Latest / Leaders In Payments / Darryl Hicks, CEO of Flexpay | Episode 396

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Darryl Hicks, CEO of Flexpay | Episode 396 · 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
  Greg Myers: Hello everyone and welcome to the Leaders in Payments podcast.
• 0:20
  Greg Myers: I'm your host, greg Myers, and on today's show we have a very special guest, daryl Hicks, the founder and CEO of FlexPay.
• 0:26
  Greg Myers: So, daryl, welcome to the show.
• 0:28
  Darryl Hicks: Hey, man, it's great to be here.
• 0:29
  Darryl Hicks: Thanks for having me, greg.
• 0:30
  Greg Myers: Absolutely.
• 0:31
  Greg Myers: So.
• 0:31
  Greg Myers: Let's start out by having you tell the audience a little bit about yourself, maybe where you were born, where you grew up, where you went to school, a few things like that.
• 0:38
  Darryl Hicks: Yeah, sure.
• 0:38
  Darryl Hicks: So my entire career I've worked in the US, but I am a Canadian.
• 0:42
  Darryl Hicks: I was born in a small blue collar town, very lower middle income city and family out on the very east coast of Canada, so northeast of Maine, right on the Atlantic Ocean small town.
• 0:56
  Darryl Hicks: I eventually moved to Montreal when I was in my late teens, started community college straight out of high school in Comp Sci but then saw that there was an opportunity to start my own business in cybersecurity, network infrastructure, network architecture.
• 1:13
  Darryl Hicks: I knew I wanted to be an entrepreneur.
• 1:16
  Darryl Hicks: It's all my parents ever put in front of me as an opportunity.
• 1:19
  Darryl Hicks: They owned a small commercial cleaning business which I worked for starting from when I was 11 years old a little bit of a child labor and net.
• 1:26
  Darryl Hicks: So starting from 11 years old I was emptying garbage cans and cleaning toilets and ashtrays and stuff, working for my dad's cleaning business.
• 1:35
  Darryl Hicks: But that was great.
• 1:36
  Darryl Hicks: He did pay me a couple bucks an hour and allowed me to have some savings which gave me some seed money to be able to move to a bigger city when I was in my late teens, gave me some seed money to be able to move to a bigger city when I was in my late teens and, yeah, I started working in IT, a self-taught coder.
• 1:51
  Darryl Hicks: Next thing you know, I'm working in New York in the Twin Towers consulting for Verizon and Sprint securing all their network infrastructure from bad actors out on the internet.
• 1:57
  Darryl Hicks: It was the wild wild west back then.
• 1:59
  Darryl Hicks: People would just take their servers and plug them into the internet and Windows NT's broadcasting port 139 net BIOS out to the internet saying here I am, log into me, and then they're wondering why they're having all these issues.
• 2:10
  Darryl Hicks: So that was really fascinating.
• 2:12
  Darryl Hicks: But that's where I built a really great network.
• 2:14
  Darryl Hicks: Executives and professionals eventually met my co-founders in some of the later businesses that I created in the early 2000s.
• 2:22
  Darryl Hicks: Just an incredible opportunity to meet some amazing people who are at the bleeding edge of IT and network infrastructure and stuff like that.
• 2:32
  Darryl Hicks: So, yeah, I've always stayed in Canada even though I had American co-founders.
• 2:37
  Darryl Hicks: We were really enjoying the arbitrage of earning US dollars and spending Canadian dollars.
• 2:41
  Darryl Hicks: So there's some pretty good benefits to have there and at scale.
• 2:45
  Darryl Hicks: Eventually we built out.
• 2:47
  Darryl Hicks: I think at our peak we had 350 employees working in the business up in Montreal, with another 60 or 70 scattered around through the continental US.
• 2:55
  Darryl Hicks: Yeah, that's a little bit of my background on the journey.
• 2:58
  Darryl Hicks: I currently live in the Pacific Northwest, so I've been progressively working my way west from the East coast.
• 3:03
  Darryl Hicks: Now I live in a small town called Kelowna in the Okanagan Valley.
• 3:08
  Darryl Hicks: It's about four hours drive East of Vancouver and it's I'm surrounded by wineries and really great ski mountains and golf courses and lots of water sports.
• 3:19
  Darryl Hicks: Around here we have a big, beautiful lake called the Okanagan Lake.
• 3:22
  Darryl Hicks: It's 90 miles long and 950 feet deep and it's just tremendous for wake surfing and water skiing, and so it's been a great place to have the family Three kids, married for 24 years, and a beautiful Bernese golden doodle dog who is constantly parked right next to me here in my office Nice, nice, nice.
• 3:42
  Greg Myers: Well, thanks for sharing that.
