Decoding the BNPL model

In this episode, Dana Stalder, Partner at Matrix Partners gets candid with Vikram Vaidyanathan MD, at Matrix Partners India, on Dana’s journey into the venture capital world, his learnings from his investments in Afterpay an Australian company focused on the buy now pay later model & more.

Salonie:

Hi and welcome to Matrix Moments, this is Salonie and joining us today is Dana Stalder, Partner at Matrix Partners. Dana is in conversation with Vikram Vaidyanathan, Managing Director at Matrix Partners India.

And through the course of this episode, they cover Dana’s journey into the venture capital world, his learnings from his investments in Afterpay an Australian company focused on the buy now pay later model. The market dynamics and evolution of the BNPL space, Dana’s advice to Indian founders starting up and much more. Tune – in.

Vikram:

Welcome to another episode of Matrix Moments.I’m super excited to welcome my partner fromthe west coast Dana Stalder. Dana has been with our west coast office forthe last 12-13years,yeah, I mighthave the number off alittle bit.

Dana:

That’s right.

Vikram:

I’m going to introduce you through the highlights. Early years at Netscape, ebay, that sort of gives away how old he is. And spent a good part of his time at PayPal and at PayPal he was SVP, headed product, sales, marketing, tech, which sounds like just about everything and became a VC around 2008. He’s made a bunch of our investments in Zendesk, Earninand most recently Afterpay which is probably the largest Fintech outcome in recent times with a reported value of $29 billion. So welcome, Dana, super excited to have you here.

BNPL is of course a huge, huge topic of discussion and you’re sort of the original BNPL OG. So I’m really looking forward to this.

Dana:

Good. Glad to be here.

Vikram:

So, Dana, maybe start withlittle bit ofyour journeyand,you know,when I went back to some ofthe old articlesaboutyou,you were pretty much offered every operator role andyou chose to be a VC.

Dana:

Yeah.

Vikram:

And what prompted you to make that decision and the extension of that is how much of that is true, why do you continue to do this, why do you want to do this for the next foreseeable future?

Dana:

Yeah. You know, my curb journey in general I’d say has been -- is kind of foundational serendipity more than anything, I’ve done finance roles, I’ve done many product management roles, I’ve done some connotative marketing and I’ve done a lot of general management. You know, so I’ve had one of these careers where it was not well plotted and each turn of my journey turned to be unplanned and unexpected. So I guess the comment there is I’ve worked with a constant set of people through my career. So I’ve kind of been pulled into new opportunities along the way.

Venture capital is one of those as well. I mean I ran a startup with two friends, we had raised lots of venture capital, I’d been recruited as an independent director on to a series A private company early in my career and kind of sat as an independent director of that company all the way through the IPO process. And so had a lot of exposure both raising capital and sitting on boards and, you know, I had a few opportunities to join venture capital funds along the way, it was never the right team, it was never the right time.

And I started having a discussion with the Matrix team back in 2008 I guess even late 2007 and it was a discussion that lasted a year actually. So was not a fast decision so it was one I contemplated a lot about whether I thought -- I knew I would love venture and it was something I had an interest in doing from the perspective of mentoring founders and I love the sport of company building more than anything. But I think it’s really important to find the right partnership and team because it is a -- you know, these venture firms are small businesses in the end.

Vikram:

I’m going to pause you a little bit and if you had advice for sort of young aspiring investor VCs on top two qualities that they should sort of imbibe themselves what would they be?

Dana:

Yeah, I’ve been asked this before. I don’t knowthat I have great advice. I think here’s my thoughts, in this day and age I think it’s different than when I joined venture 12 years ago. It’s extremely different than if you had joined venture 20 years ago. I think nowadays you need to -- this competitive category you need to have credibility andyou need to have an edge. So you need to have achieved something in your career that is going to make you competitive in what is probably one of the most competitive businesses on the planet right now. So that can be being a founder that has achieved some success as a founder. It could be as a product leader in a successful organization in playing a critical role in the success of that organization. Those are going to be the most obvious. And they’re much easier said than done, I appreciate.

