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AFT with Annafi Wahed
[00:00:00] Eugene: Welcome to the podcast Annafi. Tell us more about yourself. I know we interacted more in twitter and you have a lot of things to say about VCs and news with SVB FDIC, and I think you've been working with them for quite some time back in the days.
[00:00:13] Eugene: We would love to hear more about your story.
[00:00:16] Annafi: Great. Thank you so much for having me. I'm Annafi Wahed founder and CEO of The Flip Side, theflipside.io.
[00:00:22] Annafi: I actually started my career as Eugene said, as a bank regulator at the FDIC. I spent, two and a half, close to three years there.
[00:00:30] Annafi: Please note none of what I'm about to say is an official statement of any kind from the FDIC. I'm just here as, you know, an observer having not worked with them in recent years. But I, I still feel like I have a lot to say, having been both an FDIC regulator and now in the startup ecosystem.
[00:00:47] Annafi: Yep. And you started before working as, a research assistant and then you jumped into FDIC and then you've done political work afterwards, and now you're running your own startup, which is really amazing the work that you're doing there.
[00:00:58] Eugene: How did you come up to join FDIC [00:01:00] in the first place?
[00:01:01] Annafi: I was an economics and psychology double major in college, and I thought I would get a PhD in psychology until I realized I hated doing research. So that was a very good epiphany to have your senior year of college rather than your third or fourth or fifth year in, in as a PhD student.
[00:01:16] Annafi: I became sort of interested in game theory, trying to marry my two loves. After the 2008 crisis, just trying to understand how it all collapsed and what happened and became really interested in the role that bankers and regulations played, and didn't play in the incentive structures that were set up that led to the fall of Lehman and things like that.
[00:01:37] Annafi: So I graduated in 2012, and I was fortunate enough to have a summer internship with the FDIC beforehand. They offered me a full-time position. And I'm very gladly accepted and I was in the New York Office.
[00:01:48] Eugene: Awesome. How did you combine the game theory with your work at FDIC?
[00:01:52] Annafi: So when I would learn about these regulations and pretty much from day one after a few weeks of creating, you [00:02:00] are at the banks, you are with the regulators responsible for writing the reports and just learning live. So when we would interact with bankers, even though I was, what, all of 22, the bankers were really nice to me.
[00:02:12] Annafi: And it was just fascinating to see the complexity of the regulations and how it comes about what are we trying to prevent? What are the bad actions that were taken that led to this. Subsection D and regulation chapter five, et cetera, et cetera.
[00:02:25] Annafi: So I am a huge nerd and just found all of that fascinating.
[00:02:29] Eugene: What do you think actually evolved over the past decade after you worked for FDIC and now, like you look back, some things worked well, some things did not.
[00:02:37] Annafi: What do you think were the right steps to get us here?
[00:02:39] Annafi: I think the regulators did a phenomenal job trying to contain the crisis to the extent that they could given the, all the different pressures from politicians, the public, et cetera, in retrospect to write. There were errors made by the Obama administration that could have been avoided.
[00:02:55] Annafi: For example, I think there certainly could have been cases made where more than[00:03:00] one or two bankers spent any time in jail when in fact there were a lot of folks engaging in outright fraud. So we certainly should have prosecuted more folks to really ensure that the bad behavior would not repeat again.
[00:03:12] Annafi: I think regulators may have been too soft on the individual actors responsible. Having said that, the regulations that came out in Dodd–Frank were quite sensible and unfortunately some of them were rolled back in 2018. The president of SVB, specifically testified in front of Congress that SVB was not a systemically important institution, and they should not be subject to a stringent capital requirements and stringent, more stringent test than they were.
[00:03:37] Annafi: And so could this whole collapse have been avoided had they not lobbied aggressively? And even a few months ago, a few months before this collapse, SVB was one of the banks lobbying against the FDIC raising premiums to replenish the deposit insurance fund. So I, I think the regulators have been doing an extraordinary job given the fact that bankers [00:04:00] and the lobbyists are aggressively constantly trying to push back against their regulation.
[00:04:04] Eugene: That's great that you touched about the FDIC premiums because that's exactly one of the questions that I got on my twitter. And people asking like, is it a systemic thing and does justify the higher risk and actually going after the higher premiums?
[00:04:15] Eugene: And then on the flip side, like all, all these banks are not involved like in the trading, all the same bonds. Is it righteous for them to pay the same premiums if they're not involved in the same high risk game as SVBs and others.
[00:04:26] Annafi: Those are good questions. So, the FDIC I should clarify for anyone who may not, know this, the FDIC is an insurance agency essentially for the bank.
[00:04:36] Annafi: They're actually a quasi-government institution. So every member, every employee of the FDIC, the funds that they're using to bail out the depositors, now it's all coming through insurance payments that banks regularly make. So there is no taxpayer dollar involved with the FDIC fund.
[00:04:52] Eugene: That's the good part.
[00:04:53] Annafi: I think they're correct to say yes. All the other banks are now shouldering the weight of [00:05:00] SVB for falling. I will say that the risk of moral hazard overall here is pretty low.
[00:05:06] Annafi: With Lehman, with a few other banks in the financial crisis. They were actively making bad loans with the foresight that they were bad loans. They were actively buying up mortgage backed securities. Knowing how toxic they were.
[00:05:18] Annafi: That is not what happened here. There was not sort of this evil intent to scam. They were just, frankly, really bad at their jobs.
[00:05:28] Annafi: Interest rate risk. Interest rate management is a basic function of banking.
[00:05:32] Annafi: Yes. The the Fed has been screaming they'll raise interest rates, right? How they missed this, I don't know, but there wasn't evil intent. There was just a lack of good management. So the moral hazard here, and obviously the management of SVB, the top leadership is now facing scrutiny.
[00:05:47] Annafi: So I don't think the risk of moral hazard is very high. And similarly, same with the depositors. Should they have diversified their checking accounts and not have had millions in one bank? Obviously, in retrospect that's true. But SVB [00:06:00] was the 16th largest bank in the US . There's no reason for them to have thought it would, you know, crash over a period of two days with no notice.
[00:06:07] Annafi: I think this case is different and in a way that there isn't a huge risk of this being repeated, hopefully assuming people learned their lessons. Having said that, I do think there needs to be additional scrutiny and additional regulations, including perhaps. From the FCC about what investors and people who hold short positions on banks should and should not be able to say publicly so that they do not create a market panic for their own financial gains.
[00:06:32] Eugene: It feels like that whole bank run was actually driven, through the twitter, and it just happened as you said, like over 48 hours, which was pretty crazy. And it was good to see people to step up and actually spend the whole weekend trying to fix the problem. And gladly we are here now.
