Startup Grind Washington DC had the great honor of hosting Nigel Morris, one of the founders of Capital One at the 1776 campus. Nigel Morris, beyond creating one of the most known financial banking solutions in the world, has also invested in such companies like Webs.com, AddThis, and Braintree. Nigel provided the crowd with plenty of insight, and a lot of cheeky humor for good measure.
Watch the full interview with Nigel Morris of Capital One, and join the next startup event in DC here.
Diving into Banking & Finance
Nigel touched upon his life growing up in Britain as a rugger, eventually moving to Philadelphia and beginning his life working in the financial realm. When he met Rich Fairbank, his future co-founder, in Philadelphia, they went on to form the banking function at their company, SPA. While all the "superstars" were focusing on the bigger fish in the financial realm, namely real estate, Nigel decided to focus on the credit card industry when there was only one choice of credit options. At this time, more than half of the United States was without the option of credit due to low credit scores or high APRs acting as barriers, so Nigel and Rich decided to move into that space and disrupt it.
With the idea of challenging the norms of APRs and credit lines, Nigel and Rich decided to leave the cushy world of strategy consulting and joined Signet Bank to run their credit card function. They did not end up running the credit function overnight, but rather it was a laborious process that demanded much experimentation and managing aspects they had no prior experience in. Nigel had to even work closely with hundreds of customer services employees, trying different ways to motivate and encourage them to perform at their best while navigating the role himself.
Cherry Picking the Credit Card Industry
While Signet Bank was focused on the real estate market, Nigel found the opportunity to focus more on their credit market. By offering lower interest rates and "cherry picking" the right consumers, Nigel managed to get carefully picked customers to move their bank accounts from other banks into Signet through balance transfers of zero percent. Nigel believed that "having plastic was necessary for many people to run their lives," so he continually worked hard to find ways to "offer people credit who [weren't] credit-worthy" in the eyes of bigger credit card companies.
Solving the issues of consumer wasn't Nigel's only problem. As he attempted to expand his function, he was met with resistance from his superiors. Even when he wanted to expand into the Canadian market, he was told that the bank "[didn't] invest in foreign countries." Nigel knew that it was time to create something of his own. This was the turning point that led Nigel Morris and Rich Fairbank to found Capital One Bank.
Read next: Here's how millennials are disrupting the finance industry
Banking Fair at Capital One
Nigel and Rich went off to form the company we know today as Capital One very soon after being stonewalled at Signet Bank. The name was a tough call: it was to be called Global One, but since the bank would be located in Washington DC - the capital city - the founders doubled down on the name Capital One.
The early days of Capital One were very bootstrapped, and they were forced "to raise [capital] in the market." Lucky for them, they had all the data they needed to reach the appropriate markets, and they "could see money being made before [their] eyes." According to Nigel, "it was like cheating, [for they] knew the answer before spending the money ... [They] were a data-driven company. Big data is just a bigger version of what we were [already] doing ... [Nowadays] it's all about big data, but not about what to do with it..."
As Nigel went into his departure from Capital One into his creation of QED Investments, he touched upon some insights about being an entrepreneur. He said to always "be involved with things with the wind on your back," things you truly believe in. Company culture also plays a big role for Nigel, for he mentioned he would "rather be an average manager at a great company than a great manager at an average company."
He closed by saying that Washington DC has "a thriving entrepreneurial class," and that the "best people [want] to live in DC." He remarked that it was a great location to begin a business, for the "competition for talent that [they] wanted wasn't in DC" as it would be in New York or even San Francisco.
Although Nigel admitted to never having a Capital One card, he does have one of those Viking helmets from the commercials.
Interested in FinTech? Watch our interview with Bryan Johnson of Braintree, part of Nigel's portfolio.
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