Featured Guest:

Madhu Yalamarthi, Co-founder and CEO of Modak

Madhu Yalamarthi is the Co-Founder and CEO of Modak. Modak is a fintech app focused on enabling families to teach financial literacy to kids through doing and setting the kids up with their first debit cards and checking accounts and a fun learning app. Modak is supported with $19M in funding by leading Silicon Valley VCs and angel investors. Prior to Modak, Madhu was a Vice President at Notable Capital ($5 Billion VC firm with investments in AirBnb, Affirm, Slack, Cashapp, and a number of iconic companies). Madhu has graduated from Stanford University with an MS and an MBA, and he has lived and worked globally across the US, South America, Africa, and India.

Episode Transcript

0:02: Welcome to Social Currency, powered by Sunrise Banks, a podcast about the most innovative change makers in finance, technology, and social impact, and how they, our guests, are dismantling barriers, reshaping their industries, and perhaps even ours too.  

0:16: I’m your host, Tyler Seydel.  

0:19: And I’m Eric Schurr.  

0:20: Here we speak to those driving positive change through social entrepreneurship, from cutting edge technology to creative grassroots efforts.  

0:29: Each episode seeks to reveal the stories behind the revolution that is propelling us toward a world of financial inclusivity.  

0:37: Today, we’re pleased to introduce Madhu Yalamarthi.  

0:42: He’s the co-founder and CEO of Modak, an online platform using FinTech and gamification to help teens learn about financial literacy.  

0:51: Madhu has a background in venture capital and has worked around the world in different industries.  

0:57: Madhu , thank you for joining today.  

0:59: Could you walk folks through MoDAC, brief synopsis, what you’re looking to accomplish, kind of bring us up to speed with what you’re working on.  

1:08: First of all, thank you, Tyler and Eric, for having me, for having me over and for being friends with Modak for a while, so we appreciate that very much.  

1:17: What Modak is, we are a FinTech, that is enabling families to prepare their kids for the future.  

1:23: And we do that through an immersive learning experience, but also practical things.  

1:30: We offer a debit card and a bank account for each kid.  

1:34: That the parent can set it up.  

1:37: So it’s a kid’s card as an, as an authorized user, but the parent sets it up, can see all that a kid is doing in terms of transactions, in terms of, you know, controls and limits and stuff.  

1:47: The way that I described for business audience or for banking audiences think of us as res or ramp for, for families.  

1:55: Because the mom, usually the mother is the CFO of the family.  

1:59: And so, as the CFO doesn’t, not a chief financial officer, the chief fintech officer, but a chief financial officer, as a CFO does in a company, to oversee, you know, every employee has their own expense cards.  

2:13: Are they, you know, are they getting paid on payroll, and if they file for expenses, like, You repay them, and how do you, you know, distill that financial discipline across the company.  

2:22: That’s what mothers do, irrespective of whether they’re a bread earner or not.  

2:25: Majority of the United States families here and even around the world, mother plays that role in the family, and we enable moms to be, to do that job very effectively.  

2:38: We do that in a clean way.  

2:40: We, in addition to the debit card, we have a, an, an excellent app that’s rated as 4.8 out of 5 and, across thousands of reviews and App store, through which we enable families to do three things.  

2:53: one is that don’t give them money whenever they need it, mimic a paycheck experience.  

2:59: So they get paid every 2 weeks or every week or every month as a family to mimic that as how you get paid.  

3:05: So the kids also learn that, you know, mama or papa also gets paid.  

3:09: As you know, get paid on a cadence and so you’ve got to get adjusted to that.  

3:15: and that helps them prepare because a large majority of the United States lives on paycheck to paycheck.  

3:20: It gives that experience beforehand.  

3:23: And 2 is safe.  

3:24: So if you save better, then you don’t need to worry about paycheck to paycheck.  

3:27: So how do you create that saving experience?  

3:30: And third is if you need more money, you’re welcome to do more work to get it.  

3:33: And so they can do chores in the house or household or other things to get that.  

3:38: And you know, the bonus of beyond these three, if you’re an enterprising kid, you can have a QR code and do a lemonade stand or something and so you can earn money and the parents can absorb it.  

3:48: So through this very engaging and immersive, fintech experience, families can prepare their kids for the next generation.  

3:56: That is a phenomenal introduction to something that is really so profound.  

3:59: And when you start to unpack the, give them the paycheck experience, That to me means more than just the words do at the surface, because what that says is that two weeks, that, that kind of hand to mouth that most Americans perhaps are living or seeing as their experience, where when I get that check, it’s just in time for bill, and I may even need short term credit along the way.  

4:19: And so then you start to highlight what does this look like from a savings capacity, so you can start to create a quality of life that may be better reflects that with what you want.  

4:27: And then if you notice that you’re still running a shortfall, then we need to start to lean into perhaps entrepreneurialism.  

4:33: We need to start to look perhaps to a higher horizon.  

4:36: We may need to do something different because we’re not making it yet.  

4:39: I think that that is fantastic, if not even profound, and it inherently starts to create the baseline for what is financial wellness.  

4:46: When you were putting together this value proposition, how did you distill it so cleanly to just those three elements, Madhu?  