[00:06:44] Eugene: You mentioned in your tweet that VCs that do not understand the whole play with the bankers and how it actually went down.
[00:06:50] Eugene: Can you elaborate more like what is your position and what could be done differently in terms of the VCs engaging with the banking and regulations?
[00:06:57] Annafi: Yes, absolutely. Let me start with the [00:07:00] sort of easiest things and then work my way up to the more difficult nuanced position.
[00:07:04] Annafi: So first, A shocking number of startup founders did not know the deposit insurance limit, which is worrisome.
[00:07:11] Annafi: And I'm a founder myself. I understand completely the, the tremendous,
[00:07:15] Eugene: The $250K one?
[00:07:17] Annafi: Yes. And I have every bit of sympathy for everyone who was staying awake Friday, Saturday nights, wondering they'll be able to make payroll. I think the large share of the blame can be rightfully placed on the VC leaders themselves who told the founders to put all their money at SVB.
[00:07:33] Annafi: Who said, Hey, if you make an account here, you can also get a mortgage. You can also do this. Which is why the balance sheet was not, you know, diversified at all. The depositors, the people taking out loans. It was all the same group of folks who are now facing a market downturn, right? So it's on the VCs who forced their founders to open accounts with SVB that should be held accountable.
[00:07:53] Annafi: It should be the VCs that did not, you know, educate the founders that had just raise millions of dollars on basic financial [00:08:00] and treasury risk management.
[00:08:01] Annafi: Also it's ridiculous. Having worked in federal government , in private consulting, I was a senior consultant at Ernst and Young. Also, I'm a CFA charter holder. I've worked at nonprofits, political campaigns.
[00:08:13] Annafi: There is an astonishing lack of humility where VCs go around pretending to solve problems. They read two Wikipedia articles on. So suddenly you have people saying, whoa, why don't we just create a system? You have one account to manage multiple bank accounts?
[00:08:28] Annafi: Yes. That's called an FDIC sweep account. If you know anything about banking, you would know that already exists, or David Sachs has the goal to say, we just want basic banking. Why are banks allowed to invest in risky assets? Well, we had the Glass-Steagall Act.
[00:08:43] Annafi: And folks exactly like David Sachs, the hardcore anti-government venture capitalists and lobbyists took that regulation away, which is a large part of what led to the 2008 crisis and is now leading to more problems.
[00:08:56] Annafi: So they have no sense of banking history, they have no sense [00:09:00] of regulations and they're sort of reinventing the whole regulation system as if it doesn't exist at all.
[00:09:07] Annafi: And to just talk about David Sachs a little bit more. The FDIC took receivership Friday morning, which means they were on flights Thursday nights, which means they were actively monitoring the situation at minimum Thursday during the day, if not even earlier. So they acted as fast as they feasibly could, given how quickly that 42 billion withdrawal happen.
[00:09:29] Annafi: They were moving as quickly as possible on Friday, they were on the ground. Looking at the, this $200 billion balance sheet, they knew that the markets would open in a panic on Monday, which is why they made a statement on Sunday they know all this. They have a playbook for this, but David Sachs is going around screaming bloody murder.
[00:09:47] Annafi: How dare Janet Yellen. Not issue a statement Friday afternoon. Well, it takes time to look at a 200 billion...
[00:09:54] Eugene: About the rate of withdrawals, I saw that people commented on twitter as well, it could be the just simple AML, you [00:10:00] know?
[00:10:00] Annafi: Exactly. There have been 562 bank failure since 2001.
[00:10:04] Annafi: There is a playbook for this. 99% of the time, all depositors have always gotten most of their money back, if not all of it.
[00:10:11] Annafi: Jason has the gal on Sunday to be like, oh my God, I am so relieved that depositors are being prioritized. That is literally always the case, which they would know if they need.
[00:10:21] Eugene: That's what FDIC is for.
[00:10:22] Annafi: Or the Fed. This is a further ignorance, not to mention David specifically is always ranting about quote on quote unelected bureaucrats, you know, executive government overreach, et cetera, et cetera. And yet he was demanding that the Treasury Secretary, who is not an elected official, makes sweeping financial announcements and take extraordinary measures Friday afternoon before consulting the White House before consulting Congress, which I think is just absolute hypocrisy.
[00:10:47] Annafi: He's all about, you know, executive overreach and oh, oh oh, we can't let the unelected bureaucrats run. Until it's his ass on the line, and then he wants them to take, you know, all kinds of extraordinary measures in a matter of one [00:11:00] hour, two hours. I think that's just ridiculous. And they spread so much panic among the startup founder community over the weekend, because these are folks with huge followings.
[00:11:08] Annafi: They're hugely influential, and I think that just caused so much unnecessary stress for everyone involved.
[00:11:14] Eugene: Before you dive deeper into the political aspects of the regulations, can you talk more about the shorting of the banks that you mentioned before and how would you go about regulating that part first?
[00:11:22] Annafi: Oh gosh, I don't wanna speak about that actually. I don't the detail, but we, what we do know is that there are regulations around what can and cannot be said when you have a financial position and you're trying to manipulate the market. Right.
[00:11:35] Annafi: Was there market manipulation here? I think it's very possible there was, and you can bet the various regulatory agency will be subpoenaing people's Group chats and Twitter threads and everything that happened that transpired over the, you know, in the past 96 hours.
[00:11:52] Eugene: I think it started like with just two Twitter threads, and then just like a bunch of emails and just snowballed down there.
[00:11:57] Eugene: So if you would start educating the VCs on the banking, where would [00:12:00] you start?
[00:12:01] Annafi: Oh my gosh, what a great question.
[00:12:03] Annafi: Honestly, I would literally point them to the FDIC website,
[00:12:06] Eugene: I mean, they already read two wikipedia articles as you mentioned. What else?
[00:12:10] Annafi: Yes. I mean, frankly they should just know something about financial and risk management, given that they're managing hundreds of millions of dollars.
[00:12:22] Annafi: This is ridiculous and frankly embarrassing for them as an industry, as an institution. If they are to retain their credibility, they need to own up to the fact that they were completely blindsided about basic banking regulations. About basic corporate risk management. How could they let their founders have millions of dollars in a single bank without any mitigating factors here.
[00:12:43] Annafi: And again, I'm not blaming the founders. The founders have 1,001 things on their plate, but if you are a VC who's always whining on Twitter about villainizing, then this was the weekend to step up.
