A New Frontier in the Payment Industry

Megan - 00:00:31: Today my guest is Chermaine Hu. Chermaine is the CFO and Co-Founder of Episode Six. As such, she is responsible for the global finance and accounting functions, as well as M&A and investor activities. Prior to E6, Chermaine was an M&A banker at Morgan Stanley in both London and New York. Chermaine, thank you very much for being my guest today on this episode of CFO Weekly.

Chermaine - 00:00:56: Awesome. Thanks for having me.

Megan - 00:00:57: Yeah, today we're going to hear your origin story and discuss your experience in co-founding Episode Six, which is a modern payment technology solution. We'll also touch on your role at E6 today, general issues and payments, and the modernization of the payments industry. I'm really looking forward to learning from you and we have a lot to cover, so let's jump right in.

Chermaine – 00:01:18: Great.

Megan – 00:01:19: First of all, can you tell us about your education and your career path and what prompted this shift for you into fintech?

Chermaine - 00:01:27: Sure. And I'm going to start from the beginning because I think the beginning kind of explains the journey a little bit. So I'm from Hong Kong, born and raised there until I was 14 when my parents sent me to boarding school in the UK. And oftentimes when I tell people that they're like, “What did you do? Why did your parents send you away?” And that's a pretty normal thing back then because Hong Kong was a British colony and very small and the sort of educational options were limited. So when parents come, they always send their kids away. So I was sent away. But that was actually a very, in my mind, a transformational experience for me because I think had I stayed in Hong Kong and gone on with my education there, I probably would be a very different person and probably would have had a very different career and life path. So from the point of age 14, I studied in the UK, went to boarding school, and then went to university there. I was a math and science geek, and probably still am. And so I studied engineering at university. Very excited, and very hungry for opportunities to solve problems, and I very much think about math and science as problem-solving training, ultimately. And so when towards the end of my time at university, looking for job opportunities, the time was very different from now where there are a lot of, I think, technology engineering jobs that are very interesting with high growth opportunities ahead of them, whereas then I couldn't find anything in the engineering field that made me feel like, “ah, yeah, I will continue to be able to learn, to grow and to do different things”. So I went a different path and went into investment banking. So I was an M&A banker at Morgan Stanley for 14 years, started in London, and spent about eight years there. But then I always felt that if I was working for a global US, bulge bracket bank, I have to work in New York. And so I asked my boss at the time in London, if I wanted to move. And he was like, “Okay, sure”. So a couple of months later, I ended up in New York and I spent another probably six years or so working at the bank there. And I love my career as an M&A banker, because to me, it's also very much about solving problems, but also about just rapid learning across like many, many different areas, from the like really technical, doing valuation analysis, crunching numbers, to just figuring out how to deal with people, how to get people to help you, how to organize processes, how to negotiate contracts. It's just so much to learn. And that's that expectation of, I don't care whether you're just a fresh graduate out of college or you work for 10 years, that's just that expectation of you're here working for us, you go figure out how to do things. And so I love that because it's just such a rapid learning, high-growth environment for my own professional career. And towards the end of those 14 years that I spent at the bank, I think that what I was experiencing was really kind of towards the end of my learning courage as doing M&A. I felt I had learned a lot of things, not that I knew everything, but in terms of the type of things that I wanted to learn, wanted to grow in, that there wasn't too much more of that for me. And so it also felt like a point in time where I want to do something not just for my client's services, in financial services, but want to do something that's more for myself, for the company that I work for, in a more impactful way. So out of luck, I got a job opportunity at a financial technology company, a very small one in Austin. And so that really started my fintech career. And that was where I met my two partners who worked with me in starting Episode Six, eight years ago. So should I pause there for a second? That felt like a very long history of my life.

Megan - 00:05:38: Yeah, no, no that’s an amazing career that you just laid out. So tell us what was the inspiration behind Episode Six? What was it about problems out there that you wanted to help solve?

Chermaine - 00:05:52: Yeah, yeah, sure. So the three of us were working together at the company that I joined. And I think that was also in the financial technology space. And my partners actually have a lot more experience than I did at the time in the payments and fintech space. But having worked together for a little bit, just looking at the evolution of the industry, I think it was just blatantly clear to us that there's a huge opportunity out there in terms of providing better technology to the client base that we serve. And we serve banks, we serve brands, and companies that need to put out financial and payment products. It was just very much lacking in the industry in terms of technology that can support them to actually put out solutions, products that their customers actually want or need. It's just a function of a lot of legacy technology platforms being very restrictive in terms of how people can design the products to actually address the needs of the customers. And so we felt that there's this giant, enormous opportunity that we know, we thought we knew, the solutions to. So we decided to, yeah, let's just do it. We have no funding, no nothing, but we can quit our jobs and start this company. And that's what we did eight years ago. And so I think-

Megan – 00:07:11: That takes some guts.