Vikram:

And today when you look at why you do investing and why you love investing how do you articulate that?

Dana:

Yeah, I mean it’s a little bit as I indicated before, I love company building more than anything, I love building teams and leading teams. I love mentoring people, I think for me venture had all these things that I’m pretty passionate about and have -- you know, it’s a little bit like do what you love which I say to my kids all the time and I think it’s an important kind of guidepost in life and so for me I just got lucky to do venture because it has all these. I love strategy and figuring out how to win in a situation and watching that strategy play out and it work sometimes and doesn’t work sometimes. You know, and then you redo the strategy, I love it.

Vikram:

So I get asked this question as well. And for me it’s the constant challenge of reinventing yourself every couple of years in order to stay relevant. It works for me because I’m highly curious, I just want to learn about what’s new in the world, what’s making people tick. And it’s one way in which you can stay at the cutting edge of technology and I’m hoping I can invest in flying cars 20 years from now. And this is a great way to stay young and stay relevant.

Dana:

There’s a couple of flying car companies raising money right now, you don’t have to wait 20 years.

Vikram:

I did makethe trip up to YC a couple ofyears back and I realized I didn’tunderstandanythingthey were saying or doing exceptthat it was based off of LIDAR so I invested in a LIDAR startup instead.

Dana:

Alright. It’s probably a safer bet. Yeah, a better bet.

Vikram:

So switching gears to Afterpay how did you get interested in the BNPL space and this was very early days. So BNPL space, then got interested in a Australian company which was public and then it was a very, very unusual deal. So talk me through that entire process.

Dana:

Yeah. So I lead up the fintech industry at Matrix in the US and so I spend a lot of my time looking at all the key trends broadly in that category. The core of fintech has traditionally been payments and credit, that’s where I’ve spent a big chunk of my career before Matrix and also leading investments while I’m here. So I was introduced to Nick Molnar and Antony Eisen who were the co-founders of Afterpay actually by a gentleman who used to run PayPal Australia. Then he worked on my team, he had built a relationship in the local Sydney tech market with them, they were call it two and a half years into running that business that had been an explosive start. I mean this is a company that really ran quickly from day 1.

They were starting to think about expanding outside of Australia and this fellow that I worked with said to them, hey, you really should talk to Dana because he ran the international playbook at PayPal which I did. So I spent five years at PayPal as the commercial chief running product sales and marketing there. You know, the core of the strategy we executed during that five-year period was this was kind of from a sub hundred million revenue to close to 3 billion of revenue in that five year window. But the core of it was two things, one, it was expand PayPal off of eBay aggressively into rest of internet starting with SMB and then working up to enterprise merchants. But also globalizing that brand.

So we expanded probably I think roughly 15 countries in that five year time period. So I had experience doing it and I knew the playbook, I knew what worked and didn’t work. So I met Nick and Anthony and they did a trip to the US to kind of explore this. They knew there were a couple of key things, they knew they wanted to come to the US but they didn’t want to be an Australian company just hiring a local US guy and setting up an outpost here.

They really from the beginning wanted to build a best in class Silicone Valley tech company. They wanted to attract the best talent, they wanted to have a significant presence here and they wanted it to work in this market because they knew I mean look, the US market is you know, 5-6 times the size of the Australian market. So they knew it was a big prize. I had heard of Afterpay but didn’t really understand the story much. And Nick and Anthony came, we got together, they took me through their journey from founding which is a great story, I mean they’re almost 20 years age difference and they know each other because they were neighbors. Anthony lived on the same street as Nick’s parents and he had known Nick as this young guy that he felt was incredibly smart and high energy and insightful and had said to Nick if you ever do something new and entrepreneurial and you want a partner let me know.

Vikram:

Dana, I’m going to pause you. I read somewhere that Nick and maybe the founding team had spent a lot of time in e-commerce, jewelry businesses and so on.

Dana:

Yeah.

Vikram:

Did coming from sort of like a non-payments sort of background helped them andwhat made them best suited todesignsomething like Afterpay?

