Season 4 / Episode 2

Erik Mostenicky – Eight Roads

FinTech Strategic Investment at Eight Roads

Erik is an investment professional working across the FinTech, Tech and Financial Services sectors. With Eight Roads, Erik has developed a strong portfolio of leading-edge companies at varying stages.
In this episode, Erik discusses his early days as a nightclub owner, his shift towards a career in investment banking and his eventual move towards a successful career in VC.
Joyeeta and Erik discuss current trends in the tech sector, data’s ever-growing potential for revolutionizing business as we know it, and how enabling people with accessible tools for data insight will make their work more efficient and accurate.
Transcript:

Voiceover:  You are listening to SAMSARA. Be inspired by NO-CODE superheroes.

Moderator:  Hello listeners, welcome to SAMSARA again. We are really excited to have you here, and if you’ve dialled in today to listen to someone truly amazing, I promise you, we’re not going to disappoint you. We have Erik, from Fidelity VC Eight Roads, who is basically going to talk about his career, his journey, his perspective on the tech world, and what he really thinks about the madness that is going around. Erik, welcome to SAMSARA.

Erik Mostenicky:  Hey Joyeeta, thank you very much for having me, it’s a lovely time we are experiencing right now, so great for sharing my perspective and spending a bit of time with you.

Moderator:  Absolutely, and we are honoured to have you Erik, you are an absolutely incredible human, and I can’t wait to hear your perspective. Yes, indeed. Erik, tell my listeners, of course, I know, but for the benefit of everyone, what do you do? What is Eight Roads, who are you, what role do you play in the ecosystem?

Erik Mostenicky:  Sure, sure. So Eight Roads is a proprietary investment firm backed by Fidelity. So we run regional venture capital funds across Europe, India, Southeast Asia, China, Japan, but at the same time, there is a team which is primarily focusing on just the sector-specific investment title, which is the Fintech Strategic Investments team, that’s the team where I am sitting. We focus on early-stage investments into companies, in particular start-ups that have a close proximity towards the asset management or wealth management industry, and we’re very specific in terms of the themes that we’re following. So day-to-day, it’s primarily around companies that either are exposed to the B2B side of things, or B2C, and there are a lot of trends now around workplace investment, alternative assets, tokenisation platforms. You know, replacement of legacy software solutions which have been developed in the eighties and nineties, talking about financial wellness and opening up and disrupting the asset managers through concepts such as peer fans (ph 02.14) as well as API connectors, et cetera. So a lot of exciting stuff.

Moderator:  Amazing, sounds like you’ve always got your hands full. Erik, I wonder, what did you do before this, because it looks like where you are sitting, it’s a very nice cross-section of seeing the future, seeing the past, seeing the tech, seeing the corporate world. You’re sitting in a nice junction of things. So you know a lot of my listeners are probably thinking the same, how does one get to this amazing position? What sort of background prep or training did you have before? What brings you here? How?

Erik Mostenicky:  Yes, it’s a funny journey. I think I have a less traditional background, but I’ll just go into it. So I started off by actually having a nightclub business for two years.

Moderator:  Oh my God, what was it called? You have to tell me, what’s the name?

Erik Mostenicky:  It’s Slovakian. It was like, Fun Beach.

Moderator:  Wow, you blew my mind. Mind equalled to blown here, Erik.

Erik Mostenicky:  I know, I know, I know, cheesy, but it was 800 capacity venues, so it required a lot of work to get it filled up and pay for the rent, but it was fun. So two years of hard and hustle operational experience, before I decided that you know what, it’s time for me to actually pursue something different. So I sold off my share to my previous co-founders, and ended up going into investment banking, which was an interesting transition, because you pretty much work the same hours, but you have less social interactions, and I’ve decided after doing it for a short stint that actually there is probably something else out there, and I ended up going into consulting, was doing commercial due diligence, and strategy consulting, primarily for fintech and payments companies in Europe. You know, when you combine that experience when you look at commercial landscape markets, with investment banking, around valuations and financial modelling, it is actually very complementary to start looking into the venture capital market, and you know, I was very aware of VC, what it is. I found it fascinating to have exposure at quite a young age towards very incredible people, and companies, and got attracted to the proposition to join and build out a new team at Eight Roads, which was focusing on the fintech market, which was pretty much all that I knew in my working life since I had moved over to London. So that’s kind of the journey, and since I’ve been with Eight Roads, which is two years now, it was an interesting journey of seeing build up a portfolio of zero to eight companies. Well, many more to come.

