were doing and and what what did it look like back then? >> It was very different back then. So I studied um applied mathematics and statistics undergraduate and my graduate degree was in systems engineering which back then was about operations research and solving some very difficult big problems um that computation you know could take care of. So I was studying artificial intelligence in the early days of neural nets the early days of you know just trying to power your way through some problems that were hard to solve. And my school was paid for by the Jet Propulsion Laboratory. Um, where I was a research assistant helping them with their Mars Explorer mission. So, it's funny, people call me a rocket scientist, but I never actually built anything with my
hands. It was much more being a code monkey, you know, back then, working on some of the early AI algorithms to see if it could help uh with the the Mars Explorer mission. So eventually Capital One the opportunity comes knocking and and you joined one of the first rocket ships in the world of uh of fintech I would say no or or financial services but how did how did the opportunity um come about because obviously there in capital one you had the opportunity to of working closely with the with the co-founders. >> Yeah I mean it was interesting because in school I didn't learn a thing about finance. I didn't take a single business class, you know, everything was about engineering, about math, about artificial intelligence, about computer science. And I was recruited, you know, directly out of college by Rich and Nigel, the two co-founders of what eventually became Capital 1. They were
actually at Signet Bank at the time. So, I was recruited into Signet Bank because, you know, meeting with Rich, meeting with Nigel, meeting with some of the early guard people that were on this mission to build an information-based strategy, you know, with a bank wrapped around it. Um, sounded really interesting to me and I just kept scratching my head saying, why do they want me? Like, I don't know anything about anything. and they said, "Well, we really want to do things differently and the talent that you have, you know, um is really raw talent and we want to apply it against this problem that's never been solved before." So, it was much more about being attracted by the people I was going to work with, you know, and the problems that we were going to try to solve, and we're all going to figure them out together, you know. So, it was a very interesting time where not knowing things
was actually more important than knowing things um because we were trying to build things from the ground up. and 12 years. I mean, I'm sure that 12 years, you know, in in in doc years, you know, doing that. I mean, 100 plus, you know, if you were to be in corporate, but how how was that like, you know, because that was truly a rocket ship and and what did it feel to be inside of that rocket ship being able to experience that level of explosive growth as well? Yeah, it's it's hard to explain to people who haven't been part of, you know, a growth story like that, but to put it in perspective, you know, I was one of the first analysts that was hired into, you know, Signet Bank, which then spun out Capital 1, IPOed it. Um, and by the time I left, there were 40,000 people in the organization. So, you go from this tiny little organization to something very big. And you know, in the the early
days, we were basically doubling our headcount or even more every year. And you know, in the startup world, that's one thing to go from 50 to 100 people, but when you're going from a,000 to 2,000 to 5,000 to 10,000 to 20,000, like you're adding massive numbers of people every year. And it was in an era where you needed a lot of people because there are call centers and there are a lot of customer support. And you know it's a different world than it is today where you can build a company with fewer people. But we are constantly reinventing ourselves. Every year you are reorginging the company because of the number of people that had just been added. Uh you had to have new ways of actually communicating through the organization. You had new divisions that were being created all the time, new products that were coming up out of nowhere. And all I can say is you showed up every day and you
knew that you had so much on your desk that you just had to power through it and then show up the next day and do it again. Um, so it it was one of these growth stories where everyone reported to the mission, everyone reported to growth, everyone reported to, you know, just trying to achieve something that hadn't been achieved in the market before. And you figured it out together, you know. So you you really needed to be flexible. You needed to understand that what you do today is what you're not going to do tomorrow. And if you were comfortable with that and you were able to grow quickly, you did incredibly well. And you know, if you were worried about your title or you were worried about the work that you were doing today and protecting it, you probably weren't going to be there in a year because the company was going to outgrow you. So it was it was crazy times, but great times. And
how was it like to to be part of a story like that where and I've heard this, you know, many times where your company is growing at that level. It feels like you're like in a race car and and and many of the pieces of the car are kind of like wobbly. Uh and and it's easy to make mistakes and I'm sure that many of those mistakes, you know, kind of like put you on the brink of potentially being fired. So So what what was that like? >> Well, I actually almost did get fired a couple times. Um, and it was for mistakes that were gigantic mistakes that affected the company. Um, I didn't do them on purpose. I mean, the these were things were moving very quickly and you were making judgment calls. And when you're in charge, if you make a poor judgment call, bad things can happen. So, I happened to have been in charge of a particular business unit that was delivering basically 100% of the
company's earnings at the time. And I remember making a judgment call that ended up backfiring in a very big way and almost blew up the company. Um, of all things, it it ended up that uh I ended up putting a solicitation out that turned a business that was growing at about, you know, 30,000 accounts a month, 40,000 accounts a month in a good month to 750,000 accounts in a single month. And to go from originating 40,000 of uh you know onboarding 40,000 customers in a month to onboarding 750,000 customers in a month. The infrastructure wasn't ready for it. And when the customers started pouring in, we were on the verge of breaking. And it's not like today where you can just add infrastructure by snapping your fingers and you know getting more cloud capacity. We had to actually process applications. We had to actually ship plastics to people. and there are compliance concerns with how
quickly you…