Dana:

Yeah. So there’s two key underpinnings to Nick having this idea for Afterpay and frankly having the idea for what would become an entire category globally. And the two things were first, yes, he ran an e-commerce site. He ran ice.com in Australia which was an online jewelry business. He did that while he was a student at the University of Sydney and he did it quite successfully. So he generated a lot of income on the side, he got into jewelry because his parents did actually run a physical retail jewelry business in Sydney his entire life.

So he grew up in a household that was a small business retailer, he was a powered seller on eBay in his early 20s and he saw the need for some type of credit like product in particular -- this is the other foundation of this whole business insight is for the millennial, for his generation of consumers. Because what Nick understood was that millennials don’t like credit, they came to age during the 2008 crisis, they had lower trust in financial service brands than any generation before them, they were debit card users, they were not credit card users. And they came to age during a period of time where they had record levels of student debt, their parents were losing homes during the financial foreclosure, they saw all the bad things that come from overextending in credit.

So this was a generation that needed some kind of benefits of credit like products without all the bad stuff that came with it. And he watched the innovation that was happening, it was, you know, there was a retail point of sale players so later which ultimately became Pay Pal credit. There was a firm which is obviously a successful public company today but from his perspective those were all traditional credit businesses. They were in the business of attaching unsecure credit lines to consumers and generating revenue by charging high APRs and revolving debt for those consumers. In his mind that’s exactly what the millennial doesn’t want. So Afterpay was about really giving the millennial debit card user credit card like superpowers without all the bad stuff, without revolving debt, without high APRs. And that really was the key to this.

Vikram:

When you think of sort of ecosystem evolution and I’ll come to sort of where we are in India, do you think there are sort of enabling locks as well as blockers that need to be there before you can have sort of a BNPL wave like this is the evolution of e-com, this is how much cards should be, this is how revolving debt should be, this is the evolution of payment gateways before you can have a BNPL platform play?

Dana:

Yeah, look, I think there’s different ways to get there but for sure one of the key enablers for Afterpay is frankly the same enabler that was for PayPal which is the card networks. So PayPal was build off the back of bank card dominant western markets, right. We tried it going into Scandinavia or Germany in my Pay Pal days, we struggled in those markets inspite of even having very successful. I mean eBay Germany was one of the number two market for eBay at the time. But it was a market that didn’t have very high card penetration so it’s the combination of having a robust e-commerce market and a card dominant society that makes it really easy to spin up those two examples at PayPal and Afterpay.

Vikram:

Got it. And what do you think is unique about Australia and maybe there isn’t but it seems like that’s sort of the birthplace of BNPL because it just exploded in Australia.

Dana:

Yeah. Look I think it was the founder. I don’t think there’s anything particularly unique about Australia. This is why when I first met Nick and Anthony I saw this at PayPal, when we extended PayPal around the world it was very clear if it had strong e-commerce growth and it was a card dominant market the playbook worked. The merchant value prop was very consistent and high and the consumer value prop was very consistent. And it didn’t matter if it was France, Spain, Italy, the UK, Australia, the US, Canada they really behaved the same. So when I met Nick and Anthony we talked through what they were experiencing in Australia. I had extremely high conviction that this was going to work in the US and work in other western markets as I had seen the consistent behavior.

Vikram:

ThoughI’m just going to pushthat a little bit, it seems like when I look at the number of cards in Australia it’s just sort of dipped very, very quickly just as fast as BNPL has risen. Whereas that’s not the case in the US, it’s sort of flat and so it’s not like card strength have come down in the US, it’s just that incremental spend especially through the pandemic has gone towards BNPL whereas in Australia it just seems like it’s just shifted enmass toward BNPL. And I was wondering if it’s just that maybe there was a class deficit with existing players or maybe there’s something structurally there where BNPL just took off and seeing that the BNPL players have more --

Dana:

I think when you’re building a payment network there are tipping points and those tipping points are generally oriented around acceptance, right, the number of merchants that accepts a particular payment type. We experienced this at PayPal in the early days and we’re seeing the exact same thing play out at Afterpay. So I think what you’re referring to, Vikram, is just in Australia because it was a smaller market you got lesser population and a couple of big metropolitan areas. They were able to reach that tipping point very quickly. I don’t think it’s going to be, I mean the difference in the US markets going to be that there’s just a bunch of competitors. But we may actually get to that tipping point faster it just maybe distributed across three players instead of one.

