Bienvenidos una semana más al podcast de IDNIC. Esta semana tenemos con nosotros a
Cristo Borisov, fundador y CEO de Payhawk. Payhawk tiene el honor de ser el primer
unicornio de Bulgaria. Es una empresa que ofrece soluciones de gestión de gastos a
empresas en todo el mundo. Hablaremos con Cristo para entender si son un banco,
una empresa de software, una fintech o algo entre medias. Cristo permite a sus
clientes automatizar y gestionar toda la información financiera alrededor de los
gastos de la compañía. Fundada hace menos de cinco años y con su sede en
Londres, aunque con empleados en todo el mundo, es una historia de crecimiento
espectacular. Payhawk ha levantado casi 240 millones de euros. Cristo nos contará
toda la historia del fundraising y lo difícil que fue sobre todo en los
inicios. Normalmente no hablamos de noticias, pero debido a la gran importancia
de las noticias de Silicon Valley Bank, en este episodio también hablaremos del
impacto de Silicon Valley Bank y cómo Payhawk tenía 100 millones de euros
ahí atascados durante el fin de semana y cómo gestionó esta crisis, incluso
ofreciendo una línea de crédito de emergencia a empresas en UK y en Estados
Unidos. Os invito a que escuchéis esta historia de crecimiento, de resiliencia y
de mucha agresividad. La verdad es que Bernat y yo nos lo pasamos muy bien y
recomendamos que escuchéis este episodio. Este episodio os lo trae
Factorial, nuestra herramienta favorita de gestión de personas. En Factorial
ayudamos a más de 8.000 empresas en toda Europa, Latinoamérica y Norteamérica a
automatizar los procesos de gestión de personas y a saber qué está pasando en
tu compañía. Si todavía no es Factorial os recomiendo que lo miréis en
factorialhr.es. Ahora mi compañera Caro os explicará más sobre el performance
management. ¿Tú crees que en tu empresa tus managers están orientados a los
objetivos de negocio y a la visión? Porque lo que descubrirás simplemente a su
proceso de evaluación de desempeño es que probablemente no sea tan así. Y es
precisamente que a través de realizar este proceso con cierta cadencia que
podemos descubrir cuál es el rendimiento real de nuestros managers, que
nos permite orientar a nuestros empleados y equipos al objetivo y visión
de la empresa y principalmente descubrir cuáles son estos juegos de botella que
tenemos que trabajar en nuestra organización. A través de la evaluación
de desempeño nuestros empleados pueden sentirse más motivados y comprometidos,
impactando directamente esto en la productividad de la empresa en su
conjunto. Mi equipo particularmente ayuda a cualquier tipo de empresa a implantar
un proceso intuitivo y eficiente de evaluación de desempeño que funciona
desde el primer día. Ponte en contacto con nosotros si te interesa implantar
este proceso en tu empresa. Muchas gracias Caro y por último este episodio es
gracias a todos vosotros, nuestra fantástica comunidad que nos escucháis
y apoyáis cada semana. Os agradecemos mucho si recomendáis este episodio a
vuestros amigos y si les dais un like y os suscribís al canal de YouTube. Sin más
os dejo con la conversación que tuvimos Bernat y yo con Cristo. Esta semana la
conversación es en inglés. Espero que no os perdenéis pero Cristo no habla
español así que espero que la disfrutéis. El emprendimiento mueve el
mundo. Aquí aprendemos de las personas que lo ponen en marcha. Bienvenido a las
historias de startups de ITNIC.
Welcome to a new episode of ITNIC. Here we are today with Jordi. Hi Jordi, how are you?
Hi Bernat. And with Cristo, Borisov. How are you Cristo? Hello, I'm pretty good thanks for the
invitation. Cristo is the founder of Payhawk, right? Can you explain us a
little bit what's the pitch of Payhawk? So what we do is as a company is we help
businesses issue company cards and manage payments across 32 countries. We are
a spend management software that is helping the finance team stay in
control when it comes to managing every expense throughout the company. The
finance team can pretty much issue cards for employees. They can set certain rules
on the cards and the system can automatically collect receipts and
extract data from the receipts and connect them to the ERP of the system so
that this saves about 85 to 90 percent of the manual work. Finance teams usually
do when they have to manage company cards or payments and having the ability
to issue them in 32 countries makes us extremely suitable for companies
expanding and scaling across multiple geographies that usually need to deal
with multiple bank providers and multiple card issuers. Okay, in your
website you also have other products like travel expenses or invoice
management. So all you pitch is expense management, but do you have
more products? So our pitch is actually spend management and within the
umbrella of spend management we combine company cards, invoice payments, supplier
payments and expenses related to travel, per diem, reimbursements to employees. So
what we are trying to do as a business is pretty much combine all the
capabilities and the things you can do with the bank with all the benefits of
high-class software integrated into the payments. So the way you are actually
spending money managing things is let's say from the 21st century. You
don't have to go and log in into archaic, old-school, online banking portals,
crunching, transfers. When you upload let's say an accounts payable in PayHawk
automatically the software is extracting your information, verifying whether we
have paid the supplier before, making sure that all the payment details are in
there, extracting the payment details, running it through a workflow of who
needs to improve this invoice and then allowing you to pay the invoice free of
charge directly. So this is you can think about it as a next generation.
Actually I wanted to ask you about this precisely. How deep do you go from the
shallowest would be just a software that coordinates other services versus being
a full-on bank and your entire payment and banking infrastructure?
Yeah, actually we go very very deep. So the value proposition of PayHawk is that we
have all the software needs you need to manage the expenses and the invoices and
the workflows and the spend policies and the integration with ERP systems but on
the other side we are able to provide you you know the bank accounts, your
dedicated I-bans, you know the ability to issue cards in multiple currencies in
multiple territories. So all of those cards are actually managed through
PayHawk and on the integration layer we are a third-party processor or divisa
which means when you go and swipe your card our software is actually making the
authorization decision on the card and this allows us to implement any kind of
rules you want. So as an engineers you can actually have you know about two
seconds in which we have an ability to make an authorization decision based on
different rules. So the finance teams can actually have limits on the cards, types
of limits and controls on the cards that they cannot have with bank providers.
The future ERP should have this kind of functionality and it seems like the future
B2B banks as well. So it's kind of in the middle between the ERP concept
which is software management and the traditional banking business for
companies. Absolutely, I think this is where we are emerging as a next generation
tools in the space where we are combining what your bank would have done
if it was a software company, right? And what would have your ERP done if
they were a bank or financial institution company? And I think down
the road first of all it is important that we don't advertise ourselves as a
bank. You know, our goal is to be the largest bank in the world
without holding a single cent. So we want to be really managing the payments
and allowing you to really move money quickly, spend them, control them, but we
don't advertise ourselves as a place where you need to keep all of your money
as a business, right? Especially given the situation now with SVB and others we
are a great diversification option where we can provide you a debit card or
credit cards as well. We do credit cards in the US and the UK. That are great
where we can actually go and have those items. But the long-term strategy is
that we also don't try to be an ERP system. We are integrating with the ERP
systems that are out there. We are one of the very few companies connected to
let's say Oracle NetSuite, Microsoft Dynamics, Zero QuickBooks and all the
other required companies that you need to integrate with. So we're this smart
layer of payments that allows you to have an intimate control of everything
that happens, giving you efficiency, saving your manual work and the
bureaucracy and that is kind of the goal. And I expect that these would be
categories that are merging in the next five to ten years, but we are yet to see.
Don't you mean this last mile in which, for example, before you said that you can
manage the accounts of a customer, of a supplier, no? This information only lives
in the accounting system. And to integrate with ERP is easier said
than done. I'm sure you're lifting yourself. It's very hard to move
information forward and backwards from another information system.
Exactly. And I think this is playing to who we are as a team and where you're
coming from. So similar to you guys, I'm coming from the engineering background,
spent five years as an engineer in a company called Telerik and then spent six
more years there as a product manager leading all of our products. And the
products we were building at Telerik were developer tools. So we were building
UI components and cloud services and products necessary for developers to
build desktop mobile web applications. And we know that the bread and butter is
at the end of the day, the last mile. A product like ours is not going to be as
valuable if you don't integrate and if you don't have a way to pretty much move
data with the ERP system, because you're right, suppliers, invoices,
expenses, all of this information needs to end up in the accounting system so
that this can be reconciled and it can actually help you close the month.
And integration is a big part of that. And this is actually one of the reasons
why we have been so successful as a company because of the quality of our
integrations for the finance team. And when it comes to integration,
it is not just to do the integration. You have, as you said, a lot of custom
fields, custom things. Every company is set up in a different way.
There is a lot of information that needs to be moved back and forth.
And this is our very strong DNA as a team to be able to integrate this.
Actually, I want to go back to a previous topic, but since Bernat mentions ERP
integrations, which I think we all know how painful they are, you talked about
Oracle NetSuite and Microsoft Dynamics, which are not even ERPs.
They're like ERP design systems.
And then companies create their own ERP on top of this infrastructure,
meaning everything is a custom field, basically.
It's like it's very customized.
So when you integrate with one of these people,
how much work goes into that connection?
Like, do you need programmers? Do you need no code platforms?
How do you actually connect considering that every installation
is completely different and unique?
Yeah, I can actually go into the details.
But what you are describing is that at the end of the day,
we are not talking about a structured,
you know, scheme where you know the finite numbers of fields and classes
and the tables that you can integrate.
You're talking about a system on which people are doing a lot of custom
development, they're building.
It's an unstructured setup.
You can build any kind of setup.
And I think on our side, what we are doing is we are doing a lot of
services allowing to do this discovery on top of the API so that we can actually
figure out what is the scheme on the other side, what needs to happen.
How do you map certain fields in terms of integration?