Chermaine – 00:07:12: Yeah. But I think we also have very strong beliefs in our own sounds, but also just the opportunity was so clear to us. And I think as you think about how technology, not just in the fintech world, but technology in the world, how that has changed over the last 10, 20 years is amazing. And yet the payments industry didn't seem to be able to keep up with that. So it seems obvious to us that that is something that we can do. And again, with the experience that my partners had in particular in terms of building technology and working with a client base that we right now are also targeting, we just knew, we felt we knew what the steps are to take to build a platform that is actually some things that our clients would want and can leverage and can use to put out really, really good products for their end customers. And at the same time, I think we felt we know the market well enough to know how to bring it to market. Selling to banks is not easy. Selling brand-new technology that no one has ever used, it's even harder. So we were fortunate enough to be able to really overcome some of those challenges that I think a lot of young startup companies had. But yeah, that felt like a very long time ago, but that's what we did.

Megan - 00:08:30: Yeah, and speaking of challenges, what have you found to be most rewarding and on the flip side, most challenging about the business startup process?

Chermaine - 00:08:39: Yeah, I think one aspect of it, which I think you can look at as a challenge, but to me is also really rewarding is every day we, make decisions that affect things. And it sounds trivial, but they are small decisions that I just need to make day in, and day out. But they're also big decisions that we collectively as a team, as a company need to make. And depending on how we make that choice, the outcome can impact the entire company. So I think it's a very direct impact of what we do or what we don't do that is rewarding, hopefully when you get it right. But it's also challenging because sometimes you just don't know. Sometimes you use your best judgment because you have never experienced this before. But that's also the fun part of it because it's like if you do something that you know so well, you can do it with your eyes closed, it's probably not that fun. And I would say I think the other challenge for smaller companies in particular is to find the right people, the right talent to join your team, in particular when you're growing very quickly. And we have grown very quickly globally. So sitting in the US, needing to build out our team in Japan is not easy. How do you find that guy in Japan who can run your team out there? I don't know, but we figured it out. So there are a lot of challenges along the way, but kind of back to my whole, I love to problem solve and I think my partners do too. I think we're just solving one problem at a time as we continue to grow the company.

Megan - 00:10:11: And can you tell us a little bit about your role, which is CFO, how maybe investment banking prepared you for that role? And also, I hear like a lot of engineers that progress to the CFO role these days. So maybe just a little bit about how those two things play into what you do today.

Chermaine - 00:10:33: Yeah, I don't know. I never feel like I'm very qualified as a CFO compared with some of the other CFOs. I know a lot of them have very long backgrounds in accounting and then actually running finance functions in organizations. But I would say kind of not to keep dwelling on problem-solving. I think running a finance function, which is actually not my only job, I'm responsible for all our corporate functions. So including legal and HR people function as well. To me, it's a lot about you obviously need to have some baseline skills and experiences. But most of the work that we need to do as a team under finance, under legal, under people, a lot of times it's really applying common sense to sort of day-to-day problems, but also with some unique functional experience that comes with that. So I would say, I think I again have been fortunate in terms of being able to hire really strong leadership folks to help me run those functions. I have a great controller, a great general counsel, and a great team of people, and specialists as well. And so I think it's really knowing what my responsibility is as the leader of all those functions, but also leaning on the teams that I have who have special experiences and skills in those areas to do the best we can in supporting the company in those functions.

Megan - 00:12:01: And what have been the greatest successes of the business so far and where are you guys hoping to take the business in the future?

Chermaine - 00:12:10: Yeah, sure. I mean, I think the fact that we're eight years old and we're still doing really well, I think is a testament to what we have achieved. I want to say, I think when the three of us sat around and we were thinking about how to build a company, how to name the company, I don't think we ever really thought that we would now have about 200 people globally that are within our organization. So the fact that we have all these clients across the world using our platforms, I think that's something I think we feel very proud of. But I think importantly also that we do believe that our technology is changing the space in a meaningful way in terms of being able to really help our clients get the right products out there. But you saw the newer way of using technology, everyone doing things on their smartphones, you know, transactions, shopping, trading, everything. But it doesn't just happen. And it was not just about having the pretty UI, pretty app, right? You need the back end to work. And we are that back end to support all these new cool products that people really love, people really like, and people use every day. So I think other than just looking at ourselves as a company, having grown so much, I think we are fundamentally changing the industry that we are in. So I think that to us is really the most exciting part of having built this company from the ground up. And then I think in terms of looking forward, we closed out our CBC round earlier this year. So, really at a point in time where we are looking at a new phase of growth ahead of us. I think we're very excited about the team we have and the work that we have done to kind of get here. And so looking at 12, 24 months, we're looking at really significantly increasing the size of the company, the size of our time base globally. So a lot of work, but exciting times ahead of us.

