Interview with Samir Rao, Early Finance Hire at Chime

This article is part of a series revealing the stories of early employees from the most successful tech companies of the past few years. You’ll walk away having learned about what these individuals experienced, what they wish they knew, and the advice they’d give to others joining high-growth startups. Key takeaways are at the top and you can find the full interview below. 

This interview is with Samir Rao. Samir was the CFO’s first finance hire at Chime, joining in 2017 shortly after their Series B. Chime is now valued at $25 billion and has tens of millions of customers. Below is an edited version of a conversation he had with us here at Compound. 

Note: If you’re looking for an all-in-one solution to manage your personal finances, Compound can help. We can help you diversify concentrated stock positions, optimize company equity, plan asset allocation, and more. Request access here and we’ll be in touch.

Key Highlights

• On enabling collaborative decision-making – “I attribute this to our focus on analytics from the beginning (and is something I now look for when joining a new company). From inception, the analytics and data infrastructure at Chime was a key operating muscle. Melissa (our head of marketing and analytics) had built this incredible infrastructure and had hired an actual rocket scientist as our data engineer. There was so much investment in it and this was at the Series B or earlier, which allowed everyone to access and analyze data without having to know SQL or complex data analysis. ”
• What Samir was most proud to work on at Chime – “One thing I did was help quantify tradeoffs between different outcomes in simple ways by building a unit economics framework. It was a single unified decision-making tool for evaluating and proving return on investment for key decisions. This enabled us to, for example, turn a product decision into something that would normally be based on intuition and instead rank the options based on the highest return on investment.”
• On what the unit economics framework enabled – “One of the other use cases was to evaluate whether we could offer a free overdraft product to our members. It wouldn’t have been approved by a traditional finance team – we didn’t charge anything (except for an optional tip) and it essentially advanced money to folks who were already at a zero balance. In theory, it was providing money to people who had no ability to pay it back. It was relatively high risk and had no guaranteed revenue, but we knew this was incredibly valuable to our members. [...] Using the framework we were able to justify a product that never would have been otherwise approved.”
• A framework to evaluate the upside of company equity – “To estimate the upside, you can do simple top down and bottoms up analysis. Top down would be looking at competitors in the space and see how big they are or how much they’ve been acquired for. Bottoms up would be looking at financial metrics or growth rate and assessing how much confidence I have in the business to grow a certain amount. I don’t get too in the weeds here but it can be a good gut check.”
• On considering selling shares in a tender offer – “One other thought: coming from the Finance side of things, if a company holds a secondary sale for their employees, the company is usually fine if the employees sell some shares. It’s not necessarily viewed as a loss of trust in the business or a suspicious action – your company understands that it’s a financial decision and that even if you believe in the company long-term, you still might want to diversify or use the cash to do something like buy a house or support your family. There’s no requirement from the company to keep all of your eggs in one basket.”

Walk me through your background and how you first found out about Chime

I started my career in investment banking right after graduating from Duke. My likely controversial recommendation is still for people to start their career in investment banking. While it was hard and had long hours, it provides a foundational skill set in financial analysis and structured model frameworks for anyone who wants to go into business.

Unlike some of my colleagues, I had gotten a taste of the startup life before banking: in college, I was an intern at a gaming studio venture accelerator. It was a chance to do everything from competitive analysis to deal models to market research (essentially playing video games). I loved the creativity and the chaos, and always wanted to find a way to do that again, and so when I decided to leave investment banking I knew I wanted to get back into startups.

Before Chime, I first joined this other startup called Sift Science, a machine learning based fraud prevention SaaS startup – I had joined as the first finance hire and had an incredible first startup experience in building a finance function. After a few years, I stumbled upon this little company called Chime on AngelList right after they raised their Series B. The CFO was looking for their first finance hire and thought my startup experience could be useful.

