Commerce Conversations

Sean Harper, Co-Founder and CEO of Kin, recounts his formative years in Wisconsin, painting a picture of a Midwestern upbringing with a twist: his mother was the principal of his grade school, and his father, a police officer. This unique family dynamic, combined with his early exposure to programming, laid the groundwork for his interest in technology. Sean's fascination with algorithms began not with computers but with organizing his baseball card collection, a hobby that introduced him to the concept of sorting and categorizing data systematically. This early interest in technology was nurtured by a shared enthusiasm for programming with a cousin, setting the stage for his future endeavors in the tech industry.

Transitioning from childhood hobbies to professional pursuits, Sean's journey took him through the realms of academia and early entrepreneurship. His collegiate years were marked by a burgeoning interest in economics, spurred by his readings of Milton Friedman and other economic theorists. This intellectual curiosity seamlessly blended with his tech skills, leading him to explore the intersection of technology and finance. Post-college, Sean ventured into the payments industry, where his experiences with Fee Fighters—a platform aimed at optimizing payment processing for businesses—highlighted the potential for technology to streamline and improve financial services. This venture not only showcased Sean's knack for identifying and addressing inefficiencies in established systems but also solidified his resolve to innovate within the fintech space.

The genesis of Kin was a direct response to the challenges and opportunities he observed in the homeowners insurance market. Kin's foundation was built on Sean's expertise in tech and finance, targeting a sector ripe for innovation. The company distinguished itself by leveraging technology to disintermediate traditional insurance distribution channels and utilizing data analytics for more accurate pricing and underwriting. Kin's focus on homeowners insurance, particularly in regions affected by climate change, demonstrated a strategic approach to addressing a real-world problem. The venture not only tapped into a significant market need but also aligned with broader societal shifts towards recognizing and adapting to the impacts of climate change.

Sean's narrative is a testament to the power of resilience, adaptability, and innovation in the entrepreneurial journey. From his early days tinkering with baseball cards to co-founding Kin, his path reflects a deep-seated passion for technology and a keen sense of opportunity in the fintech and insurance industries. Kin's success, amid the challenges of navigating a complex regulatory landscape and the uncertainties of startup growth, underscores the importance of vision and perseverance. As Kin continues to evolve, Sean's story serves as inspiration for aspiring entrepreneurs, highlighting the potential to effect meaningful change through technology-driven solutions.

This episode delves into the journey of Wade, a serial entrepreneur with a passion for technology and community building.

Growing Up and Early Influences: 
Wade shares insights into his upbringing in Davenport, Iowa, and how being the third of four boys fueled his drive for entrepreneurship. His love for biking and computers started early in life, shaping his interests and hobbies. Wade's transition from a bike shop enthusiast to a tech professional is explored, highlighting his experiences with BMX and programming.

Entrepreneurial Spirit: 

Despite early interests, Wade initially aspired to work in a bike shop. However, his experiences there, coupled with his knack for technology, laid the foundation for his entrepreneurial journey. Wade's venture into FinTech stemmed from his experiences at Adobe and his desire to revolutionize traditional banking systems. He shares the inception of Moov and its focus on building robust, cloud-based infrastructure.

Embracing Open Source and Community: 

Wade emphasizes the importance of open-source contributions and community collaboration in Moov's development. He discusses the ethos behind Moov's brand and its commitment to empowering developers.

Challenges and Opportunities: 

Wade reflects on the challenges of rebuilding infrastructure from scratch and contrasts Moov's approach with traditional legacy systems. He highlights the potential for innovation in addressing underserved markets and redefining profitability. Wade shares admiration for non-traditional leaders like Rick Moliterno, emphasizing the importance of community and customer-centricity in business.

Pursuing Purpose: 

Wade concludes with insights for aspiring founders, urging them to stay true to their initial motivations amidst the rollercoaster of entrepreneurship.

Follow Wade on LinkedIn

Entrepreneurial Background and Early Experiences:

• Rene grew up in a family of entrepreneurs.
• Shared a personal story about being born on a night when his mom was sorting punch cards for a payroll job for a defense contractor.
• Emphasized the importance of having a "dinner table MBA" by growing up around small businesses run by his family.

