Creating money management solutions for the creator economy
w/ Michael Callas
For the first Talking Hedge of 2022 we were joined by Michael Callas, Senior Vice President of ElloU, by Talenthouse. Michael is a virtuoso in fintech and financial services with over 20 years’ experience leading and advising established businesses and start-ups across the globe, including LenddoEFL, EY and BBVA. He also is an accomplished opera singer and spent 13 years building a freelance career singing in Europe, the Americas and Asia.
We discussed the global creative economy, the challenges freelancers face when it comes to payments and financial freedom and how ElloU, by Talenthouse has created a product that will help freelancers address some of those challenges.
Hosted by Pritesh Ruparel, CCO of Assure Hedge.
YOU WILL HEAR MORE ON
[00:03:00] The creative economy
[00:07:34] Financial freedom for the creative freelancers
[00:10:12] Solving the problems of freelancers
[00:19:51] The next big trend in Fintech
[00:00:13] Prit: Welcome to our first Talking Hedge of 2022. I’m your host, Pritesh Ruparel, Chief Commercial Officer at Assure Hedge. For our ninth episode of Talking Hedge, I’m pleased to welcome Michael Callas, Senior VP and Head of ElloU by Talenthouse. Michael is a virtuoso in the FinTech and financial services industry. With over 20 years’ experience advising, leading, and establishing businesses and startups across the globe.
He’s also interestingly an accomplished opera singer, which we’ll touch on later in the podcast, and spent 13 years building a freelance career singing in Europe as well across Asia and the Americas. Michael, thank you for joining us. Maybe to begin, you could tell us a little bit about your background and how got to here today.
[00:01:11] Michael: Sure. For the life as an opera singer, I’ve always had this burning desire to build stuff. My mom jokes, I was always serving two masters. I started playing piano when I was four and singing when I was about six or seven years old, to correct my stutter. I love that. Loving opera means that you love history, you love languages, love going around the world and go to Italy for the summer and learn Italian, that stuff.
But I also had a big drive to build businesses. Ultimately, in my career I’d be building a real estate business, or investing in something, or trying to build something bigger than me.
I wound up in Spain after Bear Stearns fell, which is an important marker in my life. I fell into an amazing of a growing startup scene, really smart technologists, and was very lucky to become CEO of a firm called Step One Ventures in Madrid that had been founded by two of Spain’s top entrepreneurs. I got exposed very quickly to this incredible world that we’re in. After a couple of years, I decided that my heart was singing while I was running around the world supporting entrepreneurs and trying to look for VC money as we’ve discussed.
At the Vodafone group, a huge learning their going to Africa, et cetera. Was there for a while, had a bunch of startups in the time being. My partner and I were thinking about moving to the United States. I’d been offered a CEO gig of a bank. Then I met Claire McGee, our Chief Executive at Talenthouse, and the alignment of purpose and mission came together. I’m here and I couldn’t be more delighted to be part of Talenthouse, and more importantly, with you today?
[00:03:00] Prit: Amazing. What a great intro. I’m excited for this one. Michael, when I look at the creative economy, you can see that there’s some 30 odd million people working in creative industries all over the world. They generate over 2 trillion a year in economic value, which is about 3% of the world’s GDP. Why do you think they are maybe taken less seriously when it comes to some other industries? That’s a powerful set of stats there.
[00:03:30] Michael: It is. About five, six years, years ago, I became obsessed with this idea of vertical banking. I’ve been fascinated by bank since I was a boy. I know it sounds super nerdy, but I think they’re really cool. I happen to believe that banks can become a force for good on the planet.
I think as we reorganize what work is and our work comes from and how we value that work, it’s natural that you’re going to have these groups of creators, groups of philanthropists, of what have you, fluming all around the world.
I don’t think that they’re being taken for granted or not understood. But if you’re a large behemoth bank, it’s very hard to get to get focused on all these verticals. I think that it’s not so much about them not being taken seriously, but it’s more about being set up to understand the pain points and solve them. Does that make sense?
I think that we’ve had the unbundling of FinTech. Obviously, that’s how we all started. Well, let me do this part better, this part better. Now we’re at a point where we can begin to conscientiously and with a real purpose rebundle those services and lend them. That last mile of understanding your member, that last mile of being able to serve them, is now possible in a way that it wasn’t 5 years ago or 10 years ago. Certainly not 10 years ago.
