Accelerating SaaS Potential With Fintech

Hosted By Matt Watson

Full Scale

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Joe Keeley

Today's Guest: Joe Keeley

CEO and Co-founder - JustiFi

Minneapolis, MN

Ep. #942 - Accelerating SaaS Potential With Fintech

In this episode of Startup Hustle, Matt Watson talks about fintech and its potential in the payments scene with Joe Keeley, CEO and co-founder of JustiFi. The founders also chat about building a business around a purpose and how JustiFi can help a lot of companies.

Covered In This Episode

Have you ever wondered what the future holds for online payments? Are you anticipating new trends in fintech? There is much to discuss about fintech and its value to consumers and businesses.

So listen to Matt and Joe’s discussion today. Aside from answering those questions, they also delve into use cases for JustiFi and the market problem the company aims to solve.

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Prepare for an insightful session on today’s Startup Hustle episode.

Business Podcast for Entrepreneurs


  • How Joe Keeley and JustiFi started (01:35)
  • On building software on IoS and Android (04:51)
  • Building a business around a core purpose (05:33)
  • A discussion on use cases for JustiFi (07:35)
  • How JustiFi accelerates fintech tools (09:56)
  • Standardizing market rate when processing payments (12:59)
  • The value of using the cloud for backup and flexibility (16:05)
  • Competition in the fintech space (17:09)
  • The market problem that JustiFi is trying to solve (18:54)
  • Monetizing the fund flow (21:09)
  • How powerful are Mastercard and Visa on the payments market? (23:01)
  • On fraud and chargebacks in processing online payments (25:33)
  • The payment plans with JustiFi (28:03)
  • Is crypto the new payment method? (29:43)
  • What the future of processing payments look like (31:44)
  • On churn and breakage (34:55)
  • Choosing the right tech stack to help you scale (37:39)
  • Saving money vs. making money (39:02)
  • How to get the most value out of fintech (40:09)
  • Advice for founders who want to start a fintech company (43:41)

Key Quotes

So many folks really resonated with building stronger families. That’s why we existed. And how we conducted ourselves was our core value.

– Joe Keeley

When you think about how quickly you can get a platform spun up using other people’s tech stacks, there is an older way of thinking, which is, “well, I have to build it all myself.” At some point, that is actually a liability because you miss a window of opportunity. What I’m seeing out in the market is you’re not getting any extra points or gold stars or valuation for saying that we built it the hard way.

– Joe Keeley

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Rough Transcript

Following is an auto-generated text transcript of this episode. Apologies for any errors!

Matt Watson 00:00
And we’re back for another episode of the Startup Hustle. This is your host today, Matt Watson. And I’m very excited to be joined by Mr. Joe Keeley from JustiFi. We’re going to talk about their fintech startup and helping companies of all shapes and sizes. I’m sure it helps with their payments. We’re learning more about that today. Before we get started today, I do want to remind you that today’s episode of Startup Hustle is powered by Hiring software developers is difficult. Full Scale can help you build a software team quickly and affordably. And has the platform to help you manage that team. Visit to learn more. Joe, tell me how we can get paid faster. That’s what I want to know. I want more money, quicker.

Joe Keeley 00:40
You want to get more money quickly and make your money.

Matt Watson 00:43
How do we make it rain?

Joe Keeley 00:44
There you go. Well, if I had solved that, I guess I would be retired again.

Matt Watson 00:52
But you would be 1000 there.

Joe Keeley 00:54
There you go. Thanks for having me. Great to be here.

Matt Watson 00:58
All right. So, before we get started, tell us a little bit about your background. And kind of what led you to start, you know, be a co-founder of JustiFi.

Joe Keeley 01:07
You got it. Well, as it goes as it is running, you know, an embedded payments and fintech company, a platform. I was remarkably unqualified to fill that role, actually. And the reason I say that is because prior to starting JustiFi with my partners, I started 18 odd years ago. If you can believe that, what turned out to be the largest employer of childcare nannies and babysitters in the US. So what was that you know, how you transfer from, you know, a babysitting franchise to an embedded fintech platform. That’s, I guess, what I’ve done.

Matt Watson 01:52
So companies, pardon me?

