Expect 'a lot more dismantling': A fintech entrepreneur's vision for 2020
Marqeta, a provider of “modern card issuance” for many leading fintech disruptors, including Brex, N26, Square and Expensify, has been on a roll lately.
The company has issued more than 140 million cards and doubled revenue in 2019 for the fourth straight year, quadrupled its valuation to nearly $2 billion, and closed a $260 million Series E fundraising round in May.
Jason Gardner, founder and CEO of Marqeta, has built three fintech companies and learned along the way what works in building a fintech startup. He also has a stark warning for traditional institutions.
"If you're not focusing on 18-to-24-year-olds and you're a bank, you're going to become irrelevant," he said.
In an interview, Gardner discussed his experiences and forecasts for 2020. Following is a transcript edited for length and clarity.
I've been reading Bridgewater founder Ray Dalio’s book, "Principles." A lot of it is about work and life ideals like radical transparency. At Bridgewater, they record all meetings and give summaries to everyone in the company. As somebody who founded a company, have you developed principles over time for managing people and running a company?
JASON GARDNER: I really enjoy people. I think connecting with people and finding out what’s important is one part of being a leader. Trust is the foundation of any relationship, so building trust is really important. That's why when I hear radical transparency, it's very hard to build trust when you're radically transparent.
To trust people, you need conflict. If you have no conflict, there is a lack of trust because out of conflict comes buy-in. Running a business is so dynamic. There’s so much going on, especially in a space like fintech where we’re operating 24 hours a day, 365 days a year, if a card doesn't work at the point of sale, it's usually problematic. So part of having that conflict or radical candor is being very truthful to someone about their performance, good or bad, indicating what you want to do and being very clear about it, but being open to hearing other points of view.
The way I think about that is success equals performance plus behavior. They’re not mutually exclusive. You can have people who are really good at what they do, but they’re horrible to work with and there are people that are really good to work with, but not good at what they do. You can’t be one without the other. There are situations where somebody might be a super high performer, but their behavior is poor and you can't keep those people around. Because even though they're really good, they affect everybody else around them.
What's an example of that?
Bullying. You might be really good at your job, but to get your job done you have to bully people into submission.
This is my third company and what I’ve found is that companies get built by human beings, not by technology or computers, and human beings are incredibly dynamic creatures. So you have to treat them as such. They're hypersensitive. There's a lot of nonverbal communication. When you stand in front of a room, you can tell how each individual is and how their day is going. So I think being sensitive to that is really important. I certainly try to mirror as much as I possibly can. As a CEO, you’re always onstage.
Marqeta has been getting a lot of buzz lately. You have fintech clients that are very successful — Postmates, DoorDash, Brex, N26, Square, Expensify — and you’ve racked up a lot of wins in a short time.
Five to 10 years ago nobody was investing in fintech. Fintech was not a thing. When we were raising money in the very early days, a lot of the VCs thought there's no way you're going to be able to unseat the First Datas of the world. No one's going to build a startup that competes with Bank of America or Chase or Capital One. And we also took on a part of the payment card ecosystem, issuing, and no one had built a newish processor in a dozen years. And we did it and launched it via an open API.
Today, our core business supports the core business of all of these great customers. So I think we’re seen as visionaries within fintech. Now everything is fintech. It's probably the thing that's talked about the most because it's coming so fast and furious. So we're sort of the OGs — the old-school original gangsters of card issuance.
The virtual card has now become the last mile for so many companies because it generates revenue like interchange, it connects online to offline. When Google says they're going to be entering fintech, I think the bigger reason why and why even Apple got into the game with the Apple Card and Apple Cash is that the products are so well designed that they're attracting new constituencies.
If you're not focusing on 18-to-24-year-olds and you're a bank, you're going to become irrelevant.
Virtual card is what we do for companies like AfterPay, Affirm and Klarna. The consumer generates a virtual card because they need to buy something online. If they click on the Cash App, this is built on us.
Do you think Facebook’s Libra will come out and do you think it will be a success?
Yes. I think in the commercial use case, the movement of goods and services to use a cryptocurrency as payment is a good idea. I think that part of Libra will be successful. I think if somebody else came out with it — Amazon or Google — it might be more acceptable for a number of reasons. Facebook is not typically playing in this sort of commercial space. But it makes sense. You see now China is becoming a leader around crypto and how to move money back and forth in the commercial sense. The question is then how do you tie it to the offline world? And that's where the break is.
This is all coming. And blockchain for the movement of business services makes perfect sense.
Obviously anything around decentralizing any type of currency is terrifying for the government.
I get the feeling that there are fintech companies who see this as a way around the traditional banks and traditional bank accounts, so they could move money between and among different business customers without having to go back to some kind of traditional institution.
I think they're all going to have to become traditional in a way, because you can't just move money to entities without any sort of KYC [know your customer], either. There has to be a regulatory construct to even play in that sort of network of movement of money. You have to go through some sort of traditional process of attempting to find out exactly who you are, make sure you're not doing it for nefarious purposes or a terrorist or something like that. So that infrastructure will always remain. It has to remain. But the ability to instantly move money should happen and it doesn't happen. It takes about three days. If all the banks agreed to one method of blockchain and one accounting system of record, it would take milliseconds to move money.
That’s been a stumbling block, getting all the banks to agree on one blockchain.
Everyone thinks that they should have their own standard, but that's where Facebook comes in. So Facebook is saying, we're going to create the standard for the movement of money and it's Libra.
Beyond Libra, how do you see what you do and what this ecosystem is doing, changing in the coming year? What do you think might be emerging trends?
We're going to see a lot more dismantling, more and more companies coming in to take different parts of the bank down. We've already seen it with lending. We see it with digital banks, we see it with prepaid. Next for us is credit; credit is the next big thing. Revolving credit cards. So we're building that out as part of our digital banking.
What can the newcomers bring to a credit card that would really be fresh and different?
Design experience. You have to find ideas that are far more appealing than what could happen today. Today, you use your card, you don't really know what happens until you get your statement, unless you log in to your site and you look through everything. But the experience of the Apple credit card is what the future is going to look like. Just a better way of managing. And I think we're going to see much better rewards and offers.