Building a $1B Fintech in South Africa with Stitch CEO Kiaan Pillay

Kiaan Pillay: You actually can build a billion dollar business in just South Africa. 

Justin Norman: That's Kiaan Pillay. He's the Co-founder and CEO of the South African payments startup Stitch. 

Justin Norman: Largely the story for African startups has been about market expansion.

Kiaan Pillay: There's definitely a massive opportunity in being Pan-African, right? It's just stupid hard and it's going to take you like 10, 15, 25 years. 

Justin Norman: You guys have raised a $25 million Series A extension led by Rib bit Capital. 

Kiaan Pillay: Surprisingly found fit with enterprises, not with smaller companies. 

Justin Norman: Why is that surprising? 

Kiaan Pillay: This is never our strategy. Our strategy was always, um…

Justin Norman: Today's guest is Kiaan Pillay, the Co-founder and CEO of Stitch. My conversation with Kiaan comes on the heels of their recent fundraising announcement, a $25 million Series A extension led by the global fintech fund Ribbit Capital, which brings their total funding raised up over $50 million since the launch of the company in 2019.

I've had an opportunity to watch Stitch's growth firsthand. They have an open and distinct company culture that I thought had a particular impact on Stitch's early growth, their ability to recruit well in Cape Town, and their success in carving out an opportunity for themselves in a crowded fintech market in South Africa.

In this episode, Kiaan and I talk about how they've gotten here, the intangibles of company building, their vision for the next generation of payments, and much more.

Justin Norman: This episode of The Flip is sponsored by MFS Africa. MFS Africa is the leading digital payments gateway, which connects over 320 million mobile wallets across over 600 cross-border corridors and in over 30 countries across the African continent. Throughout this season, we'll hear from the MFS Africa team about their work to create a borderless world.

In today's episode, we're joined by Christian Bwakira, MFS Africa's Chief Commercial Officer for a conversation about the company's prepaid card platform, GTP, which MFS Africa acquired in 2022.

Christian Bwakira: When you look at the global prepaid market, we are talking about value of about $1.7 trillion, as of 2019. We are seeing that market based on research move to $6.8 trillion, that is, by 2030. Now specific to the Middle East and Africa, we are seeing a market that is going to evolve to about a hundred billion dollars by 2026.

So one of the areas that has significantly grown over the past couple of years is strong demand by fintechs or virtual cards, and we've seen that just as much for financial institutions. And you're able to do that simply by tokenizing, for example, a card whereby the user or a mobile phone subscriber would simply use their mobile wallet to still be able to transact. But now broadening the scope of services that they have access to, you would talk about perhaps maybe Spotify or maybe Netflix who would have to have multiple entry points and integration points with again, MNOs and others. Whereas by coming to MFS Africa and thereby interconnecting on the GTP platform, it is a single point of entry that gives them access to all of these use cases.

We have one of the largest fintechs in West Africa, for example, that has been able to onboard as many as 500,000 new customers. New customers who were historically non-banked onto their platform within I would say a year, but they were able to do so by leveraging our virtual solutions.

Justin Norman: So Kiaan, we're breaking some news here, or at least the news will come out by the time this episode comes out that you guys have raised a $25 million Series A extension led by Ribbit Capital with participation from existing partners, PayPal Ventures, Raba, and CRE, some friends of The Flip, and is 25 million on top of the $21 million Series A in February of this year.

I think a lot of people will want to hear about the story of that fundraise, but what's particularly interesting to me when you hear Series A extension is you think about in the market, market downturn, survival, all of these things, but you had inbound interest from Tier 1 VCs and you guys weren't actually raising.

Can you tell me a little bit about this round, the decision to take money from Ribbit the decision to raise a Series A extension and why you decided to take the money?

Kiaan Pillay: We're in a fortunate time. We still had good money in the bank and we were growing pretty fast. We're lucky that we have good access and we've always known quite a few of the top-tier VCs and so I probably catch up with them maybe every five, every six months, and I think a lot of people have been sitting on their hands a little bit and been a little bit anxious to deploy any capital and we had a lot of inbound interest. We weren't thinking about raising at all. In fact, we potentially thought that we could get to a really good spot from a cash position with the money that we had in our bank.

But given, I guess, the global economy and I think where things are, I think I fall back on one of our investors has three exceptionally facetious things when speaking about money. One bullet is more money is better than less money. Second is money now is better than money later. And third is no company has ever gone out of business by having too much money in the bank.

We had really good access to great partners. It, I think, was a great time to potentially take more money as a defensive move to overly capitalize, but to allow us to be offensive, right? We are six months away from launching six new products. If any one of those took off, we probably would've been in a fairly conservative place. We wouldn't have wanted to spend too much more capital to accelerate those.

