Show 119 – Unicorn Interviews – Mike Massaro – Flywire
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Our tenth unicorn interview, in partnership with the European PR Agency Tyto and their own Without Borders podcast, where we aim find out about the key issues, pain points and challenges that start-ups face and how they can address them with a strategic approach to marketing and communications. In this episode, Russell Goldsmith and co-host, Tyto’s founder, Brendon Craigie, were joined online from Boston in the US, Mike Massaro, CEO of Flywire.
Flywire is a high growth vertical payments company that gained unicorn status in February 2020.
Mike explained that Flywire focuses on the combination of what they believe is software and payments coming together, which is a major trend in tech. They started with an education vertical, their first vertical about 10 years ago. Mike said to think of this as helping foreign students attend Harvard, Yale. At this point, they have 1600 universities across 32 different countries. He said that they then added additional vertical markets, including health care, travel and business payments as continued to add new verticals and new geographies. Mike said what is unique about what Flywire, is having a certain way in which they move the money. He said Flywire has one shared tech platform for payment functions and a vertical software that’s super targeted for integration points within these industries use cases and they bring all that together for their clients for about 500 Flymates (Flywire employees) across 12 offices globally.
Becoming a unicorn
Mike said that there hasn’t been much of a change in the perception of the company since becoming a unicorn. He said Flywire raised $250 million or so of venture capital total, from investors Spark, Fidelity, Bain, Temasek, and Goldman Sachs most recently. Those are the major investors. He said that if you asked Flymates internally, he is one of the most anti-unicorn type people and he is heavily focused on execution, on all the blood, sweat and tears that went into building the company for ten years. He said it’s nice to have the label and it’s nice to be held up as one of the hallmark companies in the fintech industry, but at the same time, there’s a lot more work to do. He said the employees probably heard them celebrate it for about 30 seconds inside the company, and they then went on to doing what needed to be done.
Growth in global payments
Boston Consulting Group mentioned that the area of global payments is growing at roughly six percent annually and when asked what is driving the growth in payments, Mike said there’s definitely a digitization that’s happening. When you just think globally in general, people are shifting away from cash. Mike also said that the world is, prior to Covid at least, getting much smaller. People were picking up, travelling, they were interested in seeing the world, learning in different places, potentially living in different places. He said that this created a lot more digitization, and the drive to ecommerce, which increased during the pandemic. So that’s all trying to start to drive those types of interactions that people are having, that’s a big part of it. The other thing he highlighted, when it comes to payments in particular, is that people used to go and select a payments vendor, but now, payments are embedded in everything we do. He then told a story in New York City where, he got out of a taxi cab, but didn’t pay the taxi cab driver as he thought it was an Uber, which offended the taxi cab driver. He said that it was a good example where payments are so embedded in his day-to-day experience that he didn’t even realize there was a transaction there. He said that’s what’s happening with software as well, when you’re delivering software like Flywire is to its clients, they don’t have to make a payment decision right there and then. If payments are part of the offering, then that’s taking complexity away from them, that’s taking Decision-Making away from them and you don’t have to be an expert in payment. Mike said when you have more seamlessly integrated software with payments, usage levels go up because it’s just a better experience.
Forbes said that this is a space that is increasingly very margin thin and the fintech companies, to be commercially successful, need to be seeking out more vertical specific challenges to fix. This is an area that Flywire has really focused on. Mike explained that for Flywire, it’s the payment economics, at some point, you can look at payments and say it’s very commoditised. The cost of picking one vendor to process a credit card versus another can be very small, so people are trying to differentiate on the processing, the tech platforms that are behind them, the interfaces. It’s part of the reason you’ve seen such consolidation inside the credit card processing sector, where there’s been massive acquisitions and in consolidation in what is traditional merchant processing. He said that part of why you see software coming into this mix, is, Mike said that in some of their sectors, like education and health care in particular, the concept of paying a large amount of money all at once isn’t that common. For example, if you’re going to send your child to Yale or Oxford, you may not be able to make that massive lump sum payment at one time. This concept of a payment plan exists and that’s saying, gives the option of splitting the payment into five instalments, for example. It’s a non-interest-bearing component and it’s just pretty much the university extending different payment terms, because they know the ability to maybe pay $60,000 equivalent in a lump sum may be difficult for people. Mike explained that when you look at that, you have a situation where you have software adding a ton of value to both the payer, and also the end client, in their case, the university. So, it’s solving a complex problem that they have, but at the same time, your monetization is through software and through payments.
