Athena, The Heroes Journey - Michael Starkey and Nathan Walsh

In this episode of Fintech Chatter, Dexter Cousins chats to Nathan Walsh and Michael Starkey, Co-Founders of Athena Home Loans.

Making their long awaited return to the show, Nathan and Michael discuss their journey over the past four years, and the insane challenges they’ve had to navigate as interest rates rose rapidly and funding markets dried up. 

According to Wikipedia Athena was the patron goddess of heroic endeavor; she was believed to have aided the heroes Perseus, Heracles, Bellerophon, and Jason. She may have also aided Michael and Nathan over this last few years!

We ask Nathan and Michael the tough questions like how do you compete with banks, balance innovation with regulatory requirements, navigating the rapid interest rate rises since 2022, and the importance of partnerships. 

Nathan and Michael also share their secrets to building a resilient team and maintaining a strong company culture as they aim for the next stage of growth and innovation in the home loan sector.

Chapters

00:00 Introduction to Athena Home Loans
03:38 Founding Story and Vision
05:48 Tech Fin vs Fin Tech: Athena's Position
07:32 Navigating Regulation and Innovation
11:48 Challenges of Distribution in a Fragmented Market
13:34 Impact of Interest Rate Rises on Fintech
19:45 Lessons from Big Banks
23:23 Partnerships and Growth Opportunities
29:29 Cultural Alignment in Partnerships
33:47 The Journey of Co-Founders
37:59 Hiring The Right People
40:51 Navigating Growth and Change
45:09 Reflections on Past Experiences
48:40 Future Aspirations and Growth

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Transcript

Dexter (00:00)
Nathan, Michael, welcome back. Four years since we got together and had this conversation. If startup years or like dog years, then that's kind of 28 years since we last spoke. I'm sure it's been a lot for us to talk about. But before we do, maybe as you could tell our listeners who haven't maybe tuned into that first show, who Athena Home Loans are and the big problem that you solve.

Nathan Walsh (00:28)
Awesome. Well, First off Dexter great to be here and hard to believe it was four years. It does actually feel like they're closer to 28. You call that right?

Dexter (00:37)
Yeah,

I was going to say, there's a lot more kind of, you know, grey hairs and old hairs.

Michael Starkey (00:41)
Wish I'd go ahead.

Nathan Walsh (00:43)
Yeah,

so Athena Homelands, we're a specialist Australian homelander. So mortgages, helping people buy their home. We founded with a mission to help Aussies pay down their home loan faster. So really with that idea to say this is a massive $2.4 trillion market and it just wasn't really meeting the needs of consumers. And I think what's interesting though is, you know, Mike and I have been at this now for coming up eight years. So, you know, when we last spoke was roughly halfway through the journey.

just how you sort of your views of the opportunity and what is the problem you're solving can evolve. Really that idea to say market at this scale where NPS, so net promoter scores for consumers are typically mildly negative, I'm more detractors than advocates. And so a real opportunity for us to go out there and understand how do we change the game for good? What does it actually look like to be better? And so absolutely for those in that position, pay down your home loan faster.

there are so many broader opportunities that we sort of together work through. And probably the thing we just mentioned is we're a B Corp, so we really are about how do we bring profit and purpose together. And so we really are trying to put some real muscle behind that idea about what can we do to make life better for people with a home loan.

Dexter (02:00)
So I guess Nathan just mentioned there it's actually close to eight years than the six of that first two years. How did you both get together and decide that you were going to try and tackle this problem?

Michael Starkey (02:16)
Yeah, well, we both worked at NAB for a good amount of time. I you were more than 10 years. I was just near on nine or 10 years. And we were part of the same leadership team. we were sort of, it felt.

probably unlucky at the time, but lucky in retrospect that NAB was going through a funny phase, I think, where people like Nathan and I, we probably felt like we'd sort of reached a little bit the limit of what we could do within that organization with the leadership at the time. And we got together just over breakfast once, it was February in 2017, February 2017, and Nathan had this vision, sketched out this...

this vision of actually the way funds flowed in the market, which I still think is super relevant to where we're going and what we can achieve with Athena. But interestingly enough, that was a vision around the flow of debt and funds in the market as opposed to technology and what they could do on the borough side, which, as Nathan said, turned out to be a good opportunity as well. So we got excited about that in February, and by April or May, we had resigned. So a lot of people thought we...

We're cooking that idea for a long time because we had known each other for a long time in the bank. But we really got excited about the idea quite quickly and sort of firmed up some sources of equity capital during that period and then worked out we could raise the money and get started. we were sort of, yeah, within two or three months, we had resigned to start this business.

Dexter (03:43)
One of the questions that I tend to ask everybody on the podcast is whether they're more of a tech fin or a fin tech, as in, you're of getting creative around financial instruments and innovative on that side. Now you've kind of, you you're eight years in from that diagram that Nathan mapped out. How would you describe Athena in that context of a tech fin or a fin tech?