Depending on the complexity, we do have different types of systems
to which we integrate.
There is the let's say the zero and the QuickBooks and the exact online
of the world and data data, you know, a lot more structured.
And we do have a click integration to them.
Then you have systems as you say, for example, Microsoft Dynamics,
finance and operation, which has everything is a dimension.
Everything can be different.
This is where you you have a very clear structured way to implement the
integrate, but there are also things that you need.
You can map in different ways and you can say, hey, this is where I have my
chart of account is where I have my categories.
These are the different dimensions I want to connect to right now.
Nor of our work requires, let's say, solution engineering and extensibility
on top of the system.
But we do have the capacity and the necessary APIs to extend those
integrations and to allow you with our developer APIs to achieve any kind
of additional things you want.
So the standard setup doesn't need that.
But if you want to really go very, very advanced and very deep and build a
very, very custom process, you can with our developer APIs.
OK, just to understand a little bit better the picture of your business.
So what is your average customer?
How does it look like? How big is it?
Yeah, I mean, we what we are very well known for is really
companies that are scaling.
Actually, Factorio will be an amazing.
Now we know why you came to the podcast.
You wanted to share.
Now you got me.
We'll send you the quote after the call.
So we have we are targeting midsize enterprise companies.
Those are companies usually that are above 100 employees.
And the reason for that is because the complexity when it comes to company
spending significantly changes when employees reach, let's say, 60, 70, 80
employees. What's happening is that in those companies, the finance function
starts to be defined. You start to have a CFO or finance manager.
People that are, you know, professional internally.
Before that, you usually rely on, let's say, an external accounting team and so
on. And those people want to start putting together the right structure and
the right process. And they need these tools.
Otherwise, they need to have just a lot of people that are doing a lot of manual
work back and forth. And our value proposition is really allowing those
companies not to have an over hire and build a lot of different systems
together. Because before PayHawk, you have to have an expense management
system in place. You have to have credit cards provided.
You need to have something for accounts, payable invoices.
And then somebody needs to be crunching data manually and then entering data in
the banking portal like crazy.
So that is the reason why we are targeting companies above 100.
Specifically, you know, we have we're targeting the scale ups that are
expanding across multiple geographies.
And in different markets, we have, you know, very different, you know,
And what's the range between 100 and 1000?
Or do you go?
100 to 1000 is the sweet spot.
So this is the midsize enterprise customer.
So this is where we do see very repeatable requirements and very
repeatable needs, also very clear systems to which they integrate.
Unfortunately, when you go above 1000 or 2000, you can, especially in some
markets in which we operate, you can find some very, let's say, industry
specific systems.
Right. So if you go to the transportation logistics space, you can see even
homegrown earpiece or earpiece that were built specifically for the vertical
that have, let's say, just 20, 30 customers, even though we have, you
know, customer exports and developer APIs, the process there is a little bit
harder than to sell to customers that are using pretty much.
And what's the pricing for this customer?
Let's call it 100 employees.
How much do you charge this customer and how much revenue do they generate on
top of what they pay you?
So our pricing model is extremely, extremely competitive because we are
currently providing an industry cashback.
So we introduce something on the market in Europe about one year and a half now
on the market with what's called cashback, but cashback capped at your
subscription amount.
So companies that are using PayHook, they're buying it for the software and
the capabilities they can do.
So a typical customer of, let's say, 100 employees, depending on the number of
cars, depending on the number of entities they have and so on, let's say,
is going to pay three, 400 euro per month.
And what we are allowing for those customers is that they can actually have
a certain cashback on their transactions up to the amount of their subscriptions.
So I can say about maybe 30% of our customers are fully recovering their
subscription fees with cashback and are not paying SAS fees, which is a great
deal because on our business model, outside of the, let's say, SAS fees that
we charge, because we are issuing the cards with our partners and we are
providing that infrastructure.
We are also generating interchange from MasterCard and Visa that is able to pay
for the software and actually for our costs.
And that's to understand the example.
If we have 100 employees, what's the size pricing per employee?
Three, three euros per month, something like that you said.
So it really depends when the average, you know, high level math.
So, yeah, yeah, I think the average is that if you have about, let's say,
100 employees, you expect usually to have about 20 cards.
Very rarely you are going to issue 100 cards to everybody.
You can do that as well.
But for, let's say, 200 cards, you're going to issue, sorry, 20 cards,
you're going to issue for 20 employees.
That is going to be about, let's say, two to 250 for the cards.
And then you have a base subscription fee of about 100 to 250.
You mean 2.5 euros per card per month.
Or 250. I didn't understand.
No. So on our side, no, no, no.
So the price per card is around 10 euros.
So you have a price per card per month.
Exactly. And then on top of that, you have also a subscription fee,
which is for the license.
Yes, it's the subscription itself.
And then you are able to rebate depending on the level of cashback
and depending on the level of spend, depending on the level of complexity
that you need, you can recover that.
And do you know the average spend per card roughly?
Is it in the hundreds, in the thousands, in the tens of thousands?
It's in the thousands.
So spend per card is usually in the thousands.
So let's say between one and two thousand,
depending on the customer.
But on average, yeah, I would say close to two thousand
is the average spend per card per customer, because we are.
You mentioned the inter-exchange, which this is like some sort of cashback
that the card networks provide back to the issuers, no?
In Europe, it's tend to be much lower than in the US.
So I guess your answer will be depends.
But for Europe, for example, are we talking one percent, two percent,
or is it very far from these numbers?
Yeah, I mean, it is in the, you know, that's information that's clearly visible.
So the interchange from Europe is depending on the country.
So, for example, if you're talking about Spain,
the interchange in Spain is notoriously low.
And for example, let's say one point five, one point four, one point three
in other markets like Germany, for example, it can be up to one point eight.
And the reason why they're different is because visa is using this
as an incentive to stimulate non-cash payments.
So in markets where, let's say, you have a lot of cash payments,
they would like to have a higher interchange so that they can compete with the cash.
In other markets, let's say like the UK, where it's quite a digital market.
They tend to have.
And that's impressive. Sorry, I just wanted to finish the number
that you said for the audience if they're not multiplying.
But if if we're making one point five percent
fee on a two thousand euro spent a month,
that's 30 euros of revenue compared to the 10 euros of subscription.
So the subscription is just the tip of the iceberg.
The real business is definitely in the exchange fee, it sounds like.
Kind of, because at the end of the day,
the gross profit margin of a SaaS product
and financial services product is very different.
So don't expect that visa and all the payment providers
are not making money along the way.
So actually, the gross profile of, let's say, interchange
or let's say financial services is usually much, much lower than the 1.5 percent.
You split it with the infrastructure.
So you maybe get half of course.
Yeah, you have multiple providers.
So the math is a little bit more complicated.
But for example, just to give you an example, let's say in the UK, in the UK.
And we just released, by the way, an emergency
credit line for customers that might have been affected by the situation.
And we are providing credit cards in the UK and the US,
and we will be launching that in Europe soon.
And at the end of the day, the mathematics for, let's say, this 1.5 percent,
or even if you include the subscription, is that you need to cover
the infrastructure fees coming from, let's say, visa, the processors,
the providers, you need to be doing KWC transaction monitoring,
many other things on top of this transaction,
because we have responsibilities for that.
On top of that, if you're providing a credit card, there is an interest rate.
And that interest rate right now is not cheap.
The credit right now is extremely expensive.
And you have to bake these things.
You have to bake defaults.
You have to bake risk into this transaction.
So the unit economics quickly are eaten up by that kind of a model
that is loaded with so many components within the gross profit.
But just to play out the numbers and the unit economics, I told you,
because I'm seeing you're making the numbers.
So if you have 20 cards and let's say each card is spending about 2000 per month,
we're talking about 40000 of spent.
If you're getting an average, let's say, one percent cashback from PayHawk,
this means you're recovering 400 euro of the salary.
So on average, for a typical customer,
this customer is not going to be paying salary if it goes to us.
And it's free. It's free.
But they get an enterprise software,
an enterprise support with an integration to an ERP system.
And out of the interchange, we are making the math working for us as a business.
And that last part is what I'm wondering, because if you are giving back
in the form of cashbacks to the customer
and they recover a SaaS fee so that you must have more than one percent
as margin, and you said that in Europe, on average,
it's less than two point five percent exchange.
And the interest fee. Yeah, yeah, yeah.
So at the end of the day, how do you make a business?
You make a business by having a volume.
So you need to have obviously everything in financial services.
Wherever you go, it's a volume business.
And the reason why it's a volume business is that, first of all,
this is a business that has a very high fixed costs. Right.
So if you want to go and become a member of the cart networks,
vision, MasterCard, and if you want to work with the bank
that's providing the safeguarding and you have a processor in place
and so on, usually the set up fees, the costs are very, very high.
And that's why in payments, volumes are everything. Right.
So you need to have a lot of volumes going through the systems
to make sure the mathematics works and that you can really recover
the fixed costs and start working on top of the margin.
So that is, you know, obviously, you know, the way we think about the business.
And, of course, on top of that, we'll be providing a very soon,
you know, a lot of other products like, you know, cross border payments
and other systems where we can provide even more competitive exchange rates
than banks, which at the end of the day, again, have, you know,
profitable component in them and again are more efficient
than what the banks can provide you, because usually banks work with,
let's say, swift payments and swift payment is notorious
for cross border payments when you have to go and pay things.
Just the cost of those infrastructure is massive
and we are working on alternative payments there.
And when you explain your business, do you explain it
as a transactional business or a SaaS business?
We are how important is each part, each part of it?
Well, I would say that we are a SaaS company.
And the reason why we are a SaaS company is because, you know,
we at the end of the day are selling a solution that is not just
a payment card in a bank account. Right.
If you go and look for something that you need just as a bank account,
we are not the place. Right.
