On today’s episode, I am joined by Rodney Robinson, President & Co-Founder of TabaPay.
Rodney and I discuss the shift toward faster payments, what that means for the overall payments market, and where the US sits today in payments innovation. TabaPay is a platform built for real-time money movement.
One quick PSA. If you want to reach the best fintech community around we have all the tools you need to shape your message and reach new clients. Sponsor an episode, sponsor a webinar, buy ad space; we have it all. Please reach out anytime: todd@fintechnexus.com.
Without further ado, I present Rodney Robinson, President & Co-Founder of TabaPay. I hope you enjoy the show.
Episode highlights include:
- TabaPay’s founding story
- There And Back Again
- Faster payments costs
- FedNow
- The banking crisis
- US vs. International payments systems
- Raising capital
- Recommended reading – The Martian by Andy Weir
- And much more…
Connect with Rodney on LinkedIn
Connect with TabaPay on LinkedIn
Connect with PitchIt:
- Tweet me @ToddFintech
- Connect with me on LinkedIn
- Find previous PitchIt episodes
- Email me at todd@fintechnexus.com
Until next time.
Download a PDF Transcription of Rodney Robinson HERE or Read the Full-Text version below.
PITCHIT FINTECH STARTUPS PODCAST NO 94-RODNEY ROBINSON
Thanks for coming back for another episode of PitchIt, a fintech conversation amongst founders, investors and friends. I’m your host, Todd Anderson, Chief Content Officer of Fintech Nexus.
What we do is we take a peek behind the curtain, what motivates someone to start a company, how do investors make the right bet, what do accelerators do during and help enabling the process of growing your company, how do banks think of founders. Not to mention, we try to have some fun and what you’ll see is we’ll also do some special episodes, we have some new features coming so stick with us and you’ll get all you need to know about the fintech startup landscape.
PitchIt is really a part of a larger podcast network here at Fintech Nexus, you can go to my colleague, Peter, our Co-Founder & Chairman for Fintech One-on-One, you can subscribe to his feed or we have our newest podcast by one of our writers, Isabelle Castro, the Fintech Coffee Break. For everything produced by Fintech Nexus, you can check out Fintech Nexus Podcast, which is really our content fire hose, all shows, webinar replays, even in-person event content, not to mention, our weekly new show.
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Now, let’s get on with the show.
(music)
Todd Anderson: On today’s episode I’m joined by Rodney Robinson, CEO & Co-Founder of TabaPay. Rodney and I talk about this overall shift into a word of faster payments, what that means when we talk about faster payments, where the US sits in the international world when it comes to payments and you’ll be surprised what Rodney’s answer is there in terms of where the US is currently positioned, the risk of faster payments and the various connected tissue in the payments ecosystem, raising capital and much, much more.
One quick PSA before getting us to the episode with Rodney. If you want to reach the best fintech community around, we have all the tools you need to shape your message and reach new clients. You could sponsor an episode, sponsor a webinar, buy ad space, we have it all here at Fintech Nexus, just reach out anytime to t-o-d-d todd@fintechnexus.com and be happy to chat with you about a number of different digital offerings.
Without further ado, I present, Rodney Robinson, CEO & Co-Founder of TabaPay; I hope you all enjoy the show!
Welcome to the podcast, Rodney, how are you?
Rodney Robinson: I’m great, thanks for having me.
Todd: Of course. Well, thanks for joining me, you know, I like to kick off these episodes, if you could just tell the audience a little bit about your background and you know, what brought you to the point of founding TabaPay and kind of a little bit about yourself.
Rodney: Sure. I’ve been in business a long time and in payments for 30 years, I have started and sold five companies around payments. Probably, the last one prior to this company, we sold the company to Mastercard to do Instant Pay Mastercard and Mastercard sells that product out, Mastercard Send, and we wanted to do another company that was similar to that, but also focused on polling money and pushing money and we proposed it to Mastercard. Mastercard didn’t want to do the poll site, compete with some of their processes so we decided to start this company, but I’ve been an entrepreneur now since I left IBM back in 1996 and I have been doing my own companies since then. (laughs)
Todd: What is some of the drive behind that, I mean, you mentioned five or six companies that you’ve started, kind of where did some of that come from?
Rodney: I’m a problem solver and I love and I’ve always loved to find big problems that customers have and try to solve them. I did it in professional services initially when I was at IBM and actually started some product work at IBM trying to expand professional services and productizing and deploy professional services and so I’ve always been a problem solver. I’ve been in product management for quite a while and the combination saying hey, if I can do it for this big company, I do it better for a smaller company, do it myself and so that’s what drives me to do this.
