Our guest for today was recognized as American Banker’s “Digital Banker of the Year” and one of Independent Community Bankers of America’s “40 under 40 Emerging Community Bank Leaders” in 2020. In today’s episode, Patrick Sells, the Chief Innovation Officer at NYDIG, joins David Metz as he talks about his entrepreneurial endeavors. Patrick’s desire and conviction are what drives the change in his life. Listen in as he talks about the powerful innovation, transformation, and disruption we can achieve when we let go of commonly held assumptions that are no longer challenged. Furthermore, Patrick discusses the future of Community Banks.
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Patrick Sells: Chief Innovation Officer At NYDIG
I’m excited to announce that we have Chief Innovation Officer Patrick Sells on the show. Welcome, Patrick.
Thanks, David. I’ve been looking forward to chatting with you.
The format is pretty simple. I’m going to ask you six questions so everyone reading this can get a better sense of you and your journey. Does that sound good?
That sounds great.
Question number one, your backstory is full of entrepreneurial endeavors. Let me ask you a question. Do you think a person is born an entrepreneur? Do you think they become one because of their situation or surroundings?
That’s one I’ve thought about often in my own life and other people’s lives. Ultimately, the way I’ve thought about that is how I define what an entrepreneur is. An entrepreneur is someone who wants to live in a world a certain way. There’s something in them that says, “This is how I want to live,” and they’re so convicted by that that they’re willing to do that. In some senses, many people are entrepreneurs, maybe not as much from a P&L or corporate standpoint, but I look at that and say it’s anyone who says, “That could be this way. It should be this way, and I want to do that.”
I don’t know that it’s something you’re either born with or not. It’s more of when you get to a point in your life where you have enough conviction that you want things differently, whatever that is. That oftentimes leads you down the journey of becoming an entrepreneur, an artist, or a professional athlete in many ways if you think with that broader definition.
I’ve never thought of it, and it just dawned on me. Do you think an entrepreneur is more of a lifestyle than a professional choice?
That’s how I would look at it. I share this oftentimes with younger college students or students I talk to that there’s so much this pressure to like, “I need to be an entrepreneur.” Many of them probably will be, but oftentimes there’s this desire to have that label and that name associated with you versus knowing you have enough conviction about how you want life to be differently because you don’t have that much life experience. That’s also why some people don’t become entrepreneurs until they’re 40 or 50. Ultimately, it’s a lifestyle versus a way of thinking about my job. That opens you up also as an entrepreneur to think very broadly about what it is you want to do differently in the world.
I have a son that’s still young. I was a high school and college athlete, so I asked my friends that have older kids. I’m like, “Can you tell if your child’s athletic? At what age can you say they have something or don’t have something?” Do you think you could look at somebody and be like, “That person is an entrepreneur, and that person’s not?” Is there something that a person conveys or probably not because it’s different? What do you think?
It’s interesting. I, too, have a young daughter. One thing that stands out to me is she has a very defined personality, more so than I think many kids her age. That may or may not be a sign of something to come later in her life, but I tend to think there are certain mindsets that cause people to go toward the entrepreneurial path. You can see in someone certain levels of convictions about how they think about life or the world.
Oftentimes, there’s a lot of correlation between strong conviction and entrepreneurship. I don’t know that it’s perfectly correlated, but there are signals like that where we can look at someone and say, “This person is likely to be an entrepreneur or good entrepreneur.” You don’t see signals like that. It’s not just conviction, but there are things like that that indicate someone is more likely to be down that path versus a more standard 9:00 to 5:00 job.
One of your first forays into entrepreneurialism was building a website for a manufacturing company. What I found fascinating was you said, “Yes, I can do that,” when in fact, you couldn’t do that because you did not possess the skills. You went out and recruited high school developers and designers and completed the task. What I’ve always wondered is, a lot of times, the people that hold the keys to the building, whether it’s developers or engineers, are oftentimes not the people that start it.
A lot of times, it’s people like me that don’t possess many skills except for a few that rally it. Without me, they may be too scared or need to be motivated or inspired to do that. You have the Zuckerbergs, who are both engineers and CEOs. Do you think it’s true? A lot of times, the people that have the skills to create it oftentimes are not the ones that are leading the charge. Have you seen that in your field?
It’s some of that. On a topic like this, there’s no universalism. When I think about developers, I also think about accountants or attorneys, people who have honed a certain craft and know how to build something. That doesn’t necessarily mean that they also have the desire or the conviction as to what should be built. That’s where the role of someone like yourself or me in regards to, “I don’t have any engineering skills, but I saw a way in which the world could be or how I wanted to live life.” Going back to that time when I was in college and started that business, I simply needed money. I wanted to be able to live a certain life, and here was an opportunity to make money to build a website.People who have honed a certain skill and know how to build something don't necessarily mean that they also have the desire or the conviction as to what should be built. Click To Tweet
I said, “I’ll figure it out.” That came from my desire to change my life in some way. Whereas that’s a different mindset. I’m not as wired to do the researcher to know if A is to B and C is to D that you have more in the manufacturing of whatever it is. That’s why you oftentimes have the marriage of the technical skill of, “I know how to build that thing, you think,” but it’s not always that because I know how to do this. It’s very different thinking to be able to say, “What if the world was this way or this thing was this way?” I want that to happen.
