In 2019, Plaid, a San Francisco company that connects fintech apps to customers’ bank accounts, was climbing the ranks of startups. It had already become one of the top ten most valuable fintechs in America with its $2.7 billion valuation. But in June of that year, William Hockey, the company’s cofounder and CTO, made a surprising move. With little public explanation, he left his executive job, although he stayed on Plaid’s board of directors.
Today he’s offering a belated clarification: he left to start another business. “I love building. Plaid is an absolutely amazing company, but it’s a big company with well over 1,000 people … That is a different style to run than building something from scratch.”
William Hockey and his wife, Annie Hockey, both now 32 (they coincidentally share the same birthday), are the cofounders and co-CEOs of Column. It’s a technology-focused, federally chartered bank that aims to make it easier and faster for other companies to offer financial services. The couple spent the past three years quietly building the startup, personally paying about $50 million in 2021 to buy Northern California National Bank, a 15-year-old bank with one retail branch in Chico, California, and roughly $300 million in deposits. The purchase lets them offer a fuller set of services that fintechs usually get from multiple financial institutions and software providers.
Prior to starting Column, Annie Hockey worked in marketing at tech startups, got a Stanford MBA and was a consultant at Bain, where she helped private equity firms do due diligence on retail companies they wanted to acquire. At Column she leads the regulatory, legal and human resources parts of the business. She says her consulting experience taught her financial modeling and how to learn new industries quickly. “That [skill set] can be applied to any company, especially a bank on the regulatory and legal side. I just read the textbook, and I talked to everyone I possibly could about banking regulation.”
William was also a Bain consultant before becoming an entrepreneur, but he didn’t overlap with Annie there–the pair met through a mutual friend in 2013. He leads product development and sales at Column.
“Annie is the boss and the CEO of half the business, and I’m the boss and CEO of the other half. Having this really clear delineation is critically important,” William says. “We’re pretty maniacal about determining in advance of any project who has the decision,” Annie adds.
They’re taking an unusual approach to funding their San Francisco startup. “We haven’t raised venture money, and we probably never will,” William says. “The hyper-growth, raise lots of money, hire as many people as possible [approach] … I don’t think that’s the right style for something like this.” Some federal regulations also make it difficult for VC firms to invest in chartered banks, because the investors can then be required to comply with various bank regulations. So Column is owned entirely by its founders and 60 employees.
To fund Column, William has sold some of his private Plaid stock through secondary share sales. Forbes estimates he still owns 12% of Plaid and is worth $1.4 billion. (The company was valued at $13.4 billion in an August 2021 fundraise, and Forbes applies a 10% discount to private company valuations.)
The problem the Hockeys are trying to solve is that fintechs and large tech companies often need to cobble together a patchwork of financial services partners to offer basic products. They need a chartered bank that can hold deposits and a separate “middleware” software provider to connect the chartered bank’s systems to their own tech. Then they need a banking “core processor” to actually move money. “After working in this space for almost 10 years, this supply chain is kind of silly,” William says. “All this should be consolidated into a chartered bank that is also a technology company.”
In its strategy and marketing, Column is catering to software developers who are building financial services products, following the model of companies like Plaid and Stripe who have had so much success courting engineers. Nearly every page of Column’s website shows code that can be used with its application programming interface, or API.
Among Column’s current customers are Plaid, debit card startup Point and corporate credit card company Brex. “One of the things we learned after working with many banking partners over the years is that some banks are a little bit better, some banks a little bit worse,” says Brex CEO Henrique Dubugras. “But at the end of the day, they all use the same technology on the back-end … And it makes it really hard for them to build innovative products.”
Column offers services like holding customer deposits, processing bank-to-bank transfers, running wire transfers and lending. Like a software-as-a-service company, it charges fees every time one of its customers uses its API for a transaction. And like a bank, it makes money on loans by charging origination fees and interest. In 2021, it made $9 million in net interest income, which is largely a result of the deposits Northern California National Bank had accumulated before Column purchased it. (Northern California National Bank made $8 million in net interest income in 2019.) Hockey declined to share Column’s transaction-based revenue, but he says the company is profitable if you don’t account for the ongoing depreciation costs of its Northern California National Bank acquisition.
So far, Column’s customers have been “multi-billion-dollar” financial services startups, William says. Now it’s pitching its products to smaller companies, including startups that have raised “Series A” venture funding and have less than $1 million in revenue.