This now gives us the chance if something is really taking off, we don't have to go to the market. We don't have to spend six months trying to raise more money, to deploy extra capital. We could just shoot right now and really take advantage where I think to be honest, a lot of our potential competitors or incumbents do the opposite. They'll be retreating a little bit.

Justin Norman: And why Ribbit in particular? I know you had interest from a few different suitors and ultimately you decide to go with them.

Kiaan Pillay: We've known the Ribbit team for a long time. We've probably known them for the last two years fairly early into our journey. And I've always thought one, obviously they have a great reputation, but I personally thought their emerging market experience has just been the best that I've seen empirically when talking to... I have tons of respect for so many VCs, especially their global experience and fintech experience. But specifically all the nasties that I think you get in emerging markets, you get political instability, currency downturns.

I think they've just seen it and they've weathered it and over the last two years we've really come to appreciate how strong they are on those aspects. And secondly, actually they've been super helpful, even just knowing them for the last two years, them not even being investors, we found they've been super useful in thinking through problems and introductions in product strategy, just being on the sidelines. It was a pretty easy decision for us.

Justin Norman: I think we should say pretty explicitly that the interest that you had amongst investors to invest in a round that you weren't actually raising as a function of the fact that you guys have been growing really well in the past six months or a year and certainly since you guys raised your A in February of last year.

Can you talk first a little bit about that growth? And then I want to get into the weeds a bit more about what that growth means in investor interest in South Africa in particular.

Kiaan Pillay: We launched a few products towards the beginning of last year and about April of last year we launched a tokenized recurring bank to ban-to-k product, which is a bit lofty, but it essentially allows you to use a bank account the same way you use a card, you could pay once off, subscription, recurring. And that was the first time I think we started to find really good fit in the market and we surprisingly found fit with enterprises, not with smaller companies.

Justin Norman: Why is that surprising?

Kiaan Pillay: It was never our strategy, our strategy was always probably a little bit too romantic, but it was very developer-first, developer-centric, sell from the bottom, sell to startups, and help startups grow in the market, which will always be important to us. But I think one, the realization was surprising because we were not targeting enterprises. There were a few outbound efforts that we had without a huge amount of confidence any of them would shoot off all of our actual product bold was super developer-centric, so it was trying to target people that were almost self-serve.

And then thirdly, I guess, we were surprised at the traction because we were expecting startup traction. We thought it would be slower and we thought you'll sign up 200 startups, thousand startups, and over time they will grow and they'll be large. Whereas we got our first big enterprise customer and within month one it was a step change for the business within month two, step-change again.

And then we tacked on a few more enterprises and that forced us to really scale up the way we looked at things. That's been good, but a lot of happy accidents there.

Justin Norman: Why do you think then that the products and offerings that you've had have resonated so well with enterprises unexpectedly?

Kiaan Pillay: I think weirdly, maybe the first piece is not even the products, it's client service. This is a ridiculous thing to say, but I think largely there's still quite a big gap in terms of just best-in-class customer service when it comes to enterprises and dealing with payments infrastructure and money movement in general. You know a little bit of this, but we always have very, very strong approach when it's come to being very, very in-person with our customers, spending a lot of time with them. Our developers sit with their developers, we spend tons of time with their product people and I think really you don't get that with a lot of companies servicing enterprises still in African markets at least. I think actually first and foremost, client first, client centricity has been the most important thing for us.

And then I think we've been fortunate and we launched at a time... a little bit beyond wave one of some of the fintech players in fintech infra where we just like... this is a bit cheesy at this point, but we just built a bit more modular than other people. We're a little less cookie cutter and you could really just take slivers of what you want from us. We were very easy to plug into certain pieces of your stack, which is super necessary.

There's not a single one of our... there's great narrative around APIs. People will just come, they'll build on top of it, it'll be great, and you never have to service them in a custom way. That's just not true for enterprises. There's not a single one of our enterprises that uses our products in the same way. They're all completely different, completely custom, and I think most people just can't do things like that.

Small things make such a weird difference. Being able to post-pay your invoices, you would not believe how important that is for enterprises. What a silly trivial thing, but a lot of payers just don't have that sort of flexibility to do things like that. And small things like that I think have compounded.

Justin Norman: Can you talk a little bit about how you've had to orient Stitch as a company and processes and building product around servicing enterprises? And I think your growth is a function obviously of being able to now sell into these companies with massive payments volumes, but then at the same time you guys are also expanding your suite of products, I think, to then be able to sell more stuff to more enterprises as well.

Can you talk a little bit about that process of product development as it relates to these enterprise relationships and what that looks like internally from a company-building perspective as well?

