# How We Got Fred Wilson, Benchmark and Index to Invest $94M Why Robinhood's Strategy is Wrong · Why 1-1s are BS and What Every Founder Gets Wrong About Equity · Why Taste Beats AI But How AI Kills Org Charts with Paul Erlanger, CEO @ fomo 20VC · Jun 27, 2026 · 57 min · 11,648 words Speakers: Paul Erlanger, Harry Stebbings Source: https://www.996.fm/episodes/20vc--ep-990326dc/ ## Cold open **Paul Erlanger** [0:00]: I think we gave non founders a percentage of the company that usually founders get. For the first eight months to building, no one on our team took any pay. The best people are just so much more valuable now. One thing that I discovered was if you're trying to raise another round, wait to announce your last round. Everything is about momentum. **Harry Stebbings** [0:21]: I am Harry Stebbings. This is twenty VC. ## Intro **Harry Stebbings** [0:23]: Today, we have Paul Erlanger, co founder and CEO of fomo on the show. Now fomo is a wild story. For the first eight months of building the business, none of the core team members took any salary. Despite the company being a wild success today, they only have 17 team members, no internal hierarchy, and they have no one on one meetings. They've just announced a $75,000,000 series b at a $550,000,000 valuation led by Index and Fred Wilson at USV. I love non obvious stories, and when you unpack this one, there are so many gems to uncover. But before we dive into the show today, ## Sponsor read **Harry Stebbings** [1:02]: have you ever felt a little stuck at work? Maybe you're stuck in back to back meetings, stuck without clear feedback, or trying to learn a new AI workflow? Well, now you can move work forward with Loom, the AI first video platform from Atlassian. Use Loom to simultaneously record both your screen and yourself to share a quick update, provide feedback, train a colleague, and everything in between. 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I think like every day waking up, going to the office, getting to work with an incredible team, and building what we're building. I think one, specifically because of what we're building, but also just getting to work on something really cool, like an interesting problem with amazing people, I think that's what actually motivates us. **Harry Stebbings** [5:06]: I think it's important to set context for those that don't know what fomo is. How would you describe fomo in thirty seconds? **Paul Erlanger** [5:13]: Yeah. Fomo is a mobile trading app. Right now it's mostly on chain assets, meaning like on chain native assets, Bitcoin, Ethereum, attention based assets, etcetera. But we're soon going to launch globally access to equities and perpetuals. Non US, obviously, we'll kind of work with the government there as that comes. But the goal is to be able to give global access to markets, to individuals that don't have that access. It's also social, so you could see what your friends are holding in real time, follow them. I know everyone's wanted like a real time Nancy Pelosi stock tracker, so maybe if she trades on fomo, we could finally get one. **Harry Stebbings** [5:48]: I think that'd be an interesting addition to the angel round. Speaking of interesting additions to angel round, when we think about early rounds, you did an only angel round in the early days, no institutions, and you had a 140 angels. Why did you decide to do this, and how would that inform how you advise founders? **Paul Erlanger** [6:09]: It was pretty intuitive to us. So I think if you're running a B2B business, you hire a big sales team, and it's not an easy job, but it's a lot of outbound repetitive. When you're starting a consumer product, it's a very different problem space, because there's a lot of great products that just never get off the ground. So we knew we needed to solve this cold start problem, like get people on the app. So when we raised the initial round, the goal was to create distribution, and we think that our best users should have some ownership in the product, and early on what we're able to do is get people motivated by allowing them to invest in the product and create as large of a distribution channel as possible. And not all those people are traders. There are definitely builders in the industry, and we've been able to leverage tons of them as we continue to build. But I think that initial round is really core to the success of fomo. **Harry Stebbings** [6:55]: Who is the single best angel? **Paul Erlanger** [6:58]: There's this angel investor named Aaron Harris. He is x y c. You know Aaron? **Harry Stebbings** [7:03]: Yeah. I had him on the show years and years ago. **Paul Erlanger** [7:05]: Aaron is an incredible angel investor. He is an incredible partner. He understands financing really well, and I think that when you're financing for a business, it is one of the most important decisions you make, because a small change in a term sheet could completely change the trajectory of your company. So I think having him there in our court to really help us work through some of that as first time founders was really helpful. **Harry Stebbings** [7:29]: That's so funny. He was like one of the first 15 guests I ever had on the show. Was a YC partner at the time. Can I ask you, when you reflect back on that journey, if you were to advise a consumer founder on how to scale to your first 1,000 users? I love Kevin Kelly's essay, a thousand true fans. If you're advising on first a thousand news, what would your biggest advice be? **Paul Erlanger** [7:49]: Talk to them. You need to keep iterating until you have 10 people, a 100 people, a thousand people using it. When And you have 10 people using it, get the feedback from them, and then iterate on that feedback, and then 100 people. This is actually one of the largest competitive advantages for our company, is in the on chain and crypto industry specifically, the users are very passionate about using the products. So we have telegram channels with a lot of the top traders on fomo, and when we put out our web app, for example, we did it a week prior and we gave early access. The web app probably became twice as good just in that week, because we were able to get early feedback from people who were actually passionate, and these people are just users of the product. We didn't pay them. There's no other strings attached, but they just loved it. So I think that the most important thing is just getting user feedback and iterating on it. **Harry Stebbings** [8:34]: I have a product too, is the show itself, and my challenge is user feedback varies. Some people love some things, and some people hate the same thing. How do you determine when a user is right and you should ingest it and make changes versus when you should stick to your core product roadmap or thesis and ignore their feedback? **Paul Erlanger** [8:53]: I think you just have to be super epistemically modest, because sometimes a user doesn't even know what's actually best for them. When you get feedback from a user, you really need to listen to your instinct on what the fundamental product experience is and your intuition, and then see if that fits in your larger vision. Honestly, I think that certain product conditions could potentially kill the product like that one. So ones like that, that actually have this large potential outcome, you need to be very thoughtful in implementing. **Harry Stebbings** [9:22]: Why do you not agree with the financial super app theory then? If you have a Revolut or a Robinhood or a new bank or any of these big providers where it's like the bundled provider is the one that wins. I trade on Revolut today. Why is that the wrong approach and actually you need a trading app? **Paul Erlanger** [9:38]: Because everything app means not intentional. It means let's just throw everything in there for the user to access. What is the