• 3:43
  Greg Myers: Let's talk about FlexPay, so tell our audience what FlexPay does.
• 3:47
  Darryl Hicks: So FlexPay helps really large subscription companies reduce the churn that comes from failed payments.
• 3:53
  Darryl Hicks: We use AI to analyze transactions and really figure out where friction is happening in the ecosystem.
• 4:00
  Darryl Hicks: It was a solution that we built for ourselves.
• 4:02
  Darryl Hicks: I mentioned I had these co-founders that I met in New York.
• 4:05
  Darryl Hicks: We built subscription businesses at scale.
• 4:07
  Darryl Hicks: I was the technical co-founder of those businesses.
• 4:11
  Darryl Hicks: I was always responsible for back office operations that we would maximize lifetime value while minimizing risk factors like, well, obviously, churn, but even like refunds and chargebacks, things like that.
• 4:31
  Darryl Hicks: So when I started out in the business in 2001, I'd spend my time swimming through the sequel and we would discover that probably about 80% of all of our churn was voluntary churn People reaching out to us by email, phone, whatever, saying they didn't want the product anymore.
• 4:46
  Darryl Hicks: But as the years were progressing, we noticed this disturbing trend where more and more of our churn was involuntary churn, coming from failed payments, and so we really had to do something about this and we tried every solution you can imagine under the sun.
• 5:00
  Darryl Hicks: From third-party vendors, we had some really wonderful partnerships with some big acquiring banks.
• 5:05
  Darryl Hicks: I noticed these weird things, I think, starting in 2006, we'd have thousands of transactions, the data process.
• 5:11
  Darryl Hicks: We'd take 10% randomly selected and we'd send them to one merchant bank and 10% randomly selected and send them to another merchant bank.
• 5:18
  Darryl Hicks: On some days we'd see as much as a 3% higher approval rate on transactions going through the banks in Boston.
• 5:23
  Darryl Hicks: I called up the father and son founder team of that merchant bank and I said what's going on, guys?
• 5:29
  Darryl Hicks: And they said I don't know.
• 5:30
  Darryl Hicks: Why don't you come on down and see if we can figure this out together?
• 5:33
  Darryl Hicks: So that led to them creating the first ever optimization product.
• 5:37
  Darryl Hicks: We were client number one on that product in 2008.
• 5:40
  Darryl Hicks: Didn't write any of the code, but worked really closely with the development team.
• 5:44
  Darryl Hicks: That also gave me access to some really interesting conversations directly with the big networks like Visa and MasterCard, because we'd be sitting in.
• 5:51
  Darryl Hicks: I have to put on my suit and tie and fly to Washington DC and meeting these big boardrooms with 14 executives around the table Super intimidating for me as a young founder at the time in my 20s, but really learned a lot about what's going on inside of the card ecosystem.
• 6:05
  Darryl Hicks: Fast forward to I guess it would be 2012,.
• 6:08
  Darryl Hicks: They sold that merchant bank to a much larger bank and that new bank said well, we don't care about solving this problem holistically.
• 6:16
  Darryl Hicks: We just want to use this as a shiny object to attract and retain merchants.
• 6:20
  Darryl Hicks: And that didn't work for me because I had launched a third-party administration business at that point.
• 6:24
  Darryl Hicks: We were taking everything that we knew about how to really optimize subscription payments and selling it to really large publicly traded companies in the US.
• 6:32
  Darryl Hicks: We would take all their back office over on our billing platform and customer service and for billing related issues.
• 6:38
  Darryl Hicks: So I had no choice but to build my own tech.
• 6:41
  Darryl Hicks: The first version was rules-based and, lo and behold, it performed way better than anything else that we'd ever tried and was all internal use.
• 6:47
  Darryl Hicks: Fast forward again to 2016,.
• 6:49
  Darryl Hicks: We had over a billion transactions and a proprietary database, a pretty deep understanding of what actually drives this problem.
• 6:55
  Darryl Hicks: But the rules were turning into spaghetti at scale.
• 6:58
  Darryl Hicks: It's like if this then that, if this then that, weighted decision trees and algorithms and conflicting signals and we said you know what this really seems like?
• 7:03
  Darryl Hicks: A problem ready built for machine learning.
• 7:05
  Darryl Hicks: So we didn't get into AI and machine learning because it was sexy or buzzword.
• 7:08
  Darryl Hicks: Everybody in 2025 wants to be an AI company.
• 7:11
  Darryl Hicks: Now, right, I kind of jokingly refer to us as one of the OG AI companies, because we've been.
• 7:16
  Darryl Hicks: I think we're on version 19 of our machine learning models now.
