Episode Transcript

Greg Farber:
Welcome to the Building Interest podcast presented by Leader Bank a series of free flowing conversations on a wide range of banking and money related subjects. I’m your host, Greg Farber. And on this week’s episode we are switching things up. Jay Tuli, President here at Leader Bank sits down with another leader in the industry Tom Shen, entrepreneur and avid board member of ZSuite Technologies, Sensibill, Shastic, Axiom Bank N.A. and BankiFi. Let’s jump right in.

Jay Tuli:
So Tom Shen, thank you for taking the time to join us today. I’m pumped for this conversation for a variety of reasons we can get into. First, before we start, just for the audience, you know, Tom Shen is important person in my life. He’s served as a mentor to me. And helped me with a variety of things. And you know, we’ll, we’ll jump into that. But he has a really interesting career, a serial entrepreneur in the FinTech space, starting with software dynamics, which he built and sold Malauzai, which is a digital banking company, which he built and sold. And now he serves on numerous boards, where he’s invaluable to a lot of the leaders that run those organizations. So Tom, thank you for joining us today.

Tom Shen:
Jay, I’m delighted, honored to be part of this podcast with you, and especially to talk about entrepreneurship and leadership, knowing a bit about your family, about Leader Bank and the success in the marketplace you’ve achieved, and just being dynamic and compassionate leaders. So I’m really looking forward to this conversation.

Jay Tuli:
Awesome. Thank you, Tom. One thing that’s really important is, for all of us is entrepreneurship, and you are like the entrepreneur. Talk to the listeners a bit about what entrepreneurship means to you, and what your journey has looked like as an entrepreneur.

Tom Shen:
Yeah, thank you, Jay, too kind. So let’s start from the very, very top and think through entrepreneurialship. Over the years thinking about this particular topic, I will pick a controversial word to use, that your listeners may reject or chuckle, which is insanity. You have to be insane to be an entrepreneur, you’re attempting the impossible, with lots of lots of folks, not counting family, telling you it can’t be done. And yet you believe in the dream, and you pursue it. So you have to be a bit insane. I heard this quote a long time ago, when the sane quits and go home, the insane stay. And some of the insane will actually be successful. Some are just insane. So, so he really enjoyed that, that quote about entrepreneurship. But it is to attempt something that many will say can’t be done. Remember the early days when you and I sat down at that Starbucks in Calabasas and talked about the opportunity to launch ZSuite as an independent company. And we spoke that day, about 90 minutes and spoke about many, many of the impossible things. But we’re excited that we believe that it could be done. And sure enough, here we are several years later, having accomplished quite a bit at ZSuite. So when I think about entrepreneurship, I start with insanity. You have to be a bit insane. To attempt something like this. Early in my career, Jay. I look back. I think it was that desire to win, to excel to do the impossible. That’s what drove me. If you said, golly, this can’t be done, that I kind of got excited about it. Then later, later in my career, when I was on to my third and fourth company, it was that desire to give back. That lots of mentored me. Countless of people, I stand on the shoulders of giants. And so given that today, what I wake up thinking about is how can I give back? My life model today is built into the lives of others.

Jay Tuli:
So yeah, just for the listeners, and this is awesome, I add a little context to this. So when we Leader Bank had built out a product development team for what became the company’s ZSuite Technologies, we were thinking about spinning out the company. And I had no I had no idea how to do such a thing. And was was nervous as to whether we should even contemplate such a feat. And I randomly cold call Tom Shen, without really even knowing him, but just knowing of him, and he had recently sold Malauzai, and going to Tom’s point about giving back, I was floored with how he just gave me like, was it like 30 or 40 minute conversation, Tom? And there’s so many nuggets you said on that conversation about… Let’s see, features get commoditized platforms get monetized. I mean, there were all these like amazing nuggets. I wrote down. And I remembered after that, it was like, Okay, I gotta go and meet this guy. And we, that’s where we met in Calabasas, California at the Starbucks. And you were so generous enough to give me like three hours of your time to like, map out the whole thing. You remember that? It was incredible. And so you know, just building on that, like, you’ve you’ve had this successful career. On the giving back side and the mentorship, I’ve seen you really take a proactive role in your mentorship that not a lot of leaders do talk a little bit about that. Like, what why do you do it? What do you get out of it? What does that mean to you?