Career Journey:

• Worked at Pricewaterhouse as an accountant to learn the language of business.
• Worked for his parents' payroll company and later at Intuit, focusing on building great companies.
• Started the first company, PayCycle, which became one of the fastest-growing online payroll companies.
• Sold PayCycle to Intuit in 2009 and started Bill in 2006, which has been operating for 17 years.

Risk and Starting a Business:

• Discussed the risk associated with starting a business and highlighted the difference in risk levels compared to his parents and grandparents, who often started businesses with the money in their back pockets.

Market Timing and Early Challenges:

• Acknowledged being early in the market with Bill and discussed the challenges faced during the 2008 financial crisis.
• Emphasized the importance of being patient and decisive during challenging times.

Lessons Learned and Seminal Moments:

• Highlighted the value of learning from experiences, such as the moment when his father recognized the potential impact of the software he was developing.
• Discussed the importance of patience and impatience in entrepreneurship.

Impact and Motivation:

• Shared the impact of family, particularly his mom, in shaping his character and values.
• Discussed the imperative to do good, help others, and make a positive impact on SMBs.

Growth and Leadership:

• Discussed the challenges of growth and the need for leaders to adapt and evolve as the company scales.
• Emphasized the focus on the mission, vision, and serving customers rather than personal goals.

Public Company Journey:

• Clarified that the goal was never about becoming a public company CEO but serving SMBs and having a broader impact.
• Discussed the need to assess personal capabilities continually and focus on success rather than individual milestones.

Competitive Landscape and Global Perspective:

• Used the story of the Miracle Mile race to illustrate the importance of focusing on one's vision rather than competitors.
• Acknowledged awareness of international markets and competition but highlighted the necessity of staying true to the company's vision and goals.

Find Rene on Linkedin.

Introduction:

• Overview of the podcast focusing on Commerce Ventures' annual prediction season.
• Discussion on examining the outcomes of 2023 predictions and their implications for 2024.

Review of 2023 Predictions:

Buy Now, Pay Later (BNPL) Implosion:

• BNPL usage remains high, defying expectations of implosion.
• Resilience noted despite economic challenges.
• Acknowledgment of misjudgment on BNPL providers' performance.

Consumer Balance Sheet Resilience:

• Surprising resilience in consumer balance sheets.
• Delinquencies did not rise as anticipated.
• Challenger banks found ways to adapt to challenges.

Private Equity Roll-Up of D2C Retail Darlings:

• Lack of roll-up activity observed, challenges faced by some.
• Economic factors and unexpected rate changes influenced outcomes.

Crypto's Persistence:

• Predicted crypto persistence in 2023.
• Acknowledgment of a cold year for crypto.
• Recent uptick in Bitcoin's value impacting the prediction.

Mass Merchants vs. Luxury Performance:

• Luxury sector booms, mass merchants face headwinds.
• Economic environment affects both sectors, with some deviations from expectations.

Incumbents Acquiring Venture-Backed Payments Companies:

• Successful prediction with Visa's acquisition of Pismo.
• Expectations for more acquisitions in the future.

Skyrocketing Consumer Borrowing Impact:

• Mixed outcomes with parts of the prediction playing out.
• Opportunities in credit servicing and data space observed.

Venture Funding Bottoming Out:

• Acknowledgment of being off on the timing.
• Return of scrappy founders observed in the market.

Venture Funding Continues to Fall:

• Scrappy founder mentality due to funding challenges.
• Adaptation to scarcity of venture dollars.

Retailers Invest in Automation:

• Confirmation of retailers investing in automation.
• Emphasis on AI's role in shaping the future of retail.

Outlook for 2024 Predictions:

AI Impact on Retail P&L:

• Prediction of AI-driven OpEx reductions at major retailers.
• Anticipation of actual impact on P&L.

Consumer Adoption of AI:

• Optimistic prediction of a significant number of Americans using AI daily or weekly.
• Examples from platforms like TikTok influencing AI adoption.