Nathan Walsh (04:10)
I'd say we're a FinTech if the emphasis is on the financial services side. But I think we're really probably way more tech as source of advantage than maybe Mike and I had appreciated. I think just what the engineering teams, the product design, it is quite incredible what can be done. So I would say there's a real balance. But we're not doing original research down deep into

you know, the core of technology. What we really have an opportunity into a vertical that's well behind the world is to how do we actually bring really modern design, the agility and opportunity that presents and then deploy that in a way that's really benefiting the two sides of our business, Borrowers and brokers and then clearly the funding side as well. Incredible what is therefore possible. We are up against, you know, banks,

major players that are always going to have a massive scale advantage in this space. So for us it is about how can we move at speed, how can we deploy insights, deliver better solutions. And so that really is bringing how do you run financial services, how do you work within a regulated category, how do you create a platform that can move billions of dollars of money, but do so in a way where you're bringing some extraordinary talent in terms of the tech side as well.

Dexter (05:31)
Yeah. There's a mantra in kind of startup world, move fast and break things, which is not really applicable to FinTech. Because if you do break things, of, you know, there could be a jail sentence at the end of it. How have you balanced that kind of,

absolute requirement to move fast at pace, but also work within the bounds and the restrictions of regulation compliance. Yeah, the capital restrictions as well.

Michael Starkey (06:07)
Well, we have a very, I mean, think there's probably a few parts to answer, but we've, we hired a very experienced team right from the get go. So if you look at the people running our product function, treasury risk, et cetera, they've all got years of experience, right? Sometimes in major organizations where obviously they're dealing with highly regulated markets, they're dealing with very reputationally sensitive issues, right? Like when someone takes a home loan out and you know,

they get into trouble, how do you deal with those sorts of customers? We've got a lot of experience in our team in that, and we've got a very strong risk function, and we're relying on funding partners to lend us billions and billions of dollars of their money. And so they put us on a lot of scrutiny there, Dexter. And so we're forced to take these issues extremely seriously and put all of the frameworks there in place to deal with that. But actually, the advantage you have when, as Nathan was...

talking about when you're starting with a blank sheet of paper and you have a cleaner platform with end-to-end data that flows all the way through from acquisition, originations, servicing, all the way to the back office and the treasury functions, you're actually at a fair amount of advantage there in satisfying those requirements because you've got clean files. When our funding partners come in and examine our operations and look at the files that we've written, invariably they find that

they're just at a very clean position and we're able to demonstrate not only the performance of the loans, we've written $9 billion of loans and we haven't lost a cent and our REIS rates are typically being an order of magnitude lower than those of the majors. So not only the performance of the portfolio but also we can just justify why we've written every file because of how systematic it is and how clean the data is. So yeah, it's a space that we have to take very seriously but we think we've got an advantage in doing so. Would you add to that, Nate?

Nathan Walsh (08:02)
Yeah, I actually think what you just framed is actually the most important question for someone to think through if they're looking to play in fintech. Yeah. That you're not just thinking of almost naively what's desirable and then not really understanding all of the constraints. Yeah. There's reasons why finance works in certain ways. And so think of it almost as a double loop design where you need to think about what are the requirements to really do things better for a consumer or a broker or your channel partners, et cetera. But equally,

what is both the letter and the spirit of the regulation in which you need to operate and how do you make those things consistent and work through? Because I think that's the difference between a really great insight that can be scaled and actually deliver impact in a great business versus something which is yet the world doesn't quite work the way you'd like but you've not really thought through the idea that you need to have fuel for the car or whatever component. There is an opportunity for a startup to solve

both those problems better than an incumbent because at its heart, many of the core regulatory problems are ultimately just data access and management. And when you really get really careful and tight about thinking through the information that you need, so in our scenario as a lender, we need to think about what does a AML obligations mean? What does ratings agency obligations mean? What does ASIC require? What does, and you start to go through, that's the information that's needed.

then how do you develop systems that can capture, manage and analyze those things effectively? So there is a real double loop design problem where you could start to say, yes, let's develop something that's a better answer, but equally have something that's meeting obligations in letter and spirit better as well.

Dexter (09:41)
One of the key challenges, I believe, that what you've just mentioned there is that you're at the forefront of innovation. So therefore, from a regulatory perspective, a lot of the things that you're trying to do might not have been done before or it's uncharted waters. And the challenge I've found for a lot of people, particularly in compliance and risk, is they tend to see the world very much in black and white. And you guys are operating in all the shades of gray that...

You know, not that where there are things that are just kind of unknown. And if anything, you got to be the kind of trailblazers for changing some of those or even creating some of those regulations and that don't exist.

Nathan Walsh (10:25)
So I would say we're probably a little different than some others in that we are really at the heartland of meeting a responsible learning obligation, writing good quality credit. So we're absolutely operating in the black on all of those dimensions and not pushing boundaries. I'd probably say what we're really innovating on is how you do those things. You sort of think about the compromise of making sure this is the right line, but also getting a great, fast, easy experience.

How do you bust the compromise between many of those dimensions about speed and quality? That idea around if you move fast, you have to break things. Well, how do you move fast and not break things is actually the much more interesting question. It's sort of self-indulgent to sort of say, let's move fast. then it's not just in regulated financial services. You kind of look to some major players which have taken that philosophy way too far up the scale curve. We're all bearing a bit of

Dexter (11:18)
The analogy I use is the kind of reckless driver who drives into safety but leaves the pile up behind.

