Only 1 out of 10 fintech startups get off the ground — so what’s their secret? Our panel of industry experts, including SnapCheck co-founder Ken Kruszka, will cover what it takes to be an industry disrupter, plus answer your questions in an interactive Q&A. Register for this VB Live event to learn how to go from big idea to big deal.
All disruptive fintech startups are born from pain. Back in 2015, Ken Kruszka, cofounder and CEO of SnapCheck, was blocking out four days every month for payroll, because he was sending out paper checks to his subcontractors and employees. He found that other business owners were feeling the pain as well.
“Within the fintech world, paper check is Voldemort — everyone hates this stuff,” Kruszka says. “So what can we do to slay this dragon? How do we keep up with the rest of the world from here in the U.S.? How do we make things faster, better, stronger, more convenient, cheaper?”
Business payments are stuck in antiquity he explains. More than two-thirds of them still rely on paper checks. In the U.S., that’s $20 trillion in B2B money flows, 70 percent of which is being conducted with paper checks.
“You do a little bit of math and that’s a lot of money,” he says. “What exacerbates the problem is that while the fintech industry is coming out with different payment solutions, businesses are actually backsliding and increasing their use of paper checks.”
So it becomes a question of why? Why are they paying this way? Why are they using something that everyone hates when it’s costly, fraught with fraud, inconvenience, and time lag?
“It comes down to things that are totally not technical at all,” he says. ” It’s easy and it’s comfortable and it’s familiar. They’re scared that they’ll screw up with their company’s money and get fired.”
So the company zeroed in on the human aspect of the problem, and looked at what it would take to make businesses feel comfortable enough to adopt a digital payment mechanism.
After Kruszka honed in on this problem, came up with the idea for the solution, and brought on a co-founder to build technology, they entered into a hackathon sponsored by Bank of the West and BNP Paribas, their parent company, in the summer of 2015. The company won the San Francisco hackathon division, and was entered into phase two, the finals in Paris with the other regional winners, which they won as well.
“We just had this great validation from the fifth-largest bank in the world, that what we were doing is cool — that was really what propelled us forward,” he says. “Not to say it was a smooth road after that. Dealing with a bank is a long winding process. But we knew we had something here. That’s what drove us.”
Launching a startup isn’t a glamorous process, he says, which takes a strong constitution and an awareness of what it takes to keep moving ahead.
“It’s just knowing that there are going to be peaks and valleys, good days and bad, and hard work to persist through it,” says Kruszka. “Dealing with banks, as I said, is not an easy endeavor. We needed to go and learn and build a real company before a bank would actually do business with us.”
They entered the Yodlee incubator program, and when they emerged, launched the direct to end user service, in the summer of 2016, and have so far had more than 25,000 people sign up for that service through mobile apps and web apps, with zero marketing spend.
“We just put it out there and I’d go and speak at conferences,” he says. “We’re not doing any end user marketing. We just saw, month after month, we’d get a thousand more people signing up to use the service, because SnapCheck is inherently viral. When I send you a payment, you receive the SnapCheck and think, hmm, maybe I want to sign up for this thing too.”
There were mistakes along the way, he says — they spent a bit too much time trying to sell to banks too early, he says, trying to get into large financial institutions without going through the steps and proving the product-market fit, proving that there’s appetite out in the world for what they were doing so they could come in with real data instead of just a vision.
The other obstacle they were already aware of, but decided to go up against it anyway. The Fed has launched task forces dedicated to the issue of how to speed up payments and make them more secure.
“There are forces at work who have way more money, way more time, way more resources than we do, arguing that the digital check is not a solution that the world wants,” says Kruszka. “We just happen to have our convictions and the proof of 25,000 people that signed up that, saying, yeah, this is what we want. We happen to be right, but it’s not like right always wins.”
The best lesson for any startup, Kruszka says is to pick your co-founders really well.
“We’re lucky here that me and my co-founder, we get each other,” he says. “We’ve been through the swamps. We have disagreements, and sometimes they’re loud disagreements, but never has that deterred us from going and getting a beer afterward. It’s a matter of making sure you have the right core team at the beginning.”
That said, after you have that core team, it can be hard to find the right people to bring on to the team, especially in Silicon Valley, he says.
In the end, he says that the sage advice given to all startups still stands: it always takes longer and costs more than you think it will, and raising money takes a lot longer than you ever expect it will.
“For me, the best advice is just to go and tell your story,” Kruszka says. “It’s your story. It’s your vision. It you believe in it, don’t let anyone tell you otherwise. The market will tell you in the end if your vision was right or wrong, but give your vision a chance. Don’t succumb to someone else’s ideas. Don’t let that fear creep in.”
To hear more real-world success stories, ask your burning fintech startup questions and get advice from founders who are disrupting the payments world and the investors who are looking for the next big thing, don’t miss this VB Live event!
Don’t miss out!
Register for the webinar to discover:
- What successful fintech startups have in common
- The differences between being a solopreneur vs. being a co-founder
- Tips for finding and growing your dream team
- How to go from killer idea to disruptive startup
- Kathleen Utecht, Managing Partner, Core Innovation Capita
- Ken Kruszka, CEO, SnapCheck
- Jeff Cain, Senior Director, Envestnet | Yodlee Incubator, Envestnet | Yodlee
- Pierre Wolff, SVP Business Development, InCountry
- Evan Schuman, Moderator, VB
Sponsored by Envestnet | Yodlee