The following interview is a conversation we had with Marc-Alexander Christ, Co-Founder of SumUp, on our podcast Category Visionaries. You can view the full episode here: $1.5 Billion Raised to Help Small Businesses Around the World Accept Payments

Marc-Alexander Christ
Thanks for having me on the show. 

Brett
Yeah, no problem. So to kick things off, could we just start with a quick summary of who you are and a bit more about your background? 

Marc-Alexander Christ
Sure. My name is Mark. I actually finished the university in 2002 just after the.com crisis. So went into banking, did real estate, structured finance, which then imploded, and then through a couple of turns ended up in the startup ecosystem and started, like, two other startups, but then started SumUp in 2012 together with my Co-Founder Daniel. Nice. Very cool. 

Brett
And we’re going to dive deep into some up here shortly. But two quick questions that we like to ask just to better understand what makes you tick as a Founder. First one is what Founder do you admire the most and what do you admire about them? 

Marc-Alexander Christ
So the one I picked is samsao, who’s the Founder of Equity Office and probably the biggest real estate investor in the United States. It’s very interesting to see how he managed from nothing kind of building up, probably one of the biggest real estate companies in the world because that’s basically the area where I came from before and it didn’t do a startup lens, so I have a lot of admiration for him. 

Brett
Nice. Yeah, he’s such an interesting character. I read his book a while back. I don’t remember the name. It’s like, am I being subtle? Or something along those lines? And it was a fascinating read and really fun to hear his journey and everything that he’s accomplished. He’s a just very interesting entrepreneur indeed. 

Marc-Alexander Christ
Indeed. And not taking him to herself too serious despite all of the success. 

Brett
Yeah, absolutely. I love that. Now let’s talk about books as well. So we can’t mention his book there, but let’s talk about some other books. Are there any books that really come to mind that had a major impact on how you view the world and how you think about company building? 

Marc-Alexander Christ
I think there’s actually a ton of books that we actually produce in that space. I think probably my favorite is Loonshots. I’m sure you know that one that talks about how especially in a growth company, you need to separate phases so you make sure that you still kind of merge us younger innovation pieces of the company and allow them to grow more as a seed stage CSA CSB kind of company without killing them in the process. That inevitably comes with a larger company. 

Brett
That’s a book I’ve not heard about, which always makes me a little bit angry when someone comes on and says a book that I haven’t read. I consider myself someone who reads a lot of books, but it’s always fun to hear about a new one and that definitely sounds fascinating. So I’ll add that to my Amazon cart here after the interview. 

Marc-Alexander Christ
You should maybe I can also come up with all the standard books, but now I have the feeling of like ten great startup organization books that everybody has read by now. 

Brett
Yeah, I think 80% of founders that come on, they say built to last or hard thing about hard things. So it’s always fun digging a bit deeper and going to those other books that aren’t so obvious that founders have been inspired by. 

Marc-Alexander Christ
Exactly. Those are all also very good staples out there. 

Brett
Yeah, absolutely. Now let’s dive into SumUp. So take us back in history 2012. What was going on in 2012 and what were those early conversations like as you guys were discussing this idea? 

Marc-Alexander Christ
So I mean, I lived in the US before where obviously card acceptance is pretty much ubiquitousness, at least in New York. And then you come back to Germany and you realize that’s most definitely not the case. And small merchant very much neglected by incumbent players. And I think literally when we started, payment was something like a luxury good where it was really expensive to offer payments to your consumers and we literally set out to change that. And we had one actually two pretty big developments at that time. So first there was internet at the point of sale, which made the whole infrastructure much easier. And with a cell phone that by 2012 actually pretty much was everybody had one helped us to basically have a supercomputer at the point of sale that were able to attach card payments to. 

Brett
Fascinating. And in those early days, what were some of those major challenges that you were experiencing and how did you overcome those challenges? 

Marc-Alexander Christ
Payments is a very tough space because the market in itself is very most fragmented but very suffers from a lot of legacy structures. So I think the big ones to overcome was one obviously the regulatory piece, because as a payment provider, you’re regulated just like with a small bank license. So getting Epayments institutional license there and then I think the second one was a whole payment infrastructure, including the hardware to really build a solution that makes it very easy for merchants to accept card payments. And then that’s pretty much those two. 

Brett
And could you just paint a picture for us of what that landscape looked like back in 2012 when it comes to who the big players were and then what market was kind of underserved or neglected that you witnessed? 

