Okay. I guess that our next session is with Todd Pollak, Chief Revenue Officer at Marqeta. Todd, thank you so much for joining us. It's great to have you here.
Thanks for having me.
Relatively new joiner at Marqeta. Haven't seen you on the circuit as much as some others. Give us a little word on your background and also, you know, your role at Marqeta. What do you do there? What are your responsibilities?
Yeah. I spent the last four years of my career as a Chief Commercial Officer at Ancestry. And, you know, I ran basically all of revenue. I ran all of marketing, all of operations, and essentially anything related to sort of the monetization of the business. Prior to that, I spent 13 years at Google. I ran retail and financial services as a Managing Director there. Had a good, broad cross-section of experience with FinTech and working with different business models and really trying to understand why do companies exist, how do they position themselves in the marketplace, and joined Marqeta, back in December of last year. My responsibilities here are essentially closer to what I did at Google, which is mostly go-to-market, everything related to pricing, packaging, all the business development, partnerships, marketing.
I think that covers most of it. There's some other stuff in there.
That's most of it.
That's most of it.
The term embedded finance is one that's come up a couple times at this conference, not the least of which is because I'm bringing it up, but others have brought it up as well. It seems to represent, you know, kind of encapsulate Marqeta's sort of broader market opportunity. What does that term mean to you? Is it fair to say that that's a trend that's that exists out there that you guys are relatively well-positioned to, you know, facilitate?
Yeah. I think embedded finance means different things to different people, so my answer might be wildly different than everybody else you've heard from.
Good.
Look, I think my first experience with embedded finance was in the '80s when I was watching Back to the Future. Like, Marty McFly walks into the coffee shop on the corner, and he's like, "Give me a tab." The guy behind the counter is like, "You have to order something first." That's embedded finance, right? Like, that coffee shop is providing a financial service to somebody that's local, that they have a relationship with in the community, right? They're willing to extend credit, and there's no bank in between, right? They know that they're good for it. If you fast-forward to sort of like modern-day embedded finance, what I think about is sort of like what's happened. There's been this massive transition in the workforce.
You know, I would say over the last five to 10 years, you've seen this tremendous shift from W2 workers to gig shift economy and hourly wages. Historically, banks have not serviced very well folks who need credit, they wanna build credit, et c. When you have something that's moving so quickly, like 47% of the workforce now is gig shift workers, you generally there's a gap in the marketplace between the services that are provided, banks in this case are not willing to provide those services, and someone that needs to step into that breach. What we're seeing at Marqeta is corporations willing to take on that responsibility. This makes sense because historically, you know, you think about what a corporation does for workers today, it's healthcare, it's insurance, it's retirement planning, right?
All of that is being taken on by the corporation. It's natural for the progression to be the day-to-day management of financial services. When I think of embedded finance, it's really this transition from, you know, a bank typically trying to get information from a company about someone's viability to moving to the company itself actually having the information and being more qualified to assess whether or not they should extend credit for financial services. You know, examples are things like an Uber that's doing an Uber Pro Card where a driver can cash out at the end of every shift and get paid. You know, we see this, I would say, not only accelerating, but probably 50% of deals we've done in the last two quarters are embedded finance related.
Changing tracks a little bit. You guys had called out that bookings in the first three quarters of 2022 came in a little bit light. You've obviously made some important changes, and everything's sort of back on track. Maybe go back in time a little bit, speaking of Back to the Future, and just give us a little bit of a narrative about what kind of happened there and, you know, how you're, how you're addressing it basically.
Yeah, look, all companies go through inflection points. I think Marqeta going from a hyper-growth company that was sort of like in 2021 and 2022, you know, you have COVID, demand far exceeds capacity and supply. As a result, you operate in a certain manner. I think at the time, the way the organization was set up, you know, the incentives that you provided were company-based, not personal-based. Meaning most people are getting comp based on a company goal, not on a personal or individual goal or performance, which is not typical for a sales force. I would say the second thing is the organizational structure. At the time, you had distributed functions all over the organization.
The way a customer would experience Marqeta was essentially like you talk to a BD person, that BD person would send you over to a customer success person. That customer success person would sort of pass you over to a delivery person. They would onboard you. You'd get pushed back to the customer success person. It's like just a lot of back and forth. It's similar to sort of like in the '80s where like GM would do all the... they'd push cars through the line, 40% of the factory floor would be like dedicated to rework. We were very similar. Like, everything that would go through the line to get to market, you know, you'd have to go back and fix it because what the success person promised is not necessarily what we were capable of delivering.
