The following interview is a conversation we had with Arik Shtilman. CEO of Rapyd, on our podcast Category Visionaries. You can view the full episode here: $15 Billion Valuation (Unicorn Builders)
Arik Shtilman
Hey, thanks for having me.
Brett
No problem. So I was looking online, and I see that you were in the IDF from 2001 to 2003, so I’d love to start there. Take me back to 2003. What was going on inside your head, and what were your career plans and just life plans?
Arik Shtilman
So everybody in Israel basically is obligated to go to the military. It’s basically, by law from the age of 18 to 21. Between these years, you basically learn how reality actually works. You’re disconnected from your parents and from high school, and you don’t go to college like in the US. You actually go directly to the military. So you get a dose of reality after 24 hours. You understand that everything that you experienced up until that time is very nice, but it’s not going to work. There is nobody you can call your parents to help you. You need to deal with a new reality. And I think it shaped a lot of my personality over the three years that I’ve been in the military. I really understood what is important or what is not important. I understood also that nothing is impossible. I think that one of the main things that you learned in the military is that when you say to somebody that you cannot do something, they always tell you it’s not you cannot do it, you just don’t want to do it.
Arik Shtilman
And I think that this is a very important lesson for life.
Brett
In 2003, that was what, shortly after the.com bubble, did you leave the military with the idea of, I’m going to go into tech, I’m going to start a tech company, or what were you planning to do right after the military?
Arik Shtilman
Yeah, so I basically was in the military during the entire.com bubble from like, 1998 to 2002. And basically I experienced it from the outside, and I saw the rise of all these Internet giants from scratch. And it was itching for me to go and try to build something on my own. Because you’ve seen all this success, and then of course, you see all the failures that are collapsing when the.com bubble burst. But I really wanted to take part of the action. I really thought that I will have a chance to build something. It was the early days of the Internet, so pretty much almost every idea you try to throw around would catch. And I was really annoyed with the fact that I was actually in the IDF and I was not able to do anything on the commercial side and building companies. And when I was released from the military, it was already after everything burst and the.com bubble basically exploded and all the valuations went down.
Arik Shtilman
And a lot of people thought that these internet things is not going to work. Like Amazon is going to fail, Google is going to fail. So I had to sit down for a while before trying to build out something on my own.
Brett
And what year did you start your first company then?
Arik Shtilman
So I worked for one year for IBM. I took basically a job after the military to be a contactor for IBM here in Israel. And after one year, in the beginning of 2004, I decided to build a completely new company. And I started basically in a territory that I never thought I would be in. Unified communication and contact center. It was the early days of Voiceover IP and all these things started to become new. It’s funny to think about it because everybody Voiceover IP is such a basic commodity these days because of WhatsApp calling and FaceTime and everything. But you look back in the day in 2004 five, which is not that a long time ago, right? There was nothing there. Like there was only landline and digital phones. And then came IP. So I went into this business, I started a company in 2004 in the Voiceover IP and COPEX center space, and I build it over a ten year time frame to become, at the end, a cloud computing platform that I sold at the end of 2013, beginning of 14.
Brett
Israel today is known for its tech ecosystem. Back in, I think it was 2016, I read that famous book now Startup Nation, and no joke, I read that book and I booked a ticket to Israel the next week and I flew to Israel and just met with a bunch of founders. So now I think Israel is very famous for the tech scene. Back in 2004, when you were just really getting started, was it established and known back then? Was it starting to be a powerhouse or was it really just early days?
Arik Shtilman
No, it was early days. It was pretty much the desert with a couple of tents that people are kept in. Like funding was almost mission impossible. There were no VCs. American VCs would never invest directly in an Israeli company, only maybe later stage with an Israeli investor. There was no ecosystem. Yeah, there were some companies and some of them were successful, but there was no ecosystem. There was no understanding how to build a company. Everything was pretty much done in a very, I call it in a very college style, like, oh, you need a business plan. You need to have an understanding of what you’re trying to build. You need a deck. There was no understanding how really to build companies. And also there was a clear glass ceiling that people knew that, okay, I can build only a small company out of Israel. Maximum 100 million dollar valuation.