Kiaan Pillay: This has been one where we've been fortunate. We've always been a very developer and product-heavy org. We are 70, 75 odd people now, 50 plus of them are engineers in product. In fact, I think 45 are just engineers. It was not obvious that this was going to pay off until it did, but we were very front-loaded. We built a machine that was really good at building product. We were really strong at building payments infra, payments products really quickly. Once we started to get to a good spot with bank partnerships and regulatory licenses, we were in a position where we could, I think more than most, iterate really quickly in building new payments products, which is rare. It's very difficult and slow and tough, and it took us a while to get there and I think we got lucky that enterprises are demanding. They ask you for more things. We've done this a few times, which has been awesome.

We've served some enterprises in just pay in with one payment method to start, and then they're like, "This is great. This is awesome. This is working. We have four other payment methods that we want you to use." So we're like, "Okay, cool, we can-"

Justin Norman: So they're writing your product roadmap for you.

Kiaan Pillay: Yeah, right. Super interesting if an enterprise customer is like, "We will pay you a large amount of money if you build X product for us and it works." Awesome, we will do that. And then they're like, "Okay, cool. We're struggling with X piece of reconciliation, do that for us. We're struggling with payouts, do that for us." We've been lucky.

I think historically we've not been great when we've tried to be clever and we've tried to think of what the market needs. We've had a few duds in terms of products that hasn't worked well and not a new notion, but listening to your customers and just building what they want has been a winner.

Justin Norman: So all of the products that you guys have built thus far, can you talk a little bit about what Stitch now offers and what you've built?

Kiaan Pillay: Yeah. We kind of bucket ourselves in maybe three ways to be a little reductive about it. The first is pay-ins, just accepting money in general. Historically, as I mentioned, we start with pay with bank and that was our core product. We've now expanded that and basically any way you can pay in a market, we will accept. We allow people to pay with bank, we'll allow you to pay with card, which is obviously incumbent in some markets, not all African markets.

We allow you to do recurring debits, so the equivalent of a gym membership or a cell phone contract once a month. We allow you to pay with cash, which is kind of a non-obvious one for maybe folks outside of Africa. We'll allow you the equivalent of agency banking where you can deposit cash at a retailer or an ATM will immediately reflect in your wallet. Full suite to pay-ins.

Then the second piece is in the middle, which has been surprisingly interesting, is around any sort of payments operations. So reconciliation, all of your accounts, payables, receivables, how you manage your money, I think often overlooked, but it's just a huge problem. If you are a large enterprise, you have 10 different bank accounts, you have 11 different payments providers and they send you CSVs at different times in different formats and it gets very, very difficult to just manage all of that.

And then thirdly, we do payouts, so that can be disbursements, so if you want to pay suppliers, employees, whatever that is, that can be refunds. If you're an e-comm player, you need to refund people or that can be withdrawals. If you're a walletized player, investments, crypto, savings, you allow your users can withdraw from their wallet back into their bank account. End to end, we basically can handle any 'money movement' that an enterprise is trying to do.

Justin Norman: I think as you talk about those three buckets and the range of products that you offer there's, I think, this vision that's coming to the fore about open access and interoperability and providing your customers with a portfolio of payment options, and I think it's very different from the siloed, especially in the West, card centricity, right? You're building for one where there's the most volumes and maybe it's a function of, I guess, the diversity of payments in these markets in particular.

You've talked a little bit about wanting to be this next-generation PSP or what the evolution looks like, and maybe there is a shift or maybe we're just applying this idea of a shift to African markets where we haven't talked about it as much. Can you say a little bit about your vision, I suppose, for what this sort of payment service provider, PSP, looks like in the African context in particular and how it may be different from what we've seen either in this market or sort of outside of these markets globally?

Kiaan Pillay: This has started to play out in some markets and people are tackling the different pieces in other markets. I really admire companies, for example, like Modern Treasury that are tackling this middle payments operations piece and they're doing so in the US, which is a gigantic market. You can focus standalone. Obviously there's great historical PSPs like Stripe and Adyen as well as slightly adjacent players like Plaid and they all focused on different things and they're all branching out a little bit more now, fairly far into their journeys, 10 plus years in some cases.

I think that the zero-to-one piece is still just not there in Africa yet. There is no easy way to receive money, manage money, payout at all, right? You can't even piecemeal, stitch together a solution to get that to work at all. I think a lot of things for us, you have to focus on the entire chain. It's not a matter of like, "Oh, we can capture more value, we can do the entire thing." It's that if you don't do the entire thing, you can capture no value.