Moderator:  Absolutely, and I hope so. So in these two years, I know you said there are light synergies, but you having been through three amazing career paths, and I have to say this, I have to say that right now, you have the most amazing beginning that I’ve ever heard from anyone in this podcast so far. So I’m honestly sincerely blown over. It’s amazing. Going from having a nightclub of your own and understanding that market, that dynamics, being that guy up on his feet, all day, all night, to being a guy sitting in his chair, doing complicated deals and being an investment banker. You know, holding the entire world in your head. Going to investing in an early stage on behalf of a massive organisation, and being able to deploy that capital, to see the future, I mean honestly, you’re a man of many hats, and I’m truly being sincere here when I’m saying I’m admiring your agility and vision. What is the common thread to all of this, Erik? What is common to all of this? What do you think is the part of you that goes to all of these different things? What’s common?

Erik Mostenicky:  It’s a tough question, because I think it will resonate with different people in different ways, but what kept me always going was desire to learn something new and be challenged. I hopped around because I wanted to find my own feet really, and you know, having the lucrative position that I am in right now, which is that I can do financial evaluations of companies, I can build relationships with people, and founders, and other investors in the market, but at the same time, assess the businesses and help the founders grow their business in new areas. Understand their strategies, their go-to market, the product, it’s such a wide-reaching role, that it’s fascinating. So I think I landed here on the back of the fact I tried multiple things, and I was keen to learn and to explore further. I think that hasn’t really stopped. I’m still keen to do that, and I think there’s still plenty to learn from.

Moderator:  Amazing, I mean, wanting to always learn and expand. I think you’re speaking for a lot of us there.

Erik Mostenicky:  You know, there’s probably different ways on how you can learn. You can be creative and really seeking the knowledge and exposure, and you can get it in different other roles as well, it doesn’t have to be VC.

Moderator:  Yes, absolutely, that is very true. I’m glad you said that, despite being from the VC world yourself, because a lot of people, you know, their perspective is that’s the end of the world. The beginning and the end, and the middle. There is no centrifugal force around the sun. It’s just one thing. Okay, I’m joking, I’m being the typical founder.

Erik Mostenicky:  Good luck to them.

Moderator:  I’m being the typical founder, you can ignore my rantings, this is just a founder who’s not raised 200 million in one second, that’s all. Okay. So Erik, that brings me to a question that I’ve been wanting to ask you right from the beginning of this podcast, actually. I’m itching to ask you. So in this journey of investing in early-stage, in the last few years that you’ve been doing it, tell us something interesting that happened to you. I don’t know whether it was your side or something connected to the story, or the pitch, tell us something interesting. I always have this feeling that these dudes have a lot of fun stories they can’t tell, so maybe you can anonymise and tell us something.

Erik Mostenicky:  Yes, I have a few. We have one in particular, which I shared with a colleague of mine, that I have to just anonymise a little bit. Very early on, since I joined, I had great meetings with interesting people, and really learned a lot, but you know, from time to time you meet certain individuals who have a different perspective, and I was in this one meeting once, there was an introduction for a very senior person in the industry. So we took the meeting, and came to realise that something was a little bit not correct when we looked at the public image of the company itself. There was very little on the website, it seemed very outdated, the proposition was in the telco space, and we were thinking, you know, we probably aren’t thinking about it correctly. There must be something there, given it has so much of a reputational impact coming from a senior person. We pretty much did the meeting, there was a lot of ridiculous claims within the meeting which the founder was an alpha, dominant male, (TC 10.00) drawing attention towards his superiority across every skillset you can imagine, and despite the fact that the company didn’t have revenues, at the end of the meeting, the founder told us that given how big the telco market is, he’s expecting a billion dollar valuation, at which we would invest 50 million. He looked at my colleague, touched him on the shoulder, and said, ‘But because of you, I’m going to give you a 10% discount.’