I always find it interesting because disruption usually comes without, not within. You can have an industry with hundreds of thousands of people, but it’s some 22-year-old that doesn’t even know much about the industry and end up disrupting it. Is it because they have that rare 10,000-foot view that you end up losing once you get into an industry because it becomes so micro that you lose the macro? Do you find that to be true?
Let’s take a little bit of a tangent here, but a relevant story. We moved a lot as a kid. I moved about every two and a half years on average. When I was in middle school, we moved from suburban Richmond, Virginia, to rural Missouri, a town of about 10,000 people. As a middle schooler, especially someone who’s moved a lot, you learned to pay attention to what other people are doing to fit in quickly. One of the things that I noticed in this town was the cool guys all shaved their arms. It wasn’t like we had a bunch of swimmers. This is football, rural America. I grabbed my sister’s pink Venus razors and started shaving my arms. I fit in.
About two years later, my parents said we were moving again this time to a small town of about 2,000 people in Indiana. It has a similar culture, football, and small-town life. I thought, “I got this. I know how it would be cool right away.” I quickly learned on day one that having a pink Venus razor and shaved arms as a man was not cool. It was very much, in fact, the opposite of cool. I wore long sleeves for a few months and grew my arm hair. The point of that story that is informative in my own life was that innovation usually isn’t about adding something new per se.
It’s when you can identify a commonly held assumption that it’s no longer challenged, and you say, “I want to tweak that one thing.” As a result, everything else gets rearranged. How can it be that in one town shaving arms that were never a challenge as an assumption? It was a small enough town that thought that was cool, and over here, it wasn’t. You get the point of that. What happens oftentimes is people who work in an industry become sensitized to assumptions as to how it’s going to be, “This is what I should expect.”
You don’t have that vibrant conversation around, “What if one of those things changed and not us trying to add something new?” Where I’ve seen the most powerful innovation and transformation and disruption is when you go at those. It inherently makes it easier for someone who is new because you skip over a lot of assumptions. You don’t even know they exist. That was true of my story throughout my career as I got into finance. I knew nothing about it. Had I known then what I know now, I would never have attempted to do certain things because I know that generally doesn’t work. It’s about being able to look at what’s already there and changing one of those assumptions.
I can’t let you off the hook without asking about crypto. These are interesting times. Give me your optimistic and pessimistic outlook. It’s easy to be a pessimist now. Contrarian would believe you should be buying now. The masses would be selling now. Where do you stand with it?
Zooming out what happened with crypto is, by and large, the community of people working in the ecosystem came from the West Coast. They came from tech and on the West Coast, and technology information, which is the internet making it another means by which we can access and share information, was fundamentally not regulated. If you could build something that was faster, better, or cooler, you could do that and not worry about regulations or the establishment. That came into the crypto, which is fundamentally the first time technology is coming into money. What many misunderstood or miscalculated was that regulations wouldn’t apply.
You started using blockchain technology to build all kinds of fascinating, tremendous businesses and protocols, but because you’re dealing with money, you’re dealing with regulators. It wasn’t big enough from the regulator’s perspective to be a focal point, given all the global issues until of late, because they suddenly started paying attention. It’s very hard to look at many things that have happened and say that that’s not in violation of Securities Law, Commodities Law, or Banking Law. That doesn’t mean the technology and the use cases aren’t powerful signals of what’s to come, but you were going to almost have to have a resetting of the ecosystem from a regulatory perspective so that real companies felt comfortable investing in building out here. Biden’s executive order captured this.
What I’ve experienced from the regulators is they recognize blockchain as a powerful technology, and it’s here to stay. They want American companies to lead that innovation. That’s only going to happen once the rules are in place. Part of what’s gone on this 2022 has been as the regulators have paid more attention, and certain players have gotten in trouble, that’s caused disruption and upheaval in the market. The global macro environment we’re living in is also part of it. We are in a crypto winter, but it’s different because it’s more like the Phoenix coming out of the ashes. In other words, crypto comes back far stronger and more pervasive everywhere than what happened after 2017, when that winter was more like, “Is this thing real? Can businesses use this? Can it solve problems in people’s lives?”