Tom Shen:
I enjoy being a mentor, Jay, first of all, you get an opportunity to tell stories, and I’m a storyteller, as you know. And so the opportunity to work with bright minds with eager people wanting to learn. So I call these folks I work with, I partner with humble learning leaders. It is about humility. Humility allows you to listen. And when you listen, you have an opportunity to learn. And so when we first met, I recognized that immediately that you were somebody that wanted to listen to copious notes, I’m surprised you remember that quote. I live by that. By the way, when I think about FinTech, and I think about software companies, you need to build out a platform. And so so that allows me so that at this stage in my career, you know, I’ve built three companies, I’ve had three successful exits as an operator. I’ve had three successful exits, as a board member, board member, non operator, so six successful exits. So just been blessed with all these great opportunities work with wonderful, wonderful people. And at this stage in my career, I don’t see myself starting a company. So I have to live vicariously through people like yourself, people like Nathan, people that I partner with in the marketplace. And to paint just a quick sketch of what that looks like a picture of success, if you will. Gosh, this is looking back, probably 15 years ago, I had the opportunity. When I sold my first company to S1 corporation. I work with a young sales leader. And you could just see that drive that eagerness to win, to do the right thing in a marketplace. Fast forward today, the CEO of a $3 billion public company. I’ve never done that. And so part of the excitement for me is to build into the lives of others and then see them take it and go places where I’ve never been.

Jay Tuli:
What I find out about your story that’s so incredible is like you came here as an immigrant right? When did you come to the US what year was that?

Tom Shen:
1972 was when I arrived at these shores.

Jay Tuli:
And how old were you?

Tom Shen:
I was 15.

Jay Tuli:
15. He came here from Taiwan. And we fast forward into the future. And you’re like the FinTech King, right? And so tell us a little bit like the beginning days, like when you started Software Dynamics, like how does a kid from Taiwan, new to the country start to build banking software, which is just such a industry that that’s typically made up of folks who’ve just been in it for generations.

Tom Shen:
Yeah. So rewinding, my parents sent me to United States by myself, for higher education, to East Tennessee. So went to a boarding High School in East Tennessee. I did graduate from high school, but since passed that point, I dropped out of a few very fine colleges. But I learned computer programming along the way. And so I held on to a couple of jobs. And by the time I was 25, the company that I was working for, was acquired. I live in Southern California, and the acquiring company was in Dallas. And they asked everyone to move to the Dallas area. And I didn’t want to go, so I was at 25, without a job looking for my next gig. And so in between jobs, I took on a bit of contract work that that had to do with building out banking teller systems. Okay, so, so I learned how to build how to integrate to these large IBM burls NCR back ends, sort of viewed today, as sort of black magic connected to these cores, we, we talk about API’s, and so on and so forth. The there wasn’t such a thing. In those days, you had a hard wire. And so I learned how to program and connect to the back end. And that’s really how I got started in my first company called Software Dynamics. Looking back, I call myself an accidental entrepreneur, there was no thesis, there was no paper, there was no business plan, I fell into it, or rather, I failed into it. And so that’s really how I started software dynamics. And we were fortunate enough, first two, three years, we build out some nice tower systems, new accounts, sales systems, back office systems. And, and from that, we decided software dynamics, to then go out and build our own product set rather than sort of contract where we would build our own. And that was just happened to be a perfect timing, because there was this thing called the IBM PC that came out. So rather than proprietary terminals with teller systems, we thought, Geez, you know, you could use a PC to do that. And so with the openness of Microsoft at the time, and the tools that were available, we build out the first generation of a Microsoft DOS teller system. So that was in 1987-ish. I started a company at 82′ in 87, we launched our first product, we were fortunate enough, Jay, that over a period of 15 years, we were able to win 1200 banks and credit unions worldwide.

