Latest / Leaders In Payments / Arik Shtilman, CEO & Co-Founder of Rapyd | Episode 379

Transcript

Arik Shtilman, CEO & Co-Founder of Rapyd | Episode 379 · 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, Eric Stillman, the CEO of Rapid.
• 0:26
  Speaker 2: So, Eric, welcome to the show.
• 0:27
  Speaker 2: Thank you very much for having me.
• 0:29
  Speaker 2: Absolutely so, Eric.
• 0:30
  Speaker 2: You were on the show back in October of 2022.
• 0:35
  Speaker 2: So we're going to do a little catch up and talk about what's been going on for the last two and a half years, but let's start talking about you a little bit.
• 0:43
  Speaker 2: So tell the 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.
• 0:49
  Speaker 3: My name is Arik Stilman.
• 0:50
  Speaker 3: I'm the CEO and one of the co-founders of Rapid.
• 0:53
  Speaker 3: 45 years old, based in Israel, grew up in Israel.
• 0:57
  Speaker 3: All of my life I live in Tel Aviv, which is basically the high-tech city of Israel, been traveling a lot due to my job at Rapid between all our offices, but I spend the majority of my time in Israel and I really like my job Okay so let's go ahead and talk about the company.
• 1:15
  Speaker 2: So for those in the audience that may not know about Rapid, tell our audience what Rapid does.
• 1:21
  Speaker 3: Sure so.
• 1:21
  Speaker 3: Rapid is a company in the fintech space that actually invented, in 2017, the concept fintech as a.
• 1:27
  Speaker 3: We provide an API and money movement capabilities as a regulated entity that allows other companies to build on top of us a variety of financial services applications.
• 1:54
  Speaker 3: It can be a checkout page on Shopify and all the way to a neobank that might be built on top of our platform.
• 2:00
  Speaker 3: This is what we do at Rappi, and who are your typical customers?
• 2:04
  Speaker 3: A customer is always a business.
• 2:06
  Speaker 3: It's never consumers, right?
• 2:07
  Speaker 3: So we're in the B2B space.
• 2:08
  Speaker 3: Customers of ours are companies such as Google, uber, going all the way down to a tiny startup or a mom and pop store that wants to collect payments, and so there's really not a specific vertical or anything that you focus on Could be any business.
• 2:22
  Speaker 3: It literally can be any business, but I would say that probably around 40% of what we do is related to commerce and marketplaces, both online and offline.
• 2:31
  Speaker 2: And obviously you're a global company, so there's really no preference where the company's located.
• 2:36
  Speaker 3: That's correct.
• 2:36
  Speaker 3: We operate in 106 countries across the globe and we literally can serve customers almost anywhere.
• 2:42
  Speaker 2: All right, well, let's catch up.
• 2:43
  Speaker 2: Talk about, maybe, what's been going on at Rapid for the last two and a half years, so you could talk about any new products, acquisitions, anything that's on your mind that maybe has happened in the last two and a half years.
• 2:54
  Speaker 3: Definitely so.
• 2:55
  Speaker 3: First of all, since October 2022, a lot of things changed right.
• 2:58
  Speaker 3: The world went down due to macroeconomic situations, interest rates.
• 3:03
  Speaker 3: Now it's starting to come back to what it used to be.
• 3:06
  Speaker 3: The company had to grow up significantly because of the macroeconomical climate and basically become profitable, which is completely different, you know, from the approach of 2022 of growth at all costs.
• 3:17
  Speaker 3: And we went through a very long process for two years up until we moved to profitability in Q4 2024.
• 3:23
  Speaker 3: So, literally in the last quarter of 2024, we moved to profitability in Q4 2024.
• 3:25
  Speaker 3: So, literally in the last quarter of 24, we moved to profitability In 2025, we're going to be profitable for the entire year for the first time.
• 3:32
  Speaker 3: It required, you know, massive changes in the way that the company actually thinks and the DNA and the operations, because, you know, shifting from growth at all costs to profitability is completely different 180 degrees approach.
• 3:44
  Speaker 3: So we went through changes double downing on some specific products that we have, double downing on some specific regions and countries where we saw more profitable operations.
• 3:54
  Speaker 3: For example, in the US, we actually reduced the number of merchants that we have that are US domestic and moved more into a coast border Asia Pacific, latin America type of merchants where our margins are significantly higher than the domestic transactions in the United States Made a lot of changes from a headcount perspective, from recruiting hundreds of people on a yearly basis to basically not recruiting too many people and trying to keep the headcount stable.
• 4:19
  Speaker 3: We did it quite successfully over the last two years, getting into profitability in Q4.
