Today’s Menu ☕️

• Fintech Tech Breakfast Club Feb 13th (NYC)

• AI/ML Leaders Tech Breakfast Club Feb 19th (NYC)

• El Segundo Tech Breakfast Club Mar 5th (LA)

• SF Tech Breakfast Club March 13th (SF)

• NYC Tech Breakfast Club March 19th (NYC)

• Citrin Cooperman (Accounting/Tax)

• $2.3m VP of Product Job Post (Twill)

• Eli Wachs on building Footprint into a KYC Juggernaut

👋 Hi, Breakfast Club Members!

Thank you Tom @ Citrin Cooperman for sponsoring today’s edition. Tom works with fastest growing tech companies on tax/advisory

I hope you’re recovering from what many are saying was the most boring Super Bowl of all time. As an Eagles fan, it felt really really good. To give you something to look forward to I’ve posted a bunch of new tech breakfast club sign up links.

This week I’m in New York for Fintech Tech Breakfast Club - if you’re building or investing in Fintech, come join Parker Odrich (Comunitas Capital) and Topher Price (MS&AD) as we celebrate what makes NYC great (Fin Tech).

Also, next week in New York, we’ve got the critically acclaimed ML/AI Leaders Tech Breakfast with Baseten. Founders are welcome to that but you’re not allowed to recruit any of the cracked dev’s from growth stage companies also in attendance (sorry).

Scroll down to get up to speed on Footprint as I chat with Eli Wachs about the future of KYC and identity. I’ve watched the Footprint team go into hyperdrive these last twelve months - it’s truly impressive what you can build when you have deep domain expertise.

Resources:
-Clerky offers a $100 discount for TBC Members on their formation packet. Reply to the newsletter and I’ll send you an invite
-Fixing the YC SAFE: Reply to the newsletter and I’ll send you a redline for the YC Postmoney SAFE that can save founders millions in dilution
-Ramp is offering a $500 bonus to TBC members when they start using Ramp.

Tech Breakfast Club Events

Fintech Tech Breakfast Club (NYC) Feb 13th
Cohosting with Parker Odrich (Communitas Capital) and Topher Price (MS&AD). Come join if you’re building or investing in Fintech

AI/ML Engineering Leaders (NYC) Feb 19th
Cohosting with Baseten and celebrating some of the smartest AI/ML engineers and CTO’s in the city

El Segundo Tech Breakfast Club
Cohosting with the legend, Isaiah Taylor, and the rest of the Valar Atomics crew. We’re celebrating some big news so come join!

SF Tech Breakfast Club March 13th
Cohosting with the absolute menace, Jack Raines (Slow Ventures).

New York Tech Breakfast Club March 19th

Tech Breakfast Club 🤝 Citrin Cooperman

Meet Tom, Partner and co-leader of the Technology practice at Citrin Cooperman

Citrin Cooperman handles tax and advisory and it has a huge footprint - it covers all industries, but you focus on Tech. Tell me about the clients you work with
Generally our clients are SaaS developers, other software developers, digital media companies, data analytics companies, FinTech, AdTech, to name a few.  They’re VC-backed or intend to raise outside capital.  We work with pre-revenue start-ups all the way up to our largest client, which is about a half billion in revenue. Our clients tend to be growth-oriented and extremely dynamic, so they often deal with business, accounting and tax issues earlier on in their life cycle, including state and local tax issues, international tax issues, accounting for complex equity transactions and valuation matters. Other issues that we work with our clients on include revenue recognition matters and accounting for software development costs, from an accounting perspective, and Section 382 and 1202 stock from a tax perspective.

Usually, founders are so focused on the product and then go to market, financial housekeeping isn’t a priority. Maybe the thought is that they’ll get to the next round of funding and bring in a CFO to clean everything up
Exactly, a lot of founders are very cost conscious early on, especially if they are a first-time founder. Many resort to bootstrapping as a way to reduce costs until they start generating revenues. We help by customizing our services to meet the needs of early-stage companies, while maintaining flexibility to tap into the full expertise and resources of our firm as they grow. This allows us to become the trusted advisor from day 1.  