What really convinced me to join was the team. It was still under 30 people that the interview panel was just the leadership team. Everyone was impressive – the CTO has scaled userbases to millions, our CEO was this fintech veteran, and everyone else either had incredible startup experience or deep fintech expertise. It was clear that if anyone could take on this challenge it was this leadership team. 

What rituals or traditions did Chime follow early on that might seem ordinary but had a big impact on your success?

From the beginning, Chime was incredibly collaborative with our decision making. You might think that wouldn’t work (“too many cooks in the kitchen”) but we were frequently able to align 10 stakeholders on a decision in a day or two and get the best of many perspectives. 

I attribute this to our focus on analytics from the beginning (and is something I now look for when joining a new company). From inception, the analytics and data infrastructure at Chime was a key operating muscle. Melissa (our head of marketing and analytics) had built this incredible infrastructure and had hired an actual rocket scientist as our data engineer. There was so much investment in it and this was at the Series B or earlier, which allowed everyone to access and analyze data without having to know SQL or complex data analysis. 

This meant that from the early days we were all talking about KPIs in the same way. We knew what we cared about: revenue, number of users, direct deposit conversion. Our bi-monthly all-hands were steeped in these metrics. We were incredibly transparent because the more teams know, the more they can contribute. 

Was there ever a moment you were worried Chime was going to fail?

It wasn’t necessarily a time that I thought we were going to fail, but there was one really intense moment when I wasn’t sure we’d succeed. There was a time where we had a technical outage that caused our website, app and phone lines to be down for a period of time. 

It was short in absolute terms – maybe a couple of days – but everyone was in the office the whole time. Every department had a critical task. The CTO and engineering team were trying to diagnose the issues and resolve them, the member experience team was lining up communications, the finance and analytics teams were working on metrics and reporting both for the team and for investors. 

Eventually we got everything running again. As hard as the moment was, it was an inflection point in the business. We fully realized that we were an essential part of our members' lives – it was a utility for them. They really depended on us and we couldn’t take that for granted. I was really proud of our team. 

What are you most proud of to have built at Chime?

The best thing that the strategic finance function did was build tools so that non-finance stakeholders could make financial decisions. As I mentioned, we often had many decision makers involved. To avoid decisions being made based on intuition, tenure, or whoever happened to have the loudest voice, they were made with data. 

One thing I did was help quantify tradeoffs between different outcomes in simple ways by building a unit economics framework. It was a single unified decision-making tool for evaluating and proving return on investment for key decisions. This enabled us to, for example, turn a product decision into something that would normally be based on intuition and instead rank the options based on the highest return on investment. 

It helped us answer questions like, what is the payback period for certain investments? What does the lifetime value look like for these customers and how does that relate back to our acquisition costs? How does the outcome of this A/B test relate back to what the product can achieve? It went beyond pure costs or pure margin and really thought about value. 

It was first used during a complex potential partnership deal. Everyone contributed: the business development team helped with the initial structuring, the risk and growth teams provided key inputs on a go-forward basis, the product team helped to pressure test the model and our analytics team helped systematize the inputs. Eventually, we distilled this complex financial analysis into a simple trade-off analysis based on how the member made certain decisions in the app (spend, withdraw, save), and we could estimate the value to Chime and the value to the partner. 

One of the other use cases was to evaluate whether we could offer a free overdraft product to our members. It wouldn’t have been approved by a traditional finance team – we didn’t charge anything (except for an optional tip) and it essentially advanced money to folks who were already at a zero balance. In theory, it was providing money to people who had no ability to pay it back. 

It was relatively high risk and had no guaranteed revenue, but we knew this was incredibly valuable to our members. It was one of the biggest issues that we had with traditional banks who would either decline those transactions outright or allow members to go negative but then charge a hefty fee. We wanted to do it without any required fees. 

Our model helped balance the cost of providing a service against the benefits of reduced customer acquisition cost. Using the framework we were able to justify a product that never would have been otherwise approved.

