Derek Flanzraich, founder of Ness, built an impressive company: a credit card assembled from scratch, partnerships with top health brands, content that reached 150,000 people monthly, $50 million raised, and enthusiastic cardholders. Then he shut it down. This episode is a timely and all-too-rare look at the reality that many start-up founders will face. Sometimes, despite great effort, great ideas fail. On today's episode, we hear Ness's story, which begins with Derek's own health journey. Derek talks about Ness's strategy, successes, challenges, a near save, and unfortunate end.
Find Derek and Ensemblex on LinkedIn.
Hosted by: Shawn Budde
Guest: Derek Flanzraich
Produced by: Meagan LeBlanc
Theme Music by: Brad Frank
Shawn
Hello, this is Shawn Budde of Ensemblex and this is The Ensemblex Exchange Podcast.
Today I'm talking with Derek Flanzraich about his former startup, Ness. What went right, what went wrong and what lessons came from the experience. Derek is passionate about making health accessible and affordable for everyone, creating the largest health and wellness media site, Greatest, which was acquired by Healthline Red Ventures in 2019. With 10 to 20 million visitors each month, Greatest offers shareable, fact-checked content to empower people to make informed decisions. Derek also created a health-based credit card, Ness, in 2021, and today he consults for companies like Midi Health and NOCD. Derek is an active venture partner and sits on the board of Stoked, a nonprofit adventure sports mentorship program for underprivileged youths. Thanks for joining me today, Derek.
Derek
You bet. Thanks for having me.
Shawn
So we first talked to you about Ness about three years ago, and I know this was very personal for you. You had your own journey to a healthier lifestyle. So I'd love to hear a little bit about that before we dive in.
Derek
Yeah, absolutely. And thanks for asking. Yes, I feel very blessed to have found my deep personal and professional passion for making health more accessible early on in my life. And it really stemmed from and started from my personal experience growing up a really big kid, struggling with my weight. When I was nine or so years old, I had an accident with my hand and ended up with my right arm in a cast for four years, three surgeries over four years and so with my right arm in a cast, I'm right handed so when most guys like play sports and make friends, I did neither. I ended up reading instead, which I guess probably paid off better in the end maybe, but I just kind of felt very different and also drank six Dr. Peppers a day.
And then when my family moved to Miami, Florida, I was suddenly surrounded by all these sexy people with their shirts off and I was definitely far from sexy. And I became very passionate about trying to figure out how to become healthier and struggling and frustrated with kind of the information that was out there and the people who, you know, we like turned to. I started reading all these scientific studies on PubMed because I would obviously be very fun at parties, as you can guess. And I started reading all these like scientific studies. I learned a lot and I started to get better. I started to share that information with my friends and I learned that sharing information as sort of a friend that was a little further along was oftentimes much more impactful and much more influential than, you know, someone who has it all figured out already. And so that's what really carried me into my first startup, years later was really like I want to build the media and content that I wished existed growing up. You know, Greatest, we built into this like massive health and wellness media company. And I really cut my teeth there in terms of like becoming a leader and a business builder. I mean, I started the business when I was 22, sold it when I was 30 years old, you know, after eight, you know, kind of crazy, amazing years. And that's a good time for you to ask, like, am I still very deeply passionate about this mission that we went about, like, trying to solve? Greatest was really about talking about health in that same way, this, like, friend that's a little further along. I think we were really, like, on the cutting edge of sort of talking about having science-backed, expert-approved content that, like, was worth reading and that you would want to share with your friends. And the answer was yes, like I feel like we just scratched the surface of what was possible. And that's really what drove me to Ness.
Shawn
Yeah, that's a fantastic story. I appreciate that. So yeah, why don't you make that connection for me? What is it that drove you then to start Ness? And actually, I guess before we do that, why don't you just describe Ness for us so we all know what we're talking about.
