SaaS Interviews with CEOs, Startups, Founders
Will Veem's 300,000 SMB Customers Process Over $5b in 2021? 3 Products Driving Growth.
19 Oct 2021
Chapter 1: What is the main topic discussed in this episode?
Some people say we're heavy on engineering. They have two engineers and I go, you're full of shit, right? So, I mean, are you talking like more than 50% of your team is engineers, 60, 70 engineers?
I mean, it's a good chunk of it. It's not two people. Let's put it this way.
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Hey folks, my guest today is Marwan Forsley.
He's the co-founder and CEO of Veeam, a next generation global payment provider that enables businesses to quickly and securely send and receive payments in local currency. Marwan, are you ready to take us to the top?
All right. Thank you. Thanks for having me.
So did you have a local currency crisis a couple of years ago and this is what made you get the business going or what?
You know, I have a lot of businesses in my family and it's been quite painful watching SMBs deal with payments all day because they're busy selling what they do best, selling their products. And they're looking for ways to simplify paying, getting paid. And I'm amazed about the number of things they do that are what I call old fashioned processes.
So like cutting checks, sending wires, creating paper invoices. And we wanted to rip that whole thing up and provide something simpler to the user so that they can pay and get paid without having to think about it. Kind of becomes natural and secondhand. That's why we created Veeam so that we help them do it in domestic markets as well as cross-border international.
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Chapter 2: What challenges do SMBs face with traditional payment processes?
Interesting. Tell me about how you're doing that. So if you're $300,000 now, you're $150,000 a year ago. How are you signing up more SMBs?
So it comes in three different buckets. So some of it comes through our own marketing programs. We acquire customers directly. Some of it comes through partnerships. We're plugged into QuickBooks, Xero, NetSuite. We're integrating with bank partners. And most interesting, the bulk of it, like over half of it, comes from customers that are already on Veeam.
So kind of like think of it like member get member. And the reason why they do that, they like the service. They find it to be delightful. It's a simple experience. So they tell other customers that they have experience. hey, I'm going to use Veeam to pay you or I'm going to use Veeam to get paid from you. And so that naturally brings other customers to the platform.
That actually is the primary way of getting customers on the system, existing customers bringing other customers.
Do you measure that? Do you know what your viral coefficient is?
Oh, yeah. Yeah, yeah, yeah. Every month that passes by, 65% of new accounts come in from customers that are on the platform.
65% of new signups come from referral links from current customers. Yes. Yeah.
It's not the traditional refer a friend model where you don't know if you've been referred or not. This is in the transaction. I send money to you. You'll like it. You say, I'm going to use Veeam to get somebody else to pay you, or I'm going to use Veeam to send money to somebody else. So it's in the transaction flow.
Yep. Yep. Yep. So one party might not use Veeam yet, but they get an invoice from me and they go, what's this Veeam thing? Maybe I should sign up. And you get 65% of your growth comes from that.
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Chapter 3: How many small businesses are currently using Veeam?
And some customers start the other way around. They start on the invoicing flow, exactly what you said. You have a couple of customers you want to collect on your invoice. And so you send them the invoice or the request and you collect payments on BIM. That's a typical profile.
Robert Leonard So let's stick to this exact story. Again, I'm a new startup. I did 10,000 through your system this month in September. How do you guys make money on the 10,000 I use your system to collect?
Yeah, we make money on foreign exchange. We make money if the payer paid with their credit card. We make money when we deposit funds real time to your debit card. And we make money on capital programs. A bunch of customers really like the idea of accessing capital lines from Veeam. So I have a bill, I need to pay it, but I'm kind of short on cash.
So what I do is I request the payment to be delayed. Essentially, think of it like a pay later type program. The NPL, right? The NPL, yes, exactly. Similar to that for businesses. So these are the types of revenue we make. What's interesting is there's no subscription fee. There's no setup fee. There's no transaction fees on HCH checks or debit cards. They're all for free.
So we make money on what we call advanced features, which is credit cards, foreign exchange, and capital program.
Let me repeat these back to you quickly and just to make sure I got them. So you just said three, but so, so deposit fund, you said foreign exchange credit card fees, deposit funds, real time to the debit cards and then capital programs. But really I can eliminate the deposit funds to real time to debt cards. You really think foreign exchange credit card fees and capital programs. Yes. I see.
