with Houston Frost
Meet Houston Frost, an emerging Frost dynasty member who struck out on his own and crafted a career outside of banking. INFLUENCE spent some quality time with Houston while conducting a fashion shoot at Dillard's La Cantera for our inaugural magazine cover.
How old are you?
Thirty-four. I was born January 29, 1981.
How many siblings do you have? Where are you in birth order?
I'm the oldest. I have one sister (age thirty-two) and one brother (age twenty-five).
What type of child were you?
I was the nerd who hung out with the cool kids. So, I liked making good grades and getting in trouble. I wasn't ever much of an athlete, but I tried my best.
Where'd you go to college?
Undergraduate: University of Colorado at Boulder (B.S. Chemical Engineering, 2003)
Graduate: Northwestern University (PhD Chemical Engineering, 2007)
What's your current job title?
SVP of Corporate Development
Describe what you do for your company.
I lead the prepaid card team at Payment Data Systems, so my main focus is on our prepaid card products. I help create the vision, strategy, and budget for our prepaid subsidiary. My responsibilities include product development (managing the team that designs, develops, and improves new and existing products); operations (overseeing the daily operations of our prepaid products, including customer service); sales, marketing, and public relations (managing the team and consultants we work with on sales, marketing, and public relations); as well as helping to bring in new talent to the company. We're growing our sales team, our customer service team, and our engineering team right now.
What do you like to do for recreation or during leisure time?
I love going to concerts. I play a little guitar, but not as often as I’d like. I enjoy being out in the country and spending time at the family ranch. I read a lot of news—too much news. I'm guilty of also watching news networks (CNN, CNBC) but have been trying to wean myself off these lately. And, of course, I'm a huge Spurs fan. I enjoy watching football and basketball. Lastly, like most, I love to travel and wish I traveled more.
What book (or ebook) is on your nightstand?
I've actually been reading a book on Bitcoin that was written by a former colleague of mine at Northwestern University—Bitcoin For The Befuddled by Chris Wilmer and Conrad Barski. They did a great job of breaking down the technology, and while it wasn't all new to me, it certainly enhanced my understanding of certain concepts. I recently finished Walter Isaacson's The Innovators: How A Group Of Hackers, Geniuses, And Geeks Created The Digital Revolution. I really enjoyed this book. Not only does it provide a fresh perspective on how new technology evolves from idea to mainstream products, but it's a great history lesson. It takes you through the numerous inventions and milestones that have brought us into the digital world we know today.
"People think they understand banking because they have a bank account. But, I quickly realized that banking and capital markets were just as complex and intriguing as chemistry—in fact, even more complex..."Why didn't you go into the family business? How did you go from a PhD in chemical engineering to co-founding a financial tech start-up?
There's probably a short and long answer to this question. In simple terms, I just happened to be curious, interested, and excited about things other than community banking, although banking certainly has become a big interest of mine. In high school, I excelled in math and science, particularly in chemistry, which was most likely due to an amazing and inspiring high school teacher, Mrs. Carol Brown. I entered college my freshman year as a chemistry major. I really liked the idea that I was good at something and looked to become an expert in a field that I could call my own. The achievements were mine alone.
Of course, I could have done a lot of things.
I could have done a lot things that I called my own, but science and technology always piqued my interest. I participated in academic research almost every summer in college. That was one reason that my professor encouraged me to continue my studies in graduate school.
In my first year in graduate school, though, I decided I needed to understand basic economics and finance. I began taking corporate finance and accounting courses and moved on to study futures, options, and other derivatives while I also completed my chemical engineering curricula. I think my desire to find my own thing collided a bit with my desire to understand what my father and grandfather did.
People think they understand banking because they have a bank account. But, I quickly realized that banking and capital markets were just as complex and intriguing as chemistry—in fact, even more complex, especially markets. You can define and understand the systems you study in physics and chemistry quite well. But capital markets and the US economy, for example, involve systems that are so complex that our current mathematics cannot even begin to truly define them or to make reasonable predictions from one day to the next.
After taking a number of finance- and markets-related courses in graduate school, I ended up in a summer internship program at JP Morgan in New York on the fixed-income strategy team. I went on to work at JP Morgan full time after earning my PhD in 2007. I had the privilege of getting to Wall Street about six months before the crisis really began with the collapse of Bear Stearns in March of 2008. I worked on a team that provided market commentary, analysis, and trade ideas for US Treasuries and interest rate derivatives (futures, interest rate swaps). This was considered "boring" when compared to equity markets, but during 2008, the job became a crash course in central banking.
I had to learn and understand the Federal Reserve's many tools, programs, and open market operations for setting interest rates, and, more importantly at the time, stabilizing markets and providing much-needed liquidity when markets were freezing up. My time at JP Morgan was time well spent, and I honestly don't think I've ever accumulated more knowledge in a year than I did in 2008. Ultimately, I had entered with this incredible passion for markets and trading, but I think that passion waned a bit. I also didn't feel that I excelled in the work. I didn't feel as valuable as I wanted to. Maybe I lacked the skill and personality set for it, or maybe I just lost the passion. But, I moved on in early 2009 and decided to come back to Texas.