Vikram:

Fair enough. So brainstorm with me a little bit on India and you know India a little bit, there’s UPI which is now everywhere. And especially through the pandemic every single merchant as well as consumer is on UPI. So it’s not a card network, there’s UPI and there is also card networks. But there’s only call it $50 million users with transactions credit of some kind, that’s the penetration. So it’s very low penetration of transaction credit and probably 250 million users should get transaction credit. And so it’s all going to be credit on UPI or some form of BNPL which is actually going to reach there first before cards.

Dana:

Yes.

Vikram:

So how do you think a market like that would evolve because I’m wondering whether we just leapfrog cards and we will never have cards and we will have some version of BNPL transaction credit, maybe a few people will have cards.

Dana:

Yeah. So I guess I have three thoughts, I don’t know enough about the India market to be dangerous so but there are couple of things that I think are important kind of foundational things to building a payment network. The reason, so UPI may that just be the equivalent of the card networks in the western markets.

Vikram:

That’sright.

Dana:

The reason they’re important is because they’re standardized and they allow you to create this frictionless onboarding in payment experience. Right, so really PayPal and Afterpay were both completely built on top of the payment rails. And I don’t know that either of those businesses would exist if it weren’t for those kind of universal payment rails in those markets that allows you to just trust those people to come in the card markets they’ve been vetted by the card issuers, they’ve been onboarded whereas often settle systems that allows you to operate with lower risk so you don’t which takes some of the risk of credit losses out of the system and you can do it frictionless.

Right, so you can if you think -- have a look every PayPal user and Afterpay user the calculation happens at the point of sale with a card in the wallet, with a bank card in the wallet. Right, that’s just means you can have thousands, tens of thousands, hundreds of thousands of points of entry into this payment network and because it’s an existing system there’s a card in everybody’s wallet you can do it at a high velocity. So UPI may in fact be that for the Indian market. I think the other thing I want to separate which I think is really important is this BNPL, buy now pay later, has become this broad term. They’re actually not created equal, that’s actually two very different systems underneath it.

Right, so traditional point of sale credit is about high average order value, how do we increase the conversion rate on expensive items. This is where a firm will start it, there is a reason that I don’t know what the current number is but at one point when it went public something like a third of firm’s GMV was Peloton bicycles and Casper mattresses. That former point of sale retail credit has been around for decades.

Vikram:

And so the largest BNPL player in India on that cost financing model is Bajaj and Bajaj is a huge company. And they’ve done that forever on consumer durables, on two wheelers.

Dana:

So that’s great. And there’s a place for that kind of specialty retail credit and there are a lot of very big businesses that have been built off the back of that. I think what Afterpay has done is fundamentally different though. They don’t give you -- the consumers don’t revolve debt, they consumer will never pay interest rate, they do not generate any revenues from consumer interest fees. They are about giving the debit card user a credit card like experience, the ability to pay off a $100 purchase over four installments every two weeks without all the bad things that from a psychological standpoint come with these credit products. And that’s the core insight about why Afterpay has been so successful, and it’s grown so much faster than everybody else in the category and certainly faster than anybody who is doing the traditional high AOV credit like products.

So the question I would have for the Indian market is what is the equivalent, what is the mass market everyday use top of wallet product which is generally not a interest bearing unsecure credit line.

Vikram:

So today it is eventually a UPI app and a UPI app is effectively your debit card. And that’s the most used payment instrument by a user. Now it’s interesting that UPI’s actually open architecture so I could have bank x but I could have UPI app A which is being used to access my money in bank x.

Dana:

Yeah. Is anybody creating value off of the UPI through that’s funded by a merchant discount rate rather than being funded by consumer fees?