Okay. And of those three, is there clearly a leader in terms of what your core business model is? Or is it like 33, 33, 33% revenue split?
Historically, Foreign Exchange is the leader because historically we come from cross-border payments market. And over time, we know there's quite a lot of activity in domestic markets. So we started adding other ways to monetize domestic. So that's a newer revenue stream, cards and capital. But today, there's more skew towards foreign exchange. In the future, it'll balance out.
I see. Okay. So I mean, is it fair to say that right now more than 70% of your revenue is foreign exchange, but the other two ones are growing very quick because they're brand new?
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Chapter 4: What is the significance of customer referrals for Veeam's growth?
It's the same trend with PayPal, PayPal and PayPal credit. You'll see the same thing with Intuit. So there's cases in the market where embedding capital into something else has done really well.
Oh, embedded finance is the future. I mean, that's why you launched the product and you're testing it. So we'll see what happens. I want to move on to more of your backstory and the team here. Before we do that, though, so we just learned about all your revenue streams, your different products, how you're helping these SMBs. So what will you make on average per month from these guys?
It sounds like it's probably like $10 or $20, right?
Yeah, it's SMBs. You're making, yeah, like 20 bucks a month is a good way to characterize it.
Yeah. Okay. Give me more of your backstory here. So you launched it in 2014. I mean, how'd you get the first 100 customers?
Oh, no, I started the company in late 2014. You know, we are a regulated company, meaning we're licensed in every single state in the U.S. And we also have licenses in other parts of the world. So it took us like two, three years, just like legal compliance licensing. And in the U.S., you can't just move money. You've got to have all the licenses in place before you do it.
So the actual selling of getting customers in, did not really begin until later, like 2017 timeframe, before you can really start adding customers and bringing customers at scale. The initial set of customers, I call it like friends and family. It's like whoever we know between all of us that have access to customers, we call them up. It's like, hey, we built this thing. You want to try it?
Can you give it a shot and give us feedback? So that's the initial group that came in that used the product.
That makes a lot of sense.
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Chapter 5: What are the main revenue streams for Veeam?
Yep. Yep. That makes a lot of sense. Interesting. Okay, cool. Anything else about the business that you think we should chat about that I haven't asked about?
I think the market B2B is a really hot market and it's going to be hot for a long period of time. And that's because this is an industry that have not seen innovation for such a long time that all these manual processes need to be completely reimagined. And there's an opportunity to do that with a very different experience than when you get to that. And that's why we created it.
Yeah. Let's take off your founder hat for a second and just put on your angel investor, you're analyzing the market. Just FinTech right now is just hot, frothy, hot, totally irrational. What do you think companies that are like Veeam, what revenue do you think they have to hit where they could probably go get a billion-dollar valuation today?
I'm assuming a very irrational answer here, but I'm curious your thoughts.
It depends on what segment you're inside fintech. There's a whole bunch of segments.
Let's do SMB fintech, embedded finance, SMB products. I mean, sort of like what you've built.
Yeah, generally it's multiple on revenue and growth is the combination of the two. So if you have revenue, but slow growth that you get lower sort of multiple, if you have revenue and high growth, you got higher multiples. So to get to that billion range, you got to do like, call it like, you know, it depends on the growth rates, but like somewhere at 20 times, 30 times multiples these days.
I mean, some companies are like 50 times multiples on revenue, but If you can hit the growth pass really hard, then you command multiples that are fairly attractive these days. How long this is going to stay, that's hard to tell. That's just macro dynamics around the public markets and the valuations we're seeing in the private markets are kind of in sync with public or getting there.
I'd say this. Fintech is hot now. It's going to be hot for a while. And the reason why it's going to be hot for a while, because this is a market that has not seen change for decades. It's just been baking for a while and now it's a hot thing and a sexy thing. But that's because there hasn't been a whole lot going on in the past 30 years, 40 years.
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Chapter 6: How does Veeam differentiate its services in the market?
Number two, is there a CEO you're following or studying?
I love what Jeff Bezos did with Amazon.
Number three, what's your favorite online tool for building Veeam?
AWS. It's been really good.
Number four, how many hours of sleep do you get for each night?
Six hours.
Okay. In situation, married, single kids?
I'm married.
Any kiddos?
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