Jay Tuli:
That’s incredible. Incredible.

Tom Shen:
From some of the smaller credit unions, up to some of the money center banks, international banks, such as ABN AMRO, Westpac, in Australia, New Zealand, Compass Bank that later became BBVA in the United States. And this for college dropout, I learned, I learned how to lead on the fly. No formal education in that area. And I really subscribe to one thing. And that is, if I received this news, how would it feel? How would it feel? So whenever I say something to somebody else, I want to make sure I try it all myself is the thought okay, I could do it. If it didn’t feel good. Maybe I’ll rethink it. So that was really the the simple rule I live by in the early days of Software Dynamics

Jay Tuli:
There’s so many different ways I feel we could move this conversation but I wanted to ask you this one question because it appears to me like so with Software Dynamics, it appears you sort of saw this wave of individual PCs coming. And you saw how a bank technology solution could kind of like ride this wave for change. And there seems to be some similarities to that with Malauzai, where we could talk a little bit about that, where you see this, the sea change to mobile, before really anybody else saw it. And you realize that online banking could sort of migrate to this sort of mobile digital application. And that was kind of the genesis of Malauzai Could you touch on that a little bit?

Tom Shen:
Yeah. Again, to go back to my original theme of being an accidental entrepreneur, I have to confess many of these thoughts I share with you today is sort of hindsight. And looking back, I wish I could honestly tell you at that moment, I thought, My gosh, this is it, right? Just, I’m just not that smart. But when I look back, I look at my days at Software Dynamics, leading that organization. And then later, Malauzai, leading that company. It really is the focus of customer interaction. In the 1980s, folks went to a branch. That’s where they conducted transaction, donuts and toasters aside, you went into the branch to deposit to open a new account, where fast forward to 2010, when I started Malauzai, a mobile focused digital banking company. That’s where the customers were in 2010. And our today is there on their mobile devices, were constantly on our mobile devices. And so that was the nearest a financial institution, we’ll get to their customers. So in 2010, I realize that there was this tsunami that’s hitting the marketplace, which is mobile devices, people are not going to their desktop, most of the time to do banking, they’re going to do it on their mobile devices. So mobile became the center of interaction. Whereas desktop internet banking, while popular today and continue to be used, was going to be secondary to the mobile devices. Many of the companies that time thought, Gosh, mobile is just another iteration of the desktop, mobile will be hinged to desktop. But I saw it the other way around, where mobile became more important. And so that’s really how I started Malauzai.

Jay Tuli:
So let’s, let’s pivot now to leadership, you’ve worked with lots of different people in your organizations. You’ve been on a lot of boards, where you’ve observed different leaders. And then you’ve also worked with a lot of leadership as clients like different bank leaders and things like that. What what, what can you share about leadership from your point of view? I mean, you’re definitely very astute to this topic. So I just love to hear like, as you identify leaders, what what are the common traits that you see?