Joe Keeley 01:57
Well, a company was called College Nanny Sitters and Tutors. So I started that when I was a sophomore at the University of St. Thomas entrepreneurship program. After I answered an ad, perhaps only in Minnesota, that said, looking for a hockey player to watch my two boys. So I was a college hockey player. So I became their big brother, their chef, chauffeur, referee, and nanny. And in doing that, I really saw that I was kind of a big brother role model to these two boys. I showed up the first day, and I said, you know, I play hockey in college. He goes, oh, that’s great. We’re gonna play hockey at Harvard. So the bar was pretty high. And I needed to, you know, live up to that bar. So after that experience, I started a small headhunting business when I was an undergrad and placed my other, you know, friends, my athlete friends, with other families to be their role models. And that was sort of the spark that went that led to what ended up being, you know, a 15-16 year journey before I sold the company to Bright Horizons, a public company out of Boston. And ultimately, we grew it to 200 franchise locations with about 10,000 employees. And here’s where, I mean, maybe the link is a tech platform that allows for, you know, real-time booking sort of via Uber for these babysitters. But, you know, that’s what I ran, and I and I had the blessing to have, you know, hundreds and hundreds of folks there that own franchises and grew those small businesses, so that was my first act as an entrepreneur. And when I kind of brought my head up after a little bit of a sabbatical after selling that company, I was looking for to be in a really big industry, I wanted to, you know, do well but also do good and look where there might be some inefficiencies or issues in a marketplace. And I wanted to work in technology because, you know, the value creation and that is very much, you know, the gold rushes the software platforms of our generation today, and had the most fun building the iOS and Android native apps that ultimately became you know, an engine for scalability that was a big part of our my first exit. So that was a winding road in a very short, short story. And I can. We can double click on anything you’d like to get to go from a hockey-playing nanny to ultimately a leader of a growing venture-backed fintech company. So Oh, and the boys both played hockey at Harvard.

Matt Watson 04:42
So yeah, I was gonna ask you. I was like, I have to ask at some point in time, but they make it the hardest. I set you up on that man. Yeah. Well, congrats to the hockey players who made it to Harvard. You obviously showed them everything that you knew.

Joe Keeley 04:55
So yes, results may vary, I must say. Legal always said but You know what we really found, though, in starting college nannies. And our purpose was to build stronger families. And I think what’s really key and growing a business, whether it ends up being a, you know, single agency, or the largest employer in the country and expanded into the UK or fintech companies that you got to start with that purpose. And, you know, I didn’t come up with that. I mean, it’s been around forever from, you know, Martin Luther King to Simon Sinek, really, you know, put out his start with why but so many folks really resonated with building stronger families. And that’s why we existed, and then how we conducted ourselves with our core values, and then it made the decisions of growing much easier. You look for the next right answer. So when we started JustiFi my my partners had built a vertical SAS company, a pretty sizable one that they sold to NBC actually. And they processed $4 billion a year there at the end. And what they found was that harnessing the power of embedded payments and fintech was really complicated and really expensive, and took them a decade and a half. And we thought they came and we started talking about this. And that was really the economic engine. And that didn’t really seem fair. And as someone who’s just really, I’ve fancied myself to be, you know, really a champion for entrepreneurship, and entrepreneurship is small businesses, and it’s really scaled businesses as well. So our purpose then, when we started JustiFi was to accelerate potential. So how I actually linked those two is that there really isn’t a lot of conflict between building stronger families and accelerating potential.

Matt Watson 06:55
And for me that really is how you’re working on can change a lot, but why you’re working on things I don’t think should so for JustiFi, tell us more about what you’re doing with payments and the, you know, talking about vertical SAS platforms that can take advantage of it and stuff. Give us some more, you know, details and examples of that.

Joe Keeley 07:09
Yeah, let’s, let’s sort of, you know, what’s it? Yeah, let’s just sort of break it down. I mean, so we talked about, there’s a lot of buzzwords that are thrown out there, you know, fintech and SAS, and all of these sorts of things. So, basically, most industries, you know, 1000s and 1000s. Of micro industries, there is a software platform to help manage those businesses. You know, if you think about, you know, mind-body that uses, you know, yoga studio uses mind-body to help run their business, if you think about sports in general, or a youth sports, that was my partner’s company, sports engine provides software to help youth sports teams run better roster, their children, the athletes schedule, all those things.

Matt Watson 07:58
It’s a CRM system, you know, information systems.

Joe Keeley 08:04
That’s right. And systems of record, you know, software eating the world. This is the system, you know, it’s funny, ouch.