4:54: I wish to tell you it was a clean answer to get to where we arrived, but it isn’t.  

4:59: A lot of, you know, mode and, and, and why we do what we do sort of comes from my journey, and it comes from our values and stuff.  

5:07: The, the fun side fact is, I, before I even picked the name of the company, I actually decided on the, and or even the product or the sector or anything, I wrote down the values of the company and what we want to do and what I wanted to do if I’m becoming a founder.  

5:23: And then I went to my manager and say, I’m ready to start a company, and here are the values.  

5:27: Let me go figure out the name, what to do, who to bring on like all of these ones.  

5:31: And, and, and that strong, and, and, and that anecdote is because of my journey.  

5:36: I, I come from a, in a small village farming family.  

5:40: I’m the first in my family to graduate from high school.  

5:44: And I’ve made all this way because the world’s been fair to me.  

5:48: The world has a lot of inequalities, injustices, and other stuff, but it has been fair to me.  

5:53: And even when I was, you know, a little bit behind, it gave me a hand to pull me up.  

5:57: And I, I think COVID, and I’ve been very lucky to go to Stanford for business school and then work at a top venture capital firm, get exceptional mentors, and other people throughout the journey to help.  

6:09: And COVID sort of made me realize that, you know, how do I sort of give back, give this back to the community and give this back to the world?  

6:16: And I thought, can I use the power of business and technology to to make a social impact.  

6:24: earlier in my life, I worked in Africa and other ones, but I think I, instead of charity or instead of government, I thought, can you use the power of business and technology to make a positive impact on the world.  

6:35: So that was the opening statement.  

6:36: And so then we kept thinking a lot to say, when is the best moment to make an impact on a person’s life and when you’re a kid.  

6:42: That’s when you’re moldable a lot.  

6:44: That’s when we kept narrowing it down to say, what is the most important thing that can make a big difference in a person’s life.  

6:50: And then we said financial literacy is one of the most important things. 

6:54: And then we kept narrowing it down from pedagogy and from, you know, fintech and a number of these things and coalesce into that to say, what are the most essential things we should impart.  

7:03: When you gave that brief anecdote around how you created values and then looked to form a company.  

7:11: I would tell you that that’s probably the inverse from where most people start.  

7:15: That’s where they start with the company, and then perhaps struggle to find the values.  

7:20: And you started off kind of with your moral compass already aligned with what you wanted to do, and then you put a company around that.  

7:26: I think that that’s profound and what I would tell you is it’s probably different from how most folks would look to approach the same.  

7:31: When you start talking about the biggest difference is financial literacy.  

7:36: I think you’re right.  

7:37: But how would you frame to the audience why financial literacy is such a powerful lever for social responsibility, but also empowerment?  

7:45: Is it something important that like why financial literacy is important, but also social empowerment, right?  

7:51: I think roughly, like I was even starting like after working in FinTech, like I think 3 or 4 weeks ago, my chief of staff was doing some numbers and he’s like 40% plus Americans carry credit card debt, credit card balance month to month.  

8:08: And I was like, wow, like, how can it be?  

8:11: Like, it’s the highest earning interest, you know, highest interest debt that you can have.  

8:17: Like, how can that be?  

8:19: And, and I think, and it’s not their fault.  

8:22: Like, it’s also a little bit because, you know, life happens, you know, when you’re middle income, like a large majority of the America like works in small businesses, and being employed there, but Like live paycheck to paycheck, and you have many things that happen, you know, medical issues, like, you know, your student loans, you have a number of these things happens.  

8:40: And the best way that you can get credit is through credit cards.  

8:43: And so people carry balance and say, OK, I’ll get over this.  

8:46: But then you fall into this trap and you never get over this.  

8:49: Or you have little things like how much a credit score helps.  

8:53: Like when I first started my journey, my insurance was, believe me or not, I’m in California, but it’s still $246.  

9:00: I still remember it per month.  

9:02: And I’m like, why am I paying this much?  

9:05: Because my credit score was 620.  

9:07: Because I had nobody who can anchor me on my credit score.  

9:10: I had to build everything from the bottom.  

9:12: Now I’m at 800 and I pay like 120.  

9:15: And I’m like, I’m the same, same person, if at all, I’m actually even more a responsible driver now.  

9:20: I’m more experienced.  

9:22: But why should it be that I am, you know, why should it be that I’m misplaced?  

9:25: And, and it’s just because if I had known how important it is, I would make different choices.  

9:30: So I thought that between a rich kid and a poor kid, like I was at Stanford, in Stanford you see very varied backgrounds of people from wealth and stuff.  

9:39: I have been, you know, over time, I became more middle class.  

9:42: Like, you see this, why should a poor kid or a middle class kid spend more for the same things, whereas a rich kid or a family from another, you know, the wealthier background has to pay less.  

9:54: And that always bothered.  

9:56: And I think it’s not the fault of an economy, it’s a collective agency problem.  

9:59: It’s because the system is not bent towards it to make it happen.  

10:04: I’m a big fan of history, and I thought tech is the biggest aggregation factor to make this happen.  

