Rho’s Everett Cook on building a new “financial operating system” category

Business banking is a commoditized product that has existed for centuries. Before 2018, banks didn’t have to innovate to earn customer business; competition between banks meant expensive brand marketing campaigns and sign-up bonuses. Companies didn’t switch banks because there was no point – each was as good as the other.

Technology companies that wanted to compete in this space couldn’t, unless they first embarked on the long, expensive journey to acquire a bank charter. That meant customers who worked with these institutions because they had to. There were few, if any, well-defined alternatives.

Everett Cook launched Rho with his co-founder Alex Wheldon to create a new category that challenged this status quo, a financial operating system that helped businesses become more profitable. Their insight: You could build a business model relying on traditional financial services revenues (not expensive SaaS fees) and technology that legacy institutions can’t compete with.

What that looks like on paper is that it supplies businesses with a technology platform built on top of traditional banking services and corporate cards, helping businesses become more profitable, make decisions faster, and focus their employees on high-impact work. “All of these tools – expense management, accounts payable, budgeting – work together in a single system designed to help companies work better with money and run more efficiently.”

Since its founding in 2018, Rho has catered to nimble and high-growth businesses by specializing in delivering a frictionless user experience. To date, the company has raised more than $205 million in equity and debt financing.

Cook joined Scarlet Fu, Bloomberg Television and Bloomberg QuickTake host, at Bloomberg’s Global Headquarters in New York City on Monday, November 20, 2023, for a conversation as part of the Cornell Tech @ Bloomberg Speaker Series. He shared his thoughts on his early years as a teen entrepreneur, what Rho learned from its first customers, and the importance of continuous adaptability in the fintech sector: “When you’re getting feedback from the market, and getting feedback from your customers,” Cook says, “you’ve got to make sure that feedback loop is extremely fast and moves your entire company with it.”

“Igniting the flame” of entrepreneurship

A native New Yorker, Cook caught the entrepreneurial bug early in life.

“Most entrepreneurs have a moment in their teens, or maybe twenties when they start something that ignites that flame,” he says. “They catch the bug.” A concert-promotion business he launched out of his college dorm room with a friend ignited that flame for him. Together, the duo organized the first-ever hip-hop concert at Lincoln Center and after some convincing, Cook persuaded Jay-Z to play as a surprise guest. “The feeling of making that moment happen for 3,000 people made me want to be an entrepreneur,” he says.

But Cook also took after his parents and was fascinated by finance from an early age. By 14, he’d invested in the stock market using money he made from a summer job.

“Finance and financial markets are this really interesting puzzle to solve and to try to understand,” he says. After college, he only planned on working on Wall Street for a few years but found he loved the industry and stayed for a decade. Cook worked in investment banking before transitioning to macro analysis.

Those years, he says, taught him the importance of making canny, but sometimes counterintuitive, bets, a skill he found useful in conceptualizing and then scaling Rho. On the finance-to-founder journey: “Macro gives you a great lens for understanding how economics and markets work, and it forces you to think about the world in a way where you constantly try to identify non-consensus bets. You don’t get paid when you make consensus bets, and you certainly don’t when you are losing a consensus bet.”

“Markets force you to think about the world in a way where you are constantly trying to figure out non-consensus bets,” he says.

Rho’s Everett Cook (right) talking with Scarlet Fu, Bloomberg Television and Bloomberg QuickTake host (left), on stage during the Cornell Tech @ Bloomberg Speaker Series event at Bloomberg’s Global Headquarters in New York City on Monday, November 20, 2023.

Meeting the market where it’s at

“Business banking felt fundamentally broken,” says Cook, when he and Wheldon started strategizing the business that would become Rho. Originally, the duo wanted to roll out a specific bank for nimble and growing businesses. As they sat down with customers, though, they discovered a bevy of issues plaguing entrepreneurs. “[They] felt like it was a second job to manage all their finances” alongside the typical labor that starting a business entails.

Cook describes those early meetings as the “aha” moment. As he and Wheldon took extensive notes, they realized their potential customers needed more than a bank. Soon, the idea for Rho “morphed into building an overall operating system that brings the full finance stack together for companies,” says Cook, “to help make them more profitable” and to streamline processes unnecessarily monopolizing financial officers’ time. The pair began developing a simple, powerful financial automation platform to perform several necessary tasks under one hood.

In finance, says Cook, “you’re always looking for what is undiscounted. And I think that’s very similar to launching a startup where you’re always looking for the company no one is building.” With Rho, the pair hoped to do just that.

Scaling sustainably in the financial realm

In a sense, Rho was going up against big banks, some of the most powerful institutions in the world. But, says Cook, Rho had a significant edge when it came to user experience.

“We believe the companies we work with really want a technology experience,” he says. “They want the type of experience they’re used to across the board, with other technology products they use.” The basic idea, he says, was to make the lives of CFOs and accountants easier. That mandate helped the company prioritize what they built.

Recently, Rho partnered with OpenAI to build ChatGPT into several of its offerings, which the founder says is “about making our products smarter and making the user experience better.” And while he doesn’t think the entire fintech landscape will turn towards chat interfaces anytime soon, he’s excited by generative AI’s impact on the market. “It really can absorb and ensure context uniquely,” he says, something that is particularly useful in the financial world.

But as Rho scales, Cook is hyper-conscious of the specific challenges financial companies face, and it’s been crucial for the company to assess how markets might change as they grow. Cook says he thinks about variables like interest rates all the time, both “in terms of how we serve our customers and how we build a resilient business,” he says. And he’s particularly careful about how Rho sets its goals now, after several funding rounds. “Investor relations are a really important job of a CEO,” he says, “regardless of what stage you’re at.”

Luckily, many of the funds that have invested in Rho are in New York City, Cook’s hometown, so it’s easy to keep everyone on the same page. Cook says when he and Wheldon launched the company five years ago, they were told they’d have to go to Silicon Valley to be successful. “But I resisted, I proved them wrong,” says Cook. “The ecosystem has blossomed.” The talent pool in New York, he notes, is incredibly diverse. “In terms of talent, and in terms of just being integrated with the market, New York is unparalleled,” he says. “I think the last ten years of growth have shown New York is the best city in the world to build a business.”

You can watch the entire discussion below:

This article was originally published by Tech at Bloomberg.