glue between these things? At fomo, we think it's the social graph. We think that you can express a thesis. I think that the Strait Of Hermes is going to close. Well, I can buy oil on hyperliquid perps. I could short US equities that are reliant on oil. I could buy the prediction market that The Strait's going to close, and I can express my opinion in all these different things. And the reason these different market types exist is to you express conviction on a belief, whereas all these other apps are just everything super apps, and there's no intentionality behind why all those things have to exist in the same place. Do **Harry Stebbings** [10:17]: you compete with Kalshi then? **Paul Erlanger** [10:19]: Yeah, I mean, we haven't integrated prediction markets yet, and I'm not sure exactly where it fits in on our roadmap. I think it's very interesting there. Our first version of the product would be built on something like a polymarketer and Kalshi. Those are great businesses, and I think that there's a lot in flux around the regulation of these businesses, so we want to watch and see what happens and then move from there. But I think it's really important because public markets have been how retail gets access to capital, and we talked about this, and we were talking about Shopify and how amazing that was that retail investors got private scale returns in the public markets when it launched at, what, 2,000,000,000 and is where it is now. This is becoming earlier and earlier. If you have perps that are pre IPO, and then you have prediction markets that from a year ago Sorry. **Harry Stebbings** [11:06]: Just so people understand, what is a perp that is pre IPO? **Paul Erlanger** [11:09]: Yeah. So what a perp is, is you're placing a bet on a price, basically. I think the SpaceX will go up. You think it will go down? Exactly. And instead of me selling you SpaceX stock, I just bet you that SpaceX will go down. You're betting me it's going to go up, and then we trade money. So what you can do is you have a price on the exchange that people just agree. Like, you're like, I think SpaceX should be this much. I think I'm willing to sell this much at that price. So I will sell you that much at that price, and then we're betting on it going up and down as a side bet, and you actually don't need the transfer of the underlying asset because of that, because it's synthetic. What's beautiful about that is you can trade these things without necessarily having that underlying price. So what we saw with Cerebras is when the IPO happened, the hyperliquid price started to converge to that price at IPO. And there were people there are pictures of people on the New York Stock Exchange with hyper liquid UI up and and people looking at those markets, and I think that's really cool and interesting. But with pre IPO, with prediction markets, retail gets access to these markets earlier and earlier. **Harry Stebbings** [12:11]: Can I ask you, when you look at Robinhood today who provide or want to provide a lot in terms of trading capabilities, do you think they were wrong to go so broad so quickly? **Paul Erlanger** [12:22]: I think a lot of people that are on Robinhood would have never been on a brokerage otherwise. I see some criticism of, like, do I want to have my retirement account in the same place as I can trade prediction markets and sports bet? I think that they can do better tooling for users to self guard against some of those products, but I understand why they horizontally scaled. They grew their business, and they were able to saturate The US market, but they weren't able to go global. And I think this is why they're focused on on chain assets, because on chain is global from day one. And if they could tokenize equities and a lot of the stocks that are existing on Robinhood, then they could give global access to these assets. I think that as they go global, they could be less focused on horizontally scaling all these products and really capturing a larger market. **Harry Stebbings** [13:05]: Do you worry about the casinoization of public markets? And what I mean by that is just like a detachment from reality because of social media, because of retail exuberance. Businesses were based on core fundamentals. Now GameStop is a good example. Exactly. But social media and movements can drive such price swings that it just becomes a fucking wild west in a casino. Do you worry that now the public markets is just a wild west in a casino? **Paul Erlanger** [13:35]: I think casino is kind of a derogatory way to view it. I think somewhat it's somewhat empowering. Right? Like hedge funds have determined the value of stocks for the longest time. This group Wall Street Bets saw a bunch of shorts on this stock and was like, Screw the hedge funds. We're going to have to have them cover call the shorts and the price is going to skyrocket. It was kind of cool to see a group of retail investors coalesce and be able to kind of fight back against the institutions. I think this is a really cool corollary to fomo because fomo is a public network, whereas you had to be on Wall Street Bets on Reddit. In fomo, everything happens on real time, so people in retail can coordinate there. And I do think that attention drives a lot of things. I think whether it's sports cards, like, everything is speculative to a degree. Right? Like, why are you buying diamond rings? It's because we've kind of agreed as a society that this is worth this value. Why are you buying gold? Most financial assets are speculative. I understand the view on fundamentals, and when you're buying business, you're buying the cash flows in that business, but most people, when they buy a stock, they're not looking to get dividends. They're looking to just sell at a higher price. So in that framing, everything becomes speculative, and I'm not gonna take a normative view of whether that's good or bad. **Harry Stebbings** [14:47]: Going back to the story, when you had the angel round and we got to the thousand true fans, what's your biggest advice to founders on product market fit? **Paul Erlanger** [14:55]: I think you have to stay humble, because at any moment you could lose it. Everything is about momentum. So when you have momentum, instead of like taking the gas off the pedal and be like, okay, like this is working, it's like, no, you need to double down 10 times harder. And every day we come in and we're like, listen, we need to ship these features today, or else we're going to lose everything we have now. I guess it's somewhat of a fear mindset, but it's really just like trying to continue to keep pressure on, so we continue moving forward. Because once you lose momentum, the boulder starts rolling down the hill. You know? You need to keep pushing it up. **Harry Stebbings** [15:27]: One of the biggest mistakes I think I see with founders is, like, they're terrified of launching and not having any adoption. And so they make it a more diluted and diluted message for more and more people. It doesn't mean anything to anyone. And then they launch and it's like, it's the most mid product ever because they tried to make it so bland for everyone. **Paul Erlanger** [15:45]: A 100%. Actually, had a really good point here because there's this balance I've always tried to find between shipping fast and doing things perfectly. I've been a perfectionist, I'm like, This detail, everything needs to look perfect, and now I'm like, We have 50,000, 60,000 daily active users. We need this to be perfect from day one, or else we're going lose that user base. Chatham was pushing us like, Well, what if you shipped faster? Just think through this. Let's steal me on that side. And I was like, Well, at Apple. Everyone envies that company. They always ship perfect And then we were talking about how lithium ion batteries exploded, how the first