Vikram:

So fartheproblem withthe UPI isthat whilethe goodthing isthateverybody uses ittheproblem isthateverybody is now coming towhat’sthebusiness modelbecause it’s created as a public goodswhere allthe banks sort of bought itandthere’s avery thin marginthere. And so credit lines on UPI which sort of give a UPI user that credit functionality is sort of where things are headed right now.

Dana:

Yeah. Which I think that’s the typical trend as you go towards the consumer fees first. So the question I have is can you build a big payments brand but one that doesn’t tax the consumer, that provides the merchant higher conversion rates, higher AOV and a big base of consumers that are loyal to that brand.

Vikram:

So let’s talk a little bit about that. So far in India it’s been consumer durables and mobile phones being the largest category and then that’s everything else that you have in the home, TVs, refrigerators and so on. Are they sort of categories where this works and sort of best suited for it when I know of late there’s a lot of fashion and lifestyle and you see it going more towards health, travel. Are they categories that it works for and are there categories it doesn’t?

Dana:

Yeah, so if you study the Afterpay playbook it’s not a secret and it was really the playbook that was to Nick’s credit was the obvious path to go for him when he was starting this business. He understood that his consumer was the millennial, he did not need to satisfy the needs of every consumer. He needed to satisfy the needs of that millennial consumer, as he thought about the millennial consumer he thought about how do I actually hack acceptance, how do I show up everywhere that she is shopping online. It is about frequency rather than revolving debt. So for Afterpay they started with fashion and beauty and they started with that female millennial consumer and I want to be everywhere she shops so it feels like Afterpay is everywhere.

This also tends to be the brands that they’re the highest affinity brand affinity too with that particular consumer segment. So you’re affiliating yourself with friends that are frequented and there is high affinity for, there’s lots of social sharing around. These are also the brands that have the most social presence in their marketing channels so they’re really hardest that and in the process built a big lifestyle brand. I mean Afterpay in most respects really has built a lifestyle brand more than they built a payment network. And it’s one of the things that I think is most interesting, it’s certainly something that had PayPal in my time and today was never able to do. Those tend to be more utilitarian brands.

Vikram:

That’s super interesting and it’s probably least understood especially in the India landscape how much of a lifestyle brand Afterpay is there. And at least outside in I thought it was actually a category first choice, this is a very sharp consumer backwards choice.

Dana:

Exactly.

Vikram:

That makes complete sense, that’s how weactually end up at a lifestyle brand. A category first playwould end up in somekind of payments company, itwouldn’t end up with a lifestyle brand. So that’s super, superinteresting.

Dana:

Yeah. In the way you say, and Vikram, I’ll share a couple of stories. If you go back to the very early days of Afterpay what happened is you started seeing Facebook groups pop up. Literally there were Facebooks being created by Afterpay users called We Love Afterpay. And there were forums and discussions talking about all the merchants they wish would integrate with Afterpay and then you saw hollers on YouTube and influencers on social media that are focused on fashion and beauty starting to just organically talk about Afterpay and how much they love Afterpay. You know, and it was the millennial consumer shoppers so you just saw this momentum, anyway, so the insight is you’re absolutely right, it’s starting with the consumer.

Vikram:

It’s just super interesting to actually figure out that the founder ethos was sort of consumer backwards, you get a very sharp consumer insight and then everything sort of went from there.

Dana:

When your strategy becomes simple when you have that clarity.

Vikram:

To fast forward a little bit and not Afterpay but sort of where this BNPL is going do you see sort of vertical specific BNPL place coming. You know, health, education, where there are sort of complex business workforce, B2B. We have a company called Offbusiness which is sort of commerce cum financing but a part of that is a very interesting BNPL play. So I was just seeing that there’s almost like a verticalization of BNPL happening. Do you see that and do you think that you would invest in something like that?