Derek
Yeah, yeah, sure. At Greatest, it was about like, shaping the narrative around health and wellness and making it more accessible. But we kept coming, kept like running into this issue that no matter how friendly and accessible you make health and wellness, the reality is a lot of it is very expensive. For the average person, it can feel, and frankly, if you know, we're being honest, it is really expensive to try and keep up with the trends to try and be healthy. You know, like we used to try to make the case that like, you could, you know, shop at the store, and if you bought brown rice in bulk, it would be cheaper than buying KitKats. But the reality is like, that's not true. And, and it really came down to cost. And so I became, I kind of went down a rabbit hole, becoming obsessed with this notion of who actually wants to reduce cost when it comes to your health and wellness. Like who's actually aligned and incentivized? It drove me to, you know, one like real frustration that I have with healthcare, which is the way it was built over time and in some ways like deepened since then. Most people stay on a health insurance plan for a very short period of time because health insurance in our country, unlike almost any other country in the world, is tied to employment.
So that is like a very odd thing that like the average person stays on a health insurance plan for two to three years. And it makes sense actually why most health insurance plans don't care then about your long-term health. It's not that they're bad people. It's that there's no financial incentive for them to care. And actually, frankly, them investing in your long-term health probably is gonna help out a competitor because you're gonna switch to a different plan. This is very frustrating, frankly like infuriating, right? That like the things that we all agree and know are good for you; healthy food, working out, all of it, blood tests, all these things are expensive and most people have to pay for out of pocket because of the way the system is set up. So one of the insights that started to drive me towards starting Ness was realizing that yes, in theory, long-term you could align those incentives, but there are people who do actually care about reducing the cost of health and wellness so that more people can access that.
And one of them is employers, right? One of them is like, who's employing you. And the second one is the brands that are actually selling this stuff. That felt like a very kind of big breakthrough. It was an experience we'd had at Greatest where we were selling to all of these big brands, whether it was RXbar or any kind of like, whether it's healthy food or fitness brand, they were spending a ton of money to try and get in front of people. And so, as we started to work on what the vision became, we're going to build the next Amex. We're going to build it health first, and we're going to create a whole suite of cards. These cards will reward people for spending on healthy things and for doing healthy things with points they can basically use to do more healthy things. And the way we would be able to accomplish that is take what turns out to be a tremendously high margin business in health and wellness, turn to the brands themselves, ask them to take the money they're spending on acquisition and return that in the form of value to our members. So the math was pretty compelling. It basically meant we would have nearly no cost, almost entirely merchant funded rewards, which turned out to be true with our first card that we launched early last year. And the bang for your buck for the consumer was going to be also tremendously high and even higher than you can get on almost any card in the market. And so this felt, putting aside also the like goodNESS of that like, you know, like lovely positive like cycle, the business model felt really compelling and the opportunity to capture frankly, consumer spend in health started to get something, we got very, very excited about.
Shawn
Yeah, so I assume the name came from goodness and wellness, not Loch Ness.
Derek
That's right. That's true. Though it was Loch Ness inspired. Yeah, so, you know, the website was Ness Well, so wellness flipped. And so that's where it came from. But I love Scotland for some reason. And I thought it'd be fun to have like the Loch Ness as a mascot. And so it ended up being kind of a subtle reference. And if you like, you know, had one of our cards, which actually I keep with me, you know, here it is, like, you know, it's that's the N, but it's also it's also like a subtle Loch Ness.
Shawn
So a little play.
Derek
Yeah, exactly.
Shawn
Yeah, I mean, it's an interesting insight on healthcare. I didn't realize the duration that people had on a plan was that short. Every year when we get our healthcare plan, we're just happy it hasn't gone up 20%. We're pretty excited if it's only gone up 10%. So why don't we talk about the creation of Ness. How did you meet your co-founders and how did your interests and your skills mesh together? Where did you fit together?
Derek
Yeah, so it's worth sharing, you know, transparently that I had no fintech experience at all. Now that doesn't typically scare me. Maybe it should have, you know, looking back, more than it did, but that typically doesn't scare me. You know, I feel like I can figure out most things and that there's actually a lot of value in having like an outsider perspective. But I was also like deeply aware that I needed to build a team of people who really knew fintech.
And with just kind of a vision in my hand, I went out to people that I had met before and asked them to try and collect like a who's who in some ways of people who really knew fintech to figure out how to build like the credit card company of the future. And pretty quickly we had convinced people who had worked at Stripe, at Amex, on the Apple card to come on board. And I think at some point we had basically every major consumer card launch in the last 10 years, we had someone at those cards involved with the business in some way, whether it's an advisor or as a full-time team member. And we learned, we took a crash course in like learning a lot about fintech in a very short period of time.
