Going from Series A to Unicorn in Less Than 12 Months with Payhawk's CEO and VP Marketing

Hello, nice to meet you. Thanks for making it today in sunny Barcelona. So what we are going to do today is I'm going to go over our story of, you know, how we started the company and how we got to Series A in such a short time, and then how we became a unicorn. And then Desi is going to talk about some of the key takeaways that we got from that stage. So First of all, we are a company that is still not 4 years old. We are turning 4 next month. And we crossed in March the $1 billion mark as a company valuation. So we started the company with a big idea. We said, in order to create a big company, you need to solve a big problem in a big market. And if you can do that, then your company is going to be a function out of the market that you address. And our first strategy is going to find a company— sorry, to build a company in a way which we can search for a market which we would like to address. And that was the first key thing for us. We went through then very easy angel round of $130K, uh, and then we went through 62 rejections to get our seed round closed in 2019. Um, why 62? I'm going to explain later on. Then when everything was getting in lockdown, we sent the call for our investors to send the money for the seed round, and all of them said, "I hope those money, I'll see them again at some point in our lifetime." So that was a very key moment. Then we managed to go and close the Series A of $20 million last April, and then this year we managed to get the $100 million, combined rate $250 million, Series B round to get to a unicorn state. So the agenda today is to really to get of the, uh, to go through some of the really key takeaways of what made our journey possible and what were the things that were fundamental and instrumental for us to get things right very early on. So the first thing is starting with the right foundation. This is something extremely important, especially in the market environment in which we are today. As you can see what's happening with tech market, if you don't have solid foundation, really that strong unit economics, really strong and healthy strategy on how you're going to attack the market and making sure you have a way or your way to approach the market is really important. And then how we build our product in a way that we made sure that is something that is differentiated, that has a differentiation it can easily address the market and it's something that customers are willing to buy at scale. Then how do we work in a regulated market, which is something that is key for, for anything that's in financial services. And though then how we blitzscale our operation. So the first thing is, and this is extremely important when you're fundraising and when you're a venture-backed company, is getting the foundation right. And for us, the first idea was that We are going to go and iterate over a concept as much as possible without falling in love in that idea. So, you know, we wanted to make sure that we are iterating over something. We come up with an idea, we go and pitch it to customers, we go and create prototypes, we go create pricing, we go create websites, but we don't fall in that— we don't fall in love in that idea. So that when customers are rejecting us, we can actually be, you know, not emotional about it but rational. And we make sure that, hey, this is actually something that the market says, which is quite important. Then we wanted to make sure we have the right foundation. So from day one, we had a strong team that have used— they worked before, we have done multiple products before in a different environment, and we were sure that if we go in the market, we should find our way to, you know, be different and to differentiate. And the key thing for us was that we wanted to make sure that we can bring the game to be about software, because in the financial services market and all the banks, everything is about, you know, payments and distribution and so on. But our DNA as a company was being able to create software, and we knew that when you go in a new market, if we bring the game to be about software, then nobody can compete with us because this is the top of our game. The other thing was very important, and this is something that investors are really looking at every company, is how you structure and how fair is the setup. If you have a cap table where, let's say, you have two co-founders, one is owning 20%, the other 80%, that is the recipe for disaster. You need to make sure very early on that you have a fair split and When we started the company, my co-founder, Boiku, one of the co-founders, he had, you know, I would be happy to join the company, I'm happy with 20%. And I said, no, you should have 50% because I need an equal co-founder who is rightly invested into this business. And we don't optimize on percentages, the question is percentage of what? Because even 100% of zero is zero, right? So don't focus Focus on these micro-optimizations and make sure you have a fair structure. The next thing we did is when we set up the company, we put together reverse vesting for the founders, and we said, we are agreeing before we even start the company, if you leave tomorrow, how much you're going to take away from the business for the next 3 years, so that if it's too tough for you or things are not working or you have other ideas in life, you know, and we agree before we start how things are going to work out. And this is something that investors appreciate, and I think makes extremely easy the communication internally, because a huge amount of companies fail because their founders cannot agree. And this is the, the first thing you can prevent in a company. And the next thing we did was we also set up an employee stock option plan from day one. So we said, if we're starting, we need to take the employees fairly, as co-founders. Founders of the business, and we set up a dedicated pool from day one, and we set up a scheme how we're going to distribute that for the first 12 employees, which was preconceived without we have even met the people. So we knew that we are fair with every person we are getting in the business. Then obviously we got 62 rejections over a period of 9 months, and it was really hard time. You know, you go and you pitch and you explain what you're doing and you're showing them their product and they're saying, no, that's not going to work, you don't have this, you don't have that. We're a company