We validated that, and now it’s, “How do we apply that technology in ways that still result in economic security, instability, and what’s coming?” We’re going to have this tremendous rebirth, but along that way, many different tokens will cease to exist because they won’t be able to comply with regulations or be as attractive as a product offering, given what’s happening.
You look at what code was created to understand its purpose. Bitcoin was created to be a form of good money, and many other protocols weren’t created for that. They were trying to be something else. In the world we’re living in, from an investment standpoint, be cautious because lots of things weren’t designed to be money, but they touched money, and now they’re dealing with regulations. How do you rectify and reconcile that? I’d be hesitant to invest in a whole lot of things, but I feel good about Bitcoin.
Historically, you looked at the internet in 2000. It came on furious and crashed in 2001. People are saying the internet is dead, and then came internet 2.0. There started to be practical uses. People started trusting it, purchasing online. You can do that with all. You can say that about the housing crisis. It got out of control, and regulation came in.
It seems like a similar situation for crypto as well. Not to do a 180, but I’d love to get your thoughts on community banks. It seems like FinTech is evolving so quickly that there’s this thought that it’s leaving the smaller banks behind because now you have the birth of neobank or challenger banks. Where do you see the future for community banks? What do they need to do to stay relevant?
I’m a former community banker. I was at a bank called Quontic for a couple of years and fell in love with the industry. One thing that has happened is with the rise of FinTech and neobank, what’s behind most of that are community banks, providing banking as a service. The big banks do that, but most FinTechs are powered by community banks. It’s a way the banking in the community bank industry realized they could participate in the technology evolution that was happening. The other thing that’s going to be an issue and has been for the banking industry is that banks don’t own their own technology. By the nature of how that came to be, it was all rented. You have one too many software deployments that don’t allow for flexibility.
That is going to continue to be an issue for the banking industry, which is how they can get to the point of being able to operate like other FinTechs. They’re both FinTechs. They both completely rely on technology to provide financial services. It’s just FinTech, as we think about it, controls its own tech stack, and community banks don’t control their own tech stack in the same way. They have to figure out how they take back that control. Those that do will flourish, and for the ones that don’t, there will be some consolidation in the market.
I also know the role that community banks play in a community, especially on the credit side like neobank, which isn’t specializing in or doing as much. That part of banking, I don’t feel like goes away and is one of the real strengths of the industry. You have to be thinking about, “I am a technology company. Therefore, I need to be in control of my technology,” which is not how many banks think about themselves.
Do you think there’s a core in mobile providers? There are maybe 5 or 6 that control 90% of all community banks. Do you think they evolve and create flexibility to be able for the banks to innovate quickly? Do you think that banks have to, which is a tough thing to ask, control their own tech stack internally? What do you think comes first?
I’ve gotten to work with all of those major partners here at NYDIG. At various levels, they all are trying to enable banks to have a lot more flexibility and control. I also recognize like that’s a challenge. Those companies came to be most of them through acquisitions of many other consolidations. You have these massively unwieldy tech stacks but are critically important to America’s financial stability, so how do you do that? Those players and you could criticize them, but they all are trying to make it far easier for banks. Now, what banks need to do differently is recognize, “I need to hire developers that work for me.” That’s a big mind shift because they used to be able to go to that provider and ask for more and get frustrated when it’s not faster or more.Banks need to recognize the need to hire developers that works for them. That's a big mind shift because they are used to going to the provider and asking for more and get frustrated when it's not faster or more. Click To Tweet
As those providers started to make the technology more flexible and adjustable, the banks now need to begin to hire developers, and the average community bank didn’t have any developers on staff. That’s what is missed in that industry. It would be easy to sit here and throw shade on the core providers. They’ve got their own issues and need to be doing other things better, but it takes two to tango. The bank recognizes now is our time to start hiring that talent because we can do more than maybe we know, but if you don’t have a developer on staff who can look at the portal and the toolkits given to you, you don’t know that you can do anything, so then you continue to complain about your technology provider.
Do you think becoming an entrepreneur has made you a better person?
On the aggregate, and going back to the definition, I knew there were things that I wanted to see, whether it was in my lifestyle or the things I got to be a part of that I wanted to do. I was so willing to try to take that risk that I had to be okay with risk and failing. Part of every entrepreneur’s journey is learning how to be okay with your failures. In that regard, it’s made me a better person and how I think about helping in the role I play as a father, friend, and colleague.
I also know that I probably am okay now taking more risks in certain ways than normal people are because I’ve been on the other side of that. Maybe that has some negative impacts as well. In the aggregate, it has helped me be a much better person and be able to be much more beneficial to those in my life as a result of the experience.
When I was younger, I used to think having that entrepreneurial trait or gene was a virtue. Now, I’ve come to realize it’s just a trait. It doesn’t make me better than anyone else. Some days, it’s a blessing. Some days it’s a curse. I am unable to sit on the couch for an hour without being like, “I need to do this. I have this idea.” Sometimes I envy people who can do that, but it doesn’t make me better or worse or anything. It’s who I am as a person. That gift and trait can be used for different reasons. It can be used for good and bad.