We learned enough that really we were able to convince a bunch of smart fintech investors to actually like invest in us. And I want to flag that this was in 2020, which was a very different time in the financial markets. That comes up later because there were many more interesting times to come. That comes later in the story. But at least at that point, a second time founder who'd been pretty successful with his first business with a very big ambitious vision, venture capital loves a you know, saying we're going to build the next Amex is very compelling, especially in a space, you know, health and healthcare. The vision was very clear and the long -term vision was very exciting. You could really see how that becomes a multi-billion dollar business. That's what the VCs want to see. And we raised a lot of money, you know, a lot, probably not enough, honestly looking back, but we raised a lot of money, about 25 million or so almost out of the gates and put that into building an amazing credit card platform with a very different kind of approach than most people took to building credit cards at the time and maybe today, which was we're not gonna just try to get a credit card out. We wanna build a platform for like the long-term, right? So we can collect the most upside in terms of revenue so we can own the experience from top to bottom. So we can build out our own network of merchants. The vision was we're gonna build this big consumer credit card company, not we're gonna build a credit card. And so we decided to take a lot of like longer term, made a lot of longer term decisions, which was a decision at the time. It was definitely an approach to take.
Shawn
Yeah, I actually don't think you're that unusual. I typical say that 90% of fintechs are 100% tech. We've seen some research out of Europe that actually endorsed that. What maybe distinguishes you a little bit is that you went and sought people who understood financial services. I think we see plenty of organizations, some successful, some not that don't bother to do that.
Derek
I mean, that's crazy, right? I mean, like to, that doesn't make any sense to me. I think maybe it was from, you know, the experience of my first company. I mean, I learned a lot. I still, you know, I learned a lot at Ness and I still have a lot to learn, but for sure at Greatest, one of my biggest learnings was how important it is to be willing and able to ask for help and how critical it was to build a sort of advisory board and a sounding board of people who really knew the space deeply, who could gut check what you were doing. And again, I think we got much further than many companies do in no small part because we had really the best of the best advising us and helping us along the way.
Shawn
Yeah, I would agree with that. And I think sometimes maybe the challenge is finding people who understand the industry but aren't stuck in what the industry has been doing, right? So they're open to change, but they're also able to learn from the past and share those learnings.
Derek
That's true.
Shawn
So you talked a little bit about taking kind of the grand vision here. What were your expectations when you, in 2021? When you raised 2020? Versus what ultimately happened.
Derek
Yeah, yeah, basically 2021.
Derek
So, it's a big swing business. Venture capital, there are many ways, different ways to build a business. There are many ways to build a venture-backed business. I decided if I was gonna take venture capital again, that I wasn't quite satisfied with the swing I took last time. With Greatest, we built a good business. You know, we basically were an ad-based media company.
We tried to do a lot of more interesting things, but kind of the gravity and weight of this business that was working, that cost about as much to run as we made from the business, made it very hard to turn into something that was truly venture scale. We kind of got stuck, I guess, is the way to think about it. Now again, you look outside and in many ways it was very successful.
But in other ways, it was definitely not as nowhere near as successful as I had hoped it would be because we basically turned into a media business and sold as a media business for a multiple on revenue. I didn't want to do that again. And I wanted to take a very big swing. And I was very honest with all my investors, with everyone involved, that we were shooting for the moon here. And that colored a lot of our decision making.
We knew that there was no world in which raising 25 million was going to be enough. And our plan was to raise 50 to 100 million, not long after, and raise until we had basically reached critical mass where people were, we were generating enough money from credit card members that it could become a profitable business, whether that became through building a deeper relationship with an existing bank or a whether that was having enough revenue that we could basically move the rails to somebody else, much like Bilt has done. The math just doesn't make sense in the early days of a credit card company because you're paying so much money in interest to borrow the money to front all these people for 45 to 60 days.