You need to have the need to really control the spend and,
you know, to manage your subscriptions, to manage your payments
and invoices and have an ultimate control of your system.
So that's why, you know, the key part of our strategy
and the big unique thing about Payhook is really the capabilities
on the software part that we can give you.
And the fact that we are doing money on the financial services,
I think if you look at all the enterprise SaaS companies
that are out there today, I would say that with embedded finance
in the next five to ten years, they are going to find a way
to have revenue streams coming from financial services
within their products today.
So we are a software company and I think many, many.
I like to joke that we are not a fintech, we are a tech fintech,
emphasizing that everything starts from the technology first.
And then the financial services are something that I expect
every business to be in the next ten years.
It's also the trends in the market change.
So at some point, being a fintech was the best thing.
Then being the SaaS was the best thing.
Now being a profitable company is the best thing.
It doesn't matter the name.
So it changed.
Yeah, well, I think nothing can beat
nothing can beat sound unit economics at the end of the day.
And I think that is something that is quite important for every business
that just to add here, if you look, for example,
because we're also doing a great cart in the US,
which is a very unique thing for a company.
And there are companies doing that in the US.
And, you know, they're giving you, let's say,
you know, two percent cashback, one point five percent cashback.
We know the gross profile profile, gross profit profile
of many of those companies.
And we have seen numbers where those companies are running
on a 10 percent gross profit margin. Right.
And if you think about at the end of the day that the most probably
your grocery store in the neighborhood runs on the same profile,
that's not a tech company.
And I think you have to be extremely conscious
about how you use those unit economics, because at the end of the day,
if your business model is to be selling a door for 90 cents,
of course, they are going to be huge amount of companies
willing to buy your door for 90 cents.
But are you going to be able to really sustain that?
And that might be a great entry on the market,
but you need to change things.
And I think this is what we see right now in the US market.
A lot of those companies that went and they didn't have had
they did not have any kind of sophistication on the software.
They were just very risky in the writing.
A lot of startup companies giving them access to a credit card,
because in the US, if you go to a bank and you say,
I'm a startup with five people, usually they will tell you,
go and use your personal credit card.
We cannot give you a company credit card,
because this is still not a business.
They managed to really gain traction.
But the question is, can they make sustainable businesses?
Can they turn the tables and start generating SAS?
And to what extent, Risto, you are a bank as well.
So what do you need to have as compliance
and as infrastructure to be able to provide these kind of services?
Yeah, first of all, we are working with all the territories.
We are working with very different providers
that have the necessary licensing.
So they're part of the infrastructure that we are using behind the scenes.
We are not the bank ourselves.
So you don't have licenses, per se.
You have API partners that have the licenses.
We are we are currently working with a lot of infrastructure
banks to say that their core business, their only business,
is to sell to companies that need to use their licenses and need to use that.
So in every different regulations, you need to work with different providers
that comply to the different licensing that, you know,
covering everything that is needed in that say.
So to understand what this kind of infrastructure banks that work as an API
and they are hidden, they are not public
banks that people know, yes, and they can reach.
They are available only only for players like you.
Yes. And it's quite important to say that
in every different jurisdictions, the banks are regulated differently.
So, for example, in the US, you have one type of requirements for these banks.
In Europe, you have different UK. You have different.
The key thing for these banks is that, for example, in Europe,
they're called electronic money institutions.
And at the end of the day, the very important thing to say is that
they're not the one holding the money.
So when you have this kind of electronic money issuers,
they're required to keep the actual money of the customers,
the safeguarded funds in a safeguarded account with the bank, with the real bank.
So whether this is, let's say, Barclays or another institutions,
they need to use a banking system behind the scenes and they cannot do
anything like a lending with these funds.
They cannot provide credit with these funds.
These funds are specifically safeguarded in the banking infrastructure
to ensure that the customer money are safe.
So when a customer of Bayhawk uses your cards,
do they need to precharge an account with their cash
or do this money that is expended get deducted
in real time or daily or weekly or monthly from their existing bank account?
We support both scenarios for different markets.
So we can provide the credit line for the cards
where we underline and the right to your business
and give you a credit line of, let's say, three hundred thousand pounds.
So I don't load any cash in advance as you start using the cards.
And at the end of the period, you will say you owe me twenty K.
Exactly. This is a charge card set up.
We do that in the US and in the UK.
And you can actually just go apply for a credit line.
We provide a credit line. You spend it and then you have,
you know, seven days where you need to pay it in full.
We don't charge interest rate on that.
It is a charge card. Yes, we don't.
It's a charge card.
We provide you, you know, 30 days to spend the money.
And then in seven days you can go and pay back the balance.
And this is something that we just extended to a lot of companies
in the scenario of SBB that we're struggling with cash.
And one of the pros we just announced is an emergency credit line.
So we are currently right now having a lot of companies
coming in the US and in the UK where they need access to money,
where we are underlying underwriting, sorry,
their risk and providing them access to cash right now.
So you're holding the risk.
Yes, we are holding this risk.
If they all suddenly close because SBB doesn't come back alive,
then nobody pays you the money back and now you have to close.
That's the world of, you know, lending.
On top of that, on top of that, on other markets,
like, let's say, Spain, in these markets,
we are currently providing an account, an IBAN, where you can load funds.
As soon as you load funds,
then you can actually have limits on the different cards.
Very important thing is that you don't load money on the cards.
You just load money on the wallet.
All cards are connected to the same wallet and you can have just limits
and allowances on them.
So these are limits on our software that you set in real time.
And then what we're also doing and we're going to be just releasing
is the ability to have connection to your bank account
so that you can actually top up money directly from your bank account
if your balance goes below a certain amount, which makes it, yes,
which makes it a very efficient way to manage your payments.
So just understanding, connecting to your point earlier,
if we do this last method, which you say you're using in Spain
of we having to preload potentially an account, this is where you say
you actually tell the customer to wire the funds to an IBAN
or whatever, a bank account number, which is on their name,
that this API is providing automatically programmatically.
But the cash is actually deposited on a real bank,
not a fintech company like a Barclays or whatever,
like a real licensed bank that holds the money
and that is not allowed to do anything with the money outside of what banks
or with the money. Yeah, exactly.
So what the customer is seeing is an IBAN.
And this IBAN can be issued to every company
that is a member of the SEPA scheme with the European Banking Authority.
They can be a non-participating member.
They can have the permission to issue their IBANs.
Of course, to do that, you need to be either financial institutions
or an EMI yourself.
Once you do that, behind the scenes, the money are actually held
in an actual bank account in a real bank, right?
This is what's called safeguarding.
And you have 100 percent responsibility as a regulated company
to keep these funds in the safeguarding for the name of the customer.
And the IBAN is issued on the name of the customer.
So, for example, if Factorio is a customer,
Factorio gets its own IBAN.
It says what it is. It's Factorio.
And actually, a lot of you guys have used that.
So if you are a customer of, let's say, companies like Revolut,
for example, you are very familiar with the IBANs that are provided,
which are the same setup.
And you mentioned there are different regulatory areas.
You mentioned the UK, Europe and the US.
If I understand it right, if you have one license
or you have one way to operate in Europe,
that works for all the countries in Europe?
Or it doesn't?
Exactly, it works.
There is obviously a process of additional steps that needs to be taken.
But essentially, there is a synchronisation of the regulation.
It is under the Payment Services Directive, the second revision.
That is the European Union Directive that is providing the framework
and the regulation necessary for these types of services
to be performed within the European Union.
That was well synchronised with the UK before Brexit.
Right now, the FCA, which is the regulator in the UK,
is currently having its full, let's say, control on top of that.
They most probably are going to be upgrading and adding additional steps.
But right now, if you have a license in the UK,
you can only operate, let's say, in the UK.
For the US, you need a different setup.
And how important is this risk that you are taking
when you are doing credit lines for your business?
How does it influence your gross margins and your operation?
Well, it is quite important that you can manage this risk.
And in our case, it's very important that very rarely companies
just come to pay just because they need money, right?
And usually, companies that we provide credit to are those
that actually have the needs of the software
and the needs to be using the system like that.
So managing the risk is quite important, of course.
You can also raise debt facility for that.
So you don't have to go and use the money from your balance sheet
to provide this credit.
There is cost associated with that.
And at the end of the day, it is yet another thing
that goes into the unit economics of the business.
And managing it is quite important.
But do you typically outsource this risk or do you hold it yourself?
Like, do you transfer it to somebody else?
Usually, it is blended, right?
You know, even if you go and lend money, you know,
get a debt from somebody.
They also want to make sure you have skin in the game.
So otherwise, the quality of the debt.
Yes, exactly. So it's quickly.
Absolutely. So that's why it is a fine balance on how much
you want to take a risk, how much you can take a risk.
And in general, we are very conservative with the risk profiles.
And we have a very high quality of of of lending right now.
We have 100 percent, you know, payments.
We don't have defaults on the credit because we have been managing that.
And of course, I think one of the benefits of companies
like, you know, Bayhawk and these next generation companies
that are coming, that are going to be providing that is that
they allow you, they ask you and provide you the ability to,
you know, connect to your bank account and the information
they these companies have to be able to underline
and understand what's your cash position and how much you have
is giving them an instrument to make sure they can manage the risk well.
So, you know, if you have if you want to apply for a credit card
and you connect your bank account and you have, you know, seven euro
as a business in there, that doesn't start well.
Even though you might have, let's say, you know, very, you know, let's say
high turnover as a business, but, you know, the cash balance
and the amounts of money you have is still important.
You can also have many bank accounts and a lot of complexity.
And I think this is just going to increase after the DSB, you know,
people will diversify more.
So it's not easy.
It's not easy just by connecting with one bank account
to to get the risk profile, I guess.
