The Payment Stack That Never Changes

Ryan, I'm really excited that we're sitting down together. We have been on this roadshow, talking to lots of investors. As a part of that, you wrote a really well-received article about, you know, the changes or the current landscape within fintech. And I would love, if you don't mind just starting out with sharing your professional background with our audience so that people can really understand sort of, you know, the credibility that we have in terms of building this payment and cart technology that we're building at Whym. Great. Well, it's really good to be here. My background, I'll keep it really short and simple. I started in telecommunications and e-commerce at a company that Shopify ultimately killed. The company still lives today, but it lives as a telephone company rather than an e-commerce company. Like a lot of other companies. And I really cut my teeth there learning everything I know about engineering in that place. I actually worked there full-time while I was going to college. And after I left, I went and worked at a company that was previously known as Property Solutions. It's now known as Entrada. And I started out doing telecommunications for them, but ultimately moved into their payments division and helped run their entire payment solution for a while. In that job, I learned a ton about how the payment industry works. I learned about security, PCI compliance, SOX compliance, and a variety of other things that I otherwise wouldn't have understood if I hadn't had that awesome spot in my career. Were you working with banks at that time? JPMorgan Chase, Zions Bank, and a bunch of other banks that we were in phone calls and meetings all the time with. Constantly trying to get our budgets improved. We were moving about a billion dollars a month through the platform. And as that grew, we had to constantly talk to banks about how to continue to have that kind of volume going through our systems and possibly get loans and things like that involved, do a lot of underwriting of our merchants. Yeah, that was about my career. So a combination of ACH and your own credit card processing, really, right? From kind of the ground up, from what I remember. The majority of the money we were moving was ACH. But really, ACH is like the depths of banking. So you really learn a lot about how money moves when you're working in that world. Interesting. Okay. So you spent some time in Entrada. You really built that from, you know, zero dollars up to a billion dollars in PCI compliant payments every month, which is quite a milestone. I don't get to take all the credit for that at all. But that was part of that journey. Yeah. That's awesome. After Entrada, a bunch of buddies of mine from college had a startup called Scan. They had been in San Francisco and they're moving back to the area. And they're like, Ryan, we are doing QR codes. Our big focus is bringing QR codes to the United States the way they've hit other countries, like in the Asian countries. It was really big in APAC probably at the time, right? Exactly. And so they had already achieved, you know, millions and millions of users in the Apple App Store. They were like the number one utility app months and months in a row, all around QR codes. And they brought me on and said, hey, we want QR codes to be a form of payment. Let's solve that together. And so we worked on that in addition to a bunch of other technologies. Was the payment experience the only thing you were using the QR codes to power or were there other types of experiences as well? We started off with business cards. It's like scan this code. You get all my contact information, my website, my address, those kinds of things. We redesigned the QR code a little bit so that it looked a little more user-friendly. We worked and then payments was a thing, a bunch of business services, all sorts of services around payments or sorry, around QR codes. And then we had a few ancillary technologies that I probably can't talk about. Okay. I was going to say, like, can you tell us about what Snapchat was sort of interested in or? So the real thing that we became known for after the Snapchat acquisition was the invention of the Snapchat Snapcode, which was the Snapchat's own version of a QR code. It was completely restyled and redesigned. It had the Snapchat logo in it. Eventually we were able to upgrade it to put any image we wanted in the center and we used Bitmojis in that spot quite a bit. We were looking at selling Spectacles through it, which is essentially kind of how you and I met each other inside Snapchat. Exactly. So you were working on Spectacles. One of the things I worked on was getting the Spectacles to connect to the Snapchat app required a Snapcode. And we installed the scanner inside the Spectacles and it scanned the code from the phone. It was part of the onboarding experience using the camera technology. And you, so when Snapchat was interested in Scan, you guys had millions of users. You were powering all these different experiences. And so, you know, kind of what happened next? You came into Snap, obviously. We came into Snap. We started a division primarily focused on getting that Snapcode launched. We were also working on a few other technologies that never launched, so I can't talk about them at all. And then we ended up integrating our team into what was called the creative camera team at the time. So there was a director of camera. He was responsible for making the camera faster, more, it's the first screen you hit on Snapchat. It's everything happens. A ton of different technologies are a lot. Well, Snap's a camera company. Exactly. Right. And they were on their way. So we joined the creative camera team and then our primary goal was to come up with new ways to make the camera awesome. The first one clearly was Snapcode plus a few other technologies. But pretty soon we were acquiring a bunch of other companies at Snapchat around geo filters and lenses and other technologies like that, stickers. And so our job, since we were the first technology team to actually integrate something other than a picture take into the camera, our job was to help bring those other teams into the camera as well. Integrate into the camera. Integrate and make sure that there was no conflicts going on in those integrations so that the camera was fast and useful, but also had all these extra features. So where did you, after you joined the camera team, you know, did you get a chance to continue building any of those commerce experiences or, you know, what were, where were you recruited with inside Snap? Yeah. I mean, so everything I just told you is stuff I helped touch in some way or another. We were building teams along the way and, you know, forming that creative camera team organization with a bunch of other people. We weren't the only ones there.