• 7:19
  Darryl Hicks: We've deprecated 32 models since we started the business and we now use like AI, neural networks and things like that for analyzing transactions.
• 7:28
  Darryl Hicks: But the first version of machine learning that we launched in 2016 massively outperformed the rules-based system, and that's when I said you know what?
• 7:33
  Darryl Hicks: I think I want to take this and turn it into a standalone B2B SaaS product, but if you back up for just a second, it sounds like, okay, flexpay is this solution that helps merchants reduce the churn that comes from failed payments.
• 7:45
  Darryl Hicks: But there's this underlying thesis inside of FlexPay that wherever willing participants want to engage in legal commerce, they should be able to do so without friction, and that's just not the way that the current payments ecosystem works.
• 7:59
  Darryl Hicks: There's a lot of opacity, things are very broken, very brittle.
• 8:03
  Darryl Hicks: The solution to this problem is more trust and transparency, and so that's really.
• 8:08
  Darryl Hicks: The mission of FlexPay is to provide, to facilitate, trust and transparency in payments, and so now we're working really closely with financial institutions issuing banks.
• 8:20
  Darryl Hicks: We have data sharing agreements with them, where we send them tremendous amounts of data from the merchant side that they're previously blind to, and in exchange they provide data exports out of their fraud tools that help us build better machine learning models to better understand how to get merchants the approval rates that they deserve the good actor merchants and we are very, very careful to avoid any kind of negative merchant bias in our system.
• 8:44
  Darryl Hicks: So you know who has a lot of failed payments.
• 8:47
  Darryl Hicks: Sometimes it's the higher risk merchants.
• 8:48
  Darryl Hicks: We deliberately stay away from all those kinds of merchants.
• 8:51
  Darryl Hicks: We're very choosy about who we let onto our rails because we really believe and we have data to prove that the ecosystem is not working properly that good quality merchants are suffering with a tremendous amount of friction.
• 9:03
  Darryl Hicks: It's suboptimal and we're working hard to deliver on this promise of the next generation of payments infrastructure to power the modern economy.
• 9:12
  Greg Myers: Okay, when you look at the subscription business other than high risk, are there areas that you focus on, or is it really any business that has subscriptions?
• 9:21
  Darryl Hicks: When we first started out we were focused on SMB.
• 9:23
  Darryl Hicks: Tech works beautifully for small merchants and large alike.
• 9:27
  Darryl Hicks: But we noticed that we were kind of running into the Shopify problem.
• 9:32
  Darryl Hicks: Our number one source of churn was companies just going out of business a lot of mom and pops, right.
• 9:36
  Darryl Hicks: So we eventually decided to make the pivot in our go-to-market focus and shift more upmarket.
• 9:42
  Darryl Hicks: So now we sell to large, mid-market, small enterprise type merchants Just because, look, if you've got $5,000 a month in failed payments, getting the best possible recovery on that is probably not your highest priority.
• 9:56
  Darryl Hicks: You've got a team to build, you've got marketing issues, you've got HR, you've got capital that you need to acquire in the business.
• 10:02
  Darryl Hicks: There's all kinds of different distractions.
• 10:04
  Darryl Hicks: But if, like some of our clients, you have like $9 million a month in failed payments, $14 million a month in failed payments, $22 million a month in failed payments, every little incremental percentage point in additional performance that you can get on that is massively valuable to your business.
• 10:19
  Darryl Hicks: And so selling into enterprise is much harder and more complicated than selling into SMB.
• 10:24
  Darryl Hicks: But we've successfully made that pivot and have a pretty solid masthead of great logos now I think selling into SaaS.
• 10:32
  Darryl Hicks: Saas is a really good vertical for us.
• 10:34
  Darryl Hicks: A lot of streaming and digital services there.
• 10:38
  Darryl Hicks: But even you know auto ship on physical products and things like that and you know honestly, greg, like what isn't a subscription these days.
• 10:45
  Greg Myers: Right these days.
• 10:46
  Darryl Hicks: I mean nobody buys a license of Adobe Photoshop anymore.
• 10:49
  Darryl Hicks: Right, you sign up to the creative cloud and they charge you every year, so, but you know we also have merchants.
• 10:54
  Darryl Hicks: Our primary focus has been on subscriptions, but we have plenty of very large merchants who also do just one-time charges for products, and they still have a lot of failed payments and the tech works beautifully for them as well.
• 11:06
  Greg Myers: Okay, and you mentioned go to market.
• 11:07
  Greg Myers: So how do you go to market?
• 11:09
  Greg Myers: Do you have a direct sales force?
• 11:10
  Greg Myers: Do you work through partnership channels, or what's the strategy there?