Well, this is actually the the influx we're getting right now as a business,
because a lot of the VCs that right now recommending
PayHawk to their customers saying, hey, first of all, a get a credit line
so that you don't work only with your money, it's free.
B, you know, get something else that for every currency, for example,
in our case, for every currency, the safeguarding bank can be different.
Right. So by definition, this is in different banks
that are behind the scenes.
So that is the diversification on its own.
And that is actually, you know, you don't have you don't have to.
And we don't, you know, that's not our business model
to keep all of your money in PayHawk.
But, you know, the operational expenses you need within two weeks,
within one month is something that is normal
to have a diversification on and, of course, to use somebody else's money
with the credit product.
So that's the reason why right now we're in a, I'd say, good position as a business.
So you're using also debt funds or you're using your own balance sheet?
Right now we're using our own.
Yeah, we're right now using our balance sheet because we have
we're extremely well capitalized as a business
and we'll be raising external capital as we go this year.
Just waiting to have your money, the interest rates,
the interest rates to stop going crazy.
Yeah, you didn't have your money in any Silicon Valley bank branch, no?
We had.
You had?
So, yeah, we had money.
We had close to a hundred million there as a business.
So I know that sounds a lot, but as I said, we are extremely well capitalized
as a company and that wouldn't have been, you know, business continuity threat to us.
We were, as we said, we have many operations.
We currently are in nine countries with businesses, business entities
and present in 32 countries.
So we were well diversified.
But again, being in that position, having cash in Silicon Valley bank
was something that, you know, we were evaluating.
On Sunday when we decided to launch the emergency credit line,
we have already done the math and we decided that even in that situation
we can continue doing that.
And we're in a strong position to provide credit to companies in this situation
because we knew that I would say even if companies cannot recover
a hundred percent of the money they had in SVB,
there was a very high chance they can recover at least 30, 40 percent of this money, right?
The important thing about SVB was that this was not a fraud.
This was in, let's say, in proper risk management.
And then several other things that happened was kind of the VC tight-knit community
contributed to this kind of bank run that happened.
But one thing that I want to say in this case is that none of those funds we had
was money of the customer.
So we were not using Silicon Valley bank for credit.
The banks which we work that are actually regulated
are using very highly reputable institutions across Europe to keep these funds.
And in our case, those were, you know, part of our own money that were there.
But still, we believe that once things settled over the weekend,
we decided that the best thing is to go and introduce an emergency credit line to customers
so that we can continue doing that.
And we were very, very, let's say, judging during Thursday and Friday
when we saw some companies trying to use this for marketing purposes.
Like, you know, we are open for business, come and open a bank account.
We felt extremely bad about this because everything that can be in that position tomorrow.
And trying to be, you know, using that for marketing was extremely irresponsible
for many of those companies.
While the bank was still on, you know, people still had their money locked in there.
And, you know, obviously, having some money on our side,
we were also feeling as a customer and knowing how does it feel.
And that's why we decided that we can only think about marketing and launching such product
only when things are clear that the bank is in trouble.
There is a real risk of companies on Monday knowing that.
Let me make sure I understand this.
So you had, from the funds you raised mostly from investors,
100 million euros or something similar to that.
Close to that. We actually couldn't confirm exactly the amount
because on Friday we had a lot of funds in transit.
And obviously, we didn't have access to the bank account.
We had a lot of wires.
We didn't have access to the bank account.
And obviously, we didn't have access to the bank account.
We had a lot of wires that were out,
but we couldn't even confirm this number over the weekend.
And most didn't go through.
So you had close to 100 million euros trapped in Silicon Valley Bank
without knowing if they would be guaranteed or not.
And you offered credit to companies that had money trapped in Silicon Valley Bank
because I am presuming you had even more than 100 million euros
outside of Silicon Valley Bank.
We raised close to 240 million.
Also, during that process...
I'm sure you spent some of the 240, no?
Yeah, we did.
But also, we are generating revenue on one side.
On the other side, we also were in close contact with our investors
and also potential investors that were very willing
and have been, some of them, waiting to be investors.
So we quickly know that even if this product escalates hugely,
we can manage the risk well and we can provide enough liquidity necessary quickly
with our investors to be able to have everything working soundly.
It is calculating risk at the end of the day.
It's easy when you say it, but I'm sure you had a fun weekend.
Definitely.
You mentioned very quickly that the institutions you're working with
were not using Silicon Valley Bank as a depositor,
but they could have totally been, right?
Because Silicon Valley Bank was the 16th largest bank in the US.
In Europe, it was very small, but why not?
A lot of payroll companies were banking with Silicon Valley Bank
and temporarily holding clients' cash there.
And if it had gone down, you go down with it, obviously.
Well, I think one of the good things about the safeguarding and the setup there
is that usually, as I said, everything in financial services and payments
is a volume game, right?
And usually those companies that can give you, let's say, banks
that can give you the best terms are really the very, very large banks
that had a huge amount of volumes.
And that is why, in this case, I don't think I have heard about
a financial services company safeguarding money in Silicon Valley Bank.
I'm sure that maybe there was, but it is very unlikely that somebody
has been safeguarding funds, or at least we have never heard them
on the market of banks that are providing these services.
Which are the ones that typically do this role?
So, a lot of the usual banks, so if you look at the banks like, you know,
I would say Barclays, Bank of England, JP Morgan, you know,
there are some specialized on different currencies as well,
but pretty much usually the very large banks out there.
Bank of London. Bank of England is the government, no?
Yes, but they also can safeguard. So, for example, Bank of Lithuania, yes.
So, for example, one of the providers that we're working with is also
safeguarding Euro with Bank of Lithuania. So, in certain places,
you can be safeguarding money with the central bank.
So, you can be safeguarding money with the central bank as well.
So, you know, there are different cases where you can do that.
Bank of London, I haven't heard before, before the news.
Yeah, same here.
Yeah, and your company is based in the US, is it a Delaware company,
or is it based in Europe?
No, we're based in London. So, our headquarters in London.
So, we're a UK company. So, you can imagine we had all the incentives
and we were, you know, working with a lot of fintech founders.
I think one of the unique things that happened over the weekend was the,
you know, the open letter to Jeremy Hunt.
You know, there were up, I think, maybe 270 fintech founders
and tech founders that signed below this letter.
And I think how well the fintech community in London
and the tech community in London managed to organize itself
and how fast the government in the UK responded to that
was really, really fascinating because on Friday,
if you have read the Bank of England message,
they were saying this is not a systematic risk,
there is no, this is going to be an isolated case.
And then, you know, one of the best companies that, I think,
collectively they have raised about 15 billion or 5 billion.
Sorry, I don't remember the number right now.
We can get back to you on this after the podcast.
They said, guys, I mean, we are employing, I think, 13,000, 14,000 employees.
You know, a lot of the tech companies have other tech companies as customers,
which means that can have a really cascading effect.
A lot of the money that were in there were also VC money,
which can be also a problem.
And that could have really, really hurt a single sector significantly.
Just for our audience to understand.
So Silicon Valley Bank had the headquarters and the main company in California.
But then they had a branch in the UK where, I understand,
is where you had the money.
It was a branch. So it was a branch until August 2020.
And in August 2020, they became its own regulated company,
regulated by the FCA and the RPA in the UK.
So they had their own license, which means their money were ring-fenced,
which means their money were isolated from the money.
And that's why they could quickly do the transaction and sell to HSBC
over the weekend because that was a different bank on its own,
even though it was part of the same group.
The shareholder, though, was mainly the American company.
It was, I think, 100%.
100% the main company, the American company.
Can you explain to us what happened at the end with the UK branch?
So at the end, I think the positive is we have access to our funds.
Are you moving money in and out of your HSBC bank account?
We are diversifying further that kind of money we had there.
We plan to keep some money there as well because it's owned now by HSBC,
which, from my understanding, is one of the largest banks in Europe, certainly.
So right now, what happened at the end of the day was that for the US,
FDIC, which is the local regulator, together with the Treasury Department
and a few other agencies decided that they are going to guarantee
all the deposits of the bank so nobody is going to lose money
because of these deficiencies, which was a way to, let's say, bail out the bank.
But instead of doing a classical bailout, which happened during the financial crisis
where they are covering this money with taxpayers' money,
in the US they decided that they are going to be using funds
that were gathered by the banks themselves.
So they have some kind of pool of insurance they are gathering.
So they are using this money to guarantee the deposits.
In the UK, there was, let's say, last-minute white-knife who saved the bank.
So it was acquired by HSBC.
So HSBC, as the company acquiring the assets,
guaranteed that the bank is going to be open for business.
People are going to have access to this money,
and they are going to be covering the deficiencies or the risks this bank had.
So yesterday, by 2 p.m. UK time, access to the bank
in terms of online banking and transfers was resumed.
It's incredible because it seems so slow, a bank.
Everything is so bureaucratic and so slow,
and they buy a bank overnight and you can operate the next day.
How can it work?
I think with these kind of things,
I think when people are putting money in any kind of bank or product,
they are at the end of the day underwriting the risk themselves.
They are voting with their wallet whether that bank is safe or not.
It wasn't expected, especially in the US and the UK,
countries that are extremely well regulated,
and they are very well known for the quality of the regulators
and the technical advances of the regulators,
to end up in that kind of position.
So definitely right now, everybody was actually extremely surprised
with how fast this happened.
And I think, again, this goes back to the community
on the venture capital part where I think there were some,
I will not name them here,
but I think a lot of people know who I'm talking about,
VCs that started this kind of,
hey, maybe something is happening with this bank,
make sure you move your money,
and then within eight hours window in the US,
they moved 42 billion out of the bank on 117 billion of assets.
So they withdrew actually 30 plus percent of cash from the bank
in eight hours or 10 hours,
which I'm sure a lot of other banks would not surpass
such kind of a stress test.
