Latest / Leaders In Payments / Dan Pinto, CEO & Co-Founder of Fingerprint | Episode 282

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Dan Pinto, CEO & Co-Founder of Fingerprint | Episode 282 · 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: It is something that we're trying to do, especially with the most recent round of funding, to make it clear that we help identify devices, both good and bad, and create additional value.
• 0:27
  Speaker 2: Right, we stay focused on just the fraud space.
• 0:30
  Speaker 2: Usually it's about preventing losses, but the more that we can go away from that and show them that there's higher value like with our plaid use case, for example the more that they are both willing to work with us, the more they're willing to spend on the deals that they do with us, because there's higher economic value.
• 0:51
  Speaker 3: That was Dan Pinto, the CEO and co-founder of Fingerprint, and he is my special guest on this episode, episode 282 of the Leaders in Payments podcast, and I'm your host, greg Myers.
• 1:00
  Speaker 3: Over 6,000 companies trust Fingerprint's highly accurate real-time device intelligence to determine the true intentions of every user, even if they're anonymous.
• 1:09
  Speaker 3: Dan and I talked about Fingerprint, the various use cases, with payments fraud being the most common.
• 1:15
  Speaker 3: We also talked about what makes Fingerprint unique in this space, as well as his passion for entrepreneurship.
• 1:21
  Speaker 3: We've got a great episode ahead, so let's get started.
• 1:23
  Speaker 3: Hi Dan, thank you for being here and welcome to the Leaders in Payments podcast.
• 1:33
  Speaker 3: Thanks for having me, absolutely, so let's dive right in.
• 1:36
  Speaker 3: If you don't mind, tell our audience a little bit about yourself, maybe where you grew up, where you went to school, where you currently live, a few things like that, and then we'll circle back to your professional journey in a few minutes.
• 1:45
  Speaker 2: Sure sounds great.
• 1:46
  Speaker 2: So I grew up in Miami, came to Chicago for college, studied economics, but the economy was a little rough when I graduated so I ended up going into software engineering instead of my original plan to go into consulting or finance.
• 1:58
  Speaker 2: But I really liked it, enjoyed a lot working with startups and it actually led to eventually starting my own company, before this called Machinio, and then eventually starting this company, fingerprint.
• 2:08
  Speaker 3: Okay, well, let's go ahead and dive in and talk about Fingerprint.
• 2:11
  Speaker 3: So tell the audience what Fingerprint does.
• 2:14
  Speaker 2: Sure.
• 2:14
  Speaker 2: So Fingerprint focuses on uniquely identifying devices in web and in mobile apps, and that's basically it.
• 2:21
  Speaker 2: We provide that as a service via API for different businesses, but that in and of itself is very powerful in what we actually solve for customers.
• 2:29
  Speaker 2: So we focus on preventing fraud, improving returning user experience, personalization, any situation where knowing more about what device is visiting your website.
• 2:38
  Speaker 2: We provide that as a service, and who would your?
• 2:42
  Speaker 3: typical customer be.
• 2:44
  Speaker 2: Yeah, so usually it has to be someone that is willing to build on top of our API.
• 2:47
  Speaker 2: So it's more tech forward business, usually higher scale so that it's worth putting developer time from their side in terms of building on top of our API.
• 2:56
  Speaker 2: So companies like Dropbox, for example, uses to protect their login page for businesses like Plaid uses to improve their returning user experience.
• 3:03
  Speaker 2: So it's mostly those higher scale businesses that want a much higher level of accuracy in identifying devices than our competitors.
• 3:11
  Speaker 3: And how much of the uses for like payment fraud.
• 3:14
  Speaker 2: So a decent amount is definitely for payment fraud.
• 3:17
  Speaker 2: It's about 40% of our business, so some of those customers are like checkoutcom.
• 3:22
  Speaker 2: For example.
• 3:22
  Speaker 2: Stripe uses our open source library, so several businesses in the payment space definitely use us to help prevent people from doing things like card testing, so testing new credit cards against endpoints to see if any of them are working all the way to full fraud in terms of buying something, having it shipped to maybe the customer's house and then getting intercepted in the process.
• 3:42
  Speaker 3: So 40% payment fraud is the rest sort of around the customer experience.
• 3:47
  Speaker 2: So it actually varies.
