Commerce Conversations

In this episode of Commerce Conversations, the Commerce Ventures partners outline their key predictions for 2025, diving into FinTech, Retail Tech, and broader industry trends. They begin by examining stablecoins, predicting their adoption for cross-border payments due to increased liquidity, expanded use cases, and favorable regulatory environments. Moving to the banking sector, they foresee significant M&A activity driven by regulatory changes, capital pressures, and competition, potentially creating larger super-regional institutions.

The partners discuss anticipated regulatory shifts under new leadership, particularly in FinTech, noting potential impacts on banking innovation and sponsor-banking dynamics. They also predict a wave of successful FinTech IPOs, led by companies with strong revenue growth, and forecast 2025 as a banner year for venture funding, driven by increased liquidity and optimism in public markets.

In technology, AI takes center stage, with predictions about its disruptive impact on search engines and its potential to transform industries like insurance. They foresee AI-driven tools reducing integration costs for insurance carriers, accelerating innovation and venture interest in the sector. Additionally, they predict advancements in digital wallets and biometric payments, enabling consumers to leave physical wallets behind.

Closing with reflections on the confluence of regulatory, technological, and market shifts, the episode emphasizes the transformative potential of 2025. The team encourages listeners to engage with Commerce Ventures on their platforms for ongoing insights.

In this podcast, Johnny Ayers, CEO and Founder of Socure, delves into his journey from a sports-oriented upbringing to becoming the founder of Socure, a leader in identity verification. Growing up in a competitive environment, Johnny developed a strong work ethic and resilience, which were further reinforced by mentors and exposure to successful entrepreneurs. After college and navigating a tough financial crisis-era job market, he founded Socure, driven by the idea of leveraging technology to solve critical problems in identity verification.

Johnny recounts pivotal moments, including the development of groundbreaking fraud detection algorithms in 2016 that outperformed industry benchmarks, cementing Socure’s position as a market leader. He also highlights challenges, such as B2B enterprise sales, and the need for grit in overcoming repeated rejections.

The conversation also explores the company’s evolution from being a potential acquisition target to becoming a consolidator, with strategic acquisitions like Berbix and Effective enhancing their capabilities. He emphasizes the transformative potential of AI, which permeates all aspects of Socure’s operations, from product development to internal processes.

Reflecting on entrepreneurship, Johnny advises aspiring founders to enjoy the journey, choose problems they are passionate about, and surround themselves with complementary teams. He also discusses the importance of adaptability, customer-centricity, and leveraging partnerships like Commerce Ventures to scale effectively. The episode closes with a forward-looking perspective on Socure’s role in the consolidation of the identity verification space and Johnny’s continued enthusiasm for tackling large-scale challenges.

• Host Julie Verhage Greenberg introduces the Commerce Conversations podcast and the episode’s focus: a conversation between Dan Rosen and Aaron Schum, CEO of Vestwell, discussing Aaron's journey, entrepreneurship, and the U.S. retirement crisis.

• Aaron shares his upbringing in a blue-collar family in Chicago, where his father’s interest in the stock market sparked Aaron’s own passion for finance.
• Despite not seeing himself as an entrepreneur early on, Aaron recalls his early interests in problem-solving and teamwork, which set the foundation for his future in financial services.

• After an initial career at Northern Trust, Aaron moved to New York, pivoting toward fintech. He gained experience as a product manager in CheckFree, which later influenced his approach to financial technology.
• Aaron describes his first entrepreneurial venture, starting FolioDynamix, and the eventual acquisition by Envestnet, detailing the challenges and emotions around selling his first startup.

• Post-FolioDynamix, Aaron quickly transitioned into founding Vestwell to tackle the retirement crisis. He felt a strong conviction about Vestwell’s mission and was motivated to address the issue of savings in America.
• Aaron highlights the challenges he faced building the company’s infrastructure from scratch and explains how the experience helped him refine his approach to problem-solving in a startup environment.

• Aaron recounts the difficulties Vestwell encountered, particularly raising funds during COVID-19 and convincing investors of the company’s value in an industry where understanding core infrastructure is complex.
• He also reflects on a challenging Series C funding round, compounded by personal struggles, but explains how the experience underscored the importance of patience and adaptability.

• Aaron talks about working with legislators on Capitol Hill to advocate for retirement reform and drive awareness of the retirement crisis. He underscores the bipartisan support and dedication he observed, appreciating the intelligence and commitment of many in the political sphere.
• He mentions bringing industry leaders together to discuss solutions and advocate for policy changes that benefit the public.