Nathan Walsh (11:24)
Yeah,

yeah. So I think that idea to say you want to be able to move large amounts of money around safely. want to have consumers are making some of biggest financial decisions many will ever make in their lives. You want to step through all of those points and actually end up with things that deliver better experiences. And so I think there's an awful lot of really, really fascinating challenges. I think part of the reason why fintech is such a fascinating vertical is inherently it's a more complicated

problem set because you do need to be thinking about multiple perspectives.

Dexter (11:56)
I guess the other challenge as well is distribution and you're working in a space that is probably the most fragmented in any sector in Australia. think is it what more than 70 % of home loans come through a broker? Right. mean, how many brokers are there in Australia? That'd be...

Nathan Walsh (12:10)
assembly sale.

Michael Starkey (12:15)
There are a lot of brokers, but they are are organized under Partnership and aggregated groups and what we found and as we've evolved from being purely just a digital indirect player into dealing with those partnerships and we've got now mortgage choice as a major partner, which is part of the real estate.com.au group and then we've got loan market group there which and both of those You know originate tens of billions of dollars of loans

every year and what we're able to do is work with those groups and with the brokers that are part of those groups to really speak to the benefits of our proposition, give really great service to those brokers and then get their support in distributing our products. So yes, there's thousands and thousands of brokers but they all organize into partnership groups that we're able to really have strong and deep, really deep relationships with and that's been a huge

think feature of the last couple of years of Athena there is embedding ourselves into those big groups.

Dexter (13:19)
So I guess the other major challenge and it's a one that probably none of us foresaw, 2022, we started this period of interest rate rises every month. I think it was 10 or 11 consecutive ones. Being a business that relies on a loan book and capital management, what did that kind of present to the business in terms of challenges and how did you navigate through that period? Because I would imagine it was...

Yeah, it look pretty rocky when you were going through it.

Nathan Walsh (13:53)
Yeah, think a game of Thrones is you know,

the white walkers climb the wall. Look, you know, for us, it's probably less just about rates going up or down, right, because variable rate loans, they move. But it's probably the same time that was happening was happening because there was a, you know, inflation spike right around the world. Equity markets were eating that. There was a real concern around debt markets. So there was actually sort of a bit of a disruption of everything happening all at the same time. And so that

absolutely was a really challenging moment in time. And the real reason for that was those who are funded by debt markets like ourselves, those costs flowed through straight away. But the big banks have the benefit of both deposits, which they were slow to pass through the benefits, and their costs went up much slower in the market. But also what's got to be, you know,

an all-time great deal where there was $188 billion of nearly free money that the RBA was giving them and literally tens of billions of dollars to the larger players. So at the point where our costs were going up by well over 4%, we were competing against players who had a sweet deal where they were paying almost nothing for big chunks of funding. And so I think what's interesting, and this is probably again coming back to the 28 year...

Dog dog year type type you since we last spoke but it is interesting just how You really do need to be thinking about the seasons can change and so in our market That was a bit of a winter going through what it did though is really give us an opportunity think quite differently and retool a whole bunch of different aspects Of what of what we did so broadened out product set. I think Mike was referencing the big partnerships We've got in place etc. And so, know, we've sort of evolved our business system to be something where

Frankly, the markets as a competitive as they've ever been and we're growing at rates we've never seen before. So I think that's the resilient story of what you, people showed those pictures of that sawtooth journey that you're gonna be on as a startup founder and we've definitely experienced the awesomest shit of our journey along the way. But equally, I think that need to constantly look back at your business model and ask some foundational questions and frankly, that leads to some opportunities about

we need to think about some things differently about what we're delivering to consumers and how we're actually funding that and what does that ultimately mean. And so that was a challenging time but actually some stuff that we're just benefiting from enormously about just the great work teams did during those periods of time to think these are dimensions we need to evolve on.

Dexter (16:34)
If I cast my mind back to the GFC, I kind of distinctly remember the big four banks really pushing hard on deposits because of the challenges that they had around it, funding their lending books. What experiences did you get working within a big four bank that kind of gave you some, I guess, of reassurance to get through that period that you had to go through? Because it was pretty unexpected and...

For people that haven't experienced it before, would probably be games over. There's no way out of this.

Michael Starkey (17:13)
Well, there's probably two things. So one is things are cyclical, right? And we've seen already a few cycles just in the short time that Athena's been around. So for example, at the moment, debt capital markets are fantastic. We're about to do a huge term deal and there'll be lots of demand and our funding position is as strong as it's ever been at the moment.

But we went through that period that Nathan described, right? Where our funding costs versus the banks really widened, right? So that was challenging. So things are cyclical and you do have to play a medium to long-term game and you need funding partners who willing to back you through that journey knowing that it is cyclical. But I would say the other thing is I don't, I'm not 100 % sure working in the big four banks is a massively good preparation for doing what we're trying to do in the sense that you don't, when you're inside those organizations, realize

just how powerful the implicit subsidies are. Now, in the case that Nathan talked about, there was an explicit subsidy, like literally $200 million of free money, not even indexed to cash rate. And so that would have been billions of dollars to the bottom line. And they just sort of flipped that into mortgage competition there. So that was an explicit subsidy. But even the implicit subsidies, the fact that AA rated organizations are able to raise money cheaper than we can sell AAA rated paper.