iPhone was glitching out all the time. And looking back, you look through hindsight with rose colored glasses, but actually most companies don't ship perfect products. You have to find this balance between shipping something, a good framing is the one you're using, that a specific user base might want to adopt, and it could grow from there, rather than just building something for everyone, and something that you think meets this bar of perfection. **Harry Stebbings** [16:42]: I think now you have to ship faster than ever. **Paul Erlanger** [16:44]: Exactly. Because you can, and everyone else is. **Harry Stebbings** [16:46]: Okay. And so then tell me, we have this kind of product market fit moments, we see these strategic inflection points. How does Benchmark come into the fray? **Paul Erlanger** [16:55]: Yeah. So we did this angel round. We're making some money. Most of our team was not taking any pay. So like for the first eight months to building, no one on our team took any pay. And it was mostly because most of us are senior engineers and we were taking a bet on the company and that was really important to us. **Harry Stebbings** [17:12]: Most of you are not taking any pay. Everyone will be going, What? Slaves, slaves. You have a very generous ownership program. Can you just talk to me about that and how you think about giving employees a lot more equity? **Paul Erlanger** [17:25]: Yeah, we capitalize the founding team extremely well. I think this is gonna become more and more true. When you say **Harry Stebbings** [17:31]: extremely well, I'm so sorry to be a dick, but what does that actually mean? So many founders listen, should I give everyone 1% each? **Paul Erlanger** [17:38]: Yes, top performers 100%. In fact, more than that, right? I think we gave non founders a percentage of the company that usually founders get. And it was mostly this core group of original people that didn't take any pay. And I think what's really important here is all those people feel like owners of the business, because if those five to seven to 10 people build this business for the next ten years, there's literally nothing stopping us. And we talked about this and work life balance and how do you push your team to work harder. And our team is senior enough and also has enough ownership where they feel like fomo is theirs. **Harry Stebbings** [18:17]: So if you basically give five to seven, two to 3% each, then they're so bored in that you get kind of extended founder team. **Paul Erlanger** [18:24]: Exactly. **Harry Stebbings** [18:25]: Okay. Catch you totally. So we haven't been paid for eight months. Cool. Sorry, please go ahead. **Paul Erlanger** [18:30]: Yeah. It wasn't necessarily just the pay. I think that was fine, but we saw Robinhood and Coinbase, and those are both very volatile businesses. Like you've seen their stock price movement, it's because financial markets are volatile, right? You have like the short and long term debt cycle, and we were taking a big risk in starting a company, and we were starting to feel like we found product market fit. But why are we going to take the risk of a sudden market turn just wiping us out? And we were five to ten years focused. So at first we were like, Let's not take any venture capital. We'll do this angel round. We'll just build and find product market fit. And then when Benchmark kind of came around, we were more open to the idea to take money to protect the downside. How did they come around? Like they slide into your DMs? So no, for the Series B, that was all inbound, but the Series A, we actually did run a process because we were like, should raise money here. And the Benchmark intro came from Aaron. So going back to the most helpful Angel, one thing that we discussed earlier that is kind of funny is Se and I didn't really know the Venture game, and we're just builders, and we didn't really know who Benchmark was. I had heard some stuff about how they invested in Uber, but I didn't understand kind of like the tiers of VCs or anything like that. So when we met with Chathan, it was just a very natural conversation, and out of all the conversations we had, he got it instantly. Like he had this deep intuition about what we were building. We had very high conviction on what we were building. So to find someone else who has the same vision and conviction off the bat as us, who doesn't historically do deals in our industry, it was, yeah, just an amazing conversation. How was the partnership meeting? Yeah. The story is we met with Chetan on Friday. We ended up talking with the whole partnership that following Monday. A funny story from that is we were talking with the entire partnership, and we were going through the pitch deck. And I remember Peter Fenton was on his phone most of it, and I was kind of bummed out because I was like, Damn, he's not interested. He's focusing on other things. He's doing emails. And I remember as soon as we finished the pitch, the first thing he said to us, he goes, Guys, I love the app. I've been on it the entire time. And that was kind of this, like, deep breath moment where we're like, okay. He sees the vision like we do. They love it. And it just really felt like a natural fit. **Harry Stebbings** [20:41]: Did Benchmark offer the highest price? **Paul Erlanger** [20:43]: I think it was close, but not exactly the highest. **Harry Stebbings** [20:46]: Do you think VCs can king make? And what I mean by that is when you have a benchmark behind you, do you see a needle moving trajectory change? **Paul Erlanger** [20:54]: Well, yeah, I definitely think Benchmark being on our side helped us in that sense, but that's not the reason we did it. Mostly because we were naive to that, right? Which is kind of a funny set of circumstances, but yeah, definitely I think that there are some venture funds that their strategy is just to follow on companies like Benchmark, etcetera. And we had a lot of inbounds, and the partners we ended up working with were not those partners. I think there were very intrinsic reasons why we worked with the partners we did for our Series B. But yeah, I think a lot of people just kind of follow investment, and this is a little bit of a separate topic, but one thing that I discovered was if you're trying to raise another round, wait to announce your last round. Because as soon as you announce a round, you get tons of inbound from other investors, and it takes up time to kind of tell them, no, we're not raising right now. So in the future, that's kind of a note to self that if you really want to raise capital in the near future, you can just wait to announce your round until you're ready. **Harry Stebbings** [21:52]: I completely agree. I also think it's really important for founders to know that just because a VC wants to meet you, it doesn't mean they wanna do your round. VCs jobs is to meet companies. And I always say this to all companies, don't get distracted to a point. Focus on what you need to do because a VC's job is to meet with people. Like, never forget that. Okay. So we we have them leading the round. Do you think that founders should take a discount for tier one investors? **Paul Erlanger** [22:17]: This is the person you're gonna call every week. For every decision you make, you have to like them, and they have to be someone that you trust if you trust them more than the other person. I don't think the decision should be pick the highest tier VC. I think it's pick the person that you trust will help you scale your business the best, and it's not gonna be someone who's giving you product advice. Like the founders have to build a company, but someone who might know how to build a company because you don't have experience doing that, or someone that just trusts you and your intuition. **Harry Stebbings** [22:46]: Is one of my biggest concerns actually is always