10:10: So if you can use it to price it differently, if you use it to display the signals differently, you can make a profound impact on it.  

10:17: So a lot of times I see Madhu’s job is, of course we’re a fintech, of course we’re a technology company, we work with banks, we’re compliant and all this.  

10:25: I say the biggest impact that we are trying to do is we are aggregating a certain group of people, a certain type of a problem, a certain type of opportunity.  

10:33: And work with like-minded partners to build coalitions and build an offering that can help solve that.  

10:40: That’s how sort of I think about it.  

10:41: So Madhu, I’m clearly you have passion around around Modak and the company, and Tyler, you know, you mentioned then Tyler probed a little bit about the fact that you set up these, these values for your company beforehand, and you’ve also talked about your humble beginnings.  

10:56: I’d like you to fill in the blank, you know, fill in that that gap a little bit.  

10:59: We typically like to ask initially about your background and career path, but I’d like to understand your your upbringing by first asking you, what did your parents do for a living?  

11:10: My parents live on a farm, in India.  

11:12: They still live there and we’re still farmers.  

11:15: So my dad is a farmer.  

11:17: We, as a kid, you know, I grew up and we had banana farms and and rice paddy farms.  

11:22: So that, that’s like when I go to visit, it’s been a little while since I visited.  

11:26: When I go to visit, we still go to the farms, right?  

11:28: So, and I think as, you know, I’ve been, I think since childhood, like, I still remember, like, I was one of the early people to learn English in my village.  

11:40: And so whenever there’s an English letter that comes in, other people in the village is like, you’re a, you know, you’re a teenage kid or you’re a young kid, like, you can read English.  

11:47: Let me bring you my letter.  

11:48: Can you open and read it?  

11:50: So, and I think over time, and I’ve been, I was very good in math and science as a kid.  

11:55: I was doing math Olympiads and physics Olympiads, so I went to this institute called IIT, Indian Institute of Technology, which was India’s MIT for engineering.  

12:05: A million people write an exam in the top 5000 or 10,000 get in.  

12:10: so I was in the top 2000 in the country and, and did aerospace engineering.  

12:14: And after that is that sort of I, I want to post these social impacts.  

12:17: So I joined a firm called Dalberg, which is McKinsey but the social impact clients I worked with and World Bank and a number of these other organizations, multilateral organizations, thinking about how you can make a positive impact in the world.  

12:29: So from then on, I wanted to pursue more on the impact part to see if government would be a part.  

12:35: So I moved to Ethiopia and worked in the government there for two years, trying to figure out how to distribute food aid and logistics in the country.  

12:44: So the system that I helped developed now gives food for 16 million people in the country every year.  

12:49: I think that early experiences in government and social impact made me realize, you know, I, I working through that journey made me realize business can be a huge lever for change, and that got me to the United States to Stanford, and then on my career came here and in the tech and business and how you can make an impact,, and then I joined a firm called GGB Capital, which is currently called Notable Capital.  

13:15: They are one of the early investors in Square, a firm, Airbnb, Peloton, and a number of iconic companies and mentorship of this gentleman called Hans To.  

13:24: He is now in the 13th year on Forbes Madison.  

13:26: of who sees.  

13:27: He’s one of the legendary investors in the valley.  

13:29: And so I’ve been very lucky to be his, to be his mentee.  

13:33: So, and he’s the honorary co-founder of Modar as well.  

13:37: So he was a huge supporter and a driver for me and shadowing him and looking at how many, you know, how companies are built.  

13:43: Through him, I looked at over 900 companies, 900 startups to take pictures from.  

13:50: We came close did deep diligence and 50 of them, invested in 14 of them.  

13:55: 4 of them became unicorns.  

13:57: The the deals that I did helped support Hans to invest in, and, and he’s a number of public companies.  

14:03: And so that’s where Hans was like, you know, you, you’re young and you have the energy.  

14:07: If you have this dream of making an impact, I would support you.  

14:10: , and so then I was like, you know, I want to take the plunge and, and do this.  

14:15: And so that’s a sort of more came in the journey, but enhances this fun and I’m paraphrasing it, fundamental belief, and he’s a big student of history and so am I, is that companies and organizations do well if you align that to the society’s good because I think, and I think tech or other things can support if you do fundamentally a good thing.  

14:36: And if you can leverage the prevailing forces that support you, you will fundamentally end up doing well.  

14:42: So and his investment philosophy almost always after all the maths, numbers and all this stuff, he just boils it down to say what is the impact that they’re making in the world, and he just aligns it even in the United States, he’s a global investor, but applying that lens helps a lot.  

14:57: Sure, thank you for that.  

14:58: The, you spoke earlier about about the power of coalition in, in building impact and and creating change.  

15:07: Talk to me a little bit about examples of, of coalitions that you saw that were impactful in, in the story you just related to us.  

15:17: Before I come to Modak, I’ll, I’ll, I’m, I’m a big fan of history, as I was saying.  

15:21: I’m reading this book called The House of Moga.  

15:23: It’s about how the JP Morgan, JP Morgan came to be JPMorgan.  

15:28: And so in the 1800s or so like late 1700s, 1800s, America is still a young country, right?  