• 3:48
  Speaker 2: So one interesting thing about the type of business that we have is because it's an open API and one of our most important motions on the website is that you can come directly, sign up, put in a credit card and start using it without any restrictions.
• 4:00
  Speaker 2: There's actually a wide variety of use cases, so payments is definitely one of our top ones, if not the highest one as a percentage, but everything else is skews to a long tail of a variety of different use cases.
• 4:10
  Speaker 2: And how big is the company?
• 4:12
  Speaker 2: So we're about 100 people.
• 4:14
  Speaker 2: We've raised 77 million to date and still growing very quickly.
• 4:18
  Speaker 3: Yeah, and I saw on your site a press release around raising 33 million in October, a series C round.
• 4:25
  Speaker 3: So first congratulations on that.
• 4:28
  Speaker 3: In such a tough environment and maybe question around that how do you plan on using those funds?
• 4:35
  Speaker 2: Yeah, I think it's definitely a combination of us doing pretty well, you know, due to the focus on accuracy and providing value to our customers, has led to pretty good growth, but also definitely strong partnership with our investors.
• 4:47
  Speaker 2: They really believe in us and are helping us accelerate to the next level.
• 4:50
  Speaker 2: So the main way that we're planning on using our funds is to dive deeper into the enterprise.
• 4:55
  Speaker 2: So when we started the business back in 2019, 2020 timeframe, we focused on going after developers so bottoms up motion, people putting in credit cards into the website to actually get access to the API.
• 5:07
  Speaker 2: But what we saw over time was that the bigger the business in terms of transaction volume, the more value we provided for them, because they could see more clearly you know, the value of the increased accuracy that we provide.
• 5:18
  Speaker 2: So we're going to invest significantly more into that.
• 5:21
  Speaker 2: It's a relatively new motion for us going pretty well so far, but it takes a lot of resources right, because with the bigger the business, the more time it takes to talk to the right decision makers, provide them the resources to help the people inside of the company you know understand the value, like, for example, one thing that's been really interesting to me that I never thought about before working on the startup is that even if you have a person inside of the company that is a strong advocate for your business, they still have to convince a number of people, and that number of people inside the organization scales significantly at the bigger the organization.
• 5:53
  Speaker 2: So we have to empower them to basically creating things like collateral for them to share internally, for them to convince people inside of their own company to do a POC with us or to purchase it in the end.
• 6:05
  Speaker 3: Yeah, so the B2B sales cycle is much, much longer and more complicated.
• 6:11
  Speaker 2: Yeah, definitely, and it's basically non-linear.
• 6:13
  Speaker 2: So the time like multiplies to the end, the larger the company where, if we have a small business with like 50 people, they can have a co-founder, cto, put it in a credit card, start using it directly, get value like the next day.
• 6:26
  Speaker 2: For the bigger businesses it takes months and some sales cycles even took over a year so far.
• 6:32
  Speaker 3: Okay, and is it basically a SaaS model in those cases?
• 6:37
  Speaker 2: Yeah, correct.
• 6:38
  Speaker 2: So another thing that I think we've done a pretty good job of is staying focused and not being distracted by even what the biggest customers ask us to build.
• 6:45
  Speaker 2: So most of our interactions with customers are pretty uniform and similar, where they purchase a certain number of API calls, which are identification events, essentially, and then they do everything else beyond that point.
• 6:56
  Speaker 2: We've had a lot of requests in the past to build some specific feature for a customer, build some things that only a small percentage of our market wants, but we've remained very disciplined in focusing on being the highest accuracy solution for identifying devices on the web.
• 7:13
  Speaker 3: Okay, and obviously you're not the only company out there that is doing that.
• 7:18
  Speaker 3: So what would you say differentiates you from your competitors out there?
• 7:22
  Speaker 2: This actually ties back to the previous answer.
• 7:24
  Speaker 2: So most of the other competitors have been tempted by what those customers are requesting and have built deeper into each of the use cases.
• 7:33
  Speaker 2: So, for example, they might focus on payments specifically within like one vertical and create features for that vertical.
• 7:39
  Speaker 2: But we make sure that we stay focused on just the accuracy right.
• 7:43
  Speaker 2: So we do deep research into what information we can pull from devices, how we process that information and just provide that to the businesses and then we essentially push the responsibility for the domain specific problem solving to the business.
• 7:56
  Speaker 2: So as a result, we're able to maintain significantly higher accuracy because of that research versus needing to figure out an entire new surface area of problem solving, which can actually be significantly more complicated.