When you joined Chime (and other startups), how did you think about negotiating your offer?

Generally my framework for compensation negotiation is that you should think about the value that you are providing, rather than what you’d personally be satisfied with. You wouldn’t want to negotiate against yourself just because you’re satisfied with something less than what the role requires. 

One thing that I wish existed was better salary information. The employer will have good data around salary bands and the tradeoffs between cash and equity at certain levels of seniority, but these databases are really expensive and not typically accessible to employees. They often gate compensation behind connecting HRIS platforms, something an employee doesn’t have access to. While some data exists largely for engineering and product roles, there’s little available to business employees. It’s definitely an area of opportunity for startups (and Compound!).

How do you determine what stage of startup to join? How does valuation play into that decision?

For me it’s a combination of the role and the valuation. 

Something I’ve learned about myself is that while I have had the opportunity to join companies at the very early stages, I like to come in after the foundational finances have been built (basic accounting, initial financial forecasts, etc.). The work at this point is a lot about optimizing and improving the unit economics with the power of growth and commercial negotiations at scale, which is the type of work I get excited about. 

I also look for companies that have already found product-market fit, are ready to scale, but still have 5x, 10x or even 25x upside. To estimate the upside, you can do simple top down and bottoms up analysis. Top down would be looking at competitors in the space and see how big they are or how much they’ve been acquired for. Bottoms up would be looking at financial metrics or growth rate and assessing how much confidence I have in the business to grow a certain amount. I don’t get too in the weeds here but it can be a good gut check. 

A decent rule of thumb is that investors are looking for a 3x-5x return when they invest at the Series C stage, so if you believe in the company and the investors that could be a benchmark. 

What’s your personal investment strategy as someone who's worked for high-growth tech startups?

For my investment portfolio, I have two buckets: a stable allocation and a “risk-on” allocation (plus some cash). 

In the stable allocation I invest in mostly stocks, targeted alternative assets and bonds (and trust Compound to help make decisions). And then the risk-on part is reserved for things like my personal brokerage account, crypto, options, focused equity plays, and angel investments. 

Initially, since my job and my employee equity is in fintech, I focused the risk-on allocation on things outside of fintech (for example, I made a lot of angel investments in CPG companies and beverage startups - my “liquid” investments). But now my thought process has changed: what am I best suited to analyze? Fintech companies. So now my angel investments have moved towards the industry I know best. 

Overall the best advice I got about angel investing is to expect to lose 100% of it in the worst case and in all cases not have access to that money for 10+ years. If you do it, you should be ready to take that bet and be prepared for the worst-case scenario.

How did you think about selling equity in a secondary sale?

For me, part of it was evaluating the uses of the capital now vs the value of the equity in the future. The second part was around what was actually possible – some tender offers or secondary sales have limits for how much you can sell. And a final part was around net worth concentration – even if I think the company is going to do really well, I might sell some just because it’s such a high percentage of my net worth. 

One other thought: coming from the Finance side of things, if a company holds a secondary sale for their employees, the company is usually fine if the employees sell some shares. It’s not necessarily viewed as a loss of trust in the business or a suspicious action – your company understands that it’s a financial decision and that even if you believe in the company long-term, you still might want to diversify or use the cash to do something like buy a house or support your family. There’s no requirement from the company to keep all of your eggs in one basket. 

What are you working on now?

After building up the strategic finance function at Chime over four years and seeing hypergrowth, I decided to try something new. I recently joined the team at Unit to build out the strategic finance function as the VP of Finance's first finance hire (sound familiar?). 

Unit is a full-service banking-as-a-service platform that enables all tech companies to embed financial features into their products. We raised a Series C in March but we're just getting started. The Unit team is building in public with next-level product velocity that has already won over fast-growing startups and well-known existing players in the space. The team at Unit has done a lot in record time with intentionality and culture focus that really resonates with me and reminds me of the early days of Chime.