Dana:

Yeah, it’s a good question. I think it’d be very hard for any new entrant certainly in western markets to come into what I’ll call retail buy now pay later. I think between a firm Afterpay, and then the big eyes are going to come in with their flavor so PayPal has obviously done their copycat now as well, Copay for, I think that’s hard. I do think there is room for vertical buy now pay later solutions. I guess this is the short answer because I think history would show that consumers do in fact compartmentalize some of the spend. So I think that may exist around things like rent payments, or recurring bills that may exist around healthcare. You know, I think the card issuers globally have the most to lose by this trend and I think that’s where ultimately share is going to be taken from is spend that might otherwise have ended up revolving on credit cards, it’s going to end up going through buy now pay later rails.

So I think we should expect all of the global card issuers to come up with some flavor of it. I think their preference would be that its card based and it’s universal and you use it across multiple categories. So I think time will tell how that plays out but I do think there is room for vertical players in the near time future.

Vikram:

Going back tothedifference that you were highlighting between cost based financing and through sort of BNPL platforms and the way at least I think about BNPL platform it has sort of many parts working sort of in tandem. First is the new purchase experience including discovery and then there’s convenient payment and then there’s affordability. And that sort of starts spinning with like a virtual flywheel and then you get these network effects. That seems like it is a consumer first play and you can’t have -- maybe some issuers can pull it off but this is going to be sort of new companies which are embedded in sort of the e-commerce landscape or that vertical commerce landscape.

Dana:

Yeah. I think there’s one comment thatyou made that I think is really importantthat we can extract that out a little bit which is the point around discovery is it’s also one of the least understood things about Afterpay is their most mature market is Australia obviously, for mechants that accept Afterpay. Afterpay is generally their second largest referral source of traffic after Google.

Vikram:

We’ve seen the consumer journey actually originates on Afterpay.

Dana:

That’s right. And the numbers are quite significant, so I think in a lot of respects this is the Holy Grail of payment networks where the incumbents have never been able to figure this out where they can actually truly drive incremental GMV to these merchants. And I think because it’s a close knit network they have the integrations with the merchants, they have the integration with the consumers. I think this generation of payment network also has the ability to exploit data in a way that the incumbents, the Visa, MasterCard networks have been unable to do because they have this multi tier distributions of processors which requires issuers you don’t have the data that you do in these modern digital networks.

So I think that’s very important and that’s going to create a big competitive advantage for these new entrant payment networks.

Vikram:

This is going to be fascinating how this entire space evolves and for me one of the very interesting things about this is that this is one fintech trend where every market is almost evolving in parallel and sort of picking up things from each other because otherwise, you know, India was 10 years behind China, maybe 15 years behind the US, now we have our own networks and now it just seems like everything is sort of happening at the same time in each market. So this is going to be fascinating to see.

Dana:

Yeah, for sure.

Vikram:

Where doyouthink --when innovation movesthis fast regulation is notvery far behind. Sowhere doyouthink regulation is going to end up. Is it going to get regulated and is it going to be similar towhat we see with credit cards.

Dana:

Yeah, so to be clear it’s already regulated. You know, Afterpay in the United States operates with credit licenses in all 50 states or at least the states that require to operate with a credit license. So they do and it’s foundational to what they have built as a millennial customer platform anti-money laundering detection and prevention. So those things are -- you cannot build a payment network without taking regulation seriously. I do think the banking lobby will continue to push for more regulation because I think if you are a major card issuer, you are a big bank and you’re saddled with enormous amounts of regulation relative to any fintech startup.

So I think this tension around regulation from my perspective is less about what’s going to happen with BNPL because I think they are already regulated and they do fit into regulatory regimes in the countries they operate. But I do suspect the tension is going to escalate between the banking lobby and the big incumbents and fintechs broadly coming in and taking share from them. I mean JP Morgan, the CEO of JP Morgan has been very prolific about his point of view of this where they just feel handicapped in terms of competing with startups. So I think that’s going to be a bigger trend in almost every market.

Vikram:

I’m going to jump topics now. Is there anything that you wanted to hit on your thoughts on BNPL or Afterpay that I didn’t cover?