And eventually, you know, the, the, the monetization team started forming inside Snapchat. They had no revenue. They had no team. Wow. They formed first. They tried to recruit me a few times. I said no, like at least four or five times. Well, they're like, this guy's got a background in payments and we need to know how to make money, right? Yeah. Basically. Yeah. And so eventually, uh, the right offer was made and I would, I came over, uh, immediately picked up a team of four people. We had three months to launch Snapchat's very first in-house advertising configuration platform. There was a separate team who was responsible for delivering the ads. Our job was getting the configurations in so that the ads knew what they should deliver. Wow. Did you deliver it? Yep. In three months. Wow. So we delivered on time. Clearly it probably wasn't pretty. Do you remember the first, uh, uh, client? Oh, I don't. Well, we'll have to find someone in our network. Yeah. We met a lot of people in that, in that timeframe. Yeah. So we started the team, started as four, um, overall ad monetization was probably maybe 12 and we were in a teeny tiny little office, uh, on Venice beach. And then, you know, over the course of several years, we acquired companies acquired staff, developed more directorships inside the organization. I stayed more in a senior manager role, hired a bunch of teams myself to help with a lot of the acquisitions. But my real focus maintained being how do people get ad configurations into our system? Awesome. That technology around the time that, you know, about a year after Snapchat IPO and around the time that I started to leave was, had become basically Snapchat's version of the ad manager online. Got it. So just like Facebook has an ad manager, we had an ad manager as well. That all kind of stemmed out of my team. That's awesome. Well, thank you for sharing that again with me, Ryan, you know, just love the background that you bring, you know, from the early beginnings of telecommunications, kind of working on, uh, SMS and in phone based experiences, and then eventually in e-commerce and then all the way through to, you know, ad technology, um, by way of payments, kind of being this thread that's tied a lot of these, you know, experiences together. Um, so I'd love our listeners to just hear from, you know, the vice president of engineering at Whym. Like what is Whym in your own words? Sure. Yeah. So what Whym is today is something we never expected it to be. We started out thinking that we were just trying to work, be the very best company at taking orders inside of text message. But we learned so many things along the way that we've, we've expanded outside of just text message. We now are the best way to take transactions from your consumers on any channel. Mm-hmm. And from a consumer perspective, we're the best way to remember and maintain relationships with D2C brands without having to, you know, keep some lists somewhere in your house. You just can't remember all of it. Yeah. So Whym helps you as a consumer kind of aggregate your brands that you're interested in, keep your relationships with them nice and tight, and then transact with them at your speed and at your timing, no matter which channel you're interacting. I mean, I have this problem all the time. I meet all these amazing brands, you know, kind of on the internet and through a lot of, for me through Instagram stories and through TikTok, I'm like discovering things every day. And I have this terrible habit of actually taking a screenshot of, you know, like trying to remember, you know, and you know, we have a lot going on and, and, um, I just feel like there's only like so many slots in the front of your brain for memory. Exactly. And mine are just at full capacity all the time. So it's even when I meet these really great new brands that align with, you know, my values as a consumer or a shopper, it's really difficult to kind of remember all of them all the time and have like an easy way to access them. And I think that's like a core, you know, that's really a core thesis around what we're building at Whym is the, is this idea of helping consumers kind of, um, you know, circumvent all of the memory that's required to have some of these experiences that probably would really love to have, but you know, really have to get served and add many, many times. The, the recent like Admiral email I just got said that the average consumer has to see something 56 times now to convert to a sale. Right. And brands and businesses are paying so many times, right? They're paying a dollar per impression at least to get that customer. Facebook wants you to pay for all 56, right? They want you to pay every time, which means the cost of acquisition of your customer is going through the roof. That must be something you were intimately aware of at, at Snap, right? I mean, I, I entered the ads world as a completely unexperienced person. And then imagine as we hire people from a variety of companies who have all the experience getting to sit in the room with them and talk to them about what really matters, you know, cost per acquisition is, is paramount to winning the advertiser space. Right. A hundred percent. It's more budget, you know, and then, you know, cost of acquisition in its relation to lifetime value, right? Like you can afford to pay a high cost of acquisition, but the lifetime of your value of your customer has to sort of pay for it. And you