Latest / Leaders In Payments / John Caplan, CEO of Payoneer | Episode 429

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John Caplan, CEO of Payoneer | Episode 429 · Leaders In Payments

• 0:01
  Speaker 1: Welcome to the Leaders in Payments podcast, where we talk to C-level leaders from across the payments landscape.
• 0:06
  Speaker 1: We'll be discussing the products and services that impact the payment space today, as well as trends and predictions for the future of payments.
• 0:14
  Speaker 1: We will also hear stories from our guests about their journeys to the top.
• 0:18
  Speaker 2: Hello everyone and welcome to the Leaders in Payments podcast.
• 0:20
  Speaker 2: I'm your host, greg Myers, and on today's show we have a very special guest, john Kaplan, the CEO of Payoneer.
• 0:26
  Speaker 2: So, john, thank you so much for being here and welcome to the show.
• 0:29
  Speaker 3: It's really great to be here.
• 0:30
  Speaker 3: Thanks for having me.
• 0:31
  Speaker 2: Yeah, why don't we start out by having you tell our audience a little bit about yourself, maybe where you're born, where you grew up, where you went to school, a few things like that?
• 0:38
  Speaker 3: Awesome.
• 0:38
  Speaker 3: So, born and raised in Green, here in New York City, I've been an insatiable entrepreneur since childhood.
• 0:44
  Speaker 3: You know love building companies, learning about customers.
• 0:48
  Speaker 3: So, born and raised in New York, joined Payoneer in May of 2022.
• 0:53
  Speaker 3: And I live here in New York with my wife.
• 0:56
  Speaker 3: I have two kids, a 20-year-old and a 24-year-old, and we have 3,700 Payoneer colleagues around the globe.
• 1:02
  Speaker 3: So I spend most of my time traveling internationally to meet with our teams and see our customers and our partners around the globe.
• 1:11
  Speaker 2: Okay.
• 1:11
  Speaker 2: Well, for those in the audience that may not know what Payoneer does, can you just kind of give us that overview?
• 1:17
  Speaker 2: We?
• 1:17
  Speaker 3: are an awesome company.
• 1:18
  Speaker 3: We just celebrated our 20th anniversary, actually, which is an extraordinary accomplishment for our fintech.
• 1:23
  Speaker 3: Payne is a really interesting business.
• 1:25
  Speaker 3: We solve a problem for global small business owners, which is we're a foreign bank alternative for them.
• 1:32
  Speaker 3: We give them a multi-currency account where they receive their international accounts receivable and they use our accounts payable tools to manage their operations, and so we have 2 million active customers in just about every country and territory on the planet.
• 1:48
  Speaker 3: We are $80 billion of volume flowing into paying your accounts.
• 1:53
  Speaker 3: So we're a big scaled cross-border payment solution for small business owners, and the sort of heartbeat or the mission of the company is this idea that ambitious entrepreneurs don't have all the advantages that multinational corporates do.
• 2:09
  Speaker 3: And if we could give the ambitious entrepreneurs of the world a financial services solution with great technology, ease of use, fast speed and innovation, as well as lots of service.
• 2:23
  Speaker 3: We're on the ground in 30 markets, countries around the globe, in places like Lahore, pakistan, or in Medellin, colombia, where we're helping cross-border entrepreneurs really participate in the global economy.
• 2:37
  Speaker 3: Payoneer has gone through a pretty extraordinary pivot over the last three years.
• 2:41
  Speaker 3: We really were the innovators and pioneers of the marketplace payout space right Someone selling on Amazon or a freelancer on Fiverr or Upwork needed to get paid and pay near solve that problem and that built the company and took the company public and when I joined we solidified that business and continue to grow it really nicely.
• 3:03
  Speaker 3: And now we're very focused on our B2B business, which is helping cross-border as you know, cross-border payments between businesses, and that's one that the TAM and SAM are so big.