Arik Shtilman
It will be amazing. I will sell it and I will walk. But it changed over a 15 year time frame or 16 year time frame. It changed like dramatically. Today, the ecosystem is huge. There is a lot of knowledge. There is endless amount of funding, both from local VCs, but especially from foreign VCs that are investing directly into Israeli based companies, even from the seed stage. So it’s like in the SIM City games that you start with nothing and then you build a lot of stuff on top of it. It’s exactly what happened over the last 16 years.
Brett
From your other interviews, I understand that you’re a big basketball fan, and I read that your childhood hero growing up was Michael Jordan. I just finished watching The Last Dance a couple of weeks ago and fascinating documentary, and I feel like that gave me a new perspective on him. What have you learned from Michael Jordan and from following him throughout your life?
Arik Shtilman
So there are endless michael Jordan. You can see pictures and the famous quotes that are actually posted here in my office. But I learned that, first of all, you need to really want to win. And then you really need to push everybody around you to want to win as much as you want to win. Because that’s the only way you can be successful in a team game. And I think that the similarity between tech and basketball is that it’s a team sport, right? Cannot do it on your own. Doesn’t matter who you are, you always need a good team that will be around you, and you need to push them, and you need to be hungry all the time because it never ends. In basketball, you need to win. And in tech, you need to grow. Grow, which is basically winning every day. So basically the fact that you need to push everybody and that failure is all right because failure sets you for success.
Arik Shtilman
Like the famous Michael Jordan commercial. He’s successful because he failed so many times in his life. So I end up failing, not being able to sell, not being able to raise capital, not being able to build a company that’s fine, because at the end, it will lead you to big success as long as you’re persistent and you invest in it.
Brett
One of the big takeaways I had from that documentary is it really seems yeah. I think Michael Jordan has a very big chip on his shoulder. I think that was very clear during the hall of Fame speech when he know, almost attacking the people in his career who had stood against him, which I thought was just fascinating and just very fun and interesting to see. Do you have a chip on your shoulder like that? Do you have kind of villains in your life that you’re working against?
Arik Shtilman
First of all, I have a lot, but some of the funniest ones are first of all, the first one is that when I was released from the military, I decided that I’m going to skip school and not go to university. And my father is a university professor who used to teach Tel Aviv University, Princeton, MIT. And he told me, like, what the fuck are you? Like you can’t do that. You have to go to school. And my mother also took me to a long conversation. They told me, you’re going to be a nobody. You’re going to be a bum. You’re going to live in the Carlton, in the street corner. And I’m actually the only person in my entire family, the extended family, that never went to school and never got a degree. But, hey, I was able to succeed, even though they told me that there is no chance I will be able to succeed.
Arik Shtilman
So that’s number one. Number two is that when we actually were building this company, Rapyd, everybody told me, you cannot do that. It’s not the way the industry works. It’s too big. It’s impossible to beat something that is global. And we proved everybody wrong again and again. But the best one that I love the most is actually an email that I got from an investor when we started this company that decided to skip the investment in Rapyd because he said inhabited writing and framed in my office because I’m missing the skills of a founder to raise capital. But I raised a little bit more than $800 million overall in this time frame, and he invested it in, but I still am the email.
Brett
All right, I see the Michael Jordan similarities. Then I look forward to seeing your hall of Fame speech as you attack anyone else who stood in your way.
Arik Shtilman
There is a list. There is always a list. It fuels you. Then you need something to fuel you, and it can’t be only increasing revenue. It cannot like these small things. Okay, fine, I will double the revenue. But actually proving people that are wrong, it’s wild for me.
Brett
One of the other things I really was fascinated by is I was watching an interview that you gave and they said that you were kind of infamous in Tel Aviv for throwing, to quote them, I think it was lavish parties. And you had David Getta and you had a very good response that it was actually much cheaper. From a recruiting perspective, I think the figures you used was thirty five K to two K per employee. So can you just talk us through that? Because I think that was a fascinating part of the interview.