• Aaron discusses the importance of core infrastructure in fintech, noting his belief that many recent innovations are more sustainable as features than standalone businesses.
• He comments on the wave of AI-driven ideas and solutions, highlighting the need for these innovations to address real problems meaningfully.

• Aaron shares his admiration for various business leaders, such as Jamie Dimon and Bill Crager, and mentors who influenced his perspective on leadership, strategic thinking, and problem-solving.

• Aaron advises new founders to focus on solving real-world problems, remain humble, and embrace the inevitable challenges and learning curve that come with building a startup.
• He encourages founders to be open to feedback and leverage the knowledge of others, stressing the importance of purpose-driven work.

In this episode of Commerce Conversations, Vivek Krishnamurthy, partner at Commerce Ventures, interviews Kirti Shenoy, co-founder and CEO of Zeal. The two discuss the future of payroll technology and how Zeal is pioneering solutions in the space.

Here are the key takeaways:

Background and Entrepreneurship: Kirti grew up in a blue-collar environment and was inspired by her father's entrepreneurial journey. Her early interest in building and creating led her to start her own ventures. At Wharton, she stood out by wanting to start a business while others aimed for investment banking.

Zeal's Journey: Kirti initially started a gig company with her co-founder Pranav, which eventually evolved into Zeal after they realized a gap in payroll services for W2 labor. They identified that existing tools like Stripe weren't equipped to handle complex payroll needs like taxes and overtime calculations.

Challenges and Innovations in Payroll: Zeal found that payroll for hourly and gig workers is complex because their hours, pay rates, and shifts vary constantly. Kirti highlighted that traditional payroll systems like ADP were not designed to handle the intricacies of modern, flexible workforces. Zeal's solution is to automate time capture and payroll processing, which has allowed companies to pay their workers more efficiently, even daily if needed.

The Future of Payroll: Kirti envisions a future where large employers will have branded, fully integrated payroll systems that allow employees to manage their finances seamlessly within the company’s ecosystem. She believes that payroll will become increasingly digitized and personalized, with a focus on faster payments, automated compliance, and greater integration with financial services.

Lessons Learned: Kirti emphasized the importance of focusing on essential products that customers can't live without, especially in volatile markets. For her, payroll is a “painkiller” product that businesses rely on regardless of the economic climate. She also advised founders to trust their instincts and ensure their products are solving real, critical pain points.

Advice for Entrepreneurs: Kirti's advice to aspiring founders is to pursue work that feels meaningful and impactful, rather than work that is driven by external accolades. She emphasized the satisfaction of building something real and valuable.

In the rapid-fire round, Kirti shared her admiration for entrepreneurs like David Barrett of Expensify and Rihanna for their unique approaches to business growth. She also hinted at a passion for public policy, which she might pursue if not running Zeal.

The conversation wraps with a reflection on the evolving role of vertical SaaS companies and how Zeal is helping businesses manage payroll more efficiently with their innovative infrastructure solutions.

• Early Life: Melissa was born and raised outside Minneapolis, Minnesota, with a strong family influence from her mother, a teacher and mathematician, and her father, a Vietnam vet and entrepreneur in tech and education.
• Career Path: Started in financial services due to her interest in combining tech and numbers. Joined Citi, eventually moving to Fifth Third Bank.

• Citi: Melissa shared highs, such as working with smart colleagues and leading tech initiatives like being the first to launch a banking app on the Apple Watch. Lows included internal factions and missed opportunities for better collaboration.
• Fifth Third Bank: Moved to Fifth Third for new challenges, influenced by the company’s focus on customer service and transformation, and inspired by leaders like Jane Fraser, Tim Spence and Greg Carmichael.

• Current State: Discussed the gap between the promise of digital banking and its current state. Highlighted the importance of personal relationships alongside digital advancements.
• Future Vision: Envisions a seamless, intuitive banking experience where needs are anticipated and addressed without complex forms, leveraging AI and open banking principles.

• Branches: Despite digital advancements, branches remain important for human connection and are seen as beacons of positivity and customer service.
• Blending Physical and Digital: Emphasized the importance of integrating digital tools to enhance personal interactions and ensure seamless service.

• Progress and Challenges: Noted improvements in gender diversity but acknowledged ongoing challenges, particularly at senior levels.
• Advice for Women: Encouraged self-advocacy and building supportive networks. Stressed the importance of forming inclusive and supportive professional communities.