And that comes because this is a very tight community,
everything is a message away on WhatsApp,
and then the online banking is just a click away.
And I think a lot of the people with really big communities out there
should really well understand the moral risk they have
on saying things and sparking such kind of things,
because I'm sure things would have been different
and people would have had a very different weekend
if there was no such kind of panic.
Fortunately, it went well, it ended well.
I'm wondering though, what did exactly HSBC buy?
Because when you have this kind of bank run, what is left?
What are the assets?
Well, the assets are huge because at the end of the day,
even though they bought them for one pound,
I think from what I have seen,
the bank has about 700 employees in the bank,
it has infrastructure, it has customers...
That's liabilities though.
That's liabilities more than assets.
Yes and no, because still the bank had, let's say,
a lot of money on deposit with notice from customers.
So it had a lot of assets, it had a lot of other investments.
Yes, there were liabilities out there,
but this bank had a unique relationship
with a lot of other companies.
And I think, to be honest, to be on the fair side,
the service we have received from Silicon Valley Bank
as customer service, as tech service,
has been second to none.
They have been extremely good at their relationship
and I think building that, you know extremely well as founders,
hiring a team, building a team together,
having the relationship with the customer,
there is a lot of value of that.
And I'm sure now that the bank is in that cash position,
having HSBC behind it,
things are going to be very different,
but they are buying something that is already out there
as a brand, as a name.
Yes, there will be some fixing that needs to happen.
There is going to be some collateral damage
with people running,
but still there is a lot of assets.
I think I read the numbers and I think it's important
the SBB UK was very different from SBB US
and the numbers that HSBC announced
were that they had five-ish million in cash deposits
and six-ish million in short-term,
but fixed-term deposits,
meaning there couldn't be a 100% bank on the run,
like maximum 50% of the money would be withdrawn.
You mean billion?
Billion, yes.
Five billion, six billion.
So a total of like 12-ish billion in customer deposits.
They had pretty solid assets to back this up.
So basically three very simple numbers for a bank.
There is the money that your clients give you
and what you do with this money.
They should be equal to be safe.
And on top of that, you have the equity.
So in the case of Silicon Valley Bank UK,
the equity is everything that they have more
than what they owe their customers, simplifying a lot.
And that was a few billion.
So potentially, if the risk management
of the liabilities of SBB UK was not as bad as the US version,
HSBC bought a few billion pounds worth of equity for one pound.
Now they're assuming a risk,
so I'm sure they're assuming a discount,
but even if they lose 50% of the equity value,
70% of the equity value,
maybe they bought one billion of equity for one pound.
And also they earn a lot of trust and reputation.
I didn't have an opinion about HSBC two days ago.
Today I'm thinking, well, this guy is safe, the SBB UK.
I have a little bit more sympathy for HSBC today
after what they did.
And as a startup, I'm much more keen to working with them
because of what they did.
And just for context on dates,
I just want to say because we don't know
when people are going to be listening to this.
Today is 14th of March,
so this literally happened yesterday morning.
So yesterday morning HSBC announced that they bought SBB UK
so that's very hot news for us.
Yes, exactly.
And I think the other thing is that a lot of those companies
also had loans with Silicon Valley Bank
and I'm sure that a lot of those companies
would not really go and quickly stop these loans.
So there were a lot of assets and value
and yes, they took the risk of getting the bank out,
but I think there is a lot of value that they can have.
And for those founders that are considering now
how to manage this kind of risk for the future,
I'm sure many boards have met
and many VCs have sent memos
on how to diversify from now on the banking pool.
I don't know if you, Risto, have any opinion
on how to manage cash from now on.
Well, I think my opinion is, first of all,
make sure that you are using multiple banks, for sure.
For businesses that are multinational,
that might be more natural, by definition might be required.
Second of all, use as many financial instruments as possible,
whether it's a loan, credit, credit cards, and so on,
so that you are well diversified.
Make sure that you are also using, when possible,
also companies like what we do,
because they are further diversifying from one side the risk,
and second of all, they are actually providing better information,
better access, better control of the money
that you have in real time.
And I think I also heard that some companies
are going to be exploring more sophisticated,
you know, financial products like T-Bills and so on,
that are, let's say, maybe looking even at government bonds and so on.
But I think it really depends.
Gold? I don't know.
If you are a start, if you are a business thinking,
well, what to put with this money,
maybe you have too much of them, right?
Maybe you have to put them into work,
and you should be investing in people or technology or growth.
That's true, that's true.
But it's a nice problem to have.
Yeah, definitely.
To understand your journey, Christo,
what has been your equity story,
from your funding to how did you do the fundraising, how early?
What has been the evolution of the company?
He didn't like the question.
I had to turn on the light.
Yeah, it's getting dark.
So from the beginning, how did you start it?
With how many founders?
And when did you fundraise for the first time?
Yeah, well, I think it's a great question.
So we started in 2018, initially with myself and the CTO,
Boiko Karajov.
We founded the company in 2018, June.
Later on, we also had Konstantin,
who joined us as a third co-founder in early 2020.
So initially, when we started the company,
we were coming from a software world,
and we said, let's go and build a big company.
And I told Boiko, to build a big company,
we only need to do two very simple things.
Find a big problem in a big market.
And then everything is a function of that.
And if we can find a big problem in a big market,
I'm sure we can build a lot to solve it.
And we also knew that the next kind of emerging companies
are going to be at the intersection of software with something,
because already in 2018, software has been for 30 years there.
A lot of things that were software only were built.
And we said the next emerging categories
are going to be on the intersection of financial services,
or biotech, healthcare, or something else.
There needs to be something else as a category here.
And we found the problem of...
Our first idea was to build a product
that helps companies save money from subscriptions
that they're overpaying.
That was the first product.
So we built a virtual card,
helped companies make sure that they can have control
of the money they spend on subscriptions.
We started talking to companies,
and for 45 days we talked to a lot of CFOs.
And we identified that every time we talk about them on virtual cards,
they talk about physical cards
and how much problem they have with physical cards,
how they cannot control them, and how they have to chase people.
And we had the initial capital of 15,000 euro,
myself and Boiko.
And we said, you know, we identified at the time
there were two or three companies already doing that in space.
And I said to Boiko, you know,
we're coming as engineering people and product managers.
We know how to do stuff.
So instead of going and chasing the wild,
why don't we get their products
and let me sell them for a few days
and see where are the holes in their value proposition?
What are customers today asking them to build in the future
so that we can understand what is on their roadmap?
What are they trying to achieve?
What are the other products
that customers would like to integrate and use?
And I was pitching a few of our competitors to customers
just to understand where their value proposition breaks.
If you try to sell their product to a company
that is 100 people, 200 people, 500 people, where that breaks.
And I quickly understood that a lot of those companies
were needing to use those systems with, let's say, integration to zero.
They wanted to do data extraction
because they were releasing a company called Receipt Bank
at the time now called Dext.
They wanted to have, let's say, you know,
not only company cards, but also accounts payable.
They wanted to reimburse employees
that don't have access to company cards.
And we quickly understood that the product we need to build
is going to be much bigger.
And this is where we said, OK, we have 15,000 euros.
These guys have raised, I think, 83 million at the time.
We can do it. Let's do it.
So we raised another 100 million, sorry, 100,000 euros
from the founders of a business we worked before.
They actually said, before we started, they said,
we don't know what you guys are going to be building,
but we are in with 100,000.
So just let us know what you decided to build at the end.
And then we raised another, I think, 400,000
from a local VC, pre-seed round.
And then 2019 was the year of hell for us,
because it was extremely, extremely hard for us to fundraise.
2019 was pre-COVID.
People wanted to meet with persons, seed rounds.
Usually people like to invest with somebody they know
and is around.
And we got about 60 rejections from 42 funds
in the course of nine months,
because a lot of them rejected me several times.
And it was, you know, right now we have a great number of...
But why do you highlight the fact that they wanted to meet in person?
You were not traveling? You were not willing to go to their offices?
No, no, we were meeting them because we were based in Bulgaria at the time, right?
So the biggest liability or the biggest downside was,
you're in Bulgaria, we don't know that part of the world.
Exactly. We have never invested in Europe.
The only thing we know about Bulgarians and credit cards
is how good you are stealing them. That's it.
We don't know anything more.
I hope they didn't explicitly say yes.
Yes, well, one of them did.
As a joke.
So, you know, this is where, you know, we had to...
We found an amazing VC.
We had to actually change our headquarters to the UK
and be able to fundraise,
because they said we have never invested in a Bulgarian company.
We cannot invest there.
But the main point there when fundraising came along during that year
was that, you know, there were already two, three, four companies
doing similar thing in Europe,
and they were backed by some of the best VCs in the market.
I would not name them because you have one of them in your cap table.
But, you know, when you go to other VCs, they say,
oh, you know, all the best firms of VCs have already invested in these companies.
Why would you guys win?
And what was the liability for us from day one coming from Bulgaria
and all domestic market became the strength.
And you asked, you started the conversation.
Why are you having businesses in...
Companies in nine countries?
Because from day one, we had to be international.
And that is the unique thing about our business,
because we couldn't have a big enough market to target in Bulgaria.
We had to be international from day one.
We had to have folks in Spain, folks in Germany, folks in the UK.
And we started really attracting these kind of international companies
that have people across multiple territories
so that we can actually serve them well.
And we started building these capabilities horizontally across the board.
And when some of our competitors started going international,
they had a big liability.
Ninety plus percent of their customers were from one country, right?
Ninety plus percent of their employees were in one country.
And that was a really big mass for you to move.
And the other assumption VCs had at the time is that the winner takes it all, right?
You know, whoever has the most money wins,
which in payments is not the case,
because in payments there is...