[00:05:10] Prit: What are the advantages for the larger brands or businesses when it comes to this network? You say they’re these big behemoths, but how can they take advantage of it?
[00:05:18] Michael: Let me give you a good example. For some reason I was drafted into marketing conversations. I guess I’m a natural born salesman or something. But when you’re trying to market; you’re a little brand trying to market into a market that’s new to you, there are so many nuances about getting that right. One thing is going to New York or London and talking to the experts about that. Another thing is to have the actual creativity come from that market that you’re trying to serve. I think more and more big brands, certainly Talenthouse, we have 14 million members across the world. These people are gold to big firms, because they can actually get hyper-specific. Get them the right folks to help them build the right products, or to market the right products, or what have you. That’s where I think things get super exciting.
We serve some of the world’s biggest brands at Talenthouse. We’re disintermediating the old way of doing things, where you’d call the marketing firm and then they would firm out the work. I love that disintermediation. That’s where the real magic is for these brands. Also, for creatives being with the access is gold. Being able to put on your resume that you worked for these; that’s a big deal. We’re in a world of constant flux, you have to look at all of these different elements as a whole.
I think at this moment, we’re entering the golden age of creativity. No question that the pandemic has accelerated a lot of folks wanting to explore their creativity further. I’m a child of 9/11. I was in New York city that day. I remember going back to a rehearsal for Dungeon on at school actually, and the stage director tells us, we’re in New York, we’re glum, we’ve lost friends, my partner was a firefighter, it was just a horrible time; he looked at us, like, “Guys, were in the business of emotion, and right now people need you more than ever.” This pandemic has made it very clear that we need creativity more than ever. Creativity comes from any corner of the planet, and that’s a beautiful thing to be able to live by.
[00:07:34] Prit: Useful comment. When it comes to the Craig’s freelancers themselves and their own financial freedom and things like that, what are the types of challenges that they face as an under-serviced market when it comes to their own finances?
[00:07:51] Michael: Well, first of all many of us are freelancers, but the freelancers are on their own. If I’m freelancing let’s say as a consultant, it’s very different setup to if I’m a freelance creative. It’s different, even getting paid is different. The persona is very different. When I was performing, the last thing I want to worry about was insurance or invoicing or tax harmonization, or this or that. It drove me crazy. It was very hard to maintain my career of singing and my other business interests. I had no issue calling some tax person for my firm.
We always say that we want to allow our creatives to create freely. That means not having to worry about invoicing, or worry about chasing invoices, or borrowing money, et cetera. Our biggest mission is for us to be able to see that creative as a full person. Sure, part of them is a freelancer. Part of them also wants to be nomadic. They want to have kids, they want to buy a house. If the establishment doesn’t see my members as fully formed humans, which they are, then we’re not solving that problem. It’s a hard problem to solve, and we’re just beginning our journey.
[00:09:20] Prit: The idea behind is always to bring hedging products to everyone; be it SMEs or businesses that previously didn’t have access to these products. Can you give the guys a feel for how FinTech can help solve some of the problems?
[00:09:42] Michael: I’ve spoken about un-bundling. Now I can pick up the phone, I just solved a problem. We have a market that another provider had pulled out of, and thanks to FinTech, out of Israel we’re going to solve that problem, that pain point. Because people like us have been running around for the past 15 years solving those very specific problems. It’s that recombination element.
Any FinTech listening to me right now who might have a solution for us, email me, call me, send a pigeon, whatever. I hope that we can become the first stop for someone developing a solution, or what have you, for the creative freelancer. Please call us. We’d like to partner. I don’t want to reinvent the wheel, because I don’t have to. There’s brilliant people around the world raising money and doing great work, that can just plug into us and we help bring that distribution element to it.
But the more complex nuances are things like risk or hedging. These are things that your retail customer has no clue about. They either get the loan or not, and when it comes to currency hedging, no clue. Think about this: I agree with you for that we’re going to contract you to a new campaign for a marketing campaign in Spain. At the time of our agreement, I agreed to a certain amount of a fee. When that gets translated from dollars to euros or more complex currencies, that’s what I assume I’m going to make. Well, three months later that could be vastly different.