• 4:23
  Speaker 3: We also announced a very large acquisition in August 2023 of a company called PayU, which is another company in the payment space, in $610 million cash deal.
• 4:33
  Speaker 3: This actually acquisition is only closing these days so, literally when we're recording this podcast, the deal is expected to close in a week or two due to a very long time that it took to get regulatory approvals, because the company is regulated and there is change of control of regulatory licenses close in a week or two due to a very long time that it took to get regulatory approvals because the company is regulated and there is change of control of regulatory licenses.
• 4:49
  Speaker 3: But we went through a very long process and I think that if you look at our revenue, we probably did 4x revenue over the last two years, quite a significant growth and still moving to profitability.
• 4:59
  Speaker 3: So this is how the last two years have been for us.
• 5:02
  Speaker 2: Okay, you talked about those macro environment.
• 5:05
  Speaker 2: Do you see that getting better?
• 5:07
  Speaker 2: Do you feel there's more opportunities coming in 2025?
• 5:11
  Speaker 3: Yeah, I think that the macro economical situation is definitely going to change significantly in 2025.
• 5:17
  Speaker 3: I think that, first of all, the fact that Trump won the election in the US pretty much gave the direction of where things are going, both on the macro political situation the war in the Middle East, the war in Russia and the Ukraine, the interest rates that will start going down and actually maybe adoption of cryptocurrency, which is pushing fintech also as part of becoming more a mainstream type of a tool.
• 5:39
  Speaker 3: So I think that, overall, the elections in the US definitely changed a lot of how the future we look for a company like Rapid.
• 5:46
  Speaker 3: We started to see it already in Q4 2024.
• 5:50
  Speaker 3: We definitely see it in the first month and a half in 2025.
• 5:53
  Speaker 3: And we hope that the trend will continue.
• 5:55
  Speaker 2: So let's talk about the competitive landscape a little bit.
• 5:58
  Speaker 2: How do you differentiate yourself in the marketplace?
• 6:01
  Speaker 3: So, first of all, it's very important to understand that, because we sell to a lot of different types of clients, every single client that comes to us might compare us to somebody else.
• 6:09
  Speaker 3: Right, If somebody comes to us and wants to build, for example, some kind of financial services offering in three different countries that includes wallets and issuing cards, collecting money they don't really have a single company to compare us to because we're pretty much the only ones that can do it in the market.
• 6:25
  Speaker 3: They might think, okay, should I use Rapid?
• 6:28
  Speaker 3: Or maybe I should go with Marketo, Payoneer and Stripe in order to try and build something on my own?
• 6:33
  Speaker 3: And there we literally win nine out of 10 times the business just because of the fact that we're a single provider, the tech stack and everything that we do.
• 6:40
  Speaker 3: On the other hand, we might be in a situation that somebody is just looking to do Visa, MasterCard card acquiring domestically in Europe, and then he will compare us to an Etienne, to a Stripe, to a checkout, to endless number of companies.
• 6:51
  Speaker 3: So we're trying to position ourselves as a type of a platform that you can build on top of anything that you want.
• 6:57
  Speaker 3: We have no code solutions for very small type of clients that don't have engineers and just want to start transacting and doing something.
• 7:04
  Speaker 3: And if you're a bigger company and you like to build your own tools, we have this type of a slogan that says build bold with rapid.
• 7:11
  Speaker 3: You can build a lot of amazing things on top of our API.
• 7:14
  Speaker 3: So we're mainly trying to position ourselves as an infrastructure and not as a niche product like an acquiring, issuing and stuff like this, and it works the majority of the times.
• 7:24
  Speaker 3: Clients know how to do the comparison.
• 7:26
  Speaker 2: How often do you end up doing a lot of advising or consulting for some of these clients on what they should be doing?
• 7:32
  Speaker 3: On a daily basis.
• 7:33
  Speaker 3: I would say our account management team is pretty much working as consultants.
• 7:38
  Speaker 3: I think around 60% of our year-over-year growth is coming from existing accounts, right?
• 7:43
  Speaker 3: So clients that we signed before 2025 will be responsible to around 60% of our growth in 2025.
• 7:49
  Speaker 3: And it's only because of account management and actually providing consultancy to our clients.
• 7:53
  Speaker 3: So working with them about optimizing their payment flows, getting into new markets, telling them what do we see as trends in the industries I think that these are our main things, right?
• 8:03
  Speaker 3: In the past, account managers were more like an escalation point inside an organization the client can complain to and then maybe it will start a fire drill mode.
• 8:11
  Speaker 3: But in our business, we don't believe in this model.
• 8:14
  Speaker 3: Right, you can put an email out to do this job.
