Highlights include: 

• The factors that kickstarted Bound
• Why the team is key and other recipes for success
• Thinking big as a prerequisite of taking VC funding
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The straw that broke the camel’s back…

Dan Kindler (DK): Our journey with Bound started when we met each other while both working at a company called Paxos, where we were building software for big financial institutions and their corporate customers to manage commodities risk. We would be processing hedging trades for big companies such as global mining institutions. So we got to see how these mature companies use financial instruments to manage billions of dollars of risk. We saw a lot of FX stuff, we saw a lot of precious metal stuff.

The second thing - and probably the most painful for both Seth and I - was that we were American expats living in the UK (during Brexit). Because of that, my real salary compared to what it would’ve been in the US had dropped a ton. Seth and I worked with a few other Americans at the time, so we’d constantly talk about the USD / GBP exchange rate in the office. 

Then, finally, the straw that broke the camel’s back was that I was talking to my dad who operates a small business in New York City; he has revenue through the door in US dollars, and then he pays most of his expenses out in Euros. I was complaining to him about the GBP to USD exchange rate one day and he said, “I have the same problem for my business too, I always get screwed over by the USD to Euro exchange rate. But you can’t really beat it, that’s just how you lose money sometimes. Three things in life which are certain: death, taxes, and losing money to exchange rate volatility.” That was the moment the lightbulb went off.

I spent some time helping him understand different financial products so that he could operate his business with less currency risk. The idea for Bound came when we realized that, even though he’s amazing at operating his business, we shouldn’t expect him to be a currency expert – especially when FX hedging is such an esoteric skill. We thought “there has to be a better way”

Moving away from complexity to something that’s really simple

Seth Phillips (SP):  We knew we wanted to help people manage currency risk and to make that easy. What we didn't have a clear idea of was how; risk is a complicated concept to get your mind around. If you want to get a good exchange rate right now, that’s a pretty simple concept: you can check a few different sites and get prices from a few companies. You pick the best exchange rate and move forward. But when you think about risk, ie, “how much could my business lose if the exchange rate moves against me in the next few months. Is today’s price good or bad? Should I lock in the price for a long time? For a short time? When should I lock the price in?” What kind of financial products should I use? These concepts are much more complicated and harder to understand. 

The biggest thing that we’ve been trying to do is move away from talking about financial products like forward contracts, options, and swaps…” and make it a concept that people really do understand. Something more simple. Our customers have streams of foreign cash flows in or out of their business and we want to help them make those cash flows more stable and predictable. We have had to think about how we can take away the complication and make it into something that’s simple. 

I make an analogy a lot to investing; if you had a million dollars to invest, say 50 or 60 years ago, before ETFs, index funds and other tools to follow best practice, you’d have to sit down and invent an investment strategy. You’d sit down with an expert, ask which stocks to buy, they’d give you some advice on which industries to invest in and get exposure to. Maybe you’d read some reports on different industries and companies. Then you go back the next quarter, see how things went and so you then invent a new strategy for the next quarter..Today, there are apps that do all of this for us. I can just put money in and everything’s managed. The app finds the right level of diversification, manages rebalancing and tax-loss harvesting and all the other things that most of us don’t know how to do on our own. Well, unless we’re professional traders.

For companies managing streams of foreign cash flows in and out of their business, it’s really the same thing. They want to be smart about changing pounds to euros. They want to make sure exchange rate volatility doesn’t impact their revenues and costs. So how’s that currently managed? 

Either they do nothing and just hope that exchange rates don’t move the wrong way at the wrong time, but that doesn’t seem like a very smart strategy. Or, if they want to do something more active, then they’ve got to call their banker, maybe read a report on the economic outlook report for the European Union and then somehow form an opinion on what will happen to the Euro. Then after all that, put a strategy in place with the financial products needed. 

That’s not a trivial exercise; it’s very intense, very taxing, and worth millions of dollars. For us, the experience finance teams go through is just like that investor picking stocks 50 years ago. We want to give them a hedging strategy that is smart and efficient, but super simple to execute. If I’m a business, I can see how many euros I have coming in and out of the door, but all the complexity of volatile exchange rates is taken away from me. They take a smart and thoughtful approach but without having to think about all the different financial products and complexity behind it. We want to take all that away and make it as easy as it is for a retail investor today investing in an index fund. So, for us, it’s key to nail how we can move away from all that complexity and all those technical concepts to something that's really simple.

Coping with the challenges of being a Founder? Pure, bullish optimism.

DK: One of the biggest challenges is that we’re speaking to companies and users who’ve never done this before. They know they have an issue, but they’re not familiar with the solutions, let alone all the financial products to be able to handle it. Another challenge is differentiating ourselves from traditional FX brokers. These businesses get barraged with calls and emails from FX salespeople trying to sell them on good pricing. When a prospective customer hears “FX” they immediately assume we’re just another FX broker, when we’re a completely different solution that’s solving - in my opinion - a much bigger problem.   

SP: The other key challenge we’ve had to think about is how do we get people to understand the difference between risk and exchange rates. I’ll make another investing analogy here; if I ask someone, “how are your investments doing?” and they say “oh doing really well because Robinhood doesn’t charge me anything to trade.” It’s great to pay a low fee to trade, but the more material question is whether or not they bought the right stocks! If your portfolio is down 20%, then you're suffering, even if you transacted for free.

