So, Cleo, you guys are presumably familiar with a phenomenon in the consumer financial advice space, 400 million in AR.
Yes. Unicorn, and really rapidly growing, one of the top AI startups and based right here in London. But before you started Cleo, I want to go back to your prior career. You were a poker shark. Is that right?
Shark, a fish. I played at university. I funded my university career through playing online poker.
I only know what I've seen in Rounders and Molly's Game and all this kind of stuff. So, how does actually making like professionally playing poker work?
This was back before you had GTO and the solvers. So, it's all online and you know, play on like multiple sites and you'd play four to six hours a day heads up. And actually really interestingly, I've just built an AI agent that now plays for me and earns rake back. So I make about, I shouldn't say this publicly, but I earn about 200k every year now just through my little agent that plays and barely beats the low stakes. But yeah, I used to play, you know, low midstakes heads up and it was quite profitable.
And how so? GTO is game theory optimal, which is doing the exact right thing that the probability tables would tell you that you should do, right? And you didn't have that in 2012, 13, 14.
When I was playing. That recently. Only 2016, 17 you had the solvers and we actually learned how you could build, beat the game. You, it's still right at the, you know, the edge. You can probably beat the GTO solvers, but it's basically a solved game, which means online play is kind of dead now, but you should play tournaments. You go play a live tournament. They're always fun.
No, because I'll be playing against your boss probably.
Yeah. Don't play online against me. You're gonna get... Yeah, that's very interesting.
You always, a lot of these things are discovered later than one would think like Black-Scholes is, you know, a relatively recent invention for, you know, valuing financial options and I hadn't realized that GTO is such a recent invention in poker.
Well, you don't want to tell people if you've got an edge, right? So there's probably all these things in hedge funds where you could have a massive economic benefit to GDP which keep secret.
Exactly. Yeah, this happened in cycling as well in pro cycling where people used to inflate their tires up really high, you know, 120 PSI tire or something like that. And then one Tour de France team figured out that actually everyone was overinflating their tires and you don't need to overinflate your tires and they kept it a secret from everyone for a long time. Anyway, there's still plenty of room for new inventions is what we're taking away here. But we are not here to talk about pro cycling or pro poker. We're here to talk about Cleo. So maybe just to orient people who aren't familiar, aren't users of the product. What does it do? How did you guys get here?
Yeah. Well, we started in 2016. So as an AI assistant for your money, which was weird in 2016 and now is like the thing to be building.
AI was not as hot in 2016.
Yeah, building an AI system was completely weird. Like natural language processing was barely working, but it was the really big research output at the time. So I did my masters in machine learning and we'd just gone from the vision era of like we'd beat ImageNet and then NLP became the thing all my professors were interested in. So I'd worked at fintech as a data scientist and I had this, you know, fascination with machine learning and knew it was going in that direction. So the thesis was everyone's decisions are wildly unoptimized and your financial life is the most stressful and important thing in your life. So, how could you make a billion people make better decisions every day or make decisions on their behalf? And how could you change the economy, the world, everyone's life through doing that?
GTO for your financial life, if you will.
GTO, I don't think it would sell. But maybe to you, John. Yeah. For the, just free idea for the magazine article, you know, for the opening paragraph on Cleo.
Okay. But that's interesting, right? Because you were founded in 2016. That's before, it's obviously before ChatGPT, but that's like before LLMs, two years before the transformer.
Yeah. But even back then, if you, the Meta lab we were just talking about, like they were really focused on it and they were pushing out a bunch of good, it was just intent classification back in the day.
Then you had two years later it was the transformer. Then you had BERT. Everyone then in computer science knew this was going to be a thing. And then everyone else just woke up when 3.5 dropped. But you could see it, right? But so what I, I mean I presume today you're heavily LLM based, just how did it work like how were you providing the financial advice like you, the user input some data and then what?
It started with regex. We had a lot of regex to start with but then it was just traditional supervised learning, right? So you had intent classification and entity classification. It's a bit nerdy but intent is what you say in a sentence so it was big, big multiclass supervised learning and then you had, and we still had the recommended systems and reinforcement learning to push you information at the right time. So you've gone from a supervised learning world to an LLM based world and that completely changed our architecture and our product actually.