Matt Watson 08:11
So I went to college, and I got a degree in Computer Information Systems. And it was like, several years later that I finally figured out what a computer information system even was, but it’s like what you’re describing. That’s right. That’s right. It’s the tracking of the information.

Joe Keeley 08:27
And if you look at these, some of these, you know, systems that you got your degree from and some of the world-class software companies today, Shopify, Airbnb toast, which provides those systems, both hardware and software for restaurants. How they actually make most of their money is through embedded payments and embedded fintech. Okay. So when you think about, you know, does Shopify really make, you know, the majority of their economic value and charge, you know, $25 or $50 a month? No, is the answer. It’s in processing and monetizing the payments that are flowing through, it’s by offering loans, Shopify, you know, lending it to by offering and Airbnb is the same way. And toast is the same way. You know, the toast being recently public, it’s pretty clear when you look at the financials, what’s driving their economic engine, and that’s really what drove the economic engine of my co-founding partners. Last platform. So what JustiFi does is help every other platform small or large harness those tools, those fintech tools to accelerate their potential. We think that every platform should or could be a world class fintech platform. It doesn’t change the great software that they provide to their barber shops or their youth sports teams, or whatever it happens to be. It just allows them to, you know, simply, you know, make more money and build better software. So that’s, you know, we exist at JustiFi to accelerate the potential of vertical SAS platforms, and specifically their fintech potential. So we have a software platform ourselves that we become the processor. And we run an orchestration layer that allows platforms to easily bring in multiple partners, whether that’s a lending partner, or an insurance partner, or a card issuing partner, because these are all parts of the fintech playbook. So I think it can be really overwhelming if you’re if you’re building a software platform, because, you know, you might have an investor that says, Oh, you shouldn’t you should, you know, be a fintech companies like, well, what does that mean, and I have a full roadmap, and I’m super busy. And I’m not a fintech or a payments person. And when you go out to the market, it’s kind of hard to navigate it. So we actually, in addition to our platform, have a team that we call our engaged team, you know, some that it’s our virtual fintech team that actually works, you know, as real humans with the other software platforms to help with their strategy. Because I think, you know, you need humans to work with humans, in addition to really great tech.

Matt Watson 11:31
So, for your guys’ core product, is it more about collecting the payments themselves and various types of payment methods? Or is it also like invoicing and billing and that part of it or like, what, what part of the like, the payment? side of that, are you helping solve?

Joe Keeley 11:49
Yeah, so think about, like, think about this as more of a journey. So it often starts, the tip of the spear is often payments. So we would come in and become the payment processor for a platform. Can we have both a sub account architecture and an orchestration layer? And what does that mean?

Matt Watson 12:09
So instead of using Stripe, or some other company like that, I can use your platform to process credit cards and ACH. And that’s right, those types of things.

Joe Keeley 12:20
And we really, really focus on, you know, vertical platforms or marketplaces, because they usually have a B to B to C or something similar structure. So the platform can set the price. And let’s say they set it at market rate, it’s 3% to process a payment, right. But if you attack interchange, interchange being you know, the tables that exist Visa and MasterCard, it’s a lot like the tax code, it does not cost 3% to process a payment, it should cost maybe 2% or less. And if you structure it in that way, platforms can make the arbitrage or the difference between what they charge and what it actually costs. So that becomes an economic driver. So that’s point number one. If if you set it up correctly, and then your KYC and all your underwriting and all your tokenization is correct, then what you’re able to do is start to bring in other fintech products, like maybe you are a software platform that provides you know, software for restaurants like we were talking about, well, maybe those rest of you now know that these restaurant customers are collecting $10,000 A month or $100,000 a month, and they’re really good partners, but you know that they have a dip, you know, right after, you know, a certain time of the year, they may, you may be able to offer them a lending product that is better than their credit card faster than the bank and adds value to your platform for them. And you could make, you know, a couple 100 basis points off of offering that so what our platform does is bring in lending partners so that the platform doesn’t have to build all those, you know, points, solution connections, doesn’t have to manage different sub-account tables doesn’t have to do different KYC and just lets our platform do the heavy lifting and lets them focus on bringing value to their customers, but not in sacrificing you know, actually participating in the economic value let’s because we think platforms created that value.