Moderator:  Are you serious?

Erik Mostenicky:  We obviously didn’t do the deal. I think it might have been probably something to do with money laundering. At the end of the day, I haven’t followed up, and you just reminded me, I need to look up the company and the individual. That was probably the most bizarre thing I’ve ever experienced. There was nothing in that sense that would try to be in a jokey way, it was meant seriously. So yes, it was fun.

Moderator:  Wow, if you meet him next time, congratulate him for his unicorn, I guess.

Erik Mostenicky:  Yes, well if I will it would be a miracle in itself, but yes.

Moderator:  Wow, that’s amazing. I mean, you know, I don’t know if you’re the first person who’s struggled with this alpha-male dominating people. I have a lot of stories there as well, but this one is just incredible. I can’t believe he actually then told you, ‘I will give you a 10% discount.’ Wow, that’s some story.

Erik Mostenicky:  I mean, a 10% discount is great, obviously, if there’s some value behind what you’re getting, but in this case, you know, it’s really hard to give light to these stories which are from start to end just bizarre, because you have this founder which clearly wouldn’t be able to work with anyone anyway, because he thinks he’s the best person in the world. Yes, that gives you actually a perspective that a lot of times when you are VC, you have to work very closely with the founders to understand who they are and how they think, and whether you can work together. That goes both ways, for the founders as well. It’s a relationship-based business, about getting the capital to deploy.

Moderator:  That’s a really good point, so I think that’s a point that I would reiterate to our listeners out there. That it’s not just about going in, pitching, and running away with the capital. VCs are also looking to work with us, and they’re looking to see if you’re the type of person they’ll want to work with. So it’s not just about making the best impression, it’s the fact that you should be a person that one can work with. I guess to your point Erik, if this person is so hard to work with, even for you, where he should have been more humble anyway, I guess he or she would be very difficult with their team, you know, and what does that mean for their company eventually? So I guess you are in the right there.

Erik Mostenicky:  True, I mean, there’s examples of prolific, successful tech entrepreneurs who are well-known not to be the most.

Moderator:  Does that work any more Erik? I think it could have worked long back, when you know, Steve Jobs existed, but today, can somebody just go into a room and yell and say, ‘I don’t like that font, leave my room.’? It’s just hard.

Erik Mostenicky:  I know examples where it still works unfortunately. I would like to think that we should make a positive impact, and promote people who are true leaders or striving for it, rather than just being very dominant people in their own right. It’s a lot easier to work with people who, you know, are able to listen to another person’s opinion, and acknowledge the fact that we don’t have to be right all the time. So this, in particular, coachability and the suitability of the founder, or the founders, is important. What do they bring together? Are they in a good, harmonic relationship? Are they having complimentary skills and capabilities that you can take them from Stage 0 to Stage 100? They don’t have to have everything at the first stage, but seeing a willingness and drive that you can work with is key.

Moderator:  Absolutely, that’s a good story, and I guess it would be a really valuable reminder for a tonne of people listening who probably think that the only stories are on the entrepreneur’s side. We all talk so much about the VC stories, but there are so many stories that you have on your side as well. So thank you for sharing that. On that note, switching gears a little bit, tell as about something you’re really excited about Eric, from a technology perspective, and things that you’re looking at. Are there some things that are really exciting for you, or trends that you think have potential, and those are things you’re keeping an eye out for?