That's result of the government, the implicit government guarantee of the big banks. So, when you're in those organizations, I'm not sure you're as aware of just how much an extension of the government they are through various parts of the cycle. So I think we were a little bit shocked being outside of the system at how, when a crisis comes like COVID, all of the...

the focus of the government subsidies gets channeled through the banking sector in Australia in a way that it doesn't in other markets overseas. And I think it's an opportunity for the regulators to step back and just sort of ask themselves some questions around what the impact of competition is when they distort the market to such an extent. And Nathan's done lot of thinking about this as well, around that.

Nathan Walsh (19:22)
Yeah, I might almost come back to the question away, which is what's the value of that and on the resume and then we can sort talk about the regulatory side. But I'd say every entrepreneur has their own journey. I was quite late in working out just how awesome it is to be in this mode. And if I was giving advice to someone in their 20s, I wouldn't say go and work in a big bank for a decade like I did. I'd say go and get started. Yeah. I think every background that everyone comes from will have their own strengths or weaknesses. And I think you've got to play

to your strengths. And I think the strengths that do come from a large organization, you do learn excellence in certain functions, right? So I think those big organizations do have very smart people working with very good intent and working hard, but because of the complexity of the business system they're in, it's often like the efforts of the collective 30,000 people aren't quite what you'd want it to be. And so I think our insight coming out of that is, you know, many of the people who are on the

finance part of the FinTech are coming from those organizations and their experience is incredibly valuable. But we've got to actually say, but how do we get the business system not to have their complexity to get the one plus one plus one equals a lot more than the point three that a large organization can do? Which a lot of that is not just excellence in each function, but how do things work together? How do you get to the point where product and sales and risk and finance and all those teams actually mesh together incredibly well?

because what a customer ultimately wants is the sum of all of that coming together. And so I think that's in some sense the inefficiency. So my biggest learning of working in a big bank is not to be afraid of competing with big banks. That's the piece. But it's not because, I think it is being quite specific about where does simplicity and where does focus and where does agility give you advantage versus these are all the spaces for the reasons Michael was sort of referencing that

you know, there is big advantages in a market like Australia where there's oligopolies in way too many industries and big players have scale and, you know, implicit regulatory support and all the other components. So that's the balance I think we'd sort of get from backgrounds. You get a bit of a bit more of an understanding of that. But I'd say probably if I got to do the do-over, I'd probably take the snakes and ladders ladder up and jump straight into getting started on the entrepreneurial.

Dexter (21:45)
We talked pretty sure about kind of productivity and some kind of pretty sobering numbers coming out of Europe and Australia of where we rank in terms of globally. And I think that kind of, you know, one of the two of the things we talked about one oligopolies and competition. but then I guess the other being the kind of, you know, the not necessarily resilience, but I guess the challenges that face startup companies here in Australia.

that there just isn't the support to get them through those tough periods where they then can become the global tech player or the big player. And we've seen some incredible, yourselves included, zip, just amazing, almost like Rocky style, kind of storylines of resilience and getting hit and down and kind of it's at the nine count and you're back up and it's...

It's been incredible to watch just the, I guess, the absolute grit of people within the industry here on Oz. There's also, I guess, as you mentioned, Michael, the kind of seasons and you've kind of come out of the winter and into spring and there was big announcement last year as well of some investment. Do you want to tell us a little bit about that?

Michael Starkey (23:09)
Yeah, so REA made the newspapers back in October, I think, where we closed the deal. So they bought 20 % of the business involved in that transaction. was a bunch of primary investment into the business as well. That came after a relatively longstanding partnership that we already had in place. That was a very successful partnership because we were together writing a lot of loans with REA through the mortgage choice broker network.

The genesis of that, we had been in conversation with REA for a long time. We love the capabilities that that organization has in terms of the tens of millions of people that go to their website every month involved in the whole property ownership journey. The fact that they're interested in the adjacencies around financial services. We'd long wanted to partner with them and we'd actually pitched a few times and been in conversation with them for a number of years.

And then we did it in parts. We started with an arrangement in which we were jointly building these products together and selling them through their network. And when that worked really well, then they decided that they wanted to take an interest and get closer to us. And so they've been an exceptionally good partner for us. And I think we've been a great partner for them as well because we bring a capability that takes a lot to build.

in terms of mortgage origination and servicing platform and treasury capabilities. So that takes a lot to put in place. And so the benefit that REA get is they're able to access that. And the benefit we get is to get close to a business with millions of customers and thousands of brokers.

Dexter (24:48)
And were you ever on the kind of other side of a partnership when you worked in a big four bank?

Michael Starkey (24:54)
peripherally, mean, at some stage REA were partnered with NAB is common knowledge and other organizations at various times. But back to what Nathan was talking about before, it is actually very difficult for an organization the size of NAB to align themselves properly around a partnership like that just because of the number of people that need to be invested and bought into it. And I think, to put words or speak on behalf of REA, but I think what

the appeal of dealing with someone like Athena was they were in the room with Nathan and me. The decision makers were right across the table. so it's not a talking to the owners. You're not going away and then trying to negotiate with 10 other conflicting stakeholders in your business. So I think that probably makes it easier for a business our size to put in place a relatively involved partnership and get it done at speed.