How, the conceit of Cleo is that you should have personalized financial advice. How personalized does financial advice actually need to be? Because you know there's a view that you could say you should have the right savings rate and then you should invest in a low fee index fund and you know you shouldn't buy kind of financial products, it's like you know you shouldn't eat foods that are advertised on TV like the good foods don't, you know, don't have an ad budget and similarly you know you shouldn't buy financial products that are aggressively sold you should buy a low fee index fund and then you shouldn't have a home country bias, you know, you shouldn't buy the FTSE 100 you should buy the MSCI World Index. Like, is that not enough financial advice for everyone?
Showing how out of touch you are, John, with the real consumer and the normal humans on the street. Like, your life is your money. You spend, like it's the most stressful thing for the majority of people in their life. You spend so much boring admin time thinking about how you make financial decisions from, you know, where are you going to live, where's that mortgage, where's that rent going to be, how big should that be? Every single thing you do every day is a financial decision in reality. You make all these transactions every single day. Lost them on Stripe. But imagine if you had a world where everyone was making rational, sensible, you know, more optimized decisions. If you think about how much money goes towards consumer credit or paying on interest when it doesn't need to. You could really change the, not just the top 1% of people that get financial advice. It's the 99% that actually need the financial advice. The people that are living, you know, one month, two month, three month savings. If they can have a better life and make better decisions and you can do it for them. You shouldn't have to think about finance, right? It should just happen on your behalf. You need credit. You should just ask. It should go get it for you. If you have wealth, then it should just go get the best return. It should be tax-free. This should be a world where you don't manage your money by looking at a balance and a list of transactions. And that's coming very soon, right?
Where are you generally trying to steer people? Like I can imagine there's kind of avoiding bad financial products like the classic one of you know borrowing on a credit card. There's maybe price comparison where if you're getting a mortgage you can get somewhat better rates here versus there. There's tax efficiencies but just like it's actually your life.
You think about most of the consumers in the US, 60% of Americans have less than $400 of savings. It's how they spend their money every single day. How much do they earn? What's their income volatility? How much are they spending on rent, mortgages, subscriptions, like what are they actually doing with their financial life? And you can really help someone just by laying it out to them, making better decisions for them. And then on the products, they are just wildly unoptimized, especially at the lower end. They're paying incredibly high interest rates. They are not getting any returns on savings. Most people don't have investments when they just sit it in like a cash ISA in the UK. It's just like crazy the amount of GDP growth and the amount of financial wealth you could be creating people that's like left on the table. So I just think there's trillions and trillions of good that you can do for society and humans but also just the economy as well. If you had this thing moving effectively through the system, you can dramatically increase GDP growth.
How do you advise people spending? I mean like there's the meme online of the millennials with their avocado toast. Is it like you're trying to reduce the amount of avocado toast consumed or like how do you actually steer people usefully in an actionable way on spending?
Do you know what's funny back in the day because it wasn't as intelligent. We had to really rely on humor. So we had 30 female comedians on staff. Cleo was a, you know, it's a female agent. So we had these female comedians and they wrote every single line of copy both what we pushed and what we responded with. And we found that humor and money actually go together weirdly well which no financial institution spoke on to all your lawyers and your executives.
A banker is generally not known for...
Not for their humor. Yeah. So that was a real unlock for us in terms of engagement and like is there a roast mode in Cleo that makes fun of you for your spending. I don't know what it would make fun of you. Maybe the cheeky pints, John. But it, you know, roasts you for what you've done over the weekend or the bar whatever it is. And people really like that and it's a way to engage them in, you know, simple actionable financial advice and increasingly it's just taking action on their behalf. It's moving accounts, it's moving money, it's getting them the best credit, whatever that is, at that time for that user.
Do you have a way of measuring how Cleo is steering people's financial health?
Yeah. We have a measure, I'm actually really surprised that you, well you probably do internally but there is, we have constructed a view of financial health for every individual at Cleo. There's a score zero to 100 and all these variables and all these features. So we know whether you're leveling up your financial health or you're degrading it based on your actions that you do. So actually the objective function of the recommended system it used to just be engagement. So it was like can we make you like click this button and it was fun but now it is financial health and engagement. So we're optimizing for did this bit of advice, did this action lead to in two months, three months time their financial health getting better and them spending less than they earn, which is like the core primitive for them spending less than they earn. Oh yeah, it's like the core primitive of every human in that kind of low to middle income, right?