• 3:15
  Speaker 3: There's not enough zeros on my calculator, certainly on my iPhone, to capture the size of the market and we're the market leader there, providing value in Vietnam and in Turkey and in Australia and Japan and just about every place you could name on the planet to help cross-border SMBs participate in the global economy.
• 3:34
  Speaker 2: Okay, are there certain verticals within small business that you focus more on?
• 3:39
  Speaker 3: We have both goods and services companies, right.
• 3:41
  Speaker 3: So pretty much in our China franchise it's primarily goods exporters, right?
• 3:45
  Speaker 3: People who are selling on Walmart or Amazon or eBay or Etsy or TikTok or Timu or one of the big marketplace platforms.
• 3:54
  Speaker 3: They're goods exporters to the world, right, china is the largest manufacturer of exporter of physical goods.
• 4:00
  Speaker 3: We're the leader in China.
• 4:02
  Speaker 3: So that's one side of our business.
• 4:04
  Speaker 3: The other side, in the services, it's business process outsourcers in the Philippines, companies that are the call center for an American business.
• 4:13
  Speaker 3: Those businesses use Payoneer to receive their payments, get paid into their Payoneer account and they use Payoneer to pay their contractors and freelancers around the globe.
• 4:23
  Speaker 3: And companies here in the United States.
• 4:25
  Speaker 3: You know there was one that was at our 20th anniversary, bo Pilgrim.
• 4:29
  Speaker 3: That runs a business in Louisiana that helps insurance companies in the US outsource some of their operations around the world, and Bo's team uses Payne here to manage their payments to all their contractors globally and they help other insurance agents around the US do just the same.
• 4:48
  Speaker 3: There isn't one size of SMB, there isn't one industry.
• 4:52
  Speaker 3: It's marketing services companies in Dubai, it's software developers in Argentina and BPOs in the Philippines.
• 4:59
  Speaker 3: And what I think is pretty powerful about that, greg, for us is because we're so global and so diverse.
• 5:06
  Speaker 3: In the last couple of years there's been lots of macro shocks to the industry and we've had which is really frigging awesome, we've had 16% compound annual growth since I became CEO each quarter and that is really impressive when you think about the size of the global economy and all the shocks that have happened that we've been able to just steady our deliver.
• 5:28
  Speaker 3: That's really a testament to the pain in your team around the world.
• 5:31
  Speaker 3: That's the best people I've ever had a privilege to collaborate with.
• 5:35
  Speaker 2: I want to make sure I understand.
• 5:36
  Speaker 2: When you're a small business, you set up an account, but it's not like a checking account, but you do have money flowing in and out.
• 5:42
  Speaker 2: Can maybe you explain that a little bit Sure?
• 5:44
  Speaker 3: So every one of our customers has what I think of as their analog bank relationship in their home market, and they use that to pay their local rent, to buy their local supplies what have you?
• 5:57
  Speaker 3: But in most parts of the globe you're a global company from day one.
• 6:02
  Speaker 3: When you get started, you're either sourcing supplies or talent or capability outside of your borders, or you're a global company from day one when you get started.
• 6:06
  Speaker 3: You're either sourcing supplies or talent or capability outside of your borders, or you're selling your capability outside of your borders, and when you do that, you might be getting paid in dollars or yen or euro or what have you.
• 6:17
  Speaker 3: And your local bank certainly isn't the solution for that.
• 6:19
  Speaker 3: So our customers use Payoneer as their international account to get paid into for their international accounts receivable, and then those same customers have international accounts payable and what they do is use Payoneer's credit cards and debit cards and payment products to manage those international expenses.
• 6:37
  Speaker 3: And, as I said a moment ago, we have about $80 billion or so over that coming into the Payoneer accounts and, at last earnings, we had $7 billion of customer funds held in balance, and so it just indicates the trust our 2 million active customers have in the Payoneer platform is they're receiving their funds, they're using it to manage their accounts payable and they're holding the funds with us.
