Read the article and watch the full interview: https://dx.tips/plaid-hockey-tips

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SaaS API founders should not miss this week's Cartoon Avatars interview with William Hockey, former Plaid cofounder/CTO and now founder of Column.

He does not do interviews often and rarely do you get this level of insight into a $13 billion, fintech category-defining behemoth. What follows is a TL;DR for those who, well, TL;DW.

The $12 Billion UI Decision - Owning the UI

Many SaaS API providers take pride in being "behind the scenes", or being "whitelabel" to appeal to as many enterprise customers as possible. Jeff Lawson often proudly talks about how many people use Twilio without realizing it.

TLDR: Hockey bet the company on going against that received wisdom - forcing 100% of his customers to migrate to a Plaid hosted UI with Plaid's logo and branding - over a period of 2 years, with a lot of pushback.

He estimates this decision alone was worth 90% of the company value today (!)

From the 22-26 minute mark:

I think the most successful decision we made was actually owning the interface - the physical design and owning the client side...

When we first started, we were this transparent infrastructure provider and so the consumer had no idea who we were...

...and so what happened is you didn't know, as a consumer, that Plaid existed in that flow. We realized that this was kind of problematic because, as a consumer, you were not getting the same experience hooking up your bank account to Venmo as you were when you hooked up your account to Square Cash, or Chime or, Coinbase..

and that had a lot of security issues but also had conversion issues because every application thought that their design was best or whatnot...

so what we decided to do is we made them display a Plaid designed UI to the consumer...

We made the application insert our branding, our logo and our experience into the application. That was extraordinarily controversial, as you can imagine, because these applications want to control the experience.

One way to view this move is concluding "Plaid customers were so bad at their jobs of optimizing UI that just providing the APIs wasn't enough."

The motivations were two fold: self protection (Plaid oriented) and conversion optimization (customer oriented):

We needed to establish some level of relationship with the consumer and provide uniformity across these applications because we were the only one focused this hard on conversion.

It actually started converting a lot better... the consumer actually started to feel comfortable, like hey I know this screen, I've seen this before, and it also allowed us to do a lot of micro optimizations around messaging certain banks and just allowed us to kind of have a platform that we could actually deliver content and software directly to the consumer...

Where my eyes really popped is how far they took this - forcing ALL their users to adopt this flow - near impossible for most API companies to do especially if customers threaten to leave over this decision.

Now 100% of traffic flows this way and it's actually one of the only reasons that we have good relationships with the banks because those sensitive data never actually hits the application anymore and we can also if a bank wants to make you accept some terms of service or something like that, we can deploy that instantly... and so it allows us instant flexibility.

but it was a very very challenging rollout - it took almost 18 to 24 months, there was a lot of pushback to it - but i think if we didn't do that, A) consumers wouldn't have as good of an experience, B) we also would have got commoditized and it would have been really easy for these applications to switch it out. It would just been a worse experience for everybody

But in the end, it was worth it:

I think that (decision) probably generated like 90% of our market cap today.

You can try the full UX of the $12 Billion UI right here: plaid.com/demo without connecting a bank account.

You can see Stripe, a Plaid competitor that stayed relatively behind the scenes, increasingly start to own the experience with Billing in 2018, Checkout in 2020, and lots more I am unaware of. In fact, Stripe Checkout's marketing sounds eerily similar to what Hockey just said for Plaid:

You get the benefit of all this and everything that’s to come: even faster load times, additional payment methods we add, compliance with future payments regulations, and every optimization we make to maximize conversion—all without major code changes on your end.

Alvar Lagerlof also reports that Swedish fintech Klarna also inserts a branded UI:

This is a product direction you can expect more SaaS APIs taking going forward as they seek both to build their own customer relationships and to serve their B2B customers better (by doing their jobs better than they can).

Sidenote: Founder Intuition Over Data

What is perhaps most interesting is that this decision was made without data - Hockey felt like he would not have had support from consumers, banks, or employees - which is why these kind of high conviction bets require founder-led companies.

Also noteworthy - it took "three or four years" before it became obvious that forcing their UI was the right decision.

At 27 minutes:

I see this with founders a lot - when they go try to do product interviews or customer interviews, they're assuming that the people they're interviewing have similar knowledge, interest, or insight to them, and that's just not the case.

We just felt like there was a bit of an arbitrage where we knew where the industry was going to play out we knew what the banks were going to react and so we just made the gut call.

This isn't something he encourages at all scales - and the transition from being a product visionary at 10 employees to a delegating leader at 1000 employees is a difficult but necessary transition.

Column: The Bank with Developer Experience

For his next act (as a billionaire, post Plaid), William