Super non-obvious thing, for example, to do cash. Our thesis is not that cash is going to be more prevalent in 15 years in Africa. Why would we invest in something like that? Same thing as card, to be honest. I think actually it's a common narrative, but that Africa is leapfrogging a lot of card being the prominent method, but we're still investing in those things because cash is still the dominant payment method.

And if you are a foreign company coming into the market for the very first time and you're trying to deal with how are we going to allow end users to give us cash to pay for our American product, it's insane. It's unfathomable, but if you can say, "Hey, we will allow you to have a little slot in your checkout page that says cash, to you it looks like a card payment, to you it looks like a bank payment. You don't need to worry at all about what that looks like and then you don't need to worry about how that flows afterwards. We can really manage the full process for you end to end. You don't need to ingest a different type of reconciliation from a different provider, then send it to a different bank account to do payouts from a different provider. We will allow you to do all of that."

I think that's where we started to land in terms of positioning in almost what we term as open payments and trying to do the whole stack for someone. It, I think, allows us to have a lot more flexibility in terms of product because you just control it end to end. Obviously, you capture more of the flows and more of the value, but it also allows businesses to enter these markets a lot quicker. I think in many cases this will not be a core market for people to start, but they have a thesis that it will be in the future, and if they can just really iterate really quickly, it allows them to test out the markets and build more conviction and then invest further.

Justin Norman: There's, I think, a story in the context of APIs as building blocks around the specialization. I think that the example that I'm thinking of is Shopify using Stripe and why wouldn't Shopify just as a massive company build their own, but it's that Stripe is just a thousand times better at payments than Shopify and their specialists. Do you think about though you guys are doing so many different things - if you look at Paystack is quite focused on in the Stripe way, just cards - do you think about how do you do so many things and do them so well? 

You've talked about the technical complexity just of doing all of this stuff. Is that something that's concerning you or is it in these markets, as you just said before, it is a requisite thing to actually build all of these things because otherwise nothing works and what choice do you have?

Kiaan Pillay: It is concerning, right? It's non-trivial, absolutely, for us as well to build different payments products. There are some efficiencies. Settlements can look quite similar and certain things you can replicate, but going from bank to card was nontrivial, it was very, very different. I think we were even naive around how complex the challenges of a different payment method will be.

Justin Norman: And why is it so different and complex? Can you talk a little bit about that?

Kiaan Pillay: Yeah. I mean, I think it's almost as is comparable to entering a different African market. No payment method, especially in African markets are standardized at all. The entire stack of that, so that means which banks you can talk to that will allow you to do some of these things is different case by case.

We partner with different banks to do debits than we do with cash, than we do to card, than we do with bank. All of those are different partnerships. The regulatory and licensing requirements are different for every single piece. So this is before we're even building anything. How do you build this? The first 6, 9, 12 months of that is all different. What licenses do you need? Can you apply to get a license through a bank? Do you have to apply to the Reserve Bank? Do you apply to the payments' association? All of those things are vastly different and there's obviously no playbook for this. We try to ChatGPT, all of these things and get answers, but you cannot.

And so all of that is very different, but then when you start to integrate, ultimately you probably end up integrating with some sort of financial institute in some way, shape or form. That's all different. Do you communicate with them via host to host? Do you do it via an API? You do it via sending CSVs on email? Is crazy things that we've seen, all of that starts to look different. Each integration is very, very, very custom and then the way that you handle reconciliation of that is also nuts. All the settlements, everything is very, very different.

And then without a doubt, everything has an absurd amount of edge cases. Calling them edge cases is maybe even generous because there's just weird and wonky things that happen with every payment method that are just completely unique to that payment method and you typically just need track time. You just need to see a lot of payments and you're like, "Oh wow, there's this weird thing that breaks every single time on a Thursday morning for whatever reason. Okay, cool, let's handle that."

I think obviously that compounds when you start looking at different markets too. I could have said all of that and just be speaking about one market, but it starts to get much, much harder. And so that's why I think it gets super important to have the right kind of talent and expertise that can build these things, but also being able to quite quickly share the knowledge within the team.

Justin Norman: You just talked a little bit about different markets and just going back to the growth story in this Series A extension as well. I think an interesting thread to pull on for me is this idea of the depth of the South African market in your ability as a startup to sell to enterprise and to launch different products quickly to sell to enterprise.

But largely the story for African startups has been about market expansion as well as a way to broaden the TAM and talk about a much bigger growth story. How have you guys thought about actually, the South African market is quite deep and you can build a really meaningful company just by focusing in South Africa with enterprises versus then going out beyond the South African borders to capture other opportunities in light of the complexity that you just talked about. How do you think about that?

Kiaan Pillay: Call it 2021, you're totally right. There was this huge narrative which we genuinely believed and maybe got caught up in and certainly investors did as well, and I think, well-intentioned from all sides, there's definitely a massive opportunity in being Pan-African. It's just stupid hard and it's going to take you 10 or 15 or 25 years. It's going to take a really, really long time.