• 8:16
  Speaker 3: You don't need an account manager.
• 8:24
  Speaker 2: The job of the account manager is actually to help the client to grow by educating him on things that we see from other clients that we serve.
• 8:27
  Speaker 2: Well, let's talk about a few trends maybe that are going on in the industry, and rarely do I have a discussion with a senior leader or CEO founder that we don't talk about AI.
• 8:36
  Speaker 2: So what's your view on AI?
• 8:38
  Speaker 2: How is Rapid leveraging AI and how do you think the industry might change based on AI?
• 8:43
  Speaker 3: First of all, it is a dramatic change to the industry.
• 8:46
  Speaker 3: I would say that I constantly tell my people that seeing AI now is like seeing the internet in 1998.
• 8:52
  Speaker 3: This is the magnitude of the situation and, from my perspective, financial services is probably one of the places where AI has the biggest impact immediately out of the gate.
• 9:00
  Speaker 3: I can tell you that we implemented AI in 2024 around compliance, compliance operations, financial operations, transaction monitoring and some of the support related tasks, and it was a dramatic impact right of reviewing onboarding requests of clients and reviewing manually hits that came up in transaction monitoring, moving it to completely AI-based.
• 9:24
  Speaker 3: That is done by a machine, 24 by 7, multi-language, with learning capabilities.
• 9:29
  Speaker 3: You know that it gets better literally on a daily and weekly perspective.
• 9:33
  Speaker 3: It reduces significantly the time that it takes us to onboard new clients.
• 9:36
  Speaker 3: It reduces the time that it takes us to ramp up the revenue of the client, because the tools speed up things and create also trust with the client.
• 9:44
  Speaker 3: It reduces the overhead of managing reconciliation and financial operations related tasks, which helps clients to basically be much smarter and happier with the solutions that they get.
• 9:54
  Speaker 3: So I think it is very dramatic on financial services because we're an industry in payments where the margins are not huge.
• 10:01
  Speaker 3: Right, it's not like a SaaS product that you have huge margins.
• 10:04
  Speaker 3: The margins are coming from how efficient your technology is from an operational perspective, and I think that AI drives this thing to the next level.
• 10:11
  Speaker 3: The things that we were able to achieve cost reductions that we're able to have, but mainly acceleration of revenue these are huge wins for us.
• 10:19
  Speaker 2: Do you see it being used in the areas of customer service or sales at all?
• 10:24
  Speaker 3: Sales.
• 10:24
  Speaker 3: We use it, but we use it very in low touch by basically helping our salespeople to understand what are the chances of actually this client being successfully onboarded into Rapid from a compliance and a risk perspective.
• 10:37
  Speaker 3: It's very easy for a salesperson that has been in the job to understand what can we sell to a client, you know, and where do we fit.
• 10:44
  Speaker 3: But it's not that easy to understand what is the chances that we'll be able to onboard him, you know, from an underwriting and a compliance perspective, and we actually use AI there.
• 10:52
  Speaker 3: Basically, we have a tool that gives the salesperson an output in like 20 seconds with exactly what he thinks is missing or what exists in the client or what are the chances he will be onboarded.
• 11:03
  Speaker 3: So this is where we use it for sales, for customer support.
• 11:06
  Speaker 3: We do use it both internally, with replacement of the traditional knowledge base tools with an open AI implementation.
• 11:13
  Speaker 3: That we've done and we also rolled out a type of a sophisticated bot at the end of the day that sits inside our client portal, but it's and you mentioned crypto.
• 11:27
  Speaker 2: That was a topic that we talked a lot about a few years ago.
• 11:29
  Speaker 2: Kind of died off.
• 11:30
  Speaker 2: Now a lot of conversations.
• 11:31
  Speaker 2: So where do you see crypto fitting into what you guys do on a daily basis?
• 11:35
  Speaker 2: How?
• 11:37
  Speaker 3: regulators accept it, how the banks that we work with will accept it, and we didn't want to be under the spotlight suddenly that we've been asked by our banks and by our regulators what do you do with crypto when they are not crypto friendly?
• 11:57
  Speaker 3: I think that as soon as it became clear at the end of Q3, 2024, that crypto is going to go mainstream one way or another in the next couple of years, we started to adopt it more.
• 12:07
  Speaker 3: We started to offer settlements to our merchants in stablecoins, which became a very popular offering.
• 12:13
  Speaker 3: We started to allow our clients to have crypto acceptance as a stablecoin payment method right that allows them to accept USDC, USDT and other types of stablecoins, and we do believe that it will become probably one of the preferred ways of merchants to get settled.
