CEO & Founder, Checkout.com
Guillaume Pousaz, Checkout.com CEO on stage at Web Summit 2022
Our Founder and CEO, Guillaume Pousaz, was interviewed on the main stage at Web Summit alongside Markus Villig, Founder of Bolt.
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About Guillaume Pousaz
Guillaume Pousaz, founder and CEO of Checkout.com, has discussed the company's growth and strategy at several industry events. At the 2022 Global Investment Forum, he described Checkout.com as an enabler for merchants in the digital economy, stating that the company is "happy to be a bit in the background" and that its mission is to "enable merchants and their communities to thrive in the digital economy." He also noted that Checkout.com processes payments for major companies and holds 600 million cards in its database. At Web Summit 2022, Pousaz said Checkout.com has been "very frugal from the early days" and "very product and engineering focused," and he described the company's approach as "frugal, disciplined Swiss." He also stated that he believes "the best product wins quite often" in B2B, as opposed to the blitzscaling model common in consumer spaces. Pousaz has also spoken about the company's long-term outlook and the broader fintech landscape. In a Mission Driven interview, he said Checkout.com is "at the beginning of a multi-decade journey" and that its future involves "more products, more geographies, more work." He has emphasized the importance of the company's values—"Aspire, Excel and Unite"—and advised entrepreneurs to "follow your instinct" and choose a problem that is "meaningful to you." Regarding the fundraising environment, Pousaz noted at Web Summit 2022 that "the cost of money was zero" in recent years, which was historically rare, and that now "we have a cost of money that is high and is going to keep going higher." He has also said that Checkout.com operates as a public company internally and focuses on predictability, and that he does not care about short-term valuations but rather about "building products customers love."
Transcript (24 segments)
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Karen0:16
Good morning, nice to be back at Web Summit and Center Stage. Welcome. Terrific conversation we have lined up today as we talk about tech stocks that created last week this time on an earnings reset. We've already had the valuation reset, but this time on earnings, investors want profit, not cash burn. Very loud message for anyone following in your way. Because we talk about all the startups here on the ground of Web Summit, it must be a much bigger mode now for your companies. What do you see in terms of mode?
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Guillaume Pousaz0:50
I think, in terms of a mode, if you build a business which you control and if you have the free cash flow, it was all about the product. So I think the mode comes down to basically being able to execute against your mission and essentially control your destiny in terms of how you operate your relationship with your investors. And I think there's all these concepts about split scaling, going really fast. I'm more, you know, I'm very Swiss in a way. I like frugality. I like to be focusing on the sequence, building the best business possible step by step. And essentially, when you operate against a total addressable market which is e-commerce, and we are essentially underwriting the digital transformation of the world, commerce is going to keep growing. It's about controlling what you're doing and doing it steady, step-by-step growth.
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Karen2:12
Are there... I was just seeing in my own company last year, you would put a PDF and have a six million dollar seed almost instantly. So you know, we focus on our business. I think we always say that all the time you spend on your competitors is time you don't spend on your own business. We serve the world's largest tech companies. Our job is to do a good job for our companies, enable them to be successful. And I think we can talk about this after, but the idea is just focus on your own business. I think it's the most important. I've got the two frugal tech guys in the room on stage with me because Marcus, you are the same. But can I ask you the same question now? It's a very competitive space that you also operate in now as we talk about cash-starved companies.
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Marcus3:10
Experience, no network. And the first four years of the company were effectively forced to bootstrap, and we barely raised any external funding at all. So that culture of frugality, being very mindful with how we spend our money, has always been with us. And that's very different to how most companies operated. So actually, we really welcome this new era where the companies that succeed are not the ones where the CEO is a great hype man and a great storyteller, but actually where the company is really well operationally run and really has their costs under control. And we're actually very excited to look forward to what's going to happen now. Because when you look back in the ride-hailing space, there used to be dozens of competitors, and now there's a handful of them left. Similarly, you look at food delivery from restaurants, started off as a very crowded space, it's very... savings to our customers and our partners.
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Karen4:11
Winner takes all approach. How many players do you think will be left at the end of the day in your space?
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Marcus4:18
Well, we can look at some of the most mature markets like the US as an example, where unfortunately there's only two players left on the ride-sharing side. And then similarly, seems food delivery is trending there as well. So very clearly, these are spaces where you need to be very large in order to succeed and even survive. And that's again where cost efficiency plays a big role. So you can't operate this business with the mentality you had a few years ago where there was always the next round around the corner and you could rely on investors bailing you out. But you actually got to build a sustainable business, and that's what Bolt has always been about.