Nathan Walsh (25:49)
And so, again, coming back to your point about oligopolies, I think it's a fascinating one for a startup to think about when does a partnership make sense and then how do you unlock that value? And I think there is where it goes well, right? You can combine the innovation, the ability, the agility, the technical capabilities, all those other components combined with real scale. But clearly there's lots of stories where those things don't.

Dexter (26:14)
You're

unlocking the value piece.

Nathan Walsh (26:16)
I think what's been so extraordinary is it really does take, it's an organisation but it's also an individual piece, the individuals working together and we had the benefit of some just really exceptional executives that were sponsoring and delivering on the REA and Mortgage Choice side. I think we really assembled and had our very best team members focused on this as well. I think cultural alignment, so really actually having that same belief that we can go and do things

very differently and deliver for consumers. And so I think there is that idea to say something that sort of looks good on a PowerPoint slide to make that real. There's an awful lot of thinking and understanding and commitment and almost having the right joint motivations. The payoff I think is exceptional. So I think we would come in and go, this has ended up being a real important evolution in our own business story. And the idea of, in their case, a thousand brokers, absolute experts in the market.

real insights coming through and we've really gone through a process of being able to co-design with thinking about that as being just an exceptional group of people. So not channel, a real partnership, right down in their view. And then equally there's opportunities clearly the scale on the digital ecosystem there as well. So I think it's one of those ones which for a founder is such an intriguing idea, but one, some real investigation thinking to say, what is it gonna take to make this a success?

given there can also be some real frustration. Some of the war stories we're hearing, know, they've tried some great ideas, but just never quite land.

Dexter (27:51)
And you talked about the kind of cultural much then, you rightly point out that, it's not words on the wall, right? And I think one of the greatest litmus tests of whether there's a cultural alignment is in the negotiation phase. Because then you really see whether this is a partnership or whether we're getting there. Yeah.

Nathan Walsh (28:13)
I agree with that. mean, it sort of comes down to there is a real implicit information in are the easy things easy and then the hard things that can be worked through constructively. Because if you get to the point where, you know, what should be easy ends up being hard, then that possibly is a signal in that about what does it mean. And so that's, again, I think where we've been really lucky and very, blessed about, you know, having partners who

really are saying some of the core things that were most important to us. So, you know, we're all about fiercely fair value and, you know, there are all things that were valued and embraced by a partner. And then equally the time that the brokers have really been willing to say, this is what will make it a better solution. Here's the gaps that I have to serve my customers better. And so those real opportunities to come up with some understanding and they've been quite foundational as we've gone on our own product journey and road app.

built out with some of the real value of that expertise as part of the journey too. So I'm with you completely. It's not about what does the coffee mug say, it's what do people do. And then how do you get the learnings early and then think about what are the things that are going to set things up for success.

Michael Starkey (29:22)
We've had great set of partners across our business. It's not just, so REA is obviously a really important one and then other distribution partnerships like the Loan Market Group one, absolutely fantastic partnership. equally on our funding side, we've got exceptional partners. We've written $9 billion and we've had billions of dollars worth of funding come in the door from dozens of different...

funders and I would say we've had exceptional partnerships there as well. And then obviously on the technology side, there's different components that we work with. I think, you you're never gonna be the one delivering every single step of the value chain and so you do need to work.

Dexter (30:03)
Do you have a framework at all for kind of, yeah, deciding whether or not it's going to be the right fit or not?

Nathan Walsh (30:10)
Yeah, but in some ways the simplest one is bringing it down to for yourselves being clear on what's important and then being consistent and executing on what your own commits because I think that's the piece where many of these are not fast food. They're things that know that the kettle's on the back of the stove, boiling away and then people are sort of saying okay I like the story but let's see the delivery and if you're then at a point where things come through. For us

We ultimately have opportunities. mean, 2.4 trillion dollar market, right? So there's opportunities on both distribution and funding and we want to sort of balance both sides of that. You don't want to just, you on one and not on the other. And so we are at a point where there are real, we don't think the idea is how do we go and do a hundred small things with different partners, but how do we pick some really exceptional people who are, there's really alignment between what we can deliver and what they bring as well. And so when you're then at a point where there's some

real fundamental economic truths, some fundamental consumer value that's going to get unlocked, et cetera, then it just becomes a really interesting execution problem of making sure you deliver what you've jointly committed.

Michael Starkey (31:20)
I think personal relationships have played a big role in our story as well, to be honest. I think it's, we talked before about, we wanted to do this 10 years earlier. Personally, I don't think I could have, just with the importance that the relationships that are working at NAB was actually fantastic in terms of the number of people we met from every corner of the industry. And a lot of the people that you know from your past life end up.

in some capacity, whether it's people you know from the distribution side or the funding side or the technology side, that's been critical in our journey. So it's often less about a hard framework and more about the trust you have in a relationship that you knew that you had from a past life. That's been a huge part of our story. Think about it. Think about how we got off the funding.