[00:12:55] Annafi: This was the weekend to say hey, I have something to learn here. This was the weekend [00:13:00] to actually not be on Twitter, not creating market panic and instead be there for the founders. But I've heard from founders that they weren't hearing from their investors that they were just sort of left on their own. And it's not a good look.
[00:13:13] Eugene: I think it was just tip of the iceberg and like most of the conversations happened in private and I think some people stepped up like Sam Altman, he said lots of good things.
[00:13:20] Annafi: So definitely folks who did step up and kudos to them and I hope that founders and future VCs learn from their examples.
[00:13:26] Eugene: Yeah. So if you mentioned this future ideal VC that actually care about their portfolio company, about the diversification for their founders, what would be your number one advice to them?
[00:13:36] Annafi: I think a little humility would go a long way. And also patience. I think that that's a big part.
[00:13:42] Annafi: VCs and startups move at the speed of move fast and break things. That is not how the government functions. And by design, again, there are multiple regulatory agencies that need to coordinate.
[00:13:53] Annafi: There are folks who have to literally get on planes.
[00:13:56] Annafi: I remember someone came in and talked about the experience of actually walking [00:14:00] into a bank. Typically, it's on a Friday afternoon, not Friday morning. Typically it's Friday afternoon, you walk in and you surprise the FDIC is taking over. The low level employees, the bank tellers, the risk managers, the mortgage officers, or whoever it is, they're devastated. They're crying, and you need to let them have their emotions. But at the same time, you need that to get back to work. You literally and figuratively need them to show you the keys because you are about to work all weekend to make sure the bank can reopen on Monday.
[00:14:27] Annafi: So the psychological impact alone my heart goes out to the SVB employees the new CEO of SVB just gave an interview on Zoom and he talked about how helpful and amazing the rank and file employees have been. And I hope they continue to be again, I want to stress this was not sort of evil intent on their part.
[00:14:46] Annafi: This was bad risk management. We need to be sympathetic to basically everyone.
[00:14:51] Eugene: What do you comment on his email, the new CEO of SVB, he mentioned that back to business as usual, what do you think that meant?
[00:14:57] Annafi: The FDIC has a playbook for this. They [00:15:00] are used to taking over banks and frankly banks with a lot more, you know, complex financial products than SVB. SVB's balance sheet is quite simple. It's basic loans, it's Treasury builds, et cetera, et cetera. This is not rocket science, the FDIC, it's just Tuesday for them, where, whereas we are freaking out and again, we're freaking out because the VCs don't know the first thing about what they're talking about and creating unnecessary panic.
[00:15:21] Annafi: So this is not a complex balance sheet situation. The FDIC, this is their bread and butter. We need to trust that the regulators know what they're doing. The bank is open for business, they going to be functionally operational, even if there are some sort of technical and logistic glitches, which is understandable given that it's completely new management.
[00:15:41] Eugene: Lots of people asking question about like what would happen next, after FDIC got in charge, placed new CEO, what happens next? Is it the sale of the assets? Is it some kind of acquirer, or would it be winded down? What would happen?
[00:15:51] Annafi: So the FDIC typically tries to find an acquirer over the weekend itself.
[00:15:55] Annafi: And in fact there were offers made that were rejected for various reasons. They have a rubric against [00:16:00] which they measure all acquisition offers. That will likely be the playbook moving forward as well. Right. They will try to find a, a different financial institution to take over the operations in the meantime.
[00:16:11] Annafi: Again, they know what they're doing. They're going to run the bank as efficiently as, you know, any regular banker would. They're tapping the right talent. The new CEO is very well qualified for the job, so it will depend. For the most part, I don't anticipate that a regular depositor or someone who has a loan with SVB would experience any hurdles except maybe their login might not work right away, or there might be a little bit longer the technical challenges wire transfer than there otherwise would be.
[00:16:41] Annafi: So you all can rest assured your money is safe. Everything is sort of back to business as usual.
[00:16:46] Eugene: I guess that's what people wanted to hear on Friday.
[00:16:48] Annafi: Yes. Well, ideally in an ideal world, yes, that would've been the case, but, we cannot fault the regulators for needing to assess the situation.
[00:16:58] Annafi: Had they said [00:17:00] everything will be just fine and something wasn't, they would've been pummeled by the very same folks for acting irrationally. So they have a very hard job. They have so much public scrutiny, but they're not allowed to defend themselves on Twitter.
[00:17:12] Annafi: They're not allowed, government only is in, in the spotlight when there's a failure. So it's just a very hard job. We don't see all the crises. We don't see all the times that they're fighting for better regulations to protect consumers and depositors, and they're getting significant pushback from these powerful folks.
[00:17:27] Annafi: So I would just urge everyone to get off Twitter and urge patience. But again, everything by and large is back to normal. We'll be back to normal. Your money, everything is safe. We're in good hands.
[00:17:40] Eugene: As you know, SVB actually bankrolled, lots of startups in the valley. What do you think could be improved in terms of the regulations when it comes to such a vibrant community that actually tries to drive the innovation forward?
[00:17:49] Eugene: It's a very segmented part of the market, as you said. But what can be done better or differently? And what would be the better impact moving forward?
[00:17:57] Annafi: So I think the 2018 rollback of [00:18:00] the regulations in Dodd–Frank may have significantly contributed to this, right?
[00:18:05] Annafi: Before the rollback, any bank institution greater than 50 billion in assets was subject to more stringent capital requirements and more string stress test. So, had SVB still been subject to that, they would have had to stress test their portfolio against interest rate risk in a way that they clearly were not doing. I still don't know how they missed that.
[00:18:25] Eugene: You're talking about hedging here or something more specific?
[00:18:27] Annafi: Yes, exactly. So there, there's numerous risks that you are managing as a bank, right? Liquidity risk portfolio, credit risk, and also interest rate risk. I don't know this for a fact, but reporting suggests that this all happened because they were chasing an extra 0.4% yield ?
[00:18:43] Annafi: And also I will say, had there not been such a widespread panic Wednesday night, Thursday, it's very likely that SVB would still be standing, would've muddled through , again, their assets are not toxic in the same way that Lehmans were. They're very safe. You know, instruments.
[00:18:58] Eugene: So, just a pure bank run.[00:19:00]
[00:19:00] Annafi: Exactly. Exactly. And now how much is Peter Thiel to blame for this? I don't know. How much is just the speed of Twitter? How much is the fact that we can all just take our money out instantly? Right there I, again, I saw this at, as I speak about how bad Twitter is, I saw this on Twitter where, in India, you know, a, a banker told their the tellers to count the money twice and make small talk and ask people why they, they were taking out the money all to prevent a bank run.
