Plaid’s billionaire co-founder is back with a new startup – a fintech-friendly bank he runs with his wife

In 2019, Plaid, a San Francisco company that connects fintech apps to customers’ bank accounts, climbed the ranks of startups. It had already become one of the ten most valuable fintechs in America with a valuation of $2.7 billion. But in June of the same year, William Hockey, the company’s co-founder and CTO, made a surprising move. With little public explanation, he left his leadership job, although he remained on Plaid’s board.

Today he gives a belated clarification: he left to start a new business. “I love to build. Plaid is an absolutely fantastic company, but it’s a big company with well over 1,000 people… It’s a different style of running than building something from scratch.”

William Hockey and his wife, Annie Hockey, both now 32 (they happen to share the same birthday), are the co-founders and co-CEOs of Column. It is a technology-focused, federally chartered bank that aims to make it easier and faster for other companies to offer financial services. The pair spent the past three years quietly building the startup, personally paying about $50 million in 2021 to buy Northern California National Bank, a 15-year-old bank with a retail branch in Chico, Calif., and about $300 million in deposit. The purchase allows them to offer a more complete set of services that fintechs typically get from multiple financial institutions and software providers.

Before starting Column, Annie Hockey worked in marketing at tech startups, earned a Stanford MBA, and was a consultant at Bain, where she helped private equity firms conduct due diligence on retail companies they wanted to buy. At Column, she manages the regulatory, legal and human resources in the business. She says her consulting experience taught her financial modeling and how to quickly learn new industries. “That [skill set] can be used for any company, especially a bank on the regulatory and legal side. I just read the textbook and I talked to everyone I could about banking regulation.”

William was also a Bain consultant before becoming an entrepreneur, but he didn’t overlap with Annie there – the pair met through a mutual friend in 2013. He leads product development and sales at Column.

“Annie is the boss and CEO of half the business and I’m the boss and CEO of the other half. Having this really clear demarcation is critically important, says William. “We’re pretty manic about deciding in advance of any project who has the decision,” adds Annie.

They are taking an unusual approach to funding the San Francisco startup. “We haven’t raised venture money and we probably never will,” says William. “The hyper growth, raise a lot of money, hire as many people as possible [approach] … I don’t think it’s the right style for something like this.” Some federal regulations also make it difficult for VC firms to invest in chartered banks, because the investors may then be required to comply with various banking regulations. So Column is wholly owned by the founders and 60 employees.

To finance Column, William has sold some of his private Plaid shares through secondary share sales. Forbes estimates he still owns 12% of Plaid and is worth $1.4 billion. (The company was valued at $13.4 billion in an August 2021 fundraising, and Forbes gives a 10% discount on private company assessments.)

The problem the Hockeys are trying to solve is that fintechs and big technology companies often need to weave together a patchwork of financial services partners to offer basic products. They need a chartered bank that can hold deposits and a separate “middleware” software provider to connect the chartered bank’s systems to their own technology. Then they need a bank “core processor” to actually move money. “Having worked in this area for almost 10 years, this supply chain is a bit silly,” says William. “All this should be consolidated into a chartered bank that is also a technology company.”

In its strategy and marketing, Column caters to software developers who build financial services, following the model of companies like Plaid and Stripe that have had so much success wooing engineers. Almost every page on Column’s website displays code that can be used with the application programming interface, or API.

Among Column’s current clients are debit card startup Plaid and corporate credit card company Brex. “One of the things we learned after working with many banking partners over the years is that some banks are a little better, some banks a little worse,” says Brex CEO Henrique Dubugras. “But at the end of the day, they’re all using the same technology on the back end … And that makes it very difficult for them to build innovative products.”

Column offers services such as holding customer deposits, processing bank-to-bank transfers, making bank transfers and lending. As a software-as-a-service company, it charges fees every time one of its customers uses the API for a transaction. And like a bank, it makes money on loans by charging origination fees and interest. In 2021, it earned $9 million in net interest income, largely a result of the deposits Northern California National Bank had accumulated before Column bought it. (Northern California National Bank earned $8 million in net interest income in 2019.) Hockey declined to share Column’s transaction-based revenue, but he says the company is profitable if you don’t factor in Northern California National Bank’s ongoing depreciation charges. acquisition.

So far, Column’s clients have been “multi-billion-dollar” financial services startups, says William. Now it is pitching its products to smaller companies, including startups that have raised “Series A” venture funding and have less than $1 million in revenue.