Arik Shtilman
It’s very simple. Yeah, we got a lot of trash thrown at us because we did it. But let’s go back to 2021. Right? Rapyd is a company with around 150 people, maybe 120 people. Everybody in tech is recruiting engineers like crazy. We know that we need to recruit huge amount of people. We need to recruit like 300 engineers in like six, eight month time frame, which is basically Mission Impossible. And everybody was talking to me about, okay, let’s do a campaign, let’s do LinkedIn, let’s do this, tell the people it’s not going to work. We are like a person that is drowning underwater, not able to deliver, and I need somebody to pull me out and all these things that you’re offering me are not going to pull me out. And myself and my co founder, were thinking about, okay, what are we going to do?
Arik Shtilman
And we just signed the new office list and we came to the conclusion, you know what, as part of the office opening, let’s do a huge party. And it was post COVID, so there were no parties, there was nothing. You need to remember the timeline and let’s bring tiesto and David Geta to play. And I told him, you know what, it’s going to create a lot of noise because it’s COVID and there are no parties and it’s ties to and David Geta and everybody wants to see it. And we said, OK, let’s do it. And we did it. It cost us money. But what happened very quickly is that everybody knew about the company. Like, it exploded in milliseconds. Everybody knew who Rapyd is, everybody knew about the party, everybody wanted to get tickets. And were able to recruit the 300 engineers in six months with a cost of average cost of recruitment of around $2,000 instead of like $35,000.
Arik Shtilman
And it paid back. Every single cent paid back. And it was the smartest move that we’ve done. From a recruitment and brand recognition perspective, it was like explosion that everybody knows us. And yes, we got a lot of publicity, especially from competitors that didn’t like the fact that we used these type of tools in order to get brand awareness and recruitment. But hey, we don’t care. It works for us, so that’s fine.
Brett
Does bad or negative publicity affect you personally? Does it bother you?
Arik Shtilman
No, not at all. First of all, I don’t really care what people write about me or the company. As long as the company is successful, you will always get negative publicity. And that’s fine. It’s part of life. The only thing that I care about is I care about things that can influence my clients and my clients do not care about david Guetta or Tiesto or Ruperti. On the contrary, they actually like it. Right. So unless I will fail significantly by providing the product that I promised to my clients, or I will have some kind of a compliance or regulatory issue that will appear in the newspaper, any article about me in the newspaper is going to work fine for me.
Brett
Have you always been so level headed? When you were 20 years old or 23 years old, were you always this way?
Arik Shtilman
I was always this way because of the military. That’s the thing that shaped me. Like, these three years in the military completely changed my mindset and understanding about how to do things, and especially understanding what is really important. And my mother also always told me this sentence like, don’t be worried from something that you cannot control. Just can control it, so you have nothing to worry about. And it sits inside me and it actually affects a lot of my day to day decisions.
Brett
Super fascinating. Now let’s switch gears a bit here and let’s dive deeper into the company. So I think any entrepreneurs and founders listening who are in fintech, of course, have heard of your name. I think it’s impossible to not have heard your name. And that probably extends far outside of just fintech to anyone in tech probably knows who you are. Can you give us an idea of the scale that you’re operating at today and maybe just like a super broad overview of what the company does?
Arik Shtilman
Sure. So the company provides what we call a fintech as a service platform. By the way, fintech as a service as a category did not exist before Rapyd. Me and my CMO, mark Winnitz actually invented it. I remember our discussion about, okay, what do we do? How do we explain to people, what do we do? And then we came up in 2017 with this concept of fintech as a service. Everybody told us it’s stupid, but today everybody’s using it one way or another. It is basically a financial infrastructure with an API on top of it that allows clients to build financial applications on top of us. So we’re like AWS, but for financial services. And we offer services for collecting money, dispersing money, storing money in custody, which is virtual bank accounts at the end of the day, and issuing cards to basically enable to spend.
Arik Shtilman
We operate in 106 countries across the globe. We directly regulated at around 55 countries. Just to give you some numbers, we have about 100 bank accounts just for the company itself. We have around 215,000 clients globally. Some of them are the most famous ones, like at Google, Uber, all the way to small startups or mom and pop shop that might use us. And we have a lot of different types of financial use cases that are built on top of us, from basic checkout experience on shopify to collect a payment for a shoe store all the way to a new bank that is actually built on top of our platform. The company has about 900 employees in twelve different offices. Tel Aviv, UAE london, Amsterdam rickyavic iceland from an acquisition. Singapore. Hong Kong san Francisco. Miami. Sao Paulo, Brazil mexico City. Revenue grows 100% year over year, probably going to hit around $500 million in revenue this year.