And so I think sort of fast-forward a little bit in a very different time where people are doing very different sort of work when it comes to diligence and working on market sizes. I think we were fortunate that we had the benefit of having really good traction, so people were like, "Okay, something's happening here. This is interesting."

We primarily only operate in South Africa at the moment. Ultimately, the question gets asked, what's the TAM? Any African founder ever knows that this question comes up probably in conversation one. And we, I think, had the benefit of the doubt because we were growing very quickly that a lot of these top-tier investors were like, "Let's find out."

It used to be pretty hard to say, "No guys, I promise you. South Africa can be really big," and it just gets hand waved away like, "No, I don't think so. You're 60 million people. No." Whereas now it was growing really fast. It was really surprisingly pleasant to have a lot of these Tier 1 VCs actually spend a few weeks doing research calls and really going deep and most of them shook out and they were like, "You can build a billion-dollar business in just South Africa. It is actually surprisingly bigger than we thought. The financial services sector is huge, but it is very incumbent."

Obviously that's not the ultimate ambition. You want to build the $10 billion, the hundred billion, so of course you have to expand. We don't think there's endless opportunity. But it was really interesting that people spent their time now and they were like, "Let's really deeply understand where Stitch is winning, where they can continue to win and take share."

And almost everybody shook out and they were like, "You actually can build a billion-dollar business in just South Africa." Super non-obvious market. I completely buy that narrative that you can't do that. That intuitively makes sense, but if you actually look under the hood, tons of people have done that, which is really nice because that's a little bit of a tick, you can check that, "Okay, this is interesting as is. Baseline, what Stitch is doing is interesting."

Of course we need to think about expansion. What does Pan-African look like? What does other global markets look like? Super fun. That looks super cool, super exciting, but baseline if these guys just continue operating here for the next year, two years, interesting, there's still good room to grow and that's been cool and I think that's actually shifted a lot of investor perception from that perspective.

Justin Norman: Does it also take some pressure off of you to say like, "We can expand when we're on really solid footing and more firm foundation than I think some other companies we've seen."?

Kiaan Pillay: Yeah. I mean, the Pan-African narrative we got very caught up in, it's something we still believe in a lot, but not as frenetically. I think it was, "We raised a Series A, we have to all the markets, let's do it quickly." And there was investor pressure for that. There was pressure from us for that, and now I think it's a little bit more tempered right now. Definitely think about other markets, have a strategy about that, but is it that you're led there by clients when it is appropriate?

You have these large enterprises here, a lot of them have Pan-African ambitions. Awesome. That still tracks right to the story, but do it when appropriate, do it when you have a customer. You can do a lot of things in advance, get your licenses, get your bank partnerships and stuff, but you don't have to go all out, all the markets without much thought.

I think the alignment is a lot better because you can continue to see like, "Okay, there's still a path for a while here, and then you can do other things in parallel."

Justin Norman: It's kind of crazy to think about some meaningful percentage of the whatever, 50 plus million dollars that you've raised, it's just going to go to licenses.

Kiaan Pillay: That is an upsetting but true story.

Justin Norman: guess, it's a worthwhile investment though, of course?

Kiaan Pillay: Yeah. I mean continually when we run the business you realize like, "Shit, this is why payments businesses and fintech businesses are well capitalized, because you need a lot of money. You need it for everything, day-to-day operations." If there's a bug in your code, chances are you might've lost some money somewhere and you need to take a hit there. If there's licenses, you need to pay money. There's capital requirements. It's tough, but it's necessary.

Justin Norman: This season of The Flip is all about sharing lessons and insights from some of the most experienced and esteemed founders from across the African tech ecosystem, and it's a mission for which we're proud to partner with Norrsken22 to share wisdom and insights from the Fund's unicorn board as well.

We know that advisors and mentorship are an important part of the venture funding process and throughout this season we are speaking to and learning from the successful founders, operators, and investors from Norrsken22's unicorn board.

In this episode, we're joined by Bernard Dalle, a former partner at the global venture capital firm, Index Ventures.

Bernard Dalle: In 1997, I joined Index and have stayed with the firm until the end of 2021. During that time, I invested in a lot of companies and I've seen a lot of situations from M&A to IPO to success and some failure as well.

And if I had to summarize my learnings, I would say number one is really focused on product market fit at all costs. It's learning from customers, from prospects, it's to iterate until when comes to a commercially viable product.