Todd: So, how, ultimately, did you come to the name TabaPay and tell us a little bit more exactly about what TabaPay does.
Rodney: Yeah. So, TabaPay does pushing and pulling money in real-time. So, for a lender, for instance, we disburse funds instantly to bank accounts in US and Canada then let them collect bank installment, right, debit cards of banks accounts, we do it overseas too so a company can fund and disburse, a bank can load and unload, but our business is about moving money in a circular fashion where if a lender pushes through a consumer, they have to collect back so the money goes there and back again.
I’m a Lord of the Rings fan and so put the two together, I have money going there and back again between the business and the consumer, a business and a business and then back again as Lord of the Rings book and so the two make sense and so we named the company, There And Back Again is a long name for a company so we tabbed it, TABA, because our business is about there and back again money. We do it instantly and my love of Lord of the Rings, a book name, it all works okay.
Todd: Yeah. I mean, that’s probably one of the better answers that I had on that question. (both laugh) A lot of people, you know, this is what the domain allowed us to do or this was kind of a spin because our original domain was taken so I like the fact that there’s a real substance and story to it. You know, as someone who has been in payments for a while and you’ve seen kind of where we’ve come from and where we’re heading, where would you say we are in kind of that payments journey today. You know, there’s a lot of talk about real-time payments, there’s FedNow that’s apparently coming in July, I believe, so as someone who knows payments as well as you do, kind of where would you say we sit, at least here in the States, on the payments journey?
Rodney: Yeah. So, if you look at the Nirvana, right, when you solve payments, you can do risk-free of costs payments instantly, right, so you have the cost equation, you have the speed equation and risk equation. And we are, you know, if you look at a curve, right, there’s going to be a great acceleration, I think we’ve crossed the speed, or we can do instant payments now. Cost, we haven’t solved cost yet, right, so expensive and we haven’t solved risk yet, okay, and so the next innovation in payments is going to be risks and cost and I can opine more, if you like.
Todd: Of course, yes.
Rodney: We’re trying to solve these and so if you look at real-time payments today, most of it is done over the network, card networks, Visa, Mastercard, whether you’re collecting or pushing, but we solve the collection first. If you want to pay me, I have to take your Visa card and pull money from it and this is risk and cost in the equation, right, you can charge your bank, I have to pay interchange. The game changer is when you can just……I can request a payment from you, and you can push it to me and you do that is easy as swiping or tapping a Visa card.
And so, I think the next game changer, right, to do, I’ll say, very low cost, instant, no-risk payments is when you can push electronic money to me, and I think the game changer here is when the Federal Reserve and banks adopt digital money. I’m not going to call I crypto, I’m not going to call it anything but digital money. When you can take your phone and you can push money to me and digital money issued by your bank or the Fed that becomes the end game of no cost or low cost, zero risk because you’re pushing me money, right, I don’t have risk as a merchant, and that’s where it’s going. I think we’ve solved the real-time, we now have to solve risk and the cost.
Todd: What are some of the barriers to that happening and I would say, how do we get there as quickly as possible?
Rodney: China is doing it today, the digital yuan, right, and they’ve done a good job, now the Communist Party, of course, does it because they want to understand what their people are paying because of privacy issue. We have to solve that in this country, right, people pay with Visa today and maybe they don’t understand, maybe they do, and don’t care, but when you pay with a Visa card, Visa knows what you’re doing and if they cared and looked, they could see exactly how I spent my money. I think the concern probably of people is the government may be able to look what I pay, they can look today, they can spin a Visa and get what I’m doing today.
I think the problem when a government issues currency, people’s concern is, does that violate privacy, can the government look without asking and so that has to get solved. I think once the government can solve the privacy concern of digital money then I think it’s going to happen quickly, you know, the Fed has a paper today, there’s certain sides that’s political and screaming of privacy and not doing this. It’s going to get there because risk and cost have to get solved or our economy will not be competitive and so to keep our economy number one in the world, we have to solve this digital money and the privacy issue with it, okay.
Todd: That makes total sense and, you know, I think that it’ll be nice when that is solved because payments, I think, are a frustrating aspect for many today and I think most regular consumers probably don’t care as long as they tap something and the money goes to where or they pay what they need to pay for they don’t care, but I think they would like cost to go down and a restaurant owner would like to not have to put up in the window 3% higher in this price and 3% lower in this price.