• 8:08
  Speaker 2: Because if you think about what's different about every business, about every use case, we have 10 plus different use cases, 10 plus different industries.
• 8:15
  Speaker 2: That complexity multiplies very quickly and for our competitors they've definitely invested into that and it's a working strategy for them.
• 8:21
  Speaker 2: But the strategy for us is to stay focused on the one thing that we do really really well and maintaining that to a much higher level than anyone else is able to.
• 8:29
  Speaker 3: Do you often feel like you get bucketed into sort of that fraud prevention bucket?
• 8:34
  Speaker 2: Yeah, so definitely it's.
• 8:35
  Speaker 2: If we include payments and account takeover and everything else, it's by far our biggest percentage of the business.
• 8:42
  Speaker 2: But it is something that we're trying to do, especially with the most recent round of funding, to make it clear that we help identify devices, both good and bad, and create additional value right.
• 8:52
  Speaker 2: So if we stay focused on just the fraud space, usually it's about preventing losses, but the more that we can go away from that and show them that there's higher value, like with our plaid use case, for example, the more that they are both willing to work with us, the more they're willing to spend on the deals that they do with us because there's higher economic value.
• 9:09
  Speaker 2: That's been one of our main things that we focus on with our customers is trying to estimate the economic value that we provide for them, and it's usually a 10x relative to what they pay us, and that makes the entire process much smoother if we can show that.
• 9:20
  Speaker 3: I love the fact that you're not just you're not just out there saying we can help you save money.
• 9:25
  Speaker 3: You're talking about we can help you make more money.
• 9:29
  Speaker 3: We can help you increase and improve your customer experience.
• 9:32
  Speaker 3: And in fact, there was one thing I read, you know, I think it was one of your customers saying that the ability to identify a device through your solution has like tripled the amount of personalized experiences they can provide now, because they know really who it is.
• 9:49
  Speaker 3: That's coming back.
• 9:50
  Speaker 2: Yeah, yeah, exactly.
• 9:51
  Speaker 2: It makes a huge difference.
• 9:52
  Speaker 2: And maybe, to use an even more specific example, for payments.
• 9:56
  Speaker 2: So one common use case that we've started to see even more uptake for recently is in Europe there's a requirement called PSD2 or SCA Strong Customer Authentication.
• 10:06
  Speaker 2: That essentially means that you have to send an SMS to factor code every time you purchase something or move money around.
• 10:12
  Speaker 2: But the way that the law is written is actually written pretty well because it's agnostic to the technology.
• 10:16
  Speaker 2: They can actually use fingerprint instead, because our accuracy is high enough and it defines one of the three characteristics that they need for completing it and fits into the same category as the SMS.
• 10:26
  Speaker 2: We can significantly improve the friction.
• 10:29
  Speaker 2: So if you imagine someone in Europe going to buy something and then they don't have their phone with them but they're on their laptop, they need to go look for it and some percentage of people will not find it or will lose interest because it was an impulse purchase.
• 10:40
  Speaker 2: But with using us, we're able to identify the device seamlessly in the background of your technology and then remove that requirement in 99% of the cases, while still maintaining the same level of security for the business and meeting the legal requirement in Europe.
• 10:57
  Speaker 3: That's pretty fascinating Since you know, obviously a large portion of your use cases are around payments fraud and in the payments industry.
• 11:05
  Speaker 3: Where do you see the industry headed, say, in the next three to five years, and what are those trends that you know are going to, you know, affect your business in some way?
• 11:16
  Speaker 2: Yeah, sure.
• 11:16
  Speaker 2: So, as you know, predicting the future is pretty difficult, especially the farther out that we go.
• 11:20
  Speaker 2: But in the short term, like a few years, it's definitely going to be a lot more impacted by the tools that are more readily available in the last couple of years for creating fraud on different websites.
• 11:31
  Speaker 2: So things like generative AI most recently have been very effective in fighting against other anti-fraud solutions because it creates realistic looking information, right.
• 11:41
  Speaker 2: So the things that you can ask it to generate for you at scale automatically empowers fraudsters to be able to do things that are not caught by certain systems.
• 11:50
  Speaker 2: So certain systems focus on trying to see if it's legitimate.
• 11:54
  Speaker 2: So, for example, synthetic fraud is a big problem in payments, where you use a stolen credit card and then you pretend that you know you have some new identity that doesn't actually exist.