• 7:02
  Speaker 2: Well, what would you say differentiates you from your competitors?
• 7:05
  Speaker 2: Or maybe explain what do people do that don't use Payoneer?
• 7:08
  Speaker 2: How would they accomplish what you're talking about?
• 7:11
  Speaker 3: Yeah, so it's interesting.
• 7:12
  Speaker 3: It's a great question because really we are a seartaker from local banks at the last mile.
• 7:18
  Speaker 3: So the network we've built is licenses around the globe, critically important bank relationships around the globe, critically important bank relationships around the globe to deliver funds last mile.
• 7:28
  Speaker 3: A technology stack that enables rapid, exceptionally fast movement of funds and money around the globe and a suite of software products that wrap around that, that make doing business easy.
• 7:40
  Speaker 3: And I think you probably would agree, the payments market is big enough that there's enough at the buffet that everybody can eat.
• 7:46
  Speaker 3: So it's not really a winner-take-all market.
• 7:50
  Speaker 3: It's a focus on segments of customers super serve the hell out of them, give them what they need and they reward you with their volumes and loyalty, which obviously delivers for our shareholders.
• 8:02
  Speaker 3: We largely take share from local banks.
• 8:05
  Speaker 3: The alternatives would be to use, frankly, the technology that existed when our parents were running businesses 1970s level, wait three weeks, hope to get paid and pay exorbitant fees in the process.
• 8:17
  Speaker 3: We're innovative, at the front of the market, bringing speed and convenience to customers around the globe, and really really good at doing that.
• 8:27
  Speaker 2: And you mentioned earlier that you made a pivot from the original business.
• 8:31
  Speaker 2: What drove that decision?
• 8:33
  Speaker 3: I think pivot it maybe is not exactly the right word, Chris.
• 8:36
  Speaker 3: We have this great marketplace payouts business, which is a $300 billion market where we have 20% share, but it's a $300 billion market when you look at the multi-trillion dollar B2B payment space, where we have single digit share in a few markets but less than 1% sort of globally.
• 8:54
  Speaker 3: The opportunity for the next decade of growth is so substantial and what we see in our customers is that, as we've moved up market and what I mean by that is, instead of customers who are a million dollar a year turnover businesses to $30 million a year turnover businesses they actually need more and more of our products and services.
• 9:16
  Speaker 3: Our net revenue retention is stronger and stronger with our larger cohort of customers, and so, by moving into the B2B space, not only is the addressable size of the pie bigger, but our net revenue retention is stronger, Our revenue per customer is greater and the number of products those customers are using is more and more, and that really feels like the powerful part of our value prop is to support businesses that are underserved by the multinational banks but have all the complexity of multinational companies.
• 9:52
  Speaker 2: Okay, banks, but have all the complexity of multinational companies.
• 9:54
  Speaker 2: Okay, and you mentioned earlier you talked a little bit about, like, the macro events and how you guys have been able to push through those and continue to grow.
• 9:59
  Speaker 2: But you know, you know, and, as a payments person, one of the things we always worry about is the regulatory environment, compliance, licensing, all of those things.
• 10:08
  Speaker 2: And you guys are not doing that just in one country, you're doing it in all these countries.
• 10:12
  Speaker 2: So curious is your thoughts on that how do you manage that big of an effort?
• 10:17
  Speaker 3: You know, we operate in difficult to operate parts of the globe and do so with a very intense focus on doing it as well as we possibly can and improving.
• 10:27
  Speaker 3: But we believe our relationship to regulators and banks is part of the moat that helps to build the brand and trust of Payoneer, and so we announced that we had acquired a PSP in China.
• 10:39
  Speaker 3: That's a strategic move We've shared that we've applied for the appropriate licenses and relationships to continue to build a regulatory shell around Payoneer that our customers and the partners we do business with can trust.
