Bootstrapping with Services at the Cusp of AI and FinTech: Vahe Andonians, Founder of Cognaize (Part 1)

In this case study, you will hear Vahe talk a lot about bootstrapping – bootstrapping to exit, bootstrapping with services, so on. You will also learn a nifty way of building domain knowledge on top of horizontal AI expertise. This is a valuable and extremely interesting way of building AI companies for entrepreneurs to consider.

Best of Bootstrapping: Bootstrapped a FinTech Startup by Piggybacking with Services

If you haven’t already, please study our Bootstrapping Course and Investor Introductions page. 

Quavo Co-founder David Chmielewski transitioned from a developer to an entrepreneur by leveraging his solid domain knowledge in a particular area of FinTech: dispute resolution for credit card transactions. He and his co-founders effectively used bootstrapping using services and piggybacked on the Pega Systems platform. Read on to learn more about his journey.

Sramana Mitra: Let’s start at the very beginning of your journey. Where are you from? Where were you born, raised, and in what kind of background?

David Chmielewski: I was born in Michigan in a small tourism-driven town. They have good schools but generally not a tremendous amount of job opportunities if you wanted to do something in technology. I was one of the lucky people who always knew what I wanted to do. I was exposed to computers pretty early.

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Building a Public FinTech Company From Scratch: OppFi CEO Todd Schwartz (Part 6)

Sramana Mitra: What scale are you at right now?

Todd Schwartz: This year, we’re in the over $400 million range.

Sramana Mitra: When did you go public?

Todd Schwartz: In 2021 on the NYSE. When I walked up to the stock exchange, it was never about financial gain. It’s so funny to me to see OppFi on the banner. This was literally about helping people. I want to make that clear. If financial gain is the reason you’re doing it, your heart and soul won’t be in the business.

Building a Public FinTech Company From Scratch: OppFi CEO Todd Schwartz (Part 5)

Sramana Mitra: What about going beyond Illinois? How long did you do just Illinois?

Todd Schwartz: We scale nationally now. What was interesting to me was there were 17 other states that had small-dollar lending laws that we could use. What’s difficult is that each state has its own rules. We started to scale that way. There are 35 states that have payday lending laws, but only 17 have small-dollar lending laws.

Our goal was to provide credit access in a better way and, essentially, eradicate the payday loan. That was our original mission. That’s when I stepped down as CEO. I became Executive Chairman and hired a CEO.

Building a Public FinTech Company From Scratch: OppFi CEO Todd Schwartz (Part 4)

Sramana Mitra: What about the technology? Did you build all that?

Todd Schwartz: I do not believe in going out and blowing a bunch of equity to build this beautiful shiny technology system. In four years, it’s probably not going to be the best system with the rate of change. I used off-the-shelf solutions and did API integrations into them. I spent little on technology. I didn’t have a CTO for the first five years. They were all variable costs. I didn’t have to outlay a lot of equity. I was able to grow with a variable cost model.

Thought Leaders in Financial Technology: Diversyfund CEO Craig Cecilio (Part 4)

Craig Cecilio: There are little things out there that are meant to protect people, but we’ve to figure out a way to be able to push that out there so people understand what they’re doing. It’s hard for us to tell people exactly, “Don’t invest here. That’s too much money.” That has to be in place.

People need to be educated. That’s the whole thing with crypto. Everyone wants to put money in thinking they can be a millionaire overnight. It’s really the educational component.

Thought Leaders in Financial Technology: Diversyfund CEO Craig Cecilio (Part 3)

Sramana Mitra: As they’re getting educated, are they also getting investment recommendations that they can go and click on and sign up for?

Craig Cecilio: No investment advice. It’s a compliance thing. We can’t give investment advice. That’s another challenge. What can we say and what can’t we say from a compliance point of view? There has been a lot of oversight in the last year or two. As we move from this great bull run over the last 10-plus years to this bear market, the pendulum swings in oversight.

Thought Leaders in Financial Technology: Diversyfund CEO Craig Cecilio (Part 2)

Sramana Mitra: Is there a level of financial wealth at which you are finding people? Are these people beginning to build wealth?

Craig Cecilio: That’s a great question. We’re talking about this. We overlapped the statistics on the population and how many are accredited and considered sophisticated. We dove into our community and saw what that is. It was almost identical. There are about 10% to 12% considered accredited. We overlap that with our percentage and it matches. I found that fascinating.