Podcast Summary
Building Trust and Acquiring Customers in Fintech: A Community-Focused Approach: To build trust and acquire customers in Fintech, focus on creating a community, providing value, and learning from hard-earned lessons. Plaid's success story illustrates the importance of these strategies.
Learning from this podcast episode with Seema Amble and Zach Perret, the co-founder and CEO of Plaid, is that building trust and acquiring customers in the early stages of a B2B Fintech company involves creating a community, providing value, and learning from hard-earned lessons. Plaid, founded in 2012, started with a rocky beginning as the team aimed to help consumers better analyze their finances. They built several direct-to-consumer tools, including budget analysis and spending analysis tools, to help consumers understand their money better. However, they faced challenges in gaining traction and trust from their customers. To overcome this, Plaid shifted their focus to building a community of developers and businesses, providing them with access to financial data and tools to create innovative financial applications. By orienting their first customers around speed and ease of use, Plaid was able to gather valuable feedback and iterate quickly. They also learned the importance of a boring brand, focusing on functionality over flashiness, and the value of starting with a small, focused customer base before expanding to enterprise customers. Overall, the key takeaway is that building trust and acquiring customers in the early stages of a Fintech company requires a community-focused approach, a willingness to learn from mistakes, and a commitment to providing value.
Pivoting from B2C to B2B for Success: Understanding your audience's needs and pivoting when necessary can lead to business success.
Creating a consumer-facing financial product with a message to spend less money may not be effective and may even lead to deletion of the app. Instead, the founders discovered that their tool for collecting and structuring bank data was of great interest to other software businesses trying to build consumer-facing financial products. They pivoted their business model to go direct to businesses, selling their back-end services as a B2B solution. This pivot allowed them to focus on solving a complete problem for a narrow set of people, rather than trying to solve part of a problem for a larger audience. In the process, they identified a significant challenge in connecting bank accounts to applications, which they had solved while building their consumer product. By pivoting to a B2B model, they were able to monetize this capability and find success. This story highlights the importance of understanding your target audience and their needs, and the potential for pivoting when faced with challenges.
Starting small with a narrow use case: Focusing on a specific need and delivering a perfect solution can help validate a business model and attract larger customers, even with initial challenges in scaling and infrastructure.
Plaid, a financial technology company, started with a narrow use case by focusing on American Express corporate card transactions for expense management. They launched with a limited product, but it worked perfectly for this specific need. This approach allowed them to test the value proposition and eventually scale up, adding more connections and landing major customers like Venmo. However, in the early stages, integrating with banks without APIs required a lot of manual effort and infrastructure fixing. Despite these challenges, Plaid's focus on a well-functioning narrow use case was crucial for their success.
Authentic engagement and understanding customer needs led to Plaid's early success: Prioritizing authentic engagement and a deep understanding of customer needs can lead to meaningful relationships and valuable feedback, ultimately contributing to a company's growth and success.
Plaid's success in building a community and securing early customers was rooted in authentic engagement and a deep understanding of their needs. Plaid's founders prioritized attending meetups and engaging with New York's tight-knit startup community to connect with potential customers. Instead of formal contracts, they offered an API with the only requirement being a phone number for feedback communication. This approach led to meaningful relationships and valuable feedback, transforming loose acquaintances into lifelong friends. The emphasis on genuine care and a willingness to go the extra mile for customer feedback played a significant role in Plaid's early growth and success.
Investing in customer relationships: By investing time and effort into building authentic relationships, businesses can differentiate themselves, gain customer loyalty, and ultimately, succeed in the long run.
Building deep relationships with customers is crucial for business success. Plaid, an early fintech company, prioritized spending time with their customers, traveling to their offices, and hosting events in their own office to build personal connections. This effort resulted in valuable feedback, a growing community, and a genuine brand reputation. Plaid's unconventional approach to sales and account management, hiring people with engineering backgrounds and focusing on relationships before product sales, also contributed to their success. The takeaway is that by investing time and effort into building authentic relationships, businesses can differentiate themselves, gain customer loyalty, and ultimately, succeed in the long run.
Validating a product through user payments: Early user payments can provide market validation, encourage serious usage, and offer valuable feedback during product development. Offer extended free trials to key customers and eventually transition to market-competitive pricing.