You know, the bank would not necessarily really understand what the customer was trying to do. I think those two things have been, which I would say is sort of a blessing and a curse for Marqeta. One of the great things about the company is its flexibility and its ability to customize and do very unique things. In the early stages of a company, when you're in, like, this hypergrowth, the people that come to you, super tech-savvy, they have great marketing capabilities, and they're obsessed with customer experience. Those customers are great customers for Marqeta. The problem is everything is custom, it would take 12 to 18 months to get everything to market. The use case is brilliant, those programs scale, and they wind up being long-term phenomenal customers for us.
You can't operate in the phase we're in now, which I would call scale growth. You know, companies go through inflection points. I would say, you know, we have to make changes based on where we are today.
Yeah. Maybe we need a mic. Yeah. Sunil, your mic's not picking up your voice as clearly. Thank you. In that context, I think one of the 2023 priorities is to accelerate sales. What does that mean? Talk about the specifics of that strategy. Is that just about more staff? I mean, you mentioned some changes in the compensation plan, productivity, new channels. What does that mean, accelerating sales?
Yeah. I think there's a couple things. Look, the three things I talked about, right? Incentives. You know, what do you pay salespeople for? Essentially, you pay them to educate prospects and customers and reduce the time it takes them to buy. That's what you're paying for, accelerated time to contract. Just changing the incentives to the individual, making it more of a competitive environment, makes a huge change. The second thing that we've done is we've reorganized the company. We've taken all those disparate functions that have sat outside of go-to-market historically, and we've moved them into go-to-market. We've done what's called podded the teams. You have customer success sitting with a business development person.
The benefit of that is essentially that you are no longer sort of as a BD person, you're selling something, thinking very short term about the opportunity ahead of you. When you pod, you are forced to think long term about the customer relationship. Because you know what you sell is going to be delivered by your teammate and that you are going to maintain your relationship with that customer, the likelihood that you will promise them something that is unlikely to happen is very low. That's, like, historically a huge problem in sales. Huge change for the company, big change in the way we go to market. The third one I would say is around the custom approach to everything.
What you look at and you see, if you go across whether it's expense management, whether you go across consumer financial hub or you look at supplier payments, 80% of the constructs that we do are the same. There's 20% maybe that everybody does that's a little bit unique. Getting to a more standardized way of going to market is the third big change. Standardization for some people at the company sounds like a dirty word, but that's how you grow and you scale. You have to get to ground truth so you can get your time to value reduced. I think today we're at something like, you know, 12 to 18 months time to value, and it's a hyper-focus of the company to try and reduce that.
You said time to value.
I did.
Is that like bookings to revenue?
Bookings to revenue.
That's very interesting. And presumably with all these changes that you've made, that cycle's tightened quite a bit. I was gonna ask you to kind of walk us through, you know, the typical sales cycle and how do you get from, you know, signing on the dotted line to actually generating revenue. It sounds like you guys have been putting a lot of thought behind how to optimize that process. Is that a fair assessment?
That is a fair assessment.
Yeah.
Yeah. The way I think about it, you know, historically the typical sales cycle at Marqeta takes somewhere between three to six months. You know, this is one of the few sales in the world where you can walk into an organization that's not typically familiar with payments or credit cards or whatever it might be, and you can say, "I have money that I could give you," and it's based off money you're already spending. There aren't a lot of companies that show up and say, "Hey..." Usually it's some, like, fictitious ROI that you'll get through cost savings and efficiencies, right? The real answer here is, "If you have $17 billion in payroll, in the next five years, I'm gonna give you back half a billion dollars." It's real. It's not some projection. That's what it is.
First is explaining the opportunity to the customer, educating them, why is payments important, how do you use it, et cetera. I think the second thing is really thinking about, like, how do we align our solutions engineering organization? This is important because most of the companies that we do business with are not payments companies. They're learning about this for the first time, so we have to educate them. So making sure that we're involved deeply as an expert, understanding and helping them understand, "This is the business that you're in. This is the size of the opportunity. These are the mechanics of how it works, and this is what Marqeta is capable of doing." You know, the more sophistication the customer has, the less time you have to spend educating them.
You know, generally the process winds up, you know, with them saying, "We want an MVP, something that we wanna do that's a first." One of the nice things about Marqeta is where you start is rarely where you finish. We wind up doing multiple deals with all of our customers, which is I think unique.
Here's a question for you: Would you rather customers choose to be Managed by Marqeta or Powered by Marqeta? Maybe embedded in your answer, just level set exactly what the difference is for folks because it can be a little bit tricky.