• 11:13
  Darryl Hicks: Channel has been extremely important for us so and channel means different things to different SaaS businesses.
• 11:18
  Darryl Hicks: So let me clarify that a little bit.
• 11:20
  Darryl Hicks: Channel is traditionally referred to as someone white labels your product and takes it and distributes it and you give them wholesale pricing and then they take care of selling it and signing customers up.
• 11:29
  Darryl Hicks: We do a little bit of that.
• 11:30
  Darryl Hicks: There are some platforms out there that provide billing services to merchants and they did come up with a press release and they say we have this new AI driven failed payment recovery tool.
• 11:41
  Darryl Hicks: This is why you want to switch over to our platform is because we're going to help you deliver higher lifetime value by being on our billing platform.
• 11:47
  Darryl Hicks: It's actually FlexPay behind the scenes powering that service within their platform and we give them a wholesale rate for that.
• 11:54
  Darryl Hicks: But most of channel for us has been referral partners, so that could be payment processors, it could be platforms, it could be really large influencers and advocacy groups.
• 12:04
  Darryl Hicks: There are payments consultants, but basically there's a lot of people out there who work with exactly the merchant that fits our profile and they refer those customers over to us and we pay them a fee on that.
• 12:15
  Darryl Hicks: So channel is kind of both If I combine both of those together the white label sort of traditional channels as well as referral partners.
• 12:22
  Darryl Hicks: It makes up probably about 42% of all the revenue that we have right now, so a pretty meaningful chunk and that's growing and we're very bullish on our ability to expand that.
• 12:31
  Darryl Hicks: The rest of it is a lot of direct selling.
• 12:32
  Darryl Hicks: So you know the traditional stuff, like you know, hitting a lot of trade shows, doing podcasts like this and webinars.
• 12:37
  Darryl Hicks: We have a BDR team, we have like a named account strategy, so account-based marketing that's working really well and, yeah, that's kind of the go-to-market that we've had so far.
• 12:46
  Greg Myers: Okay, what would you say?
• 12:47
  Greg Myers: Differentiates FlexPay from your competitors out there?
• 12:50
  Darryl Hicks: I'd say three things.
• 12:51
  Darryl Hicks: One, we just have a very, very deep understanding of what's causing this problem at the root, and we're working on not just providing a service to merchants, but we're working on infrastructure.
• 13:03
  Darryl Hicks: As I kind of walked out to you this idea of facilitating trust and transparency in payments, it's at a much deeper level than just how can we come up with a better widget for merchants.
• 13:18
  Darryl Hicks: Financial institutions that, it turns out, are really passionate about this, and the reason why the partnerships with the FIs are so important is that there's who actually decides whether a payment is going to be approved or declined when you submit it.
• 13:30
  Darryl Hicks: It's very rarely your merchant bank like Stripe there's a little bit of filtering they can do for fraud because they don't want exposure.
• 13:36
  Darryl Hicks: It's very rarely the card networks like Visa and MasterCard.
• 13:40
  Darryl Hicks: There's a little bit that they do to kill transactions that are suspicious.
• 13:44
  Darryl Hicks: The vast preponderance of the decisions to approve or decline the transaction are made at the issuer level.
• 13:49
  Darryl Hicks: So it only makes sense that you have direct partnerships with those FIs and we get two things out of them insights and data, and they're equally as valuable.
• 13:59
  Darryl Hicks: The insights are like well, what are you doing and why are you doing it and how do you look at this problem and what are you really trying to solve for and what are the levers that you're pulling on?
• 14:07
  Darryl Hicks: And this really helps us to better inform our machine learning models.
• 14:10
  Darryl Hicks: And then the second is the raw data that they send over.
• 14:12
  Darryl Hicks: We now have billions and billions and billions of transaction records, not just from our own processing, from our own clients, but supplied to us directly from financial institutions which we can then run machine learning on.
• 14:24
  Darryl Hicks: And that's important, because toy data sets generate toy results.
• 14:28
  Darryl Hicks: If you want to get serious about machine learning and AI, you really need massive treasure troves of data, but then you also need really savvy people with the double master's degree and the PhD degrees in math to kind of work on this.
• 14:42
  Darryl Hicks: But the most critical component of this and this is really the third differentiator for us is this deep understanding of what's actually happening inside of the payments ecosystem and why, so that you can shepherd the machine learning and the AI models to focus on the right things, on the right dimensions and on the right levers.
• 14:59
  Darryl Hicks: So the deep understanding of the problem leads to working with the right people, which leads to getting massive amounts of data and having really smart people to kind of work on the problem, which leads to more deeper insights, which allows us to have better informed conversations with the FIs.