when founders say, Oh, I'd love for help on either product, I'm like, or hiring engineers. I'm saying in all honesty, if you're not the one hiring engineers, we got a problem. **Paul Erlanger** [23:00]: That's the founder and CEO's main job. It's like sales, selling to future employees, selling your product and vision. How you build the product? **Harry Stebbings** [23:09]: Can help you get some employees, but like hiring core eng, sure I'll jump on final calls, but I shouldn't be doing pipeline for you there. **Paul Erlanger** [23:17]: The best people you're gonna hire are not gonna come from a recruiter, and they're not gonna come from like a one time intro. It's people that you spend months building a relationship with. Those have been all our best hires. So we raised **Harry Stebbings** [23:29]: this round from Benchmark, right? And suddenly we have like $20,000,000 or so in the bank. It changes when you're scaling from zero to one to one to 10. In that scale phase that pre this latest round, which we'll get to, but in that one to 10, what are your biggest lessons and reflections on that? **Paul Erlanger** [23:46]: Hiring too fast is something we're very, very vigilant of. Some of the biggest mistakes I've seen in other people scaling from one to 10 is they start to acquire businesses. And when you acquire businesses, you're not interviewing all the people that you're bringing over, so you end up just adding tons of bloat all of a sudden to your business. And I think that could be a huge issue. **Harry Stebbings** [24:05]: It's so funny. I think we're in the biggest paradox moment ever where we're replacing everyone with tokens. We don't need engineers anymore replacing everyone with tokens. And then you speak to every single founder and you ask, What's your biggest problem? They're like, Oh, hiring. I'm like, Which one is it? **Paul Erlanger** [24:20]: Well, I think how you reconcile it is the best people are just so much more valuable now. Because it's like, you could use ChatGPT to make art, but you need to have the creative direction behind it. Your software engineers are your architects, and they're doing amazing things, but now they can use AI to do the lower level things maybe a B tier or a lower level engineer would do. **Harry Stebbings** [24:39]: So do we just have dramatically smaller teams? Yeah. I think so. **Paul Erlanger** [24:43]: And which is why it's okay to give more equity early. That's kind of how we saw things. **Harry Stebbings** [24:47]: How do we think about structuring the teams of the future then? **Paul Erlanger** [24:51]: So currently, fomo is extremely horizontal. We don't have meetings, one on ones. We don't really have any hierarchy. Everyone is kind of self reporting, and I think as we scale to a certain number that will have to change, you will What number are you at today? **Harry Stebbings** [25:07]: 17. What will you be in a year's time? Hopefully below 25. Okay. We are really not scaling the headcount. **Paul Erlanger** [25:14]: Listen, maybe things change, but currently, we really don't see a need. We did have a bottleneck on our engineering side. We just hired two to three incredible engineers. **Harry Stebbings** [25:24]: Uber and Microsoft have both put question marks around the productivity gains that come from AI tooling and and engineering, saying they are questioning it. Do you think that's moronic and you unwaveringly see it? Or do you actually say, Yeah, we get a load more code, but we're not faster? **Paul Erlanger** [25:42]: I think it's definitely faster. It's not just a lot more code. It's a lot faster to thoroughly review even than write. For example, Tina, she's a staff level front engineer of ours. She built our feed. She is building sliders for our new product. There's like all these like small things on the front end that probably would take a while to implement and learn. You have to go watch YouTube videos or go search to find libraries, and she has experience with a lot of this, but some of like the small components are new. But if you could ask AI to do it, they'll kind of give you an overview of how to build this thing. They'll even write the code for you, and then Tina will go back through and even restructure and rewrite most of the code, but having the framework of understanding how to write it, think just speeds up the learning process significantly, even for the best engineers. The product velocity, like I told you that we just dropped everything to ship this new product we're shipping next week. We built this product in three weeks, and this product is basically what entire other apps, their entire product is. We built our web app in one month. **Harry Stebbings** [26:40]: So funny, Paul Graham said last night, the new question that he asked all YC batch members is, How do we AI protectify your product? How do we put in non AI features that build defensibility? I think the social graph for you is unwaveringly one of those Exactly. Which I think is really interesting. When we go back to the enabling powers of AI that come from some of the tooling that we've mentioned there, What are the team using today? Is this all core code? Is this Cursor? Is this Codex? I'm just fascinated by distribution of tooling. **Paul Erlanger** [27:13]: Yeah. So we have an internal AI policy to make sure that we're only using enterprise account, that there's not sensitive things being uploaded, etcetera. I think that's really important. And then within those guidelines, most of our engineers are using cloud coding codex. **Harry Stebbings** [27:25]: Has that changed over time? **Paul Erlanger** [27:27]: I don't think so for us. I think we have seen some frictions, like these models degrade, and then the cloud code credits got really expensive recently. So there's definitely some frictions there. How price sensitive are you? Not at all. We don't have enough engineers that it's really, really hurting our bottom line yet. Once it starts to do, maybe we'll have some kind of quota there, but no. Do We think encourage there's a **Harry Stebbings** [27:47]: time when it will? **Paul Erlanger** [27:48]: Yeah. I think depending on how big we get and how much we use it, Currently, the trade off is it just makes no sense to limit **Harry Stebbings** [27:55]: it. For me, the core question on on AI bluntly is an industry, and it is determined by one question, which is like what percent of developer salaries will we see spent on tokens? Right now, if you look at Marc Boiron, he said they spent 300,000,000 on Anthropic. That's about 3.8% of developer salaries spent on tokens. If it stays there, paying a trillion dollars for OpenAI and Anthropic is grossly overvalued. If it goes to 20%, which is what many think is, 20% of dev salaries go stones, they're $5,000,000,000,000 companies. Can you feasibly see yourself spending 20% of dev salaries on tokens? **Paul Erlanger** [28:29]: Definitely. I mean, depends on the price of the tokens. I hope that there's a race to the bottom and these major models are kind of commoditized and they get cheaper and there's not like price collusion. Yeah. So hopefully they get cheaper with time. Energy gets cheaper, compute gets cheaper, and then these things get cheaper. But at the current state, absolutely. I think 20% is definitely within reason. **Harry Stebbings** [28:51]: Going back to what we said there about like, hey, you just have the really great people. In terms of design to eng ratios, does that change in this new world? **Paul Erlanger** [29:01]: Right now we only have one designer. But yeah, I do think that design becomes more and more important, especially for like some of these bigger businesses that do have a lot more mid level engineers and doing tasks that AI can kind of take over pretty easily. **Harry Stebbings** [29:13]: If design becomes more and more important, do