But, you know, relating it back to where we’re at today, we’re in the midst or we thought we may be past the banking crisis but it looks like we’re not, given how some others might be teetering, what does the various networks and working with different partners, like how does some of these impact that and what about working with different banking partners who might be in different places when it comes to payments? Does it matter, you know, what are your thoughts on kind of that and maybe how the banking crisis is impacting some of the stuff today.
Rodney: That’s a good question. Payments and banks, of course, you need banks in the United States for payments, they have different risks, and they have different merchant tolerance, right, so picking a bank is important, right. I mean, the Silicon Valley Bank crisis taught everyone that liquidity matters now, and I had our customers calling us, you know, pleading for us to delay funding. We have an instant payment business merchants have to fund in order to push money out or if we collect money as a payment process, right, deposit that money.
When Silicon Valley Bank shut down, right, it was panic though amongst a lot of the merchant bases because our fintech banks are still not that kind of bank. With that top down, we can’t be singly dependent on one bank and so our strategy is a multi-bank strategy, we process with 15 banks now and we’re trying to listen to our merchants, we’re trying to get them on board with multiple banks, right.
So, part of our value proposition is youboard with us, whether it’s instant pushing, instant pushing and we can settle, we can support you in multiple banks. So, if SVB locks up, a new bank locking up, you can continue to do business in another bank and I think you’re going to have companies do this and lately, that’s just how it is and we haven’t seen the final fall off in the interest rate hikes so let’s just see what happens, okay. But everyone’s now looking at banks and what we’ve never seen before is companies doing diligence on banks. I’m a vendor for a lot of companies and they ask me for my financials, they ask me for my diligence bank, they ask me for these which is unheard of.
Todd: Yeah, I know. (cross talking)
Rodney: We want to help banks invest its capital, right, how to invest these deposits to avoid what happened to Silicon Valley Bank.
Todd: You mentioned in your intro, you guys are operating internationally, how do we compare to the rest of the world. I mean, we touched on China a little bit and their digital yuan but also the Communist Party and kind of their control of that, but in other markets how are their payments versus where we sit today and is there anything we can learn from what folks are doing around the world that maybe we could apply here to improve the payment system.
Rodney: So, we operate today in Canada, we are setting up in Latin America and I think the US actually has a, at least compared to the Western Hemisphere, I think we are the leader, right, and, you know, people think the US system is a mess payment. They think it’s expensive, they think all these banks cause problems, you know,10,000 banks and credit unions in the United States, but look, if you look at the United States, you can send money instantly to everyone through Visa and Mastercard, RTP is 65%, right, you can collect back online instantly.
Canada, I’m going to take a step back, Canada I think is probably leading right now with their RTP and (inaudible), that’s a very good system because it’s ubiquitous across all consumer accounts, but the US and Canadian markets look similar and as RTP expands I think it’ll be similar to Canada. Latin America, I think, is pretty far behind right now in real-time payments, in terms of these electronified payments, it’s very expensive to move money in Latin America and we’re trying to solve those problems in Latin America, instant and low cost.
Todd: What about some of the incentives in the payments system, you know, obviously you have the fees that go along with payments and then you also have, you know, banks and others that make money on interest income when it comes to doing payroll. I mean, we’re moving towards everything that’s moving faster, maybe someday we’ll have access to our payroll on an almost daily basis.
How do some of these incentives, maybe where they sit today, evolve as we get some of what we’re working on into the payment system and things are faster and cheaper and some of that interest income kind of goes away, is it just you need to evolve as a bank and get other revenue sources? How are some of the incentives aligned today versus maybe where they’re headed?
Rodney: Yeah. So, there is a lot in that question, let me start (Todd laughs) by saying…so, firstly, companies, right, companies pay you every two weeks, right, you earn wages every day, so the companies are making money on your work, right, and so that’s number one so that’s going to go away. I think it’s up to ADP or some these payroll companies that will support real-time payment every day.
The cost of real-time payments has gone down to pennies, right, with the clearing house and it will decrease further when FedNow comes on board so real-time payments every day is no longer a cost issue, it’s an accounting issue. So, there’s going to be innovative companies, and they exist today, where the company pay their employees real-time that will help people, keep them away from payday loans and things like that, but companies lose that incentive to hold money for two weeks and let it float.