• 12:03
  Speaker 2: Certain solutions look for methods of detecting whether it's synthetic, but with generative AI you can make it look so realistic that those solutions will not be able to detect it, which is good for our business, because we still are able to detect the devices behind the scenes.
• 12:16
  Speaker 2: So, regardless of whether it's synthetic fraud or really really good looking, synthetic fraud using generative AI still requires a physical device to submit the request and we can identify those patterns and help prevent those issues in the future.
• 12:28
  Speaker 2: Then in the longer term, a similar principle applies in that we won't really be able to predict let's say, like 10 years from now what the methods of fraud are going to be, but I can confidently say that they still need to submit those requests to via device, either you know, a laptop through the web, or phone through the web or a mobile device, and ultimately, if we can identify those devices uniquely, we can detect those patterns of even super realistic, unusual behavior and then bucket them together and then provide that to businesses to more intelligently prevent those attacks in the future.
• 13:00
  Speaker 2: So we've designed our system to be as future proof as possible via our approach.
• 13:05
  Speaker 3: I know, or at least I've read you know companies who talk about being able to tell if you are the user of the device by you know how you use the device.
• 13:16
  Speaker 3: Is that part of what you do as well?
• 13:19
  Speaker 2: That's more of a behavioral type approach.
• 13:21
  Speaker 2: So we don't use that many behavioral techniques today.
• 13:24
  Speaker 2: It's something that's on our roadmap to add in the future, but definitely is an interesting method for sure, because if things are unusual so for example, if it's an automated attack, like a bot trying to try multiple credit cards the way that the mouse moves, etc.
• 13:38
  Speaker 2: Will not be as natural.
• 13:39
  Speaker 2: So we will be adding that in the future.
• 13:41
  Speaker 2: We don't focus on that today because we catch a high enough percentage with just detecting that there's too many attempts within like a short period of time and more simpler techniques that you could categorize as behavioral, but we don't really.
• 13:53
  Speaker 2: But eventually we do definitely want to add, like the mouse wiggle detection and all that kind of stuff.
• 13:59
  Speaker 3: Okay, cool.
• 14:00
  Speaker 3: So let's switch gears a little bit and talk about you.
• 14:02
  Speaker 3: So tell us about your journey to your role there.
• 14:05
  Speaker 3: Maybe tell us the founder's story and maybe you know talk about why you got into this business, what was attractive about it.
• 14:12
  Speaker 3: Maybe just give us that background.
• 14:14
  Speaker 2: Yeah, sure.
• 14:15
  Speaker 2: So the way I got into this was in my previous startup, machinio, one of the first software engineers that I hired.
• 14:20
  Speaker 2: His name is Valentin.
• 14:21
  Speaker 2: He created Fingerprintjs, which was an open source library at the time, and that's what actually this business was based off of.
• 14:27
  Speaker 2: So he had been working at a coupon company before Machinio, so learned a little bit about coupon fraud and decided to try and create an open source library for browser fingerprinting and had really good adoption during the time that we worked at Machinio.
• 14:42
  Speaker 2: He left in 2019 after we got acquired to try and, you know, basically be the first founder of a building a business from the open source library.
• 14:49
  Speaker 2: And then I actually joined him in January 2020 after leaving the acquiring company prototype that he had built, which was beyond what the open source library was capable of, really excited me about the potential to build a business.
• 15:00
  Speaker 2: So I joined him and things grew really quickly from that point.
• 15:03
  Speaker 2: As I hinted at earlier in the conversation, the reason that we got to where we are today is that really deep focus on solving one problem.
• 15:11
  Speaker 2: If we tried to solve too many things in the beginning with the limited resources that we had started with, where it was just the two of us, we definitely wouldn't be talking today.
• 15:18
  Speaker 2: It was recognizing from the beginning that the key value of that open source library and eventually the key value of our service was in the unique device.
• 15:27
  Speaker 2: Identification at scale helped us get to where we are today.
• 15:31
  Speaker 3: Okay, given the timeframe when you started the company, did the pandemic affect things one way or the other in your business, especially given it was the early days?
• 15:42
  Speaker 2: Yeah, it was definitely very scary because in the beginning, we thought that likely our business was going to die and that certain signs looked really bad, because some of the early signups that we had in January, february, march, 2020 were around travel companies especially.
