 In the world of financial services, banks use automated software controls to detect financial crime, think money laundering. Now to test that these controls are working properly, regulatory compliance teams will analyze financial records for signs of illicit activity, and they have to do so mostly manually. So the startup firm Cable delivers a platform that automates a lot of the manual work involved in this analysis. The company's product analyzes the effectiveness of a bank's controls and automatically scores its efficacy saving time and money. Cable secured $11 million in May, reported on SiliconANGLE as part of a Series A financing, bringing the company's total capital, raised to 16 million, and Natasha Vernier is here. She's the company's CEO, and this is part of the CUBE startup series. She's here to share her story. Natasha, welcome. Thanks so much for taking some time out. Thank you for having me. It's great to be here. All right, so tell me, why did you and your co-founder, Katie Savitz, start the company? Yeah, in a previous life, we worked at Monzo Bank in the UK, and our job was to build financial crime controls. So think about things like identity verification or fraud detection and transaction monitoring. And there are lots and lots of great technology products that you can use to help you with those things. We also had the benefit of having engineers in our team, data analysts to help us build lots of automated tooling. But there is another regulatory requirement that banks have, and there was another team at Monzo, whose job was to test whether those controls worked. And that team had no technology, no engineers, no data scientists. And we felt that that was a huge gap in the market. There should be a way to automatically tell how effective all of these controls are. So we left Monzo and we started Cable to solve that problem. So in my intro, did I describe the problem sort of that you're addressing accurately and how serious is this issue? Yeah, you did. The way that we think about the financial crime world with regards to the regulatory requirements that banks have is firstly, they have to have the controls in place. That's the stuff that most people think about when they think about financial crime technology. Your so cures, your ideologies, your unit 21s, your alloys, et cetera. There is another regulatory requirement which is to independently test if those controls work. And it's not talked about as much. There's no technology that we're aware of that's actually doing what we're doing today that is automating that testing. So it's an area that either even people in banks and sometimes in financial crime teams do find confusing because we're building something that has not been automated before. We talk about it as effectiveness testing. It was interesting. There's maybe an analogy in disaster recovery. There is a compliance that you have to test it, but so many, so oftentimes companies would, they basically half ask the test to do a checkbox because it was so risky to test or so time consuming to test. So this is maybe a, and then of course that changed with the pandemic because risks went through the roof and people really actually had to worry about business resilience in new ways. Is that a fair analogy where people don't really do a good job and that might affect the quality or it becomes a check off item and you're helping with that problem. Yeah, that's right. Sometimes we get asked by investors or we certainly did a couple of years ago, do banks really want to know if their controls are working? Because if they know about them, they then have to spend money to fix them and so on. And we're seeing a big change in the market that really began, I think last summer, the US regulators in particular started coming down pretty hard on the banks working in the banking as a service space in particular. But also I think we're seeing a bit of a changing culture amongst compliance officers where maybe they used to not want to know that the attitude was survival almost. And now we're seeing compliance officers really wanting to proactively do the right thing. They want to actually work in a bank that cares about these things. We're seeing consumers care about this too. A large number of consumers that were called recently actually want to have their money with and bank with a bank that does the right thing. They're not interested in having their money with a bank where the bank may know that they are helping illicit actors or sort of not caring too much about their anti-financial crime controls. When you talk about controls, for instance, know your customer, KYC would be an example of a control. Is that right? Are there others that are relevant here? Absolutely, those are some of them. OFAC checks, politically exposed person or PEP checks, transaction monitoring, all of those sorts of things are what we would talk about as controls. Now you started the company during the pandemic in a period of extreme volatility. How did that inform your strategy? Has it changed in any way as we've exited the sort of isolation economy? It has had a big impact on, I think, how we run the company more so than the product. The product that we're building is still the same product that we set out to build, but we are a fully remote company. And I think that the pandemic actually just enabled us to more easily build the company that we wanted to build. When we started the company, I was living in the UK, I had always intended to move to the US. My wife is American. We had plans personally to move here. And we always expected that the majority of our customers would be US banks, which is turning out to be true. Because of the pandemic, we were able to really work from home, build a remote team, and it enabled us to just build this company in the way that we wanted to, without it being quite so different from every other company out there. You know, that's interesting. On your website, you have some little about page. And then you've got sort of a teaser for prospective employees. 