• 10:52
  Speaker 3: And that is a super priority of ours, because I think people look at the volumes of money moving around the globe and think, oh wow, I want to get myself a piece of that, but don't understand the responsibility that comes with it.
• 11:14
  Speaker 3: And we take those responsibilities as deeply important.
• 11:19
  Speaker 2: And you recently had an announcement about your relationship or partnership with Stripe.
• 11:24
  Speaker 2: Can you talk about that for a minute?
• 11:26
  Speaker 3: Yeah, so this came out of our, if you think, sort of in a big picture.
• 11:29
  Speaker 3: We are helping customers who sell on marketplaces Amazon, ebay, etsy, what have you.
• 11:40
  Speaker 3: We're helping customers sell B2B, wholesale orders around the globe, and lots of our global customers actually sell direct to consumers and we built a direct to consumer checkout business that got to a billion dollars of volume.
• 11:48
  Speaker 3: So we saw the product market fit and the opportunity and the team leading that effort recognized that we wanted to accelerate our capabilities really quickly and the fastest way to do that was to partner with Stripe and leverage their best-in-class technology with our global distribution and incredible service model.
• 12:07
  Speaker 3: And so we've announced that and we're excited about the prospect there, which is, you know, we want 100% of someone's accounts receivable in their Payoneer account and 100% of their accounts payable using Payoneer tools.
• 12:19
  Speaker 3: And if building our ecosystem of partnerships with Stripe or MasterCard or fill in the blank potential partner, we think that's a better way to serve customers.
• 12:29
  Speaker 2: Well, let's switch gears a little bit and talk about you.
• 12:32
  Speaker 2: So, if you don't mind, walk us through your career journey how you got to Payoneer, maybe where you started and how you even got here.
• 12:38
  Speaker 3: Well, I started on 9th Street in Branch Village in Washington Square Park, so I was an English major.
• 12:44
  Speaker 3: This is a dream come true to work at Payoneer.
• 12:47
  Speaker 3: It's an extraordinary group of people.
• 12:49
  Speaker 3: I've been an entrepreneur my whole life.
• 12:51
  Speaker 3: I was on the team that helped create Arizona Iced Tea, the beverage company.
• 12:55
  Speaker 3: I led marketing for the expansion of Starbucks across east of Chicago.
• 13:00
  Speaker 3: When that was happening.
• 13:02
  Speaker 3: I was on the team that really helped build and think about what the first wave of the internet was.
• 13:07
  Speaker 3: When I was at Aboutcom in 98, 99, and 2000, which was an extraordinary journey.
• 13:12
  Speaker 3: Then went to Ford Models, the fashion talent firm, and modernized that business, which was a really interesting experience and taught me the value of platforms Both.
• 13:23
  Speaker 3: About was a platform to empower content creators.
• 13:27
  Speaker 3: Ford Models was a platform to empower people in the fashion industry and then started a firm called OpenSky to help small businesses sell on the internet and ultimately sold that to Alibaba Group, where I went to lead the modernization transformation of Alibabacom, which is, you know, when I got there was $800 million of revenue and $200 of EBITDA.
• 13:49
  Speaker 3: When I left it was $3.5 billion of revenue and $800 of EBITDA.
• 13:51
  Speaker 3: When I left it was three and a half billion of revenue and 800 of EBITDA, really the fastest growing, most global part of the Alibaba franchise.
• 13:57
  Speaker 3: And that's when I met Scott Gallat, who was my predecessor here, and we were taking a walk in Central Park during COVID, like two middle-aged dads who are obsessed with cross-border trade and small businesses, and we're taking a walk in the park.
• 14:10
  Speaker 3: I was like, hey, Scott, you know, I think I'm leaving Alibaba.
• 14:14
  Speaker 3: I'm not sure what I'm going to do next.
• 14:15
  Speaker 3: And he said, well, why don't you take my job?
• 14:16
  Speaker 3: And I was like that sounds like the best job in the world.