15:34: We’ve got independence in 1776, so, and so when you were trying to get capital into the country to build things, you know, on the East Coast, a lot of the money had to come from London banks.  

15:45: And so London banks always saw these Americans as a ragtag bunch of young country that has its issues and stuff.  

15:51: And then, you know, and there’s like defaults and a whole bunch of stuff.  

15:54: So George Peabody was one of the early people who went to the UK and he took immense pride that Americans are honest people, that we had a good opportunity and good things.  

16:03: So far he weathered for 2030 years to more than money.  

16:07: He’s like, I am going to be that change maker.  

16:10: Then, you know, Julius Morgan, he came in and then JP Morgan, those three generations of gentlemen.  

16:17: And they have complicated personalities and a lot of good and bad, but if you look through between the lines, they take more pride that they’re getting resources from from Europe, being an advocate for Americans, and bring opportunity to here to build railroads, to build factories, to, to support these things.  

16:35: And so the way they describe this when governments are new or when governments are busy with.  

16:39: Other things.  

16:40: So like even Civil War era for Lincoln, that was actually where banking took off in a huge next era, because the government bonds was marketed by the banks going in and doing the retail marketing to say, do you believe in the in the United States?  

16:54: If so, by the government bonds, you don’t need to go to Europe or France or others.  

16:58: We can actually select the ones.  

17:00: And each generation of that creator.  

17:02: This, so the bankers, before some of these crisis and the Great Depression and stuff, bankers were seen as at least by the government, not by the regular people because of controversies and stuff, as if you have a collective agency problem, they’re the ones you can depend on to organize, you know, people’s deposits, people’s interests, other ones to get an industry or to get a problem solved.  

17:25: So I think when you apply that to the modern era, now I think in the FinTecherarchy, every, every ecosystem had this and so you can, you can trace the history of banking in FinTech to every 20-30 year horizon and see what technology, social factors happened and how the realignment started.  

17:41: So Fintech sort of started in the last since 2008 or so after the in the banking crisis, where in a way where people lost trust in big banks and so how do you sort of, you know, And you do good in the world.  

17:53: And so that’s where you, you have this, the sponsor bank, the partner banks, and FinTechs working together to take on the big banks, community banks and other works.  

18:03: So now we come to this era where, so for a kid program, let’s think about a simple thing as this card, right?  

18:09: So this is our card and this design on the card.  

18:14: Like, if you were to have the kid really appreciate this.  

18:18: One of the biggest things for a marketing for it, if you see all those chase ads, they say $600 to open a card, because the levers on which they can compete are quite different.  

18:28: So they’re just trying to, you know, bombard on airwaves to get this done.  

18:31: Whereas a simple thing as a nice card design would make a kid say, Hey, I want this.  

18:36: This is a video game, and this is my favorite one, I want this.  

18:38: And so that little thing can drop your cat by 30 times, and that is magic and how you can do this.  

18:45: And to do that thing, you need a number of partnerships to make it happen.  

18:49: You need a willing and a same mindset partner bank and good partners which people are here to say, we understand the value of this, we understand this approach, so let’s work together.  

19:00: Once you say yes, we need to go work with the issue of processor, someone like Galileo, who are good friends, to say, how do you enable such a thing like this?  

19:08: Then you’ve got to go to a card printer such as Narrow and tagged to say, how do you make this happen?  

19:12: Then you need to build a technology team to say, how do you get a card design like this?  

19:16: Then from the technology you need to go to a marketing team.  

19:18: So every single person has to work and it’s to make this user one, how do you sort of distill that down to 30 or 40 people across multiple organizations to make something happen, to make impact in the world.  

19:31: And I think that’s where I believe that, you know, in FinTech, the right to play comes from doing all the important things with compliance, technology, and like all this, but the right to win comes from similar values and similar cultural environment across organizations.  

19:47: But do you gave me a lot to chew on there, and I am actually, what I will say, just in the short orders, I’m sure you’re doing Stanford proud right now because it’s brilliant student of history, I’m starting to really understand that.  

19:59: The analogy, if you don’t understand history, you’re doomed to repeat it, that really lives and probably resonates within your mind there.  

20:05: And I think you’re right.  

20:06: Why wouldn’t you leverage and stand on the shoulders of giants, be a student of history, so you know how to structure your value proposition, present day if not future state.  

20:16: One thing that you mentioned, and it really resonates with me is your mission alignment element, how you say you have a right to win when you have maybe similar mindsets.  

20:28: So unpacking that more, how important is partnerships or mission alignment set differently?  

20:36: How important is mission alignment for your partners in process or subprocess fulfillment?  

20:40: Is that top of mind for you when you’re going to market to look for issuing partners and other subprocess vendors?  

20:45: Could you unpack that a little bit for us and How you do that level of due diligence?  

20:50: That’s a great question.  

20:51: And I am, I am learning as well, you know, this is our, you know, this is my 4th year of the like 3rd year, we finished 3 years recently, so we’re in the 4th year of our journey and from my time as we see, like that was 5 years before that.  

21:03: And my whole career for the last 2 decades, I’ve been spending a lot of time with like partners and stuff, right?  