know, those scales were tipped in the favor of the brand and the business, you know, within, within these different channels over the past 10 to 15 years. And so marketers job growth, you know, growth folks job, and retention folks are all about balancing those skills to get at least like a three to five X return on investment between whatever you spend in acquiring that customer to the amount of money that they're going to spend with you before they literally never care to hear from you again, or just don't remember, right. To buy your product again. Yeah. Which is again, why I think from a sales channel perspective, we just like really believe in this space that we're kind of building in. Yeah. And so, so just kind of last like, you know, quick background question, Ryan, talk to me a little bit about how you see this like intersection of where Whym sits today, you know, between like messaging and e-commerce and fintech, you know, what's our real role to play from a solution perspective. Yeah. Well, there's, there's a, there's an unnumerable number of companies out there now that have really claimed their space as like payment providers. They take money. Yeah. But they, that's not about all they do. They don't facilitate figuring out why the money is being taken. They're just about making sure the money moves. Yeah. They exist and they're great providers. And we have no reason to, you know, dissuade you from using any of them. The, on the other side of the coin, marketers need to reach their customers. Traditionally, they've done that through e-commerce. Consumers don't spend their time there anymore. They spend their time on these messaging platforms. So then these other providers have popped up to help you message your customers directly. Yeah. Now on Instagram, they're walled gardens. So you have to use their advertising technology to talk to your customer. And commerce stack kind of now, right. Exactly. Or they're trying to encourage you. Exactly. Right. Yep. And then like channels like SMS who have no single walled garden provider, there are providers that are providing you, you know, advertising type technologies to communicate out in broad mass to a variety of customers and then try to get their attention. What they all miss, what they all lack is the appropriate tools to help the customer convert when they meet you, right? It's going to take you 56 impressions to convert that customer. Part of that reason is that when that customer does interact with your ad or interact with your reach out that you've made to them, you're going to send them off channel to like your website. And that website is not fun to navigate. It's, you know, they've got to relearn the whole user experience. They have all these steps they've got to get through. And, you know, if you're on TikTok, are you really going to stop everything you were doing and all the fun you were having to turn yourself into shopper mode and then try to buy right now? Whym basically says, let us help you do that. We can be the best solution that you'll ever meet for helping your customer when they meet you in that channel. You make that decision. And we do that by not necessarily forcing the customer to make that decision right now. Yeah. But helping them make that decision when they're ready to make that decision while still keeping them connected to your brand. I really love those insights that we've gained from, you know, talking to a lot of brands and businesses, which is obviously Whym's customer with our SaaS platform, but also consumers, right? There's this idea of don't slow your scroll, right? Don't, don't slow down having that fun or discovering. And obviously these platforms are great, you know, mediums to do that, to discover, to consume content. Um, and so, you know, at Whym, we've been really intentional about how do we actually capture impulse buy, right? In that moment, how do we help brands and businesses close the sale immediately if there is that moment of take my money, right? And then subsequently there's those other 55 impressions that are more like there's intent to buy there, right? And so is that intent to buy going to get lost through a screenshot in your photo role or is it going to, you know, have a really intelligent way of helping follow up and close that sale? Yeah. So, um, our, you know, kind of the meat of our conversation today is all about the changes in the FinTech landscape. And so we want to help, you know, set up our listeners to understand, you know, FinTech is a very buzzy word, right? Sure. On, on, from the investment side, you know, from a industry perspective on the B2B side. Um, so I want to kind of pull back the curtain today and demystify, you know, um, some of the different players in FinTech and talk about that. Um, and, and so that's where I'd love to get started. The main question, you know, that I would love to kind of answer as we go along in our conversation today, Ryan is like, does this space really need another payment solution? And if so, you know, why could Whym be positioned as the next, um, you know, right, uh, alternative payment method for conversations, right? Because there's a lot going on out there. So, um, let's break it down today and talk a little bit more about that. I'd love to start, you know, kind of go old school for a minute and talk about, um, banks and then payment networks and payment processors. Okay. And also, you know, I think we can kind of direct our, um, listeners