Payments is usually a very intimate local thing, right?
You want to be using a local currency.
You want to speak when it comes to money with somebody that's speaking the language,
somebody that is supporting in the language, right?
And that is why the payments were fragmented.
And then we managed to raise three million,
which was on March 13, three years ago,
which was the day of the lockdown.
So March is very eventful for us as a company.
So on the day of the lockdown...
For the entire industry, I have to say.
Did you reach the agreement before or after the COVID?
Yeah, yeah, before.
So it was before the COVID, but on March 13, we sent them the notice to send money.
And a lot of them called me and said, Christo,
I really don't want to be leaving this many of my bank accounts.
I really hope I don't see them for the last time.
So we raised it out.
And on March 16, the first day of the lockdown,
we were with three million euros in the bank account and I slept for three days.
And then 2021, we raised our Series A round from QED,
which is the team behind the founding members of Capital One in the U.S.,
extremely specialized fintech fund.
And then we raised our Series B with Green Oaks from the U.S.
And then we raised our Series B with Lightspeed Ventures
when we became a unicorn a year ago in March 2022,
which became actually the first Bulgarian unicorn.
So we managed to also raise from our side of the world,
in Central and Eastern Europe, one of the largest B rounds.
The one that was very close to us was UiPath,
with, I think, 120 million and with 140.
And it was also on March 2022 when also the new crisis was starting.
So you always are in the edge.
Exactly.
You're always in the edge.
Yes, we were on the edge.
We were always on the edge.
And when we signed the term sheet for the C round,
we had money for about 25, 26 days.
And I think, you know, I called, I will tell you a story.
So I called one of our investors on Sunday and I told him,
I will not name him, but I told him,
so we assess the situation.
We know where things are.
We are going to be on the aggressive side.
And he said, OK, hold on.
Before you tell me anything further,
this is the most classical pay hook thing.
We are going to be on the aggressive side.
So, you know, I think two things I want to mention here.
First of all, you know,
we are coming from a country where we are used to not live,
let's say, with much as an economy
and as people that grew up with,
we were not growing up with having access
to a lot of money as families as well.
And I think that's what makes us dangerous,
because we can be really, you know,
we can really work with as little as possible
and we can really work with a lot.
And we are not concerned to go
and change our positions over time.
And that's why we were not concerned on Sunday
when we had to say, OK, we do have cash.
We have options.
We have investors willing to help here
if things really are needed.
Let's go and help those companies that need that.
And I think that is something that we could not convey
as messaging in 2019 when we were fundraising.
And people were saying,
well, how can you guys be these companies?
I mean, it was like we can build better products.
We know our stuff.
We know how to talk to customers
and understand the actual deep needs they need.
And we don't care about what the competitors are doing.
We are building our own future.
But sometimes it's really hard to convey.
And I think after this fundraising,
a lot of investors have been sending messages.
We had a hard time sleeping
that we passed on your seat
or Series A or Series B rounds.
And just to get a little bit deeper
in the very early stages of PayHawk,
so you said you started with 15,000 euros
that you put yourself, the founders.
Yes, two of us.
Then you raised one year later or less
in 2018, July 2018, 130K according to Crunchbase.
We raised actually in September 2018,
100K, I'm not sure if Crunchbase is correct.
We raised in September 2018, 100K.
Was it friends and family?
Yes, it was friends and family.
I think it was 120K or 115K, something like that.
So collectively maybe 130K.
Then we raised 400K in the beginning of 2019,
which was our...
With 11.
Which is kind of an accelerator in Sofia, in Bulgaria.
Actually it is, I would say,
the best VC firm in Bulgaria.
It is currently targeting seat
and early Series A companies in the region.
So they're not an accelerator, they're a VC.
But their tickets at the time were slower.
But that was very good signalling,
the fact that the main VC in Bulgaria is investing in you.
Yes, but 2019, the other one, very notable name,
again I'm not going to name them here,
rejected us three times.
So three different partners looked at the business
and they rejected us three times,
which I think has been...
I have been speaking to the founder of the firm
and they have done a lot of retrospectives
of what they did wrong here.
And he was joking, at least we were consistent,
but it was a terrible decision.
And then you managed to convince one of the biggest funds in Europe,
which is Early Bird.
Exactly.
No?
Yes, so we managed to...
You invested three million.
Yes, so the seed round we managed to get...
And this is the learning from the story,
because we understood in 2019
there are three types of VCs in this world.
The top-tier VCs.
They're building their own strategy,
they're doing their own analysis,
and they always don't care about who else is investing.
They will make their own judgment.
See, there is a tier two,
which are the best friends of tier one,
and they just want to tag along and be in the round,
and somebody else is doing the hard work
on figuring out the business.
And then tier three is the worst types of VCs,
which are private equity guys hijacking the VC term.
And in this case, after so many rejections,
we realized the only way we can compete with the tier one funds
is to find another tier one
that doesn't care about who else is in there.
And they can really see, you know,
the talent and the opportunity,
the early science and the mathematics.
We launched our product in January 2019.
By May 2018, we had customers from 16 countries,
which was showing this kind of opportunity
to build a company that can be targeting
multinational companies from a single base.
And also Early Bird Digital East invested in UiPath.
They were the investor of the seed round of UiPath.
And what was the metrics that you were having right now?
You said you had customers, but what about revenues?
Well, these are things we don't disclose.
Yeah, we don't disclose those things,
especially now in that environment
where fundraising is not top of mind of anybody.
But we have pretty healthy unit economics.
We are growing pretty well.
We are hiring constantly,
and we are on a very, very good trajectory as a business.
But to understand the range,
if we think about run rate revenue,
I know ARR is difficult in your world,
but like the revenue that you more or less
would generate in the next 12 months
with your current business,
are we talking 10, 50, 100 million?
What is the range that we're operating in,
just to understand?
It is quite big.
We cannot comment exactly on the numbers.
But in terms of run rate for a burden
and the way we are currently building the business,
we have many years ahead of us,
four or five years plus as a business.
Especially if Silicon Valley Bank survives.
Yes, but again, I mean...
It did survive.
Now, happy HSBC customers.
No, but my question was run rate in terms of,
I know ARR is not really the core metric for you
because you also have this other revenue.
So when you say very high,
it's like high double digit millions.
Is this something like a reasonable approximation?
It's in the double digits.
In the double digits.
Okay, so we leave it there.
But that's now.
But I was asking in that moment,
in these early moments
where you managed to convince early bird,
for example, with the three millions,
did you have significant revenue
or you had a product,
you had proven that your value proposition
was good for certain customers?
What did you have?
We were making 3000 euro per month.
So we had 3000 MRR,
which was 30, 40K ARR.
Like almost nothing, right?
But the reason for that was
because we were still experimenting a lot with the business.
We also had some, let's say, crappy unit economics
because we didn't have the volume.
We couldn't negotiate amazingly well
some of the financial services vendors.
We were also experimenting.
We did 24 iterations of our pricing
in the first, I would say, two and a half years.
So there was a lot of experimentation,
but one thing that was very telling was the cohorts.
So one thing that's very impressive,
I think, for a business like ours is that usually
when a customer gets in, in PayHawk,
the amount of revenue we generate within 12 months
is about 240% from the amount they started with us.
And that kind of stickiness, that kind of cohorts
were already telling of how things were growing
and how those customers were exhibiting,
even though it was extremely, extremely early on.
So we still had some data to show.
It wasn't massive as volumes,
but for a pre-seed company trying to raise the seed round,
able to overcome the barriers to enter this market.
I mean, we had to invest a lot of our money
into infrastructure providers at the time
because that is how payments work.
Also, at that time, you put a lot of business angels
into the cap table, no?
We did, and that was very key for us
because we managed to convince the ex-Chief Commercial Officer of Visa,
Marc Antipov, to join us as an angel.
He was running Visa Europe for 18 years,
and he really knew his staff.
We found Perry Blatcher, for example,
who was consulting Google for all their fintechs in Europe at the time,
and Barclays as well.
He was a serial entrepreneur and angel investor.
Marc Ransford, who joined us.
We also have a lot of local talent in Bulgaria,
so people like Vasil Terziyev and Svetozar Gegev,
who are the founders of Telerik.
Telerik was the company in which we were working before,
and when I was an engineer there from 70 employees,
we got to 850 employees in seven years,
and sold the company for 265 million.
So there were a lot of kind of well-known people joining us,
and I think during the crunch times,
when we had money left for 20 days,
having such kind of investors,
having such kind of people next to you
was quite important to really stay sane
and to make sure you can continue to go.
Why exactly?
Because they would take the phone and we get psychological support,
or they would make wire transfers?
I would say both.
We did not get to the point where we had to tell them,
guys, we need more money,
but I think that was very clear
because they were seeing that things are getting there.
So that was part of it.
I knew at any point that if I asked them,
they are going to help, so that wasn't a concern.
Second of all, they were also helping
because we were seeing really this big disconnect
where you go and speak to a customer and they're saying,
guys, this is amazing.
We have never seen payments integrated that much
with spend management or expenses.
We even haven't seen products that are doing like that.
We really like it.
Then you go to talk to a VC and he's telling you,
oh, Accel already invested here, guys.
What are you doing?
And it is really the big disconnect,
and I think you should stay true to yourself
and to trust your method
that I think I know what the market wants.
And even though right now I have this small situation
where I can fund it or I can find the right ways to get there,
I'm absolutely sure about the long-term success here.
And also business angels were important
to convince Early Bird or QED in the next round
or not in that sense?
I think they are to some extent,
especially getting access to them, getting to them.
And the dynamic with Early Bird
was that they already were one of the funds that rejected us
a month and a half ago.
And one of our angels was speaking to another guy,
and we got the term sheet, which was very, let's say, crappy.
Excuse my French.