Dana:

No, I think we covered them. The only thing I would add is I think it will be interesting to see Afterpay has obviously entered into an agreement with Square to merge companies, it will be interesting to see if there is more consolidation in the space on a global basis. I think the scale of that merger has a potential to create more consolidation in the category probably earlier than people thought. This is a category that’s growing so quickly and there’s so much competition and it’s taking the prices big. So I think I would be surprised if we don’t see more consolidation around the world.

Vikram:

So talk a little bit about that, I wasn’t sure if you wanted to go there but if you look at sort of a consumer brand in payments like Afterpay and you called it Lifestyle brands and an acquiring network, are they sort of natural partners for each other and is that where you think most consolidation will head?

Dana:

Maybe. I mean I was just in some smaller markets I think if there are BNPL copycats that have emerged in those markets I wouldn’t be surprised if incumbents try to absorb them sooner rather than later where they may have like let the stock little fintech thing kind of go. Like I think in general we’re going to see a lot more fintech acquisitions over the course of the next five years. I think this is an industry that, you know, there were a handful of companies that are taking big share from incumbents but the amount of capital that’s gone in, the amount of innovation that’s happening in the potential disruption of profit pools on a global basis is significant. So I will be astonished if there’s not a lot more M&A globally in fintech broadly.

Vikram:

I was smilingbecause I readthis articlethatyou guys put up in TechCrunch maybe Jan ’21whichsaid $100 billion of fintech M&A and outcomesthis year.You guys accounted forabout 29of that 100.

Vikram:

You aren’t very far off.

Vikram:

And in a podcast in our notes I’ll actually drop a link to that article. Last topic that I wanted to talk about is as Matrix US especially you Dana you’ve had great success with companies that have originated anywhere in the world, Zendesk, Canva, Afterpay, all of these companies were founded in different parts of the world and then you’ve had great success in sort of partnering with them and bringing them to the US and making them big household names in the US. So one, are there specific founders or founder traits that you look for in people who are able to make that transition. And second what advice would you have founders especially in the India SaaS ecosystem who are all making that leap to becoming sort of in the Indo US corridor from an Indian company to a US company.

Dana:

Yeah. So we do have a good history of funding foreign nationals who started companies in their own local markets and want to move to the US market. I think there’s a couple of things I would separate. We’re not active investors of Autralian founders who want to build a big Australian company for the Australian market. What we are interested in is partnering with founders who want to attack the US market and actually want to relocate here and have a presence here. We have a lot of expertise in starting building and scaling companies and you know, so Zendesk we met with Mikkel when he was initially in Copenhagen. I met Nick and Anthony when they were based in Sydney.

We certainly met Cliff and Melanie when they were based in Sydney. You know, at the time actually when we led the seed round in Canva they came to us specifically saying we want to relocate to the United States actually to go after what will be our biggest market. Now in their case they ended up staying in Sydney and are certainly on a path probably to become the highest marketcap Australian based company in the world in history. So we very much want founders who want to bring their product and attack the US market and be successful here in the early. So and we love doing that actually.

Vikram:

Now I’m hoping that we can work together as these founders go from India to US and I’m looking forward to that journey.

Dana:

So I think let me qualify because I didn’t exactly answer the question actually when I think about it. I think the advice I would have is if you’re an Indian based SaaS company and you want to attack the US market I think one of the founders needs to be here. I think it gets pretty hard to stay in India and just hire people.

Vikram:

Absolutely.

Dana:

And expect that you’re going to build the category leader. I think you got to have a presence here so you can actually understand this market and the nuances of it.

Vikram:

And I think that pretty much every founder has understood and especially through this pandemic it hasn’t happened as much but as soon as people can travel everybody is on a campaign to set store and trying to figure out how they get to move. Yeah, this has been just a fascinating conversation. You’re just so thoughtful about payments, about fintech, I can just keep talking to you forever. And I’m hoping some of our listeners get to learn as much from you as I have. And hope to have you back talking about something else.

Dana:

Absolutely. Any time.

Vikram:

Thank you, Dana.

Dana:

Thank you. Good day to you. Bye.

Salonie:

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