[00:19:27] Annafi: Right. But now it's instantaneous. So how do you prevent a bank run at the of light, right? So I think these are hard questions. But certainly the fact that SVB's customer base was all concentrated with a very much herd mentality, all VCs, all startups move in the same way. It all of that contributed.
[00:19:44] Annafi: So again, this bad risk management why didn't they try to diversify their, you know, depositor base? Why did they all have loans? The same depositors, right? Like it's all sort of a vicious cycle that just collapsed on Friday morning.
[00:19:57] Eugene: And obviously lots of founders learn that they have to diversify, who would be [00:20:00] the right hire for them , to actually learn this, this money management?
[00:20:03] Eugene: And actually not go into the same trap as they did last weekend.
[00:20:07] Annafi: Great question. So let me say that, as of now, all uninsured deposits over $250K have been backstopped by the federal government. That is, if you have $5 million sitting in a small regional bank or et cetera, your money is safe. Again we have people who know what they're doing.
[00:20:24] Annafi: They're not going to allow a financial crisis to fester beyond what is absolutely necessary. So your money is safe. Now in any bank that you know, is a financially registered institution. Some of the risk has been taking it off your hands.
[00:20:40] Annafi: Honestly, I would urge them yes, to obviously research the banks, but also research the VCs.
[00:20:44] Annafi: This was again, a very telling moment, are the VCs you are signing a term sheet with going to adequately prepare you for the myriad of risks you don't even know to look for yet. It's the VC's jobs to make sure their portfolio companies, put their best foot forward and are not taking unnecessary [00:21:00] risks on top of all the usual risks that they have to take.
[00:21:03] Eugene: Sounds like VCs usually do due diligence on their startups, on their portfolio companies and invest in, but this should be the opposite. It should be the founders doing the diligence on the VCs.
[00:21:11] Annafi: Exactly. Absolutely. A lot of folks show their true colors. A lot of folks, you know, the level of hysteria I saw on Twitter, I mean, first of all, can you imagine any female leader in any industry putting in all caps?
[00:21:22] Annafi: "You should all be terrified right now". Like the audacity of these men on Saturday morning. To continue to try to pressure the regulators who are sleep deprived trying to do their best to clean up your mess. It's frankly astounding.
[00:21:34] Eugene: Going back to your previous experience like a decade ago at the FDIC and what you see now, do you think FDIC performs better function these days or something can be improved or done differently?
[00:21:43] Annafi: Good questions. I think overall after the 2008 crisis, there were a lot of folks like me who became interested in banking regulations. So there was a lot of new talent and new blood. I noticed that that was, you know, sort of tapering down. Now that things have calmed [00:22:00] down, you know, but you know, the, the sort of latest drama in the...
[00:22:04] Eugene: Do you think it'll be new wave of new talent come and try to solve this?
[00:22:07] Annafi: I hope The other thing I hope both startup founders and VCs learn is, despite constantly being vilified by both the left and the right, there are a lot of good folks working in the government. There are a lot of folks who are doing their jobs, right, who are preventing so many crises we don't even know about.
[00:22:24] Annafi: And I hope any talented person thinks about what they can do, whether there's a role for them in civil service.
[00:22:31] Eugene: As someone who worked this path over the past several years, and what would be your number one advice to somebody who just jumps into the same boat and trying to understand the banking regulations and try to solve and help with these problems?
[00:22:41] Annafi: The FDIC website, the Consumer Financial Protection Bureau, the Feds, there's a lot of information on the websites themselves. They're trying to be user-friendly. They're trying to explain to depositors that their money is protected, what they're doing. Investopedia is a great resource and frankly, so is Wikipedia, right?
[00:22:58] Eugene: Those two articles.
[00:22:59] Annafi: Go [00:23:00] googling basics, but maybe, you know, ask questions rather than put out definitive statements after reading those two articles. Like there's always more to learn. You are not going to reinvent or or solve the problems of moral hazard and complex investment making decisions for a bank overnight.
[00:23:15] Annafi: Like so maybe stop giving advice to folks who've been doing this for their entire careers.
[00:23:20] Eugene: So you recommend them to go the same route and actually start with FDIC, or would you see them start like with the banking or any other regulator?
[00:23:28] Annafi: I think especially for people, the FDIC is the most user-friendly because again, they're the ones ensuring personal funds as well.
[00:23:34] Annafi: Yeah. So anyone who has a personal checking account. So that would be the place, and it would also just give you an appreciation of what it is that people are doing behind closed doors and this "The unelected bureaucrats", et cetera. There's a lot of complexity.
[00:23:47] Annafi: Matt Levine, he has a great explainer this morning. Matt Levine in Bloomberg, I think it's called Money Matters. I've subscribed to his newsletter for years.
[00:23:54] Annafi: But anyway, Matt Levine is a great resource. He breaks down in sort of simple terms what [00:24:00] actually happened.
[00:24:00] Annafi: So he starts with, okay, let's say you have a hundred dollars in deposits, you put it into a bond that's worth $100.
[00:24:06] Annafi: But when the interest rate goes up, it, that value goes down to $98, et cetera, et cetera. So really breaking.
[00:24:11] Eugene: So asking for a friend, is there a VC version of that?
[00:24:15] Annafi: No, VC should also listen to Matt Levine!
[00:24:18] Eugene: The biggest takeaway. Awesome. So you worked for FDIC and then you left FDIC to carry on with your journey as a consultant and Ernst & Young.
[00:24:26] Eugene: Right. And then after that to the political stuff. Can you share more about your, your journey? How did you decide to do the jump? Right? And what motivated you to actually go into the political business.
[00:24:35] Annafi: Oh my gosh, that's a whole different story. I'm very glad to tell it though. Yes. So I spent a few years at the FDIC, then "I sold myself to the dark side", as I like to say.
[00:24:42] Annafi: I went into consulting at Ernst & Young. I was actually on the treasury risk management team.
[00:24:47] Eugene: So that's what VCs would actually hire to do the risk management .
[00:24:51] Annafi: Exactly. My job was to stress test banks portfolios.
[00:24:54] Annafi: To see how they would rather, you know, a liquidity crunch or an interest rate risk. [00:25:00] I'm very familiar with unfortunately what SVB was going through. So I did that for close to two years, and then it was the summer of 2016 and I just was bored. I had just earned my CFA charter and I was at the top of the mountain.