we double down on Figma, and that is the stage where art and creativity is fundamentally performed? Or to your point earlier, do we move to a world of speed and iterations where we just prototype it and we use other tooling, Rapplr and Lovable and you name it, to get fast product out the door? **Paul Erlanger** [29:33]: I think it's somewhere in between, but mostly the latter actually. Figma has a huge advantage here because humans want some control. So for example, on fomo, we could just be an LLM, you execute trades, etcetera. Maybe in the future we have an interface that allows you to do that, but I still want to go to Harry's profile, see in this beautiful view everywhere you've trade, and be able to track that through a graphical user interface. Someone on Figma will be like, I want this design. It generates you the vector file, and then you could still manipulate it and do whatever you want. And I think that's really important to have the hybrid, because humans still want to feel like they're in control. So with Lovable, it's much harder because they haven't built the human centric software. I think it's much easier to add the LLM on top, especially as it becomes commoditized by all these major models. **Harry Stebbings** [30:18]: Why have we not had a big social company since Snap? **Paul Erlanger** [30:22]: It's really hard. Consumer is so difficult. Some small mistakes could be pretty existential. Like for example, Clubhouse. That started to take off. That was doing really well. Everyone was using it during COVID, and they had a very core user base that loved them. But then they started bringing on all these celebrities, and it overshadowed the core user base that actually would love the product with people that don't really care about the product. **Harry Stebbings** [30:46]: I remember when it was like Marc Andreessen just sharing wisdom on a Sunday evening. Exactly. And it was the most amazing behind the scenes, but fascinating lesson from the back, and it was so spontaneous and cool. What do you learn from that? **Paul Erlanger** [31:00]: That it's very important to find native creators to your platform. So instead of going out and bringing on all these creators from other platforms, they already established that. Like Logan Paul, he got big on Vine for the first time. And I think when there is a new social platform, there is an outsized strategic advantage for creators to build an audience on that platform early, because they'll be known as the creator of that platform. So I'm not trying to get LeBron James to trade on fomo. I want these native creators. **Harry Stebbings** [31:31]: It's so interesting to hear. It's like Charlie D'Amelio, I think, obviously On TikTok. On TikTok where it's like the lesson there is you have to make internal champions and you can't bring an Instagram star to TikTok and say like, hey, Paul Erl your audience. Really, really interesting. Exactly. B Real was another one that I was in. Is there any lessons for you from B Real? Because that too had the clubhouse hype cycle that didn't sustain. **Paul Erlanger** [31:58]: I think B Real didn't have the feedback loop. It required people to do something every day, and people don't want to have to do something every single day. And I think as soon as you lose that, you lose momentum very quickly. **Harry Stebbings** [32:10]: Is there a way to synthetically create momentum within a user journey? **Paul Erlanger** [32:14]: Absolutely. So for example, one of the most important things on fomo are the share cards. So if I go to Harry's positions, I can see all of your positions and share any of your positions of these beautiful share cards on any other social media platform or your fumbles. So let's say you sold too early, and then the price rockets, then I could see how much you missed out on, and what this does is it creates this feedback loop where I can fully publicly share your things on other platforms, and then people want to see that in real time, so then they come to fomo, and then you're building this growth feedback mechanism within the app, that every single time there's a top person that's having a top trade, whether it be this guy Iceman who turned he turned 10 k to $2,500,000 overnight in one night on fomo. There's another guy, Remiss, he turned I think it was $300 into 1,500,000 in a month, and then these are being publicly shared on other social media platforms, and then it's driving attention to our platform. **Harry Stebbings** [33:07]: Why aren't you also a media company? And and the reason I say that is because if you were to do amazing Shorts with each of maybe they don't want it and they wanna stay anonymized. But if you were to do amazing Shorts on turning $300 into a million dollars, I mean, is the most viral crack content for TikTok. You have **Paul Erlanger** [33:27]: great intuition. We're building a huge media arm fomo. Right now it's external to the product. So we're doubling down on content creators, we're doing tons of partnerships with streamers, we're trying to do like a lot of the clipping content, etcetera. And we want to become one of the largest media businesses for a tech company in the world. **Harry Stebbings** [33:44]: You mentioned clippers there when we were talking about media. It is a new form of media. It is a dominant form of media. How have you approached that first? **Paul Erlanger** [33:53]: It's kind of a game you have to play because of how attention works on these social media platforms now. How do you budget for it? **Harry Stebbings** [33:59]: How do you work with UGC? What does that actually look like? **Paul Erlanger** [34:03]: So we actually have this all in house. We have these creator managers. They're fully in house, and we manage a group of 30 to 40 creators. We're constantly getting rid of the bad ones, adding new ones, and doubling down on **Harry Stebbings** [34:14]: bad creator, what makes a good creator? **Paul Erlanger** [34:16]: It's honestly numbers game. It's just based on their impressions. So like when you're building a product, it's a lot about intuition, what your users will like. When it comes to like growth, especially on these platforms, it's just based on metrics, like how many impressions they're driving, how many conversions they're driving, etcetera. And the ones that whatever, the CPM or the CAC based on the acquisition cost versus the lifetime value of the user, if that ratio isn't right, then you'll just kinda churn out that **Harry Stebbings** [34:40]: How do you determine acquisition cost? Is it on a per download basis, or is it on a per funds and deposited basis? **Paul Erlanger** [34:47]: It's revenue to us, right? So it's someone who has to deposit and trade. So depositing is free. If you trade, and then we take the total amount that we earn on any given month, from I people who trade from those channels that are directly attributed, and then how much it costs us to get those users. **Harry Stebbings** [35:02]: Do you see commonalities in talent that works and that doesn't? **Paul Erlanger** [35:07]: Absolutely, and this is the most important lesson that I've learned. Early on, you create a form of content, or you find a creator that has a form of content, and they're working, and you're like, Okay, now figure out the next thing that works. That is completely wrong. What you want to do is continue to iterate on that and make until it works better and better and better, and then replicate, and just have that type of content being replicated. This is something that we're still building up the muscle for. Users are more likely to convert if this is the type of font, if this is the color of the font, if this is the placement of the font, if it's this person talking versus this person talking, and you figure out these things, and you kind of just double down on what works. **Harry