Erik Mostenicky:  It’s a good question, I think that there’s a lot of things, and we’re always reminded not to get too excited over the sexy stuff. You kind of have to at the same time, you have to understand what’s out there in the market, and I think the one thing that I’ve been able to observe, and just to give you a disclaimer, given the fact that I spend most of my time looking at things in the financial services space, I, kind of, have a tilted perspective on that. There’s so much potential still, and revolutionising data and how we work with it. I mean, I remember back in my days when I learnt to work with tools such as Tableau, and was able to pull of things in a much quicker way for clients, to visualise inputs and find customer insights and perspectives on datasets, it was revolutionary. It wasn’t that hard, but that became a day-to-day standard. I think there’s more things that are going to come, you know, like, I kind of got excited when we were talking about your business and what it enables for potentially the asset management industry, when you are deducting the necessity of data scientists in the front office. I mean, enabling business people, or data people, to have tools which will propel their work and make it more efficient, more accurate, there is still a lot out there which is untapped. The problem with adoption is that it’s always driven by specific use cases, and people have to understand how it can be applied, because technology can be so many times widely defined. It’s not just a Swiss Army Knife that you can deploy in an organisation across a hundred places and people straight away understand it and back a platform. You have to really go and explain how you can use it, what is the ROI, what is the path to adoption, and that’s when it starts to pick up.I’ve seen that in the industry as well, when you can monetise properly is when you have nice stories of use cases which are touching specific users that are actually making decisions on how to purchase the tools as well. To wrap up, it is probably definitely the use of data, and the next generational wave that is going to come.

Moderator:  Perfect, I think, you know what, I actually heard this from someone else, day before yesterday. I was talking to this big VC in the Valley, I’m not sure if they want me to quote them yet. For something else, it wasn’t for fundraising actually. We were speaking about something around this podcast, and some other things. I heard the same thing, that one of the biggest trends they’re looking at is how data and access to data, and data sciences, will still be a top investment topic for them for the next five years because there’s still so much to be done here. What excites me, Erik, is the fact that I think that every small step we make in that direction, you know, with or without Gyana, of course I have a vested interest about my company. Generally, I just feel like it’s going to make a huge difference, you know. I see this current crisis in COVID, or all the political things that have happened the last six years, I think almost always I would be looking at something on social media, or reading an article, and I’d be thinking, ‘A lot of what I just read would literally be something else.’ The whole scenario would be something else if there were at least 10% more people in the world who could actually work with data comfortably and see it for themselves. They wouldn’t have to believe anything that’s handed down, they could actually check it. Their life would become so much more, how should I put it, transparent and clarified. So that’s one of the things that really drives us at Gyana. We’re really excited about that. Anyway, not about us, this is about you. Erik, I’m also very excited about something else.I think that you once mentioned that you are in an interesting position where although you are connected to a really large brand, and a corporation, but at the same time you have the autonomy and you have the freedom to create a VC strategy on your own. I’m pretty sure there’s lots of listeners out there who are thinking, what is Erik interested in looking at? So if there were people looking at approaching you or making introductions, or being interested in working with you, what sort of things right now are on your plate?

Erik Mostenicky:  Great, a free promo.

Moderator:  Who doesn’t love that?

Erik Mostenicky:  As I eluded to before, anything to do with asset management and wealth management is really (TC 20.00) what interests me and the team on a global scale. Specifically, there’s a lot of topics about democratisation of pensions, enabling the workplace benefits towards a larger audience. You know, the modular software components of the buy-side tech stack, which are quite interesting, but very tough to break, because there’s a lot of incumbent players, and it’s very hard to replace for a lot of large asset managers. Then specific topics around data are becoming quite prevalent, because the issue of ingestion, cleaning, consumption and handling of data, between not only internal divisions, but also the interconnected softwares that they use, and then plugging that into the third-parties. Whether that’s clients or suppliers, is just a nightmare. That’s beyond just asset management, that’s also relevant for financial services and other industries. So definitely, if there’s anything that is new and interesting that touches the world of asset management, I would love to hear about it.

Moderator:  Amazing, so listeners, you heard him. There you go. Now, on a slightly darker tone, Erik, is there some tech trend where you worry about, maybe you’re not sure, but you’re thinking that this could turn out negatively for the world? Do you have a concern?