[00:25:14] Annafi: You know, I was up for manager at Ernst & Young and I thought, wow, I don't want to keep doing this. And I just wanted a change of pace. So I left my office in midtown, traded in my pencil skirt, and put on jeans and sneakers, and spent the next four months in New Hampshire knocking on doors for the Democratic party.
[00:25:30] Annafi: Amazing and exhilarating and then obviously devastating and all the other things that came about. Sort of caught the political media bug then started the flip side actually as a side project. So while the flip, flip side was getting off the ground, I actually took a job as a business analyst for a financial counseling nonprofit.
[00:25:47] Annafi: Helping low to moderate income households, stay away from payday lenders and check cashiers and sort of get them into the mainstream banking services. We're talking individual checking accounts and things like that. And they were on a, they're on a [00:26:00] wonderful mission and I really enjoyed everyone I worked with, but my heart wasn't there anymore.
[00:26:04] Annafi: So we were fortunate enough to raise pre-seed funding in early 2020. Fast forward to now. We just raised a second round of funding. Our newsletter, which fact checks and curates commentary from both liberal and conservative media reaches nearly a quarter million subscribers every morning, five days a week.
[00:26:19] Eugene: Congrat!
[00:26:20] Annafi: Thank you. And we just launched a new platform that's actually aiming to be the intellectual salon to Twitter's Town Square. So, you know, I, I keep talking about how Twitter does not allow...
[00:26:30] Eugene: Could this be a place to educate the vCs?
[00:26:32] Annafi: Yes. I hope so. Right. There's only so much nuance you can have in a Twitter reply thread.
[00:26:38] Annafi: We are building something better. We're building something different. It's still just coming out of beta. We have about a thousand users. We're seeing a handful of daily comments every day, and we're really excited about what the future holds. So the website, theflipside.io, if you want to sign up for our newsletter.
[00:26:53] Eugene: And you posted the SVB piece as well recently in your newsletter. It was a really interesting read.
[00:26:59] Eugene: The [00:27:00] question I can ask is how did you combine the political aspects, the regulation aspect, and put the banking in the core of this? What was the result ?
[00:27:07] Annafi: I've been directing my IRA and mostly David Sachs and because I just think the whole "All In" podcast behaved terribly over the weekend. See the politicians politicize the situation to frankly, grossly misrepresent what's going on, this is not a taxpayer bailout.
[00:27:23] Annafi: So many startup founders would not have made payroll. Again, there's no taxpayer money involved here. Definitely not directly. And also the depositors are not the VCs themselves. They are startup founders like me . We have payroll, right? If I'm not getting paid next week.
[00:27:40] Annafi: That's going to affect my mental health that's going to put a strain on already my full schedule. So I think there's a lot of gross misinformation. And also the conversation about wokeness. Like we can fault as VP management. For a lot of things, including the fact that they didn't have a chief risk officers for eight months left.
[00:27:57] Eugene: How did this happen?
[00:27:58] Annafi: Right, exactly. Like how did [00:28:00] this happen? There's plenty to criticize without having to delve into the sort of the wokeness culture wars. Like the word woke has lost all meaning. It's now just anything that doesn't benefit me directly. And then on the left you had folks talking about, oh, the rich always get bailed out, et cetera, et cetera.
[00:28:15] Annafi: Well, no. As much as I hate to agree with David Sachs here he is. That there would have been, and we already saw evidence of a run on the smaller regional banks had that FDIC and the Fed not stepped up and said, we are putting a backstop on every single a deposit account that is in the US right?
[00:28:31] Annafi: He is right. We do want a vibrant regional bank ecosystem. And the Fed and FDIC took the right actions, which they were going to do anyway, regardless of your all cap tweeting.
[00:28:42] Eugene: But that was not clear last, last weekend. That's, that's what I guess people were asking like, Hey, can somebody actually clarify this stuff?
[00:28:47] Eugene: Because it's pretty complex to navigate, especially for people outside of the banking.
[00:28:51] Annafi: Yes. Very complex. And you know, does the regulatory...
[00:28:54] Eugene: Wikipedia doesn't help there unfortunately.
[00:28:56] Annafi: Yes. Do they need better PR? Yes, absolutely. They need [00:29:00] better press communications. Right. So I actually am a big proponent, very talented people saying, I want to do good in the world.
[00:29:07] Annafi: Well, okay, go join the government. Go help them get their message out. Go become a regulator, do all this stuff.
[00:29:12] Annafi: I don't disagree. There were sort of errors, communication, sort of missteps, errors that were being made. But again, it's. The first thing you learn as a regulator is you do not speak out of turn.
[00:29:26] Annafi: You only promise what you know with a hundred percent certainty you can deliver. And I think it's fair that they took the weekend to be a hundred percent certain. And again, they are, you know, unelected officials. They had to consult with Congress.
[00:29:39] Annafi: We know that congress, like dozens of congressmen and women got on a Zoom call and I think 1:00 AM or 2:00 AM Saturday.
[00:29:46] Annafi: These things had to be taken. We have a democracy in this country. Our elected officials, the White House, they all needed to weigh in. It would not have been fair for the regulatory agencies to basically themselves king and make [00:30:00] these executive decisions without consulting the elected officials.
[00:30:02] Annafi: We need to understand that the government functions differently from startups, and we need to just be patient and know that we're in good hands.
[00:30:10] Eugene: Interesting is, is there a way to make it more transparent so people would understand what's actually happening?
[00:30:13] Eugene: It's sounds like it's like a tip of the iceberg. Like 1:00 AM of course, I think it's amazing for people to step up and do that, but like not knowing about that, it's kind of...
[00:30:21] Annafi: Yeah, that's a great question.
[00:30:22] Annafi: A congressman from North Carolina actually put out a video about the Zoom call that he was on and he said, yes, "we were all on Zoom". Just figuring out what's happening...
[00:30:31] Eugene: While you guys are on twitter, we are on zoom.
[00:30:33] Annafi: Exactly. So yes, I, I agree with you that better communications would be warranted. But for them to basically guarantee everything they did they said on Sunday to do on Friday afternoon, would have been a misstep and would have been sort of an overreach in a way that I don't think that people appreciate.
[00:30:53] Eugene: Yeah, makes sense. So from your experience, like you mentioned that usually FDIC folks come in and during the Friday afternoon and this time they flew in [00:31:00] on Thursday night. Do you think they actually did the faster turnaround than the usual? What happened differently versus the usual playbook?
[00:31:06] Annafi: So I think this is a little bit different. Most often they are able to find a buyer over the weekend. So that's sort of the the scenario.
[00:31:14] Eugene: They found one in UK.
[00:31:15] Annafi: Yes, yes. For one pound, right? This is a little bit different also, this is the second largest bank failure in the history.