Stebbings** [35:44]: Any reflections now from UGC building this Clipper content management system that other founders should know if they're thinking about it? **Paul Erlanger** [35:52]: So So I guess there's two things here. One, need to make sure that the lifetime value of the user is actually worth it, but two, you don't always have to go for the lowest hanging fruit, and this is a journey that we're on now, where you have someone whose lifetime value might be let's say, 30, and you're only spending 80¢ on them, but then there's another user that you actually need to spend $3 on, because they need to see it 10 times instead of two times to actually convert. You should actually start to increase your CAC, even if the LTV stays the same, to capture a larger and larger audience, as long as the CAC is lower than the LTV. **Harry Stebbings** [36:29]: Does CAC go up or down over time? Some people Up. **Paul Erlanger** [36:32]: Well, I guess there's opposing forces, right? The force that makes it go down is that you get better at the game and you iterate, but the force that makes it go up is that each incremental user, usually you get the lowest hanging fruit, right, to convert. So each incremental user is harder to convert, so they cost more to convert. **Harry Stebbings** [36:49]: And then also it goes down because of brand proliferation, which is when you just become the default provider or the number one, inherently you just get people because you are the number one, and we're an investor in this business at Wallachs, and they're on the side of shirts, football shirts. And so like brand marketing comes into play. Brand marketing is a very difficult one to understand. **Paul Erlanger** [37:13]: Brand marketing is actually one of the hardest things because you don't see the direct benefit. It's so important, but it's not like you don't really even know what the CAC is. Right? And you could spend infinite amounts of money and not even see conversion and You **Harry Stebbings** [37:26]: try attribution by looking at hyper local search results, by looking at conversions on a per account basis and whether that was in the vicinity of North London where Arsenal played at a certain time of the game. But it's really freaking hard. The thing I say actually on brand marketing is look for immortal assets. And what I mean by immortal assets is like, if you sponsor a podcast, make sure that the podcast has it in perpetuity. Like, if you sponsored an episode that we did with Bill Gurley, it still gets thousands and thousands of plays per month even though it was recorded three years ago. That's quite valuable. If it's a billboard and in two weeks it's gone, it's not that valuable. What are some other examples? A football shirt. There are kids all around the world wearing Man U shirts from ten years ago with a Vodafone logo on it. That's pretty valuable to have people still wearing your massive logo in the thousands and thousands from ten years ago. Do you see what I mean? Yeah. And there's a lot of assets like that which are immortal versus very transient. Every single big founder I've had, Nick at Revolut included, said the single biggest mistake he made around marketing was he did not appreciate brand marketing enough early enough. **Paul Erlanger** [38:36]: Yeah. At a certain point, building a product transfers from a game of intuition to a numbers game, because you just have so many users that One of the early stories from Robinhood I love is that the deposit amounts from people with iOS were twice the ones from people with Android. And their assumption was just, Oh, like people with iPhones just have more money, so they're depositing more money. And what they realized through data is actually there was something on the loading screen where it took like twice as long to load for Android, so people were just churning off and not using it. And as soon as they fixed that, then the prices converged. So I think there's a lot of unintuitive things that data can explain, and at a certain point when it becomes a numbers game, it really is data driven. And we haven't gotten there yet, but that's something we're aware of. **Harry Stebbings** [39:20]: As we move forward, a very exciting announcement on Index and USV doing the Series B, two of the best investors in the game. I have to ask, how did that come about? **Paul Erlanger** [39:30]: Yeah. So we weren't in a position where we necessarily need to raise capital, and we were pretty opportunistic about it. I think after the A, we got some inbound and we took some time. We didn't really talk to investors. We were just building products, and we were talking with USV for actually a few months. We really liked Fred. We spent a lot of time with Fred. He's incredible. Talk about VCs not being focused on the product, but Fred actually has a really good product intuition. I think it's very rare for VC, and just the conversations with him and Well, this is like **Harry Stebbings** [39:58]: the combination of two of his biggest passions in decentralized networks and then network effects. Exactly. This is like, right in the mesh. **Paul Erlanger** [40:05]: So I think it was actually the one of the other times besides the chathing conversation where there was this moment, but we didn't get to speak with Fred during the Series A. Why not? I don't exactly know. I think Fred was traveling, and the time just didn't match up, but but it worked out now. Right? **Harry Stebbings** [40:22]: No. This is what I fucking hate about my job though, which is like a holiday like that. I'm I'm not saying it was Fred, but, like, a holiday in general can lead to, like, hundreds of millions of dollars lost. **Paul Erlanger** [40:30]: It's all opportunity costs. Yeah. **Harry Stebbings** [40:32]: Hard to know. I know. Okay. And so you meet him for this round. **Paul Erlanger** [40:38]: So he comes to the office. We're building a relationship with him. He was actually super helpful on a few things even when he was an investor, and we just really appreciate that. And then we got inbound from some other investors, and I remember the first time we talked with Index Ventures. They were just amazing partners. I think Benchmark doesn't really have as many resources. These multi stage funds have so many resources for founders. The Series A announcement, we did all the PR in house. We didn't have anyone, any help with anything, and having know the history of Index being very involved in Robinhood and USB being very involved in Coinbase, and then even aside from the fact, just Julia and Yong being such amazing partners, and same with Fred at USV. We were opportunistic and thought it was time to do the rounds. It was really great timing for us. I think the capital is gonna be high leverage for us to How how big is the round? It's we're we're raising 75,000,000. **Harry Stebbings** [41:29]: 75,000,000. How much did Index do? Index did 55. 55. And then USV did 15. 