Thomson Nguyen On Selling His First Startup To Square And Now Raising $78 Million To Make Your Finances Work For You

Thomson Nguyen is now on his second tech startup. That’s after raising over $12M for his first venture which was acquired by Square. His latest venture, Nearside has attracted funding from top-tier investors like Kevin Hartz, Ryan Peterson, Valar Ventures, and Kleiner Perkins. Interested in sponsoring this show or podcast ads for your business? Go to Zencastr and fill out the contact information so Zencastr can help you, bring your business story to life.

In this episode, you will learn:

• What this founder says he would focus on more when launching a business
• How nearside is different to the banks business owners are struggling with
• How his startup is strategizing and balancing scale

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About Thomson Nguyen:

Thomson Nguyen is the Founder and CEO of Nearside and a visiting scholar at New York University’s Courant Institute for Mathematical Sciences. Prior to that, he was the Entrepreneur in Residence at KPCB and the Founder and CEO of Framed Data (acquired by Square.

Connect with Thomson Nguyen:

• Crunchbase
• LinkedIn
• Twitter
• Facebook

Read the Full Transcription of the Interview:

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Alejandro: Alrighty hello everyone and welcome to the dealmakerr show. So I think that today we’re gonna really enjoy the conversation with our founder a founder that has done it that now he’s on his next startup his last one was acquired by square and I think that we’re going to really enjoy you know his journey as a home. So I think that without far ado let’s welcome our guests today 

Thomson Nguyen and let me see if I get a right in Guyen did I say it right? Thomson Nguyen:.

Thomson Nguyen: Win is probably a better way to say it all vietnamese words are are one syllable. So Thompson Win is like pretty good already. Yeah.

Alejandro: I’m from when got it amazing. Well Thompson is super nice to have you here. So why don’t you give us a walk through memory lane. So I know that everything started for you in San Diego but but I know that you know how your parents came here for a better future. And the future that they were able to provide for you. All was very inspiring. So so it be fantastic to hear you know what are what are the roots give us a walkthrough memory lane.

Thomson Nguyen: Yeah, no, of course I think yeah know I was born in San Diego but my parents were born in Vietnam and so after after the vietnam war my my my parents fled ah you know it’s in search of a better life and so my my dad actually came to the states first. And my mom my older sister way in Vietnam for for 7 years you know while their visas were underway and so during that 7 years my dad had a whole bunch of odd jobs he was you know, basically saving up money ready to receive them and so when my mom my older sister’s visa ah came up. Du sold all of this stuff moved from Belmar New Jersey to Los Angeles received them and they they basically had the the whole sort of like you know the the immigrant grind they they worked a whole bunch of jobs they were trying to make it work in in Los Angeles and then eventually. You know they they found a job at what would later become qualcomm in San Diego and so by the time I was born I was born in ah in a quiet suburb in San Diego and you know didn’t know anything about my parents’ struggle. Um, until much later in life. But ah, you know now that i. Understand exactly everything they went through just to find ah a better opportunity to to build a better life for themselves and their family and their their community. Um, you know it’s sort of given me this sort of like life purpose and and mission to to try to do the same thing to try and lift up as many people as possible. And that’s sort of been reflected and in my professional career today.

Alejandro: And how do you get or how do you develop this law for math.

Thomson Nguyen: So you know as I was growing up in in San Diego and you know I ah I really liked um, understanding the the rules of of things like the rules of games. The the rules of languages you know I growing up I learned english I learned vietnamese and then I learned spanish and so you know eventually that came into learning the rules of of numbers and mathematics and and and you know I think once you get outside of arithmetic and algebra you you learn that there’s actually like a very. Beautiful I wouldn’t say game but set of rules that comes with mathematics. You know like that set of axioms that underlie the foundations of mathematics and and just how how we manipulate symbols and and numbers and so really fell in love with that early on in high school and you know. Then took that to ah ucberkeley where I went from my undergrad where I majored in ah pure mathematics. My my dad joke like it was unemployable mathematics. But um, that’s that’s really where I got my ah my my start and and sort of like learning more about maths and and just how. Ah, how did how did he use that to to or lever that into to critical thinking or solving problems in general.

Alejandro: And obviously you continue there. You graduated you did the grad school in Cambridge again math now. How do you think that things ended up leading you into data science.

