The AI Private Bank | Zaid Rahman, CEO of Flex
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
This episode features Zaid Rahman, Co-founder and CEO of Flex, the AI-native private bank for high net worth middle market business owners. (01:44) Rahman discusses Flex's recent $60 million Series B funding round and the launch of Flex Elite, their new consumer product that competes directly with Amex for wealthy consumers' spending. The conversation explores how Flex scaled from zero to $3 billion in payment volume and nearly $100 million in revenue run rate in just two years, serving "jumbo shrimp" businesses - companies doing $3-100 million in revenue that are too big for traditional small business banking but too small for enterprise solutions. (08:13) Rahman explains how these 500,000 middle market businesses power 40% of US payroll despite being largely underserved by existing financial institutions.
Speakers
Zaid Rahman
Zaid Rahman is the Co-founder and CEO of Flex, the AI-native private bank for high net worth middle market business owners. He is a serial entrepreneur building his third company, with 12 years of experience in startups. Rahman grew up in Dubai where his family runs a medium-sized construction business, attended the Thiel Fellowship program, and previously went through leadership development at Pathwise alongside other founders and public market CEOs.
Key Takeaways
Focus on Underserved Middle Market Instead of Micro or Enterprise
Rahman identified a massive white space in financial services by targeting "jumbo shrimp" businesses - companies doing $3-100 million in revenue that are owner-operated and profitable. (06:56) These businesses are too large for traditional small business banking (which focuses on micro businesses like Uber drivers) but too small for enterprise solutions from companies like Ramp or Brex. Despite representing only 500,000 companies, they power 40% of US payroll and have been largely ignored due to regulatory constraints post-2008 that made banks avoid middle market lending. This customer focus allows Flex to build deep, vertical solutions rather than competing in crowded markets.
Use Community-Based Customer Acquisition Over Digital Marketing
Flex achieves 85% organic growth through events and referrals rather than traditional digital advertising. (55:07) Rahman explains they spend less than 15% of their sales and marketing budget on digital marketing, instead hiring city managers in Middle America to host community dinners and events. These events often have negative CAC because partners sponsor them, and business owners value meeting peers more than receiving sales pitches. This contrarian approach works because their target customers - wealthy business owners in markets like Dallas and Nashville - don't respond well to cold outreach but will attend community events where they can network with similar entrepreneurs.
Build Multi-Product Ecosystems to Maximize Customer Value
Flex's average customer uses four or more products, compared to many public fintech companies that achieve only 2-3 products per customer after years of operation. (23:05) Rahman emphasizes their five-pillar strategy covering private credit, business finance, personal finance, payments, and ERP functionality. This compound startup approach, similar to Rippling's model, creates higher retention and allows customers to solve end-to-end problems rather than juggling multiple vendors. The key insight is that middle market business owners want consolidated solutions, not best-in-class point solutions that require a sophisticated finance team to integrate.
Combine Business and Personal Banking for Owner-Operators
Middle market business owners frequently commingle business and personal transactions, spending $200,000 on inventory in the morning and checking into a luxury resort the same afternoon. (1:50:19) Traditional banking creates artificial walls between business and personal finances, but Flex's new Elite product allows single-card usage across entities with post-transaction allocation via SMS. This addresses a real pain point where successful business owners might have $20 in one account while having millions in another, leading to overdraft fees and operational friction. The insight is that owner-operators don't want separate systems - they want unified financial management that recognizes their reality.
Innovate on Process, Not Credit Models
Rather than innovating on credit underwriting (which has led many fintech failures), Flex focuses on serving super-prime borrowers more efficiently using AI. (1:41:21) With only a 3% acceptance rate, they maintain strict credit standards while using AI to process unstructured data from middle market businesses - financial statements, project pipelines, AR aging reports - that would traditionally require manual underwriting by credit analysts. This allows them to make credit decisions in days rather than months while maintaining excellent credit performance. The philosophy is to not reinvent what works in credit but to dramatically improve the customer experience and operational efficiency.
Statistics & Facts
- Flex processes approximately $3 billion in total payment volume annually and is nearing $100 million in revenue run rate, growing 15% month-over-month. (44:00)
- Middle market businesses (500,000 companies doing $3-100 million revenue) power 40% of US payroll despite being a relatively small segment. (08:13)
- 85% of Flex's customer growth comes through organic channels like word-of-mouth, events, and referrals, with less than 15% of sales and marketing budget spent on digital marketing. (55:07)