15. And the price? The **Paul Erlanger** [41:37]: price is 550,000,000 **Harry Stebbings** [41:39]: Okay. Post money. Did you come to them with like, this is the round size and this is the price? Did you kind of come to it together? **Paul Erlanger** [41:44]: There was an early conversation far before the term sheet where we discussed what price range would make sense for us. I think we weren't looking to do a round. So they were like, what price would be interesting to you? And we set a number, and I think that kind of helped anchor the conversation. And, yeah, when they were open ears to that, I think that, yeah, that anchored the conversation in a way where we had a great conversation from there. **Harry Stebbings** [42:05]: In rounds like this, often founders take secondaries. Did you take secondaries? **Paul Erlanger** [42:10]: Yeah. I think I've watched the podcast actually with who was it? It was Evan Spiegel. He was on the Diaries CEO, and one thing he said is that our goal is to build fomo for the next decade. And he mentioned that him taking some secondaries early on was really important for him saying no to Meta, right, when they came to acquire him. So I think founder secondary is a good idea as long as it's not extravagant. We took a little bit off the table, but it very little amount. Nothing that would really change our lifestyle in any way. **Harry Stebbings** [42:40]: When you have $7,580,000,000 bucks in the bank following around like this, what can you do now that you couldn't do before? **Paul Erlanger** [42:48]: Yeah. So there are a few things. One, it obviously kind of helps us even more in the former point about market cycles. Our team is scaling. I mean, we're making money. We have much more money in the bank than we ever raised. **Harry Stebbings** [42:59]: It's that difficult actually. Brian at Coinbase has said before the chat, I think he said on the show with me, is like the challenge of his business is just like volatility and how it impacts culture and morale in some cases where it's like, it's just hard when it's a fucking depressed crypto period. Exactly. And you're like **Paul Erlanger** [43:14]: Exactly. And that's why giving away so much ownership is important, but also having this capital really keeps motivation high during those periods, because we know no matter what we can build through it, and it's not like we're scraping by, right? We're like building in a way where we're really being able to take the risk that we need to, because we have the capital to back them. Our plan is to kind of verticalize all of our infrastructure and own as much of it as we can in house, because it just makes the product experience that much better for our users. Do you **Harry Stebbings** [43:40]: determine what you buy versus build? **Paul Erlanger** [43:42]: It's a really good question. Anything that has to do with the core product, meaning the things the users face, you kind of have to build yourself. For example, some of our competitors, they just acquired trading terminals and then built that into their product, but fomo web is like a whole different experience. You have the same social graph. You could place a trade there under one identity, open it on your phone, and it's this social trading experience on a web that no one has ever done before. So that's something that was very obvious that we just have to build this, but then something like data infrastructure, maybe someone who's set up bare metal servers so we don't have to pay so much money to AWS or Google Cloud, or someone who does indexing for us, or these things that are behind the scenes that would take so long for us to build up the expertise to, that's something that obviously makes sense to to kinda acquire to bring in house. **Harry Stebbings** [44:31]: America likes to shit on Europe, but when we look at the numbers, right now, is kind of shitting on America when it comes to fintech. It's our fintech provider, Revolut, which has stolen the show, and on the next round will be considerably more valuable than Robinhood. Why has no one in The US built something that Europe has? **Paul Erlanger** [44:50]: Yeah. I think it's true. I mean, listen. Because every country has different brokerage laws, Europe is a lot larger in terms of like there's so many countries in Europe, and I think Revolut has been able to kind of saturate all of Europe at once, and has been able to grow globally a lot faster than Robinhood. Robinhood has done a great job. I think they have a little over 20,000,000 funded accounts in The United States, and we were discussing before how they've horizontally grown to other product categories. Their biggest move with on chain tokenized equities is to be able to finally distribute these things globally, and I think it's really important. Look at Facebook, look at WhatsApp, all of these social businesses that really scaled are global from day one, and I think that's really, really important. So So I don't know if it necessarily answers your question of Europe versus US, but I think the reason is your ability to saturate a larger group of people. Are you a social company, **Harry Stebbings** [45:43]: or are you a financial company? **Paul Erlanger** [45:45]: We're trading at first. I think that's really important. What the social features do is they, at least right now in its current form, is they allow you to become a better trader by having transparency to what the best people are doing. So you could instantly discover, you could instantly get notified, you could follow people. I do think over time, you want to create momentum for people to use the app, maybe even if they're not trading. You don't want to obfuscate what the app is good at. We have to always be the best trading app in the because the top traders won't use us otherwise. However, over time, if you build these other social products, maybe the people who aren't necessarily trading every day can interact on the platform more. So I'd say we're much heavier on the trading side today, but heading in the direction of becoming more social. **Harry Stebbings** [46:29]: Dude, I want to do a quick fire round with you. I could talk to you all day, but I say a short statement, you give me your immediate thoughts. Does that sound okay? Okay, let's do it. So what have you changed your mind on in the last twelve months? **Paul Erlanger** [46:39]: How important social is on fomo? I think we were doubling down the trading product and assume that people will come to trade, and then the social graph will grow from there. But you need to be very intentional about the social graph. And I think that's something that is very momentum based, and as soon as you start losing momentum there, people stop using the app, and then the whole thing kind of unravel. **Harry Stebbings** [46:57]: Revolut versus Robinhood. **Paul Erlanger** [46:58]: I'm a Robinhood user because I'm in The US, so I'm gonna say Robinhood. But I do think Revolut is very well positioned. Maybe Revolut. **Harry Stebbings** [47:06]: Biggest advice to someone studying computer science at universities today? **Paul Erlanger** [47:10]: Use less AI. **Harry Stebbings** [47:12]: Use less AI. **Paul Erlanger** [47:13]: I think use less AI, because you're gonna have AI at your disposal, and all of the best engineers today had to learn not using AI to become really, really good. And I think that when you're in practice in your job, you're gonna use AI, but I think this is a controversial take. I try to use AI for as little of my writing as possible because I think if I use AI for all my writing, I'm not gonna be able to write anymore, and I'm not gonna be able to remember what is good writing. I'm pretty scared of that, to be honest. **Harry Stebbings** [47:39]: I agree with you, especially on social posts. I completely agree with you. Some of my team were using, you know, chattypuji for social posts, and I was just like, it's shit. And I can tell. There's no humor. There's no personality. There's no texture to it. But I'm like, with engineers and with coding? Fuck. If I'm advising CS students, use it as much as freaking possible because you're like I'm **Paul Erlanger** [47:59]: not an engineer, so don't take my advice on that one. Tell me. **Harry Stebbings** [48:03]: That that that's very funny. What investor do you not have that you would most like to have? **Paul Erlanger** [48:09]: Ribbit Capital. **Harry Stebbings** [48:09]: Have you pitched them? **Paul Erlanger** [48:10]: We spoke with them. Yeah. I really like Mickey and the team. They're they're great. Sponsor any sports **Harry Stebbings** [48:15]: team with fomo. What sports team do you want? The **Paul Erlanger** [48:18]: New York Knicks. Not even a question. **Harry Stebbings** [48:20]: