Mar 31, 2023, 11:06 AM ETInterview

Jackie Reses: The Most Powerful Woman in Finance; Making $50BN for Yahoo on Alibaba | E996

Jackie Reses founded "The Bank We Wanted to See" after leaving Square, driven by a desire to build a high-quality, scalable banking platform that applies creativity to the thousands-year-old banking industry.
Her career is rooted in an entrepreneurial family environment; she is the only family member to have worked for someone else, having started her career at Goldman Sachs before moving into entrepreneurial roles.
Reses moved out of her household at age 14 to attend boarding school to escape a chaotic environment, forcing her to develop "grit" and financial independence early.
She attended the University of Pennsylvania (Wharton) solely to meet parental expectations, viewing the school as a primary driver of her lifelong connections and career success.
At age 18, she met her husband, whose family's emphasis on integrity and longevity served as a counter-reaction to her own childhood chaos.
She identifies her core motivation as a drive to escape her childhood environment, resulting in a career defined by building businesses and achieving independence.

Reses prioritizes innate human skills (judgment, curiosity, grit) over specific domain knowledge or resume pedigree when hiring.
She advises against over-indexing on "zeroes" (previous scale experience) at large companies, preferring candidates who are scrappier and comfortable managing ambiguity.
Her interview process deliberately avoids resume-based questions, focusing instead on life goals, intrinsic strengths/weaknesses, and real-world case studies to assess how candidates operate on the fly.
She believes in a "long game" approach to people management, often sending high-performing employees to business schools or other companies for their own career growth, even if it temporarily hinders her team's roadmap.
Reses emphasizes "calling bullshit" directly to foster trust, viewing honest, sometimes difficult feedback as a way to help professionals improve.
She advocates for a high-performance culture that avoids entitlement, stating she expects intense work and will "weed out" those who do not hit goals.
During the pandemic PPP launch, she led a company-wide volunteer effort where the entire Square team worked 24/7 as loan reviewers, driven by a shared mission to "change the world."

She views deal-making as a non-zero-sum game, relying on creativity and understanding the counterpart's underlying needs rather than leveraging power aggressively.
In her deal with investors for Lead Bank, she prioritized regulatory speed and structural approval over maximizing economic returns, giving investors significant control in exchange for their expertise and discipline.
She cites her time on the Alibaba board at Yahoo as her best deal, where she had zero leverage but used trust-building to renegotiate equity back for Yahoo shareholders.
Reses admits to a personal failing in investing: selling winners too slowly, noting that the best returns often come from strategically "leaning out" of winners over time.
She praises risk managers like those at Coatue for their ability to detach emotion from market dynamics and use data science to manage risk effectively.
She warns that consumer-facing neobanks without a differentiated use case or unique advantage are unlikely to succeed, especially post-Apple ad model changes.

Reses predicts the next 10 years of fintech innovation will focus heavily on expense management and infrastructure, noting that revenue abstraction (inbound) is mature, but expense abstraction (outbound P&L) remains a "hot mess."
She identifies the "super app" model as a difficult path for most startups, citing only Square (Cash App) and Nubank as successful examples of broad-based consumer ecosystems.
She warns of an upcoming wave of M&A and rationalization in fintech as 2020-2021 funded companies face upside-down cap tables and fail to achieve product-market fit.
Reses describes banking as an "anti-network effects" business, where a toxic customer can cause regulatory issues that endanger the bank and all its other clients.
She argues that successful fintech founders must possess three equal pillars: technology, regulatory compliance, and finance.
She anticipates the crypto winter will force a return to "first principles," eliminating business models that were products of the bull market.
Reses believes regulatory clarity is the most critical need for the crypto industry, currently suffering from an "inequality of knowledge" between private companies and public regulators.

She predicts the macroeconomic environment will be better by December 2024 as inflation comes down and market uncertainty regarding unemployment levels resolves.
While she notes signs of consumer weakness (credit card balances, savings rates), she is not currently worried about a widespread recession due to strong unemployment numbers.
She disagrees that crypto has improved income inequality to date, viewing its primary use case as investment speculation rather than a day-to-day currency for the underbanked.
She recently changed her mind about avoiding psychedelic drugs, expressing interest in exploring them following Michael Pollan's work, specifically regarding PTSD and depression treatment.
Reses has no regrets, viewing all past mistakes and "stupid decisions" as necessary learning experiences and "battle scars."

Her goal is for Lead Bank to be a top global innovator in fintech infrastructure by 2028, operating in multiple countries.
The bank aims to serve "A-plus" players in the fintech and crypto sectors, providing existential safety and compliance support.
Reses plans to expand Lead Bank's offerings beyond core banking to include deep compliance products, making onboarding into the global banking system easier for partners.
She built Lead Bank specifically because she could not find any existing provider that met the needs of high-growth tech companies, necessitating the creation of a bank that understands the tension between tech culture and banking regulation.

Her first memory of working as a child was playing "bank teller" with a Barbie convertible and a David Cassidy doll in 1976.
She admits to personally cleaning coffee pots in the office to avoid creating an entitled culture.
She wrote a book titled Self-Made Boss as a "love letter to the little guy," aimed at providing pragmatic help to small businesses during the pandemic.
She describes her management style as: "I ask incredibly smart people; if they are worried, I am worried; if they are not, I am not."
She identifies her biggest vice as an obsession with carbohydrates, contrasting with her squeaky-clean reputation.