Tom Shen:
Okay, let me rewind and start and talk about entrepreneurs and talk about leaders. I find that entrepreneurs, successful entrepreneurs, possess two qualities. The first one is a passion for the mission. Whatever the mission is, they have a passion for it. The second compassion for people, people being teammates, being customers. So passion, permission, compassion for people. When you have those two attributes, I find this an opportunity to be successful as an entrepreneur. As an entrepreneur, you serve three constituents, customers, teammates, shareholders, and the words I use for those three constituents are delighted customers that we can go to delight customers off another tangent because I love talking about delighting customers. delighted customers, number two, thriving teammates. Teammates needs to thrive in the environment in the culture of which you the entrepreneur you the leader have created. And number three, the end result of one and two satisfied shareholders. Often we get confused in the marketplace. And we try to satisfy shareholders first, I believe when you flip that on his head, you get bad results. So let’s jump to leadership. I mentioned earlier about humble learning leaders. I love working with humble learning leaders. I talked about humility. In every meeting, I go to, on every call I get on, I want to learn one thing. I’m curious, I want to learn one thing. Even if that doesn’t directly affect what we’re doing right now, that one learning will benefit sometime down the road. So I’m greedy. I want to learn. Humility is really at the heart of what I believe, good leadership. I subscribe to a school of leadership called servant leadership. I believe leaders are to be servants. First, our job is to serve and delight our customers. But if you build an organization, the leader is actually the furthest away from the customer. So therefore, to continue to delight customers, you need to build a team around you that respect you. You need to earn the right to be respected, and the right to lead. And so in order to build that team that delight the customers, you have to have thriving teammates. So servant leadership, I love this quote, by Professor Antonio, Argondono, I’m sure I’m butchering his name. He writes about humility. He said, you know, in our society today, we never use that word, much less in business. And he writes, humility is key, because it’s strengthened self honesty, builds relationships, and engenders trust in teams. That is so well said. So humility is really, to me, the key to sustained good leadership.

Jay Tuli:
Tom, you said something really interesting. You, as a leader have to earn the right to be respected. I love that. How is how does a leader earn that right, to be respected?

Tom Shen:
Well, I think the leader needs to first of all, think clearly about the mission. And the vision, the clarity, of mission and vision is important. So in order lead, there has to be something, an idea to lead with. If that idea is not clear, it’s really hard for people to follow. Right? It’s as if somebody gave you a roadmap, that wasn’t very clear where to get to. It’s hard to drive a path of what you don’t know where the end is. So it’s really important for a leader to be crystal clear in what the mission is, what the vision is. And then the the ability to articulate that vision and mission. You know, I often say you’re not a great leader, if you don’t have great followership. I remember early in my career, I had a young fellow working for me, who really wanted to be a big leader. So he often came to me and asked me if he could be next in line for promotion. And so I try to gently prod him, and try to help him think through leadership, starting from Why do you want to become a leader? And he often had the wrong reason. And at one point, he was so exasperated when he was speaking to me. He said, I’m a great leader. It’s just I don’t have any followers. It was so hard not to just break out laughing. Right? And that’s where I got that scene from. Great leadership must have great followership. If there isn’t great followership, you got to look at a mirror, you’re probably not a very good leader. Right? So you need to be very clear in your vision in your mission. And then you must be able to articulate that in some way, codify that. And then from that, you need to carefully pick men and women that can accept that that can catch that vision. And then you form the team. Is that helpful?

Jay Tuli:
Totally. That’s awesome. Thank you, Tom. And then another thing you said, which I wrote down with delighted customers. At Leader Bank, one of our main values and core tenants is client obsessed service, we try to really get the whole culture around this sort of focus on the client, do everything we can to delight them. Talk to me a little bit about that from your experience.