Yes. Who do you compete with? Like is this substituting for existing products? Is this just kind of a new thing that...
Yeah. But well, think about how people make financial decisions today. Like it's a vibe based optimization game for most people. It's maybe it's a packet and a napkin, but the vast majority of consumers don't budget. They don't think about their money in a very rational way or they do it in a very late way. There's only a really specific number of nerds probably everyone in this room actually that will have an Excel and I'm sorry I shouldn't make fun of all the audience but have this, you know, set of advice that they'll construct themselves so we're really in the advice game for people that don't have advice and I think there's going to be loads of avenues like this imagine health right we all make terrible decisions for our health all the time we've all got a Whoop now we're all getting into it but there's going to be all these big verticals in your life whether it's education or health or finance where your decisions are wildly unoptimized today and they are going to be, they're just going to be so much more thought through. Imagine how you deploy capital and people at Stripe. There's probably an army of nerds that are thinking about how you deploy that versus your strategy and where your goals are going. Imagine if you do that for every human for every decision they ever have to make.
So you think you go broaden beyond financial advice into...
There's a lot to do in financial advice. I was big time. So we're going to nail that first. And I think, you know, you're going to have these four or five agents that go really deeply vertical in these big specific areas of your life. And I don't think they're going to be the frontier model companies. Actually, I think they're going to be companies that focused all on health. They go all the way to the MRI and the blood test and they have a whole stack of advice. So, I'm bullish on that. And I'm less bullish on like OpenAI being the interface for everyone for everything.
Do you see that competition dynamic with users where anyone who's building AI tools? There's always the, anyone who's building kind of specific vertical AI tools, there's always the dynamic where people might just, you know, take a bunch of financial statements or connect their bank account to Claude and start asking questions. Do you practically see that behavior where an alternative to using Cleo is wiring up the relevant data to an LLM?
You can connect your Plaid account now to ChatGPT and ask questions, right? But I would bet a huge amount of money, they get very little engagement and it becomes a kind of side project that goes nowhere in reality for that business because to engage people with financial advice, it's got to be proactive and it's got to be agentic. So people don't wake up and go, 'Oh, how much did I spend on?' Yes. What, like is it just a boring thing to think about? So it has to be this agent that's always on, always pushing information. If you think about all the frontier model companies, it's a very reactive thing. It's replacing Google search for most people today. You have something in your head that you want to research, you want to go into, but there's so much space in the product cycle for it to become a proactive, intelligent, always on agentic thing. And that's going to require a lot of effort and a lot of training data and a lot of understanding of what you need to say to a user at what time and that's going to work.
It feels to me that we're early in personalization. When you're saying it'll be very personalized, it's just, I mean if you look at how kind of OpenClaw works underneath the hood, it's this static model and then a bunch of flat files that it's kind of writing notes to itself. It's like the movie Memento where he's like writing on his hand. And that's the only memory he has. That's basically the AI models today. And I'm curious just for your experience trying to build personalized products where the current AI technology is just kind of fundamentally a bit resistant to personalization.
I've never thought, there's definitely a meta point here of like we just have text, right? And like how does the human store memory and like when are we going to get to a different form factor for that? But in reality and what we've been doing, you can build a knowledge base of every single human like their financial aspirations, their financial health, their financial goals, every conversation they've ever had. So you remember Karpathy did that thing a few months ago where it's like oh I do this thing recursively with LLMs. We've been doing that for years. Like that is such a powerful way to build a structured knowledge. I was also giving you a bit of grief for Stripe not being intelligent enough and like they should be that knowledge base at Stripe. They should be every single card connected to every single user, who this user is, how much income they have, where do they spend. So we've built that over time for every user and then we have a recommended system that is thinking from that knowledge base. There's all of these opportunities for us to say things to users. What is the thing that's going to move the objective function the most? That's going to move that financial health, deliver that information, take that action on the back end. So I think text works as long as it's stored in a thoughtful, clear schema and database.
One thing we were talking about backstage is just the concept of personality in AI is interesting. Like I think at the beginning of the field when people were first introducing LLMs people might not have predicted that personality would be such a big thing but you know we're talking about the new Anthropic model Claude and just like what its personality is like or famously you know GPT-4o had this very controversial personality where you know some people found it too sycophantic for some people I guess they really liked how sycophantic it was and they were annoyed when they tried to take it away from them. And I get the impression that for you guys the personality of Cleo and how it interacts with you is a big part of the differentiation. And so what goes into getting the personality right? And for example like do you need to tune it for different users? Do you try to suss out what personality people want? Is it just what it is? How do you build that? Have you moved beyond the army of comedians or is that still how you engineer the personality?