• 15:14
  Darryl Hicks: So you can see, it kind of becomes like a feedback loop that spins.
• 15:17
  Greg Myers: Okay, great.
• 15:18
  Greg Myers: So when you step back and look at sort of the payments and fintech industry as a whole, where do you see it all headed?
• 15:24
  Greg Myers: Say, maybe in the next three to five years?
• 15:26
  Darryl Hicks: Yeah, I think I'm really excited about all these alternative methods of payment.
• 15:31
  Darryl Hicks: I'm bullish on stable coins.
• 15:33
  Darryl Hicks: I really like, and I think you know a lot of people were really excited about the promise of Bitcoin and we've kind of realized that it's a fantastic store of value.
• 15:42
  Darryl Hicks: But there are some real challenges to using it as a means of trade and there are some really interesting companies that I'm personally invested in as an angel investor that are working on some of those problems and I hope that they'll be able to make some progress on them.
• 15:55
  Darryl Hicks: But my assessment, looking really closely at all the players and the incentives in the ecosystem, is I would not bet against Visa and MasterCard.
• 16:02
  Darryl Hicks: There's just tremendous bias built into the system.
• 16:07
  Darryl Hicks: They're deeply embedded from a regulatory perspective.
• 16:09
  Darryl Hicks: There's such an important, meaningful part of the economy that literally it's like trying to turn the Titanic at this point to get anything off of there, and so that's why I've decided to double down and artificially constrain the activity of FlexPay, my company, to really making the Visa MasterCard networks work better.
• 16:24
  Darryl Hicks: We're not trying to replace those networks, we're trying to reduce the friction within those networks.
• 16:29
  Darryl Hicks: I still think, long-term, some of these things like FedNow and RTP, like real-time payments and stable coins and stuff, we'll start to pick away at the periphery.
• 16:37
  Darryl Hicks: I think there's some really great use cases for those, but I don't think that we're going to see any shift anytime in the next decade or so meaningfully away from the Visa MasterCard rails.
• 16:47
  Darryl Hicks: And especially if we're able to deliver on our promise of upgrading those networks with better connective tissue and more trust and transparency, I think that only makes them even that much more valuable.
• 16:57
  Darryl Hicks: So that's where I think in the short term, in the next 10 years, what we're going to see.
• 17:01
  Darryl Hicks: And of course I'm answering this question specific to my lens Like, oh, I'm talking about open banking and loans and insurance products and all these things.
• 17:07
  Darryl Hicks: Like we can talk about some of those other things.
• 17:09
  Darryl Hicks: You probably find people that can be much more intelligent to riff with you on those.
• 17:12
  Darryl Hicks: I have conversations with our financial institution partners about those kinds of products and the innovation that they're looking for in those areas.
• 17:20
  Darryl Hicks: But you know, when I think about where we really have deep expertise in the Visa MasterCard network and where payments are heading, that's what I see for the next decade.
• 17:28
  Darryl Hicks: Beyond that, I think it'll be interesting to see will Visa MasterCard roll out stable coin functionality within their networks.
• 17:35
  Darryl Hicks: I know that they have pet projects that are fully built and that are just kind of sitting on the shelf because they don't want to rock the boat, right now but they are ready to pivot and to adapt should those things become a little bit more mainstream.
• 17:49
  Greg Myers: Yeah, I'm curious of your thoughts because recently both Visa MasterCard made announcements around AI and payments and you as an OG in AI, as you mentioned, I'm curious what are your thoughts?
• 17:58
  Greg Myers: I mean, I think from my perspective, what I read into it is something that's very high level that we've all kind of talked about in payments is really making that payment disappear.
• 18:07
  Greg Myers: But I don't know if that's the intention over time or sort of the goal, but I'm just curious what are your thoughts on that?
• 18:12
  Darryl Hicks: I think that there are some really really good people, really smart people with great intentions sitting inside of the Visa MasterCard network who really care about creating more transparency, for example.
• 18:24
  Darryl Hicks: Unfortunately, what we see is that the right hand doesn't know what the left hand is doing.
• 18:29
  Darryl Hicks: Quite often, I don't think that you need me to tell you, greg, that innovation very rarely comes.
• 18:34
  Darryl Hicks: If you look historically at where innovation happens very rarely comes from within these really large organizations.
• 18:41
  Darryl Hicks: They're so big that they're too big.
• 18:43
  Darryl Hicks: They can't get it out of their own way, basically as they roll things out.
• 18:46
  Darryl Hicks: So there are some people that say the right things and that mean to do really well and are actively working on these things, but they're fighting against multiple conflicting forces.