Yeah. Managed by Marqeta is essentially services on top of processing. The way to think about it is program management. Risk management, risk control, anything from handling the bank to handling disputes, the call center, IVR. We're doing anything fraud reduction, it ranges from all of those services to additional things that we do. That's Managed by Marqeta. That is essentially processing plus services, as I said. In a powered by relationship, you are essentially just doing bare metal processing. You know, there are customers who are highly sophisticated and already at scale, as a result, they either have a program manager or they program manage themselves. The ability to do business with both is incredibly important. I don't value one over the other. I actually think of them as a continuum. That's one of the...
I think one of the huge advantages of Marqeta, and it's, you know, when you aren't the loan to the market like a growth company and you are a Series C FinTech, your capacity to manage the fraud, the risk of a financial services program is very limited. You need someone like a Marqeta and managed services and program management to get that program up and running, help you navigate the bank, the regulatory environment, and manage the program and how the customers are gonna react once the cards are in their hands, whether that's virtual or physical. Over time, and we see this with almost all of our customers, the more they do business with us, the more they learn, the smarter they get.
Eventually they start to realize, "Well, maybe there are some things here that I can do myself." They start to pick off things that are important to them, and everybody's different. It depends on how much they value the customer experience. They might say, "Well, we wanna do the call center because we prefer our dedicated agents to answer questions for our customers as opposed to outsourcing to a third party." The way to think about Managed by to Powered by, it's a broad spectrum of services that are available that enable us to service different companies, different industries in different phases of complexity and sophistication. Ultimately, what it enables us to do is transition with them and not get pushed out because we are only one thing for everybody.
Interesting. Okay. It's, it's not a, it's not an either/or. It's a, it's a menu of basically different items with two poles, basically. It's, it's a melange, I would say.
A melange. Smorgasbord. Smorgasbord.
There's, you know, you get people who are in the middle, right? Like, most of what we do now, I would say, is like powered by plus. There's always some things that we're gonna do on top of managed services and some things that our customers want, even our most sophisticated customers. The way to think about it is like it's a traditional outsource versus in-house decision.
Mm-hmm.
It's, you know, they run the economics, and then they make their decision about how they wanna manage their cost and their balance sheet.
Hmm.
Block obviously is a significant partner of yours. Maybe just also to kind of level set with everybody here, how does Marqeta support Square or Block? I know you're used to calling them Block.
Yeah.
How has the partnership evolved over time? I guess the end of my question there is, in what ways can the relationship sort of deepen as we move forward?
Yeah. Block's a fascinating customer. I expressed earlier sort of like what is a great customer for Marqeta. Block is like the ideal, what I would say is like they have incredibly powerful and incredibly sophisticated software engineering talent and capacity, right? As a result, what they want is extreme flexibility. They're great partners for Marqeta, right? We are a cloud-based API first, you know, modern card issuing platform that has lots of flexibility. For Block, because they are so sophisticated from a technology perspective, because they're a great marketing company, and because they have this like real understanding of customer UI, like the experience that you actually get, that's really the difference in their product. It's how you use it versus the services that are available, right? Because there's thousands of competitors, but they're the winner.
What really makes it a great partnership is you get Marqeta where it's, you know, we can do anything that they wanna do, and they can configure it in any way they want in their experience. It's not, you know, like a traditional banking relationship where you say, "Here's a co-branded card, and if you wanna access that information, you have to go to the bank's app." That's traditionally how banks offer co-branded credit cards. For us, it's, "How do you want the experience to look?" It's completely embedded in the Cash App experience. Marqeta is white labeled. It's in the background. Nobody knows who Marqeta is. For us, we just keep adding services, and that's been our strategy. It's keep adding as many capabilities, capacities, so banking and money movement, right? Enable them to get money in, so direct deposit accounts.
We're working with them on boosts to their rewards programming, like how do you incent people to use the product more frequently. You know, we've launched Square Seller, the Seller card obviously in Canada, we go international with them. You know, we launched the Cash App Teen Card last year. There's all these things that we continue to do with them and, you know, Like I said, they're the ideal customer, right? If you think of any company that looks like them, and there are hundreds, ultimately it is they are pushing us as much as we are pushing them. We are innovating together, and we are learning as we go. That's, in my mind, that's the best partnership you can possibly have.
