William Hockey - Building the Operating System for the Dollar and Silicon Valley Heresy - [Invest Like the Best, EP.463] - Invest Like the Best with Patrick O'Shaughnessy Recap

Podcast: Invest Like the Best with Patrick O'Shaughnessy

Published: 2026-03-17

Guests: William Hockey

What Happened

William Hockey, founder of Column and co-founder of Plaid, dives into the mechanics of building a software company that owns a bank. Column serves software companies looking to integrate financial services, with its infrastructure supporting payments, deposits, and credit for businesses like Wise and Brex. Column operates as a SaaS company, with over 90% of its revenue derived from software via a per API call model.

Hockey's unique approach includes not raising venture capital, allowing for long-term investments and significant employee ownership. The company prioritizes profitability and treats annual profits like a funding round. By buying back shares with 25% of earnings, Column aids in employee retention and liquidity without diluting equity, a common issue in VC-backed startups.

The episode highlights Hockey's belief in the value of personal risk and deep specialization. He financed Column through a $70 million loan backed by over $1 billion in stock, facing margin calls and financial stress. Hockey argues that the safety of modern entrepreneurship reduces the quality of founders, advocating for significant personal investment and risk.

Hockey explores emerging markets, noting their innovative financial services due to constraints. With mobile phone and banking penetration below 25% and 5% respectively in the Democratic Republic of Congo, these regions offer unique perspectives. Companies like CASPI in Kazakhstan have successfully expanded by acquiring banks, mirroring Column's strategy.

The conversation touches on the U.S. financial system's strengths, such as its decentralized nature and the role of the dollar in global trade. Hockey points out that the U.S. infrastructure is robust and capable, with the Federal Reserve's technology moving money faster than stablecoins. The system's dominance also supports economic sanctions as a non-military national security tool.

Hockey discusses the impact of artificial intelligence on financial services, suggesting it could improve fraud detection and user experiences. However, he notes that AI companies might not capture the most value; instead, those with existing distribution and cost structures, like large banks, could benefit more. The episode concludes with insights into the importance of having a financial cushion to withstand market downturns.

Key Insights

• Column is a software company that owns a bank, serving as the financial infrastructure for businesses like Ramp and Mercury. It generates over 90% of its revenue from software, operating on a per API call model.
• William Hockey's decision to avoid venture capital allows Column to focus on long-term growth and employee ownership. The company buys back shares with 25% of its earnings, enhancing employee retention and avoiding dilution.
• Emerging markets, such as the Democratic Republic of Congo and Kazakhstan, offer innovative financial services opportunities due to constraints. Companies like CASPI have expanded by acquiring banks, similar to Column's approach.
• The U.S. financial system's infrastructure is robust and decentralized, capable of moving money quickly and supporting economic sanctions without military intervention. The Federal Reserve's technology outpaces stablecoins in transaction speed.