SaaS Interviews with CEOs, Startups, Founders
1008 WePay CEO on $1b+ in Transaction Volume Helping Your Favorite Online Platforms Process Payments
28 Apr 2018
Chapter 1: What is WePay and how does it serve online platforms?
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple hundred thousand dollars to 2.7 million.
I had no money when I started the company. It was $160 million, which is the size of many IPOs.
We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everybody. My guest today is Bill Clerico.
He's the CEO and co-founder of WePay, where he drives the company's vision, strategy and growth. WePay's payments API is built specifically for platform businesses like marketplaces, crowdfunding sites and small business software like those we've had on the show before, like Constant Contact, JotForm and some of these folks.
These platforms empower millions of sole proprietors to start and grow their businesses. Bill, are you ready to take us to the top? Yeah, really excited. All right. So tell us about WePay. You know, fintech can kind of lurk in the shadows and people have a hard time really grasping what it is. What does WePay do for your customers like Constant Contact and JotForm?
Sure. So there's this big revolution happening out there in payments where payments used to be sold kind of door to door by folks that would sell payment terminals to small business owners or you'd get it through your bank. And so you'd basically contract with a payment company or the bank and you'd use that to accept credit cards, whether that was in person or online.
But what's happened over the last five to 10 years is that software companies are totally disrupting that. distribution mechanism. So more and more small business owners are using software to grow and run their businesses. And payments are just coming as a tightly embedded or integrated part of that.
And so companies like WePay are helping those software companies tightly embed payments into their software offerings so they can then sell them to small businesses.
And these are, I mean, can I give some other examples like folks like Fiverr, any really marketplace, right? You're powering a lot of those.
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Chapter 2: How did WePay evolve from group payments to a broader payment solution?
And, you know, I think there's a lot of exciting momentum there. I think there's going to enable some cool stuff. But, you know, for small businesses and small business software platforms, I think it's still super early.
All right. I want to jump more into the backstory here, kind of getting your into the head of the 23 year old bill, because you grew this thing and correct me if my numbers are wrong here. But, you know, research teams said about over 70 million dollars raised over the course of the company.
And the price basically was reported on the acquisition, which was, I believe, October this year of somewhere around 400 million. Was that released publicly or is that speculation?
Yeah, it's still kind of speculation. We haven't really tried to keep focus on our customers and what we're trying to build and haven't talked publicly about the financial details of the transaction, although I think it was a great win for our shareholders and also a win for Jake and Morgan Chase. That's great.
Okay, let's get more of the backstory here. So there's other 23-year-olds listening to this show going, okay, this Bill guy's a killer. I want to be like Bill. Where was your head at when you were 23? What were you coming from? Where were you thinking?
Yeah. So I always grew up around computers and technology and kind of tinkered and programmed since a really young age. Went to Boston College, studied computer science. And, you know, I think really got fascinated with the business of technology. Like I could, you know, I could see even in college just how transformational technology had been to the economy. and kind of what was left to go.
And I said, hey, that's like, if you're going to bet your career on a sector over the next 50 years, seems like technology is the place to be. But I was really interested in the way technology shapes business.
And so I went to and became a technology investment banker after college and got to work with some really awesome entrepreneurs, kind of selling companies, taking them public, advising them on all this stuff. And what year was that, Bill? Uh, that was, I graduated in 2007. So it was kind of 2007 was kind of a great time to be an investment banker. And then 2008 was not.
Uh, and so, you know, kind of got to see the good times and the bad. Um, but you know, really like after working with a bunch of clients that were technology entrepreneurs, I said, you know, actually that looks like a lot more fun than just doing finance. You know, I'd rather really want to be in there building stuff, building a team, you know, building a product that can kind of shape the future.
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Chapter 3: What challenges did WePay face in its early years?