If you look at banks today, right, what Silicon Valley Bank taught everyone is you can’t assume interest rates are going to stay low, if a company’s money, liquid money, you can’t invest that money and earn interest and that’s what SVB has taught other banks. And so I think where banks used to make money on interest, I’m not sure they’re going to do that a lot, okay, I think the banks that do well in payments are those that have a lot of liquidity and with liquidity, you can’t make a lot of money on liquidity. You can’t lend it out, you can’t put it in CDs and so it’s about monetizing payments and so, you know, you have to support liquidity, real-time payments and figure out how to make money on it. Unfortunately, this may be the big high-volume guys which are the big banks, right, and so the big banks may have an advantage in this market because of liquidity and the massive volume they can do.
Todd: Since you’ve started Taba, what’s one of the biggest lessons you’ve learned about the company?
Rodney: It’s hard to solve engineering (both laugh), but it’s about priority, right, we listen to our customers, and we try to move the company based on what they need. What we find about payments, and this is what makes it hard about priorities, is that you have to solve all of someone’s payment problems and if you don’t, they’re going to go to someone else, right. We do a ton of card processing, ACH processing and RTP processing and if a merchant calls me and says hey, we need to support, as an example, Apple Pay tokens with 3D Secure, that’s a lot of gobbledygook.
But if I can’t supply that they’re going to go to someone that can, right and so we have to constantly listen to our customers and solve all their payment needs because they go to vendors that can and so that’s what I’ve learned. You just can’t solve a slice of someone’s payments, you have to solve them all and that’s how you win, you solve them all inexpensively and you perform a great service. Payments should be a forgotten service at low cost, high speed that the company does not have to worry about.
Todd: What about regret, any regret to share, I mean, there was a sound like a little bit in there but any regret to share in terms of, you know, where you guys started to where you are today.
Rodney: Oh, I’m not going to call it regret, you know, we are in California, I love California. My regret is we probably should have set up engineering labs somewhere else, right, somewhere else in the United States……
Todd: Interesting.
Rodney: ……just because it’s so hard to find people. Anyway, other than that, no regrets, we’ve had a great ride and I think we’ll continue.
Todd: What does the rest of the team look like around you, how big are you guys today, what’s the breakdown in terms of engineering versus product versus other roles in the company, kind of who are those that are around you today?
Rodney: We have 60 people, 10 of them are engineers, we have a QA team, I would think at least a third of the company is technical resource, engineering and QA and we keep our engineers in California and actually it’s okay. Lately, it’s been easier to hire people, we see layoffs all around us, right. We’re in Silicon Valley, you see Google and Meta and all these companies laying people off, we haven’t laid anyone off and we’re able to hire engineers finally which is great.
We have grown rapidly, we grew I think our top line and bottom line 70% last year which is a lot and we’ve doubled the work force to two years and our processing volume now is about, I think it’s over $40 Billion a year and so, you know, it’s pretty good. My concern is interest rates, right, we serve a ton of lenders and the companies that need liquidity, and they borrow money to provide to their customers and as rates go up, this is not going to go down. And so, we have not seen impact yet, but I expect those customers will start to suffer from higher interest rates because they borrow money.
Todd: You guys have raised, obviously, some outside capital, how was fundraising maybe in this venture or some of your previous ventures, as someone who’s had a few companies and, you know, any piece of advice for a founder who might be starting their journey today or might be a year in as someone who’s, you know, sold some companies and had some success and is running a successful company today.
Rodney: So, we raised a small amount of money back in 2017 and we have not taken any external capital. What’s really nice about where we are right now is employees own 30% of the company, I’m sorry, 70% of the company……
Todd: Wow!
Rodney:…….a private equity owns 30% and that is amazing and energizing for the employees, all of the employees have stock and we’ve been profitable since 2018. And so, my advice to entrepreneurs is it’s fine to raise money, it’s good, better to spend someone else’s money, don’t give a lot of your company away and don’t spend a lot of money till you’re really sure about the problem to solve. We were lucky in that we put a business plan together back in 2017, we received money, we are still on that same business plan, we have not changed one thing about that business plan….
Todd: Wow!
Rodney: ..…which means that we found the problem, we’re solving it and will continue to solve it, we’re going to expand the universe of solving. The mistake that a lot of companies make is they raise money and then they’ll spend a lot of money without an unproven problem in the market, right, they don’t know if they have a good product market fit, they don’t know if they are solving a big problem. Don’t spend money until you know you have a good product market fit, you can solve it well, that’s my advice, that’s happened in every company I’ve ever done (cross talking) we have our people that could solve it.