Impact of Coronavirus
Mike explained that Covid-19 was definitely quite an experience. He said they have 65 or so Flymates in Asia Pacific, and a number of them started to be impacted even in January and February, in places like Singapore, Tokyo, Shanghai. This meant that Flywire got an earlier view than a lot of other tech start-ups had, of what the potential implications were, for example having people shift and work remotely, some of the stresses that happen to people in this environment. Therefore, when it happened in the United States, and pretty much the rest of the world in mid-March, their first focus, like many, was to make sure they could transition well to home to make sure people had the equipment they needed, they could perform their job to the to the best of their ability at a home office. This actually happened relatively easy for them, being a globally distributed team, they used to a lot of collaboration tools. He explained that at Flywire, they have a video conference embedded in every television, in every office, so that actually wasn’t a big transition. The harder part for them was actually helping their clients transition. Mike said that if you think of some of the top universities, top medical hospitals, even travel companies, all of them were significantly impacted with Covid and transitioning to work from home. They didn’t have access to maybe systems the right way,or they didn’t know how to adapt maybe their billing dates, their invoicing dates, things in which they were doing had to change. Mike said their team spent a lot of time and effort making either changes to the platform, changes to customizations for the clients or configuring different features for them that they may have not utilized before. He said that was a big focus and gave them a rallying cry around, ‘how do we help our clients navigate this?’. In many ways they tried to defocus it about themselves and their experience and focus on what they could do to help their clients. That helped them a lot. Initially, they did all the financial planning. Mike said that they immediately realised they were fortunate. They had just raised $120 million in February and he was thankful that they we kept the pedal down on the fund raise. Mike said however, look at your spending, you look the plan they had to hire 120 new Flymates this year and of course that wasn’t going to happen in this environment. So, they adjusted their financial plans and then tried to navigate, he said they definitely played defence for that two-to-three-month period between March and early/mid-June. They then had to think about how they started playing more offense, as they realised this was going to be a bit of the new normal for a long time. Mike’s belief is that people want to play more offense than they do defence, but how do you look for opportunities to innovate? How do you look for new products to build, new markets to enter? Mike said they started their full again efforts in July and August, as well as trying to support their people and address some of the wellness mental health issues that everybody’s facing in a stressful time.
Brendan said on the surface of it, the payment space seems very noisy and crowded. He then asked Mike what Flywire’s approach was to raising awareness and differentiating themselves in the market
Mike said that a lot of other companies go after the massive payment opportunity. He said that you’ll hear companies talk about how much money is moving around the world, you’ll hear them talk about the digitization of cash, about these kind f massive TAMs (Total Addressable Markets) and you’ll hear them talk about these huge challenges. For Flywire though, he said that they have always taken a slightly different approach. They look at their areas. All the money moving around the world is actually moving around the world for different reasons, and so their belief is that you have to actually understand those reasons. You have to dive into the use case or the vertical or the actual problem statement you’re trying to solve. He thinks that’s probably one of the things that differentiates them most. In early days, Mike said that frankly, everyone thought they were just this niche player who was going after the small education market, but their plans were always much bigger and broader. They looked and found that there are certain industries that have been poorly served by payments, they don’t just need credit card capture, they actually need more, more software, a more comprehensive solution. Oftentimes the payments are larger, they’re more complex, they’re global, and their belief was that that was part of the big reason why so much of that money wasn’t digitized well. So, they started in education, but expanded out. Mike said a lot of people probably said, ‘let’s see if they can actually get outside of education, can they get into other verticals? Can they get into other countries? Can they offer additional products?’ So, again, they were hyper focused on the problem they were solving and then have scaled a bit different than casting this big net, this big story, even though ultimately they are going after that same large, total addressable market. Mike then explained that for Flywire, about 20% of their volume is over credit card, so, 80% is over bank accounts. Effectively, part of that is to do with the transaction size, the complication of the payment, some of it’s due to just the ability for someone to put, 20, 30 thousand dollars or pounds on a credit card, for example. There are certain types of limits that a lot of consumers still have and that’s a major differentiator. Most of the traditional payment processors are oftentimes merchant processors for cards, point of sale, kiosk type payments, maybe e-commerce. Flywire are actually casting a much broader net and are digitizing a lot of things that used to go over maybe bank wires or even cheques in the United States or paper cheques are still quite significant. So, people used to be using those mechanisms and are really starting to digitise.