Arik Shtilman
So it’s a very big operations and of course processing around $75 billion probably a year, something like this.
Brett
When you were first starting the company, was the intention to build a multibillion dollar company in world domination? Was that in the back of your mind as you started it? Because I have some founders who come on, who’ve built billion dollar plus companies and they tell, oh, it was an know, I just kind of stumbled into it. And some tell me, Brett, that was the goal day one. I’m going to build the biggest fucking company I possibly can. What was it like for you?
Arik Shtilman
So that was the goal for sure, because you need to remember that we came from another company that we sold successfully and we had money. So were not looking for, okay, let’s make money. Okay, we had money already. Now the question is, how can we build something like very big that we can make shitload amount of money from?
Brett
Right.
Arik Shtilman
That’s the difference between money and a lot of money. And then we actually came up with an idea that was a disaster, that was not Rapyd, which was a consumer facing e wallet product to compete against PayPal for travelers. So the concept was back in 2015, let’s build a company called Cash Dash. That was the name of the original company. And we’re going to build this consumer facing wallet that will allow consumers that travel to travel around and spend money without paying any FX fees to anybody on planet Earth. But we stumbled into every single shit show that exists on planet Earth when you’re trying to build financial services product, because we had no knowledge in the space, like nothing. We didn’t know anything about it. Regulation, compliance, sanction screening, KYC, KYB, all this stuff that you need to deal with. He had no clue.
Arik Shtilman
And after a year and a half in this story, launching the product successfully, actually in one market in the UK, we looked at each other and we said, how can it be that there are no infrastructure players in financial services? Every company is around three component. An acquirer. An ischuel a KYC specialist. An FX specialist. Like, what the hell is this mess? It’s like, I will come to you and I will tell you. You want servers? No problem. Go build me a data center and then you will plug the servers inside this data center. Nobody does that. So we said, okay, it doesn’t make any sense. We pivoted from this consumer facing app to an infrastructure play because we had already built a significant infrastructure for our own usage. And we said, okay, let’s sell it to somebody else. And this is how Rapyd was created, because we renamed the company from Cash Dash to Rapyd, we still, by the way, have one entity in the entire structure that is called Cash Dash, which is a bit funny.
Arik Shtilman
And we basically started to sell it as an infrastructure, and then the company scaled like crazy between 2018 all the way to now.
Brett
This show is brought to you by Front Lines Media, a podcast production studio that helps B2B founders launch, manage, and grow their own podcast. Now, if you’re a founder, you may be thinking, I don’t have time to host a podcast. I’ve got a company to build. Well, that’s exactly what we built our service to do.
Arik Shtilman
You show up and host, and we.
Brett
Handle literally everything else. To set up a call to discuss launching your own podcast, visit frontlines.io podcast. Now, back today’s episode. What year did you first cross the threshold to be a unicorn and to be a billion dollar company?
Arik Shtilman
I think it was 2019. I think it was the first year, 2019. I remember when I did it, I was in a conference in CBI Insights Conference in New York, and in the middle of the conference, I was going in and out from investor meetings in New York City, and I closed with one of the investors, basically the billion dollar round.
Brett
What did that feel like for you? Take us back to that day. And the reason I ask is a lot of early stage founders are listening. And I think that’s one of the big things that every founder aspires to do is to build a billion dollar company. So give us an inside look, no bullshit. What was it like for you walking out of that meeting when the deal was done?
Arik Shtilman
So, first of all, I’m paranoid as basic inside my body, right? So the deal is done only when they wire the money. So when somebody shakes your hand, sign a document, term sheet, spa, whatever, it means nothing. Only when the money is wired, the deal is done. And you need to remember, it happens a lot of times that something fucks up in the middle. So when I walked out of the meeting, I was more excited from the 100 million dollar check that I got and less from the billion dollar valuation because I was realistic. Because I knew that okay, I will need to justify the billion dollars. But at least I have $100 million. That will allow me, for the first time, to build whatever I want. Like, I thought, that $100 million, I can compete with Elon Musk and Jeff Bezos and build the spaceship, right?