• 18:56
  Darryl Hicks: Not everybody inside these organizations agrees on what the right solution is, and I think that, unfortunately, there are a lot of people that benefit from how opaque the current network is.
• 19:07
  Darryl Hicks: Visa and MasterCard have done a really really good job of making sure that merchants never talk to financial institutions directly, because as soon as you have them directly communicating, you're one step away from disintermediating the networks, and they don't want that to happen, and so they have this incentive to kind of create this opacity and to stay deeply embedded into the middle and say, well, you don't need to talk to each other, just work with us and we'll make it all work better.
• 19:29
  Darryl Hicks: But then that lack of transparency enables all kinds of bad behavior.
• 19:34
  Darryl Hicks: Human beings are incredibly good at following incentives, and so there's all these unintended second order and third order consequences of this lack of transparency that turn into the friction that we're seeing.
• 19:46
  Darryl Hicks: And, by the way, fraud is a problem.
• 19:48
  Darryl Hicks: The need for FlexP pay would not exist, I believe, if there wasn't fraud.
• 19:51
  Darryl Hicks: It's because of the prevalence of fraud that a lot of the networks and the issuers say well, we can't be transparent about what we're doing and why we're doing it, because then the bad actors are going to reverse engineer our fraud systems and we're going to have more fraud losses.
• 20:05
  Darryl Hicks: And we have to keep these systems, even if you think about it.
• 20:09
  Darryl Hicks: Anti-money laundering and OFAC are two really important considerations from a regulatory perspective for FIs.
• 20:14
  Darryl Hicks: They must have systems embedded that check against lists that say we're not going to process transactions for embargoed countries, or even within certain countries, there are certain merchants or certain transaction types that are embargoed.
• 20:26
  Darryl Hicks: But as soon as you have this system that's able to filter, then all of a sudden, you'll have a financial institution that says well, I have a moral problem with gambling, so I am not going to facilitate any of the online gambling transactions, but they don't publish that anywhere on their website.
• 20:40
  Darryl Hicks: They don't tell their customers when they're switching to that FI.
• 20:42
  Darryl Hicks: By the way, if you get a credit card from my bank, you're never going to be able to go on DraftKings.
• 20:47
  Darryl Hicks: Go on DraftKings, but yeah, that ends up being the way that it works.
• 20:53
  Darryl Hicks: So I think it's totally appropriate in a free, open market for a financial institution to make that kind of decision.
• 20:56
  Darryl Hicks: I just think that it should be transparently disclosed and there are certain cardholders that are going to be very aligned with that vision and say, yes, that's the kind of FI that I want to work with and I don't care because I don't do online gambling and I like all the other bells and whistles that I get working with that FI.
• 21:12
  Darryl Hicks: So the transparency will mean that certain people in the ecosystem are not going to be able to do things that they do today, but I think everyone understands that ultimately, that's where we need to go, that everyone will benefit and you will have like if we could just perfectly identify which transactions are fraud and that we want out of the ecosystem, which ones aren't, then everyone would really benefit from that.
• 21:32
  Darryl Hicks: And then all these ancillary things where people are taking these off-decisioning platforms and crowbarring other things into it and, by the way, cardholders are also gaming the system right All these virtual cards where you can turn on a virtual card, you can sign up to a subscription because maybe there's a promotional offer or an incentive and you get the incentive, and then you log in and you turn your balance to zero and then the merchant's not able to charge the card anymore and they don't really understand why, because there's no transparency in what's actually happening.
• 21:58
  Darryl Hicks: So the opacity of the system is facilitating all kinds of edge cases all over the place of suboptimal behavior from multiple different players, and that's really what we need to get out of the ecosystem.
• 22:08
  Greg Myers: Okay, well, let's switch gears a little bit and talk about you.
• 22:11
  Greg Myers: You talked a little bit about your journey, but maybe talk us through the kind of founding story Are you the sole founder?
• 22:18
  Greg Myers: Maybe a little bit about the background there and just kind of walk us through that if you don't mind.
• 22:22
  Darryl Hicks: Yeah, so when I first started out, FlexPay is my eighth business Well, ninth, if you include my window washing business.
• 22:28
  Darryl Hicks: I started when I was 18.
• 22:29
  Darryl Hicks: I'm not so sure that one counts, but I'm definitely a serial entrepreneur and I've built multiple large businesses.
• 22:35
  Darryl Hicks: I'm very proud of the fact that, in aggregate, across the businesses that I founded or co-founded, I've created over a thousand jobs in North America and generated in the hundreds of millions of revenue and really good returns for our shareholders.
• 22:48
  Darryl Hicks: I've had a couple of exits in there as well.
• 22:50
  Darryl Hicks: I had an amicable parting of the ways with my co-founders back in 2011.