Marc-Alexander Christ
We started in four countries on launch and launched like ten countries within the first three, four months after launching. And the payment industry is very interesting because especially at the point of sale, you usually have like two or $3 billion companies in every market and then another 20 smaller players there and very few of them go cross border just by the nature of your home market being very large. And then usually both the regulatory piece and the technical setup being somewhat country bound. So when we started, there were pretty much the same in all the different countries, but usually large players that used to be part of banks and were split off banks and just by the nature of even ones around. That offered a five year contract or at least a three year contract where we started to then also charge the merchant 30 $40 a month in fixed fees plus percentage fees and so on. 

Marc-Alexander Christ
So before you know it, you have a cap driver that does a $1,000 in monthly volume, paying $9100 for that solution, so literally giving up 10% of the patients for card payments. And then we came along and we offered them the same service at one and a half percent, lowering the price from like 92 for them. 

Brett
And were you hated in the market then by the legacy players coming in like that and undercutting them on price? How did they feel about that? And what were some of their reactions in those early days as this startup was breaking into the market and eating up their profit margin? 

Marc-Alexander Christ
So, first of all, nobody took us serious and were more seen as a toy. And really this market was not well served by anybody. So nobody really made profit there just because the structure of the market was all very much sales driven and then manual paper based onboarding. So it made it very expensive for the incumbents, even at those expensive prices to serve those merchants profitably. So nobody took us too serious. And then there were a couple that said, okay, we can do this easily ourselves. And then just kind of got the dongle connect to the phone and then realized that there’s much more to do there. And then most of them closed activities in the next couple of years. 

Brett
And as you were expanding country by country, what was that like from a regulatory perspective? Was this just a regulatory nightmare? Like, were you spending all of your time dealing with regulation related matters? And is it different, I’m guessing, as you move country by country, or are there some similarities that make it easier to jump from one country to another? 

Marc-Alexander Christ
It’s within Europe there’s a way of passporting, so that makes it slightly easier because you kind of have one license in one European country and then kind of comply to local laws, but kind of bring your home license to the different countries. Then went into Russia, Brazil and so on that were very different countries, and they just literally start from scratch. The good thing is that all central banks look kind of for the same things. So once you understand the concept, there’s still a ton of paperwork and a ton of legal bureaucracy, but at least you know what you need to deliver and what they’re looking for. 

Brett
Are there any specific countries that stand out that were just very hard to penetrate it and bring this to market there? 

Marc-Alexander Christ
I think every market is different in itself, but then at the same time, once you learn how to tackle a couple, there’s a lot of commonalities and you’re very much able to copy a lot of stuff you did in a different market. 

Brett
And I was watching one of your previous interviews, and the interviewer said you’re the square of Europe, and you were quick to correct him, no, we’re the square of the world. We’re all over the place. So how many countries are you in today? 

Marc-Alexander Christ
We are 36 countries. That’s the whole of Europe, brazil, Chile, Colombia, Peru, and the United States. Wow. 

Brett
And could you give us an idea just so we can understand the scale and just how big the company really is? What are some of those numbers and metrics that you could maybe share? 

Marc-Alexander Christ
We have about 4 million merchants on the platform, pretty much across those 36 countries, still pretty much fast growing and like 40% plus growth year over year. 

Brett
And what’s like an average merchant like for you? Is it like a mom and pop coffee shop? Is it a small chain? What’s the average customer? Or is it hard to really have like an average customer? 

Marc-Alexander Christ
It’s more the Micronano space. So 70% of our merchants are sold traders. So I think anybody below ten k a month in volume usually defaults to us. So we are the clear market leader in this long tail segment, up to ten K. And then in the, let’s say next segment, 10,000 to 10,0000 years of monthly volume or dollars of monthly volume, that’s then where we are more the attackers, I would say. 

Brett
I think a lot of the conversations I hear, and maybe that’s just because I’m here in Silicon Valley, but what a lot of people talk about is you don’t want to do SMB. It’s all about enterprise. Enterprise is where the money’s at. So early on, did you ever have any pushback from investors to say, hey, maybe we shouldn’t do the small merchants or the SMBs, we should go after the big guys? Did you have any of those debates early on and what did you do to come to that decision that it was always going to be or the primary focus was going to be SMBs? 

Marc-Alexander Christ
I think the primary focus, especially when you start was always SMBs just by the nature of you basically launching your minimum viable product, which then doesn’t do all of the stuff that the enterprise people expect from you. We’re now actually in year eleven and we’re just starting out with our enterprise efforts and have seen pretty good success with this in the last, let’s say one, two years. We’re actually serving some of the biggest stadium operators in the world, so doing like concert football games and so on. So really serving like the largest merchants. 