based in Bulgaria, and what, what happened for us was that it was really important for us to really think about what are the things we have and what are the things we don't have. So what we don't have is access to a local market, but on the flip side, this means that from day one we need to be concentrating on the, you know, markets that are outside of Bulgaria. So from day one, we have to be international, and we turn that into our advantage. And we are a company now focusing on multinational companies, and that's our part of our core strength. And what was key during that time with fundraising is that investors were saying, that's really, really hard for you to be able to penetrate the international markets all at once based out of Bulgaria. Nobody has done that before, and so on and so forth. But what What was key for us was to really focus on the customers. We didn't listen that much on what investors are saying. We were listening what the market is saying, which is the most important thing. And we were in that paradox where you can see that the customers were really fond of what we were building and they really wanted to use that thing while investors were having any other kind of, you know, multiple reasons why this is not going to work. And that leads us to the most important thing when you're starting a business, that is fulfillment, getting spot on in the eyes of your customer. If you are able to pitch something and you can see somebody engaged and listening to you and willing to learn more, that is a big, big signal that you are on something big. If it takes so much time to explain, maybe you're explaining to the wrong guy. Change the person or the target persona or the company size that you're explaining to. And really find and nail down your target customer because that is really key. Stay customer-focused. So this guy that you see is actually the CEO of Luxembourg Airlines, which is a customer. And once you get those customers who are, you know, this is a company that is around for 75 years, but, and they have never used another product in financial services market before Payhawk. They had a bank account for 70 years. And they have never changed that. But if you are able to really make somebody that is obviously not the, let's say, the perfect customer right away, and you can turn it into a big believer, that is going to be a huge advantage for you down the road because this shows you how big the addressable market is. And on the other side, we were really obsessed about serving those customers and getting things into the right direction. So How to make change within the rules. So disrupting a regulated market is really, really hard. So what we knew is that the next frontiers of big companies are going to be at the intersection between industries. So it's not going to be only SaaS anymore. It needs to be SaaS with fintech, SaaS with healthcare, SaaS with biotech or something. Because any more now, you know, we went through that phase of scaling SaaS until 2015, 2016, and now that market gets supersaturated. Everything is SaaS, everything is a software company, and you really need to find the new pockets where some of those markets are going to start to converge. And this is what happened for us. We identified that, you know, company cards, accounts, company cards, bank payments, expense management, spend management, invoice management, data extraction should be actually one system. It doesn't have to be 5 different markets that are now— and this is where the disruption comes. When you are able to identify something that is currently being used. And the key thing for us was that we knew that the finance people were not tech guys. They were forced to use 4 or 5 different products at the same time, and that was key for us. We said, well, why don't we merge those market categories? And of course, all the investors said, you guys are crazy, those are 4 different markets that they have huge, huge competitors. And I said, well, that's so good for us because we're addressing a massive market. So You guys should be happy, not afraid. And then you need to start thinking a little bit more about, uh, how you can actually measure where you're going. And while you're scaling fast, for a company like Payhawk, we have been growing 21% month over month for the last 20 months. You sometimes lose, uh, uh, yourself in the data and the metrics, and you really need to nail down what's your north star and what you're optimizing. And all of All of your company should know about one or two goals that you focused on, and this is something that you communicate to investors, and that's something that you really make sure all of our— if you're using OKRs or strategy or metrics— realigns to. And then in terms of blitzscaling our operations, our strategy was to have a small team that is fully capable, and we empower those people to focus on key things. So instead of having a very heavy organization, we said, let's go, let's have a very flat organization. Let's empower people. Let's give them the benefit of the doubt at the beginning, and let's see whether they can execute. And if they cannot, you as a manager and a leader, you have to make sure you have set these people for success. Do they have the right resources? Do they have the right— the goals that they need to go for? And do they have the tools to achieve that? And if you have done that, and if those people are not able to you know, go and deliver, then if you have to let go people, it is fair for both parties and people understand that. But you treat people with respect and you give them the opportunity right away, and that makes a huge change for, for us. So we are a company that is, um, last year at that time we were 29 employees. Right now we are 200 employees and we are operating in 6 markets. And that's not going to be possible if you do not let go and you focus on the people so that they can build on that. On our part, was also important to use everything that is SaaS. Really cut the meantime and the paperwork and the heavy process as much as possible because at the beginning you really need to focus on the key metrics and you are not in the business of managing expenses or being an HR tool or managing, you know, many other things that are excessive. And it was very key for us to be able to focus on allowing people to do their job in the most possible, in the fastest possible way. So now we will go to Desi, who is going to share the key takeaways, and then we will do a short Q&A session.