Term sheet.
But still Early Bird understood we got a term sheet,
and they reached out again.
And because I was already at the verge of the time,
and I said, we have to be on the aggressive side here,
they said, can we speak again in three days?
And I said, guys, we're signing up the term sheet in seven hours,
so we can speak in the next six hours.
And if not, the deal is gone.
And they said, OK, let's speak.
And we spoke to them, and they really understood
how much they have missed in their initial evaluation
and got interested.
And then we started speaking day after day,
and then we met in person in Sofia.
And then we boarded the flight from Sofia to Munich,
where Early Bird is.
And because this was the earliest flight from Sofia,
it was at 6 a.m., so when we got into the flight,
the pilot of the plane said,
welcome to this Early Bird flight to Munich.
And I said, OK, that's the sign.
It's the sign.
We are getting a term sheet.
So we got with the Early Bird flight to Munich
to meet Early Bird,
and it has been an amazing relationship with them
over the last three years.
OK, this is a story, the fundraising.
It's a story of lack of things that are completely,
I don't know, impossible to plan.
But you need to talk with a lot of people
and keep persisting, no?
And you seem to have persisted a lot
with so many rejections and keep pushing and pushing, no?
Yeah, I think it is quite important to always
try to be as resilient as possible.
And I think it's quite important in these situations
to be showing this resilience to the rest of the organization.
Because right now, even though we were not in a great position
and we were looking at the setup,
having gone through so many things as an organization
really built this muscle, right?
Even though people at PayHawk, if you ask them,
one year in PayHawk is like a dock years, seven years.
They feel it was like, you know, seven years here.
That really builds a great team.
And one that is keeping its composure, it is calm,
it can really think clearly, it can think strategically.
And, you know, we at the end of the day
might go through many different things,
but we are staying together and we are pushing as a team.
And I think building this spirit and going through moments like this
is where you are forming the character of the company
and the culture.
And I think that's really what is making the true
true lieutenants of PayHawk as team members.
And I realize that you, after surviving this crisis
and these very edgy moments,
you went very aggressive to get as much money as possible
and you raised a lot of money
and you put a lot of investors in your cap table.
Not only the main ones, the lead investors,
but also a long tail of investors,
including people like HubSpot, you know,
invested in your company.
So that is what you...
I mean, that has been your strategy to have a very big
and long term of investors
and make sure you have as much money as possible to survive.
So my strategy always has been that
everything is self-fulfilling prophecy.
You know, the more minds and the more people you can put
and if you don't try to optimize, let's say, for percentages,
but optimize for the outcome,
because at the end of the day percentage of what
is the important question.
So our strategy has always been
let's really get as many investors as possible,
let's get as many employees invested as possible
and that is going to form the character
of who we are going to attract
and how these people are going to stand up
for the company in the long term.
And that's why we have...
PayHawk is also an Endeavor company.
I know Endeavor is also a great network
of like-minded founders like us
and Endeavor Catalyst was also another one that invested
just because we wanted to be in the community
with so many Endeavor companies
in the emerging markets in Europe and in the world
that are going through this kind of processes.
And HubSpot is another one that's on the cap table
and we have a really long tail of...
Tiny VC is another fund that also invested with us early,
so many, many others.
What about control?
Did you give up control with all the fundraising?
You always give up control.
You always give up something, let's say.
So to me, control hasn't been always, let's say,
a percentage or hasn't been always a board seat.
It has been a fine line of what's the capabilities,
what's the possibility,
what is the decision-making I have,
what is the contract with the board and the investors
on how I'm running the business
and how we as a leadership team are running the business.
And we are also a very data-driven company.
So by nature, obviously, being in FinTech,
but one of the core capabilities, characteristics
when we interview people for the business
is how data-driven they are.
And at the end of the day, when you have a very clear metrics
and very good contracts with the rest of the, let's say,
the board members, everything is in a very good spot.
And I think control is not only measured by, let's say,
a percentage, but also by trust and also agreements
on what would be the goals, what we need to achieve
and how we are going to achieve it.
And in that terms, do you control this through agreements,
not just the board or the cap table, but through agreements?
Do you feel you keep in control of the company?
Yes, I have. Yeah, of course.
I mean, we do have all of those agreements also in writing,
signed across the board.
So at the end of the day, that's how you think about business, right?
At the end of the day, it's a professional setup
and everything can happen and you need to make sure
that you have everything well described, every, let's say, case
and every decision you can make,
what kind of decisions might be reserved matters,
what kind of decisions can be within your control.
But yeah, I feel extremely comfortable.
And I don't think I feel anything.
I don't think more restrained than I was when we were a seed company
or a pre-seed company, right?
I feel the same way.
It's a partnership with the investors.
We have a very clear terms.
Obviously, scales are different of what you can do,
but I feel the same way.
I think it's everybody's on the same boat.
Especially because you are executing quite well and that helps.
I hope so.
You definitely pull up the contracts when things go wrong.
I think it's not very popular to say nowadays,
but we all want the smallest dilution as possible.
It's kind of popular to say, no, we don't care about dilution.
We want to dilute ourselves as little as possible.
It's only rational to want this,
especially if you're building for the long term.
But I think what you said or what you both were talking about
is something that many entrepreneurs don't know at the beginning,
which is that the fine print of the contract
is way more important than the dilution, the valuation, the board seats.
Even the preferred equity, like the fine print,
the little details of the contract,
is where everything is actually detailed.
You can give up percentage, you can even give up board seats
if you write a good contract that specifies who decides what.
You actually might have amazing percentages,
but what's sitting in the contract might be very different.
It goes both ways, right?
And I think having this conversation early on, I think it's super exhausting,
obviously, going through these terms, managing multiple parties.
It's not fun to negotiate a contract like this.
Yeah, I know.
But it's worth it.
It's worth it, and I think that's kind of the most important thing.
At the end of the day, you really want to go through this at once,
being painful, but then sleep well because you are not in a certain position.
And the same goes even for, let's say, two co-founders starting.
So we started the company with Boiko from day one, and we agreed.
Boiko was one of the team members of my team before,
and he was the most talented engineer I have ever seen.
And when we started, Boiko said,
I would be fine to have less than 50 percent.
I was like, no, I want you to have 50 percent
because I need a co-founder when we are starting, right?
But let's have an agreement between us.
If you are leaving in the next three years,
here is how much you can leave with every month.
So here is our 50 percent.
Each of us gets 10 percent of what we own from day one,
and then every month we earn more.
And it's very clear if you leave on 15 of January, on 27 of February,
what exactly you are leaving or staying,
so that we don't have to have the conversation
when there is obviously a lot of baggage or emotional burden.
It's very clear from day one.
And I think that is something that I do advise.
A lot of the companies I invest into
or some of the founders that are looking to start a business,
get this sorted before you start,
because then it always gets more complicated when things go.
And you learned that because you were not a first-time founder?
I learned that because I started the business with friends,
and then it was a mess.
And then people that I knew, at some point I decided,
you know what, guys, get all the percentages
because I would rather have friends than foes.
And I learned it the hard way.
And I learned that at the end of the day,
that needs to be the way to do it.
And I guess your co-founder and CTO never left in the next three years.
Yeah, he never left.
And you always had a very good relationship with the three of you.
Yes.
That's also very key, no?
I think it's very key that, first of all,
one thing that I have been always very clear about
is also everybody having a very clear role.
And when there are...
Even though we're co-founders, we have a very clear title.
I'm the CEO, one is CTO, the other is CFO.
And everybody has very clear responsibilities.
There is hierarchy, right?
Even though we're co-founders, the co-founder part comes from
here is how we divide value
and how we build the culture of the organization.
But we need to have a very clear setup
because being in a setup where you don't know exactly who's making the decision,
everybody's making excuses, well, he said that, I said that,
it's a very different setup.
So that was very clear for me from the setup.
And then from there on, having the relationships to always challenge each other,
to always be able to say and speak your mind has been quite important.
We have been setting this thing in this context with the rest of the leadership team.
Now that we have a lot of VP people in the organization soon,
other C-level people in the organization,
having the ability to have a radical candor
and to be able to really express exactly as things are,
not sugarcoat them, be very pragmatic about it,
requires for you to have a team with very low ego.
And I think that was very important for me,
for the people I'm going to start a business with,
is to make sure there is no ego.
You know, we can speak the way we want.
If things fail, we should say that they failed,
and we shouldn't take it personally.
We should only look for ways to improve.
OK. And you've been aligned also in the fundraising,
in this dichotomy between wealth and control that you had every round.
When we're fundraising, I'm the only one that is doing the fundraising
in terms of communication negotiations, right?
So they just sign?
Well, they sign, but we also obviously discuss the terms and so on.
But I'm the face and I'm the person, because when you're negotiating,
you know, and you want to control all the information
and the dynamics of the conversations, right?
And the best way to do it is to make sure you do it this way.
Of course, they're meeting the rest of the founders.
Of course, we're negotiating certain terms,
but I'm the one in front, and there is no excuse, right?
We don't play the bad cup, the good cup.
Everything should be in that way,
because it makes it much easier to go through these challenging,
challenging, let's say, negotiation stuff, tactics.
And how do you come around the other dichotomy
between growth and profitability right now, especially in this moment?
What's more important?
Both at the end of the day.
So right now, if you look at how the world of venture capital is judging companies,
last year, let's say 2021,
85% of the driver was the top-line ARR,
and very little was the gross profit.
Right now, just 20% of the time,
the top line is the multiple or the main driver.
80% is really the gross profit and the long-term profitability.
I think you need to grow both.
And that is a place where you need to make sure that if you're,
let's say, taking shortcuts on the gross profit in the short term,
you also know how the sensitivity that's going to be on the ARR.