Values and Culture
Mike said that collaboration is one of the Flywire’s values and so he was asked how they have managed to build this into such a fast moving and high growth company culture. He explained that Flywire actually had ups and downs early on in the evolution of the company. There was a point where they almost sold the business, about eight to nine years ago. Mike said they focused on their investors, they supported them through finding product market fit, and they were able to really accelerate. Mike then added that they picked their heads up probably about three to three and a half years into the journey and realised that they had a team of about 40 and were going to have to scale in the next part of their journey to probably triple that. Mike said that was the moment in which everybody kept referencing how great their culture was. They didn’t have the fancy posters on the walls and the motivational statements and everything that people normally would put out there. So, Mike embarked on a program internally with Flymates to unearth what everybody kept talking about. He said, everybody who visited them, their investors, bank partners, there was ‘oh you guys have got a great culture’ They all spoke about what they saw consistent across Flymates, even across very distant locations, and he found that fascinating. So, he I likes to say they unearthed their values and culture, because it was there, they just had never put words to it, and before they hired another hundred people, they felt like they needed to know exactly what those traits were, so that they could look for them in others and grow. So, that’s where global collaboration came from, part of it was a forcing mechanism. He added that early on, one of their biggest challenges was navigating global collaboration. They didn’t have the money to fly themselves around the world to see each other. So, they had to use technology the best they could, and they did have to get on an aeroplane and go see people and build those relationships because they then had to go remote again. Mike said that collaboration is one of the most important values they’ve had. He said another one that’s top of mind is authenticity, which covers a couple of things for him – a level of transparency, of directness, bringing true self to work, which he thinks has lots of tie ins. A lot of people aren’t in work environments where you’re actually allowed or encouraged to bring your entire self to work. Bring a bit of your personal life in, to let people get to know you, know who you are as well. Mike said he has had experiences in his career where you would get into tech companies and you’d have CEOs and others say ‘ask me any question’. So, you think they’re really transparent, then the person asks the question, for example ‘how much money is on the balance sheet’ or ‘how many shares are outstanding in the cap table?’ All of a sudden, any question isn’t quite what the person meant. He always wanted to push that at Flywire, where they have had this level of transparency that’s been it, and they have been able to maintain for the entire ten years so far. There is truly no bad question to ask, there is no question he won’t answer to a Flymate. That’s even happened during pretty challenging times. So those values have held up for a while. They may insert a new one or two here and there, especially after Covid and some of the traits they have learned.
Mike said that taking bad experiences you’ve had in the past and correcting them in the future is part of the journey. He said that at Flywire they have this great mural that’s on their wall in their Valencia, Spain office. It literally shows all the major milestones of the company, even ones that were not great. Times in which they had to either cut staff or had a huge amount of uncertainty. Again, he thinks when you read about tech, it seems like every start-up’s successful, but Mike said that is not the case. 95% of them fail. It sounds like everything’s an overnight success but it’s not, it’s a grind. He said there’s a lot of work that goes into building these companies and there is value to actually focusing on where you didn’t get it right. People believe that when you’re able to highlight those things, you’re human, first of all, the second part is, you learn from them and you avoid that rock the second time around.
When asked what role a business has in driving the agenda relating to diversity, equity and inclusion, Mike said that it’s obviously a critical thing on the mind of so many people. Specifically, for Flywire, he said having a value around authenticity has been something they’ve tried to push for a long time internally, they want a diverse group of Flymates. It’s naturally diverse just with the geographic footprint of the company. But at the same time, every one of their offices has a diversity challenge, something they’re looking to improve. Whether it’s their tech team’s gender composition, maybe it’s a certain type of religious diversity in a certain geographic part of the world, maybe it’s the male to female ratio in their sales team in a certain area. So, there are all types and Mike thinks every company has those types of challenges. The key is to how do you start moving forward? How do you start improving those numbers? How do you set goals, hold yourself collectively as a team, accountable for those goals around diversity?
Mike said one of the biggest learnings in the last few months for him has been the power of the team. He said that they have a great group called Flymates First, who are their volunteer Diversity and Inclusion team, and are passionate about those types of topics. They have actually helped navigate them through a lot of different decisions recently. For example, how are they going to look at their KPIs? In what markets do they capture KPIs around diversity? What’s OK to ask in certain regions? What is not OK to ask in certain regions? How do they make sure they are looking at diverse talent pools? He said that in some ways it isn’t rocket science. If you keep finding the same types of people, you’re likely looking in the same type of spots. So how do you broaden out your networks and actually target different pockets of talent that you may not have found before? His experience over the last few months is that it doesn’t take much. Even if you go in and follow five or 10 people that maybe aren’t in your normal circle geographically or religiously or industry wise, you will start to see pockets of information on places like Twitter and LinkedIn that you’ve never seen before. Then, pockets of talent that you can recruit from, so that’s been a huge learning and there’s a long way to go. Unfortunately, he thinks it’s still a generational issue, he doesn’t think there’s an overnight fix. He tells his team often that it isn’t about tweeting hashtags from your couch, it’s actually about getting out there, looking at what you’re doing every day, making change, having an active role in that change in the community as well as in professional life.
