How do you find the right people for your startup for a market that doesn't exist? This is the first part of the journey of Othera, an Australian startup led by John Pellew, a startup that was born out of a financial crisis with a solution for the future.
In Eindhoven, the trend for the past 20 years is for successful tech innovations to start as internal projects at multinationals such a Philips, then evolve into world-changing technology companies. Witness ASML, which has an 80-share in photolithography, and Shapeways, the 3D printing pioneer.
The exception is Othera from Australia, which was selected for the HighTechXL Corporate Launchpad program in 2017.
Othera uses blockchain technology to digitize loans, tokenize cash flow and then make the cash flow available to trade. Blockchain provides total transparency of the risk of the financial produce while matching investors looking for higher-yield investments with vetted borrowers seeking capital.
Founder John Pellew had been in finance for years. So, in the Eindhoven Model, he just spun up from an environment where everyone was already using blockchain/distributed ledger technology, right?
“Absolutely not,” said Pellew in a recent interview from San Francisco.
Instead of advancing an existing project, Pellew started from scratch with a technology that barely existed, and most people still don’t understand – blockchain.
In this unorthodox gambit, Pellew came up with a startup management and team-building approach that is wildly divergent from his decade as a banker and financial entrepreneur.
“One of the finance companies I had (in equipment leasing) I started 9 months before the global crisis,” said Pellew, a serial entrepreneur. “We went from startup with one man at a desk to 32 staff and 2 offices and past the break-even even in 9 months. That’s pretty damn fast."
When the global financial crisis hit in 2008, overnight there were no leasing companies to place the deals with.
When he started to examine why this happened, the core problem turned out to be lack of transparency and liquidity in the financial markets.
How is this possible? Pellew asked. “And just as a hypothetical … I asked what could be done in the future to change the industry so this could never happen again.”
At the time, a Swedish friend “was talking about this thing called bitcoin,” which Pellew said he didn’t find all that interesting at the time.
But the underlying tech was interesting: distributed encrypted ledgers that store data including an audit trail of everything you've done. And the blocks are immutable … sequential, and nothing can be altered.
After reading a white paper on the blockchain platform Ethereum Project, Pellew started putting down the framework for a loan-origination software platform with verified data that can’t be disputed in a court of law.
“All this extra capability they’ve built into the underlying technology for blockchain is the solution to my problem.”
While I'm looking at this industry gamble, I need blockchain (expertise), but there are no blockchain people, because blockchain hadn't existed before.
About that time, there were starting to be people putting their hands up saying, "I'm a blockchain expert." I'm laughing (because) they're trying to catch the unwary. They might have written one basic smart contract. They might have traded a bit of bitcoin. Are they really a blockchain "expert?" Unlikely. So I bypassed all those people and went back to look at what the core tech stack was likely to be.
When you really break it down, any enterprise blockchain solution is only about 20 percent blockchain and 80 percent traditional tech stack: Java ... and other stuff. There are plenty of those people who actually are experts, who've done five to seven years of hardcore development in those spaces.
I had one contractor who I had on my payroll for a year or so doing some other work in credit analytics for small businesses. So I said to him, "How do I go about recruiting people when I don’t know anything about software engineers?"
He'd said he'd help check out resumes and code quality.
If they said, "I'm a Java developer," I could say, "Send me something on Bitbucket that you've done," and that proves the technical aspects of the resume.
On the other side, it’s much more about the philosophy of the candidate. It's less about technical capability or what they’ve done in the past.
I've distilled the HR process to a few core mantra - the qualities to look for in people and how to get the best out of them.
In one defining word, I suppose it would be "courage." I call it courage under fire.
There are a lot of people who say, "I've got courage." So I say, "Show me an example in your life when you can demonstrate real courage. This is where it gets challenging for most. Because most can't and they're just talking bullshit to get the job. The ones who are really thinking about it actually can.
One of the very first hires ... my first CTO said of a java developer candidate, "He's got the technical skill, but look, he's not the right guy." I said, "Well, he probably is the “right guy” just because you said he's the wrong guy." My CTO was an ex bank guy, incredible skills, but wrong philosophy. I made a mistake hiring the CTO in a time crunch; it turned out he was the exact profile I warned myself never to hire.
Anyway I got the Java candidate - an Indian guy - to come into the office for another interview, this time with me and said to him, "I can't tell if you're a good developer or bad developer. What I want to talk to you about is how you got here to Australia, because he had literally “just got off the boat.” I said, "Tell me your story." At the time (for the last few weeks) he was working in an IT job shop, solving peoples' problems.
His story was quite amazing. He actually spent a number of years working for Oracle in India. Oracle needed a small team to go to Africa to do an implementation of software in a small bank in Zambia. He put his hand up and said, "I'll go!"
Indians in Africa don’t get treated that well, so it's a hard world to live in. He went anyway and ended up staying five years, and he said, "It was the best time of my life." I thought to myself, “I probably wouldn't do that,” and entrepreneurs are natural risk takers. So I'm sitting there benchmarking against what I would do, and I'm thinking that's showing a lot of courage.
I said to him, "I'm quite interested in hiring you as what I'm really looking for is this thing I call “courage under fire.” We're going to build a platform, to solve a massive problem, using a technology that is really young and not well proven and where there are no experts or people with experience in the field to rely on. We will be solving really hard conceptual problems that have never been solved before, and I need to know if you can dig deep and stick it out and solve the problems at all costs.
"When the bullets are flying and you're in the trenches, you’ve got to keep on pushing to solve the problems, and you can’t let go.”
He said he could and he would, so I hired him and ... now he’s our software development lead. He's literally the backbone of the business because of the strength of character and his quiet leadership.
He’s been quite amazing.
Othera is an Australian financial technology company based in Sydney, NSW. We launched in 2015 and have been expanding our services to meet the needs of loan originators and investors. Their software incorporates two tools for loan originators: Blockchain Lending Platform & Digital Asset Exchange. To know more about Othera, please visit www.othera.io
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