I had dreams of starting a company through much of undergraduate and graduate school. In 2007, my last year in grad school, a lifelong friend, Tom Turner, and I even started an LLC. We had no business model other than to investigate and research opportunities in bio-fuels. Tom convinced me to come back to Texas from New York in 2009. I thought about continuing to work in Wall Street, but excitement about building something and working for a small company was too much to resist. Tom talked me into working with him at his small investment firm called Pisces Capital Group. He was looking to make some investments that year in private companies, and he wanted my help in evaluating various opportunities, running due diligence, and such. I thought it would also give us some time to work on our own business ideas.
In 2009, we actually worked on the business plan for the LLC we had started in 2007. I had some ideas on how we could build a product/company around the technology I researched in graduate school. Specifically, we looked into building natural gas storage tanks for portable applications (NGVs, natural gas vehicles and similar). By using novel adsorbents (those are materials that literally soak up gases like a sponge soaks up water), we could store more natural gas at a fraction of the pressure of just compressing the natural gas in the same size container. So, ANG (or adsorbed natural gas) had a number of safety and cost advantages when compared to CNG (or compressed natural gas). Long story short: we were working with technology that hadn't made it out of an academic lab yet. The materials cost $100 per gram, and we needed kilograms. Really cool technology, but probably not the best idea for your first startup.
At some point, we came across several opportunities in the payments space. I had used credit and debit cards thousands of times in my life, but never really understood how our modern payment systems worked. We looked at a number of deals ranging from credit card processing contracts (or merchant account contracts) to prepaid debit cards. When I found out that we could launch our own debit card and bank account alternative partnering with a bank without actually becoming one, the ideas starting really flowing. And of course, that's when the idea for Akimbo came about.
So, why did I start a prepaid card company? Well, I saw the product as a platform and felt that there was a ton of innovation still possible on that platform. It was a relatively new industry, and all the products seemed somewhat boring and basic. We wanted to create an exciting, technology-first debit card product with a social aspect, which was instant peer-to-peer money transfers. Not only was it a product and industry that was still somewhat new and interesting to me, but building and launching a new product seemed quite possible with a reasonable budget and a reasonable amount of time. The business plan was doable. I felt we could execute on it.
Tell us about the Akimbo Card enterprise.
I think I'll tell you about the Akimbo Card product. The "enterprise" is now a part of Payment Data Systems (NASDAQ: PYDS).
The Akimbo Card is a new kind of debit card built for budgets, allowances, and sharing money with friends and family. The idea is that you can create a card for really any purpose that might help you with everyday spending and finances. In about ninety seconds you can create a new account online or with your mobile phone. You can also add multiple cards to your account. It's incredibly easy to create and manage cards for a teenager or other family member, for a babysitter or a housekeeper. Many of our customers create cards for specific budgets, maybe "travel" or "groceries" or "dining out." This makes it easier to budget and share money within a household. You can link any bank account to the cards and set up one-time or recurring loads to your cards.
To what do you attribute the success of Akimbo Card?
I think enthusiasm and passion are as important, if not more so, than capital or funding in any startup. Our entire team had the necessary passion and enthusiasm for the product we were building.
Tenacity and persistence were also paramount. There are many days you think you may not make it. But you keep pushing, and you keep trying to find a way to fund the next month, next marketing campaign, next feature, next hire.
When you're a hand-to-mouth startup, I also think transparency with your team is incredibly important. I hear about too many startup founders who don't communicate as they should with their team. They hide financial difficulties or paint an overly rosy picture of their fundraising efforts or their ability to raise capital. There were months when payroll was delayed; there where months when payroll didn't happen. I think one of the reasons the Akimbo team stuck together for almost five years, through the good times and bad, was that they trusted me. And they knew I wasn't hiding something or being secretive. I was very open and specific about the opportunities and challenges that were in front of us.
But, most of all, I would attribute the success of the company and product to the team. I was lucky to find an awesome senior developer early on. I was incredibly lucky to find an amazing designer. I was lucky to have a close friend whom I trust that oversaw operations. I was lucky to have co-founded the company with a friend who never stopped supporting the company, both through financial commitments and otherwise. I also was lucky to have a number of investors believe in me, the team, and the product. By the time we sold, we had nearly thirty investors.
If I was talking to you about a startup that grew like a rocketship, I'd probably be talking about how lucky I was to have hit the market at the right time. Or how we stumbled upon a huge untapped opportunity. But, the Akimbo story is about people. Hard working people. Supportive people. Good people.
Realizing you've gone to school/lived/worked in other cities, how do you feel about being in SA?
You know, San Antonio feels very comfortable to me. It's easy and comfortable. I've lived in Lexington, VA; Boulder, CO; Chicago, IL; New York, NY; and Austin, TX. But San Antonio is home.
It's also been very cool to see this city evolve over the last several years. The burgeoning tech scene, Southtown, the Pearl, and all of the new apartments going up. It's starting to feel more like a city and less like a giant suburb. And those are things I miss about the cities I've lived in previously.
What's one thing most don't know about you that they would find surprising?
I studied Arabic at Northwestern University for two years. I can still read and write Arabic decently, although I have no idea what I'm reading or writing. Most letters of the Arabic alphabet have a single pronunciation, so once you learn it you can basically read or write anything even if you don't know the meaning.
- Cedric Fisher
- Photography - Evan Silva
- INFLUENCE Fashion Consultant - Gerald Simmons
Wardrobe furnished by: Dillard's, La Cantera
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