25 days of paid holiday per year. I know at Silicon Angle, we have unlimited PTO, and that's always an interesting balance. But 25 days, very generous, additional paid day off in your birthday. Last Friday of every month off, which you call cable unplugged, et cetera, et cetera. So the reason I bring this up is because a lot of banks actually financial institutions are forcing people to go back to the office. You serve that industry, and yet you're a fully remote company. How did you kind of land on that? And we see a lot of companies struggling with the right model now, and it seems like you're very comfortable with fully hybrid or fully remote. Yeah, fully remote, specifically not hybrid. I don't think that a hybrid works. People who are sat next to the senior management team or the leaders of the company in an office, it's very difficult for them to not become favored just naturally through osmosis. You're talking to them all day. So definitely just fully remote. We take the view that it's definitely possible. You just have to be very, very intentional about some of the things that you do as you build that company. My co-founder, Katie, she lives in Dublin. I was living in England, so already we were distributed. And as we started to hire people, we were thinking about what were the hubs or the areas or the time zones, which we thought would make sense to build different teams across the company. So the way that we do this is that we build our product and engineering teams in European time zones and we build every other team in North American time zones. At the moment, our team is small enough that we can get together every single quarter somewhere that someone in our team lives. So we get together every quarter. We do planning. Recently we've been to Romania, Poland, Greece, Ireland, Portugal, Toronto and Canada. We're off to Italy in October. And that's a really, really great bonding experience. But the idea is as we grow, we may not be able to all get together once a quarter as a company, but by focusing on different time zones for different teams, we'll be able to make sure that the different teams can get together on a regular basis for planning purposes. We probably have a lot more structure or process than other companies of our size. And we don't think it slows us down, but we do have to have that process in order to make this fully remote work for us. So it does work, but you have to be very intentional about it. Yeah, sounds like you've thought it out well. Tell us more about your product and how it works and what's so special about it. Yeah, so this independent testing that is a regulatory requirement that banks have to do today, it is done by teams of people, manually dip sampling, a tiny percentage of accounts, usually less than 1%. And looking to see if all of the right processes were followed. What we do is we just automate that. We take in through our API or other integrations that we have with data warehouses, like Snowflake or BigQuery, we take in 100% of the account level data and we monitor it in real time for any regulatory breaches, control failures, or indicators that financial crime controls may not be working effectively. And the product is configurable to a bank's unique risk appetite and control environment. So it can be set up to really align with the way that the bank thinks about their regulatory requirements. So do you integrate with, you mentioned Snowflake and BigQuery, do you integrate with these data platforms or you sort of sit outside of them? How does that work? Yeah, we have an integration with them so that we can pull data on an agreed cadence from our customers data warehouses. We also are building out a suite of integrations with a lot of the financial crime control providers, some of which we've talked about. And that will enable us to pull data very easily so our customers don't have to go through integration processes when they want to work with us. When you saw the AI shot around the world, heard around the world, what was your reaction? Did you say, hmm, okay, great. Now we can accelerate that. Is there an AI play for you guys? Was it a uh-oh moment? Let's rethink kind of our technology roadmap. How did you respond? We didn't make any drastic changes in our business. We utilize some AI and some machine learning in some of the sort of internal tools that we use and the tools that we use that help our software team be more efficient, for example. We definitely have plans to introduce more machine learning and AI in our product. We didn't massively bring those plans forward because I think that we're still learning a lot about use cases and they were at a certain point in our roadmap for very sensible business reasons beyond just sort of, you know, the hype factor. So it was interesting. It is interesting to talk about and certainly investors and customers are asking us about our plans, perhaps with a little bit more frequency, but we haven't significantly changed our roadmap because of it. So, and did you series A? So I presume you've got, you're pretty comfortable with your product