Megan - 00:14:02: Sounds like it. Curious, where did the name Episode Six come from?

Chermaine - 00:14:07: I shouldn't have thought that up. So when we were discussing what a good name is, and I can promise you there were many other ones before we got to this one, the reason we got to this was among a child's-free time, my two partners and myself, I think we felt we collectively had done five meaningful things before we get to this episode. So this is the sixth episode for us. So hence Episode Six, E6.

Megan - 00:14:34: Yeah, I like it. So, switching gears a little bit, let's talk about diversity and gender and what your view is of both FinTech and finance.

Chermaine - 00:14:47: Yeah, so I mean, I've experienced it really since college, right? When I went to study engineering, I thought I was maybe female or 10% of the entire sort of class. When I went to become an M&A banker, very few females in particular, the more senior you go, the fewer women are in those positions. As I started my journey at Episode Six, I remember every investor meeting, pretty much every meeting that I went to felt like we were just talking to a lot of male executives, and male investors. And so, I mean, I think the women population among a lot of these areas are still relatively small. But I do feel that it has changed over the last decade. I was just actually on a few calls with one of our global partners. And I was telling the group that I was with, I was so impressed and slightly amazed. And I guess the fact that I have to make that statement speaks to the status of the world today. But every meeting that I've been on with the global team, you know, in the US or in APAC, is all female. And I was like, I have not had that experience ever with any other companies that we have been working with. So I do think that is a gradual shift. And I think obviously we all want that to shift faster. But I do think that the more women are in the workplace and in particular in more senior positions so that they can influence the hiring decisions and promotion decisions, are going to help drive the increase of women's representation across the board. I mean, I think that's a little bit of a human aspect that we need to remember. I don't think it's building bias, but it's just we as people generally prefer the knowns to the unknowns. And I think if a lot of men are making decisions about hiring, about promotion, maybe the more known entities to them are still men. But at the same time, I think when there are more women able to be at the table making those decisions, then I think that shift is going to occur. And actually, we won't have to talk about this type of diversity conversation in the future.

Megan - 00:17:09: Yes, that'll be a good day. So what do you attribute to the growth of women in the profession or the industry? And what can we do more to encourage females to enter the space and stick with it?

Chermaine - 00:17:23: You know, I mean, I believe it's just a society. I'm not an expert in this area, but my personal belief is just a change in society's perspective of a woman's position at home versus in the workplace. And I think 30 to 40 years ago for my mom, definitely the perception is that the more normal place we should be at is home. And so I think that has changed dramatically over time. And I think with increasing education opportunities for men and women and women being financially independent, there's just a lot of, I think, fundamental drivers that resulted in the increasing representation of women across the workforce at any rate. But I also think that this educational aspect and being able to be financially independent means that women can make choices about, yeah, I'm going to stay in work too. I'm going to focus on my own career. I don't know if I have the right answer for this, but that's my belief. I don't think it's one thing or another other than it's just as society changes in terms of perception.

Megan - 00:18:30: And switching gears again, but what tech innovations are you seeing right now? And where do you envision Fintech delivering the most value for finance in the future?

Chermaine - 00:18:40: Yeah, I look at innovation, they're quite similar to what we have done in our industry. I don't think we have reinvented the wheel. We have just built technology to do the same thing, like processing transactions and providing digital ledger to banks, just doing it in a cheaper, better, and faster way. And because of the sort of underlying technology transformation that has happened, as things can be in the cloud, you don't have to go to a data center. And with that, there are different ways to build technology to do things that people have been doing for the last century. And so I think that similar to what we're doing, I think I'm seeing just a lot of other tools, a lot of technology platforms out there that are just helping you to do things in a better and easier and therefore cheaper way as well.

Megan - 00:19:32: And looking at the rapid evolution of technology and now artificial intelligence, do you think that those things are presenting any specific challenges or risks that finance leaders should be aware of? And if so, how should they overcome them?