Arik Shtilman
I thought, okay, wow, this amount of money, now I can really build something. So I was more excited from the amount and less from the valuation. But I was very concerned that the deal would not close, not because there was no interest. There was a lot of hype around the deal. And even one investor was running after me in New York and showed up in my hotel suddenly to try and give me a check in. Another crazy story. But I think that there was a big concern that the round will not close because all these small dynamics that exist in fundraising of when you have a group of investors that syndicate around, somebody can pull out and break your round. So I was very nervous that it’s not going to close, but I was super excited. From the $100 million.
Brett
What do you think your superpower is? Do you think you have a superpower or a skill that you’re just the best in the world at?
Arik Shtilman
I think that my superpower is that basically every morning that I wake up, I’m as hungry as I was before. Like, I always want to do more and more and more. And the second superpower that I think I have is that I’m always in the details. I’m super familiar with the product up until now. I can tell you about the code that is written in a specific area, even though there are like 500 engineers that work here. I know trends of clients. I like data and I like to be very data oriented. And I really like to meet in my week not only my executive team and to see spreadsheets. I want to meet the actual people that do the work. The support team, the compliance operations team. I want to know what’s going on. It’s very important for me.
Brett
What’s a typical day look like for you right now?
Arik Shtilman
A typical day, I arrived typically to the office at around 830. I use the gym for an hour. We have a gym here, so it’s like part of the routine. I’m already sitting in my desk and typically the first 45 minutes I used to clear up the emails from last night because I went to sleep and my US team or my Latin America team were working. So basically I clear out whatever happened there from questions, perspective and giving my feedback on some things and then I start some meetings. Typically it’s at least two, three weekly meetings with some of our management team members that happen in the morning timeframe, especially with the European ones. Then I do at least one product deep dive with a product team. And typically I also meet my personal assistant to go through schedule and agenda and moving meetings and changing priorities.
Arik Shtilman
Lunch for typically 45 minutes, 30, 45 minutes in the canteen. And then I go into either customer related calls, investor related calls. I do some strategic blending with our strategy team and the cop dev team. Sometimes I get pulled into M and A’s in case we’re involved a meeting with the support team. I do it every day I meet my VP of Customer Success on a daily basis, at least twice 15 minutes, walk in, walkout just to understand what is going on. It keeps me in shape in order to understand what’s working and what’s not working. And then I go and take calls with my US based team, with my CMO, with my CRO, and I end my day typically at around at the office at around 637. Go back home, dinner with the kids, try. To put them to sleep. And typically, at around 930 Ten, I go into another set of a call or two with the US.
Arik Shtilman
Or Latin American team, and I finish my day around midnight.
Brett
What drives you and what fuels you to have that type of schedule and that type of pace? Because you’ve been doing this now for a long time and maybe that’s Michael Jordan inspiration, but where does that come from? What’s your day to day drive?
Arik Shtilman
So I do it for 20 years because I never had vacation, right? This year will be 20 years since I started to do it. And I will tell you that one time for six months I wasn’t doing it because my company got sold. And like after a year I didn’t have anything to do because I finished the integration and that was the most miserable six months of my life. Because suddenly you go from everybody needs you read the details, you have like a zillion emails a day to nobody needs you have no emails. And I remember how I freaked out clean inbox, like you have nothing. So I really like the action. I like the action, I like building products, I like solving issues, I like selling to clients, I like to see clients succeed. But at the end of the day, the main thing that pushes me is the fact that I want to make enough money in this entire thing in order to buy my favorite basketball team and to one the team.
Arik Shtilman
Now, people need to understand that European basketball, which is my real passion, is not the NBA. So when you buy a team, you need to finance the team for years because it cannot make money. So every single send, every single player you sign or whatever it is, it’s going to cost you money from your own personal pocket because the teams are not profitable. So you need a lot of money to run a good team. So that’s the only thing that pushes me.
Brett
What’s the team? Can you tell us or is that.
Arik Shtilman
It’S the local team here in Israel called Makabi Televiv. It’s basically a team that won the European Championship for five years. Five times. Excuse me. In the past. We are actually a sponsor. So Rapyd is a sponsor of the team itself, but it’s one of the top five teams in Europe and it appears in the Euro League, which is the second best league in the world. After the NBA. But European basketball is very like college basketball. It’s very emotional. Every game is for the death. Like, everybody’s involved in it. And it’s always been my dream to own the team since I was a kid, since the age of seven or eight. And at the end of this process, I would get there.