Because exchange rates are not something any of us can control or predict, people obsess over what they can control: the price they pay for exchange. They obsess over who’s charging them the least or the most at the moment of exchange. There’s very little thought that goes into ‘am I pushing the button at the right time, am I taking the right approach?’ Bound wants to help companies think more strategically about how to manage foreign cash flows. For most of our customers this is a new concept; it’s a strategic risk mentality, rather than a transactional price of exchange mentality. That’s really tough and it’s really hard for us to communicate it with our customers. Hopefully we can get better at this! 

Then there are the personal challenges that come with being a founder but, maybe because I’m so optimistic and bullish personality wise, I just think I’m really lucky. I think Dan is lucky, I think the employees that have joined the company are lucky, I think the investors that have chosen to invest in the company are lucky. I’m glad to have all these people on the journey with me - I just feel like we’re all lucky to be here. That’s my pure bullish optimism. Of course, the stress is also very real. That’s everyday. The thing I obsess about is earning the right we have to pursue this big opportunity. Every venture-backed startup gets the lucky chance to pursue the team’s dream, but you’ve got to figure out the complicated challenges of product, growth, team, and market at each stage. You can’t chase the dream forever without meeting the right milestones along the way.

Our success is all down to Notion (just kidding!)

DK: It might be cliche to say (which doesn’t mean it’s not true) but I’ve met some awesome people. We have some amazing hires, amazingly talented people. I wouldn’t be here without people like Seth, Marita and the amazing engineers we have in our team. Of course our investors have been awesome too, and our success is all down to Notion (just kidding, but you guys have been great).

SP: Building a great product and a great company is addictive to a founder, I think - Bound is for me. I get a hit when customers take an action you’ve been designing for them to take. When you’re building a product, you have this dream of what a customer will do with it. Dan has more of an engineering and product background, whereas mine is more product and sales, but both of us have done a lot of work in product. When you’re working on a product and you’re building things, you think it’s going to be good for the user if they just use the app in the way it’s designed, then it’ll take them to the right spot… but then you just see them meander off the path, they take the wrong turn. You end up seeing customers all over the place, but not the place you’re trying to direct them to. 

Success is when you put something in the product that you really think is going to be valuable for the user, and then the user gets it. That’s my dopamine hit. It’s so rewarding when a customer - unpromoted - logs in, does the things they’re supposed to do and we see it in our activity reports. It gives us the confidence that they’re getting a lot of value from that and that’s really rewarding. 

Our advice to other Founders? Pitch hard, pitch a lot and pray to the venture Gods

DK: Notion is by far our most hands-on investor. Others that are looking to take funding might have varying opinions on what a ‘hands-on’ investor might mean but, honestly, all my experiences have been so good. Stephen and the whole Platform team have been absolutely amazing and obviously our Investors, Itxaso and Melissa, have been phenomenal. There’s so much support, you’ve been a sounding board for us, you’ve been great and I’ve really enjoyed working with you all so far. 

I’d also advise founders to start a business with someone they have a pre-existing relationship with. Seth and I had been working together for about 3 years, then we became good friends. There was a lot of trust between one other before we decided to start Bound. I obviously know Seth way better now than I could’ve done back in 2020; we’ve been through a lot of ups and downs together but it definitely helps to have a co-founder you already have history with. 

SP: When you’re an early entrepreneur it can be hard to get down that institutional VC path. But once you’re on the path, you’ll get inbounds from dozens of VCs. Every institutional VC will want to talk to you and get updates on where the company’s growing. Suddenly, you’re in everybody’s pipeline.

As we grow, we’ll be able to have more say in who we choose to work with (assuming we hit our numbers, which hopefully we should). The hard bit is getting on the VC radar in the first place and it meant that someone had to believe in us. The biggest hurdle is that first round, then after that first round you’re on pitchbook, so the company gets shown up and identified for everybody else. We were lucky that we got conviction really early on and it set us on the VC path - we’re funded by some great funds, funds that have funded lots of really successful companies in our space and have backed founders behind lots of successful companies. So for now, we’re really happy with that.

The advice I’d give to someone else at that stage in the journey? Get lucky. Pitch hard, pitch a lot and pray to the venture Gods that someone takes a view on your business. Fortunately our investors, including Notion, have just been great. Some are hands on and call us all the time, whereas others are more hands off but the support is there when we need it. We’re ok with both of those models. 

The other piece of advice is that you have to think big. VCs will wonder how big your business can be, particularly because it needs to be big enough for them to return their fund. It needs to have the potential to be so big that, if you accomplish your dreams with this business, all the investors will return their funds. Make sure you can tell a story that can paint a picture that’s so big.

Co-founders and the team are also super important and you develop a special bond with people. You feel a lot of weight on your shoulders, and that’s hard, but you feel like there are people around you that are carrying a lot of weight on their shoulders and everyone's coming together to support each other with the weight. It’s just such a bond that you make with the people around you in that environment, and the bond is super rewarding. 

Our business is far from successful yet, and we’ve got a long time to go to get to what we’ve set out to accomplish, but really I couldn’t be happier to be on this journey. I never think about how many hours I have to work this week, but how many can I work; not because I have to but because I’d rather be doing this than anything else. It’s my hobby, it’s my work, it’s my life.