• 14:19
  Speaker 3: I'd love it.
• 14:20
  Speaker 3: And said yes, on the spot.
• 14:22
  Speaker 2: That's awesome.
• 14:22
  Speaker 2: So what was it about?
• 14:27
  Speaker 2: Payoneer, you so much.
• 14:28
  Speaker 3: Well, the culture of Painter is extraordinary, right Like this.
• 14:30
  Speaker 3: This is a company of entrepreneurs for entrepreneurs, and so we are.
• 14:35
  Speaker 3: You know we have 2 million customers in every, who speak every language, sleep in every country, have grew up in every tradition you can imagine, so there's something very empowering about being in service of other people who are trying to make the world a better place for themselves and their families.
• 14:51
  Speaker 3: Like that's just like jump out of bed in the morning stuff.
• 14:57
  Speaker 3: So that was one.
• 14:57
  Speaker 3: The second is it's a big challenge to join a firm in its 16th, 17th year, responsible for modernizing, transforming it and re-energizing growth and profitability in an industry you haven't worked in before.
• 15:10
  Speaker 3: It requires an equal combination of chutzpah, which is Yiddish for courage, and just curiosity, and I love helping other businesses be successful, and at Payoneer we get to touch lots of companies and help them achieve what they're trying to achieve, and it's working, which is really nice.
• 15:29
  Speaker 3: The team we've assembled here is a combination of insurgent entrepreneurs you know extraordinary payments people, great deal, makers and innovators, and the orchestra is playing pretty nicely together these days, and so I feel like this next decade for Payne is going to be a great one.
• 15:47
  Speaker 2: That's awesome.
• 15:48
  Speaker 2: That's awesome.
• 15:48
  Speaker 2: So what are some things you're passionate about?
• 15:50
  Speaker 2: Maybe one work-related passion and one personal passion.
• 15:54
  Speaker 3: So the work passion for me is I like to champion the underdogs.
• 15:57
  Speaker 3: So what we did at Payoneer is we created a top talent program where, when I first joined, we're in our third or fourth cohort, where we take high potential, high impact people who are the future leaders of the company, that maybelong curriculum about the company and opportunity to inflect and influence the business we're building.
• 16:21
  Speaker 3: And it's cross-functional, it's global.
• 16:24
  Speaker 3: So your people from Vietnam and Brazil and China and Israel and the US all coming together as a cohort to grow and I love that and I think it's awesome and it's customer-centric and employee-centric and it's, I think, showing really great progress for us.
• 16:37
  Speaker 3: Centric and employee centric and it's, I think, showing really great progress for us.
• 16:41
  Speaker 3: And outside of work, besides my family and my kids, which I adore, I'm someone who likes to spend a lot of time in museums and explore art and creativity and understand the creative process and where people seek inspiration and how they take that inspiration to create things.
• 16:57
  Speaker 2: So when you travel, do you take extra time to visit places like that?
• 17:00
  Speaker 3: I do.
• 17:00
  Speaker 3: I actually do.
• 17:02
  Speaker 3: If I'm lucky, I try to get an hour in whatever museum, wherever I am in the world In the next couple of weeks.
• 17:07
  Speaker 3: I'll be in Boston, london, Tel Aviv and San Francisco in the next three weeks, and so I'm hoping that there'll be a 45-minute pit stop along the way in each of those destinations.
• 17:20
  Speaker 2: Nice, nice.
• 17:21
  Speaker 2: Well, john, if someone comes to you and they're interested in maybe a career change into payments or maybe they've just graduated from college, they look at fintech as an exciting industry and they want to build a career there what kind of advice would you give them to help them be successful?
• 17:36
  Speaker 3: I think the first thing is there is no substitute for really studying and learning and being curious, right.
• 17:43
  Speaker 3: So I think the payments industry is, in a funny way, kind of insular, where payments people only talk to payments people, and I actually think the industry benefits when career switchers come in and learn and then ask why.