market fit, is that fair? Yeah, the way that we like to think about this is it's one of the things that it's good to be consistently paranoid about. It's very easy to sort of really think that you've got product market fit because you have a certain number of customers or a certain amount of revenue. But the way that we think about it is what are the additional measures that we can put in place that give us additional confidence that we're heading in the right direction that we really are knocking on the door of product market fit? We like to constantly challenge ourselves about that. We like to try and think of new ways to measure it to build up that confidence level. I mean, as I'm sure you know, and a lot of the conversations you have around this, there's no single measure of whether you have product market fit. And so we are finding different ways to try and build our confidence around that always. Yeah, I mean, Mark Andreessen says when your servers are blowing up and you can't handle the business, you've got product market fit, I think Mark Roe Bears might say, well, things like retention are maybe a better, more measurable example. But so, okay, so you got product market fit and you're constantly adjusting that. What about so-called go-to-market fit? Talk about getting your go-to-market if you would. Yeah, that's really interesting. We actually just hired a new Chief Revenue Officer, Candice Sogren, who comes to us from Marquetta, went through the IPO there. So Cure, Selling Identity Verification, and then most recently, zero hash of crypto as a service. So really amazing background. And she's come in to help us get our go-to-market team in really good shape and take advantage of the opportunity that we have. The fit that is the strongest for us right now is the banking as a service banks. So all of these banks that are essentially lending their banking license to Fintechs, they have this requirement to understand how well the controls are working at all of these Fintech programs. And if you think about some of these larger banking as a service banks, they have 10, 20, maybe more Fintech programs. And they may be a medium-sized community bank with a compliance team of maybe five people. How on earth do you scale dip sampling across 10, 20 or more Fintech programs? You simply can't. And so what we're doing is we are finding good fit selling into these banking as a service banks who then require all of their Fintech programs to integrate with us and use us. And that gives the bank the complete visibility into all of those Fintech programs, the compliance that they have in place. So those banks can have the right conversations with their auditors and their regulators. You've got a pretty interesting observation space between sort of the spectrum of, traditional financial services all the way to crypto and notwithstanding the crypto fraud, let's put that aside for a moment. We know there's a lot of that, but there are actually some crypto companies that do a really, really good job with controls like KYC. And a lot of the traditional financial institutions early on anyway avoided it. And now are sort of, as you say, maybe lending some of their capabilities to that world of crypto. Do you see those worlds coming together? Did one learn from the other? Is there an equilibrium being reached? What's your observations and learnings there? Yeah, it's interesting when you think about the different jurisdictions as well. So in the UK, I've just moved to the US from the UK. Crypto companies have to be registered with the Financial Conduct Authority and comply with all of the same money laundering requirements as a regulated bank would. So we're working with Ramp Network, for example, and they have fantastic financial crime controls in place. They're using our product to assure themselves of that and to gain efficiencies. And what we are seeing is in the US an increasing need for those crypto companies to get to the same standard of financial crime controls as they have now in the UK. And that's really being driven by the regulatory scrutiny of those banking as a service banks. So all of these crypto companies have to work with banks. Those banks are getting increasing pressure from the regulators that their Vintech programs have great controls in place. So really what we've seen is a power shift it used to be over the last couple of years with the venture capital boom. It used to be that the Vintechs, the unregulated entities, the crypto companies had the power and they were growing really fast or the banks wanted deposits. So the banks were just trying to grab as many of these Vintech startups, these crypto companies as they could. Now what we're seeing is the banks are able to be much more considerate. They're able to spend more time thinking about which programs they want to onboard and they now have the power to say to those crypto companies and other Vintechs, we need to see that you have a BSA officer. We need to see these controls in place. We need to see you have this assurance. You have to use something like cable. And the banks are now turning away actually often more Vintechs and crypto companies than they are actually onboarding because of that power shift. That's interesting because of course there's interest rates rise, risk on assets, become less attractive, which actually makes your service more attractive. I have a question. Again, brought up Andreessen before, but they moved, I don't know if it was the crypto center of excellence, but they moved some crypto expertise from Andreessen's firm, which