Erik Mostenicky:  Negatively, you know, there’s a lot of talk about data privacy and the usage around it, which obviously has its limitations and stuff, but I think I don’t perceive it in a negative way per se. The biggest negative that I was exposed to in the last two years was the ever-increasing valuation rounds, which, you know, especially when you compare the European and the US landscape, can be frightening at some points, especially when you’re trying to be competitive and look for an interesting deal that makes sense for everyone. Not only for the founder, but for the venture capital firm backing it, and then for the future investors as well, because it’s not always advisable to raise at the biggest round possible. It’s important to also understand what else is coming with the cheque. Whether it’s the board seat of a very reputable person, or a distribution channel that’s opening up. Or the advice that you’re getting from the people they bring along the journey. So I’m not that much concerned about some of the negative impacts technology will have on us as a society yet, but obviously it’s important to remain cautious. There are some major trends now erupting around remote working obviously, right, given the COVID situation. Some companies have done phenomenally well on the back of it. Now you have to ask yourself whether the trend of remote working is short-term, long-term, or whether the valuations that are coming on the back of it are just because of the momentum. Now I think that the work as we know it, will change, and that’s for better or for worse. I think it’s for better, because we will have more flexibility in the way we operate, and as long as we can improve that, we are efficient in the way we communicate with each other and work together, it doesn’t really matter what the occasion is.So there’s going to be a lot of positives of that, but also of seeing some, let’s say, dubious ideas on the back of the remote trend currently happening.

Moderator:  Yes, always, right. There’s always the strange phenomenon where you can get a bubble really quickly, and then you get some amazing things out of it, and there’s the majority which is not so amazing. I guess it’s people like you, your role is literally to pick out what’s real from what’s not. It can’t always be easy, I guess. All of us, especially you, might sometimes come to a point where it’s really hard to pick out what’s real and what’s not. So it might get a bit stressful for you. Yes, it may be, I don’t know. So what do you do when you’re not working, Erik? Who’s Erik when he’s not working? Where are you from? Tell us a bit about your life outside this investing world.

Erik Mostenicky:  That’s good, you know, question would be very different a few months back before the COVID situation, because life has actually changed a lot. Nowadays, the biggest pleasure I have is to actually go for runs and just spend some more time outside of the house really, because you know, you can get so sucked up into the day-to-day Zooming, and getting fatigued on just doing more and more, because things are piling up. So we’re busy, despite the fact that the COVID situation happened. Before that, I mean, I used to play a lot of tennis, so you would find me playing away, when possible, and when the weather is good in London which is not always the case. Otherwise, I really love to travel, which is obviously a hard thing to do right now. So I really look forward to being able to travel again, and have some good wine and some good food, and some of the European destinations that I dearly dearly miss right now.

Moderator:  Yes, absolutely, I’m with you on that 100%. You’re speaking for all of us there, 100%. Where are you from, Erik?

Erik Mostenicky:  I’m originally Slovakian, but I grew up across Austria, Germany and Slovakia, so I’ve been probably half of my life in Austria, half of my life in Slovakia, and then in London for the last eight years. So my maths doesn’t add up, but you get the gist. Actually, if I think about it right now, I’ve been in London for almost eight years now, and it’s the longest I’ve ever lived in one place continuously. So I’ve been changing locations quite frequently, but London’s been now the place where I’ve been the longest for eight years in a row.

Moderator:  That’s amazing, and you know what, that probably makes you who you are, this well-rounded person, with so many different perspectives, and so many inputs from different parts of Europe. It’s probably what makes you who you are, and I absolutely believe that this is the way to go, that the world is truly boundaryless, no matter how much we try. We become who we are because of the influence of all the different places that we’ve been to.

Erik Mostenicky:  100%.