Number two is to build the right team, intentionally to never compromise on cultural fit. Number three, I would say it's kind of silly but it's, don't run out of cash and be smart about your finances. The largest successes that I've seen at Index are actually companies that they may have raised quite a bit of money or not, but they were always building a business that wasn't consuming a ton of cash early on. Number four, as a founder or as a member of the founding team or the early team, I would say it's evangelize, evangelize, evangelize, and the founders are the number one salespeople for the company for a long time.

And then finally I would say it's build a business, develop a product and a service offering. Find the right channel, find the right price point, develop your business model over time with the prospect of becoming profitable, I would say within two to three years.

Justin Norman: So just taking a step back a little bit, I want to talk about team and culture. This is something that I've gotten a chance to see firsthand. I think for context, you and I met I think probably 2020. You had these lunches at Stitch where anyone could come. You still do it every day. You've built this open office environment where people can come and work, and some people like myself have taken full advantage of that. I think it's really distinct. You're trying to be, in my opinion, at least this node in the middle of an ecosystem, literally stitching together the ecosystem in person as well.

I want to talk about how that relates to talent as well, but before we do, can you just talk a little bit about the company building the cultural element of Stitch and your vision for that or why you've done the things that you've done and how it impacts the business objectives that you guys have?

Kiaan Pillay: I guess, somehow this start-up was romantic in a few ways. One, I come from a gigantic Indian family and I've been fortunate that the households I've grown up in have always been very central from a community perspective, people in and out 24/7. I remember having friends over in certain points of time and they were like, "Who are all these random people? Random people are in and out." And they're like, "The gate's just open. What's happening?" And so I've always loved and been guilty of not having any boundaries in terms of go to lunch and an investor will be there and a friend and a family member and a coworker. That's always been an important thing for me personally.

Secondly, I think at least for me, have been fortunate to spend a decent amount of time in Silicon Valley in San Francisco and actually seeing some of the culture there. And one of probably my favorite part, which is commonly lauded, is how open it is.

I would meet a random person who worked at X billion-dollar startup and you chat to them a little bit about some kooky idea and they'd be like, "Let me introduce you to the founder, to the CEO." And I'm like, "Of this? No way. You can't use your social capital like that." I think a lot of... maybe, let me just speak from Africa's perspective, not be overly general, but it's very closed off. People often don't want to spend their social capital. People don't want to interact out of their sphere. I've always thought that's just such a massive thing that's been holding these ecosystems back.

I think we do a very, very small part to help that, but that was a big piece about how we thought about hiring people initially. It's like, "How open are these people to community? How open are these people to a lot of this unknown?" And we didn't deliberately do this, but the first four or five team members that joined, I don't know, three of them were actively dissuaded by friends and family to join Stitch.

Justin Norman: Really?

Kiaan Pillay: They were like, "Don't do it. This is crazy a startup. You were working in a room in someone else's office, they have 12 months of runway. What's runway?"

Justin Norman: This guy's walking around with no shoes on.

Kiaan Pillay: Yeah. Well, what's happening? Why are they talking about things like the company will go out of business in 12 months? What are you doing? You're in a good job. And I think weirdly counterintuitively, the people that are like, "This is cool. I'm interested. The openness to try something like that."

And I think that's been a very, after a point in time, you build a little bit of a critical mass where that becomes self-fulfilling. Those people attract similar people and you start to build that up. And I think we've been really lucky that we've been able to build up people like that. And this openness has attracted so many people.

I can't tell you how many people have been totally disinterested in Stitch. And then we've said, "Come have lunch with us." And they've come once and after the lunch I'll get a phone call or message and they say, "Are you guys still hiring?"

Justin Norman: Really?

Kiaan Pillay: Yeah. I can point to at least 10 examples in a 70-person company that we've hired. I mean, we've had other people that we haven't even hired where that's happened like a ton. That's been great.

Justin Norman: I mean, you guys have definitely built up a pretty good reputation in Cape Town, certainly as a choice employer. And I look at you guys from the outside looking in and I wonder about to what extent is it... you've always been relatively, I think you're a good fundraiser. It's like, "Well, you shouldn't be having open lunch and getting all this merch doing all of these things unless you have the money to do it, and/or you guys are in a position to create some traction."

And I think that if you were looking at it from an ROI perspective, it would pay off. But it sounds like also you're not really necessarily explicitly thinking about, "Well, if we spend this much amount of money on lunch every day and merch every day, that we're then going to be able to do this or that."
I think the question I have for you though is if you can take me all the way back to the beginning. You're in this virtuous cycle, but at the beginning were you having to sell... sounds like to some of those other people, you found some people that were open, but were you also having to sell, especially in the South African context like, "We can build something meaningful. You can earn startup equity that could be actually worth something and you should come do this crazy thing."

How much of it was also in spite of the money or the resources or anything having to sell and to pitch people to actually come and join you?