Matt Watson 14:27
Well, it’s common for companies that take a lot of American Express whatever right can almost do that sort of stuff directly with American Express and, and others like that, right? Where you’re, they’re taking the funding out of the receivables of the credit card processing. So they’re like fronting the loan, and then they’re taking the payments back out of the American Express and taking it back out of the credit card. receivables, right. Yeah, that’s right. And a similar sort of thing.

Joe Keeley 14:54
Similar, but I think that the world right now is the fintech world. So many different parties involved. And if you’re a software platform, how do you navigate it all? I mean, that’s it, there were 50 people in the fintech department. And it took 15 years off of my co-founder’s platform. Well, that’s not repeatable. I mean, it was a great outcome. But so we looked at it and to say, building all of that yourself makes about as much sense as building out a server farm, like Yeah, of course, you would use AWS and it would be even better if you could orchestrate which you can, using AWS and using, you know, Azure and using the Google and all a cloud so that ultimately you always have backup and flexibility. We think that building and owning your own, you know, fintech team and fintech architecture, there’s no need to do that anymore. As long as you can get the same economics with a partner. So that’s really what we do is we help software platforms, win with payments and embedded fintech products.

Matt Watson 16:05
Okay. Very cool. So who do you consider to be your competitors in this?

Joe Keeley 16:11
Well, what’s really great, and when I was on sabbatical, what I did was when I sold the company, my first company I stayed on for three years, did a lot of projects in Europe, and then and then I ultimately took some time off. And I put down a list like what do I want to do? What industries do I want to be in? Where do I want to go next? And one of the things that is great about the payments and fintech space is it’s so bloody big. That, you know, there can be a lot of winners, you know, so we certainly have competitors, you mentioned stripes, and that is sort of the platform of record. And if you’re spinning up a retail shop online, very quickly, you should probably use stripe that makes the most sense. That is what stripe was originally created for. And you know, bravo to them, you know, they reached a $90 billion valuation at one point, we could all say that, you know, you won at that. But when it comes to actually like, the more complex nature of payments for platforms, with sub-accounts, and orchestrating multiple partners, they are definitely their stripe connected product that is a competitor of ours, but we just have a different philosophy, we grew up as building platforms. And you know, the type of strategy, we bring platforms you can’t get with them. Even though they have a sub account architecture and allow you to monetize payments, it’s not really what they originally were created to do.

Matt Watson 17:46
Well, and that’s, that’s the thing is you have you have companies that are generalist a lot of different things, and you have people like yourself that are like, Hey, we’re gonna be very specific, you know, at this specific kind of niche, this specific vertical, this specific use case, and nobody’s better at it than us, because that’s what we focus on, you know, everybody else can do these, these other, you know, basic things, whatever. But if you have this exact problem, this, we are the best solution for this exact problem. And there is no, there is no other solution. That makes sense. Yeah, that’s a good place to be.

Joe Keeley 18:17
Yeah, it is in you know, I think that you know, the broader in some regards, it’s very, very specific, what we do we work with software platforms, vertical software, in another sense, like, we do take a much wider view of what is the problem they’re trying to solve, we actually don’t think that the problem they’re trying to solve is just a payments problem, even though that’s what most platforms are out shopping for, I want lower cost payments, I want to make more money on payments. And we think that yes, that is where you should start to correct guests, you do want to do that. But the story is only half written. When we think that there are, you know, 500 to 1000 basis points on any dollar that flows into a system that might be available. If you view it as money into a platform, money flows within a platform, and then money flows out. So let’s talk about another example of what that means. So let’s say you’re a property management platform. You can monetize, you know, receiving rents, you could monetize inter-platform transfers between, you know, folks that are already on the platform, and then you can monetize monies out. So let’s say you know, your platform supports and pays all the vendors that your customers who are building owners use. Well, there are a variety of things one can do, but that can be a service you can provide them like paying vendors is not something you know, that’s sort of like that. How fun is that?

Matt Watson 20:01
But there is a massive unicorn Billion Dollar Startup in Kansas City that does just that called CTFO. That is like accounts receivable payables vendor, financing kind of company.