• 17:57
  Speaker 3: Career switchers come in and learn and then ask why, keep asking why, why do we do it this way, why is the firm set, why were these the rules?
• 18:06
  Speaker 3: And that's one of the reasons I think the stable coin innovation is pretty exciting because some of those innovators now in the context of the Genius Act have been asking why and talking about innovative solutions that may bring value to customers.
• 18:17
  Speaker 3: In the past that hasn't been there and those why questions, I think, lead to breakthroughs.
• 18:21
  Speaker 3: So everyone I think I would suggest is you know and then listen more than you speak in the beginning.
• 18:27
  Speaker 3: It's always you save your powder for when you know what you're talking about, not for when you're, you know, shooting from the hip.
• 18:34
  Speaker 2: Well, one final question before we go.
• 18:36
  Speaker 2: Let's talk about the future a little bit.
• 18:38
  Speaker 2: Where do you see payments headed?
• 18:40
  Speaker 2: Where do you see Payoneer headed?
• 18:41
  Speaker 3: Just curious about your outlook on the future thinks about the pipes and the plumbing until they stop working, and I actually think payments can be a lot more than pipes and plumbing.
• 19:00
  Speaker 3: It can be value accretive to customers and we're certainly seeing that in our business when we see our net revenue.
• 19:05
  Speaker 3: Retention numbers for our best cohorts of customers are really strong, and they're strong because they're using both payment rails and software together, and so I think the sort of narrow definition of what a payments firm is, I think, is probably long-term going to expand more broadly.
• 19:23
  Speaker 3: So that'd be one area.
• 19:24
  Speaker 3: Another is certainly in the innovation in stable coins and blockchain technology for treasury.
• 19:30
  Speaker 3: Work, I think, is we've shared in our last earnings.
• 19:33
  Speaker 3: We're leveraging our massive scale and incredible last mile to begin to explore ways to deploy things in a pragmatic way, and that's underway.
• 19:42
  Speaker 3: I think that's exciting.
• 19:43
  Speaker 3: We've added a workforce management component to our offering, which is fantastic, where we're actually helping people manage the employees and contractors outside of their home market in a way that shows you can do business globally with your payments and your employees in one platform at Payoneer.
• 20:02
  Speaker 3: I think that's pretty exciting for us.
• 20:03
  Speaker 2: Okay, all right.
• 20:04
  Speaker 2: Well, john, before we wrap up, just want to open the floor, see if there's anything we may have missed, anything else you wanted to cover before we closed up the show?
• 20:13
  Speaker 3: Yeah, I think one of the things about Payoneer and certainly my approach and our approach at Payoneer has been this sort of innovation agenda is in full swing here and taking a business like Payoneer that had experienced hyper growth through the pandemic and then 5% growth right after we re-accelerated that 24 or 20% growth business, we were solidly a mid-teens grower in the first half of this year and, given all the macro dynamics that have gone on with tariffs and the like, we feel really great about our execution and performance and for the young people who are paying attention out there, the water is warm up into payments.
• 20:53
  Speaker 3: It's a lot of fun here, even if you come from outside the industry, because they're smart people looking for creativity and we certainly are.
• 21:00
  Speaker 3: So we have open jobs Apply.
• 21:02
  Speaker 2: Awesome, awesome.
• 21:03
  Speaker 2: Well, john, thank you so much for being on the show today.
• 21:05
  Speaker 2: I know your time is very valuable, so, again, thank you so much for being here today.
• 21:09
  Speaker 2: Greg, thanks for having me All right, and to all you listeners out there, I thank you for your time as well, and until the next story.
• 21:16
  Speaker 1: Thank you for joining us this week on the Leaders in Payments podcast.
• 21:19
  Speaker 1: Make sure you visit our website at leadersinpaymentscom, where you can subscribe to the show and where you'll find our show notes.
• 21:26
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