“What It Takes to Build a Billion Dollar Fintech Startup” written by Tom Villante, Chairman, CEO & Co-Founder, YapStone.
Next week, I’ll be speaking on a panel at Money 20/20, the World’s Largest Payments and Financial Services Innovation event, on a topic that is near and dear to my heart. The panel is titled, “When Startups Grow Up: How to Build a Billion Dollar Financial Service Business.”
I’m obviously thrilled to contribute to the greater discussion of Fintech with the esteemed professionals on my panel, such as Gene Alston, Head of Business Development at Pinterest and Moira Forbes, Executive Vice President of Forbes Media – as well as the 500+ Money 20/20 speakers from global world of Fintech.
The event is sure to be an exciting and illuminating one, especially given Fintech’s meteoric rise to prominence in the past few years. Indeed, now more than ever, Fintech is expanding into new and exciting directions, and is completely transforming financial services, from lending to payments.
In preparation for the panel, I’ve been reflecting on my own journey as the Co-Founder and CEO of Fintech company, YapStone, and more specifically, on topics like how we’ve succeeded and failed, what I wish I’d known going in, and the lessons I continue to learn each day.
2016 has been a big year for us. YapStone will exceed $15B in electronic payments volume this year, we have hired amazing senior talent and leadership from companies like Twitter, SalesForce, and First Data, and just two weeks ago we expanded our international headquarters in Drogheda, Ireland (regarded internationally as a mecca for high-profile fintech startups).
As I think about our journey to change how the world pays through online payment solutions (we started in 1999), I’ve outlined five strategies to build a successful Fintech company.
1. Look long term
I started YapStone in 1999. To put that in perspective, PayPal had been around for just a year, and MySpace had not yet launched. At the time, the general public was more concerned that Y2K would ruin their world than they were about making easy, secure payments online.
Sixteen years later, the seeds we planted with YapStone’s go-to market strategy, payments platform, and customer base are continuing to scale.
The lesson here? Fintech is not an industry for the impatient nor is it the place for the overnight success. It is a highly complex and regulated industry and a long-term investment to build your product, service, and customer, while maintaining the necessary compliance and security. We’ve been at the heart of the payments industry for over sixteen years and we’re still growing, learning, building and innovating – for the long-term.
2. Go deep into specific markets
Many entrepreneurs and CEOs will tell you that success was had because they remained focused on solving the right problem for a specific customer set. I firmly heed this approach and due to the complexity of Fintech, it is all the more relevant.
YapStone’s long term, consistent growth has been possible because of our focus on powering online payments for large vertical markets, specifically, the apartment rental and vacation rental markets. As most businesses in these markets rely heavily on the paper check, we quickly realized that a robust, online payment solution would save them both time and money – and ultimately transform the way they do business.
By maintaining our narrow focus on the customer and delivering a customized solution, YapStone has emerged as the payments leader in these markets. For other companies, I recommend a go-to market strategy of focusing on a specific market, identifying the problem and then solving it. I like to think of it as going deep, instead of wide. Rather than trying to be all things to all customers, hone and define your product solution. This razor-sharp focus may be a crucial factor for your growth, as it will provide a foundation to build on.
3. Be unique and differentiate your offering
The Fintech industry is still in its infancy with exciting opportunities and innovations yet to come. Yet, at some point, this industry will reach a saturation point of competitive companies with commoditized services. To build on your long-term approach and market focus, you also have to maintain an eager eye on the competitive landscape and make sure your company (product and/or service) stands out.
At YapStone, we offer a customized, end-to-end electronic payment solution to meet the needs of specific markets and the respective businesses because we believe that our partners and customers need more from a payments company. A simple API to accept credit card payments is great, yet it does not cover the entire life-cycle of the transaction. We are focused on supporting our partners and customers with custom payment functionality, merchant of record status, robust customer onboarding, and global customer and chargeback support. This approach differentiates YapStone from our competitors.
When thinking about your business model, it is important to identify an angle that will make you stand out and offer a different approach to solving the customer’s problem. Think about the way Venmo tapped into the millennial market by offering an app to transfer funds to peers, or how TransferWise provides low-cost international money transfers to clients frustrated by high fees for overseas transactions. Now more than ever, it’s important to offer something unique.
4. Build credibility through security
Every company wants its product and service to be credible and trustworthy, regardless of the type of customer. For Fintech, credibility and trust go hand-in-hand with security. As your company may be dealing with a customer’s personal information or credit card transaction data, it is vitally important for ‘risk and fraud’ mitigation to remain at the top of your product roadmap and be supported by resources, investments and systems. Compliance and security are again, a long term commitment, and should be a keystone in building and maintaining a prosperous relationship with your customers.
5. Collaborate intensely with your customers
Sometimes, when you’re so entrenched in your own company or your internal product development, you lose sight of gaps or limitations in your business model. Many companies recommend talking to your customers, and engaging in basic usability or qualitative studies. Certainly, this is a solid approach. At YapStone, we like to take that one step further and actually collaborate and build with our partners and customers. Going back to our core differentiator, this approach enables our teams to work closely with our customers to build the solution that’s best for their particular needs, in both the short term and long term. With this intense collaboration, we are able to deliver a true win/win scenario.
Overall, building a Fintech company has remained a challenging and rewarding endeavor, especially given the speed at which the industry is now evolving. I remain passionate about building a billion dollar company using the approach I outlined, as I feel that Fintech has the ability to make people’s lives easier.
I am looking forward to sharing my experience at Money 20/20, and I am even more excited to be inspired by the thousands of Fintech companies and leaders who will be in attendance. For more information about Money20/20, visit their website and be sure to follow the event on Twitter. And if you are attending, I will see you there.