I think this is one of the biggest things of Frontier Labs. Maybe they don't need to. Maybe they should be boring and it should be a generic, you know, not even personalized thing and they should just be the AWS intelligence. But I think for any brand or any company doing this, it moves the metrics, the personality and the personalization to the user dramatically changes engagement. It dramatically changes what a user does. So being funny, being concise, writing well, all these things move our MAUs, it moves our revenue. So we've known from like I don't know the first kind of like three, six months of building this business that the brand and the personality and the tone of voice mattered a lot. So it's been a, it was kind of linear supervised learning one tone of voice and then since LLMs it is now a much more personalized tone of voice based on your income, your financial health, where you live, you in Boston, you're in San Francisco, don't know how it talks, I want to make fun of John but I shouldn't make fun of John in front of 1500 people but it will talk to you however it thinks you want to be spoken to and you can craft that as well.
But is your general learning that you know finance for a lot of people is a high stakes topic. It's maybe they're nervous about it. It's a bit of a schlep. And so you're trying to make it more approachable is kind of the fundamental.
I think all these kind of great companies take the inverse. Take Stripe. Like it's completely archaic and complicated. I've got to go through enterprise sales to do anything in payments. Let's do the opposite. Let's make it really simple, dev friendly. It's going to be a one-click thing. It's the exact same. Remember Monzo? Like it was really bad UX to do anything with a bank and they just made it simpler, more transparent, less opaque. And we've gone, okay, it's really complicated financial advice. We're going to make it really simple. It's really boring. We're going to make it really fun. And we've just taken the inverse position, which is such an obvious thing to say, but I think like how many founders do you see actually take that? So I think it's worked for us.
It's product contrarianism or product differentiation. Yeah, it's like the, you always want it in the most extreme form generally like what is the biggest pain point of your incumbent and like what am I going to do? I'm just going to go incredibly hard at their biggest pain point and make it the most delightful experience. So it's a hack for building your first product, right?
How is the landscape of financial products that you advise people on changing? Like borrowing is presumably changing somewhat at an industry level due to the emergence of BNPLs and things like this. I don't know is kind of the mortgage industry changing and how people are getting those here just yeah I'm curious how you...
There's only so many primitives with money as you definitely know, right? Like you can borrow, you can spend, like there's just only a finite set of things you can do so all of the innovation is, it's useful but it's slow and it's guided by regulators. I think you know buy now pay later is a great example of credit cards were this really bad thing for all these years so we're doing something better and something different. But it's not that interesting in my opinion generally. Hopefully like the biggest thing will be stable coins and like how do we transact and how do we move away from those rails but I don't find building the, we build a lot of financial products so I shouldn't say this because all my teams work on them. I find them constrained and slightly boring because the limited number of primitives but I think the intelligence and the advice if I was building Stripe I would be like the intelligence what I can give consumers from that would be the most important thing but I guess that's also my wonk.
Well it's not just a limited number of primitives, right? It's also all these products are heavily regulated and so they end up in kind of certain streams but for example do you see different like should people be consuming a lot of BNPL or a little like what's...
Well they shouldn't be maximizing that. What happens generally for consumers is they'll take a credit card out and they will max the limit and then they will stay on a max limit paying the minimums for 10 years. It's probably the most inefficient form of credit the vast majority of society has. So BNPL is a better way to pay over an actual time period and make it more like a termed product for a fixed amount of borrowing.
Though if you just use it to borrow more pretending that's bad. This has been my whole rant on debt for a long period of time like credit is such an important part of the economy and people's lives but is used so poorly by so many people and this is why I think the intelligence is the answer, right? Help make people make better decisions about how much credit they consume, how much they spend. If you just provide financial advice or provide financial products without the advice, I don't want to bash Robinhood but you end up just selling products and trying to get the most margin and it leads you down this way of like let's do day trading or let's do, none of these things are bad, right? And they can be used in the right way. I do think you need some sort of...
You can't be purely revenue maximizing is your view.