I believe that currency hedging brings a level of fairness and a level of transparency and a level of assuredness to our members, that they shouldn’t have to worry. It is like being tasked with fixing risk for creatives. I find hedging to be one of those things that God knows is not sexy on the retail side, but people are delighted when it works.
[00:11:55] Prit: Exactly. I love the way you put that together. In terms of solving problems of freelances, what was the inspiration behind that?
[00:12:05] Michael: You walk into a firm and go, “Oh my God, I get it right!” A mutual friend of ours contacted me and said, “Let’s talk to Talenthouse.” They care about our community in a way that I’ve not seen anyone care about vendors. Because on paper, they’re vendors, not Talenthouse. When it takes 40 days for payment services to let a payment go, for example, but I won’t mention certain payment services that were great 10 or 20 years ago but now are little old, that is a pain point that we can’t solve using those old rails. That pain point is center to everyone at our firm. Our Chief Executive takes this personally. When you take a problem personally, you tend to solve it with a vengeance. The real inspiration was making our creatives lives easier, truly. 30 or 40 days for some people in the world is not a big deal, but for most people it’s life or death, literally.
This is not a minor or incremental improvement. This is a major improvement. I think that’s been the impetus. Once again, we have our chairman Schmidt, who’s in Vienna, chief corporate development person. These gentlemen know FinTech and banking inside out. I walked into the perfect storm, because they get it. We speak that language, and Claire has this vision of how things should go. I’ve got 14 million people who already use our platforms. It’s a perfect storm for a hope, a successful product.
[00:14:11] Prit: It sounds like a really passionate cause that you have there, and a community that’s very strong.
[00:14:19] Michael: Claire made me smile when she talked about the passionate economy. It really isn’t that. Maybe I wasn’t able to thrive as an artist at that time, but if I can help artists today and creatives thrive in the passionate economy that’s a win. A big one. That means more people creating and more people living from creating beautiful stuff. We need more beautiful stuff, man!
[00:14:50] Prit: Speaking of beautiful stuff and passion, how has your experience as an opera singer influenced your career in FinTech?
[00:14:58] Michael: Good question. A couple of things. When you decide to take on an instrument, and then one that has magic in you, discipline is critical. I from elementary school was very disciplined with how I managed my time. Academics were always most important because I come from immigrant families, which means a B is a failure. Well, I had to perform at school. I had to perform because of my ego, frankly, as an artist. I got quite good at segmenting and controlling my time and being quite disciplined.
I also think that opera specially opens you up. The best definition of an opera is extraordinary people having an extraordinary day. When you want to grow up to perform these roles, like Don Giovanni, for example, a play by Mozart, based on Beaumarchais’ plays, this is enlightenment stuff. This is major cultural change. To be a decent Don Giovanni, you should know the story to be a great one. You need to understand what happened before and after. There’s an opera of residue. I walked in as whomever on stage, I come in having that day already lived. I think that that level of training, that level of research, that obsession with the truth, that obsession with trying to give a performance that’s authentic and real, usually influences how business works.
I also was very lucky that I was given many opportunities, very young, younger than most. I was surrounded immediately by world-class artists, but also world-class business people that understood the importance of supporting art. My first job in New York that wasn’t singing was working for a woman called Kay Koplovitz, who founded USA networks. I used to get her assistant to only get coffee. These people took me under their wing and just taught me about VC. I was looking at term sheets when I was 19. That does show my age, but that’s, that’s fine. I got to meet Titans of industry when I was singing. I realized that I wanted to go out to dinner with them to learn more, than I did with the street I was looking for. But I’m very grateful for the discipline, I’m very grateful for the exposure, plus frankly, the language flexibility that one has. You have to be able to at least sound decent in Italian, French, German, Russian. You have to go to Russia and sing there. I was in Russia when I was 21. When people talk about Russia, I understand it in a very different way, I worked there.
Now as a banking guy, I have that opportunity to go most places in the world, and be able to not be a typical American. You embrace those cultural differences, and that’s where the magic happens. I think a lot of it is exposure. A lot of it was disciplined, and failure happens a lot. Most auditions are not good. But you let go of failure easier, and that toughens you up. I’m a nice guy, but I got right on the stand. I think that’s what you need in business and in opera, frankly.