Thomson Nguyen: Yeah, so you know I I think I remember this distinctly you know I I was in Cambridge in the Uk and I realized um I wanted to do something a little bit more applied with everything that I’d learned at that point and I wanted to figure out what exactly. Um, were were jobs that people could get with ah with a mathematics and applied mathematics or computational biology background and so you know applied to a whole bunch of places and it was actually a childhood friend of mine who yeah I got back in touch with and. You know at the time they they were hiring ah a data scientist and I had no idea what a data scientist was you know like they had just raised their series a and I didn’t know what a series a was they were moving from la to San Francisco and I thought it was a really exciting opportunity to to join a tech startup and I had never worked at a tech startup before. And so moved from the Uk all the way out to San Francisco and became the the first data scientist for a startup called lookout mobile security lookout now is ah you know an amazing cyber securityity companies serving enterprises and government agencies and you know back then when I joined in 2000 2010 was the first data scientist working on a whole variety of machine learning and data analytics problems to basically identify mobile malware and and basically stop bad actors from from scamming consumers.

Alejandro: So you were there for for quite a bit for for how long were you there because I mean you did a little of um startup land before actually when ah went going at it on your arm mean you did like a few years before you started with frame data. So what was that name. What was that sequence of events that really led you to? Okay so this is how it works now I get it I have full visibility now I’m ready to do it on my own.

Thomson Nguyen:  Yeah I think what I realized from working at lookout and working at another startup called causes was that you know ah startups have common problems not just in setting up machine learning infrastructure to run arbitrary machine learning models. But then applying those models towards some business purpose and so the the biggest business problem that that I had noticed with many startups that I had talked to was user churn user churn was a huge problem. Um, and this was around like 2013 when the idea of like programmatic marketing. Or understanding how and why users leave your application through machine learning or automated means was was a little new and along with ah you know an undergrad friend of mine that I had met at Uc Berkeley we started framed data under the premise that if we could programmatically. Understand and analyze user behavior. We can identify triggers um to people leaving your application or people upgrading and staying onto your platform and so on that premise you know we start frame data. We we were in y combinators winter 14 batch 2014 and then raised a seed round from Google ventures and initialized capital and then you know built the team up built up the business and then sold the the company to square and I think this was.

Alejandro: So because from frame data I mean for the people listening what what was the business model. How how were you guys making money there.

Thomson Nguyen: Late 2015

Thomson Nguyen: Yeah, so we basically charged we were a saas company so you know we charged anywhere from 500 to $5000 a month to businesses usually startups to assess and understand um you know which users were about to leave so it was like. You know we were the the companion to mix panel or your amplitude or your data analytics stack where you know you had a data analytics provider and you had us and so you know we charged ah a monthly basis on the small startup end but then we also had yearly contracts for the larger enterprises.

Alejandro: And how would you say that because I mean here you went to y combinator which is tougher to get into than harvard by the way and then also you had the opportunity of landing those great investors I mean what do you think you know like you learned there about getting into the. Into into that you know circle of of Silicon Valley of the who is who because I mean now you’ve also raised again from you know, an incredible group of of individuals. So would you say that maybe y combinator was the door that opened up the like really door to everything.

Thomson Nguyen: They definitely helped you know at the time our goal was to figure out what our user’s biggest problems were and to solve them and so you know our goal wasn’t like oh like we need to get the y combinator in order to succeed. Or oh like we needed to raise money in order to succeed our goal was to just succeed you know, like like we had a plan if we didn’t get in the yc. We had a plan if we did get in the yc and so I think what I ah what I cherish about my time in y combinator was that well it’s an accelerator. You know, like if you have a business plan and if you understand what exactly you’re building for your users then y combinator can help you accelerate that vision accelerate that roadmap really accelerate the the customer acquisition process. Um, but you need to be a fully fledged business and a startup first and so I think you know if we’ve gotten if we were successful and framed and if we’re if if I’m considered to be you know somewhat of a success in fundraising so far. I believe it’s because we focused on trying to solve the user problem first and then from that ah figuring out ways in which we can accelerate that through raising venture capital or startup accelerators.

Alejandro: Because for for the company for frame data. How much capital did you guys raise prior to the acquisition.

Thomson Nguyen: Um, you know we ended up raising a total of 12,000,000

Alejandro: 12 millioners. So then what was that the point in time you know where where square comes knocking I mean how? ah how was that process like.