Hi, and thanks, Christoph, for sharing all the insights of how we managed to become a unicorn. It was a really long journey with a lot of ups and downs and really a lot of hard work in a very short time. So I actually joined Payhawk 1.5 years ago, and to be honest, it feels like at least 10 years ago because so much has happened. We not only raised a seed round and Series B with a unicorn valuation, but also we grew the team. I think when I started, we were 40 people and now we are at 180.

14.

14. And now we are at 180. And, um, yeah, also we expanded to a lot of new markets. We now have offices in Sofia, in London, Berlin, Barcelona actually, and Amsterdam and Paris. Um, so I'm, I'm certain that we only managed to grow this fast because we got the foundations right. And also I know that you cannot just take success story of us or any other scale-up and just apply it to other business models or other founder teams. However, there is some like key success factors and, and takeaways I want to share with you to, to also take home if you want to grow or grow even faster. So let's start with the first takeaway, which is to build a stellar team. So to build an excellent team, um, is key So it is an excellent team with the right skill sets and shared values is key if you drive to grow your company. And this stellar team starts with the right founders team. You need a founders team that complement each other with their skill set. So, so for example, if you have a team of techies, you might manage to build an amazing product and excel in product development. However, maybe you are not able to define a suitable go-to-market strategy. So at Payhawk, we have this team that complements each other with their skill set, with backgrounds coming from product management, engineering, and finance. To build a stellar team does not only mean to build the founder team, but furthermore, you have to hire your entire staff. Um, and when hiring your staff, So first of all, obviously diversity. And besides diversity, actually at Payhawk, I think we have 40% women, which is quite unique in the fintech industry in Europe. But besides diversity, I would recommend to start hiring very senior first because you need to get the right foundations to allow to scale after that. So for example, the marketing team, as started hiring a content director and head of offline marketing who would then build the team further. This will allow you to really focus on scale, on getting the marketing strategy right, and then to further scale. Also, don't do any compromises when it comes to hiring. You might feel the pressure to hire very fast, but if you— you still should ensure that you have a lean but still really smart hiring process. Because if it comes to— if you have to let people go or people go because of not aligned skill set or values, it will create unnecessary chaos and turbulence with your team. So make sure you don't do any compromises when it comes to hiring. Attract investors, new investors, but be picky. So it is crucial that one of your founders knows how to pitch an idea and knows how to network, um, so to be able to attract investors. So if you have the luxury of choosing your investors, choose them wisely. Um, and by wisely I mean that you have to find an investor who truly understands your business model, your challenges, who supports you, and in the best case who also has invested in other companies in the same industry, because this will allow you to, to get inspired or also to, to challenge your strategy. Guarantee true product market fit? Well, you have to fully understand your core customer. Let's say your sweet spot customer, the customer segment you will start to target. And if you fully understand what their needs are, you understand what features they need to solve this need. And so if you understand your product segment, your customer segment, this will define your product roadmap. So as important as it is to really understand the needs of your customers, it is likewise important to expand your segments further, because only if you, if you capture really big market, you will be able to scale really fast. So let's say you have an initial customer. Let's take Payhawk as an example, with our sweet spot initial customer being scale-ups in the software as a service and fintech industry. So we built all features to fulfill their needs. Then more and more enterprise customers became interested in our product, and that's why we are now targeting on those and building more features in the enterprise area. This is, by the way, why today we are launching our Oracle NetSuite integration here