Tom Shen:
Yeah. I love that. Right? We exist as a business to serve our customers. If we didn’t have customers, we wouldn’t exist. We shouldn’t exist. So it’s all about the customer. I talked about being maniacal, about delighting customers. And I’ll use two examples in my journey that I’ve learned about customer service. Your listeners may not remember this far back. But many years ago, decades ago, there was a bank called MBNA, they were in a credit card business mostly. And they were extremely successful. And MBNA contracted with Software Dynamics, to build a back office system, a call system. I work with one of their leaders, Jerry Pollard And when the system was ready to go online, he asked if he could come to California and address the QA team. So one fine day he flew in from the east coast to Southern California. And we piled in the entire development team QA team into a room. He was very generous, he gave out gift cards and then free vacations to get everybody’s attention. But something he said that day resonated with me. And I’ve held on to that. And I use that with every company, every team I work with. He said, You know, we sign a contract with you that says 99.99 uptime. Those are days of four nines. I think we’re 5,6,7,8 nines now. But 99.99. uptime. But I want you to know that I’m expecting 100%. Now before all of you in the room start laughing at me, because I’m not a technologist and 100% is impossible. Let me tell you this. Say you achieve 99.99 when you fail, that 0.01% of the time, that one customer on the other end of the call center, you have failed that one customer 100%. Don’t ever forget that. That’s so resonated with me. Because that one customer and I’ve been that customer, you’ve been that one customer and we failed them totally. And that’s just not acceptable. Right? So that sense of 100% is so important to embody into the culture of the company. So I learned that and I preach that and I have teams are so sick and tired of me telling that story. But as I said earlier, I’m a storyteller. And I love that story. Many years later, I invest in a small company in Atlanta, and I had the good fortune of serving on a board with a gentleman that was part of the Chick fil A organization. David Salyers and David Salyers shared something about a delighted customer. He said you know when you have a delighted customer there’s three characteristics of that delighted customer. Number one, they use your products. Make sense? Number two, you grab your friends, and your family, by the lapel and you drag them in to use the product. Number three, and this was the one that I had not thought of before, when you have a delighted customer, they will pay full price. If you gave a Chick fil A fan, a 50% discount to another chicken sandwich store, they’re going to drive an extra half a mile, wait in line for an extra 15 minutes and pay full price. It is economic power, that when you’re a FinTech, or you’re a bank, where you have delighted customers, your rates may not be as good. You may have a little premium that you charge, but your customers are happy to pay for it. Because they’re delighted.

Jay Tuli:
I love that Tom, it, you know, it’s interesting that some organization, whether they be FinTech or banks, really embody this, this concept of client obsession or delighting customers, and others don’t. And I’m curious, from your point of view, what culturally creates that in an organization? And and for those that don’t have it, you know, what’s lacking in those organizations? Like why is there such a difference on how organizations think about client service?

Tom Shen:
Golly, you know, I don’t want to oversimplify this, Jay. And many of your listeners may not agree with me, I believe it starts very top of the house, it starts from the leader. It is not what that leader says. Every company has got some kind of, you know, ethics thing going on. It’s not about that. It’s about how the leader behaved. How our leader model that behavior. I used to say, when I answer my customers phone call, I don’t check the size of the contract first. I don’t check the renewal the contract first. I believe the leader sets the tone, the leader models to behavior. I think modeling the behavior is most important. I have to be honest, I’ve been in organizations, where leaders would say all the right things, but come budget time, come close the door. That’s often not a consideration. I think you need to have a little longer view to be focused on customer delight to be maniacal about customer delight. So it’s a simple answer starts from the top of the house, where it is a believe in the heart. I used to say this, when my customer hurts, I physically hurt for them. Because they gave me money instead of creating value for them. I’ve destroyed value for them. That can’t be the case.

Jay Tuli:
So Tom, now let’s, on our last topic, let’s pivot to banking. You know, we are at leader bank always thinking about how do we continue to evolve? How do we continue to be a relevant banking brand. You’ve worked with 1000s of banks, from your various companies. And you’ve seen both very progressive banks that have done phenomenally well. And you’ve seen banks that have floundered or gotten acquired or sold or whatever. Tell us a little bit about you know, what can we learn from that? What have you learned from a banking organization that really separates the leaders from the pack?