21:07: So I’m trying to figure out my SOP.  

21:10: The current thing that it is and how it evolves is like, That I actually write down values for the partnership.  

21:17: So in the first, not the first meeting, like when you visit the offices, it’s like visiting the families on both sides.  

21:23: It could be an issue.  

21:24: It could be a printer.  

21:25: It could be anyone.  

21:26: One of the things I spent time is to jot down 4 or 5 bullet points to say, here are our company values, and here is the proposed values for our partnership.  

21:35: And I think, you know, simple things like to say, assume good intentions, you know, customer comes first, then comes in our bank, then comes us.  

21:44: And the reason being that if customer does well, both of us do well.  

21:48: If the bank does well, then we as FinTech do well because if you don’t do well, and if your regulators are not happy with you, if you’re If you’re standing in the world is not good, then my customers get worried on FDS insurance.  

22:00: So then us comes first, right?  

22:02: So then assume good intentions is an important one because all of us want to work well, but the way a bank grows because you have a risk mindset.  

22:11: Like Jamie Dimon has created the last 2 recessions that did not happen.  

22:15: But Jimmy Dimon is so good because he, he is always paranoid, and that’s the job of a banker.  

22:21: Whereas as a fintech, you need to grow.  

22:23: If you don’t see both sides to say, hey, how do you predict, how do you see what they’re seeing, what they’re worried about?  

22:31: And so if you ask me about, hey, this account is not reconciling or this something is happening, if I brush this off.  

22:38: That is, you know, that may not be as important to a random engineer in our team, but it is so important to you.  

22:43: It is like mission critical and life saving for you.  

22:46: And if I don’t train my organization, if I don’t propagate those values to my team, then the whole partnership doesn’t work.  

22:53: So that’s why I think having those values for both partners publicly and then sharing that in my team as well that this is important, then, then it values on it.  

23:03: So, and I think Cultural or values driven, there’s a really popular class called Stanford that leading through culture, and I think it’s borrowed a little from some Jeff Bezos from Amazon time is like culture is how decisions are made when you’re not in the room.  

23:17: And in organizations and fast growing organizations and partnerships like FinTech and bank ones where there are so many conversations, compliance has their own operations as their own joint meetings, like all of these ones.  

23:28: How are decisions made?

23:30: How do people behave in these rooms when, you know, Eric or you or I am not in that meeting is important.  

23:36: And so if I propagate those values and give it to say this is how we make decisions, this is how we interact with it, it makes it super easy.  

23:43: So that’s the number one thing I used to, I used to dictate.  

23:47: And the last but not the least thing is when you negotiate on pricing, and, and this is a tip to anybody doing business with Mo, I always say, guys, like, what’s the one single metric that we can optimize for that is a win-win for this partnership?  

24:01: For example, in pricing, you can have like, you know, menu of pricing, you can optimize.  

24:05: But as an engineer, multivariable optimization never works.  

24:09: Like multivariate optimization are many solutions, but there’s no one solution that all can agree on.  

24:14: A single variable optimization always works.  

24:17: So almost all the time I spend time on, which is one metric, one pricing unit that is a win-win for both of us in this partnership, let’s increase that as much as we can and I’d rather to the customer.  

24:28: Everything else, let’s figure out on a cost basis.  

24:31: So if you, if the customer succeed, then you make money, and they make money.  

24:35: Everything is clean and everybody’s alive.  

24:37: Well, you guys have heard it here first, you know, my dude from an engineering background giving fantastic pricing advice in relation to multi-variable optimization versus single variable optimization, and I would agree the logic there holds, buddy.  

24:49: I mean, it holds a lot of water.  

24:51: and I think when you approach it from that perspective, you could quibble around a lot of things or you could just quibble around one.  

24:57: and I think that it really narrows the focus of that conversation.  

24:59: So, do we You’re actually gonna deploy that strategy, hearing it here first, in our next interaction.  

25:05: So, we appreciate that.  

25:06: We’ll certainly call you and let you know how that turns out.  

25:09: One thing that you did mention though, and I just wanted to take the opportunity to highlight it, is that you’ve, I think, validated every risk professional within banking and even other industries, when you mentioned kind of the paranoid components, and you’re right, you know, there’s elements that you need to worry about.  

25:23: There’s elements that you need to be anxious about.  

25:25: And when you start to drive your cultural conversations with your partnerships, and it really just boils down to character in a way, and partnerships are, in fact, a marriage.  

25:35: So you do want to be sure that you’re approaching this from a very cultural line and values driven place and perspective, so you know that as you’re signing this agreement, which isn’t just a one and done thing, it, it lives on for 3 to 5 years and even perhaps even longer.  

25:50: And so these relationships, they’re material.  

25:53: At the very least, certainly in the short term, it’s you want to be sure that you’re all rolling in the same direction and that you’re not getting pulled by opposite ends in terms of motivators, ulterior motives, or otherwise.  

26:04: well done, very well situated.  

26:06: The one thing that I’d look to ask, because that was a lot that you started to unpack, just around education, certainly the approach, is if we start to shift.  