Joe Keeley 20:15
But a lot of times, you know, if you go to a single vendor, but you’re aggregating a big dollar number, and you know, they would have a 2% pay early discount? They do, let’s take 2%. A, there’s 200 basis points right there. And I see you take credit cards, so we have a credit card, we’d like to pay the bill. Okay, great. Well, you spin up a virtual card, and you’re able to make part of the interchange. So, you know, there’s so many different ways to monetize the funds flow. And what’s really exciting about platforms is that they’re the trusted, you know, source because folks use vertical platforms, because they just want to run their business, they want to run their restaurant, they want to run their, you know, youth sports team. And by providing these tools for them, you’re actually doing them a service. And that way you can, you know, charge less of a SaaS fee, or none at all, in some instances, and still be able to fund the growth of the company, because, you know, the bar for the features is getting higher and higher, you know, thank you, Apple, Google, etc. Like, you know, anytime you start a new platform, customers have a pretty high expectation of what an MVP actually is. Yeah.

Matt Watson 21:35
Well, before we get to, I guess, more questions for you, before we get to that, I do wanna remind everybody that finding expert software developers doesn’t have to be difficult, especially when you visit, where you can build a software team quickly and affordably. Use the Full Scale platform to define your technical needs, and then see what available developers, testers, and leaders are ready to join your team. Visit to learn more. So whenever I think of payments, I always think of two things. I always think about the evil fees that Visa and MasterCard charge, because it’s insane. And I also think about something else. But before we give you the second question, I’m just curious, what do you think of the kind of Visa and MasterCard stranglehold on the payments market? And do you foresee that changing? And what are your thoughts on that?

Joe Keeley 22:23
Well, it is, it is remarkable. And I would say that there is plenty of shade to be thrown at Visa and MasterCard. But they’re not the only ones that sort of are in that chain, we’ll call it a value chain. But maybe it’s a d value chain there. Because there’s there’s multiple banks along the way. There are, you know, the actual interchange rates, there’s the processing rate fees, there’s the acquiring fees, and the terminal fees, and that exact point. It was one of the things that has caused us to start JustiFi, and to have the name that is JustiFi, because we think that that’s actually not that fair. If you know, what’s not fair about it is there is no transparency of what is actually the cost of a payment. Yeah.

Matt Watson 23:19
And it’s a different type of credit card, right, if it’s American Express, or in a corporate card, or this or that every single one of them has different interchange.

Joe Keeley 23:27
And it’s a lot like healthcare, and I don’t know that the US healthcare system is one that we would put as the castle on the hill of efficiency.

Matt Watson 23:34
And a good example for anything.

Joe Keeley 23:37
But it is a good example of a bad example, right? Which is only in healthcare and payments, do you not know what something costs until the transaction is done? Yeah. So we think that’s right. And here’s why they punish smaller processors? Because the way that contracts work today is that let’s say you have the same transaction profile, everything you said matters true. It depends on what the card is, what the MCC, what business has been bought, is it present? Is it swiped? Is it online? Is it all these things? But let’s just say that you process a million dollars a year. Okay. And it’s the same, same, you know, profile, or you processed a billion dollars a year with the same profile? Well, clearly, the billion dollar company gets way less fees like remarkably less fees, it costs them less to process than the million dollar one, even though the core costs have not changed. So we actually think the cost of a payment should be reflective of what the cost of the actual payment is, not the size of the company.

Matt Watson 24:53
So what percentage of that do you think kind of comes back to covering fraud though? Because it seems like that is Ultimately, one of the biggest problems with all of this is fraud. Right? And that’s why there’s a part of the percentage that is kept, is because of the fraud and the chargebacks. And all the other crap that goes on. Right?

Joe Keeley 25:12
Yeah. And that can be quantified, you know, with enough data for sure. But we’re still in, in a world where it’s a pay to play sort of scenario. So I think, and part of it is that the system itself is one that is guilty until proven innocent, meaning the payment rails default to the most expensive option. They don’t, it’s not an innocent until proven guilty. So let me give you an example. Like of that, if you go and use your debit card, and you buy $1,000, or $100 payment, or $100 product, it’s going to default and cost the merchants let’s say in interchange fees, not the processor fees and everything like that, you know, about 1.65% or so. Because it’s going to be default on the Visa Signature rails. And that’s what that costs, it depends on if it’s regulated debit or unregulated debit, but if you, if you stop that transaction, and use a different debit rail network, it’ll process at point six, five, and you need to do that with software. So now you can imagine, that’s just one of many optimizations. So if you are constantly obsessed with and maniacal about saving basis points as we are, over time and at scale, little things can turn into meaningful things. So, you know, I think it’s, it’s, it’s similar to the tax code in some regards, since no one’s doing anything wrong. But if the IRS is not going to call you and say, you know, we heard, we saw on your Facebook that you posted that you got a new, you know, energy efficient furnace, and some solar panels in you know, did you know you qualified for a $5,000 tax credit, because of this obscure law that was buried in, you know, the build back, better program, like, so you’re only gonna get it if you take action, no one’s gonna give you a call and say, you know, we think you’re overpaying and you’re processing.