Moderator:  So my last question to you is going to be a little bit interesting, it’s like, let’s assume you were talking to your VC friends, and they’re invisible, and they’re listening to this podcast right now. They probably are, you know. Yes. Would you like to give them a message of some sort? I mean, I know there’s a lot of things you could say work-wise, technically, financially, and I’m pretty sure you all have your own forums, and meet-ups, and you know, (inaudible 27.40), whatever, all the fancy things we can’t go to. What would you say, on a personal level, if you could just give them advice right now. You don’t know who they are, but you know they’re listening. What would you like to say to your peers? I ask because, you know, I’m like a lot of people. I think there’s this huge thing right now in the world where people are very divided. There’s either a lot of negativity, or there’s a lot of power equations around being a VC. I personally think that this is one of those parts of the investment world where you’re actually shipping the future, and I’m very excited, because I think that what you do directly impacts what we’re going to see, ten, twenty years from now. So you know that fun book for economics, which connects those odd trends to each other, from centuries ago to things happening today, and I think that just simply following different VCs and seeing what they invest in, and seeing what the world is like, would literally be able to predict what the world will be 50 years from now, because you are participating in sowing seeds for the future, and therefore I am always super excited at looking at them and figuring out what they do, not just from the eyes and filter of an entrepreneur, you know, who needs to pitch, and get money, not just that.Sincerely speaking, I always look at them and also people who are looking at seeds, and they’re choosing seeds and planting them, and we will have a world full of crops in the future that will look like something because of the seeds that you sowed. If you were to speak to some of your VC friends right now, who are listening, what would you pass on as a closing message to them? What would you say?

Erik Mostenicky:  It’s a good one. I genuinely think that the VC industry is probably the most open and friendly industry I’ve ever been exposed to. I mean, on a day-to-day basis, other VCs are talking to each other and sharing perspectives, and giving each other advice, which, you know, if you come from a, let’s say, consulting or banking background, that’s just unheard of, because you are perceived as a competitor, and you just don’t share any information, because otherwise you’d be prosecuted almost. So on that level, it’s very good, but the one thing that I’ve perhaps used for myself is just always stay true to yourself (TC 30.00) and to your ethical means, because it is a relationship business, and you have a perspective, and just having an open mind makes, I think, a lot of a difference in the long run. So that’s perhaps just my perspective on this.

Moderator:  Thank you so much Erik, that was absolutely lovely, having an open mind and seeing what the future brings. I guess, you know, it applies equally to all of us, even to entrepreneurs, and I’ll take your advice, and keep an open mind, and see what the future brings. I guess with the current scenario we’re in, we all have to keep an open mind.

Erik Mostenicky:  Yes, we definitely do. I mean, I’m sure that it is easier and maybe tougher for some, but creating that new rhythm in your life, especially now when stuff is not normal, is important to keep sane. I mean, we all miss our family, we all miss our friends, we all miss our activities, the 5:00 p.m. Pints in the pubs as well as having the ability to freely roam the world, but it’s important to just take a break and figure out how I can function now in this new world, and be sane and be happy. Not to waste time.

Moderator:  Not to waste time, absolutely. You know, strangely enough, like you said, we are not wasting time. It is crazy how busy we’ve all become. We’re working from home, but we’re overworked, and we’re working so much. Almost everyone I know. So somehow you know, we’ve managed to make good of the time, and like you said, it has hit different people differently. You know, you probably are aware of it yourself where you might have family across all over Europe. I personally have a mum who lives on another continent. I haven’t seen her in over fifteen months, because it takes so long to get there, and I don’t know when I’ll see her next. She lives alone, all by herself, and it takes me such a long time to get there that I basically just turn up once in two years or so. So I constantly worry, when will this ban be lifted? I’m regretting taking so long this time, because I don’t know when I’ll see her next. So we are all hit to a different extent. On that note, I’ll also pass on a message to all my listeners. VCs, entrepreneurs, friends alike, who are listening, let us all be a little bit kind to each other. We don’t know what somebody else is suffering, they may or may not say to you, but we are all suffering to different degrees. So on that kind note, thank you so much, Erik, for finding time. I’ve always enjoyed speaking to you and getting to know you, and today’s talk absolutely confirms, you are nightclub king, investment banking pro, tennis player, and this really visionary VC investor. So good luck to you, and let’s continue chatting outside of the podcast and have a great day everyone, thank you.