Brett
So what do you think? Three years? Five years, ten years?
Arik Shtilman
I almost bought it already, but things happen. I think it’s going to take three years more.
Brett
Now, let’s talk a little bit about near death experiences. So when I Google your name, when any founder Googles your name or the company’s name, they see success. That’s what you see. Are there any stories maybe behind the scenes where the company almost died, the company almost failed, or really just untold stories that you can share?
Arik Shtilman
Very simple. This company was I already announced to the employees that I’m shutting it down, and I’m closing it in 2017. So in 2017, after launching this consumer facing, cash dash product and before pivoting to Rapyd, basically nobody wanted to invest in the company. And I invested my own money. And I came up to a situation. I said, Listen, I invested so much amount of money into the company, it’s not going anywhere. I’m going to raise external capital because otherwise I’m going to spend all my money in the company. And I was failing to raise capital, like everybody said, no. And then I called all the employees, which all of them, by the way, are good friends of mine. They work with me also in my previous company. I told them, Listen, guys, we’re shutting down in three months. Send your resumes. I have money to pay for three more months.
Arik Shtilman
We’ll give it another shot. I have one more meeting to take. It is tomorrow, and if it’s not going to work, then we’re done. I went to the meeting, and I got a $5 million check from the meeting.
Brett
Wow.
Arik Shtilman
Yeah. And the way that I got the money was crazy because I went to meet basically a family office. It’s not even a fund. It’s organized like a fund, but it’s a family office. And I went to meet the guy that manages the fund and the actual money behind the scenes, which is the guy that doesn’t understand tech. And I sat down with them in a coffee shop, not even an office, and he asked me, what are you trying to do? And I was thinking to myself, okay, I’m going to explain to him what I’m trying to do. And there was a currency exchange booth right in front of the coffee shop. So I told him, you see this? I want to take them out of business. So the guy looks at the other guy, tells him, give him $5 million stand ups and walk out of the meeting.
Brett
So incredible.
Arik Shtilman
But they made a billion and a.
Brett
Half dollars from that $5 million investment.
Arik Shtilman
Yeah.
Brett
So they must like you then, a.
Arik Shtilman
Little bit, I’m guessing like me a lot. We’re good friends. They’re amazing people, and, yeah, we made a lot of money.
Brett
It seems like you’re definitely able to tame your own ego and to really channel that in the right direction to achieve outcomes. What do you do to make sure that your team does that as well? From what I understand, other founders I’ve talked to have built companies that are of a similar size. They said that it can be very difficult for the team to remain hungry when you start to see these big, massive valuations. So how do you maintain that hunger with your team?
Arik Shtilman
A, it’s very hard to do. B, you do not allow management team members to sell too much secondaries, because if they sell secondaries, they’re out. They cashed out. Like, if somebody has $50 million that is sold, it’s not going to work. Right. So you limit the secondary sale or you don’t do any secondary sales. In our specific case, we limited it to make sure, yeah, people made money, but not too much money because they will check out. And the last thing that you need to make sure is that people will actually enjoy what they do. If an executive team member enjoys what he does, so he comes every day hungry. And yes, there are always bad days. Everybody has a bad day. But you need to make sure that they’re actually enjoying what they do and they feel that they’re contributing, because otherwise it’s not going to work.
Arik Shtilman
That’s the keys here.
Brett
And I know we touched on that a little bit earlier in the interview about the category you created so fintech as a service, obviously, that’s widely used now by a lot of different companies all over the media. Analysts use it. Take me back to those early days when you were creating the category. What were you doing to evangelize it? How did you convince people to say, yes, I need this category or I’m open to this category? And the reason we ask is, all founders listening in want to create a category. Everyone wants to create a category, but it’s not easy to pull off. It’s very hard to pull off.