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Karen4:52
I want to talk a little bit about how business is tracking. When we saw from the sector, still spending when it comes to revenge spending on the back of COVID, that could be changing with more aggressive rate hikes and possibly more from the Fed. What are you seeing in your business?
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Guillaume Pousaz5:20
So we process hundreds of billions of dollars globally, so we get a good sense of what's happening in the world. We obviously have share of wallet growing with customers. So you will have certain sectors. You mentioned crypto, of course this year is not as good as last year, but this was a small part of the overall business. And our business comes out of cohort growth, existing customers that are either growing or giving us more regions, and net new cohorts which are the customers that we signed this year. And we're on a very good track in terms of signing new customers. What you do see though is that some of the historical cohorts are not growing as fast as they used to. There's a lot of tech companies... transactions are now people are going to credit. And I think the last thing that I could say that we've really seen from the data is that consumer spend in the US is still quite high. While in the UK, I mean we all read the same news, the cost of energy, the inflation, the UK has been slowing down much faster than some of the other parts of the world. We don't see any slowdown in Asia for instance.
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Karen6:37
Marcus, how is Bolt faring?
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Marcus6:40
So for us, actually over the last few years, as for many companies, we've actually been far more supply constrained than we've been demand constrained. So generally, and people here who've used the product have probably seen the same, the fares for rides and food delivery and all of the services have gone up tremendously because the consumer demand keeps on... inflation European Union nearly 25%. And you can imagine that obviously consumers are gradually pulling back on spend. And we actually see that in the short to medium term, this is going to lead to a bit more healthy balance because the prices were just outrageous in many of these markets for a very long time. And we think that in some ways we're now transitioning back to a more normal state.
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Karen7:30
As you bring up the word health, I want to talk about valuations. A lot of people in the room thinking about if they grow a business, where do they get to, what sort of valuations they can be thinking of. And if I can start off with you with Checkout.com, I mean you raised money in 2021 that saw a valuation of 15 billion dollars. By January this year, your business was valued at 40 billion, so 167...
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Guillaume Pousaz8:11
I think the valuation is an investor component. I'm a founder, I care about building, I care about my net revenue growth and I care about my margin. How much am I generating out of the business and what margin do I operate against? What is my OpEx? Valuation is something for investors who care about entry point and exit point. And the multiples last year are not the same multiples than this year. But I think this is for somebody who cares about his time series when he enters and when he exits. I'm a founder, I'm a holder. I care about building products that my customers love, that they want to use, that they talk about to other customers. And we care about our mission, which is to enable businesses in their communities to thrive in the digital... going to ask me why that happened and I would not have the answer. I would say you should ask the investors. Marcus, likewise. Ultimately, again, what the especially the management teams in these companies are thinking about, if they're good teams, is that the company going to do well. And eventually what we always see is that as long as the company keeps on performing, revenues grow, costs are under control, profits are going to follow, investors are going to follow with valuations as well. So we're not overly worried about the short-term dynamics here because we're not in a position where we would even need to go out to the market and fundraise.
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Karen9:43
So you don't think we're in a new normal though? That there's been a massive reset and everything that we saw over the last 12, 18 months or longer is just gone? That is it, it was a moment in time, it has gone now?
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Guillaume Pousaz9:54
So again, I mean I don't have a crystal ball and I wish I had because... a cost of money that is high and is going to keep going higher. I have many of those hedge funds in my cap table, I have sovereigns, I have just a lot of people who are very smart know about this, and we talk about it quite often. And right now I don't think anyone knows where the floor is on the upper hand. And I think we need to reach the floor on the upper hand to then decide and start predicting where it's going to be the lower end, which is going to be the long-term residual cost of capital. Most investors do a valuation still based on a DCF, discounted cash flow, and to do that you need to know what is the residual floor on the downside. Is it 2%? Is it 4%? I wish I knew, I don't. But again, I think this is a question for the true entrepreneurs, the ones who...
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Karen11:10
What's the link to the IPO story? Because when it comes to Bolt, nowhere near enough money in private markets, that's what you've said recently. So as you look at the torturous journey out there on the public markets right now, what's the pathway to an IPO?
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Marcus11:27
Bolt has always taken the view that we're in no rush to go public. We have enough funding to last for as long as we want. We have been profitable in the past and we're going to have to be back there already next year as well. So we're not the company that is too much worried about whether we will need to raise funding in the private markets or in the public markets anytime soon. But again, what we're focused on is how do we actually grow the business in the current environment, how do we serve our customers better, keep prices low in the environment where they're more mindful...