[00:18:44] Prit: That’s a great parallel between your background and the VC world where you learn to accept certain things go your way, certain things don’t. Having been a trader in my past, I think one of the things I learned to do is keep an even kill. Day-to-day things don’t go your way; sometimes they do, sometimes they don’t. For whatever emotions, you have to learn to keep pretty steady. That’s important with any business. It’s a good transition.
We have a couple of questions, Michael, if you don’t mind if I put them through. The first one’s a little bit of a cheeky request. Somebody asked, are we going to see any of Michael’s opera talents on this podcast?
[00:19:31] Michael: Definitely not. I’ve only had one coffee, and I just had a cigarette. Not going to happen.
[00:19:40] Prit: Somebody will have to find you when you’re performing to get hold of that
[00:19:43] Michael: Only as special requests. I leave the singing to the pros now.
[00:19:51] Prit: The next question from one of our followers is, what do you think the next big trend is in FinTech?
[00:20:02] Michael: I don’t know. It’s double-sided. Banking as a service is getting so good. As that continues to evolve, I think it’s about the really specific and purposeful rebundling of services. I do think that people are tired of having too many apps on their phone. There was an article in Forbes that our chairman shared with me, that millennials (which I unfortunately am, being born in 1980, which is shocking, I feel way older) are tired of having 40 to 50 apps on our phone to do different things. That was okay before my life got more complex and more complicated, but now I’m too busy. I can’t do 40 apps. Sometimes I don’t trade on my trading apps because I don’t have time.
The thoughtful rebundling of these services geared specifically for these verticals – there’s a lot of people on the planet, I think that we’re united more than just by region. I always think about the community bank. My community, I have people in Thailand, I have people in Indonesia, I have people in South Africa, people all over the world. That’s the next thing. I think it’s getting more complex. The harder the problem to solve, the better the solutions that we’re going to have out there to choose from.
[00:21:40] Prit: Is it a case of you seeing an emergence of big aggregators of things just to consolidate, and make that user experience so much more unified?
[00:21:48] Michael: Think about this: you’ve raised money for startups, I’ve raised money for FinTechs; the biggest problem to solve is distribution. If I can distribute to 14 million people, then I bring a big solution to the FinTech world. How do you get customers? So many founders now don’t care about their brand being first and foremost, they care about paying back their investors and their employees eating. I love that. I think that the ego shedding has happened quite a bit. I mean, I would have been upset if my first product, I want my logo! But now, who cares?
[00:22:35] Prit: That’s great. Well, Michael, it’s been a real pleasure having you on this morning. Thank you for your time. Is there anything else you’d like to tell the audience today, before we sign off?
[00:22:47] Michael: One more time: if you’re a FinTech founder with something I should see, reach out.
[00:22:53] Prit: Thanks. Our next Talking Hedge will be in a few weeks’ time. Until then, it was surely a great week. Thanks for joining us today.
High Risk Investment Notice
Trading in leveraged financial instruments such as Options or other financial derivatives, carries a high level of risk and may not be suitable for all investors. Investors who make use of these financial products run the risk of substantial capital losses which may exceed your initial deposit. Assure Hedge (UK) Limited makes no claim or warranty regarding either the appropriateness or suitability of these instruments for your purposes whether commercial or otherwise. Assure Hedge (UK) Limited may provide general commentary or educational material available on its website or otherwise, which is not intended as investment advice. You should carefully consider your financial situation and needs and seek independent advice from a duly authorised financial adviser. Assure Hedge (UK) Limited assumes no liability for errors, inaccuracies or omissions; does not warrant the accuracy, completeness of information, text, graphics, links or other items contained within these materials. You should read and understand Assure Hedge (UK) Limited’s Terms and Conditions prior to taking any further action.
In conversation with Rob Wensak: Empowering corporate hedging clients with options
We discussed the importance of coaching clients when it comes to understanding the market and what options are right for them in corporate hedging.
The future of finance, Embedded Finance Experiences w/ Nigel Verdon
We discussed the next stage of embedded finance and the recent announcement from Railsbank of Embedded Finance Experience and what this means for the industry and consumers.
TREASURY MANAGEMENT in the Era of Decentralized Finance w/ Thomas Otendal
We discussed the evolution taking place in Treasury that is driven by technology, the challenges faced when building the infrastructure to safeguard assets, the impact of centralised and decentralised finance on treasury management and more…