Sramana Mitra: Let’s come to the year that you started Saphyre. What year was that?

Gabino Roche: 2017. I remember it was scary. To do work in finance, you had to go all in. I told you about my three failed businesses and the one that broke even. In this case, if I’m going to do it, I have to do it full-time. There’s no financial institution that would do business with you if you’re doing a part-time gig. That’s why when Stephen said he would back me and pay for my salary for a year, I had to fully commit.

Sramana Mitra: In 2017 when you decided to do Saphyre, what were you going to do?

Gabino Roche: I would also like to share the motivation of why at that time it was important to seize the moment. I had helped JP Morgan and all these other banks sell that consortium. I couldn’t go back to JP Morgan. I had to go with the buyer because they wouldn’t buy it without me. The buyer said, “Gabino, great stuff. You’re going to take all this knowledge and give it to these people we’re bringing in.”

I was pitching the Saphyre idea the entire time, but these people didn’t get it. They were going to follow the path that I thought was not optimal. I’m not at JP Morgan anymore. All this knowledge is given and then what? They’re not even appreciating the perspective that I have. I knew that that was the moment.

The financial crisis created a big problem in the industry where they were literally spending $40 million to do KYC AML, which stands for Know Your Customer Anti-Money Laundering. Everyone was focused on the cost savings to create a utility that does this for the industry but no one is altruistic. All these institutions, as good as the name sounds, they’re selfish for their interest. It’s business. We have to tie this to revenue.

The vision at that time was to help firms onboard new businesses. If Coca-Cola starts a new pension fund, they got $500 million. They’ll hire investment managers. That’s the stuff that makes Citibank and JP Morgan say, “Pick me!” As part of that process, you can institute the KYC AML and other things to get firms to consolidate this. I was trying to explain this. They only wanted to go with the one angle; they didn’t want to think about the revenue angle. I said, “We have to seize the moment. If I don’t do this now, this is going to be another failed venture.”

That was the starting point. It was to help speed the onboarding of accounts. In reality, it was to create standardization around the data that’s being transported so you can conduct KYC and other things. That’s what our 107 patents do. It’s for collecting metadata to create standards behind the scenes. Believe it or not, you think finance is standardized. It’s not. You’ll be shocked at how messy the data is.

Sramana Mitra: In 2017, this is the idea that you jumped in with. How much development work did you need to do before you got your first customer?

Gabino Roche: The starting point was creating click-by-click screens. At first, I did it with mockups.com. The version looks very cartoony with our Chief Product Officer. At that time, he was the intern I hired at the consortium. My background is really around products. I’m a Chief Product Officer and I train multiple people this way. In software, the product management component is a key winning ingredient. He and I created a wireframe mockup.

We pitched to three firms before I even decided to get money from my brother. One of them is BlackRock. They manage about $10 trillion in assets. They could see click-by-click what was going to happen and how this could work out for them. Next, we hired Kelly who’s our user experience designer. I will tell you that was so key. The user experience has been a big saving point. Everyone loves the experience on our platform.

When you can actually design the screens ahead of time, you don’t have to spend all the money on code right away. You can validate your hypothesis. Once you have finalized the screens, then we do the coding. This is one of the ways we saved money in the beginning.

Sramana Mitra: This is one of the principles that we follow. Do not write a line of code until you have validated your hypothesis.