Chermaine - 00:19:48: Yeah, I think it's definitely, to me it's a positive role in terms of the innovation in those areas. Cause I think it's going to drive efficiency and really improve upon the lot of things that we're doing today. We can probably do a lot easier going forward. But I would say with most things that are new, just knowing how they should apply, and how they should be regulated, typically are the pitfalls. And so I think, for example, AI, we are watching that very carefully. And software definitely doesn't want engineers to be using ChatGPT to code and things like that. But at the same time, there are also users for AI for other aspects of our business that we are considering that can drive efficiency and just make what we do better going forward. So definitely overall a net positive in my mind, but certainly I think we need to keep an eye on it as those areas continue to develop across the world.

Megan - 00:20:46: And what's your advice for CFOs on how to best keep up with the rapid pace of technology change?

Chermaine - 00:20:54: Yeah, I think it's just to keep an open mind about how to do things. Because I think probably good for me that I don't have that long CFO accounting background. So every time someone brings something new to me, I'm like, “I want to try that out and see how that goes”. And there are a lot of new tools, new technology that we are using now that didn't exist probably even five years ago. And it's really helped us in terms of the operational aspect of what we do. So with that in mind, we are always on the lookout for new things and just staying in the know is very important. I think with things are changing so quickly across so many industries today.

Megan - 00:21:35: And I'm just curious, but for the people that are out there listening, how would they know if they need your product or not? How would they know if E6 is the right solution for what it is that challenges them?

Chermaine - 00:21:49: I would say, anyone who is thinking about building new financial payment products, come talk to us because if you work with potentially other providers, they probably would give you a laundry list of what you can do. Whereas I think with us, we would rather hear what you want to do and then we can tell you whether we can do it or not. And generally, the answer is yes. So I think if you're coming up with something new, then we are the right partner for you. But I would say also anyone who currently is working with other vendors who are not particularly happy for whatever reasons, we're also here to hear what your challenges are. Because I think we understand pretty well in terms of the industry pain points that most clients are facing, in terms of long lead time before anything can be changed, just be restrictive in terms of how to configure their products. Some a lot of limitations around things that you never think as, well, you can't do that because the platform won't let you. So I think that a lot of reasons to even just have a conversation with us, because I would say a lot of our customers, once they started digging into what we can do, the first reaction is, I don't believe you because can't be like no one can do this. And when we show them how it's actually done, then they're amazed and they stay with us. They never go away anymore because they don't have to. So having that first conversation would answer a lot of questions.

Megan - 00:23:20: Yeah, what a refreshing way of looking at things. Like, what is it that the client actually needs in listening?

Chermaine - 00:23:28: Brought to you guys.

Megan - 00:23:31: So what advice would you give to aspiring entrepreneurs in the payment space or just in general?

Chermaine - 00:23:38: Yeah, I think long and hard and make sure you fully understand what your passion is, and what you feel so strongly about before quitting your day job to start a company because it's not easy. Like raising money is hard, doing business is hard, and growing a team is hard. It's really hard. But at the same time, I think if you believe what you believe strongly enough, and you also actually, I think the other pieces have a team of people, or at least have a few people that can work with you and have the same beliefs as you. You know, like I was very fortunate to have two partners who really believe in the same thing. Then it could be and it will be a very rewarding experience whether you know, ultimately the company is successful or not. Because I do think a lot of appreciate that you can never grow a company on your own. And at the same time, with a lot of challenges ahead of you, you need to firmly believe that that's the right path to go down. Because otherwise you're just going to quit or it's just going to be really hard. So I think it's just really look inside and make sure that's really what you want just before you start.

Megan - 00:24:54: That's some great advice. So last question, but as you look out into the future, what is it that keeps you up at night? What concerns you about what's coming?

Chermaine - 00:25:04: I don't want to be a flippant, but nothing. I mean, I sleep really well at night because I know there are so many things ahead of us to do tomorrow, so I want to be well-rested. But I would say, I think that there really isn't anything in particular that we haven't thought about that we are worried about. And I think ultimately we feel we have set up our business and our approach to business in a really solid way. And so, yeah, we don't know what we don't know, but we-

Megan - 00:25:34: Great answer. So, Chermaine, thank you so much for sharing your time and experience with us today.

Chermaine - 00:25:40: Yeah, thank you, Megan. Thanks for the opportunity. We really appreciate it.

Megan - 00:25:43: Yeah, I really enjoyed speaking with you and I wish you and E6 much success in the future. And to all of our listeners, please tune in next week, and until then, take care.

Chermaine - 00:25:53: Thank you so much, Megan.