It’s a similar idea going all back to like, “I’ve got this conviction of this business or this thing.” The trade-off for that sometimes is you’re so convicted. You put blinders up on other parts of your life. Are you there for your kids or friends? Are you taking care of yourself? That’s part of the trade-offs where if you want to do this, there are other aspects of that. As an entrepreneur, how you live life and the ups and downs will also affect those in your life. It can be good. You can help provide money for people and jobs, take care of things, and pay for other things if you’re successful, but you’re also subjecting those who love you to a bit more whipsawing than someone who isn’t an entrepreneur per se.
People think it goes easy as an entrepreneur, but it’s not. If you have friends and family that are coming on the ride for you, you certainly have to think about them. For me, I’ve been married for several years. It’s important to have a support system around you in order to be successful. It’s important for you as an entrepreneur to be transparent too. This is not going to be easy, but the journey is what’s rewarding for the entrepreneur.
I read this study years ago about a mouse going through a maze. They were able to measure their brain waves and when it was happiest. What they found out was the mouse wasn’t happiest when it got to the cheese, but it was going through the maze. As cliché as it sounds, it’s about the journey. That’s what gets us most happy. I have so many friends that have sold companies. They get all this money and buy their West Village Townhouse and all that stuff. They’re like, “I still have this void.” What they missed was building something with people. That was most fulfilling. You cannot fill that with things or money or things like that.
Going back to the beginning of the conversation, if you look at it as a profession in a way, one of the outcomes of that is you feel like, “What does it mean to be an entrepreneur or a CEO? If I want to be a good entrepreneur, I need to have sold my business or made a bunch of money, but what do I do there? I made it up the next ladder, but then what?” versus if it’s a lifestyle, if it’s, “I’m going to orient my life around trying to create things that are new or different that I want for others.” It never ends. Like I look at the life of an artist, you can be painting pictures your whole life. It wasn’t about any one picture.
That’s a great way to put it. I totally agree. I usually save the last question for something a little out of the left field. Here comes your left-field question. You’re standing in the middle of a field. You have to pick one or the other in this situation. You got to let me know what you’ll pick. You’re standing in the middle of the field and can be attacked by 25 85-year-olds or 25 6-year-olds from all sides. You have to survive this. Who do you think you have the best chance against?
I’ll take the kids.
You’ll take the kids versus the 85. What’s the reasoning for that?
It’s easier and more inclined to fall into groupthink than 85-year-olds and more inclined to be easily able to be distracted if you create a game or a structure. It’s far easier to try to redirect that attack into something else, whereas with a bunch of 85-year-olds who don’t have maybe all the physical strength, they’re going to each have more defined thoughts, views, and not going to be able to change the whole group with the same efficiency with the kids.
I’ve asked that question a lot, and most people think of it from the physicality standpoint. That’s an interesting way to think about it. The 85-year-olds are less to fall into a group mentality. Having a young kid helps to know intimately how they think.
The mental functioning of a five-year-old is far different, and it’s going to be much easier to distract them or get them to move on intellectually. Maybe I’ll end up beating up a bunch of bruises and apple sauce all over my face, but I’d like to think that’s the better path.
That’s great. I’m glad I asked that because that’s a unique way to approach it. Patrick, I appreciate you taking the time. Any other questions for me or comments before we end?
That has been great, David. I appreciate what you’re doing with this show and talking to people about the journey and what it means to be an entrepreneur. We need more and more narratives out about that. Thank you for having me on. I’m very much impressed by what you’ve done with everything as well as an entrepreneur. It’s been great. Thank you so much.
I appreciate it.
About Patrick Sells
Patrick Sells is Chief Innovation Officer at NYDIG, responsible for elevating the company’s bitcoin offerings and executing their mission in expanding bitcoin access. He leads NYDIG’s work developing industry-leading technology solutions and partnering with banks, traditional financial institutions, and more to help them meet the growing client demand for bitcoin offerings. Formerly the firm’s Head of Bank Solutions, Patrick has helped raise NYDIG’s status as a partner of choice in navigating the technology, governmental, audit and regulatory components necessary to offer bitcoin products and services in highly regulated industries.
Prior to joining NYDIG, Patrick served as Chief Innovation Officer at Quontic Bank, where he evolved the firm into a leading adaptive digital bank in the U.S. through a focus on technology and innovation.
In 2020, Patrick was recognized as American Banker’s “Digital Banker of the Year” and one of Independent Community Bankers of America’s “40 under 40 Emerging Community Bank Leaders.” Patrick currently resides in New York City and graduated from Taylor University with a degree in Political Science.