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Karen12:11
You get there. Yeah, I think we care very much. I mean we hired a CFO who was in a very big public company. Most of my C-levels were in public companies before, and I built an executive team that has this experience, pattern recognition on how to operate. And it's about closing your books within a quarter, two days at the end of the quarter. Build a good business. Being a public company forces you to be a very well operated business. And so we see this frugality of the early days as just a forcing factor to build a better business and a more long-term sustainable business. The markets are what they are, and right now there's not much IPOs in the public markets. I have raised my Series A in May of 2019, so I don't really have... and again, we operate against e-commerce. There's essentially three modern players, the ones that have the motor next to the thanks to the best technology. But we still have a small share of e-commerce. Most of it is sitting with banks, with incumbents, with the Barclays, B of A, JP Morgans of the world. And my bet is that we will beat them in the long term. They stand zero chance against us.
Let's talk a little bit further about growth, because we've spoken about the economic environment, but what about the digital environment? A couple of big terms have been used a lot lately: super apps, I mean Elon Musk is talking about it, Google is talking about it, plenty of others as well. Web3, the metaverse, all big terms. How does Bolt play in a world of super...
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Marcus14:10
World are realizing that we have too much cars. We need to transition away from private cars into actually cities that are livable. And that means that we need to move away from that to public and then shared transportation. And that's what Bolt is about. And what we realized long ago is that it's not only going to be ride-hailing that's going to be doing this transition. I think ride-hailing is going to play a role, you will need to have an ability to get a car on demand, but that's going to be a minority of all trips in the city. I think that there's going to be a massive wave of shift, people who just transition away from private car ownership to use e-bikes, to use scooters, whether they're shared or owned, mopeds, electric vehicles. That's what we think is going to be a massive transition. So how we think about being a super app is that we need to have all of those transport options really conveniently available...
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Karen15:10
Synergies or revenue synergies, adding a product that makes no sense in the context of what you're otherwise building. Okay, and what do these terms mean to you and your growth story?
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Guillaume Pousaz15:19
I think the best way to correlate super app, which is a B2C term, so towards consumer, and the B2B is the platform play. Which is that essentially it's about being more than a single product company, to be a multi-product company. And ultimately start leveraging multiple revenue touch points with your customers to basically be able to subsidize the margin from one place to another and build better retention, better love from your customers because they're buying more products. And we at Checkout, I don't know if it's super hot, but we have a real strategy of being a platform. It's about reinventing how people interact with financial services. It's about moving... the word super app was going out of Asia where admittedly they went really far. And we process for most of the largest tech Chinese companies, both Ant and Tencent. And the truth is, you go into the Ant dashboard as a consumer, you have 80 different products at this point. You can do everything from planting a tree to getting an insurance. There's literally everything. And the truth is, these are just companies who have expanded their suite of product. This is the goal of any good entrepreneur, is to have multiple products to bring more value to their customers, be they businesses or individuals, and just creating a better business in the long term.
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Karen16:52
I think regulators will crack down on a super app at some point. I mean we spoke... that if tech companies tend to become too powerful, the regulators become quite active. In China you had basically a duopoly between two big companies, so Pinduoduo joined in, another customer of Checkout. But the truth is, Ant and Tencent are so powerful, then the regulator comes in because it threatens the banks and the traditional incumbents that still have a role to play. I was here a few years ago talking that banks have a role to play, and I deeply believe this. The banks are not disappearing. The markets one word of regulation from your industry because you are facing legal challenges about how workers are treated within the gig economy, whether they're on staff on the books or whether they are contract workers. What can you say about the looming changes and hurdles?
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Marcus18:10
Other companies to own the data about where everybody lives and where they go, and we've already seen that many European countries have taken action against that. That's one level. Another is transport regulation. So do cities actually want to retain the status quo being car dependent, or are they moving to shared transport? And third one, as you mentioned, is employment. And on that one, we very clearly see that the vast majority of our drivers and couriers want to retain the existing model. So every time you run this survey, the vast majority of them are self-employed, they pay taxes, they're happy with the status quo, they don't want to switch. So we don't necessarily understand why a small vocal minority should force the other drivers to move to a new model.
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Karen18:45
Marcus, there's so much more to talk to you about. We're going to have to do it on CNBC, so stop by the Squawk Box studio. Thank you so much for joining us here at Center Stage of Web Summit. Thank you very much.