to build more enterprise features. So also when it comes to a product market fit, the needs can differ widely when you enter new markets. So you might need different features in Germany than in Spain. So we tackle this problem by hiring local experts in all of our key markets. Get your marketing strategy right. So for like a market you newly created, it's really important to educate customers. If you're in a market that is already really crowded and competitive, it is really important to get your positioning right. So If you have a— you need to have a really clear positioning and communicate it via a variety of marketing channels to the customer so that they understand what you are doing different than the rest in the market. So this can happen in various ways. So for example, you can have an out-of-home billboard live and measure the brand traffic, or you can attend events and count the number of leads you will generate. I would recommend that you test a lot of different channels and make those channels measurable, also brand awareness channels, because this will allow you, when you have the necessary budget and funds to scale, that you have the right setup. Dream big right from the start. Walt Disney said that to have a truly creative team, you need to have a dreamer, a critic, and a realist. So for young startups, it's easy, like for young startups that face the challenge of foundation and the pain of growth, it's easy to overly become critical and pragmatic. And this is where you need a dreamer, a dreamer who thinks outside the box, who who sees what you cannot even think about and who's not afraid to fail or to take risks. So for example, when I joined Payhawk, I actually asked you, what is the vision, your vision for Payhawk? And you said, we will be the biggest bank in the world without holding a single cent. And frankly, at that time I thought, wow, that's a bit too big for me, maybe a bit crazy. But then I realized that this vision vision actually drives the whole growth of the team and became kind of the North Star for, for the team and for what we have achieved. So I really think that only if you think a bit too big, you will be able to become a unicorn. Thank you.

We have a mic at the back, so If anybody has questions, feel free. And maybe just to add on the talent, because I think attracting 1% of the talent is easy to say, but if you don't overspend on people, that's not going to happen. And for us, that was a key metric. We would rather go and build a plan of 5 people instead of 10, but overcompensate those 5 people and make sure that these guys are full fully compensated, and, you know, we are very aggressive in attracting the right people, because otherwise headcount doesn't matter if you get the wrong people. So there is a person there.

I think the microphone is coming. I was just going to ask, on the topic of talent, Is there anything special about your interview process that you're doing to make sure that you're finding the right people?

Is there anything— just maybe just to repeat, is there anything special in our recruitment process?

In your—

yeah. Yes. Well, first of all, there are a few fundamental things. So I myself as a CEO and the other founders, we try to be involved as much as possible. So I spend 80% of my time of my time interviewing and meeting people, which to me is critical. One of the interesting things we do is we do have 8 characteristics for every role. 4 of those are company-wide and they're set: work ethic, intelligence, you know, data-driven as a person, and, and being humble. Those things should be right, and we have a very clear strategy on What are the questions you need to ask and what are the kind of the good signals and the bad signals that people would go through that is going to tell you whether this person is, let's say, data-driven or humble and doesn't have a big ego and so on and so forth. So we are trying to train those people on those 4 key company characteristics that really are making us successful. And then 4 others are role-specific. So it's a BDR, curiosity, and so on and so forth. So that is maybe one of the things we do. The other things we do is we try to be very careful on how we recruit people. So in general, what we did is we never had a job ad for the first 30, 35 people. All of them were recruited and headhunted and targeted specifically because we knew exactly who we need and what we need. And it was much harder. It takes 3 to 4 times longer time to fill a position if you just post an ad and get people. But it was the right targeted approach for us that worked. There is a mic coming, maybe.