Thomson Nguyen: But you know we we weren’t actually looking to to sell but you know I think ah yeah, we we originally got a reach out from you know someone on their their corporate development team and then eventually chatted with both the the head of square capital at the time and then. You know eventually had ah had a conversation with with Jack and and and realized that there was a tremendous opportunity to to start and seed what would then become square capital they’re their small business lending arm and so you know when we sold the the entire team got folded up into that business unit and our engineers. Became part of the the square capital partnerships team I ended up running the machine learning and and data science team at square capital and then our our sales team was folded into to squares account management team.

Alejandro: So I mean Jack Jack Dorsey for the people that are listening I mean the founder of Twitter and square so one of the best entrepreneurs in our generation. You know, no doubt so how how are the interactions with someone like Jack I mean how how would you define really? Jack. You know what were were you like like it was it like mind blowing that first interaction that you had with him.

Thomson Nguyen: Um, I you know it’s ah it really was humbling yeah to to meet an amazing product visionary and I think you know during my time at square we we worked on a machine learning boot camp. Where you know we actually helped educate everyone at square about the foundations of machine learning and and data science and and you know got to work with him on scoping out the curriculum for that and you know he even filmed ah an intro video. For it and and you know just through my interactions with him and my my meetings with him I’ve always been struck by how he’s been focused on the user first and focused on you know, understanding. What are the biggest pain points for small businesses and for consumers.

Alejandro: So how do you land from the operational site. You know after the transaction happens and now you’re in Square and and all of this How how how do you end up landing in cleaner Perkins I mean that’s quite ah, quite a shift from the operator site you know going more on the investment site. So.

Thomson Nguyen: Yeah, so I you know I left I left square in 2018 and um I think at the time I’ve been sprinting in startups for you know, like almost ten years at that point and and I realized I I needed to take a break. And so I thought I was going to take a year off and I ended up taking two months off you know I was introduced to ia bushman who’s a partner at Kleiner Perkins and um, you know after a couple conversations with him. It became really clear that one. He’s he’s a one of a kind. Venture capital as an investor like he has an amazing amazing foresight into not just how software companies and technology companies get built but how how fintech was sort of shaping and and eating the world. Yeah in 2018 and yeah, he he invited me to come on board as an entrepreneur in residence and I accept it and so at Klininer a lot of my time there was spent talking to founders talking to folks at Klininer Perkins and understanding a lot about. The the fintech space and the the small business space as well.

Alejandro: So I mean here you had the opportunity to to also do that from one of the best venture capital firms in in the world I mean really and I’m sure that that allowed you to to to really mingle with those folks and. Certain degree like have an end into that pattern recognition that they have from differentiating the best founders from the ones that you know maybe not so so such good like or or would not have like fundable ready stories. So Why I mean what would what would you say that you learned. About successful entrepreneurs and.

Thomson Nguyen: yeah yeah k client perkins their their motto is make history and I think the companies and the founders that they’ve backed have been companies that not just have. A focus on on building like a scalable enduring business model but truly want to solve some enduring problem that we face today in society you know whether whether it’s you know the improving web search with with Google or ensuring that you know, um. You can order what used to be a book but now it’s pretty much anything and gig shipped to in two days with Amazon um, so many of their partnerships and what I’ve learned through their portfolio is that so many of their their partnerships with founders start on the premise of what is the problem you want to solve. What is the personal motivation behind that problem that you’re looking to solve and you know that that really resonated with me. You know, going back to how I got here and the sort of struggle and strife that my parents had to go through It’s it’s the exact same story. That’s repeated across small business owners today in the United States you know 28000000 small business owners another 30000000 ten Ninety Nine s gigsters and solopreneurs ah all working to simply just build a better life for themselves their families in their their communities and so you know. What I learned from my time at Kliner was that my my own burning desire to try and you know like build a better more fair financial system for those folks um was actually the the strongest asset I had in building a company and you know by extension. Um, I think what one of the qualities that they’re looking for I mean you know I say I think they they they ended up investing in my seed round. So I guess it worked out there.

Alejandro: So then let’s talk about that. So obviously wants an entrepreneur. Always an entrepreneur entrepreneur. So at what point do you decide? hey I’m gonna go at it again and.