is pretty prominent in crypto to the UK. Was it the case that it was UK public policy that actually drove some of those early on controls or was it some other factor? I don't know what it was that drove Andreessen to. I'm sorry, I misspoke. Let me rephrase. You had described the situation in the UK as I think more mature, if I could say it that way, than what you're finding in the US. And is that, what I was asking, is that because of the public policy or were there some other factors? Yes, so the financial conduct authority who are the main regulator of banks in the UK, they expanded their remit to also cover crypto firms. So crypto firms in order to operate in the UK had to register with the financial conduct authority, which meant that they had to go through a process of sharing their policies and procedures, their financial model, all of that sort of thing, their business model with the regulators and to get approval so that they could maintain those customer accounts. That meant that they had to have a certain level of maturity with regards to compliance. That has not been required in the US until more recently and it's now becoming much more common. Well, hopefully the situation will, I mean, I often feel like the US government's trying to kill crypto in the US, we'll see how that plays out. How big is the market you're going after? How do you think about your total available market? Yeah, I mean, really it's any regulated financial institution in the world. So it's not just banking as a service banks, it's banks, it's money service businesses, it's gambling companies, it is all of those sorts of businesses all over the world. They need to have testing of their controls and at the moment we're not aware of anybody else automating this. So the market is huge. We're starting off really with a focus on the US and the UK, but eventually it will be global and eventually well beyond just your traditional bank. So you raised, I guess you raised your seed. You've seeded the company in 2020, right? During the pandemic, 2020, early part of 2021, I guess. And then you did your series A earlier this year, correct? Yes, so we raised a small precede round in late 2020 and then our series A this year. So what was it like raising money? I guess you were early enough, right? So you hit companies that are later stage are having some trouble, but you guys were early enough showing the growth. I think I saw something in TechCrunch or maybe SiliconANGLE where you had drawn like 5X in the past, I don't know what period it was, but you're growing very rapidly. And so what was that fundraising like? Why were VC so attracted to your firm? The precede, that was very early on in the business. It was just me with a business case. And that was very much background and I guess found a market fit. So coming from Monzo, having the unique insight I had, that was I'm sure the main reason for the successful fund raise then. The seed round that we did the following year, which we did in 2021, we had a number of proof of concepts in motion. My co-founder had managed to finish our time at Monzo and come on full time. We'd hired a small team and built a very early product. So that was about initial traction. What was interesting about both of those fundraising rounds is that I did not meet any of those investors in person before signing the term sheet and getting the money in the bank. So that was kind of a fun COVID anecdote, I suppose. The series A, that was about early traction and market momentum, I think. So the traction that we've had, the growth, the types of customers that we're signing, but also the regulatory tailwinds. It is becoming the topic compliance. It's amusing because compliance is always thought of as maybe a little bit boring, not super interesting. You might start talking about financial crime and money laundering and terrorist financing and you can start to put some popular names around it and think about Pablo Escobar and so on. But it's certainly not been, I guess the hot topic like some other areas that have been well-funded recently, but that's changing. The last year has seen a huge momentum shift in the compliance space. It's top of mind for all bank CEOs and that was really apparent as we were speaking to investors. No, no question, it's like the new killer app. So last question, was the Bay Area a combination of the obvious business decision or personal decision? Of course, a lot of companies that are fully remote are saying, hey, we don't have to be in the Bay Area or in Silicon Valley. We can be anywhere. So it's kind of ironic that you chose that part of the world. Why? Yeah, it was honestly mostly personal reasons. It was where my wife was living before we met and before she moved to London. So we're getting back to her friends and family. Interestingly, whilst we do have some investors here in the Bay Area, CRV led our seed round and they are here, our series A leads are not. They are a stage two, our fully remote venture capital company. And so the people that I speak to most are in Boston and Minneapolis and the co-leads for our series A they're based in Chicago and New York. So really nothing to do with the Bay Area. Well, Natasha, congratulations on all your success thus far. I know you have a lot of work to do, but love to have you back. Visit our Palo Alto studio and meet some of the folks down there and let's keep in touch. Brilliant, thank you so much for having me. You're very welcome. Okay, and thank you for watching. This is Dave Vellante for theCUBE Conversation. We'll see you next time.