Kiaan Pillay: Huge, huge. For long. I would say, I don't know, until at least... timelines get blurry, but till at least probably we were 30 odd people maybe when... which is about when we raised our A, where we had a decent amount of capital at that point in time. Most people were a really, really desperate long sell. It's scary.

No one understands what a startup is really. Certainly, no one understands what equity is. No one has really made money in most of these markets from equity. There's a few handful of people. When you say, "Hey, we're going to pay you a mostly market salary, but we're going to give you a lot of equity," in the early days people were like, "Yeah, but equity is not going to pay for my bond. Equity is very difficult." And even people that didn't have obligations were just like, "I don't know what that is. I'm not super sure."

And so at the beginning I think it was fortunate that we found a few people that were really 'startup' and did really value equity. And so that was helpful at the beginning.

And then after that it was just a ton of relationship-building. At the beginning I was a bit more intense about, "You have to join here and now." I think I started to realize stage fit is a very real thing. Not everybody wants to join the three-person company, but I also probably have 20 examples of people that we had conversations with every three months for two years, and then eventually they joined. And those are some of the best people we have now. And it worked out great. The stage fit when we were a 30-person company was much better for those people.

And wherever we thought if there was really strong talent, we were very happy to have that conversation to keep in touch, have them come over for lunch, have them work from the office, join hackathons. We send tech updates too. The equivalent of investor updates, we send tech updates, we send those to prospective engineers the same way we send investor updates to prospective investors to just keep people interested. And that's proven to be really, really good.

I think for startups and things like this where there are high risk, often people just need to build up conviction over time, which is proven to be great.

Justin Norman: Can we tell the Junaid story? I think that's my favorite talent story. Maybe if we don't say who the investor was.

Kiaan Pillay: No, you can. You're welcome to.

Justin Norman: You tell it. Maybe the most high profile or the biggest hire that you made was... What is he now? He's the president?

Kiaan Pillay: Yes.

Justin Norman: Junaid Dadan. And he was not looking. My understanding is he was not looking to leave Stripe and Stripe was trying to recruit somebody who was your investor who took the call without any interest in going to Stripe and then quickly turned it around to-

Kiaan Pillay: Judo'd Junaid. One of our investors was being poached, headhunted by Stripe. Junaid was at Stripe at the time. So Junaid was trying to hire one of our investors. And in a master judo class, our investor said he took the call, very nice call, "Not interested, but hey, you're in Cape Town, why don't you go to talk to Stitch? These guys are doing cool things."

And also it wasn't an instant thing. We started it with lunch. We met Junaid for the first time and we are still 10 people. We didn't even have a table. We were all just sitting on chairs and slowly over a couple of months started to build up conviction. I mean, he was super, super senior at Stripe and eventually I think tipped at some point where he was like, "This is starting to get super interesting. Well, what's happening over here? This is also happening in an African market in South Africa. I'm very curious to what's happening. It's an emerging market. There's not a lot of this happening in the space."

And that's now one of many cases, but that was really prolific for us at the time. Kudos to our investor for-

Justin Norman: When they say actually... the meme, how can I be helpful?

Kiaan Pillay: It's like that.

Justin Norman: Get recruited and go and convince the guy who's trying to recruit you to join your portfolio companies.

Kiaan Pillay: Yeah, exactly. So no, that's been super helpful.

Justin Norman: Just one thing that I think is really curious. You had told me as you guys were raising the Series A extension that this was a function of really rapid growth, but that the prior raises in the Series A even was a little bit more of you guys were still trying to find your footing in the market. You talked a little bit earlier about the startup focus versus enterprise. I think all the while though you were still investing considerably in talent to the point that you just talked about a bit earlier.

And I'm curious to know, was there always just this trust from you and maybe from your investors, especially those who invested at Series A when you didn't have as much traction that if you put enough smart and talented people in a room together, you guys are going to figure it out. Is that how it went or is that the thought process at that time?

Kiaan Pillay: Mostly. I think the important call-out is what we were investing in was product and eng. Even to date, we have a very, very small 'revenue team'. We have very few salespeople, very few customer success. It was never obvious that we would just crack it, but we always, always, always were very proud of…

And it was well-recognized that we had an exceptionally strong team and that was compounding. We were attracting better and better people. The knowledge that was getting shared internally was getting really, really strong. And so we got to a point where we could prove we were clever engineers and maybe product people. It's hard to say you're a clever product person if no one's buying your product. But we were building things very fast in a best-in-class, developer or infrastructure way. And at the time that was the bet. There will be a need for payments infrastructure, there will be a need for these tools in the market. Who is going to do it? Stitch looks like a decent punt for that.