Thomson Nguyen: I think you know I I didn’t come into Silicon Valley thinking I was going to start a company you know would frame data I had realized that there was a unique problem that I wanted to solve and you know I ended up. Just taking my first steps and trying to solve it and with this time around with nearside I realized that you know for all the strides that square now block shopify and all of these companies are doing to to serve small businesses. Um, you know that. There was still ah an opportunity and and still ah a market to serve them on a foundational financial infrastructure basis and by that I mean that you know for for the hundreds of small businesses I interviewed during my time at Kleiner I realized access to capital. Still a huge concern for them and having a bank account that was just a little bit more fair was is extremely important to them and when I say just a little bit more fair. They were getting charged $35 for an overdraft fee. They were getting charged $30 um, a month just to keep their bank account and you know they would larger banks and financial institutions will will waive that if you have over say three thousand or four thousand dollars but the average balance of the small businesses that I were talking I was talking to at the time had around eight hundred or nine hundred dollars simply because they were using the money what what money they had to run the business and so what I realized was that there was still a huge opportunity to provide easy fair checking accounts and easy transparent. Ah. Credit cards and term loans to these small businesses and so that’s when I realized okay time to to get back into the fray and and and and start another company.

Alejandro: So so how did you go about building the team. The founding team.

Thomson Nguyen: Well, you know I think ah once I decided I was going to build nearside and once we once we had raised the the seed round when I say we it was just me at the time and so you know my my first porter call was reaching out to to folks. Who I had already worked with and and so you know our our our first employee at nearside was ah is a guy my name of Jim Lee who used to be the general counsel at at square capital and at the time he was at ah, another startup. And I was talking to him and I told him a little bit about you know the the vision and the product that we were building and he he signed on almost immediately and and you know the 2 of us got to work. You know he he started building out the legal and regulatory infrastructure behind. Ah. Partnering with financial institutions to provide checking accounts and business line of credits and I got to work just writing the the initial um minimal viable product. The Mvp um on my end in in code and then from there we we fanned out and started hiring software engineers. So you know folks that I used to work with at ah other startups and and other companies. Um and built out our founding team basically through you know, ah folks that that we had worked with together.

Alejandro: Nice and now in terms of business model here with near side. How how do you guys make money. What’s the what’s the business model there.

Thomson Nguyen: Yeah, so you know ah we we make money in 3 different product lines so on our business checking Account. We we make money through the debit interchange which so anytime someone swipes a debit card from Nearside. We. You know we make some percentage off of the total amount of the debit card transaction on the lending side we make money through the credit Interchange. So if they swipe a a business credit card or a business line of credit through us. We get some percent of the interchange as well and and through the interest. And on our software products you know for sprout we incorporate businesses in as little as 10 minutes and so people pay us a yearly fee to not just incorporate and submit the state filings but to maintain those state filings and to maintain a registered Agent. So. It’s a virtual mailbox. Where official business mail that gets sent to that address will forward it to their and mailing address of their choice. The reason why people do this is because otherwise your your home address could be on a ah public register of of businesses and so. Um, you know it’s ah it’s a recurring sas fee for for that arm.

Alejandro: And in terms of financing you were talking about I mean you got the seat there from from Kliner. But but 1 question that comes to mind is you know on the last company you had raised about the you know 12000000 you said and now ah you went at it again. You know you’ve you’ve raised quite a bit with with with nearight how much have you raised for near side. So yeah, so so so so as you were saying and now I mean seventy seven plus seventy plus million to date. So how did you go now about really.

Thomson Nguyen: A total of 78,000,000 to date so you know is yeah.

Alejandro: Thinking through the investors that you were going to bring and why you thought those investors had what what you needed based also because on the last experience you already knew you know like they they make it or break it that an investor can make So so why did you go with the investors that you chose here. Okay.

Thomson Nguyen: Yeah, you know, um, with Kleiner Perkins I think ilia brings a remarkable set of technology and technology insight and focus. That has definitely helped in the early stages of our company figuring out who to hire figuring out the the bar around hiring setting culture writing our values. He helped a lot in in drafting the initial set of values and operating principles for the company. Ah, you know we we raised a series a with foundation capital in February of 2020 and so you know with Charles Moldo he’s a well-respected fintech investor who has been through multiple macroeconomic cycles including the one that we may be going through right now. And so I’ve I’ve always valued his macro sense of you know how? how to think about our business as an enduring one? Um, regardless of what happens externally in the markets and with our series b we raised from velar ventures. And you know these are these are 2 folks in New York who have very very strong fintech concentration and and from that remarkable expertise into understanding. You know how do fintech companies grow and scale. And so I think we we got extremely lucky with the institutional investors you know on our side to date and then from our angel network they ended up being ah well a whole bunch of my old co-workers from from lookout from from block and square um, and and so I’m I’m grateful to to have them. Um, sort of in my corner helping me out along the way.