Brett
And are more and more of the transactions happening with the phone to the point of sale system, or is the majority still with cards? 

Marc-Alexander Christ
The phone is definitely picking up. Google Pay and Apple Pay are doing a very good job. I have to admit that I didn’t recently check statistics, but it’s definitely rising, I think still more cards today. 

Brett
Do you think ten years from now cards like in the physical form are still going to be a thing? Are they still going to exist? 

Marc-Alexander Christ
And yes, probably not. In the end, the phone is also just another form factor for the card. I don’t think with technology evolving, we don’t need a plastic card anymore and you can literally put the chip into whatever form factor. Door of the future. I think the phone is a pretty good spot for that one. 

Brett
Yeah, take a note of sense. And that’s nice to hear because every time I lose a credit card, I just think like, man, there has to be a better way here. You can’t believe we’re still carrying around these barbaric cards when there’s a phone that works very well for the same purpose. So glad to hear that. We’re ten years out there. 

Marc-Alexander Christ
Hopefully you’re sitting in Silicon Valley and you’re still using plastic. 

Brett
Still using plastic. It’s not accepted everywhere. They’re getting better, but it still use cards a lot. 

Marc-Alexander Christ
Yeah, just in Boulder last week and at least everything was foam based. At least I paid everywhere. Phone based. 

Brett
Yeah, I think it probably just depends the restaurant you’re going to. If it’s like a quick serve restaurant or a coffee shop, I think they’re a bit faster to adopt. If it’s a nice restaurant that you go to for dinner, it’s still the barbaric system of paying with a card. 

Marc-Alexander Christ
Well, we’re getting there. We’re getting there. 

Brett
Yeah. 

Marc-Alexander Christ
Send them to me and I’ll upgrade them. 

Brett
Sounds good. 

Brett
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Brett
Big is your presence in the US. Compared to Europe? 

Marc-Alexander Christ
US. Probably like 5% to 10% of our total volume. 

Brett
And is the long term plan to dramatically increase that, or is this more about covering the rest of the world? 

Marc-Alexander Christ
I think that really the opportunity or the problem we’re solving for merchants is pretty much a global problem and we’re growing very nicely across all of our markets. So we don’t have like a strategic thought that now country A needs to be super successful, but we’re literally going out and investing at like twelve month or below payback periods to really just grow the business all around. 

Brett
Do you typically go to a country when you’re expanding there for the first time? 

Marc-Alexander Christ
You mean me personally? 

Brett
Yeah. Or maybe in the early days. 

Marc-Alexander Christ
Were you going there in the early days? I did by now I’ve never been in Colombia and I’ve never been Peru, but I’ve been in most of the others. Nice. 

Brett
I bet about those countries. Highly recommend. It’s a good vacation. You’ll enjoy it. 

Marc-Alexander Christ
That’s the problem. Usually when you go to a summer country, it’s not a vacation because you stop by the office and there’s so much fun stuff to do, that vacation is over before you start. 

Brett
It makes sense. And how does that feel to seeing your products out in the real world? That must be a very unique experience because I think most of the founders that I speak to, it’s a software company, it’s a widget on a website or enterprise software, but it’s not out there in the real world. They can’t touch it with their own hands, but you can. So what’s that like, being a Founder, walking around and seeing this and using this yourself in your day to day life? 

Marc-Alexander Christ
It’s definitely a lot of fun. I think literally having a piece of hardware that you can show people they can interact with makes people understand the product much easier. But then we’ve been doing this for eleven years now, so this didn’t happen overnight. So you just kind of see it growing over time. But it’s still fun to get pictures from remote islands or in some deserts where you see a card reader and friends of yours just say, yeah, just seen a card reader on a tall mountain or somewhere in the middle of nowhere. 

Brett
Nice. Yeah, I can imagine that’s. Very fulfilling and rewarding to see those and fun to see those. Now I’m an outsider to this industry, but to me it feels like and looks like this is a very noisy, crowded market and that it’s somewhat commoditized. So what have you done with SumUp to really stand out and rise above all that noise and differentiate yourself with such a noisy landscape? 

Marc-Alexander Christ
We’ve been very true to our mission to basically empower small merchants all across the world and build a world where everybody can build a thriving business and have been just very fair, transparent, and easy for merchants to adapt. In some countries, like Italy, we literally have like a 30% unaided brand awareness. And I think that helps a lot in continuing to build the business. 

Brett
And if we look at that growth, that’s obviously incredibly impressive. And I think that’s the type of growth that founders would love to see with their own companies. What do you think you’ve gotten right? If you really reflect on that success? I’m sure there’s many things that you did right, but if we had to pick out one to really highlight. 