Arik Shtilman
So how’d you do it, so the story is even funnier because we could not raise capital to this company because were not able to articulate simply, what the hell do we do? Like, every single meeting we had was, oh, we build this infrastructure for moving money in and money out. And it’s like an international network. And investors don’t like to hear this bullshit. They don’t have the patience. They hear 800 companies a year, everything sounds the same. And we came out from a meeting again, failed completely to explain. And I remember going down the elevator with my co founder. It was either up or down. I don’t remember what it was, but I was telling him, I do not understand why these idiots can get what we do. It’s very simple. It’s like Amazon. AWS. But for fintech. And suddenly we looked at each other and we said, yes, that is the elevator pitch.
Arik Shtilman
That is the story. And this is how Fintech as a service was born. Because my CMO told me, you cannot write AWS or Fintech because AWS is something else. But we can say Fintech as a service, which is basically cloud computing or whatever you want to call it as a service. And this is how it was born. And from that moment that were able to articulate AWS of Fintech, aka Fintech as a service, went from raising 5 million to raising more than 780 something million.
Brett
I love that the elevator pitch actually came from an elevator.
Arik Shtilman
We were so frustrated because you feel like a baby that is in pain but cannot explain. And you cannot explain it a meeting after meeting. You fail. Up until it hit us that like this AWS authentic. Okay. Yes, I get it.
Brett
Then what happened after that? So investors started to get it. It started to click. What happened? Take us through that.
Arik Shtilman
So investors started to get it immediately because they understood the pain point and they understood the correlation to cloud computing and to scale and to multi services. And then clients that had the need to more than collecting a payment with a credit or debit card said, yes, I need infrastructure. You’re right. Because I need to move money in and then I need to store it and I need to KYC this consumer and I need to pay out the money. I actually need an infrastructure. But I never thought about it because I was using multiple providers. Everything connected in this perfect situation.
Brett
What about failure? So is there a specific failure that you’ve made in the company that you learned from? It was painful. Are there any big things like that you can share with us?
Arik Shtilman
There are always failures. Literally every week there is something new that we learn. Big failure we need to fix. I think the biggest failure that we’ve got is that we delayed our entrance to support Visa and Mastercard card acquiring. We were building this infrastructure to do collection of payments in alternative payment methods. Basically everything that is not card rails, disbursement of funds, wallet, infrastructure. But we said, we don’t want to do acquiring. We don’t want to do acquiring. We don’t want to do acquiring because we thought it’s a commodity and we didn’t invest enough time in it. And only in end of 2019, beginning of 20, we started to offer it. And I think if we could have done that in 20, 17, 18, it would have pushed us even more like, okay, we’re a big company now. We could have been a bigger one because we didn’t understand that if you look at the share of the wallet of the client.
Arik Shtilman
Okay, we always got in and we sold, but we got 10% out of the 100%. And with that last piece, you can get to 50, 70%, because you can get more. So that was a mistake in the scale of the company, and only when we did that, everything moved even faster.
Brett
And as we mentioned there in the intro, you’ve raised 800 million, which is a very large sum of money. It’s kind of funny hearing these stories of you struggling in the early days with fundraising. So look at you now from that journey of fundraising. What are some of the top tactical lessons that you’ve learned so far that you could share with the founders listening in?
Arik Shtilman
So, first of all, we learned two things. A, the deck matters a lot and cannot be longer than twelve slides. And it has to be very like, it’s not product oriented, not many technical details about technology and stuff like that. It has to be very high level about the market. The problem, how are we going to solve it? Because nobody has patience to read more than twelve slides. And the most important piece, do not spray and pray when you’re going to fundraise. Do not do that. A lot of founders think, okay, I need to raise $2 million. I will go to 100 funds. Somebody will give me the money. No, all the funds, all the partners, everybody, they’re talking to each other. If you fail one place, everybody knows about your failure. You need to choose smartly. Go to only three or four maximum and choose funds that are familiar with your industry.
Arik Shtilman
Do not try and raise for fintech for me cyber fund or for cyber for SaaS fund It’s not going to work. You need to be able to explain to people your business by default. They don’t understand your business. There is a good chance that they invested in something similar and that they would understand. So go and try to find a similarity and go to minimum number of funds, because otherwise it’s going to be a disaster.
Brett
Outside of fundraising, if you could give one piece of advice, tactical advice, to early stage B, two B, SaaS founders, or just Tech founders in general, what would that advice be?