Alejandro: And in terms of um, you know the the size of the operation today I mean anything that you can share in terms of number of employees or anything else

Thomson Nguyen: Um, you know I think we’re we’re around 65 employees right now and you know I think our goal is to try and build a a tech company and by that I mean you know is there a way we can scale out our product offerings and still provide ah a level of customer support. And human touch for for our customers when they need it that allows us to to Scale. You know I’d say more thoughtfully and carefully where you know I don’t want to balloon up the team as fast as humanly possible I I don’t want to overly ah, commit to to hiring hundreds of people. You know the next year or 2 I want to understand how can we use software and automation to continue to provide remarkable service and products to our customers so that we can continue to be extremely careful and thoughtful in how we scale our business operations and our team.

Alejandro: Now As as you were pointing to a goals imagine if you were to go to sleep tonight and you wake up in a world where the vision of nearside is fully realized what does that world look like.

Thomson Nguyen: I think that’s a really good question. You know when when I when I think about it. It would have meant that we’ve permanently made it easier for people to start a business and I think what I find interesting about small businesses is that when when you look at tech startups. For example. Every tech startup wants to become this multinational enduring possibly public company worth tens or hundreds of billions of dollars every small business simply wants to build a better life for themselves their families and their communities and so. In realizing our mission of providing better more transparent financial services for those people. We’ve all we would have also made it easier to to start and easier to grow and easier to succeed. And so we we found this interesting intersection between an enduring business model and some sort of societal good or even societal mandate where you know, starting a small business is probably the majority route to socioeconomic mobility here in this country. You know, like if. Didn’t go to university and land a job in ah in ah in a lucrative sort of like service sector company. Um, it usually is starting a small business that that allows for folks in this country to to build a better life and so when when when I realize you know what we’re working on. The the future that we’re building towards is one where people are are able to to realize their own personal financial goals in starring a business ah much easier and much more transparently through us.

Alejandro: Now imagine if I put you into a time machine Thompson and I bring you back in time back in time to that moment that you know you were like bouncing from one startup to another and maybe you were thinking you know hey maybe you know I started something on my own imagine if you were able to. Have a sit down with that younger self and you were able to tell that younger Thompson one piece of advice before launching a business. What would that be and why given what you know now.

Thomson Nguyen:  That’s a good question I I think what I would tell my younger self is to always focus on on the customer and and center the entire company around that person I think you know. Um, for my first startup I was a lot younger than yeah I’m I don’t want to say I’m old now. But I was a lot younger then and and I think you know when when when one is in their twenty s there’s a whole bunch of sort of like optical like awards or accolades or. Even just like social media clout that that feels like success that feels like you’re doing well and I think what I would have told myself back then is that the only thing that matters you know isn’t that it doesn’t matter whether you got into like y combinator or it doesn’t matter whether you raised from. Like Google ventures or initialized or all of these like amazing people. Um, the only thing that matters is whether you solve a problem a genuine problem that your customers have you know at the time it was turn reduction so you know if we’re serving other saas companies. Like are we actually helping them reduce turn are we actually helping them succeed with their customers. Um, that’s really the only thing that matters if you can do that then all the accolades and all the other stuff come anyway. But um. You know I think I think what I would tell a younger version of myself is to to 1 be present. You know, like what already what we’re doing today is a gift that I’m able to you know, come on to to your podcast and and talk to you about you know my journey is a gift and so. From that realizing that we have ah an immense opportunity to to serve other people by simply just banging on keyboards and writing code um is not just ah, a gift but an opportunity that. You know I want to make sure that a younger version myself doesn’t take for granted.

Alejandro: I love it. Wow! That’s profound Tom soon. So for the people that are listening. What is the best way for them to reach out and say hi.

Thomson Nguyen: Ah, yeah, if you want to reach out say hi to me, you can just send me an email thompson t h o m s o n at http://nearside.com if you’re a small business and you’re starting up I’m happy to talk to you if you’re looking for a job in tech or you want to learn more about how to get started. I’ll ah you know happy to answer any questions you’ve got.

Alejandro: Amazing. Well hey Thoson thank you so much for being on the dealmaker show. It has been an honor to have you with us today. Okay.

Thomson Nguyen: Ah, thank you Al hadro for having me.

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