• Final Thoughts: Melissa reflected on the importance of bringing people along and setting the pace for others in their careers.

The interview highlighted Melissa's journey, insights on the evolution of banking, and the importance of combining digital innovation with personal relationships.

Global Perspective and Resilience:

• Sharda's upbringing was deeply influenced by her parents' journey from India to the United States and their subsequent global relocations. This nomadic lifestyle instilled in her a sense of global citizenship and adaptability. She learned the importance of creativity, risk-taking, and dreaming big from her family's experiences, which have significantly shaped her professional journey.

Career Risks and Pivots:

• Sharda's career is marked by several significant risks and pivots. After law school, she transitioned into a business development role at Silicon Valley Bank, which set the stage for her future in tech and finance. Later, she moved from Wells Fargo to PayPal and eventually to Square, where she embraced roles that pushed her boundaries and leveraged her passion for technology and innovation.

Importance of Mission and Culture:

• Sharda emphasizes the importance of aligning with a company's mission, vision, and culture. She advises that believing in the product and leadership is crucial for meaningful work. She also highlights the value of being true to oneself and recognizing when a company's culture and goals do not resonate with personal values, which can significantly impact job satisfaction and effectiveness.

Key Discussions: 

Future of Sponsor Bank and FinTech Relationships:

• Banking as a Service (BaaS): The discussion centered on the evolving role of BaaS, especially in light of a major player's public bankruptcy. The consensus was that future models should focus on collaboration between fintechs and sponsor banks, jointly handling regulatory compliance, product development, and financial monitoring. This might diminish the traditional role of BaaS platforms.
• Compliance: Compliance has become a fundamental focus for all parties involved, indicating a more complex and resource-intensive future for launching financial programs.

Open Banking:

• Regulatory Changes: The CFPB’s proposed rule change (1033) aims to expand data access in the U.S., potentially transforming financial services by making data more freely available and real-time.
• Comparative Insights: Differences between the U.S. and Europe were highlighted, with Europe being more payments-focused and regulatory-driven in its open banking initiatives.
• Implications: Easier switching between financial accounts could lead to significant changes in banking relationships and fintech dynamics in the U.S.

Generative AI in Financial Services and Retail:

• Adoption: Large enterprises are rapidly adopting generative AI, deploying it across various applications for both employees and customers.
• Compliance and Privacy: These remain top priorities, with a focus on ensuring regulatory compliance and customer privacy.
• Capacity Expansion: Generative AI can enhance capacity by allowing employees to handle larger workloads or providing AI-driven support tools.
• Enterprise Advantage: Large enterprises might have an edge due to their access to vast amounts of data and resources, though startups will still play a crucial role in specific use cases.

Mergers and Acquisitions (M&A):

• Market Dynamics: The gap between buyer and seller valuations, especially for unicorns, is a challenge. However, mid-market M&A might see faster activity.
• Integration of Venture and M&A: There is a trend towards integrating venture investments, strategic partnerships, and M&A efforts for better relationship-building and understanding.
• Regulatory Environment: Companies are now more willing to pursue deals they believe are beneficial for consumers, even if there’s a risk of regulatory blockage.

Early-Stage Venture Trends:

• Founder Profiles: There is a return to stronger, more technical founders.
• Valuations and Capital: Despite market fluctuations, capital supply remains strong, driven by LP allocations.
• Geographical Considerations: The debate continues on the optimal locations for building companies, with a strong case for San Francisco, though other ecosystems also offer valuable resources.

Public Markets and IPOs:

• IPO Market: The IPO market is open but not as robust as before. Companies need to balance growth and profitability to appeal to public market investors.
• Valuation Normalization: The valuation gap between public and private markets has normalized, affecting IPO decisions.

Final Thoughts:

The episode encapsulated the diverse and complex issues discussed at the Commerce Ventures summit, offering insights into the future of fintech, open banking, AI adoption, M&A strategies, early-stage ventures, and public market trends. Each topic reflected the dynamic changes and challenges within the financial and retail tech sectors.

In this interview, Madeline Parra, CEO and Co-Founder of PurpleDot, shared her journey from growing up in North Carolina and being a D1 swimmer at Davidson College to becoming an entrepreneur. Madeline's interest in startups sparked after reading Paul Graham's blog, despite initially lacking coding knowledge. Her first entrepreneurial venture was a fashion startup aimed at helping teenage girls find their fashion style. Although she gained valuable experience, she eventually joined Teach for America and later worked in IT at a pharmaceutical company.