It's just a capital intensive fintech business if you're doing it on your own. And that was something investors were excited about in 2021. And a year later, with like fintech kind of imploding. Frankly, all the venture markets shifting and changing, I mean, you know, like, very much a venture capital winter, but also in particular for fintech, also healthcare companies were beaten up too. And we ended up trapped. I mean, basically, right. Everyone was like, well, this business doesn't work yet. And we were like, yeah, well, we never told you we'd work by now. And we actually launched a card early last year, our premium card that I showed you earlier. We launched it with Sweetgreen as our anchor partner, Parsley, Prenuvo, Seed Health, Exhale Spa, really like an amazing assortment of partners, about $3 to $4 thousand dollars in benefits to the end consumer almost none of which we paid anything for. Pretty extraordinary returns on any health and wellness spend. We did a lot of amazing things, honestly, and people loved that card. And actually, basically every number we had hoped to reach outside of kind of like the total membership, you know, we had hoped we would reach a lot more members, but it's hard to sell a credit card. All the like actual usage and engagement of the card were like off the charts, but it was never intended for that premium first card to be the business, right? It was always the beginning to build the brand, to build the relationships so that we could launch another card. We were working on a no annual fee card that was due to come out late last year that would have, I think, really changed the game. And we just never made it there.
Shawn
I mean, you hit on it. It is an extraordinarily capital intensive business. I mean, we have launched a credit card business and it has great CAC acquisition costs. And even so, we think we're going to have to raise on the order of 300 million. If the CAC isn't great, you're probably at half a billion. I think a lot of people don't expect it to be nearly that expensive when they get started.
Derek
Yeah. Look at scale, they make money, right? These are great businesses. I mean, cards essentially, to my knowledge, are among the most profitable revenue streams at most of these banks. The problem is you're not a bank yet when you're a startup, and that means you're borrowing, essentially, with a bank. Most people I know who started a credit card company in the last few years have ultimately done it on a credit card as a service solution. I mean, the solution being a Deserve or a Bond or whoever it is, you know, Lithic. And that is no way to build like a good profitable business, but it's definitely a lower risk way to get a product out there and start proving something out.
We decided to build a relationship, you know, went out and got our own bank sponsor. We decided to create our entire app from scratch. We decided to do all the customer service, you know, again, all these decisions, you know, we didn't do everything, but most things we did because we wanted to own the experience at the end. And again, the vision was very big and I believe ultimately you do want to be planning for the success of this. But, you know, come, you know, early 2023, all those decisions started to seem kind of silly as the timing had shifted so much. Suddenly we had like made a lot of calls to invest in a thing that was not fundable anymore. And so we had to ask ourselves some really hard questions around, what could this business become? And was there really a there there still? And it was a tough time.
Shawn
Yeah, so I want to come to that in a second, but first I'm super curious how you go and get Sweetgreen and other folks to sign up when you have, I assume, round numbers, zero customers.
Derek
Yeah, yeah. You have to be very charming. No, I think...
Shawn
There's my weakness.
Derek
Oh I haven’t seen that. I think the short answer is you have to have a good pitch. The reality is as long as you're pitching to someone who's actively trying to acquire the customers that you intend to get in front of too, and you intend to put a lot of time and resources and money into trying to reach those customers, it's kind of a no-brainer to try something.
So we built everything in a way that was basically no cost, right, to these brands. Unless they were able to get in front of a member who was going to convert and be the kind of member they would have spent a lot more money to go and acquire using paid acquisition or direct mail or however they go and acquire customers. So frankly, we had a very good pitch. We had a beautiful, beautiful product, brand, experience that people got very excited about. I think that is often underrated, you know? And then we had very compelling partnerships and salespeople with deep experience in the space. Our partnerships lead was ex-Amex. She basically built the Amex Gold card. And so there was also this element of like real, true legitimacy. And then I also knew the space deeply as somebody who had been sort of at the epicenter of it for 10 years. That also like plays a role. You know, people kind of took me seriously too. And so me and our partnerships team, I think we were like kind of a great tag team. Mara who ran it is extraordinary, and we're able to honestly land like some pretty extraordinary deals. See, we had to get kind of creative with some of them, you need a couple kind of key features to stand out as a credit card. And I really think like it was the brands that helped us. But it was work. It was not easy. And we were hoping it was just the beginning. Once you have a lot of members or enough members and good numbers, I think honestly we could have partnered with anyone in the space. And we were in talks with you know, basically the most, the 10 most interesting health and wellness brands that everyone has heard of as we were approaching our no annual fee second card.
Shawn
Let's talk a little bit about acquisition costs. Did those come in where you expected or were those tougher to realize?