Do you remember? Uh, we were small, I would say no more than 10 people. Um, so it was really, you know, rich in myself and actually, so sorry, before we raised that money, we were three people. It was rich in myself and, uh, the first employee at the company was a guy named Eric Stern. And, um, we, it was really us kind of hacking on this, supporting ourselves and,
Um, we'd been funded by Y Combinator and that was just enough to kind of keep things going. And then we raised $1.7 million from August capital and an angel investor named Eric Dunn. That was post Y Combinator. That was right after Y Combinator. Yeah. And they, uh, and that was kind of what allowed us to get an office and hire our first couple of team members, uh, as well.
But I think that was really a bet on the team and the market, um, because our product and the sort of proof points there, um, you know, we're still super, super early.
Now, what did you grow the company to? So like, let's fast forward to maybe, you know, fiscal year 2016. What do you guys do there in terms of total payment volume?
Yeah. So 2016, um, definitely sort of low single digit billions, uh, as we were, as we were growing. Um, but, but, you know, and sort of doubling year over year. And then, um, you know, obviously coming into this year, another big step up. And then with this, uh, recent transaction with chase, um, you know, we, uh, you know, we're excited to kind of take things to the next level.
Are you going to, you're going to break 10 billion this year? You know, can't comment, but definitely expecting some really big growth.
Your smile is doing all the commenting. So good. Lots of growth. Okay, but Bill, let me ask you a serious question because you had to have run into these people I'm about to mention. So you got off group payments, but there was a company called Tilt. just aggressively actually getting into that exact same space around the same time, touching Y Combinator, backed by Andreessen.
They just kind of wallowed around for a little bit. And I know most of those guys, they had a very soft kind of landing pad at Airbnb recently. I mean, what did you do different than them? Why did you get a $400 million exit and they kind of floundered trying to figure out the way?
Yeah, I have a ton of respect for the team at Tilt, and I think they built a great company. In my opinion, that market is just a super tough market. The company that was ultimately successful in person-to-person payments was Venmo. And Venmo ended up selling to Braintree for a pretty small amount way back in, I think, 2012 or 2013.
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Chapter 4: How does WePay's pricing model work for customers?
podcasts. You'll see contracts that I've signed there and boy, oh boy, are they big and they work and the app is so easy to use. Get started today. Get signed easy.com forward slash podcast. When you were going through white combinator and right when you're raising that first round of funding, were you being encouraged to figure out a revenue model at that point?
Or were you just trying to raise to buy more time until you figured out the model?
Yeah, I think we always needed, and anytime you're raising money, you need to have thoughts on what your business model is going to look like at scale and how you're ultimately going to make money as a business. But the focus then was really on traction. It was just about how do we grow? How do we demonstrate that people want the service that we're creating?
And then if there's good ideas about how to make money in the future, then I think investors at that stage will give you a little bit of a pass on revenue. It's always best you know, the best case scenario is to be profitable. Next best is generate revenue. You know, traction is sort of a nice number three. So, um, that's why, uh, we, we really were focused on traction at that point.
I'm trying to get into your brain to understand why you saw what was going to happen in group payments and you didn't see the opportunity. And that might've been because you were trying to make money on it and you realized there was no money to be made. And that's why you were so, I guess maybe you were confident, maybe you weren't in pivoting to what you are today. Um,
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Chapter 5: What competitive pressures has WePay encountered in the payment industry?
Yeah, it was really hard to get traction while we were charging fees. And so it was sort of like, anytime you have to choose between traction and monetization, you need to cut some other strategy for how to monetize.
And we figured actually working in the platform space with software platforms, that was a market where we could actually provide valuable technology and be compensated for the value we were adding.
In August 2010, you raised another $7.5 million. A year later, May 3rd, you raised another $10 million. January 16th, 2014, about two years later, you raised another $15 million. And then you do kind of a monster round, Series D, $40 million in May 2015. What would that have been? About two years prior to the acquisition, right? Yep, that's right.
As you're kind of growing that, tell us how a company like you kind of in the fintech space is valued. Is it on that key metric? Is it just volume? Is it number of platform partners? What is it?
Yeah, I mean, I think there's a number of different ways people look at payment companies. More mature payment companies are definitely valued off of EBITDA and earnings. You know, for us, as just a fast growing company, it was really around sort of TPV revenue and the growth around that. What is TPV, Bill? Um, TPV is total payment volume. Sorry.