Madeline transitioned from a travel industry startup to founding PurpleDot, driven by the goal of solving the unsold inventory problem in retail e-commerce. Inspired by the efficient inventory management in the travel industry, she aimed to apply similar principles to e-commerce. PurpleDot developed a pre-order system, allowing brands to sell inventory before it arrives at the warehouse, thus addressing the inflexibility of traditional e-commerce systems where 25% of products are never sold.

Throughout the interview, Madeline emphasized the importance of being customer-focused and adapting based on feedback. Initially exploring dynamic pricing, she and her team pivoted to pre-order solutions in response to customer needs. She also highlighted the significance of building a strong, cohesive team and creating an environment where hard work is enjoyable and aligned with team values.

She acknowledged the inevitability of mistakes in entrepreneurship and stressed the necessity of learning from them, advising new entrepreneurs not to fear failure or embarrassment but to maintain confidence and persistence in their journey. Looking forward, she suggested that future e-commerce innovation will focus on pre-warehouse activities, such as supply chain and inventory management. Additionally, she mentioned the potential in scarcity marketing and the creator economy, particularly appealing to Gen Z.

This episode centers on the emergence and development of Banking as a Service (BaaS), tracing its recognition and adoption back to around 2019. It was a period when FinTech platforms began to explore BaaS as a means to expand their offerings without forming direct partnerships with banks. The concept was initially appealing because it promised a reduction in the complexity and regulatory overhead for FinTechs by outsourcing banking operations to third parties specializing in BaaS. This approach allowed FinTechs to focus more on product innovation and market expansion while relying on BaaS providers to handle the regulatory and operational complexities.

However, our conversation also highlights the challenges and limitations encountered in scaling BaaS solutions. BaaS, while innovative, struggled with issues of customization and scalability. The inherent complexity of financial services meant that BaaS solutions often required significant customization to meet the specific needs of different clients, contradicting the initial hope for a one-size-fits-all solution. This customization led to operational inefficiencies and made it difficult for BaaS providers to achieve the scale necessary for significant growth or to attract substantial investment interest. The dialogue further explores the role of human intervention in BaaS, noting that despite the automation potential, substantial human management remained necessary, complicating the scalability and reducing the cost-effectiveness of BaaS offerings.

We also address the strategic responses of traditional banks to the rise of BaaS. Observing the traction BaaS was gaining with FinTechs, banks began to integrate similar technologies to offer direct partnerships with FinTechs, thereby bypassing BaaS providers. This shift not only heightened competition but also pressured BaaS companies to innovate beyond their initial service models. The banks’ move to adopt BaaS-like capabilities internally suggested a diminishing intermediary role for standalone BaaS platforms, potentially relegating them to niche roles within the financial ecosystem. This evolution reflects a broader industry trend where initial technological disruptions are gradually absorbed and integrated by established financial entities, challenging the long-term viability of independent BaaS providers.

In this episode of Commerce Conversations, Erika Hull, a Senior Associate at Commerce Ventures, talks with Melissa Pancoast, the CEO and Founder of The Beans—a company dedicated to developing financial tools for what is described as the "caring class." Pancoast shares her entrepreneurial journey, beginning with her childhood in Miami, Florida, where early experiences with money and her family’s narrative around entrepreneurship and care-oriented professions shaped her path. Her interest in addressing financial stress for mission-driven workers led to the founding of The Beans, aiming to serve a significant and growing segment of the American workforce prioritizing societal impact over economic return.

The conversation delves into the unique financial challenges faced by the caring class—comprising educators, healthcare workers, and non-profit employees, among others—who prioritize community impact over financial gain. Pancoast discusses how traditional financial systems, focused on net worth maximization, fail to meet the needs of this demographic. The Beans addresses this gap by providing tailored financial solutions and leveraging data to offer personalized financial management tools, aiming to alleviate financial stress and improve quality of life for these individuals.

Additionally, Pancoast reflects on the hurdles of being a female founder in the fintech space, a traditionally male-dominated industry. Despite these challenges, she emphasizes the importance of resilience, networking, and leveraging unique insights to carve out a niche in the market. The discussion also touches on the broader fintech landscape, the need for innovation in personal financial management, and the significance of redefining financial literacy to better serve modern needs. Pancoast’s journey underscores the role of determination and innovation in addressing underserved markets and making a meaningful impact.