Sorry.

Hi. Hello. Hi, I just wanted to have a question regarding the the markets that you were targeting. So you said that you hired a local person in every market, but how did you decide which market you want to target? And the part of the targeting different markets, it's your like feature set or the customers or your pricing models different per market? So we— so first of all, how we decided, we focused on the biggest markets and the richest markets. So it was about how big is the addressable market and how penetrated is the market from others. So those were the key drivers. And also for us, how digital is the market versus how kind of paper-driven is the market. So we had those criterias and we selected our targets. And for us, it was key that we have local people in those markets and we localize as much as possible. So we have the website, the mobile app, everything is in the local language. Customer support, customer success, sales, BDRs, everything is in the local language. All the touch points with you are in local language. The feature set is tailored to the market, but it takes time. So you start with the markets where you have big overlap that with your capability you can address the market with, let's say, 90% of your features, and maybe 10% is local features you need to dig For example, today we are launching 60 days VAT return for the Spanish market, which is key thing for these local markets. And we took a year and a half to certify with the tax authorities in Spain so that we can be a paperless business. And you can actually take a picture with our app and throw away the paper and not end up going back from this conference with a pile of receipts in your pockets, which I'm sure a lot of you have somewhere. So those were key things. And the way you do them in different markets is different. For example, the standards for being paperless in Germany, UK, and so on are different. So the key thing for us was the addressable market, likelihood of success based on competitors, how educated is the market, which is usually pros and cons. It's a double-edged sword and you need to be careful. Hi there. Sorry, in the back. Going back to talent. Did you create like a scalable process on hiring and motivating talent, like senior talent, to come and join Payhawk? Probably this question is also for Desirée. What made you change, and is there any scalability to that process? Thanks. So Desi can say what we do, but I think fundamental is that the CEO is involved into recruitment. That is extremely important. So for example, for senior hires, it is really important for them to get the vision, make sure they're comfortable, and they can actually build a good relationship with the founder because we are peers, right? We are team. I have my leadership team and all those people, we are working together, deciding things together, and we are on a daily basis making decisions. And I think that's, that's really important. And Finding ways to, to show that you have common values is the first part, because if you find somebody that has your values and really is a proponent of your thinking, and then show you a market that is massive so you can really grow your potential, and it is a great opportunity, I think that's the key thing for us. We are entering in a massive market with a great fit and opportunity for somebody. Let's say we're interviewing for a sales position, let's say on a director level, is massive. This person can go from, let's say, in his previous company he managed 5, 6 people. We usually always hire one level below. We always go for up-and-comers who we believe are going to be fundamental and they can, they have been pivotal in their teams for the success of their organization so that they can, we can give them the ground for for them to grow. And those people really appreciate that, this kind of, you know, benefits you give them. And you also ensure that those people are also scrappy and they have very high work ethic. And this is key for a startup, right? Because at the end of the day, if you come and say, I need 45 people from day one, that's not going to fly.

Yeah, so maybe what I can add I think what's a challenge, so if you hire really senior people, sometimes they expect to, let's say, start just managing the team. But as I also mentioned before, we start to hire senior people first. So this means they also have to be super hands-on because they will become more strategic and more the manager person as they would hire their own team. And this is sometimes hard to find.

Maybe you can say why you rejected 3 times. And you can explain why you rejected 3 times the offer and then finally decided to join? Oh, okay, because that was part of the question— why did you join?

Yes, um, so in the end, so I got an offer, um, 2 years ago, and then I rejected it actually. But what the reason behind it was, um, well, I wasn't actually ready to change. I was happy in my job. And then I talked to Christo again, and we had like, um, not an interview call, but more like a general call. And I got really convinced of their values and their drive of the whole founder team. So I really talked to all of them, and it somehow got me like rethink, rethink my decision, and, and yeah, making me join Payhawk.

So never give up.