Mike said that one thing that they did to help foster that is they actually created two things, They call it ‘fly better days’ – in parts of the social injustice, unrest and racism issues that have happened in the world, it became overwhelming to so many people inside the company and outside. They said we’re going to create two paid days where people should go and give their time and efforts to causes that they care about. So, it allowed Flymates to go out and potentially participate in a peaceful protest. It allowed them to maybe focus on getting people out to vote. Some people use that for all types of different causes, children’s groups, etc. It was a way to say, they can put money where their mouth is and say you have two paid days, they know our Flymates want to do these things. Sometimes they don’t feel they can step away from work, so they encourage them to do it, to take a picture post it in the slack channel, share what they did. They had a great response with that and it focuses people on taking action. Don’t just talk about what we hope the world will be, let’s find ways we can actually go out and start making it that way.
Mike said they used to travel a lot, but due to the pandemic, they have had to get more creative. He said he used to probably spend 150 thousand miles a year in the air and much of his executives would as well, and it would be very common to be in a Flywire office in Valencia and see people from their Singapore office or Tokyo office. That was just commonplace but obviously the pandemic changed that and they have had to get more creative. He said they have probably tried three different formats of all company meetings because everybody is on video conferences so often. How do you not take up more and more of their time to communicate the information when they’re constantly on these conferences to do their jobs? So, they’ve been recording short videos, trying to give people bite sized content that they can consume throughout their day, or sometimes people even catch up on them over the weekend. So, it gets information out there without forcing people that are going to sit there and listen in a forum so they have been trying things like that. He said he’s been known to drop a zoom link in a slack channel of a couple of hundred people and say, ‘I’m on this zoom for the next hour if anybody wants to drop in’, and things like that. Mike then said, he thinks create a little spontaneity in a world where I serendipity may be gone for at least right now, everything seems so planned. Those are some of the things they’ve done, again, trying to create pockets of socially distant activities that people can participate in if that’s acceptable in the region in which they’re in, they give people a stipend, for example, and say, go find a Flymate, get a coffee, go get a drink, go order pizza or go to a park. Those things to try and encourage people to get together, even if you couldn’t get together with large groups. He also talked about how they sometimes rent locations for retreats – they had a place that had twenty bedrooms in the state of Maine in the United States, about two and a half hours north of Boston, they delayed it because we couldn’t actually go there during Covid, and so delayed it ’til September. They didn’t have anybody that was going to use it, his executive team was distributed around the world so they couldn’t get there to use it, so they decided to open it up for Flymates. They called it ‘The Fly Lodge’. There was a 20 thousand square foot house with independent bedrooms for anyone that went, you had to get Covid tested before you could go into the house effectively, and people loved it. They actually got a chance to see people again, work through the week, just have a different experience, and actually gave them an idea that they hadn’t thought of maybe months before, but maybe trying to replicate it in different parts of the world where they can’t maybe cross borders, but within certain regions there’s acceptable practices. There are ways in which you can get tested, ensure safety of everybody, so they may try something like that to help keep people engaged. It’s not easy, people do miss community, he thinks the future of work isn’t going to be staring at the screen. There’s going to be some return to some level of interaction, even if it’s not the level of commuting and challenge we all had in just dealing with the old world.
Mike said that he is a massive introvert, and everybody’s often surprised because he thinks he is good at faking it. His level of interaction at a certain point, he needs the downtime and the focus, so for him, being the external spokesperson has been something he has had to grow into and realise how to navigate just with his own personality. Mike then explained that he absolutely loves the industry, that he’s in. He’s been in tech for 20 years, a lot of that in payments, so building up that network has been amazing. He said that have a lot of great partners, they have some of the top banks in the world that are partners, the city banks, Deutsche Bank, Bank of America, Barclays. They also have MasterCard, Visa, American Express, Union Pay, Alipay, PayPal. So, you have these amazing companies who have been so good to them over the years and supporting them as they are trying to do something new and different. He said that having those relationships and getting to interact with those companies, talk about partnerships externally has been great. He a big believer in culture, a big believer in people need to be working on things that they’re passionate about. He said, if you’re not passionate about it, go find what you’re passionate about. He loves talking about the culture they have built, how companies can adapt and be a little more employee focused, try and focus on things that I’m most passionate about, even if it’s not my core default behaviour.