• 12:27
  Speaker 3: So people prefer stablecoin settlements over regular settlements to bank accounts in quite a lot of merchants to get settled.
• 12:31
  Speaker 3: So people prefer stablecoin settlements over regular settlements to bank accounts in quite a lot of jurisdictions across the globe.
• 12:34
  Speaker 3: And we're really trying to understand better should Rapid get its own crypto license, like we have our own payment licenses globally, or we still need to continue and partner, Because for now, we partner with other companies that have a license, but because it seems it will become more and more mainstream, it will basically just merge into traditional payments.
• 12:54
  Speaker 3: I think that in the end, companies like us will have to get the crypto license and add it to our portfolio officially.
• 13:00
  Speaker 2: Beyond AI and crypto, what other trends are there that you're seeing in payments?
• 13:05
  Speaker 2: Where do you think this payments and fintech space ends up in the next, say, three to five years?
• 13:10
  Speaker 3: I would say that, first of all, the consolidation in the space will continue and more and more companies will become a one-stop shop.
• 13:16
  Speaker 3: Platforms for traditional payments, for payouts, for crypto acceptance, that actually have a platform and actually have the budget to invest in AI technology are the ones that are going to survive, because, at the end, as a merchant, when you get served by somebody that actually implemented AI across the board, you will not be able to go to somebody else that might provide you a little bit cheaper pricing and suddenly everything is manual, everything is delayed, you don't have the insights.
• 13:50
  Speaker 3: So I think it will have a lot of impact on churn and movement of clients between the portfolios, and I think it is a very interesting time in financial services globally, because I think that AI is going to shake completely these industries upside down.
• 14:03
  Speaker 2: Do you think that there's potential that there's going to be a fintech or payments company, an AI startup, that has five employees but still $100 million in revenue?
• 14:12
  Speaker 2: Do you see that happening in the fintech space?
• 14:15
  Speaker 3: No, but only for one reason Not because technologically it is impossible, right?
• 14:19
  Speaker 3: I'm sure that if, today, I will want to restart my company and build everything from scratch, I will be able to build an unbelievable technological product that is built on top of AI completely, and it will be amazing.
• 14:31
  Speaker 3: But there is a huge barrier of entry, which is regulation.
• 14:34
  Speaker 3: You need licenses, you need banks, you need relationships, and AI is not going to get it for you.
• 14:43
  Speaker 3: It might assist you a little bit to speed it up, but still you will spend a year, two years in getting a license in a country or two.
• 14:47
  Speaker 3: So there are still these barriers of entry that I don't see them being removed specifically in this space.
• 14:53
  Speaker 2: I would agree with that.
• 14:53
  Speaker 2: So let's switch gears a little bit and talk about you.
• 14:56
  Speaker 2: Maybe give us the highlights of your professional journey, how you started Rapid and got to the position you're in today.
• 15:03
  Speaker 3: So actually, I started my own company when I was 21 years old in the cloud computing space.
• 15:08
  Speaker 3: I built it as a bootstrap startup, as a unified communication cloud computing company, and I sold it in 2013 to a company called Avaya that used to be one of the biggest players in the space, together with Cisco, and then, after a couple of years of working for them, I decided to start a new company together with my co-founders, and we decided to go into consumer payments.
• 15:26
  Speaker 3: We didn't want to build Rapid in the way that Rapid is today.
• 15:29
  Speaker 3: We wanted to go into the consumer's payment space and try to build a type of PayPal competitor that is built on untalented payment rates.
• 15:36
  Speaker 3: And while we were trying to do it, we stumbled into never-ending problems.
• 15:41
  Speaker 3: When you're trying to build a consumer financial product in 2016 and 17, which is getting regulated, needing compliance, finding a bank that will bank you, getting an acquirer that will move your money, we had so many different problems that we looked at ourselves and we said how can it be that it was back in 2017?
• 15:57
  Speaker 3: There are no platforms in fintech.
• 15:59
  Speaker 3: Everybody's building their own infrastructure from scratch.
• 16:02
  Speaker 3: It's like literally going and, instead of using AWS, to go and build your own data center, which makes zero sense.
• 16:08
  Speaker 3: So we decided to pivot the company into what Rapid is today, which is an infrastructure play that allows other companies to build on top of us different types of financial services applications.
• 16:17
  Speaker 3: And I can tell you that, if you look at the original product that we started from before Rapid, it took us like a year and a half to launch, only in the UK, this product.
• 16:27
  Speaker 3: Today, if you want to launch something similar on top of Rapid, you can launch it in 106 countries across the globe in literally three to four weeks.
• 16:35
  Speaker 2: That's the difference in the scale.