Tom Shen:
Today, when I look into the marketplace, I see successful financial institutions that are growing. And it was circling all the way back to customer service. It is about maniacal about customer service is about being focused, defining your mission, your vision, who are your customers, and once you’ve defined that set of customers be maniacal about serving those customers. One of the lessons I’ve learned in building companies is when you make a mistake and you onboard a wrong customer, you must have the courage to fire that customer. Because that wrong customer that you cannot service properly creates a drag on the organization. Very often, if you think about it. Most of our meetings, we spent 80% of time talking about a problem, not talking about how do we build a better business or expand the business, we’re problem solving very often is because we onboard the wrong customer. So it takes courage. And I’ve had to learn that in my career, you don’t want to do that. But if it’s the wrong customer, you need to have that conversation and fire that customer. Find them somewhere else to go to, because you’re not going to serve them correctly, they’re not going to be delighted. So customer service, finding the right customer, you can’t we you can’t serve everybody, and make everybody happy. Leader bank is very targeted, and very focused. I’ve watched your organization and what you’ve built, very specific. And you don’t want to go outside of those swimming lanes. Unless you deliberately plan and move forward do that doesn’t mean you can’t expand. I serve on the board of a small community bank and Florida Axiom bank. And we’re focused on a particular segment and very well defined, and we make sure we do not go into the wrong. So customer service. The second is in today’s world, as a financial institution, you must be nimble, you must be nimble. And that really starts again from the organization, the ability to say, hey, we spot a trend. And that will must react to that. Whether it’s nimbleness in product offering or nimbleness in technology, we need to meet the customer where they are at. We need to serve them where they’re at. Right, which sort of leads to the whole discussion of hyper personalization. I think we are approaching, maybe we’re entering an age of hyper personalization. So you target a particular customer set that you can serve. But you need to understand their particular needs. You need to understand their life stage, you need to understand their behavior, their preferences, and based off understanding of that customer. Offer intelligent propositions and smart servicing, service them where they’re at. If they have a particular channel, they like to use use that channel. That’s how they like to communicate. It may not even just be that personal channel. But it may be that channel at that time of day. I may be on my mobile cell phone during working hours. But late in the evening, I may be on my iPad possibly. Or on the desktop. It is that type of hyper personalization that makes the customer feels special. And we all like to feel special.

Jay Tuli:
Definitely true. Tom, so as we wrap up, and you’ve just been such a wealth of knowledge and really loving this conversation, what’s what’s keeping you inspired these days? What do you look forward to now?

Tom Shen:
Jay, you know, as we’ve talked, and you know me a little bit, you know, I think Blessed is the word I would use for my life. You know, every time there’s the last piece of the apple pie, I get it. You know, there’s a $20 bill floating around on the sidewalk. I pick it up. So I’ve just lived a blessed life. And, you know, I golly, you know, I’ve never had to work, because whatever I did was fun. Right? You remember a couple years ago, you and I had a one on one conversation about fun, right? And it’s about fun. And then I tell people around me that when I have unfun, that’s when I’m going to stop. So I want to continue to have fun. You know, it’s it’s fun to build. In golly, it’s fun to win, right? It’s fun to win. It’s okay to lose. You learn. You learn from losing. You know, when you and I talk, you know, most of the stories you hear from me are about losing, because that’s when you learn the most. Right? So, so continue to build, okay, learn from your mistakes, right? And live vicariously through young leaders like yourself, who’s got that energy and dynamism. Right? And, and, and to me, you know, that’s fun. And I’ll continue to do that. As long as it’s fun.

Jay Tuli:
Well, I can just say, you know, you’re, you’ve definitely inspired me in many ways. And I know you inspire a lot of the people you work with, and the passion is infectious. So yeah, it’s just been great having you as a friend and a mentor, and I appreciate that. Thank you, Tom. Thanks for the time today. That’s awesome. I really appreciate it.

Tom Shen:
I love the conversations and I hope your listeners pick pick up one thing from this conversation, and that helps them along life’s road. And so thank you so much for the time. Thank you, Tom.

Greg Farber:
Tom Shen is not affiliated with or employed by Leader Bank, N.A., and all opinions expressed by Tom Shen are his own and not the opinions of Leader Bank. In addition to past episodes, you can also find our corresponding blog entries on our website leaderbank.com. This podcast is a production of Leader Bank N.A. equal housing lender. Member FDIC. NMLS number 449250.