What does that mean? How do you actually work with early-stage startups?
We offer a fixed-fee program for early-stage companies that includes business tax return preparation, outsourced bookkeeping, and access to advisory services like the R&D credit and QSBS. The goal of the program is to provide guidance on issues that many early-stage companies may not have the answers to or know how to handle. In other words, we’re here to help them get their “house” in order. We've found that there are often key missteps at this stage that can lead to costly and time-consuming clean-up if not addressed properly from the start.

We’ve designed it to be as simple as possible, bring us in at the beginning so you can focus on running your business or - “focus on what makes your beer taste better”

Hah, I like the Jeff Bezos AWS reference and there’s definitely some similarities. Basically, it’s like infrastructure for running your company. 
You’re trying to build an incredible company. Any part of your brain that’s worried about tax compliance or how to maximize tax credits in multiple jurisdictions or company structure, or should we be recording this as a debit or a credit, that’s taking away from your core mission.

If people want to chat with you or learn more about Citrin Cooperman, what should they do?
Feel free to connect on LinkedIn or email me at [email protected]

Also, check out Tom’s upcoming webinar on Tax Strategies for Tech Companies

Get Paid $5k for referring talent through Twill

Hey - so you’ve got a sick network. You know all the best engineers or maybe you know all the best marketers. Maybe you’re the friend who is already finding all of your other friends new jobs already… except you’re not getting paid for it. Well, that should change. You deserve compensation and Twill wants to pay you.

How does it work? Well, take this job posting for example:

[ Name Redacted ] is looking for a VP of Product Management with 10+ years experience in advertising technology AND 10+ years in product management. It's a hybrid role in San Jose or New York and the comp is... $1.5M-$2.3M. 

Okay - so you know someone who might be a fit?

Signup for Twill here and submit the referral.

If your friend gets the job, they’ll owe you big time. And Twill will pay $5k.

And if you don’t know a perfect fit for this role - don’t worry. Twill has dozens of other open roles you can help fill. Apply to Twill and start earning $$$

Eli Wachs is crushing KYC

I never thought I would be excited about onboarding but that’s because I hadn’t met Eli Wachs, cofounder of Footprint. I’m kicking myself for not seeing Footprint earlier and investing. I spent an hour chatting with Eli and had to do everything in my power to not beg him for some secondaries.

Eli, okay, so a lot of readers will be familiar with Footprint, but for those who aren’t what’s Footprint? And what’s the vision here?
Footprint is an identity company. We help companies like fintechs, financial institutions, car rental platforms and real estate platforms onboard, verify and authenticate their users. 

There are a lot of companies in this identity verification space but I think the math game they are playing is very flawed.

What do you mean by that?
Fraud, risk and identity companies typically sell you on their ability to find every bad actor. There’s an infinite number of bad actors. Anyone can buy, create or steal real or synthetic identities. You can buy 50 of them on the dark web for $25. It is impossible to block a potentially infinite number of fraudsters but there are a finite number of people in the world. 

So, the idea behind footprint was to create a company to find and label good actors. Everyone is looking for needles, let’s instead just harvest the hay. To us, that was the most scalable way to actually solve fraud on the internet.

What is the actual process of labeling good actors like? Why haven’t others done this?
Our goal isn’t to catch more fraud then anyone else, our goal is to eliminate it. There are more fraud tools now then ever, but fraud on the internet continues to reach record highs. These tools are not working because of what we highlighted before. So we need to label good actors. 

Labeling good actors unlocks this notion of portable identity. When we verify users, we securely vault their information and set up a reauthentication method. These three things, verification, vaulting and authentication, allow us to treat identity as more ongoing, rather than a single point in time like many other providers. Each Footprint Vault grows with your users, enabling continuous identity assurance and trust-building over time through configurable identity challenges, revalidation, and progressive data enrichment.

Portability is challenging though because you need to be highly confident in the initial verification. So rather than just checking information against a database, Footprint marries together traditional risk and fraud capabilities with identity orchestration. You can deploy sophisticated identity orchestration, custom data collection, and dynamic fraud prevention with five lines of embeddable code. And get complex verification results in clear, actionable, easy to understand formats. 