M&A Surge in 2024:

• Anticipation of increased M&A activity in the first half of the year.
• Factors include scale, revenue generation, and potential market closures before elections.

Crypto Market Resurgence:

• Prediction of a crypto market run-up in 2024.
• Factors include legal actions, regulatory clarity, and market sentiment.

Bank Industry Dynamics:

• Expectation of a bank collapse or acquisition due to challenges in commercial real estate.
• Potential impacts on the broader financial services landscape.

Chime IPO and Retail Market Response:

• Prediction of Chime's IPO and subsequent market reactions.
• Expectation of retail market emulation of successful models like SheIn.

Challenger Banks IPO Filings:

• Anticipation of IPO filings by large challenger banks.
• Questions about business model viability and profitability.

Interest Rate Changes:

• Expected sequence of events leading to interest rate reduction.
• Impact on lending and capital requirements for banks.

Rich Clow's Role and Team:

• Rich Cloud leads payment innovation at Bank of America.
• Focus on evaluating new technologies and solutions.
• Assessment of new networks, checkout solutions, and step-function capabilities.
• Pro-stage gated process for evaluating and validating solutions.
• 75% of his time dedicated to consumer and small business solutions.
• 25% of the time with the GTS function, bringing Bank of America capabilities to large corporates.

Real-Time Payments Basics:

• Real-time payments involve instant settlement of funds between banks.
• Reduces risk and friction compared to existing frameworks like ACH.
• Credit transfers with an evaluation of account standing before sending.

Importance of Real-Time Payments:

• Speed of funds transfer is the essence of real-time payments.
• Enables the development of innovative solutions for consumers and corporates.

Consumer Transactions with Real-Time Payments:

• Immediate confirmations in consumer transactions.
• Improved bill pay experience with proof of fund availability.
• Introduction of "Request for payment" user experience.

Corporate Implications of Real-Time Payments:

• Significant opportunities for collections departments.
• Ensures timely payments with proof of fund availability.

Real-Time Payments Landscape:

• Two main networks for real-time payments in the United States: FedNow and the Clearing House.
• Similar to the existence of multiple networks for ACH and wires.
• Competition is expected to drive better innovation, cost, and terms, similar to Visa and MasterCard in the card payments space.

Fintech and Developer Impact:

• Successful FinTechs leverage tools and standards from networks to create innovative user experiences.
• Integration of standards like ISO 8583 and ISO 20022 into businesses and applications.
• Continuous innovation in payment flows, such as virtual cards for B2B payments.

Looking Forward:

• Real-time payments are considered transformative in the payment landscape.
• Predicted to be a major shift in payment experiences, comparable to the evolution from knuckle-buster credit card authorizations to modern payments.
• Global adoption of real-time payments in various markets, with the U.S. learning from international experiences.
• Emphasis on collaboration and partnerships to accelerate innovation and time to market.
• Acknowledgment that real-time payments will play a significant role in the majority of payment settlements globally.
• Recognition of the need for inspiration from markets ahead in real-time payments, fostering a collaborative and iterative approach to innovation.

Find Rich on Linkedin

Background and Early Life:

• Born in Cameroon, moved to Paris at three.
• Studied in the United States, as student athlete in track and field.
• Achieved fifth place at French Junior Nationals in track and field.
• Represented Cameroon at the World Championships in 2003, faced injuries.
• Injured before the 2004 Olympics, ending his athletic career.

Transition to Technology:

• Met someone on a train working on procedural textures for After Effects and Photoshop.
• Joined Algorithmic as a business developer.
• Algorithmic acquired by Adobe in 2019.

Entrepreneurial Journey and Fintech Focus:

• Worked as an Entrepreneur in Residence (EIR) at Science Inc.
• Inspired by fintech trends, founded Lenny Credit in 2015 (micro-lending platform for students).
• Evolved into Grow Credit in 2018, offering a credit-building MasterCard for subscriptions and cell phone plans.