Derek
So, you know, there was a, our CAC numbers were pretty good, but we, it wasn't a perfect test. Our like largest investment in the beginning was actually in influencer marketing. We believed people would make, you know, would sign up for a credit card. The likeliest way for these members to sign up for a credit card was gonna be to hear about this credit card from someone that they already followed and trusted in health and wellness.
And so that was our like biggest investment. That's really hard to measure the like ROI and CAC on that. We also got very scared as we were frankly approaching, you know, in the early 2023, we were launching the card. We kind of saw that the market was really shifting. And instead of putting the money that we were hoping to raise a big round of money and then really put the capital into promoting the card, we started to get very, you know, like scared.
And so, we did all the same channels. We had the most effective channel, is my favorite channel always, which is content. We had created like a wire cutter for health and wellness products and services that was getting about 100,000 unique visitors a month, totally organically. That was the best ROI channel. We had this influencer channel that we partnered most like, the biggest partner of ours was Jonathan VanNess, which just coincidentally. His last name is Ness. We thought that was really fun and I don't know if we managed to convince him to come on board. He had a very big following. Melissa Urban from Whole30. We had a, you know, I think 30 in this program that we had created called Our Legends. And so, you know, they were promoting the card and that was working, but it's kind of a long-term, it's harder to sort of judge on the CAC. And then we also did some normal paid spend and that landed where we thought it would land.
But it was just the very beginning, you know, and then we kind of pulled back a lot of it. But what we saw was that the CAC was within where we were hoping to be, you know, a few hundred for a card that costs $399 in an annual fee. And then what we saw pretty quickly was that the people who did sign up, the average spend was well over $2,000 a month, and that was what we were hoping for. You know, that's like the dream, right? The dream is that people actually move their lifestyle, primary lifestyle spend to the card. And that just turned out to be true. We were just right about that. The people wanted to use this beautiful card. They were rewarded meaningfully for their health and wellness purchases and also willing to put a lot of other spend on the card because of the experience, because of the customer service, because of the brands associated with it. And so all that felt like, like we were really getting all that part right, at least.
But I don't think ultimately on the CAC, we were able to do like a perfect test. And by the time that we were kind of in market trying to fundraise, you know, that it was looking not very likely. trying very hard to like preserve cash all of a sudden, you know.
Shawn
Yeah. So talk to me about that experience. So it sounds like you went out to raise another round. The interest wasn't there. When did you reach the point where you said it's time to shut down? And how did you get through that process with the board and with the original investors?
Derek
Yeah. Well, first I just want to like, it's been about six months since we formally shut down and I frankly haven't talked a lot about it. You know, so it's nice and cathartic to actually talk about it because frankly, it's heartbreaking. You know, it's heartbreaking. Look, nobody should cry for like a venture capital founder that raised a ton of money and spent it and like to build something cool and it didn't work. Okay. So like, I'm not asking for any pity.
But from a personal perspective, I convinced all these extraordinary people to spend two or three years of their lives building this really special product, deeply dependent on the financing partners. And I spent two to three years of my own personal life. I have two young girls now, like my family's time to build this special thing.
And it is, yeah, I mean, heartbreaking, disappointing that the thing you built just isn't the right thing anymore. You know, like you can control so many things. I think we did so many things right, frankly. Look, there was a lot of things, and we can get into that, all the things I think we did wrong. But I think we did a lot of things right. And in a normal financing environment, I think we would have had no problem at raising a lot more money to like give that a try, you know, truly, but it was not a normal financing environment. And the timing in some ways couldn't have been worse. You know, we were supposed to launch the card in early 2023. In 2022, the entire market fell apart. And in early 2023, nobody wanted to invest in anything, you know, much less $50, $100 million in a capital intensive fintech business. We kind of knew that that was going to be the case. Like I remember, you know, we're hoping all it takes is one, you know, check, to like for the rest to come together. And we were trying to find the right balance to be frank between, you know, how much do you say, hey, we're going to go all out in a sprint and continue down our path in the hopes of finding the one investor that will, you know, buy into this versus pivot, shift what you're doing and try to do something else before you run out of capital, essentially.