Marc-Alexander Christ
What would that be? There’s also a lot of things we did wrong. I think resilience and just sticking to it is a big plus. I think literally for the first five, six years of the company, we’re literally failing constantly. And we’re not wondering we’re wondering how we can pay the rent in three months down the line. 

Brett
And what were some of those mistakes that you made? Is there one that you remember just being especially painful to deal with? 

Marc-Alexander Christ
The first card reader we had didn’t accept Visa cards. It only accepts Mastercards because Visa said just signing on the screen might be a security problem. And at the same time, because were all about land grabbing and scaling, we hired 100 salespeople across Europe and tried to basically sell this product, which actually worked relatively well in, for example, Germany, where we have a big portion of debit cards. But the unit economics were totally out of whack because the revenue we made out of the merchants was way too small to basically sustain the sales team. And then we basically pivoted from that one, reduced the whole sales team down below zero and focus very much on the marketing and basically going towards more towards push marketing kind of approach versus direct sales approach. 

Brett
Makes a lot of sense. Now let’s talk a little bit about money. So I know you’ve raised 1.5 billion, or at least that’s what it says on the Internet, which is a large sum of money. And I know there’s a split there with debt and equity. But talk to us about conversations with investors. What do you think they’re so excited about to back you with such a large amount of capital? 

Marc-Alexander Christ
I think back in the day, it was pretty much the vision and the way we approached the market. And we had like a ton of competitors. We were the first to launch in Europe, but we had like probably 1020 competitors within the first six months. And were very much the one with a global footprint. And we’re going out pretty strong launching ten markets upfront, and most of the other people then died along the way. I think today we just have a very attractive profile because you have in Payments very resilient cohorts. So the cohorts we see in payments, there’s no secret small merchants all across the world, depending on the category in the market churn 5% to 12% or so. But the beauty is that the payment volume that the surviving merchants produce would actually outgoing that churn. So we have net negative churn within our cohorts or in the revenue cohorts. 

Marc-Alexander Christ
And that just makes us very attractive because since 2017 or so on we are operating expense break even, which means that we can literally switch off our growth, continue having this revenue stream and being profitable to very profitable these days. And now last half a year we’ve actually been fully EBITDA profitable and I think despite a pretty significant size and a good EBITDA margin combined with a 40% plus growth make us a very attractive investment, I would say. Yeah, I can see that and can. 

Brett
See why investors are so excited. Now. Last couple of questions here for you before we wrap. What excites you most about the work you get to do every day? You’re what over a decade into this journey? Do you ever have days where you feel less motivated or do you wake up just every day ready to run through brick walls? 

Marc-Alexander Christ
Pretty much running every day. The purpose is pretty strong here. So helping small merchants all across the world and also providing a good environment for the 3000. Some others across the world basically strive and be fulfilled in what they do in helping merchants every day. 

Brett
And last question here, let’s zoom out into the future so we can say three years or maybe five years from today. Can you just paint a picture for us for what that future looks like for some up and what the company is going to look like then. 

Marc-Alexander Christ
So we’re coming for the payment space and in the last couple of years we added software, so POS, online store invoicing account and all of those things. And also more financial products. So like a card and account and a little bit of lending there. So really attaching those newer products to the payment merchants and pretty much becoming the overall provider to merchants on all of their financial and technology needs out there. Then also kind of growing a little bit, always being true to the smallest of merchants but also going to the segment above. So helping the next largest group of merchants there and just doing more of the same. I think the opportunity out there is still enormous and growing there. And I think the one that’s a little bit more futuristic is this whole merchant consumer network building this out. We have like 3 million, 4 million daily consumer touch points where we provide them great service because they can pay by card even with their phone, unlike the restaurants you prepare. 

Marc-Alexander Christ
But I think there’s more to be done there to making the transaction even more delightful both for the merchant and the consumer. 

Brett
Amazing. I love it. Mark, we are up on time, so we’re going to have to wrap here before we do. If people want to follow along with your personal journey from a Founder perspective as you continue to build, where’s the best place for them to go? 

Marc-Alexander Christ
Just find me on LinkedIn. That’s awesome. Nice and easy. 

Brett
Mark, thank you so much for coming on, sharing your story and sharing some of those lessons that you’ve learned as you’ve built up this company. It’s been a really fun conversation. I’ve enjoyed hearing some of those stories from the early days, and I’m sure our audience will as well. So thank you so much for taking the time and wish you best of luck in executing on this vision. 

Marc-Alexander Christ
We’ll do my best. Thanks for having me. All right, take care. 

Brett
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