Culture and Leadership:

• Emphasized core tenets: high focus, high quality, high speed.
• Incorporated gratitude in weekly reports for positive momentum.
• Emphasized the importance of building a strong, positive culture.

Challenges and Lessons Learned:

• Challenges in sustaining culture during remote work.
• Consistency, positivity, and turning negatives into positives key to overcoming challenges.
• Importance of coaching up and leading by self-criticism.

Transparency and Limitations:

• Learned about limitations of transparency, especially with strategic partners.
• Stressed the need to be delicate and careful in information sharing.

Coaching Up and Positive Criticism:

• Coaching up by criticizing oneself first before others.
• Positive impact of maintaining a growth-oriented and positive culture.

Scott's Background:

• Transition from payments (Vantiv, now WorldPay ) to travel.
• Six and a half years in the payments industry during a transformative period.
• Met founder of Allegiant, recognized it as a platform company, similar to Amazon, and eventually came on as CMO.

Industry Trends:

• Resurgence in consumers using online travel agencies post-pandemic.
• Airlines seeking additional highly profitable revenue pools.
• Emphasis on sustainability in the travel industry.

Impact of AI:

• AI improves search behavior for consumers.
• Prediction: Within two years, about two-thirds of traditional call center issues handled by generative AI.

Role of Technology:

• Companies like Kevil enabling travel businesses to monetize the audience through ad serving platforms.
• AI transforming search engine optimization (SEO).
• Potential for more relevant and customized bundles for consumers.

Focus on OTA (Online Travel Agencies):

• Discussion on the battle for checkout between direct sellers and OTA providers.
• Allegiant's decision to stay off OTA and the reasons behind it.
• Pros and cons of choosing to sell only direct to consumers.

Technology in Travel:

• Most promising aspect of technology: Solutions addressing the challenge of purpose-built systems in the travel industry.
• Overhyped aspect: Emphasis on creature comforts like onboard entertainment, which may not be significant for leisure travelers willing to pay a premium.

Closing Thoughts:

• Acknowledgment of the exciting time for travel tech.
• Recognition of Allegiant's position to leverage trends in the industry.
• Appreciation for sharing insights on the travel industry.
• Insightful discussion on technology, AI, and their role in shaping the future of the travel industry.

Find Scott on Linkedin.

• Gerry initially found himself in the Bay Area, started an MBA at Stanford, and worked in tech in SF.
• Inspired by the evolving mobility landscape, he saw an opportunity for shared bikes and scooters in LATAM with higher density and traffic issues.
• Gerry founded a micro-mobility startup in LATAM, which later merged into Grow Mobility, achieving rapid growth across 7 countries.
• Despite market success, Grow Mobility faced challenges in financial practices, access to funds, and resource traceability.
• Gerry's transition to the B2B payment space and commercial credit cards was driven by the need for financial agility and sound practices in the mobility industry.
• The experience highlighted the importance of financial efficiency for business operations and employee needs.
• Dan inquires about the initial focus of Clara on fast-growth startup customers, given Gerry's background in the startup ecosystem.
• Gerry mentions that startups in the ecosystem were among the first to recognize the need for financial controls, visibility, and agility.
• Clara initially resonated with startup customers, with over 80% of the top hundred startups in Mexico using Clara.
• However, Gerry emphasizes the broader opportunity beyond startups, with 90% of Clara's business today coming from non-startup customers.
• Clara has expanded its focus beyond startups to include a wide range of companies, and 90% of the current business growth is outside the startup segment.
• Clara's underwriting process has led them to primarily work with mid-sized SMEs and above, avoiding the smallest companies or individuals.
• Over time, Clara's products have become more robust, meeting the needs of even the largest enterprises operating in LATAM.
• Clara is the only company offering locally issued credit cards in multiple markets, citing an example of a customer, Smart Feet, a gym chain in Brazil.
• Clara aims to evolve into a platform where companies not only make payments but also receive payments, creating a comprehensive financial ecosystem.
• Establishing a multi-country LATAM solution for credit cards is challenging due to the region's lacking infrastructure, requiring Clara to build much of the solution from scratch.
•  Existing market enablers were not equipped to meet Clara's needs, lacking capabilities in credit, business collaboration, and having functional shortcomings in APIs.
• Clara overcame these challenges by investing eight months in building its solution, operating under its principal member license, and establishing a direct relationship with card schemes, primarily MasterCard.
•  Presently, the company is concentrated on developing a robust payment solution, encompassing all payment methods utilized by businesses.
• The future vision includes potential expansion into more countries, serving a broader customer base while maintaining the core focus on enhancing payment solutions for businesses.
• Gerry cites Gary Kelly, co-founder of Southwest Airlines, as an admired business leader for steering the challenging airline industry with a remarkable 40-year profitability record.
• Southwest's success, according to Gerry, stems from its approach of using first principles, reimagining the entire industry beyond customer-facing aspects like seat assignments and lower fares.
• In the absence of Clara, Gerry envisions himself exploring other ideas, maintaining a reservoir of concepts waiting to be pursued or kickstarted to address unmet needs.
•  Despite having multiple ideas, Gerry's present focus is solely on Clara, dedicating every waking second to the company and its mission.
• Gerry advises founders to be crystal clear upfront about the type of company they want to build, acknowledging the honor and dignity in running a well-managed small business, a prevalent model in Latin America.