• 22:55
  Darryl Hicks: And so went back to becoming a sole proprietor at that point.
• 22:59
  Darryl Hicks: But, like any great founder, I've got an incredible team that works with me, and quite a bit of the executive leadership team inside of FlexBay have been with me through multiple businesses.
• 23:10
  Darryl Hicks: So a lot of them worked with us in the previous business where we were incubating this technology that became FlexBay, and we worked through like divesting ourselves and selling off assets and getting rid of all the rest of the other business so that we could focus solely on this business.
• 23:23
  Darryl Hicks: So that's part of the origin story.
• 23:25
  Darryl Hicks: We are institutionally backed, so we've raised a fairly significant amount of capital from financial institutions, from FinTech focused VCs and private equity.
• 23:35
  Darryl Hicks: You know very grateful to have their support, and you do need capital to go out and build this tech and to be able to fund the growth and the speed, but I'm still majority shareholder and largest shareholder inside of the business.
• 23:47
  Darryl Hicks: I paid for that privilege.
• 23:48
  Darryl Hicks: The seed capital for the business came out of my own genes from previous exits, and I think that that's also something that's really important If you're going to go solve this problem and I've seen this across other industries having a I don't want this to come across the wrong way, like a from a place of ego or anything but being able to have, like one person that can really make the call you know who has voting control, chairman of the board, founder, CEO the deep understanding and the will to just drive something through.
• 24:18
  Darryl Hicks: There's still no guarantees that someone's going to be successful, but there's so much that you're able to do from being nimble and really pushing things through and bringing people together in order to really bend the market to your will, so to speak.
• 24:30
  Darryl Hicks: That, I think, comes as an advantage.
• 24:32
  Darryl Hicks: Along with that, as far as why I'm really passionate about this, I had a bit of a troubled childhood.
• 24:38
  Darryl Hicks: Growing up, I was really badly bullied when I was in elementary school and junior high got beat up a lot, jumped from behind.
• 24:44
  Darryl Hicks: I had my front teeth chipped out and chased with broken baseball bats and had a pretty nasty experience with some of the teachers in my school as well a real lack of support from them which really caused me to be super sensitive and really, really upset about creating more accountability, a real sense of justice and fairness as well, Understanding that people in positions of power the greater the amount of power, the greater the need for accountability.
• 25:11
  Darryl Hicks: But in order to create accountability, you need transparency.
• 25:17
  Darryl Hicks: If the people in the position of power had all the facts available to them to really understand the ground truth of what's happening and knew that their decisions were going to be out in full sunlight for everyone to see, I think that we would build a much better society and system.
• 25:29
  Darryl Hicks: And so some of those, some of my own personal experience from my teenage years, really created that sense of, I'd say, justice and the need for trust and transparency.
• 25:40
  Darryl Hicks: It's deeply embedded into my DNA.
• 25:43
  Darryl Hicks: It's also one of the core values of Flex Bay radical transparency.
• 25:46
  Darryl Hicks: Ray Dalio talks about this in his book Principles and how it's a double-edged sword.
• 25:51
  Darryl Hicks: Not everybody's able to work successfully inside of an organization that's radically transparent, but that's one of our core values as well, and I think it's one of the reasons why this team is perfectly suited to go work on this problem, because this is what's needed.
• 26:05
  Darryl Hicks: If you talk to the people who really deeply understand what's broken inside of payments today, they'll tell you that more trust and transparency in the payments and the ability to very transparently share all the data that's available on all sides of the ecosystem and to be able to make better decisions based on that data is the real answer to the problem, and so that's what we're working on.
• 26:25
  Greg Myers: Okay.
• 26:26
  Greg Myers: Well, it's obvious what your passion is on the business side, but what about a personal passion?
• 26:30
  Darryl Hicks: Yeah, I mean I live here in the Okanagan Valley for a reason.
• 26:34
  Darryl Hicks: You know, I lived most of my life in really big cities.
• 26:37
  Darryl Hicks: During the pandemic, the value proposition of living in a dense urban environment was seriously mitigated, especially here in Canada.
• 26:43
  Darryl Hicks: The lockdowns were pretty severe.
• 26:45
  Darryl Hicks: In Montreal we even had curfews at one point because, you know, covid only comes out after eight o'clock.
• 26:52
  Darryl Hicks: But it turns out that quality of life here in a place like Okanagan Valley was tremendous, because everything that people do in dense cities is like going to nightclubs and restaurants and festivals and the symphonic orchestra and sports teams when they're in the playoffs.
• 27:04
  Darryl Hicks: That's all the best stuff of being in a big city, whereas here the greatest stuff is horseback riding and water sports and golfing and hiking and snow biking and skiing, and this is a mecca for all those kinds of outdoor activities.