Dexter (32:09)
Yeah, this isn't scripted, but this is exactly what I wanted to talk about next, which is I guess the journey that you've both been on together and yeah, what you've learned about each other through this last, you know, six, seven years or so, eight years. do you, I guess, first of all, like, what are the changes that you've noticed in each other? Maybe as if you go first, Michael.

Michael Starkey (32:31)
Yeah, that's good question. mean, we worked in quite separate parts of the business. We happened to work on the same leadership team together, so we knew each other in that respect. But we didn't observe each other that closely, did we, before this business? No, I I think, you know, Nathan has huge integrity and a brilliance there, which, and you get exposed much more to that when you're working closely together with someone than when you're just a colleague at, you know, working in different division.

And so how have you changed, Nathan? I don't know, I think you're much the same bloke you were when we started, so seven or eight years ago. I think we've both probably grown into the role because there's no safety net when you're doing what we're doing. Whereas at the bank, there's plenty of safety nets. And I think when you've been in the trenches, I mean, if it's all beer and skittles, then I think you probably don't really test one another's metal. I think the way in which...

you know, Nathan led the business through, well, it pretty challenging, probably a year and a half there when we talked about the earth moving beneath our feet. Now we're going great again, right? So it's easier to be a good leader when everything's great. So I think it's been a really great journey for both of us, yeah.

Nathan Walsh (33:49)
I Mike's been very generous there, but look, for me, I did feel I knew Mike really well before we started. And in the sense of when we sat down and had that initial conversation and then he was saying, yeah, I think this is interesting. That was a massive deal for me. I would not have jumped in and done this without. think, Mike being one of the smartest people I know, someone with the integrity, someone who's calm under pressure, know, someone who you know is going to meet, if they say they want to do something, you're going to do it.

I think that was a massive deal and the idea of having a co-founder was a big part of the journey. Clearly there are people who can go and make a big success of being a solo founder, but I think that does take some particular, for me there's just so much value in having someone I incredibly trust in that journey. I think what I have been absolutely fascinated by is we do see the world quite differently on certain things, but it's fascinating when you get a lot of decisions that you need to get to work through together and you know,

Michael Starkey (34:39)
is.

Nathan Walsh (34:48)
equal co-founders in a journey of just how often we actually are making the same call on stuff very quickly, right? So you can get to a team member asking a question of Michael or myself and very confident that either it'll be a quick answer and I wouldn't be second guessing the cause he's making and vice versa. And then the ones where that's not the case, they are really the hard problems which we need some real thinking through. And so that's to, again, coming back to that point about

The biggest thing in a startup is don't make the easy things hard and then be very thoughtful about the hard things and knowing the difference because you do need to move at some real speed. so I think that's been, you know, the idea that we've kind of gone through, you know, great times, gone through hard times. having Mike as a co-founder has been an absolute blessing and I should call out a number of the team that we've been working with from before day one.

equally been exceptionally great partners through, you know, out. So I think getting a team that you trust, getting a team that you really feel like you're going to take on the world together, and that's something that's true on a good day and a bad day, there is so much resilience that comes, you know, from the right group of people around you. And then, of course, know, good talent, great talent as well. So again, we've been really fortunate, I think, to

set of Athenians we've had to go through and so many of which are you know six, seven, some approaching eight years with us.

Dexter (36:21)
And what's been the secret to attracting great talent?

Nathan Walsh (36:26)
So I think there's a few things that we'd call out, but we'd also say there's definitely some good fortune in there as well. I think we started with, we knew people that we really respected and we went out quite specifically before this started and said, we'd to work with you. We'd to work with you. There was a couple of phone calls of come and have a lot of fun. The job you're in at the moment and so brought in some just truly exceptional.

people and we did start with this idea of we were six people, we were gathering the team that we wanted to have this when this was a $10 billion business, not where we started. So that's probably the first one. I'd say the second one is there is real value in making some explicit choices about the culture and behaviors and what is the company that you want to be. And that's a little bit less important when there's just six of you, because that's really what you're day to day.

But it's surprising how quickly you get to the point where you kind of do need to make those calls. Because you'll be 30 people before you know it. And all of a sudden, your culture is something that's emerging. And we kind of came with sort of a bit of a simple model, which is like, what do we want to be for customers? And then how do we be like that for each other? If you want to be a reputation being straight up with customers, you need to be straight up with each other. If you want to be the point where you're going and disrupting things out there, you need to be kind of brave with each other. So we've come up with this idea to say the marketing proposition,

product proposition and the employee proposition, it's so much easier. Things are all aligned. But that wasn't, just to be clear, that wasn't Mike and I sitting down with some Persian cat in our lap sort of planning out the world. This was stuff which was very much an open conversation with team members and stuff that we organically had discussions about, about what is the real choices we want to make. And one of the things that are important to actually call out, so it's not just...

motherhood, apple pie statements, but actually things that people can be afraid to say, look, hey, you know, let's be braver about this, right? Let's be, yeah. So I think, I think they all end up being really important. And then I think the last one is about trying to therefore get accountability and knowledge sort of lined up. Well, people come because they are making an impact on the world that's quite different. These are people that could go and get great jobs in all sorts of places. They're here because they,

choose to be. And so I think there's a lot about, you know, what is the purpose? How do you tell that story? What are the things you're going to be able to do and actually allow people to go and do some extraordinary things. And so that's where, you know, the list of stuff that we can sort of talk about what we've done. And that's ultimately been assembling some amazing talent and then them executing really well.