• Yele's entrepreneurship journey was somewhat planned, driven by his desire to make a big impact on the African continent.
• He initially studied finance in the UK and worked in a hedge fund in New York before joining the United Nations in Kenya.
• Yele's motivation for starting his own business was fueled by the challenges he faced in accessing financial services on the continent, leading to his first startup at the age of 25.
• Yele and his co-founder have a clear vision to make world trade more seamless and believe they can achieve this through innovative software solutions.
• They met through a mutual friend, share similar goals and values, and have complementary skill sets, which they consider crucial for their successful partnership in pursuing their business opportunity.
• Intuit's QuickBooks has been influential for Duplo as it serves as an effective go-to-market channel, with QuickBooks being the most popular accounting software in Africa.
• Bill.com has provided inspiration for Duplo in terms of partnership and go-to-market strategies, even though the markets and problems they address are different.
• Payments innovation in Africa is evolving with unique characteristics, including the prevalence of mobile payments and the speed of bank transfers. Cross-border trade and the African Continental Free Trade Area are driving increased B2B payments across the continent.
  The African FinTech market is still in its early stages, with numerous players attempting to establish themselves in various niches.
• Despite the competition, this early stage offers significant opportunities for founders and investors to make an impact and potentially become major players in the African FinTech space.
• While there haven't been many African companies going public yet, the market is expected to evolve as businesses become more efficient and growth-oriented. Some potential candidates for going public in the future include companies like Wave, Franco, and Inter Switch.
• Yele is passionate about making a significant impact on people's lives, either through entrepreneurship or politics
• Yele's advice to other founders is to focus on solving important and substantial problems, especially in places like Africa, as it not only motivates you but also attracts collaborators who are drawn to challenging and meaningful endeavors.

• Understanding Business Models: Recognize the commonalities of strong business models, even if they aren't flashy or consumer-facing. Valuable software products often drive recurring revenue streams on the enterprise side – student often don't know what the B2B side looks like.
• Framework for Market Analysis: Develop a structured approach to understanding markets, including size, pain points, existing solutions, underserved areas, and emerging companies. This framework helps you quickly analyze niche industries.
• Market Dynamics and Questions: Learn to grasp evolving market dynamics and trends. Focus on asking the right questions to uncover insights about where industries might be headed.
• Effective Communication: Sharpen your ability to convey findings and insights clearly and succinctly. This skill is valuable for internal discussions and interactions with founders, investors, and experts.
• Investor Mindset: Gain an understanding of what makes a compelling investment case. Learn to think critically about metrics and factors investors prioritize when evaluating startups.
• Learning Curve: Embrace the fact that you won't know everything at the start. Building a solid foundation in market analysis, communication, and the investor mindset can accelerate your learning curve and enhance your contributions to the VC firm.