Mike explained that the biggest challenge has probably been the pace. He is competitive in nature, a father of four boys, so he said it’s constant competition everywhere around his house. He said that the pace in which he often ran before was probably too fast and too much, especially when it came to global travel. He’d hop on a plane for an hour meeting on the west coast of the United States, many people did, but it would just be a constant grind. He remembered one trip where he thinks he hit Boston, Tokyo, Singapore, Cluj in Romania, Valencia and London within a ten day span. So that’s actually really challenging to do. He thinks he slept on an aeroplane four nights or something. He said those types of runs were just crazy in hindsight, he didn’t get enough time in any location and should have split it up. He was doing it so often that there was just a constant wheel that you felt like you were on, so he would say that was by far the biggest challenge. Reflecting back, Mike would definitely do it differently, go and spend a week in Singapore and do it four times a year, five times a year, like he normally would have done, but have longer trips where he could put more activity around with the people in those areas.
Mike then explained that the biggest communications challenge for him was that sometimes he is overly transparent. He is realising, especially as the company’s getting bigger, there’s a lot of folks who may not want to know all the detail. Almost constant level of decision making that the executives and he has on a daily basis, some of those decisions are hard. If you look at just the pandemic, you have uncertainty, people want to know that the future of work is, for instance. He tell Flymates, ‘I can’t tell you what the future of work is like, I can’t mandate it’. But he said that is the wrong answer. He can try, but it’s the wrong thing, their engineering team may need a different future of work than their sales team, so part of it is about figuring it out together. So, sometimes he thinks being that direct and that transparent may actually push these complex decisions onto other people that don’t necessarily want them and show a level of uncertainty, even though he thinks that’s the reality of the world. He’d say that’s the balance for him. He knows other CEOs who just go in and say, ‘this is the future of work, this is what we’re doing, this is how we’re going to be organised’. To Mike, though, that’s just too simplistic of an answer, so he tries and convey that. At the same time, some people may see that as pushing the challenging topics onto other shoulders, which isn’t the intent, just an aspect of transparency.
When asked if Mike has ever been given great advice that he would like to pass on, as far as communications is concerned, he began to talk about his chairman. He said that he has a chairman who ran major divisions of American Express for years, and is on the board of a number of tech companies, Betterment, Yoyo Wallets, for example. He has a way in which when he’s talking and oftentimes, CEOs come to him with these ridiculous challenges, problems, complex things and his ability to reflect, first pause and then reflect before he answers is something Mike has been trying to work on. Most people want to jump in with an answer, and that’s his default behaviour too. He said, his chairman does a great job where he will often reflect and he’ll actually pause a conversation and he’ll say, you know, let me reflect on that. He’ll take 30, 60, 90 seconds before even uttering another word, and then he’ll come out with an actually well thought out, well-articulated point. That’s something Mike has been trying to leverage more, because he thinks the default, especially in tech companies and start-ups, it’s to fix stuff, it’s to change stuff, it’s to try stuff. So, you’re like, maybe shoot first, aim second. When it comes to communication, sometimes if you just take that pause, if you really think through it, you can actually organise your thoughts in a better way.
Mike explained that if he were to go back and speak to his old self, the guidance he would give about communications and the steps he would encourage himself to take in order for himself and his business to excel in communications, would be to understand who you’re communicating to and how best to get your point across to that person. He said one thing he has found in the last 20 years in business, has been people are barely able to understand themselves, what made them, who they are today, how they were brought up and the challenges they’ve faced in their life. The more you can understand about the personal aspects of a person, for example, who they truly are, what gets communicated to them, how they react to information and what’s the best way to interact with them, that uniqueness of an individual is really, really important. Oftentimes, people have broad communication strategies, where they try and do the same thing to different people. He said that he has some execs who he walks in to, random, one on one, no agenda sink up, 90 minutes every two months and that is all they need to connect. He has other execs that he works closely with who if they miss a checkpoint every five days, their relationships is off the tracks, and then they have to get it back. So, he thinks oftentimes people think of communication as kind of, ‘I get to decide it, I’m the communicator, I’m the person communicating’. The reality is, it’s a two-way street. It has to work for both parties for the relationship to really be great.