Matt Watson 27:25
So how do you guys charge your customers, you charge them? You know, like a percentage of what you help them save? Or a monthly fee? Or how do you guys charge your customers?

Joe Keeley 27:35
So we first analyze, like, what is their profile? What is their cost of payments, and then we charge them, oftentimes a flat rate that is reflective of that cost and what we think is a more appropriate, you know, small margin for us. And the net result ends up being remarkably less in many cases than what they were getting out in the market. Especially, you know, if they’re, you know, the truth is, if you’re under 250 million, or in processing volume, you’re tiny in there in the world, you know, like no, no one other than Costco is going to, you know, and baking off Visa and MasterCard with each other. So, that’s how we do it. And because we run an orchestration layer, we work with multiple across acquisitions and so that we have different options to drive that down. And then we aggregate everyone’s vol volume in that regard. And, and, and then take them on more of a fintech journey. So in many cases, and the reason we can do that, and also provide those, you know, really, in many cases, not so scalable professional services is because when we work with software, vertical platforms, you know, they can scale and get big pretty quickly. And so they do, you know, and this, if this is their economic engine, they are very incentive to get this right.

Matt Watson 29:04
So, my other question for you, and I’m sure you’ve had this one a few times, too, is how do you see potentially things like crypto changing the payment space? Or do you think that’s just never going to happen?

Joe Keeley 29:15
Well, never is an awfully long time. So I try not to use absolutes in that regard. But you know, I do think that it’s going to be a payment method that will have a place now. Is it going to have a place you know, on Main Street America, you know, off of your phone to pay for x, you know, product? Probably not anytime soon. But I think that it is definitely real if there’s definitely an asset class that while sometimes highly volatile, many have $1 side of it too, right?

Matt Watson 29:58
Just us dollars on crypto, right like so to me, that’s the fascinating part is like, Can I pay with us DC or whatever some, you know, dollar crypto and and basically transfer the money to like your platform and you send it to the vendor and maybe they get the money once a day still in one big batch or whatever. But then you cut out all those crazy banking interchange fees and all that crazy, you know, old legacy of all of that will be fascinating to me. It’s like it’s just all gone.

Joe Keeley 30:30
Yes. And there will need to link in though to some of those, those crazy rails are also linked, though, too. I mean, when we think about some of the Know Your Customer and KYC, whether it’s anti-money laundering, or OFAC, like those are, those are very, you mentioned sort of fraud and things. So those are very important. Because, yes, what we want to make sure is that, you know, the movement of the money is all above board and, you know, doing the good things that they said they’re doing with it.

Matt Watson 31:06
Yeah. Well, it’ll be interesting to see how that changes. What else do you foresee in the future could be a change for the payment space? Do you see more ACH, or other types of things that are big, you know, changing the trend of how people spend money?

Joe Keeley 31:23
Yeah, I mean, I think when you one of them, one of the things, particularly with the, you know, the younger someone is, the more comfortable they are withholding stored balances in different payment methods. So, you know, whether you have, you know, your Zell or your Venmo, or, you know, PayPal was really the leader in this so that there’s tremendous amounts of assets that are sitting on these stored balances. Now, they might have started as dollars in, but they may never leave the platform, you know, so you.

Matt Watson 31:55
So you mentioned this, and I read about this the other day, and I’m sure you probably know this, if you don’t know this, it’ll probably not be a big surprise to you, one of the largest banks in the country, and one of the largest holders of money. Start with actually Starbucks. And so you already knew that. So I thought, I thought that was crazy when I read that one day, but then you know, when you go to buy Starbucks on your mobile phone, you have to top up your account. So like I actually did it the other day, and it’s like, oh, I had $10 My Account, who the hell knows how long that $10 had been sitting in my account. And then when I go to buy something, I have to top it up, like $25 or something. And so like, there’s always just like floating balance running around in Starbucks. And like, it’s a perfect example of what you just described. They’re holding billions and billions of dollars. And it’s like floating money.