to, you've written a great article on medium about this, about sort of demystifying the FinTech landscape. So we'll put that in the, in the comments and in the link. Um, so to start just by talking about, banks and the, in the payment networks and how this kind of works. Yeah, sure. Uh, so the article explains it really well. We've had a lot of good investor feedback on it. Everyone who's read it really loves, it helps really, you know, frame their position on what they think about the industry. So what we're talking about here is that every time a transaction happens, happens, money moves and the banks make that happen, right? If you work at, or if you're banking with JP Morgan and your credit card is tied to that and I'm banking at Wells Fargo, if when you send me money, that money has got to move between those two banks. That's what they facilitate. And that's all they really do every day is move money around, loan it out, et cetera. But that's their role in this space. Then you have the payment networks. They're what power the communication layers, the authentication layers, the technology layers, the, the fraud detection layers and all the, the, the technologies that make the ability for you to swipe a card and for everyone to feel good that that transaction is done before you walk out the door, right? That's what they facilitate. But they actually don't facilitate hardly any of the hardware. They don't facilitate the card. They don't facilitate any of that. They, they facilitate the technology that that's all powered by, but they're a dependent separate organization and they've, you know, arranged their financial structures, how they get paid with the banks in their unique way. That is, you know, much, many, many layers deeper in the stack than any merchant ever has to worry about. Yeah. And these payment networks, is there like a, um, is there a common one that we would Visa, MasterCard, you know, American express, they're each on different network. They're all mostly technology based companies. They don't do the hardware. They just do, they, they do the agreements between all the relationships and the technology that says this transaction is valid. Got it. Yeah. And then the last one is the, the payment processors. And I always love your analogy of like how you start talking, you know, how you kind of bring this all home with the idea of the payment processor and the application of payment. Let's talk a little bit about what payment processors do first. And then we can kind of go into, you know, the application of payment and a real life example of that. Yeah. I mean, I can probably tie it all together in one quick little story. There's actually three players that we will be talking about in this moment. Um, the best picture that people have in their mind today of how this works is when you go to like a grocery store with self checkout, right? You have the really big machine that you swipe all your products across and it creates a tally of what you use. Oh, and all the discounts you're getting, et cetera. Yeah. That's the application of payment. That's a third party. It's not a payment processor. It's whole job is just to decide what the order is. So I'm standing in Target. Yeah. Um, and I'm, you know, self checking out and I've got that big touch screen where I have to enter, you know, the different configurations or how many bags I used, um, which in California I use none. Use none. Use none. I promise. That's right. Um, okay. So that's the application of payment. Yeah. So then sitting next to that, always a separate device in the real world is this terminal for payment, the credit card terminal. And that's the thing you actually swipe your card into. That's provided by a separate company. They're called the payment processor. There's a variety of types of payment processors in the real world. That's a, you know, a point of sale processing solution. You know, PayPal represents the more e-commerce version of that. Okay. There's a variety of providers. So online, that would be like a PayPal. Yeah. PayPal. But in the real world that could be a Visa. Well, it actually will be made by somebody else. You probably won't even recognize their name. Got it. The one you will recognize is Square. Got it. Square makes a version of that that you will, that's very well branded and everyone knows about it. Awesome. So, so the payment processor is who provides that terminal. And then the third party in this transaction is the person who produced or the company who produces and distributes the card itself. They always have to have a relationship with the bank to make it happen. Okay. But you'll get like a card from Amazon. You'll get a card from somewhere else. Usually there's actually a variety of parties involved in that relationship that gets that one card out to you as the customer. But that will come from someone that you've, you've repainted from and they're supplying, you know, what the third part of this relationship, which is, here's where the money is coming from. Here's how we're going to get the money moved. And here's why we're moving the money. And I always love when you tell this story, Ryan, because for a long time, I would look at like my Apple card from Goldman Sachs, right? And my, my Amazon Visa, you know, Amazon card with Visa. And so I was like, well, how are these multiple people sort of getting their names in this, you know, this financial space and like, what, what do all these people