[00:31:23] Annafi: So even though they do have a rather sort of simple balance sheet, these are not complex derivatives on the balance sheet. These are not toxic credit derivative instruments or even toxic mortgage backed securities.
[00:31:34] Eugene: The equity still went to zero?
[00:31:36] Annafi: The equity went to zero, but the, the FDIC and the Feds should be able to sell those assets for 90- 95% of the value. I don't know that they could have moved any faster, without overstepping their bounds.
[00:31:48] Eugene: Is it a good thing or is it a bad thing?
[00:31:51] Annafi: It's a great thing that they consulted with Congress, that they consulted with the White House, that they consulted the elected officials.
[00:31:57] Eugene: So this speed is by design.
[00:31:59] Annafi: [00:32:00] Exactly right. Janet Yellen is not the queen of our queendom. Like the neither is Martin Bloomberg, who's the chair of the FDIC, neither is Jerome Powell.
[00:32:10] Annafi: We need to understand the roles that the regulatory agencies versus our elected officials.
[00:32:17] Eugene: You understand for people on Twitter, it's almost like a black box . Diving into this: regulation and saying who says what and why? What time does it take...?
[00:32:25] Annafi: Look, the idea that they should be able to, you know, sell 200 billion of assets at the speed of Twitter is just not realistic.
[00:32:32] Annafi: And the fact that David Sachs and Jason, I don't know how to pronounce his last name, are going around pretending that it is, is wildly, wildly immature and frankly irresponsible.
[00:32:41] Eugene: Yeah. Sounds like they, they actually shortened the banks.
[00:32:45] Annafi: , I hope that they recognize in the light of day how irresponsibly they behaved and how they put undue pressure on the regulators already working around the clock to make sure that Monday morning the markets would not panic.
[00:32:58] Eugene: Some of the people from the FinTech [00:33:00] community decided to call them out, actually seeing like what is their place. So I think it's not just the wave going one direction, but people tried to stop it early. But yeah, we are where we are these days.
[00:33:09] Annafi: And, and I mean, again, like we, we have to be consistent .
[00:33:12] Annafi: If we don't want "unelected bureaucrats" dictating everything that we do, if we don't want "unelected bureaucrats", again, this is not my terminology, I'm using the terminology that's normal in the VC circles about civil servants. If we don't want government overreach, we have to have patience when they come in and they have to take actions.
[00:33:28] Annafi: If we don't want them to act on a whim, if we don't want them to sort of behave like kings and queens and overthrow democracy, frankly.
[00:33:36] Annafi: Like Janet Yellen is not an elected official. We have to keep that in mind. Jerome Powell. They have significant powers granted to them by Congress, but when it's significant events like this, they have to consult with the governing bodies.
[00:33:51] Eugene: And if it wouldn't be for VCs, they wouldn't get so much political outreach for this problem with the bank. And it wouldn't be, as you mentioned, like with the local smaller banks.
[00:33:58] Eugene: Do you think it's also [00:34:00] part of the problem?
[00:34:00] Annafi: Yes. I think there is some chicken and egg here, right? So the fact that you had such high profile folks like Peter Thiel ringing the bell and others certainly.
[00:34:12] Annafi: Let me put it this way: there were five lawmakers who explicitly were parroting SVB banks, talking points about not raising their insurance premium a few months ago.
[00:34:23] Annafi: They collectively received almost a million dollars in campaign donations from the banking lobbyists. So the bankers, the VCs, they have tremendous soft power, tremendous hard power, right?
[00:34:35] Annafi: Money talks, certainly. If the bank was not Silicon Valley Bank, I don't know how regulators would've reacted. I am confident they would still react expeditiously. They would still get the job done. It's actually.
[00:34:52] Eugene: But it would be Friday afternoon, right?
[00:34:54] Annafi: I don't know. The fact that there was $42 billion withdrawal, it was significant and they might have acted [00:35:00] regardless.
[00:35:00] Annafi: Frankly, they might have been able to do their jobs even faster had they not been being harassed publicly on Twitter and probably by Congress folks saying: "Hey, I have my donors screaming at me. What's going on?".
[00:35:11] Annafi: Just let them do their jobs, let them do their zoom.
[00:35:15] Eugene: So it wasn't just one zoom call, but actually it was like a wave before, and the wave after.
[00:35:18] Annafi: There were definitely a lot of calls being made to Congress folks from the powers that be, I guarantee that. Yeah, that doesn't happen on twitter.
[00:35:28] Annafi: I don't know, given that time is such a precious resource in this scenario. It's not that the regulators don't understand severity of the situation. Believe me, they do. That's why they showed up Friday morning. Like they're already on the case. What are you going to how are you going to make them move faster than the speed of like human cognition?
[00:35:45] Annafi: I don't know, but certainly.
[00:35:47] Eugene: Stakeholders.
[00:35:48] Annafi: Exactly.
[00:35:49] Eugene: Makes sense. So obvious, like VC's had a lot of stress, founders had a lot of stress, consumers had a lot of stress, everybody had a lot of stress, bankers as well. On the FDIC side how do you guys usually manage this amount of [00:36:00] stress and communication you go to go through and still stay sane and still do your work?
[00:36:03] Annafi: So thankfully right bank runs they happen pretty regularly that the average consumer does not know about, but it's not as though everyone's working around the clock all the time at the FDIC. Um, These scenarios are explicitly because there's an emergency situation .
[00:36:20] Annafi: And there's certain teams that, you know, their schedules are inherently unpredictable because they, they're on the ground. But for the most part, the FDIC, you know, has actually pretty good life balance. So one of the nice things about being a civil servant is you actually do end the work day around five, six o'clock and you can go home and be with your families and things.
[00:36:38] Eugene: Except this one Friday, once in a while.
[00:36:39] Annafi: Again, there are dedicated teams to the FDIC who do this, who know what they're getting into. Very much. You know, when I had the rotation in that division, we were warned, Hey, if there's a bent crisis, you know, while you are here, like have a go-to bag.
[00:36:51] Annafi: Everyone has a go-to bag ready to go in case like they need to show up on a Friday or Saturday, right? So they know what they're getting into.
[00:36:59] Eugene: Interesting. Can you [00:37:00] compare this travel with consulting like you did Ernst & Young right after that? Was it a similar kind of like lifestyle or was it a bit different?
[00:37:06] Annafi: Consulting hours are just worse in general. So you are working long hours. And it's very funny as a bank regulator, the reports you put out are actually quite consequential. Whether we rate if a bank, you know, a five rating versus a four rating actually determines how much insurance premium they have to pay.