Uh, and that's in the payments industry is a metric we use to just measure the total, the dollar volume going through the system.
Got it. Okay. Now there's a, there's a saying out there that says once you make a man rich, it's very hard to motivate him. I assume this was a good exit. I mean, you guys raised 74 million. I'm assuming there wasn't some crazy forex liquidation preference. You said it was a win for both shareholders and for chase. So you're in a good spot now.
Why are you still motivated to be at the company and be growing the space?
Yeah, it's a good question. He says with a sigh. This is certainly a good outcome for myself personally and for our team. But I think one of the things that Chase was really thoughtful about here was how do you motivate the team going forward? And so they were really thoughtful to set aside big incentive targets for the team to help grow. And so we've been really fortunate that
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Chapter 6: How is WePay adapting to emerging technologies like blockchain?
So one of the things that just fascinates me is all of the, you know, all the technologies around Raspberry Pi and Arduino and kind of how you can build these really interesting, you know, things out of hardware now that just weren't possible a couple of years ago. And so. Um, you know, love kind of just building a little, you know, internet of things, projects and, and, and all that.
Um, love to ski, love spending time with family. Um, and I also, uh, one of the things I really love doing is advising other startups and entrepreneurs. So I, um, spend some time with folks at Y Combinator and helping them, um, advise companies.
If there's a young 22-year-old male, female, they just graduated, they don't have a lot of debt, not a lot of responsibility yet, they can go live anywhere they want and do anything they want, where would you suggest, what market would you suggest they really throw their mind sure at if the only thing they care about is total potential market size 10 years from now?
Yeah, well, first of all, what an amazing opportunity that is. I spoke at MIT Startup Bootcamp many years ago, and I had this big slide that I put up that had a picture of a BMW 3 Series and a big X through it. And it was a reference to a lot of the people I've worked with in finance. You get that first big paycheck, maybe you buy a car or something like that. And
you know, my advice was keep your burn rate low and your responsibilities low. And it really frees up the world of opportunities for you to go work on stuff. And that was something that a decision that Rich and I made, and it was, you know, hugely influential in our life.
So what was your, what were your monthly expenses? Do you mind sharing your monthly expenses personally back then? What would you keep them under?
Oh, it was almost nothing. We were, um, we, when we lived in Boston, we shared an apartment with two other people and we were probably spending a total between the two of us of about a thousand dollars a month in rent. And you know, we'd buy like frozen burgers from Costco and we'd eat those every night and ramen and, you know, all that.
And then when we moved out to Silicon Valley, we lived in kind of Southeast San Jose and, you know, in a house that we rented for $2,000 a month. And we had three other roommates and just really kept that burn rate as low as we could. Um, because we were self-financing in the early days and it just gives you options. It lets you stay alive for longer. Yep.
Guys, Bill, good stuff, man. Let's wrap up here with the famous five. Number one, what's your favorite business book?
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Chapter 7: What were the key factors in WePay's acquisition by Chase?
No kids yet. We're, uh, we are enjoying the double income, no kids life.
That's a book right there. All right. And how old are you, Bill? Uh, I'm 32. Last question. Take us back 12 years. What do you wish your 20 year old self knew?
20 year old self. Um, you know, I think I would go back to that burn rate, uh, example and just that, you know, to the extent that, you know, when you graduate from college, that's such a unique time in your life where you have no responsibilities, you know, no kids, no pets, no burn rate. Um, if you're going to take a risk in your life, that's such a phenomenal time to do it.
And, uh, something that I'm so glad I did.
There you guys have it from bill launched. We pay back when he was 23, dabbled around a little bit, realized early on group payments with just 15 grand and total transaction volume in year one was not going to cut it, scale the business by helping platforms like constant contact jot form, basically do online payments quicker and easier among their members.
They scaled that thing into the low billions in TPV, uh, And then obviously sold recently to Chase for a reported 400 million bucks. Bill, thank you so much for taking us to the top.
Thanks so much for having me.
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