Dexter (39:13)
Two things that you mentioned there and I think the first one is that thing around getting to 30 people and then all of a sudden, yeah, well, actually the data that I've collected over the last what, nine years of being specifically focused on FinTech here in Oz shows that those businesses that hired an HR person in the first 30 people have 50 % less turnover of staff as they're scaling the business.

Now, know, I of used to put that down to just the fact that was an HR person there, but there's actually been some businesses that have booked that trend where they didn't. But what they did was they focused on the culture piece and got real clear about hero values. And it wasn't, you know, they didn't just copy what Atlassian had done. It was very much a clear set of rules and principles of, hey, these are the behaviors that we don't tolerate, right? We see them in me or you see them in anybody.

it's called out and it's addressed straight away. So I think that was the first thing. The second thing that you mentioned that I think is really interesting as well is just these growing pains that happen in the business, they're now happening with those businesses that were kind of, oh, we're remote first and we're flying. They're that 50 person mark and starting to now have exactly the same problems in terms of staff turnover and.

scaling challenges that happened when you had everybody in the office. So I think there's a kind of real fundamental bedrock that needs to be in place. Regardless of what your operating model is, that if you don't have the principles around a clear set of values that everybody has to add tier two and knows exactly what they are, you're going to be in trouble.

Michael Starkey (41:04)
Yeah, and there's a certain amount of turnover that's inevitable and actually desirable. We've got 140 people. Our leadership team has been extremely stable. As Nathan said, we're an exceptional HR person who does much more than just HR, Liana and people like Mario and Kam, as you identified, were joined before we even incorporated the business.

because they're so good and stable and there's only 140 of us, inevitably as people grow, they are gonna hit the point.

Dexter (41:35)
I think this is the challenge, right? And I've tried to explain this to people as this isn't a corporate where you got five-year careers, you know, that your business has been what maybe five different businesses in this last seven, eight years that require different people with different skills to get you to the next stage. And if it means that your journey is 12 months, but you make an impact, that's actually a great thing, right?

Nathan Walsh (41:58)
I think this is one of the topics where selling my own growth has been sort of the biggest, think, Mike, you might be in the same place. So we came from a big corporate where we actually had really nice people, smart people in HR, but not empowered to really do very much. And we kind of came away, started this business with almost a point of view of you don't need one. So we were very much in the category of we're going to work it through, we're going to own the people, as the line managers, we'll talk about cultural arrest. And there was one of our investors at one stage, he said,

You know, think the problem is you've probably never seen a really good one. They made an introduction for someone who was not, you know, we're purely just just going to understand what this particular executive's perspective of the world and what she does and what it's all about. And sort of came away with, OK, that's, know, it sort of seemed like, you know, the long line version. And that's the Ferrari version of what it can look like. And interesting enough, you know, got an exceptional

Dexter (42:31)
Thanks.

Nathan Walsh (42:56)
head of people but not from a traditional HR background right but just with exception skills and change and people and community and and she's got a very you know tight team to do some pieces. Absolutely fundamental.

Dexter (43:08)
So I'm going to transport you back to the last time that we did this four years ago. Kind of, yeah, going back to where you were then, if you were going to talk to your 28 year old or your earlier version of 28 years, what would be the words of guidance that you would give that, you know, those versions of yourself?

Nathan Walsh (43:31)
I think

I'd probably arrive with a very good quality bottle of Scotch.

Dexter (43:35)
Hahaha

What I'm about to share with you is gonna be hard.

Nathan Walsh (43:44)
Well, early 2021, if that's when we spoke. And so I think we were probably at that stage really motoring along pretty fast and feeling pretty pleased because there'd been clearly some major... Really motoring along. And so I think we were sort of saying, we survived COVID, here's what we've done. There were some moments in early 2020 and like there was still pretty hair-raising. It was probably not really appreciating that that was like only the first round.

Dexter (43:57)
We were the hype, right?

Hey, he he. Things'll warm up.

Nathan Walsh (44:14)
Things. Yeah,

not so much coded, but actually the implications of unwinding, you know all the rest of that was that was probably when the much bigger components came through. I'm not sure we do much other than batten down the hatches just that little bit faster. We got some great advice from investors and so we did move fairly quickly to get much more focus as a business and all the rest and really pleased about that. So it's probably just almost realising that you know.

the world was going to change and get ready for that. But probably just going through to say this too shall pass. That's literally all that we would have needed to say and then hand over a know, nice taluska or something like that for the right moment in the way.

Michael Starkey (45:01)
I was going to say exactly that. impact, I think we probably didn't appreciate the seismic impact of the, not so much COVID itself, people didn't stop borrowing through COVID, but the shift in the market and how deep and long that impact was. We're still dealing with the fallout of that in some ways. We've reoriented the business to be very strong now and growing really strongly and it's fantastic in the moment.