[00:37:23] Annafi: So it's not actually that all banks are paying the exact same amount or the exact percentage, it depends on their risk management services.
[00:37:31] Eugene: It's risk adjusted, basically.
[00:37:32] Annafi: Exactly. So the reports we put out are extremely consequential, but we know what we're doing.
[00:37:37] Annafi: My managers were wonderful and trained me very well, and the bankers, this is a very orderly process, so we know how long things will take, et cetera, at EY I remember having to pull all nighters for a stupid report that did not matter, that would go to like a junior analyst who would then put it into a drawer for two weeks before the manager got to it a month later.
[00:37:57] Annafi: Like there's this weird harried scenario just [00:38:00] because the client demands it, even though like none of this is of consequence and there's absolutely no reason this shit needs to get done by, you know, 9:00 AM tomorrow. So it was just very funny to me watching, like going from writing reports that matters a great deal.
[00:38:12] Annafi: We're talking millions of dollars in difference between a four or five rating, potentially, if not hundreds of millions of dollars for the big banks. Versus again, like a status report that has to be detailed for no good reason.
[00:38:25] Eugene: Level of impact.
[00:38:26] Annafi: Exactly. So that was a really funny moment , talk about government being in inefficient.
[00:38:31] Annafi: They've clearly never worked at a Big Four consulting firm.
[00:38:34] Eugene: If you go back to the FDIC reporting that you usually used to do back in your days there, do you actually go back and forth with the bankers as well? Or is it something that is final that you give to them?
[00:38:42] Annafi: There are so much conversation. I mean, we're literally on bank sites doing these.
[00:38:47] Eugene: So it's not a zoom call.
[00:38:48] Annafi: No, it is not a Zoom call. They have a dedicated conference room usually, and they give you very nice coffee and send you donuts because again, they're very much sucking up to you and you're, there's tons of [00:39:00] back and forth.
[00:39:00] Annafi: You take their loan records. You go through their stress tests and you say: "Hey, why are you only stress testing this and this and that, that". So there's different categories like liquidity risk, interest rate risk, credit risk. You look at each significant factor and you say, how well are they mitigating their risks?
[00:39:15] Annafi: How long, how well are they diversified? Do they know what they're going to do in a crisis scenario? Do they have procedures set up to quickly able to sell assets or to quickly hedge their risk? All of these things are, you know, being done by the time the report comes out.
[00:39:30] Annafi: Nothing is a surprise. The bankers know exactly, you know what we're going to say and they know why we're going to say it. So again, this is why I say as a regulator, I was in front of the bankers from day one and I had to be very careful about the words that I was using. And similarly, with the situation on Friday morning, Friday afternoon, the FDIC and the Feds joint statements is being read across the world.
[00:39:52] Annafi: Right. Globally speaking, not speak out of turn. And the fact that these seasoned investors think they could is just [00:40:00] astonishing to me.
[00:40:02] Eugene: Going back to the initial topic of where we started with the VCs getting educated on how to understand the bank risk and so on. I remember we talked about the due diligence part, right?
[00:40:09] Eugene: And you, you done some of that with risk assessment with, with the bankers inside at the FDIC.
[00:40:15] Eugene: What are your recommendations to the VCs asking the right questions to their due diligence team when they assess the risk at the banks?
[00:40:23] Annafi: Oh, that's a good question.
[00:40:24] Annafi: I would certainly ask about, you know, the latest, you know, regulatory reports.
[00:40:28] Annafi: I know KPMG is getting some flack for signing off on the audit report. But KPMG, as an auditor, their job is to make sure that papers say what they're supposed to say. Even if it's bad risk management practices, it's not like they were hiding them in secret sheets.
[00:40:45] Annafi: This was all public knowledge, which is why there were folks concerned January as early as January, February.
[00:40:50] Eugene: Well, we all remember the case with Wirecard card in Germany.
[00:40:53] Annafi: Right? Right. Certainly, I think they need to be educated on sort of risk management [00:41:00] practices at financial institutions.
[00:41:01] Annafi: Look. Yes, the Feds did spike up interest rates rather quickly, but as a bond investor, your job is interest rate risk management. So the fact that Jerome Powell has been shouting from the rooftops: "Hey, we're going to raise interest rates", and SVB didn't take action accordingly is not the Fed's fault.
[00:41:21] Annafi: I think there needs to be more scrutiny on not only just the reports themselves, but the culture. The risk management functions, right? Again, not having a chief chief risk officer for eight months when you're a 200 plus billion institution, that's just like a basic failure.
[00:41:40] Annafi: And that's an easy question to ask. Hey, do you have a chief risk officer? How often are you stress testing your portfolio against liquidity risk, credit risk, in interest rate risk? This is again, sort of basic banking 101 and there are tons of resources available for them to sort of just learn the ABC.[00:42:00]
[00:42:00] Eugene: Yeah, I feel like it just oversaturated with the amount of information. And as, as you know, like in the banking, in the FinTech in general, this amount of reports is just crazy. So what kind of signal to pay attention to is really, really crucial.
[00:42:10] Annafi: Is clearer in hindsight.
[00:42:12] Annafi: I just wanna stress that I don't think there was evil intent on anyone. In the bad risk management at the same time, they lobbied aggressively so that they could be lax about all of these risks. So I would put the onus, not necessarily on sort of the, the end result, but the process.
[00:42:30] Annafi: Why were they so insistent that they not be subject to stringent regulations?
[00:42:34] Annafi: Why were they so insistent that the FDIC not the insurance premiums?
[00:42:38] Annafi: The, it's the lobbying efforts that give them, The sort of freedom to be lax and ignore these things until there's a crisis and then they want the regulatory and then suddenly they're like, oh, no, no, no. We're systematically important.
[00:42:49] Eugene: So it comes in waves.
[00:42:51] Annafi: Exactly.
[00:42:52] Eugene: Is there a way for FDIC to push back on the lobbying that institutions usually do?
[00:42:56] Annafi: So thankfully the FDIC did not listen to the lobbying efforts months [00:43:00] ago and they had raised the insurance premium, which is why they were able to step in so nicely and say, yes, all the depositors money are going to be safe as of Monday.
[00:43:09] Annafi: Now creating a separate fund that banks will be paying into because again, they are now ensuring all deposits over $250K. So they're taking the right steps. They're ignoring the aggressive lobbying efforts.