mean for me? Yeah. And so, you know, I want to talk a little bit more about the application of payment because that's really what Whym is. Yeah. Whym is the application of payment. And there's some great applications of payment out there that we can talk about too. Before we get there, can you just also break down for me why it's important to understand, you know, how these different entities actually get paid, right? Because at the end of the day, whoever's paying the bills or how the bills are getting paid is really important to understand the infrastructure of why one company might build something a particular way, or may never build something competitive to one of those other particular channel partners or things like that. So can you talk to us a little bit about how are each of these people getting paid? Yeah. I mean, so at the end of the day, the money starts its movement when the customer pays the merchant. Okay. And the, the numbers, the, the totals of that are calculated and transacted in over a variety of computer systems, but the merchant then has to pay some fee to their processor. And that processor will then work, you know, they have relationships with the banks who will find a way to get the banks paid, get the networks paid, and then ultimately get the people who created the card that facilitated the transaction paid. And then, you know, you've got rewards cards who also have, you know, there's a little, it's a very complicated network of money movement, but everybody has their unique piece of how that works. It all, you know, as far as how they all get paid, it all starts at that transaction fee that you're paying to your credit card processor. Yeah. Today, the average starting transaction fee is like 2.9% plus 30%. That's how people recognize what I'm talking about here. And then historically, you know, back 10, 20 years ago, the application of payment, they usually were paid on like a monthly fee. Okay. Today, almost every application payment you'll meet gets an additional percentage on top of your initial 2.9% or 30%. So, and that's really like the trans, it's more of a transaction fee, right? It's based on number of orders. And, um, I think a lot of the consumer, you know, a lot of consumers probably don't realize, right. That there's, they're getting their card, which is, you know, essentially free, right? They have their bank relationship. There's a bunch of parties getting paid and really they're kind of getting paid out of this 2.9% plus 30 cents, you know, or something like that. But there's lots of people that have to get a cut of, of, um, that amount of money. And then, you know, from the brand side, the brand and businesses usually paying or the merchant, right? Anyone selling anything is usually paying that transaction fee. They're paying that fee. And I think a lot, in most cases, it has to do with the application of payment, that the service or the solution, right? That the application of payment is solving is really that end to end user experience. Yeah. And because they're not focused on necessarily like the tech now, the car technology or the payment processing or the bank relationship, they're really focused on what is that value that we can drive for the end consumer in a way that no one else is actually, you know, creating that solution or solving that particular problem or being really efficient in a particular sales channel. Like you've got in store, you've got online, now you've got messaging as a potential sales channel. And, and, um, is that the right way to think about this? Yeah. I mean, there's a variety of places where you're going to transact with your customer and every one of those places needs an application of payment to solve the solution for that space. Whym, just to bring it back to us a little bit is, has basically said, Hey, look, these application payments have been really hyper-focused on e-commerce or these, these application payments have been really hyper-focused on real world in-person transactions inside, inside of, inside of restaurants, inside of grocery stores, physical retail store, a boutique coffee shop. Like at a restaurant, you want a different tool than when you want in a grocery store. You know, there's just a lot of different providers who provide services to a variety of different experiences. Well, it turns out that one of the things that Whym discovered is that commerce inside of messaging, inside of not just SMS, but any messaging platform, social media platform, you can imagine, Discord, TikTok, Driftbots, you name it. They need a specialty, uh, application of payment there as well, because it needs to cater to the medium. And that medium is just so different than a search-based website that you might be browsing through. Yeah. It's very different. And, and sometimes you see these technologies actually cross channels, right? Like, um, you've got, uh, Square with like a presence in physical and also, you know, trying to do more partnerships in digital, right? Or, um, you know, QR codes, which is really funny because that's a technology that you know really, really well. And now you're starting to see them with touchless payment at restaurants and things like that, which, you know, is, um, is, is driving more of those physical digital experiences too. So it's interesting to watch these, um, payment and, uh, you know, now we're going to talk a little bit maybe about cart technology, um, that you kind of driving all of that.