Joe Keeley 32:43
That’s right. And so a couple things. Number one, you need to drink more coffee mat. Number two, you don’t actually have to top $25 Is their default, you can change it. Yeah. So and the reason why they’re doing that is because if you had $25 with one set of transaction fees, it’s a lot less than if you had the same transaction fees, not the percentage part time, but the per transaction cost on a $5, top-up or a $5 You know, coffee drink with all kinds of whipped cream and other things you might have on it. So I guess this illustrates the point and why we exist in our little corner of the world of serving vertical SAS is that I think it might be over a stretch to say every company can be a fintech company. You know, that’s if we’re getting really technical. That’s probably not a true statement.

Matt Watson 33:45
But everything from payments, they’ll take payments, but that doesn’t make them a fintech company.

Joe Keeley 33:48
That’s right. But every company can or should harness the power of fintech tools. You know, we are a fintech company. We help others really benefit from the tailwind and the power that fintech has available. So Starbucks hid there in plain sight. You know, they have, they’re using financial technology to have billions of dollars of free money, and not only freely any loan to them, but there’s a certain amount of churn and breakage there that never gets used. Yeah. And they’re able to lend that out to suppliers, they’re able to, you know, borrow less money, gain interest on that money. So that is just like a great example of, you know, who knows what fintech tools might apply in your business or your software platform. But, you know, ignoring it, I think you’re missing out in a very, very major way.

Matt Watson 34:53
Well, I know from my past my last startup I had we, our challenge was in the invoicing like billing side of it and and like because we had like all this metered billing and then a monthly subscription fee and like how we did invoicing and all this stuff. And then we had international customers and like, it was a nightmare it was by far, like, the most complicated thing we had to deal with was actually our invoicing system was by far one of the most difficult components of what we did. And, yeah, it’s a shit you don’t think about. It’s just like, all this complexity in this, it’s not it has to do with the service we provide our clients, it’s just all this back in crap we have to deal with.

Joe Keeley 35:31
And that’s the thing I would say is yes to that. And we’ve sort of been lulled to sleep, to just believe and accept that. 3% is what a payment costs. And we’ve been, you know, sort of lulled to believe that, well, you know, a basis point here and basis points there don’t matter. And maybe that’s right, when one is a real small business. But if you aspire to scale, at scale, this is super meaningful. So, you know, my partner’s platform 85% of their revenue 85% of their many hundreds of millions of ARR, which translates into quite an impressive valuation in the SAS world, as you know, came from embedded payments and fintech. So I mean, we’re talking about, you know, 10x Improving evaluation by obsessing over the little things, you know, but most folks have been taught to say, Wow, when I get big, then I’ll look at this. Well, what if you do it now, and those extra little bits help fuel your growth without having to go, you know, raise capital quite as often, or whatever it is, or you’re raising capital for different reasons, right to accelerate than to stay alive?

Matt Watson 37:07
Well, it’s like my last company, we change credit card processors, right to save money on the fees. And that amount of money we saved was enough money to hire another salesperson or hire another person, you know, employee, whatever, right to help us grow. You know, and even though we’re not, you know, we were small, still, you know, fairly small company. But it all adds up, you know?

Joe Keeley 37:28
That’s right. That’s right. And I think about things never, never before, and it only continues, I’m sure. Has it been as realistic as today for startups to legitimately think about? scale from the beginning, you know, when you think about the infrastructure that one can use when you think of today when you think about how quickly you can get a, a platform spun up using other people’s, you know, tech stacks, you know, and, you know, there is an older way of thinking, which is like, well, I have to build it all myself. And it’s like, well, at some point, that actually is a liability because you miss a window of opportunity. And what I’m seeing out in the market is you’re not getting any extra, you know, points or gold stars or valuation for something, and we built it the hard way.

Matt Watson 38:24
Yeah, you know, what, you know, we will always say, in business, like saving money is, you know, the same as making money, right? Like, it all adds up. But actually, if you reduce your cost by $1, it’s the same, potentially increasing sales by seven or $8. Yeah, because for every $7 in revenue, you only make $1 in profit. If you save $1 in cost and increase the dollar in profit, it’s the same as $7 in revenue, right? So saving money is making money.