• 16:36
  Speaker 2: When did Rapid start?
• 16:38
  Speaker 2: 2017?
• 16:39
  Speaker 2: , 2016.
• 16:40
  Speaker 2: And you have co-founders, so was there sort of the you were the tech guy and they were the marketing guy or the sales guy.
• 16:48
  Speaker 3: Actually we are two tech guys and there is one let's call it BD sales person, but over the years every person got his own role inside Rapid.
• 16:57
  Speaker 3: We're all still here and actively managing the business.
• 17:00
  Speaker 2: What are some things you're passionate about?
• 17:02
  Speaker 2: So maybe one work-related passion, one personal passion.
• 17:05
  Speaker 3: Personal passion is basketball.
• 17:07
  Speaker 3: I'm a huge basketball fan.
• 17:09
  Speaker 3: The reason why Rapid exists as a company is because I ever dreamed to buy my favorite basketball team.
• 17:14
  Speaker 3: I wanted to make enough money in order to buy the team, and this is how you know.
• 17:17
  Speaker 3: The company started because, after selling my first company, I didn't need any more money, but I wanted to do something bigger, like buying the basketball team, which cost a lot of money.
• 17:25
  Speaker 3: So it was very funny that I ended up building Rapid and Rapid became the center of my life.
• 17:30
  Speaker 3: And I still don't own the basketball team, even though, in theory, probably I can own it, but I just don't have the time to do it, unfortunately.
• 17:37
  Speaker 3: So basketball for me is huge, and also I'm a big car guy.
• 17:41
  Speaker 3: I'm into cars and I like collecting cars and driving cars.
• 17:45
  Speaker 3: On the business side, I really like my job.
• 17:47
  Speaker 3: I like running the company.
• 17:49
  Speaker 3: I like to see the innovation In 2022,.
• 17:52
  Speaker 3: I thought, okay, now we're moving into this boring stage that we just need to move the company to be profitable and there is no innovation in the technology anymore.
• 17:59
  Speaker 3: How can I continue and run it?
• 18:01
  Speaker 3: But then came the AI storm, which brought back everything to life in a much bigger scale, and I would say that today I'm much more enthusiastic from the day-to-day technology improvements than I was in the last 10 years, probably from anything that I saw.
• 18:15
  Speaker 2: One final question.
• 18:16
  Speaker 2: Someone comes to you, maybe they're interviewing for a job.
• 18:19
  Speaker 2: They're right out of school, right out of the university, and they say hey, eric, I'm interested in building a career in fintech.
• 18:24
  Speaker 2: What would you tell them they need to do to be successful?
• 18:27
  Speaker 3: I think that, first of all, the most important thing in financial services and in fintech is that you need to be in the details.
• 18:36
  Speaker 3: If you're not the person that really wants to be in the details, that wants to learn the industry upside down, to understand every single bit and bite that might be there, you will not be successful in financial services, because financial services the devil is in the details the transactions, the costs, the interest rates, how the money moves, all the different players.
• 18:57
  Speaker 3: It is a much more detailed industry than a lot of other industries that exist and sometimes people that are coming into specific industries they come in with a certain knowledge that they brought from somewhere else and they think it will fit.
• 19:06
  Speaker 3: I'm a manager, I'm a director, I'm a team lead.
• 19:08
  Speaker 3: I know how to do it.
• 19:09
  Speaker 3: That's okay.
• 19:11
  Speaker 3: In financial services, it's not going to work.
• 19:12
  Speaker 3: I've seen again and again and again great people with great knowledge that were very successful in cybersecurity, in online marketing, whatever it is.
• 19:20
  Speaker 3: They are coming to financial services and because they're not in the details, they fail like big time.
• 19:25
  Speaker 3: That's my number one tip.
• 19:27
  Speaker 2: All right.
• 19:27
  Speaker 2: Well, we've covered a lot of ground about Rapid, the industry, where it's headed.
• 19:31
  Speaker 2: Is there anything else you'd like to add before we wrap up the show?
• 19:34
  Speaker 3: You know just that two years from now, when we will talk again, I'm sure that the AI storm will conquer completely financial services and there will be things that we will talk about that we cannot even imagine to talk about it right now.
• 19:46
  Speaker 3: So I'm super excited about that.
• 19:48
  Speaker 2: Well, eric, thank you so much for your time today.
• 19:50
  Speaker 2: I know it's very valuable, so thank you so much for being here, thank you very much for having me, and thank you to all your listeners out there, and until the next story.
• 19:57
  Speaker 1: Thank you for joining us this week on the Leaders in Payments podcast.
• 20:01
  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.
• 20:15
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