Todd: I mean, have we in the we kind of venture/fintech universe, have we glorified the capital raising too much because it feels like there’s a lot of founders that think they have to raise money when in essence, you know, they might not or maybe they shouldn’t raise this much, they should raise this much because, you know, to take some of what you’re saying, it not all about raising capital and spending that money.
It seems that some incentives from the VCs and others, it’s here’s a check, now go spend that check and then we will re-raise and go spend that check. It feels as if those incentives that we’re talking about before as incentives are kind of misaligned and some founders, you know, maybe get themselves in a bit of trouble.
Rodney: I agree. Private equity is the double-edged sword in that they press a company to grow or grow revenue and the founders and employees get drunk on money, they think victory is round after round after round. That’s not the case, right, victory is solving the problem and not needing money, right, can you grow without needing additional money, but it’s this whole mindset now, both with hiring people, go ask who your investors are, how much money did you raise and I’d argue it’s not how much money you’ve raised, it’s how many customers do you have, are you solving the problem, what’s your growth rate, right.
These are important questions that no one asks, it’s all about your investors and where you’ve raised money and it’s the cycle that people get into, and I think the cheap money of the last ten years has done nothing but smash prices for companies in order to make profit. So, anyway, what we’re going through now is just fine, you’re going to see separation, you’ll see some companies go broke.
Todd: And that’s not necessarily a bad thing, it also weeds out companies that maybe shouldn’t have either raised a certain amount or maybe shouldn’t have gotten to a certain point because they really didn’t prove out the business that they were hoping to prove out.
Rodney: Yeah, that’s a hundred percent correct.
Todd: So, we have just a couple of minutes left, I’d like to end with a couple of fun, lighter questions. Do you have a favorite book or the last book that you read?
Rodney: So, I’m an Andy Weir fan and I’ve read all his books, but my favorite book is actually “The Martian,” out of the movie and I think he’s a great writer, I’m waiting for his next book.
Todd: You know, all founders obviously work hard and some risk burnout, what do you do to constantly stay fresh, I mean, you have done this for many, many different times, how do you keep your mind fresh and fresh for your team?
Rodney: So, I get up at 3:00 am every day in California, I like to beat my East Coast customers to work, and I go on a run every morning in the dark and look at the stars, it’s beautiful. And then I coach track, I go to a high school, I volunteer, I’ve been doing this for ten years and I’m a shot put and discuss coach in the high school, I get between 30 and 40 kids every year out there and I tell everyone that they actually teach me more than I teach them.
I will challenge anyone, if you’re good at something, go volunteer at a high school, right, I do this for about 12 weeks a year, but what you learn is how to communicate to people, right. Imagine you have 35 people that don’t understand numeriron (?), these are 14- to 18-year-olds, you have to explain something complex to them, it helps me in my job when I can communicate with younger kids, and they understand me then I can take that learning back here. I’m a better leader here because of them.
Todd: Interesting. So, dovetailing into my next question, is your favorite sport or sports, you know, is it track & field running?
Rodney: Shot putter, I like shot putting.
Todd: Interesting, you’re the first. (laughs)
Rodney: (laughs) Probably the first you’ve ever met.
Todd: Yes. (both laugh) Do you have a favorite vacation spot?
Rodney: My wife and I love to go to Aspen every year, we love to bike, run and hike and that’s what we do in Aspen.
Todd: Alright. Final question, you know, what inspires you, you’ve done many different companies, what keeps you going, what’s your biggest inspiration?
Rodney: Every company, every job I’ve ever had, they’ve taught me more than I’ve taken from them and what I love and what gets me up everyday is I love solving my customer problems and I love learning. Every day in a small company, your job is so broad, your learning is so great, and I challenge everyone to do that, don’t work for money, money comes, right, with success. You want to work to learn, you want to enjoy it and learn it as you go and that’s what I do everyday.
Todd: Well, Rodney, I appreciate your spending at least a small portion of your day with me, you know, thank you very much. If someone wanted to reach out to you or reach out to Taba how do they do that?
Rodney: They can email me rodney@tabapay.com that’s probably the best, I love to hear from people, particularly potential customers.
Todd: Rodney, thank you very much, appreciate you spending the time and look forward to catching up sometime in the future.
Rodney: Thanks for having me, Todd, appreciate it, thank you.
Todd: Thank you.