But that original model would still be sputtering along if we hadn't have done all the work over last few years. I think, yes, I was going to say the same thing. It's just understanding the seismic nature of that shift in the market would be the main thing. But again, what could you have really done differently? I think we did move pretty quickly to face into the reality.

Nathan Walsh (45:53)
I think it is interesting over that time period. So we clearly went through process and we sort of talked to some just amazing founders out of the ecosystem who were going through. I think what sort of every scenario different, but what's the common core was that idea of really zero basing your business. Right. Really start from the ground up and go, what's the resilience that you need in terms of having a really compelling proposition, not just for today, but thinking two or three chess moves ahead. What's the range of uncertainty, what could happen and how do we make sure we set up for that?

And then what are the building blocks of the business system that you really focus your investment on, you know, the things that are most important, right? And so I think there are a lot of things that we are actually really great ideas that we started trying to do them all in parallel as opposed to no, no, let's really focus on our superpowers, get that done, then this done and this done. Productivity of that focused business system is just so much greater.

Dexter (46:49)
Well, I hope I actually don't leave it this long, but if we were doing another podcast another four years from now, what would you kind of love to see happen in this next four years and where would you like to be?

Michael Starkey (47:02)
I actually think we've got the building blocks in place now to be on a really strong trajectory. And even if you were to look at the kinds of propositions we've got or we will have in the next year and the distribution arrangements, I think we've got the building blocks to really have a super scale business, right? We will be profitable this year, right? Which is a couple of years after we thought we would be just with the disruption, but still it's a great milestone.

And in four years time, we'll have a sizable business. We should be pushing the size of, you know, one of the regionals type in terms of the book size is where we'd want to be. And we'll have a, you know, still a super tight culture and a super tight business, but it'll be a significant scale. We're not satisfied just with playing in a very small part of the market. We want to be a...

want to be a big player.

Dexter (48:00)
Brilliant. And for you.

Nathan Walsh (48:03)
I agree with Mike there. think in some ways this is now an execution story. Yeah. We've got an exceptional team. I think we've got a really clear view of what we're wanting to do. And this is now how do we go and change home loans at real scale. The partners that we've got represent a very significant share of the entire mortgage market opportunity. think the funding side, similarly, we've got just great support around what we're doing. And in some ways it's nice where you sort of think about building a house.

Dexter (48:30)
Yeah, I was going to say how does it feel now that you're not, for the first time in what like eight years you're not earning the right to the next six months.

Nathan Walsh (48:39)
Building

a house where there's a lot of time that's not always visible, where you're getting the foundations and getting the slab and all of those components and then things can really move from there to kind of get all everything.

Dexter (48:49)
Well, if you think about it, this eight years, right, you've been laying the foundations and somebody's been behind you.

Michael Starkey (48:55)
That's

right.

Nathan Walsh (48:58)
So, but I think where we've got to, even over the last two or three years of broadening out, adding distribution partners, adding products, breadth, and we're talking about some really foundational pieces, right? So we're moving from sort of the simple loans at a price to some really sophisticated, talking about splits, you're talking about offset accounts, you're talking about multi-collat, you're talking about self-employed like Doc, you're talking about companies, you're talking about trusts. We really started to talk about quite a broad part of the market that we really.

don't believe we can deliver exceptional value when we're having some of the best brokers in the country recommending us as being one of the really big parts of the menu. So I think from here, it starts to get at lots of simple opportunities to say, where do we go from here? I think we're a clear line of sight of both product and distribution and funding components. I think, I'm just going to go with Mike, we look pretty excited that we're a couple of months away from passing through our 10 billion of

of lion's saddle, I mean, that's a pretty big milestone and we're looking to be well through double that in terms of the size of what we've actually been through. I think what's exciting is you look to other markets around the world, no banks are over half of the US market. They're roughly a third, parts of Australia, it's only about 5 % of the market. And so there is a real opportunity to give Aussie borrowers, Aussie brokers more choice.

to actually have technology that can deliver better solutions that we can really begin bringing those insights to say, how do we make a day in the life of someone owning a home who needs finance that much better? And so I think that's where we're really excited. These foundations where we've established ourselves as a funder to say, right through some market events, the loans we write, exceptional quality. Therefore we were rewarded by great funding costs and therefore we're able to provide a great deal.

Dexter (50:48)
Well guys, it's been really generous of you to kind of share all these insights and the journey that you've been on. Before we wrap up though, we do have some amazing talent listening to this podcast. If anybody's interested in careers at Athena, where's the best place for them to go?

Michael Starkey (51:05)
Well, email either of us, get hold of us on LinkedIn and we'll get your details through. Do we have a particular HR email address? I'm not even sure we do. Do you know it?

Nathan Walsh (51:16)
I think it's specific to particular.

Michael Starkey (51:19)
Get all of us on LinkedIn and we'll get your details.

Nathan Walsh (51:21)
Yeah

Dexter (51:22)
Well, I'd hope that they've got the critical thinking skills to be able to find the right contact details. As always, folks, thanks for joining me. If you're new to the show, make sure you follow us wherever you listen to podcasts or on FinTechChatter TV on YouTube. If you're coming back, thanks so much for your support. It really means a lot to me and it really helps me in getting great guests, Blake Michael and Nathan onto the show. Until the next episode, keep well.