Maybe putting even Block aside for a second, how important is that flexibility in the sale? I mean, are your customers really looking to you because, hey, they could go to a more traditional vendor who would just give them sort of a, you know, something that's somewhat clunky and say, 'Here, adopt this,' versus sort of like you guys saying like, 'Here's a bunch of LEGO bricks, you know, build your own,' you know. Is that in essence the value proposition or part of it? Part of it?
I think, yeah. I think historically that was the value proposition and probably one of the reasons when I say like we got to this inflection point, right? We talked about 2021 and 2022 where everything slowed down. You know, at some point you burn through the early adopters. Early adopters are generally the most technology savvy. They're the ones who generally understand what they need. They're payment savvy. They have huge payment teams, and what they're looking for is just a technology provider. Take like an Instacart or someone like that. These companies are wired to do business with a Marqeta. Eventually when you burn through that TAM and you get to sort of like, okay, now I want to go do business with, I don't know, pick any multi-channel retailer, right? Who's got legacy systems, legacy technology. They don't have great engineering teams.
How do you express to them that you want to do this payments program that's going to be phenomenal, and it's going to be embedded in their experience? You know, if you think about sort of like the opportunity and you know where we're going, I would say having the ability to do everything completely bespoke for one end of the market, phenomenal. What we really need to get to is, like I said, 80% of what we see across all of our customers, and there are hundreds of them, is common and standard. What we've been working on is how do we get and line up? We know this bank will assess this credit box, and it is this program, this construct, meaning like this BIN, whether it's commercial or it's consumer, and then, you know, we know it's expense management.
It goes, this is it. Like, this is your partner. We can have you stood up in 90 days. That's where Marqeta is going. You know, where I think we have seen competition historically is either at either end of the spectrum. It's you either get competition from someone who's not as flexible as you from an API perspective or capabilities perspective, or it's I have a point solution that can be up and running, and it's not flexible. It's basically an app that works out of the box. You customize 10% of it and you're ready to go. That's at the lower end. It's having the ability to do all those things. We have historically been very good at the mid to upper echelons.
I think we're moving what I would call it down market, but it's really for smaller, less sophisticated customers who are really looking for like a quick to market easy button.
Mm-hmm. Expand a little bit on competition and, you know, what is your view of the competitive landscape? Who do you guys go up against? you know, I think you have a differentiated offering. There are others out there maybe trying to chase the gold ring at the same time. What do you think about competition, and what differentiates Marqeta?
Yeah, it's funny. I would say we see different competitors depending on the industry that we're in and the size of the company and the level of sophistication that they have around payments. Typically what makes Marqeta unique is that we are one of the few players coming to the table that is not just a processor but also a program manager, has the bank, will give you end-to-end services to stand up a program, or as I said, somewhere in between, we would say, "You can own these things, we'll keep these things." It depends on the balance of what you want to do. The other thing that we can do that I think is unique to Marqeta is it's debit and prepaid. Generally, it's international, and it's now credit with the acquisition of Power.
We are one of the very few that regardless of what you're trying to do, we are a player, and you should be evaluating us. The other part of it is if they're thinking future forward and we're a big enough, sophisticated enough customer, and these are the customers we want. They're thinking not about like the program that they're gonna stand up tomorrow, they're thinking about where they're gonna be in payments in five years and how many providers do you wanna work with? Like if I go back and I look at like legacy technology companies that have built massive payments infrastructure, they have teams of people, thousands of people who are dedicated to payments, and you know these companies. Essentially all of them have cobbled together. This is like the traditional software marketplace.
Like you've gone to 20 different providers, you've hired consultants, systems integrators, and you've built this complex, unique stack, and you can't get out of it. You're stuck. What you see is like if you are thinking smart forward and you are for the first time thinking about payments, Marqeta is the answer. If you go ask those companies who are legacy players, like can they get out of their stack? Most of them will say no until it's so painful that they'll do it, and then they wanna work with Marqeta. Everybody wants one provider. We are one of the few, if not the only, I would say, in the market that offers end-to-end. Our strategy is bearing this out. You see it like two-thirds of our deals that we're doing are expansion deals with existing customer base.
One-third of them are outside of the United States. We are doing things that very few companies can do themselves. To me, the competitive landscape is littered with a bunch of players who can do a piece of what Marqeta can do, but none has the horizontal view of the market that we have.
You mentioned credit, that's a relatively new area for you guys. Help us think through sort of the demand side of the equation there. You obviously got into that business for a reason. You know, what are some popular use cases or interesting use cases that you're seeing that, you know, really drove you to get involved there?