26:18: What do you think was the, there’s elements of gamification within Modac.  

26:23: What was some of the inspiration behind that?  

26:25: Knowing that there’s an entire field of study of science around endorphin releasing, engagement, right?  

26:31: You can, the science and practice, you could go to Vegas and you can kind of see an element of that output.  

26:36: What type of study did you put into the gamification components of your value proposition just to out of curiosity.  

26:44: I’m, I’m a big fan of games and gamification.  

26:47: Like I’m on Duolingo now.  

26:49: I did this morning too.  

26:50: I’m on 1,375 days streak right now on Duolingo.  

26:55: in fact, Spanish, and it’s, it’s a keyword, and I, and I do that a lot,, and, you know, yeah, I’m a nerd, so do what you want with it.  

27:09: but I think there’s a lot of good gamification and bad gamification.  

27:13: I think, the biggest one is, is a bad example, or even right now on like sports betting, I, I truly, I know it’s a tangent, but I am so worried about sports betting in the country.  

27:24: I have seen around the world what sports betting does to families and stuff, and I think in my village as well, there are people who do betting on, and on sports, and they have lost their families.  

27:34: Like in a small community, you see what happens to your family and debt traps with, with the betting and stuff.  

27:40: So I’ve seen this many times.  

27:41: I think in the US with sort of making gambling available on your phone.  

27:45: Is making it really worse.  

27:47: So I’m really worried about it.  

27:49: So I’m even thinking that as we build, as we enhance our product, if you see a transaction on a, on a gambling one, we don’t want to stop it, but we want to give some resources to say, hey, how can we help you?  

28:00: But, but in bringing back to this, there is good gamification, which is, which is doinging or does this really well is like, how do you create a habit?  

28:09: And how do you think about, hey, every day, check your, like, do a little bit of, roundups is a great example.  

28:15: We haven’t launched that yet, but, you know, how do you say, you know, save every day or like save a little bit.  

28:22: So more than that, more than the quantum you do, habits stick on.  

28:27: We are creatures of habit and habit evolutionary wise gives us comfort.  

28:31: So how do we create habits that are good ones and then do that?  

28:35: And so, and then you can create 3 different habits, but only 2 or 3 really works.  

28:39: So we try to distill it down and we are very careful on how much gamification we use.  

28:44: We use very little on it on purpose.  

28:46: And that’s why I started with these 3 things.  

28:48: It’s like the 3 things I want to drive it down to all the customers are how parents drive it down to their kids is You know, mimic the experience of paycheck.  

28:58: So you know you are ready when you’re an adult on the paycheck to paycheck experience, or I hope you do better.  

29:04: Second is savings that you need to save.  

29:06: and third is, if you need more, then learn the value of work, and the value of enterprise.  

29:12: And so all of our gamification is surrounding that.  

29:15: I appreciate that clarity.  

29:16: I do.  

29:18: and thank you.  

29:19: For that and also sharing.  

29:22: The one thing that I wanted to maybe bring back or to, to touch on was the sports betting and gambling addiction that you captured there and some of the debt traps, the betting, how you’ve seen that in your travels around the world.  

29:38: And would you think that that’s because of a lack of financial education, where folks are kind of trapped in a cycle, or they’re trapped in circumstances that they may not understand.  

29:46: And so they look at this as, well, you know what, there’s nothing that I can do, right?  

29:49: I, I, I get a sense perhaps in some cases, it could be from maybe desperation.  

29:53: And lack of options.  

29:55: And so they see this as one of the only ways perhaps to get out of this perhaps cycle or circle that I’m stuck in.  

30:00: I’d love to give you the floor on that, Madhu, since you’re close to this.  

30:03: I can tell, how personal it struck you, just to maybe get some of your readers to what that causal factor is.  

30:10: It’s not about lack of awareness.  

30:11: Like think of exercise, right?  

30:13: Almost all of us know that the food pyramid, the exercise, the importance of these things.  

30:18: It’s not because we don’t know it.  

30:20: It’s not because we don’t know that we don’t exercise, or it’s not because we don’t know that we, we eat, we don’t need a balanced diet.  

30:28: It’s just people’s habit, right?  

30:30: And you see the instant joy in your brain, the chemicals.  

30:32: Our brains are such weird characters and, and, and the chemicals that go in that you get resorted to.  

30:38: So if you get used to this dopamine hit, by getting a little bit, like, you know, if you really believe, I know the Pacers versus the Warriors game, and so at the start of it.  

30:47: Like, oh, like, you know, Warriors are supposed to win.  

30:49: So you, you start, you, you think this game is gonna bet.  

30:52: And so, in the past, if you need to bet on it, the barrier to go there is you have to go to somewhere and to Vegas or somewhere and then bet now, you can open your phone up, you can open a Robin Hood, you can open Car share or anything, and then make a bet on where this game’s going to go.  

31:06: And I think you made the barriers so low to get a quick dopamine hit, to think that you know something.  

31:12: And, and this is sort of same with investing to, like, the best way you can invest is passive investing, like buy, buy daily, by the index funds, and then, you know, and just keep, keep, keep compounding.  