Obviously, not a hundred percent that we would get the customers, would get the right fit, but I think at the time that was really a lot of what was important in the market. I think this could have gone a thousand different ways. We are lucky that we stumbled into a really good patch and we can just continue to pull on that.

But I think it would've been sticky if we were investing heavily in the go-to-market or rev side. I think that thesis that the best-in-class engineering and product team has a really good chance of winning this completely white space market, that's pretty compelling.

Hiring a 30-person sales team where you have very nascent traction, no one is buying your product, you're not having month-on-month growth. That's hard. To say we're going to bull the best in class machine, we're going to get invest in class partnerships with banks and licenses and regulators, and then we will find the product, not guaranteed, but that's more compelling. I think we would've got a lot of pushback from our investors if we were investing in other areas of the business.

Justin Norman: And then I think one thing that is always fascinating to me about entrepreneurship, in general, is you went from when you and I met, it was an under 10-person company. We were having lunch around the table this size, and then I guess two, three years now, you're now what, 70-plus people.

I'm curious just to hear a little bit about how you think about as a founder and leader that evolution from, you talked about stage fit before for talent and you've had to evolve across all of these different stages and how you think about what it means to go from zero to 10 to 30 to now 70 plus as a founder and as a CEO. How have you thought about and figured out how to do that?

Kiaan Pillay: Probably not well at all stages. I still get itchy and want to be involved in tons of things that I think no one cares or wants me to be involved in. I don't know. I think increasingly this next phase that we're in... well, it started really early. At some point in time I wrote code. I don't think any of it exists in the code base anymore. And then at some point in time I did all of the sales and now I do some and I get involved where needed.

At this stage. I think probably most important and where we are, and I guess my evolution I think is building out that next layer. We have exceptionally strong leaders in the business across their functions that have far, far, far superior understanding, autonomy, knowledge than I do in any of the functions. And I think it's actually stepping off a little bit and being less of a blocker in some cases, being enabling wherever possible, which I think is often just not true for me. And I think I slow things down very often, but it's finding that balance I think will be important.

There's just too much going on and I probably interject myself unnecessarily in some cases. And so I think finding that balance in the next phase of really allowing people and their departments and org to just run, I think that's probably the next phase for us.

Justin Norman: I imagine that it feels a little bit easier to do that knowing that you've hired high-quality talent that you can trust and that is capable.

Kiaan Pillay: Yeah.

Justin Norman: That's a nice luxury to have, I would imagine.

Kiaan Pillay: It is. We're lucky.

Justin Norman: And then as a final question, just big picture, we've talked about it a little bit, but you guys have some great traction now in South Africa. I think there's a lot of white space we talked about across the continent as well as outside of it. What does success or what is the vision for Stitch at this moment? What does that look like?

Kiaan Pillay: I think there's tons of white space in the continent. I think for us, if we can start being in the near term, the player that people look to when they want to enter the market for the very first time or when they're expanding throughout the market is super important for us.

Whenever you think about accepting payments in the continent right now, we want to be your go-to call. In any way, shape or form moving money at all, we want to do that. And I think you start to unlock a lot of possibilities and opportunities when you start to be able to work with one partner, one client across multiple markets, and you can start to do interesting things with cross-border flows. You can start to do interesting things in terms of how those nodes are interacting with each other.

That's a very important next step for us. Africa has always been very prominent in our story and always will be. And I think that's where we have right to play. I think that's where we have good brand and understanding, but we've never wanted to shoehorn ourselves into just this African plan. We have to just do this.

We've actually had surprising interest in some more western markets and some of our partners that we already work with have... I think it's just one of these things where we built some solutions in a very African-specific context that no one else has really thought about. Not because we're clever, just there are problems here. People have been like, "We have this problem in X Western market. If you had this product there, super interesting for us." And just I think one of those blind areas for other people, and we've just been lucky that we've happened upon it.

We are trying to be quite open in how we think about product development and expansion, but certainly always want to have a global view of these things. Most of our important customers right now are completely global, so want to see what we can continue to do with them in other markets.

Justin Norman: When Stripe launched payments links, Patrick Collison wrote a thing on Hacker News saying, "I think it's going to become increasingly important for people to pay attention to what's happening in other markets."

And he was explicitly saying that they saw payments links in the Paystack in Nigerian context, and then they realize like, "That's something that could work really well in the US market," and it's just for them, was just having a view of what's happening in these other markets and the complexity in these markets might mean that it's... I'm also very interested in the idea of what can the rest of the world learn from Africa.
Is there anything else you want to talk about? Should we leave it there?

Kiaan Pillay: Nope.

Justin Norman: Cool.

Kiaan Pillay: Thank you, Justin.