• 27:18
  Darryl Hicks: So it's been a real blessing for the family to be here.
• 27:21
  Darryl Hicks: Everyone's so much more active.
• 27:24
  Darryl Hicks: We're a wake surfing boat.
• 27:28
  Darryl Hicks: We get out wake surfing on the lake all summer long.
• 27:30
  Darryl Hicks: We're blessed to have a ski in, ski out at a really beautiful ski resort up in the Rockies here close to where we live.
• 27:37
  Darryl Hicks: So it's been a great life and I have a lot of passion around all those sports, but doing it with my family.
• 27:43
  Darryl Hicks: I travel a lot, like every CEO, but when I'm not traveling I'm all in and really working hard to get the family together and out, doing these really amazing, active things.
• 27:52
  Greg Myers: Okay, well, daryl, if someone comes to you maybe they just graduated from college and they're looking to go into a career in payments or fintech and they come to you and say, hey, daryl, what do I need to focus on to be successful, what kind of advice would you give them, Well, I mean, there's the obvious ones on, like, think about what you're really passionate about.
• 28:10
  Darryl Hicks: This is what I even do with my kids like what you're naturally drawn to, and like what kind of YouTube videos you watch in the evenings and the stuff that you do, where you just get into a state of flow and you completely lose track of time.
• 28:20
  Darryl Hicks: Like, my oldest son is just super passionate about all things cars and he's constantly watching YouTube videos and like how to change your own suspension and change your own radiator and change your own brakes and he's just and he's always been really gifted mechanically with his hands.
• 28:32
  Darryl Hicks: Well, that's probably going to be a really great place for him to focus on.
• 28:36
  Darryl Hicks: You know where he's going to go and work.
• 28:38
  Darryl Hicks: If you are really passionate about payments which is rare but does happen I'd say the one of the biggest lessons that I learned early in my business that I try to share with people is, I think, one of the smartest things I did.
• 28:50
  Darryl Hicks: Before I had my first dollar of revenue in FlexBay, we built a killer advisory board.
• 28:54
  Darryl Hicks: You can't do things on your own and being able to find, curate, incentivize, communicate, compensate a really killer advisory board, or a tribe of people around you has been a massive unlock for me.
• 29:10
  Darryl Hicks: I would not be where I am today if it wasn't for the advisory board that we built together.
• 29:14
  Darryl Hicks: I have a really great framework on that, which I teach to founders and to executives.
• 29:18
  Darryl Hicks: I recorded a video on it and I share it with people completely for free.
• 29:21
  Darryl Hicks: The framework that I learned from a mentor of mine and then I kind of added to it and refined it with some business coaches, and I think that that applies even for people just kind of like graduating out of school is getting yourself out there, like showing up as half the battle, and I mean like showing up in person, like go to the pockets where there are people that are actively working on the thing that you're really passionate about, find out what problems they have and find ways that you can provide value to them and start to build that connective tissue and those relationships with them, and just get yourself out there and find out more and who are the major movers and shares and players in the ecosystem, and you'll find that all kinds of doors will open to you as a result of that.
• 29:58
  Greg Myers: Okay, great Thanks for sharing that.
• 30:00
  Greg Myers: So we've covered a lot of ground about the company, the industry and you.
• 30:04
  Greg Myers: Is there anything else you'd like to cover before we wrap up?
• 30:33
  Darryl Hicks: no-transcript need for transparency.
• 30:40
  Darryl Hicks: It's something that I'm deeply passionate about and I think it's something that we need across all kinds of aspects of our society.
• 30:46
  Darryl Hicks: I'm working on it in payments.
• 30:47
  Darryl Hicks: I got payments.
• 30:48
  Darryl Hicks: I'll take care of that, but I think that there's a lot of other things.
• 30:52
  Darryl Hicks: The same thesis that's really driving success in FlexPay and in this particular problem could work in a lot of other areas.
• 30:58
  Darryl Hicks: It's something that I'm deeply passionate about.
• 31:00
  Greg Myers: I think that's a great way to close out the show.
• 31:02
  Greg Myers: So, daryl, thank you so much for being on the show today.
• 31:04
  Greg Myers: I really appreciate it.
• 31:05
  Darryl Hicks: Yeah, it's great to be here.
• 31:05
  Darryl Hicks: Thanks, Greg Cheers.
• 31:07
  Greg Myers: Absolutely, and to all you listeners out there, I thank you for your time as well, and until the next story.
• 31:12
  Speaker 1: Thank you for joining us this week on the Leaders in Payments podcast.
• 31:15
  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.
• 31:22
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