31:23: But we all love the stock, we, we think we know something about it, so we want to gamble and we want to put on it, and that’s what causes all these issues.  

31:31: So now the way to solve it is how do you sort of get over it.  

31:35: So I think sometimes for addicts and stuff, instead of doing a cold turkey, some people do it and there’s a lot of concepts and stuff, but the way they do it is if you’re gambling, then you take your wallet, you take your cards, everything off.  

31:45: You only take like $50.  

31:47: That’s it.  

31:48: You don’t get anything else, your loved one only give you $50 go do it.  

31:51: That’s it.  

31:52: You’re not getting anything more.  

31:53: So like some control, some system to help you get there.  

31:58: Like, I don’t think, you know, we spent a lot of time building on it.  

32:01: Thankfully it’s kids.  

32:03: Our MCC code for gambling is blocked.  

32:05: So we actually took it.  

32:07: It’s a funny story.  

32:08: So when we were first on a partner bank, we went to them and said, Can we block these MCCs?  

32:13: And our relationship person is like, Why would you need to these block?  

32:16: Like, what are these things?  

32:16: And they’re like, Hey, this is gambling, this is guns, like these ones, these are blocked.  

32:21: And, and, and they’re like, wow, this is so insightful.  

32:25: So every time we apply to a visa to get like a new band or something, they’re always like, why do you have restricted MCCs?  

32:31: And they’re like, this is why.  

32:33: And though at first, it raises eye grows and everybody’s like, Wow, we appreciate it, because you did a lot of little things in the behind the scenes that put very thought behind into why we do what we do.  

32:44: Well, 11 thing that I did not know out of that, or at least one thing that I learned out of what you said there, and what really differentiated gambling from maybe standard gambling, now that I’m starting to perhaps bifurcate these, is that on sports bettings, I think you’re right, there’s an element of almost perceived control or insight.  

33:02: Oh, I know for sure that this sports team is gonna win.  

33:04: They have such and such, such and such, and he was rookie of the year and all, all of these things.  

33:08: Whereas if you’re playing something that truly came a chance, you don’t have that perceived element of control or insight.  

33:14: And so now you start to see how it can be so addictive, if not even beguiling, for lack of a better word, Madhu.  

33:20: So that was phenomenal for me.  

33:22: The one thing that I would like to touch on, Is you’ve mentioned that you’ve seen this throughout your travels, even in your own village, when you were probably traveling through Ethiopia, India, Mozambique, if I remember a little bit of your history.  

33:35: How has that experience, that worldly experience shaped your view of social equity?  

33:41: And how has it perhaps even evolved your view of social equity, and how has it now shaped Modak’s mission?  

33:47: America is the only country that’s founded on the ideals of on on the principles of an idea.  

33:53: Like almost every other country, maybe some of the newer countries in the last 2030 years is different, but almost every, like there is no other country in the world that is formed on a concept of an idea and not an ethnicity or on, you know, some of the other factors.  

34:08: It’s the only country that’s formed on the concept that, you know, on freedom, on pursuit of happiness, and, and on opportunity.  

34:14: So it’s And, and that’s why when Lincoln like led to a civil war time, it’s such a powerful one, and a lot of Europe also scoffed that this idea may even work and, and the idea may go away.  

34:26: and I think it is so profound that around the world people crave for this kind of an opportunity.  

34:32: And I think even in, even in restricted governments and societies, people sort of strive towards this kind of a structure because in here you can be anyone.  

34:41: Of course, there may be some obstacles, but in general, you can pursue an opportunity, you can pursue an idea, and you just need to try harder if it’s, if it’s tough, like there’s sometimes timing is not right, but you will find some sympathetic care, some sympathetic partner to make it work.  

34:58: and I think, I believe that if you, I believe that, you know, the US, It despite all its faults and stuff, it’s one of the best places in the world to, you know, for social mobility, as simple as I forgot the US that, but in India, I think it takes 6 generations to go from the bottom most decile of of income level to the topmost decile if you try all hard.  

35:26: I think in the US it’s 3 generations or so, it’s one of the highest, fastest ones in terms of economic mobility.  

35:32: If you assume that you can move, you can, you know, if you, if you assume certain things go well.  

35:37: Madhu, thank you so much.  

35:38: This is, this has been great.  

35:40: It, your passion around what you’re trying to do really, really comes through.  

35:45: And so my question to wrap us up today is, how do you take that passion outside of work?  

35:52: How do you express it outside of, outside of the work you do at at Modak?  

35:58: Currently, I think Modak is like my, like it’s it’s taking all my energy and effort, but I, I I love to mentor, and I’m like pretty selective.  

36:09: You saw my LinkedIn, like I have this line where if you’re the first in, first in the family to graduate from college or high school.  

36:14: , just drop that in the LinkedIn and I’ll respond in 24 hours.  

36:17: So, like, I have, like, my inbox is full, my LinkedIn is full and stuff, but that is one course that I take a lot and say, let me help on that, because I believe that even at business, even at the top schools at Stanford, in my class, like I was one of the first people to create this affinity group for first generation low income, community ones because irrespective of ethnicity and stuff.  