• 15:55
  Speaker 2: They were dealing with like travel fraud and then they all just canceled their accounts because there's no one traveling and they needed to cut their spend as much as possible.
• 16:02
  Speaker 2: So we got really worried at that point, but ultimately, because of that bottoms up motion, anyone could come to the website.
• 16:07
  Speaker 2: We just ended up seeing shifts in the market and it actually ended up being a really strong tailwind for our business, as everyone started buying a lot more things online more than they used to in the past.
• 16:17
  Speaker 2: Fraudsters also increased the volumes of their attempts, so we actually had a big increase in inbound business and people trying to prevent fraud in payments and in other industries as well.
• 16:27
  Speaker 2: So it ended up being a huge tailwind for our business and helped us get our first seed funding as well during the pandemic.
• 16:34
  Speaker 3: Okay, all right.
• 16:35
  Speaker 3: Well, what are some things you're passionate about?
• 16:37
  Speaker 3: So, maybe one work related passion and one personal passion.
• 16:40
  Speaker 2: Sure.
• 16:41
  Speaker 2: So I think I mean being an entrepreneur.
• 16:43
  Speaker 2: They kind of tie together, interestingly enough, where if you want to start a company, you kind of have to spend a crazy amount of time on it, so the work itself has to be a passion.
• 16:52
  Speaker 2: But for me, one thing that I really like to do, almost like subconsciously, is that I really like to encourage other people to be entrepreneurial.
• 16:59
  Speaker 2: So whenever I hear anyone has even like the slightest interest in starting their own company, I try to encourage them as much as possible, which is probably bad because maybe a lot of people are not a good fit for starting their own business, but either way, I still really like it.
• 17:12
  Speaker 2: Encourage as much as possible and, you know, give them pointers about things that I struggled with in the beginning common mistakes and stuff and it always makes me extremely excited and it feels really rewarding when one of them actually does start the you know a business and then does something around it.
• 17:25
  Speaker 2: And then I'm going to do this again because I've got some kind of I don't know, maybe like an illness or something that makes me really interested in entrepreneurship.
• 17:31
  Speaker 3: There's a fine line between passion and being taking over your life and being, as you call it, an illness.
• 17:36
  Speaker 3: So I think there's definitely a fine line there.
• 17:38
  Speaker 3: So final question if someone's coming to you maybe they want to come to work at Fingerprint and they're talking to you and you know they want to get into this payments industry and this space, what advice would you give them, you know, to help them be successful in payments?
• 17:55
  Speaker 2: Yeah, definitely.
• 17:56
  Speaker 2: I think the answer actually is a little broader and comes back to the most common answer that I give for anyone interested, even in entrepreneurship.
• 18:03
  Speaker 2: I think a common mistake that people make whenever they're trying to get into a new space whether it's payments or entrepreneurship generally is that they think that they need to come up with like some new idea or it has to be like unique or something in some way.
• 18:16
  Speaker 2: But the truth of the matter is that in business, there's a lot of problems that are unsolved.
• 18:22
  Speaker 2: So you should try to find a problem, so talk to someone in the payment space and find out, like you know, what challenges they're experiencing today and see if there's some way that you can solve it for them.
• 18:32
  Speaker 2: Right, and you can use some of your previous you know industry expertise of what you worked on in the past to try to make analogies.
• 18:38
  Speaker 2: But ultimately, looking at everything that people on the other side that you're talking to are struggling with and seeing if you can help them solve those problems is what leads to success both in payments and in entrepreneurship.
• 18:50
  Speaker 3: Okay.
• 18:51
  Speaker 3: Well, dan, we've covered a lot of ground, obviously, about you and your background and the company and the industry as a whole.
• 18:57
  Speaker 3: Is there anything else you'd like to add before we wrap up the show?
• 19:00
  Speaker 2: No, I think we did a great job of covering most of the stuff that I wanted to cover.
• 19:03
  Speaker 3: Awesome.
• 19:03
  Speaker 3: Well, dan, thank you so much for being on the show today.
• 19:06
  Speaker 3: I know your time is very valuable, so I really appreciate you being here.
• 19:08
  Speaker 3: Yeah, thanks a lot, greg, and to all you listeners out there, I thank you for your time as well, and until the next story.
• 19:16
  Speaker 1: Thank you for joining us this week on the Leaders in Payments podcast.
• 19:19
  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.
• 19:26
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