In the early stages of building a product, particularly in a competitive market, having users pay for the product, even with lenient pricing and long free trials, can help validate the market and encourage serious usage. The speakers discussed their own experience with this approach, which included offering extended free trials to key customers and eventually transitioning to market-competitive pricing. This strategy allowed them to gather valuable feedback and traction while also establishing a sense of value for their product. Additionally, they mentioned that considering the size of customers was important, as both smaller and larger companies could provide valuable insights and potential growth opportunities. However, prioritizing early user feedback and product development was crucial in their experience.
Focusing on the right customers for growth: Prioritize smaller, engaged customers in early stages, hire early for go-to-market roles, and transition to dedicated go-to-market team members as the company grows.
Identifying and focusing on the right customers, both for business and for communication, is crucial for a startup's success. The speakers shared their experience of prioritizing smaller, engaged customers in the early stages of Fasten, while simultaneously reaching out to larger companies for future growth. They also emphasized the importance of having a strong go-to-market team, starting with an early hire who could assist with customer interactions and follow-ups. Initially, the team consisted mostly of engineers, but as the workload grew, they recognized the need for dedicated go-to-market personnel. The first such hire was Carl, who started off as an engineer but proved to be an excellent communicator and leader. Together, they worked closely with customers and eventually handed off the go-to-market role to other team members as the company expanded.
Balancing high-growth and enterprise sales: Founders can prioritize a small, agile team for high-growth sales but need to expand and formalize for enterprise sales. Investing in a dedicated sales team and leadership can help scale effectively.
During the early stages of a company, founders may prioritize a small, agile go-to-market team focused on supporting high-velocity tech-driven organizations. This team, often composed of quasi-technical growth hires, can effectively replicate the founder's sales process and expand the customer base. However, as the company grows and matures, it may become necessary to expand the customer base to include larger enterprises. This transition can be challenging, as enterprise sales often require a more formal approach and longer sales cycles. It's essential to strike a balance between serving the needs of smaller, high-growth customers and larger, more established enterprises. Additionally, investing in a dedicated sales team and leadership can help a company scale effectively and successfully navigate the complexities of enterprise sales.
Building successful revenue teams in companies: Finding the right champion inside organizations, adjusting messaging, and building trust through relationships are crucial for revenue team success in the fintech industry.
Building a successful revenue team in a company requires a careful approach. This includes having excellent salespeople who build strong relationships with customers, rather than turning them off. While chasing large logos can be valuable, finding the right champion inside these organizations is crucial. Regarding messaging and positioning, initial approaches may need to be adjusted as the market becomes more competitive. Our early strategy involved creating a boring website and avoiding press to build trust in the financial services industry. However, over time, we've recognized the importance of telling our story and adapting to changing market conditions. Ultimately, trust and relationships have been key to our success in the fintech industry.
Build distribution into the product and prioritize customer relationships: Emphasizing product functionality and nurturing customer relationships leads to organic growth and expansion for startups
Focusing on the product's functionality and customer relationships, rather than just marketing, is crucial for a startup's success. Plaid's philosophy was to build distribution into the product itself and prioritize learning from big contracts. Additionally, fostering a strong community and maintaining relationships with champions can lead to organic growth and distribution. The intentional cultivation of these relationships, which Plaid referred to as "free radicals," helped drive Plaid's reputation and expansion over the years. Overall, the success of Plaid can be attributed to its emphasis on product, customer relationships, and community.
Creating value for early customers: Focus on finding and creating value for early customers, iterate based on their feedback, network, and tell a compelling story about your product or service to build a successful business.
Building a successful business starts with finding the right customers and creating value for them. This was a common theme among the guests on the My First 16 podcast. They shared their experiences and offered valuable insights into the importance of identifying early customers and understanding their needs. One guest emphasized the importance of building a minimum viable product and getting feedback from early customers to iterate and improve. Another guest stressed the importance of networking and building relationships with potential customers and industry experts. Another guest highlighted the role of storytelling in building a brand and attracting customers. They shared how telling a compelling story about their product or service helped them stand out in a crowded market. Overall, the guests emphasized the importance of being customer-focused and iterating based on feedback. They also emphasized the importance of networking and storytelling in building a successful business. So, if you're an entrepreneur looking to build a strong business, focus on finding and creating value for your early customers, iterate based on their feedback, network, and tell a compelling story about your product or service. You can hear more insights from these and other successful entrepreneurs by listening to the rest of the My First 16 podcast at a16z.com/podcast.