36:37: It is one of those where when you come from, you know, very little, the kind of choices and career paths you pick are a lot more risk averse, because you want to get some stability and foundation before you do it.  

36:50: I’ve been very lucky to get Hans as a mentor, so I could stand on his shoulders and say, Hey, I’m there to catch you if you fall.  

36:56: But try, pursue your dreams.  

36:58: And I think I Can I do that for other people to say, Hey, don’t worry, if you’re new to Silicon Valley, I can help you.  

37:04: And you’re new to something, I can help you think about it.  

37:06: Or you’re just a fresh graduate from undergrad.  

37:08: Instead of that, let me give you a quick call, let me help you out, take that chance.  

37:12: If it doesn’t work out, I have somebody else who can take you.  

37:15: Just little things, I think that can make a huge impact in the world, and that’s one sort of I want to pursue and, and help people.  

37:23: I don’t know if it will be successful at Modak or not, but at least through the process, like, I wanna make sure that we, we do some good in the world.  

37:29: You know, but you, based on the logic that you shared with us earlier on kind of what constitutes deserving to win, I would motion here that you certainly do.  

37:38: , one thing, that I’d like to ask, and it’s simply now out of just sheer personal curiosity.  

37:45: You mentioned kind of Rich Kids, Poor Kids, which parallels the book title Rich Dad Poor Dad pretty closely.  

37:50: So in my mind, then it means that you read that book, and I imagine based on how a prolific and also scholarly you are, that you’ve read a lot of books.  

38:00: And so now out of pure curiosity.  

38:02: What is one book that you’ve read that you wish you would have read earlier in your life because it was so profound in terms of the difference that it made?  

38:10: I would say the book about Charles Schwab.  

38:14: Charles Schwab has this book called Invested and it’s his biography.  

38:18: And I think it is, and it talks a lot about his journey, about, he has like learning ability issues.  

38:27: And so, there’s a fun story.  

38:29: I know at the end of the time, like, he found, like, he can’t concentrate or he can’t read more than a page.  

38:36: So he, in his assignment at Stanford, he was a Stanford MBA back in the 60s, and so there was a 20-page assignment.  

38:44: And he only did a page because he couldn’t do more, and the professor, and he got the best grade.  

38:48: He was not a top student, but in that class, in that test, he came in to talk, and the professor asked, there’s 20 pages.  

38:55: This is so good.  

38:57: I wish I, you wrote more so I could see it.  

39:00: And Charles Schwab says, I wish I could do more, but I can only do one because of, you know, because of my learning.  

39:06: And so, and, and so that’s what made him.  

39:09: And that was the spark of his idea because then he started a newsletter business in Silicon Valley for wealthier people to manage their money.  

39:17: So he started a newsletter and stockings, and then he started investing business and stuff.  

39:21: So all Charles Schwab’s ran through that in his whole life, in even his meetings.  

39:26: He’s like, I can’t.  

39:27: A lot of things.  

39:27: I’m going to do a few things that I can do really well and it.  

39:31: But, but the moral of the story and why this is so important is, and he was in a parallel CEO and founder at the era of Jobs and Gates and a lot of these, you know, huge personalities like Jack Welch or GE, like all this.  

39:45: So he didn’t try to be somebody who he’s not.  

39:47: He leaned in a lot into what are his strengths and what are his weaknesses and how can he actually turn down with strength.  

39:53: So he did not try to be somebody who he’s not, and he leaned in a lot more inwards.  

39:58: And that would have helped me a lot in my life to earlier to say, I don’t want to be somebody who I’m not.  

40:04: Of course, there are areas and technical skills that I can learn, but how can I, like, introspect myself internally?  

40:10: And I think it helps to kids as well.  

40:11: It’s my best recommended book to, you know, young parents and stuff to read it earlier because instead of focusing on your kids’ weaknesses, focus on their strengths and, you know, this is a good book that can sort of help on.  

40:23: Well, there you folks go.  

40:25: Madhu, he’s genuine, he’s introspective.  

40:27: He blurs the lines between margin and mission because he started with mission and now he’s finding his margins.  

40:33: If you’re interested in doing business with people that are doing good, Modak and Madhu are folks that you should reach out to.  

40:40: We’re gonna wrap it up here.  

40:41: There’s no shortage of inspiration.  

40:43: Madhu, we may have you on for round two.  

40:44: That’s the first time we’re gonna position that simply because it was just so profound, so scholarly, and I think that everybody can take away something to learn here.  

40:51: There was a great life advice that bleeds well outside of FinTech.  

40:56: you know, and when my son’s old enough to listen to some content, this is gonna be the first podcast I introduced him to.  

41:00: I appreciate your time.  

41:01: We’re all better for having spent time with you here today.  

41:04: Be well.  

41:05: Thank you so much for having me and thank you so much for your partnership.  

41:11: And that engaging dialogue was powered by Sunrise Banks, member FDIC, equal housing lender.  

41:17: Thanks for listening to the Social Currency podcast by Sunrise Banks.  

41:21: If you’ve enjoyed this episode and you’d like to help support the podcast, click like and subscribe anywhere you get your podcast content.  

41:27: We’ll see you soon.