And I think we were very mature about those decisions. We were very thoughtful. We had two basically like rounds of layoffs essentially. One was where the whole team got together. We decided we were just gonna keep trying to build what we were building, continue to gather data, but do it with like the minimal amount of people necessary. People volunteered to like step off. You know, it was pretty extraordinary honestly. Still, you know, tough, but it was kind of like, look, we need to be a lot leaner to really like get into the conversation. And then when that was not working, we cut the team to be much more lean and started to talk about how we can pivot it to something else.
And we actually got pretty far down the path of pivoting the business away from being so consumer focused into being B2B focused. Maybe not a shocker, but we started to pitch all these insurance companies on becoming their co-branded cards. So the idea being that yes, these insurance companies might not care about using their money to increase your long-term health and wellness success, but they would totally love to offer you perks and benefits from these brands. Plus HSA dollars and other benefit utilization is something they want people to do. And so we actually got pretty far with four insurance companies you all would have heard of, including one who actually committed to leading a round of capital in us. This was it! Like our Hail Mary was working and we were gonna make it. And then at the last minute, basically they pulled out and it was over. They knew we had nearly no money left. It was a strategic corporate decision. It wasn't the people we were working with. They really wanted to do it. It just felt like the rug was pulled out from under us after a really tough go of trying to make things work. And it was a real bummer, you know?
And then the problem with credit card is you can't just like sell it off in parts because you've got a bunch of people who were using it and our bank had to step up in a really tough situation where, I mean, there was a lot of stuff that happened. Basically, our primary debtor, the person who was underwriting all the people's receivables took over the business and seized all of our assets to try and recover things. Again, it was a weird market at the time. And so we had no more assets left. Basically the minute this big partner pulled out, everyone started to like, vultures came, and tried to grab as much as they can. People who were frankly left with like the worst part of the hand that was dealt were my team and me. I was okay, but my team and also the bank who had to step up and try to make the best for members that are ultimately theirs. And they really did. I mean, we were lucky enough to work with a partner we loved.
Shawn
Who was that?
Derek
The Bank of Missouri. I couldn't recommend them more highly. They were an extraordinary partner to us. And it ended in a way that I think was really unfair to them basically, and I'm very sorry about that. And like truly like in the sense of like I'm like deeply personally very sorry about that, you know, because I don't think they deserved it. And then, you know, we're all left like, you know, trying to shut down the business and pick up all the pieces. And that was scary and strange, but ultimately an extraordinary learning experience. But it is what happens when you go all out and you swing big and you miss.
Shawn
Yeah, you mentioned that you grew a mustache as part of your emotional coping and taking control again. So other than growing a mustache, what are you up to now?
Derek
That's mostly, I'm spending most of my time focused on the mustache, Shawn.
Shawn
It's worth it. It's showing.
Derek
Along the way, I, well, you know, like people forget about this, but like that was my job. You know, it was the startup. And, and believe it or not, my wife did not want me to jump right into starting another company. And plus you have a lot of like emotional.
It's a very emotional process. There's a people part, there's a vision part. I'm still mourning really the loss of Ness, which I think, again, with a different timing and a different situation could have been all the things that I hoped it would be. I think we were ultimately right about our vision and I don't regret the approach we took. Again, there are many things I would have done differently and I take responsibility for the outcome.
Ultimately, you know, it's like on me and my shoulders. But it's hard and it's heavy, and I was not ready to like go do something, you know, after that. Plus, I'm still winding some parts down. And so I fell into doing what I had done in between my first company and Ness, which was consulting.
Along the way over the years, I've become sort of this, frankly, like full stack health and healthcare marketer. I've basically done every type of marketing. And whether that's, you know, like, out of home advertising on vans in rural areas, or whether that's direct mail, I've basically done everything now. And a bunch of friends who run healthcare companies ask me for help. And so I've been mostly working with a bunch of different, you know, all very, very exciting five or six amazing health and healthcare startups to help them go to market.
So that's been taking up my time for now. And frankly, it's been a nice change of pace. And I'm making more money from that than I made from Ness, believe it or not, which isn't hard to say. But I'm excited to get back into the fray, frankly. I'm probably gonna need a little bit more time.
Shawn
That's how that works.