Arik Shtilman
Invest money in brand awareness and building a brand as early as possible. A lot of times people think that the brand, they can invest in it later. They need to invest in marketing in order to generate leads, in order to do online acquisition, whatever it is. But they don’t understand that. The most complicated thing when you do a sale is to have brand awareness because it reduces the friction. So invest super early in a brand. Now, a brand is not a logo. A lot of times people think that brand is my logo, brand is the color, brand is the website. No. A brand is a lot of different parameters is the logo, is the website, it’s the colors. It’s how you talk about the company. It’s how you present the company. It’s how people interact with the company. It has so many different elements. I strongly recommend founders to invest in brand awareness as early as they can, because building brand takes time.
Arik Shtilman
It’s not like, okay, I have a $50 million. I will get a brand overnight. No, it doesn’t work this way. You need to build it slowly and gradually from the beginning of the company.
Brett
And I think founders listening in, especially technical founders, would be thinking, okay, it sounds great, invest in brand awareness. But how do I justify the ROI in the short term? So how do you approach that? How do you think about that?
Arik Shtilman
Very simple. By the way, it reduces the sales cycles. It reduces the amount of lost deals, because at the end, when you go and pitch a new SaaS product to a company that never heard your name, by definition, you’re going to fail and you have a small chance to succeed. But if they know you already, they know the name, they know who is the company. In general, forget about the product. Your starting point is dramatically better, by the way. It’s like in dating. When you meet a man, a woman, whatever it is, you need a better starting point in order to have higher chances. And that’s exactly the story. You can easily show an ROI of brand awareness. Easily.
Brett
And publicly, it does say that there’s a $15 billion valuation on the company. I’m guessing at that size, you must be at least heavily considering, or it’s been considered in the past to do an IPO. How do you think your life as a CEO will change if and when you become a public company? And if so, how are you preparing for that shift?
Arik Shtilman
I’m not preparing because I’m not that eager to be a CEO of a publicly traded company. But I will be. So it’s clear that the path of the company is to go public. And it’s a matter of two to three years, depending on market conditions. We will be public. CEO of a publicly traded company is a completely different job from what I have today. I need to speak differently, I need to dress differently. And probably I need to focus on different things, especially like managing investor expectations and earnings calls and stuff like that, which are not things that I like to do, but I know to do them extremely well. And yeah, it will change a lot of my day to day stuff because probably I will be less focused on the product and the clients and stuff like this, because you don’t have the time to do it.
Arik Shtilman
But it’s part of winning. Like when you’re in a team and you need to change your job to help somebody else, to help you win, you do it. That’s the story. And as unfortunate as it is, nobody likes to be a CEO of a publicly trained company. It’s not fun.
Brett
Final question. Now, I know we’re almost up on time. What’s the next five to ten years going to look like for the company? You mentioned you’re already in 106 countries. Where do you go from here? It’s already a big, massive company. What’s next? What do you do next?
Arik Shtilman
No, it’s not massive at all. It’s very small comparing to where it needs to be. And I will give you a very simple example. We did analysis and we analyzed the cloud computing market versus the fintech as a service market, because we see the correlation and fintech as a service in 2023 is at the same stage that cloud computing was in 2010. That’s the get. Now, think about the next ten years. Think about what happened for AWS, Google, Compute, Cloud and Azure over this ten year time frame. This is where we will be. We will be a business that is worth 60, 70, 8100 billion dollars, massive infrastructure, billions and billions of dollars in revenue. And there is an endless world, because what people don’t understand about fintech infrastructure is that the total addressable market is increasing every year because the GDP is increasing, which means payments, by definition, are increasing.
Arik Shtilman
So there’s like this endless time that you need to support, which is the beauty of this industry.
Brett
Amazing. I love it. All right, we are up on time, so we’re going to have to wrap here. If people want to follow along with your journey as you build this into a hundred billion dollar company, where should they go to follow along with your journey?
Arik Shtilman
LinkedIn best place.
Brett
Amazing. Thank you so much for taking the time to chat, talk about your journey and really just give us a behind the scenes look at such an incredible and influential company in tech. I’ve really enjoyed this interview and I know the audience is going to as well. So really appreciate you taking the time.
Arik Shtilman
Thank you very much for having me.
Brett
Keep in touch.
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