What do you mean by marry them together?
Traditionally in the onboarding space there are a couple of problems people are focused on:

1. How do we create a beautiful user experience to speed people to their ah ha moment?

2. How to we conduct KYC to keep our banking partner happy?

3. How do we block bots who are trying to onboard?

4. How do we block fraudsters trying to onboard?

5. How do we set up auth to let each good actor sign back in?

These problems have been solved with disparate point solutions that do not talk to each other, require separate integrations and result in a clunky user experience. 

All of this leads to a drop off in conversion rates, ineffective fraud prevention and wasted internal resources. 

With Footprint, we combine these solutions giving you a tool with immense power but simple enough to not require a user manual. If you wanted to just collect SSN for people who seemed to be good actors, but collect ID documents from people who displayed suspicious behavior, like they copy and pasted they SSN, you can set that up in Footprint with one no-code change to the rules engine, and it will automatically be live in production. 

I’m sure you get this a lot – why hasn’t someone already solved this? Or what happens if Stripe does this?
Portable identity has definitely been attempted before but I think people have failed for a couple of reasons. First is just the technology was not advanced enough yet. We spoke earlier that portable identity really means 1) verification, 2) vaulting, 3) reauth. The verification piece has been fairly solved for a bit. The vaulting is another story. 

Vaulting this kind of sensitive information, hopefully for everyone in the world, is a very big deal and needs to be handled with the upmost focus. We did not feel like traditional encryption methods were adequate. But over the last decade, some industry leaders were hard at work designing the primitives that make up today's landscape of confidential computing. Companies like Intel who built SGX, Apple with their Secure Enclave, and Google’s Titan chip have laid the foundation for building truly isolated computing and key management systems to protect users' confidentiality and privacy at its core.

Until recently, technologies on the cloud/server side have been somewhat lacking the same kinds of guarantees of isolation we get on personal computing devices.Then a couple of years ago, Amazon launched Nitro Enclaves on select EC2 machines that provide isolated compute environments that are designed for processing highly sensitive data. We thought this made the vaulting possible for the first time. 

The last part is authentication. I am blessed that my co-founder, Alex, has spent his career in authentication, so I didn't have to think about this part too hard. Alex’s first company was an Auth company that was bought by Akamai before FIDO2 was put into effect. Alex was a member of the FIDO2 Alliance when they decided on Passkeys as the unified standard. 

Passkeys are cryptographic keys, where the private key is stored on your device and the public key on whatever website or application you are authenticating in. Passkeys not only leverage strong cryptography, but do so in such a way that is virtually unphishable and uncrackable by most adversaries. Don't take our word for it — Webauthn (the protocol behind Passkeys) virtually stopped all phishing attacks at Google. We're excited to bring them to more companies and people.

Many of the ideas behind Footprint are not new — but there are certain technologies like Passkeys which only recently took flight — that are crucial to making Footprint improve the status quo and not hurt it. 

And now of course you have large companies like Plaid and Clear trying to capitalize on portable identities. It’s funny that you mention Stripe. Footprint wouldn’t exist without Stripe. 

How so?
So Alex (cofounder), he’s a brilliant cryptographer. He paid for his MIT degree with the profits from an app he built in high school and then studied under Shafi Goldwasser, the inventor of the zero knowledge proof – Alex did his masters about NLP on encrypted patient data. Then, as I said, he started a mobile auth company that he sold to Akamai. After exiting, Alex was looking around for what to do next and Stripe had just launched their identity product. He thought Stripe was going about it all wrong. He emailed Patrick Collison but didn’t get a response back. Undeterred, Alex tried to reach out to Patrick through an MIT friend at Stripe. The friend was like I can’t get you a meeting but you should talk to Eli who is interested in the same idea.

Wow, so if Patrick had been a little more responsive, Footprint wouldn’t exist?
Haha, yeah, so when VC’s ask what if Stripe tried to do this, I get to say that I’m grateful that Stripe built their identity product the way they did because otherwise I wouldn’t have met my cofounder. But, yeah, it’s been a dream building footprint with Alex because of his deep background. 