Joe Keeley 38:58
It makes a lot of fun if there’s actually a multiplier effect, depending on the business, right? So we work with software platforms, so we’re actually talking about increasing revenue through cost savings, and because they’re making the payments is revenue for them. And adding new sources of revenue can literally be, you know, if they’re dealing with a 10x revenue multiple, like, you know, that that’s super, super material, and very, very exciting. You know, from a value creation standpoint, and then I think, if you’re able to increase velocity on your platform because you have more, you know, fuel on the fire, that can put you into a different valuation category because, yes, it’s revenue, but it’s also growth that ultimately determines multiples used and there are multiple tiers, right.

Matt Watson 39:54
So for most of your customers that get the most value of a product like or are they e-commerce and things like that, where they’re kind of the payment processor in the middle that is, you know, taking the money from the consumer and then ultimately giving it to the seller. And so they’re keeping, you know, some of the money in the middle is that the primary use case would be a marketplace, right, where they’re, they’re providing that buyers and sellers are coming together.

Joe Keeley 40:16
And we do certainly have some of those, and that is a good use case. But probably the sweetest spot for us is vertical software platforms where you have the platform, and that platform has a business customer, whether that be that, you know, your sports team, that barber shop, that, you know, auto repair shop, you know, they’re using the software, and then that business has customers themselves. So think of it like three legs of the stool. And when you have that environment, it allows the platform to offer payments as a feature.

Matt Watson 41:00
It’s like a point of sale or something almost set price.

Joe Keeley 41:03
And then, because of vertical software, their customers often are very sticky, like a marketplace, someone, a buyer, may come and go, right, I want to buy something on your marketplace. But in vertical software, the users of that software are using it to run their business seven days a week, and you get to really know those customers with the data. And then that’s when you can bring in other things like, we’re going to offer you insurance, we’re gonna offer you lending, we’re gonna offer you card issuing spend management because it’s a longer-term relationship, you’re able to bring really delightful features from a product roadmap perspective, that also that add value to those customers and maybe their customers, but also bring that you know, return that power of the fin financial tool to the platform, and that’s who our customer is, is those platforms, we provide the infrastructure and the talent, you know, and the strategy to help them win with that strategy.

Matt Watson 42:07
It makes sense. Well, do you need to hire software engineers? Testers are leaders. Let Full Scale help. We have the people on the platform to help you build and manage a team of experts when you visit All you need to do is answer a few questions and let our platform automatically match you up to our fully vetted, highly experienced team of software developers, QA, and software development leaders. At Full Scale. We specialize in building long-term teams that work only for you to learn more when you visit Well, I think this has been a fun conversation. And there are a lot of fintech companies out there. And there are actually a few in Kansas City. And I’ve always enjoyed the fintech side of it. We’ve got CTO CFO, as I mentioned, is huge, like a billion-dollar unicorn here, and the founder of it’s been on our show a couple times. An amazing person comes from a banking family and, and we’ve got another one here that does like some like 401k management stuff, and like there’s all sorts of fintech companies out there. So any kind of final thoughts to somebody out there who’s saying about starting a fintech company?

Joe Keeley 43:13
Well, you know, fintech is the best tech, I think, but, you know, it’s like any other company. We started with talking about, you know, purpose. And then you brought in Matt, you know, really focusing on that niche. You know, I think those are two really good takeaways, you know, and it’s in. Frankly, that is applied to a fintech company, but that’s just applied to any company.

Matt Watson 43:39
Yeah, absolutely. What’s interesting to me about fintech is if you went back 2030 years ago, the banks, you know, pretty much did everything, but they weren’t specialized at any of it. And now there are lots of companies like yourself and Tito and this other company, I mentioned that like they’re coming and like slowly peeling away, like the things that the banks used to do, but they’re doing them way better, way more optimized, and making them available for everybody to use and to slowly peeling away what your traditional bank does, and how traditional banks make money. So it’s gonna be interesting to see how traditional banks continue to survive in the new world.

Joe Keeley 44:18
That’s why traditional banks often buy fintech companies.

Matt Watson 44:22
Yeah, yep. All right. Well, thank you so much for being on the show today. Again, this was Joe Keeley with JustiFi. Sounds like if you’re processing a lot of payments, he’s a guy you should talk to. So thank you so much for being on the show today, Joe.

Joe Keeley 44:39
Thank you, Matt.

Matt Watson 44:41
All right. Thank you so much.