And we are a very unique business where the cash back is a very good lever we have,
which has a correlation to the win rate of the business and to the gross profit.
So finding the right amount of cash back and the way to use that information
to control how much you can give back to customers as SaaS
and how much to retain as SaaS is a very key metric.
And I think that's something that we managed to really perfect well
over the last 18 months on how to use this,
with what kind of customers this matters,
what kind of models we can use, what is the sensitivity to the win rate,
what is the sensitivity to the gross profit,
what's actually the effect of the gross profit when you have it at certain levels.
And that's why we have this lever where we can really control
exactly how much we can optimize on the ARR and on the gross profit.
And right now we have a level of cash back blended in the portfolio
that is giving us the best top line with the best gross profit.
And one question you mentioned before that you had,
I think around five years of runway,
and if you have 200 million, that's like 40 million of porn a year.
So I'm assuming you're not profitable by that assertion.
Do you have a timeline where you think or where you know the business gets to profitability?
And what does this timeline look like?
Well, I think if you have money and if you're in a market that is growing,
you have this money for growth, right?
And this is by definition you're going to be burning money.
If you want to be a profitable business, that can happen,
and that's a different setup.
Right now what we're optimizing is really getting market share,
building the PayHawk brand, investing time on podcasts like you guys,
and making sure that we invest as much as possible to be in a good position
to win market share.
So you're clearly prioritizing growth then, saying because we have money,
we are clearly prioritizing growth,
and there is no plan for profitability as long as we have money to grow?
No, we are prioritizing unit economics,
and we are prioritizing not growth at every sense.
So we are very clear on what needs to be our acquisition cost,
what needs to be gross profitability, what needs to be our growth level.
So we are maximizing growth of the right mix of revenue,
and that's why I'm saying that we can be growing much faster if you want right now,
but that's not the goal.
It's less efficient.
Exactly.
If you grow a lot.
It's difficult to ask you these questions because I know how nuanced it is
because we have the exact same thing on our side,
but I think for the audience to understand.
And just one data point I read, I think from your last fundraise one year ago,
or almost one year ago, it mentioned that you were doubling the business every quarter.
Now, is this still happening?
Are you multiplying by eight year over year?
It gets harder and harder.
I would say that right now we are definitely below the eight times year over year.
Thank you.
But we are still in the, you know, this year,
I think the projections are for three to four times growth of the business
and we're on a good trajectory to do that.
Again, we can even grow at seven, eight, but with the crappy gross profit,
which at the end of the day...
Can you grow seven, eight times, really?
Like even with the worst...
If you do cash back, yeah, you can.
Well, yeah, if you give money for free, yeah.
Exactly, right?
So here you go.
So in our model, yes, we can.
But that's not what we need and we don't want that.
Because then what's happening is that it's not only the top line,
but it's also the quality of the customers you're getting, right?
And especially when you're providing credit,
you definitely want to keep the quality of the companies you are attracting high,
because otherwise you can grow it with a very crappy customer base
that is not willing to stay and doesn't care about the general business.
We're here just because they're getting some gimmick like cash back,
and then they're gone.
Actually, the majority of our customers today
expect that cash back is going to be gone at some point.
And you talked about quality of customers.
You have very sophisticated customers.
You talked about large tech companies, scale-ups.
I forgot exactly how you described it.
But these type of companies that grew a lot and had a lot of money,
now they're struggling.
Are you seeing an impact in the business or not?
Because what you do is more administrative
and it's not so related to the growth of the business.
I would say that that is part of the customers we serve.
We also serve very traditional companies.
For example, Luxembourg Airlines is a customer of PayHawk.
We have a different mix of companies.
Definitely some of the tech companies right now
might be in a position where we don't see a decrease
of the demand of our products because we are right now
helping them manage spend and actually save money.
But they spend less.
They spend, but they actually spend less.
You're correct.
Right now, and this is where we see the slowdown
because usually, let's say, marketing budgets and SaaS budgets and so on.
This is something that is currently decreasing.
But on the other side, the demand is there.
On the other side, we have companies with expectations right now
that as we go through the year, depending on how things go,
thanks God this thing with SVB didn't happen
because I think our real concern there would have been
the domino effect this could have had
because a lot of tech companies are using and buying other tech companies.
I think that would have been the more scary thing.
Even if companies did not get exposure to SVB,
if they lose 30% of their customers,
that might be a different story.
And the 100 million would have hurt as well.
To some extent, yes.
Yeah, nice.
Very interesting story.
I don't see it exactly like a SaaS model
because you are talking about paybacks, margins,
and usually a SaaS company,
once they've paid for the product organization,
all they care about is the go-to-market and customer acquisition costs.
But you have this dichotomy between customer acquisition costs
and go-to-market and margins,
and you can have zero CAC if you have 100% payback.
So you play with these two metrics,
and here is where I see different kind of company,
but it's quite interesting.
And the fact that you are unicorn since last year
also puts the exit possibilities of the company
quite high.
So is that something you would be considering?
You would receive an offer of, let's say,
1. something billion euros to acquire PayHawk.
Would you sell?
No.
We would not sell because we have been working so hard
over the last five years to be in the position in which we are today.
To be able to sell PayHawk,
to be able to have a great chance,
to be able to really be able to be something that is at global scale,
something quite unique.
The ability to be able to serve customers base across multiple countries
in a very unique way is something that we have been working on.
And every day we have worked to add more countries,
like we opened the US late last year,
and we started having good traction there beginning of this year.
We are thinking about new geographies and new markets
because we just see that if you are a company
and you need to use, let's say, company cards or payments,
it is a very disconnected world.
You need to have different card providers.
You need to have different softwares in different markets.
And this is the market that we are just, I would say, scratching the surface.
And the market category is one that is growing.
Yes, right now, not all the companies are in the best position to spend
and to grow their business, but it is a cycle.
And we expect things to get better by the end of the year
and beginning of next year.
IPO plans? Neither?
No, not that much, I would say.
Especially now, no?
Especially now, we are looking at what is happening
with tech companies being battered.
It is sometimes really hard to reconcile the reactions of the public market
and we can even see what can happen to a bank
or somebody dealing with payments.
If they do something incorrect, let's say, on the public market,
the message it can get can be very detrimental.
Pretty fast and pretty brutal.
Pretty fast, pretty brutal.
Something that I would say would happen much harder to a private company.
OK, almost last question from a seasoned founder like you
that has lived this growth, this level of scale.
Can you tell us something that you learned about building your management team,
your leadership?
Do they come from scratch, from the beginning?
Did you hire senior executives? How did you solve it?
I would say both.
Some of the leadership people on my team.
I think, by the way, it's a great question.
Thanks for asking because I think that is the number one priority
a CEO has when they get to a scale
because they don't want to be the growth limiter of the company.
They cannot be everywhere. They cannot know everything.
And they really need a strong leadership team to really lead the functions
and to be extremely professional.
So we do have a mix.
We have some people that grew within the organization,
that are at the VP level in the company.
We have some people that we hired externally that really we managed to get them
and even have one or two steps for them.
So building what I learned building the leadership team is that at the end of the day
one thing that is very important is to look at the previous experience
and the previous performance of those people
to be able to really judge how the future is going to look like.
People that went through such kind of scaling know what scaling is.
And they have a lot of premium.
I would say people that went from this kind of journey last year
we went from 62 employees to 260 for a matter of 12 months, which was crazy.
And people that have seen that are really coming with a different...
They're looking at it through different lengths and they know what to expect to a big extent.
People that are seeing this for the first time might be a little bit more overwhelmed.
So I think I put a lot of premium on that.
People that have been through that journey, people that had excelled in their previous position,
people that come with really strong references, people that come with the potential to have a great career at PayHawk.
So I think building that, I took a lot of advice also from Guillaume, who is the CEO of Checkout.com.
He has seen an immense growth as an organization.
And I think building the leadership team and the management team is quite hard,
but quite, I think, important to get right, to be able to get the company in the next shift, to shift the gears to the next stage.
And last question, unless Jordi has another one.
Do you get your inspiration where exactly?
Do you read books, follow podcasts, talk with founders?
Can you give us some examples of those?
I would say that we talk to founders a lot.
I think there is, you know, coming from the engineering world,
I know that there isn't a problem that at least somebody else was trying to solve before, right?
Which means somebody approached it in some other ways and learning from these mistakes,
learning on how these people approached it was, I think, quite important.
So we try to do a lot of benchmarking.
So, for example, before we go and search for, let's say, a senior person,
I try to speak with three, four, five similar people just to understand what I need.
And this is usually where you see a lot of inspiration.
I also try to have a lot of activities outside of work.
And just to keep myself engaged and not to be, you know, just to find motivation,
that is not just into work because, you know, it can be a rollercoaster.
You know, as a founder, you go through five phases every day, you know.
And I think being able to get inspired outside of work or something that, let's say,
is constant, whether it's a hobby, whether it's your family.
In my case, obviously, family is quite a big thing for me.
But also, you know, everything outside of, you know, work like playing tennis,
you know, sailing are things I love.
But do you do all of those or they are just examples?
No, no, I do them. I play a lot of tennis.
I sail a lot when my wife allows me to and I have time.
But, yeah, we are lucky to have Greece next to Bulgaria.
And that's why I actually love our Barcelona office.
There are so many boats there that, yeah, makes me eager every time I go there.
We should go one day.
Yeah, we should.
Okay. Thank you very much, Risto, for sharing your very interesting story.
Congratulations for the amazing story.
Thank you, guys.
And I think thank you for all the questions and insights.
I think I have never been on a podcast in which we went so deep
into many of the metrics and dynamics.
And I think that has been a podcast I'm going to share internally
with a lot of employees that start at PayHawk
just to have a crash course of the history of the company.
Thank you. Have a great week.
Thank you, guys. Ciao, bye.
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