Derek
Last time it took me 18 months. I think this has not changed any way that I perceive, it's not changed my confidence about and excitement to try and swing big again and work on that mission that we started with that I feel deeply about, which is making health and wellness more accessible and affordable for more people. I think that's never been more important than it is today. And I think more opportunities, especially with like, you know, Generative AI and some of these like really exciting trends. I think there's a lot of really exciting stuff going on. Right now I'm just trying to help and support where I can, but I'm excited to get back in the mix again in the future.
Shawn
So as a final question, I want to ask you, what lessons will you take into that future role?
Derek
Yeah, I think there's a lot of value into seeing things work and not work. Sometimes when things work, you know, you start pretending like you're so great and you were right all along. It's very humbling to think you were right a lot and still turn out wrong. I think a few things. First, I don't think ultimately I appreciated how difficult the credit card model was. Frankly, like I know that sounds so silly or stupid in some ways, but you have to understand I had like every smart person in the room, you know, with me. And I'd like to think I'm plenty smart too and understood the model very well. But it's a very tough model, a model that I wouldn't recommend to anyone, frankly, try to take on without a business that is working so well already that you can fund it for many years and have a consumer base to start it with, or extraordinary partnership or backing in terms of capital or like a bank partner. I don't think consumer driven, I think Bilt is a very odd exception that basically got all the timing right. Again, I think Ankur and that team have done a pretty amazing job, but they basically got lucky, you know, from my perspective, I think their timing was really right, right? They were able to build, you know, a year or two before us, were able to build enough to get Wells Fargo to partner with them at a moment in time that was very unique to them. Wells Fargo, I mean, I'm blown away by what they've done, but there is no other examples that I can think of. And in fact, if you need any proof that consumer cards are hard, like look at Apple Card, where Goldman Sachs trying to get rid of it. I think that was the wrong path to take, frankly. And in retrospect, that was probably me just being stubborn and feeling like it could work, feeling like I could raise the capital to make it work. But ultimately, I think to have seen through and accomplished our mission, we probably should have to frankly taken another different form factor.
I think one tied to fintech, but probably not in the form factor of such a capital intensive, such an odds stacked against you situation. That's a big learning. I mean, I think we did a lot again, I think we did a lot right. Like the team was extraordinary.
We probably should have pivoted sooner. You know, we were hoping that the market would change. I think we knew what the kind of business we had and the response that we would have. And so we kind of, again, maybe this was stubbornness, you know, like this is one of those things like, you do the Hail Mary and you hope that it, you know, the guy catches it at the end.
We probably should have reacted quicker to the market changing, been a little less frankly optimistic about it shifting and improving and instead taken kind of taken quicker, more decisive action in a way that would have allowed us more time to pivot into a different model and potentially have saved the business. Again, hindsight is 20 -20, but I do think the timing is something that is very hard to predict.
And there were as many people saying, it's going to be like this for 10 years, as there were people saying, I think it'd be better in six months. And so we chose to assume it might be better in six months and we were wrong, right? So again, that's the way it works. But I don't feel like I made any mistakes around the people that I partnered with. Frankly, anybody, the people we hired and the people on my team, best in class, our investors, extraordinary. Every one of them amazing, so like supportive and...understanding at a time when like this was, you know, this was a loss for many, I mean, all of them, but also like, you know, it's like not easy, right? When you make these bets, but they felt like we communicated, we took their opinion, we listened to them and they, a lot of them really helped along the way. I'm sorry, it didn't turn out the way it should have, but you know, and then even our partners around, whether you talk about the merchant partners or you talk about the partners across the app credit card stack, really, I think we worked with best-in-class people and best-in-class partners. And so, you know, it's about piloting the ship too in the right direction.
Shawn
Yeah, and it's a roll of the dice at some point. Well, thank you so much for sharing your experience. Yeah, I think everybody loves to talk about the wins. Everybody loves to make a eight-part series on the dramatic failures, the FTXs, the Theranoses. But listen, we all know that there are more failures in this space than there are successes. And I really appreciate you opening up. I guess if you got some catharsis out of this, that's a win for all of us. All right, you can follow Ensemblex and Derek Flanzraich, that's D -E -R -E -K -F -L -A -N -Z -R -A -I -C -H on LinkedIn. You can also visit us at Ensemblex.com and you can find The Ensemblex Exchange Podcast on all major platforms. Thank you for listening.