You can give one one piece of advice to yourself starting fomo again. What would you tell yourself if you knew everything you know now? **Paul Erlanger** [48:27]: Have the hard conversations sooner. I think the hardest thing about being a CEO is having hard conversations, whether that's with employees, whether that's with early investors, whether that's with friends who are helping you, all of these things. And I think that people try to avoid confrontation, avoid having the hard conversations, because it sucks, but have those sooner. Just be completely transparent and honest and come from the best place you can, and they'll understand. **Harry Stebbings** [48:54]: Often when you have a hard conversation, it's not as bad as you think. You feel a sense of accomplishment, and then you actually take on more hard things because you're like, it wasn't as hard as I thought. It leads to, like, a domino effect of taking on hard things. Do you know what I mean? That's **Paul Erlanger** [49:07]: exactly what I realized too. **Harry Stebbings** [49:09]: Nine nine six. How do you feel about this grind, slot, hustle culture? **Paul Erlanger** [49:14]: I think at fomo, there's no we don't put numbers to it. There's no 996. I think if you give, and this might be unique to our business, but if you give a lot of ownership to a team that takes a lot of ownership, like these people are fully autonomous and they really care about what they're doing, they all feel like they're owners of fomo. They feel like they're owners of the business, so I trust that they're going to do their best work. And there are times where people don't have to work on the weekends, and then there are times where we're building a new product like this week and we're working all weekend, but people love to do it. I think you can't beat a team that's having fun, and we're just loving what we're doing. So I'm always on in the sense that if something comes up, I have to work on it, but we love what we do. **Harry Stebbings** [49:54]: What's your greatest strength, but also your greatest weakness? **Paul Erlanger** [49:58]: I have loosely held strong beliefs in the sense that sometimes the downside of it is sometimes you just need to make the decision, but I always listen. Like, whenever there's a decision at fomo, we're asking every single person, especially the core team, what they think about it, and we're talking it out and coming to the right conclusion. I think it's definitely more of a strength than a weakness, because it's a forcing function for us to strongman the other side always. We're always like, What if we did it this way? Or I have the opinion that's inverse to yours. Let's talk it out. But I do think that sometimes you need to just make a decision and we get hung up on things. **Harry Stebbings** [50:33]: Has Trump made business better in The US? **Paul Erlanger** [50:35]: I think there's been a lot of positive movement on regulatory clarity, but at the same time, I think that sentiment for crypto has also gone down significantly from the general public. **Harry Stebbings** [50:46]: What has driven that crypto sentiment downgrade? **Paul Erlanger** [50:49]: The goal for fomo, as cheesy as it sounds, is to be a beacon of light. It seems like everyone else in crypto has always been so short term focused, and I think in any early industry you go to, the industry at first is kind of like riddled with like the short term gains, and the people who are like taking advantage for themselves, and then someone's got to come with the broom and sweep up the mess, and our goal is to create a product that's for our traders, and something that they'll love, and something that's with them for the long term, and I think what's given such a bad rep is there's no consumer protection here on a lot of these products, so people will buy it. It's so hard to do in the first place, but then they get over the leap of actually doing the thing, and then they just lose all their money. And it's not because they didn't know that this coin might go down, it's because it was a scam coin, and there was actually a real one they were trying to buy, but they bought the wrong one. There was no warning signal. And I think people just got burned so many times in a row that it led to all this negative dogma. **Harry Stebbings** [51:44]: That's called a triple layered Anthropic SPV. **Paul Erlanger** [51:46]: Yeah, there you go. And this, Harry, is why perps are so important, because with the perp, you don't actually need to trade the underlying thing. So like we could have a perp on whether anthropic will go up or down, but we don't need to actually transfer the underlying anthropic asset. So if Anthropic goes, all secondary asset transfers are null, it doesn't matter because we're just betting on the price of the thing. You're never actually exchanging the underlying thing with me. **Harry Stebbings** [52:11]: Does that remove SPVs? **Paul Erlanger** [52:12]: Yeah. You don't need an SPV for a perp. Yeah. How do you expect **Harry Stebbings** [52:17]: and the because you're gonna now have Anthropic, OpenAI, and SpaceX Yeah. Where you'll have perps on the platform, I guess. **Paul Erlanger** [52:25]: It's gonna be really interesting to see what happens. I think there's only so much demand in the retail markets. I think SpaceX being first to market, it's going be very interesting. I think like 30% is devoted to retail now. Will there still be a ton of retail interests if people get burned on SpaceX in Anthropic or OpenAI? Think if SpaceX performs well, the OpenAI Anthropic IPOs will also go very well. I think if SpaceX performs poorly, then those are gonna have a hard time. **Harry Stebbings** [52:51]: Final one for you. What's the kindest thing that anyone's ever done for you? **Paul Erlanger** [52:55]: I mean, the true answer is like my parents giving me everything I have. That's like, feel like maybe everyone kind of has a similar thing there, but, yeah, I do really owe them everything. I think that there were parts of my upbringing that were tough, but, like, my dad, for example, didn't have much savings and, like, worked his way to help pay for my college. And, like, that was, like, one of the most incredible things anyone's ever done for me, and my goal is to just continue to give back to them. But, yeah, I think, like, my probably my parents giving me everything I've had today. So **Harry Stebbings** [53:25]: My mother is absolutely the same. My mother taught me it's not what you say. It's not what you do. It's how you make people feel that matters. Absolutely. I always say, like, cool your parents up and tell them how much you love them because there's a time when they won't be there, and you'll regret not making that cool. Exactly. Dude, this has been such a pleasure. Thank you so much for letting me be a part of the journey. Thank you so much for coming. It is so good to do in person, and you've been fantastic. **Paul Erlanger** [53:47]: Thanks for having me on. It was a pleasure. **Harry Stebbings** [53:50]: But before we leave you today, ## Sponsor read **Harry Stebbings** [53:52]: have you ever felt a little stuck at work? Maybe you're stuck in back to back meetings, stuck without clear feedback, or trying to learn a new AI workflow. Well, now you can move work forward with Loom, the AI first video platform from Atlassian. Use Loom to simultaneously record both your screen and yourself to share a quick update, provide feedback, train a colleague, and everything in between. AI instantly adds a title, a summary, and edits to your video so clarity travels with the work. Finally, you'll have more focus time, fewer unnecessary meetings, and more effective ones. It's a real team changer and game changer for personal productivity. Try Loom today at loom.com. 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