You’ve raised a solid amount of VC funding for Footprint -
Index led our seed round in 2022. I actually met the folks at Index through my college roommate, George Sivolca, founder of Hebbia. We were both working on ideas senior year of college. George, I guess, is smarter because he was focused on agentic workflows. But George recommended Shardul (Index Partner) chat with me and we hit it off. 

Shardul, super smart – he had a huge win with Datadog, too.
Yeah, so Shardul told me to quit my job and take two months to find a cofounder. And then we did our Series A last year with QED and have raised $20m total 

I’ve been impressed with how many different industries Footprint works with – consumer fintech is kind of the obvious fit but you’ve also found that Footprint works well with like car rental companies...
We have a weird product market fit curve where we work well with startups and large enterprise companies. We’ll have a big announcement later this quarter with one of the largest financial institutions in the country. 

But we might not do well, at least right now, with late stage consumer fintech companies that might have built something in house. We won’t automatically be 10x better than what they have until portable identity is fully realized.

With the large enterprise, legacy companies, they may have built their system 20 years ago. We come along with a comprehensive tool that allows them to fully rip out what they cobbled together and replace it with a seamless system. 

The biggest enemy we’ve found is just human tendency or inertia. If you’ve used a certain interface for a decade, you’re hesitant to replace it even if there’s a better option. Interestingly, if you look at a lot of pre-IPO companies, they have a ton of people who have been there for a decade. But with large enterprises, often they’re bringing in new people to take ownership of these products and because they’re new, they have more willingness to switch. 

I’ve heard some rumors there’s a fake ID printer in the Footprint office -
It’s true – My old fake ID performed pretty well on a bunch of consumer fintech onboarding processes despite having a completely fake street, so we got a machine to make fake ID’s in house. We’re serious about dogfooding our own product and the fake ID technology has gotten scary good. You can [  redacted ] and then just [ redacted ] and it’s super effective. 

And we’re always thinking about the P&L of a fraudster. If it’s going to be much more expensive for them to commit fraud when a company uses Footprint, they’re going to go somewhere else. 

Yeah, you must see some pretty wild scams out there.
This one isn’t fintech specific, but there was a group in the southwest effectively kidnapping native americans and holding them hostage under the guise of addiction treatment and were raking in money from the government. Fraudsters will also target the homeless and pose as social workers to collect data at homeless encampments and turn around and open accounts. 

One of the more entertaining cases we’ve come across was when a company started using Footprint (they switched from Plaid) and were having a massive issue with duplicate fraud. We were able to clean it up in like two weeks. There was one fraudster who had maybe 60 different accounts on the platform – we fully blocked them from the platform. He had the nerve to email me to ask to be unblocked. 

That’s absurd. Wow, incredible stupidity or confidence – maybe a mix?
Yeah, and as funny as that is, it's important to remind yourself of the real-world consequence of fraud. The elderly are disproportionately the victims of fraud and there’s a shame that comes with being scammed so we don’t hear about it as often as we should.  

Before you go, what other NYC FinTech companies are you excited about?
Well, I have to shout out Fizz. We share an office with them and have a front row seat to the amazing work they’re doing building a debit card for students so they can graduate from college with a healthy credit history. It’s a tough space but Carlo, the founder, is the guy to do it. He came from Germany to the US for college and had a tough time getting established without any credit history so the mission to him is personal. 

And I’m also impressed by Wingspan – they’re marrying embedded payroll for contractors within financial tools for the contractors. It’s such an interesting venn diagram they’ve created of tools they’re replacing. And I love anything that empowers people and gives full ownership of their paychecks in a non-predatory way. 

But most of all, I think I’m excited about New York. Post covid it’s no longer just a place to build a FinTech company. You can build any tech company you want here. 

About Morgan Barrett:
Morgan is the creator of Tech Breakfast Club. He hosts breakfast meetups in NYC, LA, SF, (and occasionally Austin, Miami, Boston) that bring together the best founders and investors.

Morgan is also a Startup Lawyer at Optimal, an elite lean boutique startup law firm repping clients funded by a16z, Sequoia, Kleiner, Accel, and countless other VCs. He works with clients from formation to exit, in collaboration with Optimal’s partners.