[00:43:21] Annafi: I would now say to the VCs, where are your campaign dollars going? Where are your lobbying dollars going? What are you going to do? When you were the one crying and screaming bloody murder all weekend to make sure this doesn't happen again. Are you going to stop vilifying civil servants? Are you going to stop aggressing lobbying efforts? Probably not. They're probably gonna go back to their old ways and I would hold them to account and hope they learn one small lesson here.
[00:43:45] Eugene: Hmm. Which would be.
[00:43:48] Annafi: Um, maybe not all civil servants are bad. Maybe not all government is bad, and maybe government functions and should function differently than the way you function. They cannot turn, they [00:44:00] cannot just tweet. Janet Yellen cannot tweet off random things that come to the top of head. Like, that's just, that's just a ridiculous ask.
[00:44:07] Eugene: Yeah, it's very, very different. Going back to the reporting that you mentioned, at the beginning. That consequential impact of actually releasing that report and knowing what you say and delivering what you're saying. Isn't this what you missed? Like when you moved from FDIC, from the regulator to Ernst & Young to consulting and then to the political work that you're doing these days?
[00:44:24] Annafi: So that was one of the shocks when I was a regulator. You again, I was trained on the ground. I was in front of banks starting my fourth week, someone took me along and I was leading meetings pretty early on in year one. But everything I said, you know, was carefully vetted.
[00:44:41] Annafi: I made sure never to speak out of turn, never ask questions that I basically didn't already know the answer to or have a good hypothesis for. Because you need to be very careful that you don't set false expectations about what the reporter will or will not say, et cetera.
[00:44:54] Annafi: Moving to that, moving from there to EY where I would just get put into meetings [00:45:00] and they would just look at me like, oh, you were a former regulator. What do you think about this? And I would say, I haven't done the research. And they're like, well, what did your intuition say? I'm like, there is no such thing with banking regulation.
[00:45:11] Annafi: Like I need to go back and read. I'm so adjusting to that.
[00:45:14] Eugene: But it's not that regulators don't have any issues that you guys don't use it, right, because it'll be contradictional.
[00:45:19] Annafi: Exactly. Oh, we definitely have intuitions. We are just not allowed to speak about them publicly, and rightfully so again.
[00:45:24] Annafi: I mean like bond investors . No, they're reading the reports from the Feds meetings monitoring every sneeze, every comma, every pause of Jerome Powell. Like it's a really hard job. So you need to make sure that you're as confident as you can be with the information you have before you make any announcements in front of anyone who's not an internal stakeholder.
[00:45:46] Annafi: So obviously there are frank conversations going on with, among the regulatory agencies. We talked about how SVB employees are uncertain about their careers and their future. So you don't want to freak them out. You don't want to falsely reassure them. You don't [00:46:00] mislead in any way, and we just need to be cognizant of that. There are so many stakeholders here and we need to urge patience for all parties.
[00:46:07] Eugene: Sounds like you have a job when "you always need to be right".
[00:46:12] Annafi: We strive to be, right? Yes. As as regulator, as a former regulator myself, yes.
[00:46:16] Eugene: Awesome. And I guess you're doing the same amount of research when you work on your pieces at the flip side.
[00:46:21] Annafi: I wish I had that luxury, but again, we're, we produce five days a week. I have an incredibly small team. We do our best two, our knowledge, we've never , quoted false information and we're very proud of that.
[00:46:32] Annafi: We're very careful about, you know, what we're citing what we're not citing. We have a lot of commentary that exaggerates that manipulates, but never any false information.
[00:46:41] Eugene: Awesome. Alright, I'm gonna ask you a couple more questions just to get a sense for our audience about your personality.
[00:46:46] Eugene: And this are very basic questions like what is the last book that you read?
[00:46:51] Annafi: Oh, great question. I'm actually rereading Misbehaving by Richard Taylor. I think it's a great book to read actually, for anyone interested about human [00:47:00] behavior and looking to learn about how to create consumer products.
[00:47:04] Annafi: I think, you know, everyone has read Nudge or Hooked or all of these, but Misbehaving focuses more on financial decisions people make, and it's a really great book by economist, Richard Taylor.
[00:47:15] Eugene: Awesome. And who is the leader that you admired most?
[00:47:19] Annafi: That's a great question. Recently I was in awe of New Zealand Prime Minister for stepping down. That was an extraordinary action she took to. She's extremely popular, she most likely would've won reelection so easily. But she knew that her country, her constituents, the New Zealand government deserved more than she could give right now.
[00:47:39] Annafi: And I just think that's this an amazing show of leadership .
[00:47:44] Eugene: That's a really good answer. And for those people that are looking at this podcast today and looking at your journey, what be your advice if they want to replicate your success?
[00:47:53] Annafi: Oh, wow. I am normally very much just a lurker on Twitter.
[00:47:57] Annafi: I have a very minimal Twitter presence until this weekend [00:48:00] when I realize I actually do have knowledge and insights to. So I would urge folks to spend less time both because it's a time suck and because oftentimes it makes you look bad and not tweet and not say things publicly that you haven't done the research for or haven't done extensive analysis on, there's just a lot of ways for people to misstep.
[00:48:21] Annafi: I probably misstep this weekend, right? Like, I got feisty. I saw myself, you know, checking the notifications every five minutes and I thought, oh my gosh, I need to get off the stupid app.
[00:48:29] Eugene: It's how social media works.
[00:48:30] Annafi: Exactly! The flip side is building something better. So hopefully there'll be an alternative. Until then, I would caution you that it's very easy to misstep on social media. And also when you're building things, especially if it's in an industry where you don't have wast experience.
[00:48:43] Annafi: So many startup founders want to disrupt an industry before they actually understand the complexities. So I know in fact FinTech, you know, folks will say, oh, I'll fix banking, I'll fix regulatory oversight.
[00:48:54] Eugene: I've seen this every day. Yes.
[00:48:55] Annafi: No problem. And you say, Hmm, okay , talk to me about [00:49:00] consumer protection, right?
[00:49:00] Annafi: And they just are not as knowledgeable as one would hope, hoping to disrupt the system.
[00:49:05] Eugene: That's why they need people like you to actually explain what matters, why should be done this way.
[00:49:10] Eugene: Awesome. So for people that want to contact you and work with you and follow you, what would be the best place for them to find you?
[00:49:16] Annafi: Great question. So our website is theflipside.io, and I can be reached at annafi@theflipside.io. I'm also on Twitter. It's @annafiwahed. I look forward to email me directly and put in the subject line, looking to understand more about banking or regulations, et cetera.
[00:49:35] Eugene: Awesome. Thank you so much for the time today, Annafi.
[00:49:38] Annafi: Thank you so much for having me.
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