Yeah, great question. Look, I think we have historically offered secured credit, and we did credit processing, but we did not do credit program management. The real value add for a company that's getting involved in payments from the, from the get-go, if it's an initial new sale, they are interested in program management because they don't know how to manage the bank. They don't understand the regulatory requirements. They don't wanna manage the networks, they come to us, and we can stand them up. On the credit side, historically, we've not been able to do that. Power gives us that capability. I think the really interesting way to think about credit is not historically the way credit has been thought about, which is like there's a co-brand program, you need a bank partner.
Here's a credit card that has some rewards program, and there's a credit limit based on your income. That's like 99% of the market. What's really interesting to think about is that gig shift worker problem, right? Which is how do I become creditworthy in the United States if I'm an immigrant or if I'm underbanked or thin- file client? You have to graduate from prepaid to some kind of credit building to some form of credit if you're gonna get a loan in this country, right? One of the nice things about what we're building with respect to Power Finance and all the banking and money movement capabilities is not to think of them as like we're going in the banking and money movement because we want banking and money movement to be a huge business for us.
These are capabilities like we were talking about LEGOs that can be attached to constructs. I can have a credit card with a direct deposit account attached to it, and that can be a secured card to start. Over time, I can use Power's capabilities to say to somebody, "I'm gonna use your workforce history, so I know how often you work a shift, I know how often you complete a shift, I know how long you've been working here. I know how reliable you are. I know the quality of your reviews, your 360 reviews. I'm more qualified to determine whether or not to extend you credit." What I can do is with a credit construct on a revolving 30-day, I can have a dynamically changing credit limit. You've earned $700. That's the limit you have today.
Because I know you've worked the last 30 days every day, and you've worked six hours a day, now I'm gonna extend you $400. Nothing has to happen on the back end. You don't have to apply for a loan. You don't have to do anything. Magically in the background, you have two balances now. One is your earned wages and one is your potential that you can take either early access to wages, so they really are secured or it's, I'm willing to make you this loan because I think that you're good for it, right? It opens up all these unique possibilities in the market that didn't exist before.
If you, if you think about that gig work or shift work or opportunity to 47% of people that are out there that are living paycheck to paycheck that can't get credit, massive opportunity. For me, it's not about like how do you go and take the legacy business, it's how do you go build businesses that never existed before. The market has responded. There's a number of customers that we will stand up and announce in the next couple of months that are doing exactly that with credit.
Do you think that traditional FIs and banks will start to need those types of capabilities? I ask that because there's always this tantalizing sort of like, wow, the TAM of card issuer processing and banks is massive. Marqeta can just take, you know... Going up against this large kind of commodified, again, to your point, you know, card, cookie cutter box card issuers, it's tough. Will that be the thin end of the wedge where the bank says, "Well, you know what? I actually need those types of capabilities too." Which I guess is another way of asking, like, talk about the bank opportunity for Marqeta.
You know, look, I would say banks are really smart. They follow the money. The reality is, like, in all markets, the economics come to bear at some point. If you think about where the market is today, it's very easy to sit as a large bank with your current processor and your current programs that you're supporting that are traditional. The market isn't challenging you yet.
You know, as you start to think about these upstarts, maybe 5 years ago it wasn't that interesting and they were ignoring it and looking the other way and saying, "Well, some of these modern processing capabilities are interesting, but we don't need them in order to be successful." I think now that you're seeing corporations step into the breach and say, "I am going to take this on, and I am going to have a direct relationship with either my employee or my customer," and the bank is in the background. At some point, that market comes so far that it is impossible to ignore. I do believe over time, when they're ready, the large FIs will say, "We need these capabilities too." I truly believe this. We have great relationships with all large banks today. We talk to all of them.
We have relationships with all in different capacities. We're constantly in communication with them about working together. At some point, I have no doubt that Marqeta will become a part of their stack, but, you know, couldn't possibly say when.
What about the international opportunity? How is that? How do you think through that?
I love the international opportunity. I'll tell you why. I think every customer we have is pushing almost every customer is pushing us to go internationally. One of the nice things about that is, you know, we have sort of this amortized market entry position. Most people have to go and invest in advance to open up a new market, and you have to take that risk. Marqeta doesn't actually have to do that. What happens is our customers push us. Uber is all over the world and constantly opening up new markets. We have Western Union, who went from Europe and is coming back to the United States. There's all these customers that are pushing us to go to Canada or wherever it might be. As a result, we don't have to make those choices. You see patterns.
It's everyone wants to go to the same markets. Everyone's done the same research. If you see your customer base and you've got this broad swath of people pushing you into new markets, and they're all pretty common, it generally lets you know there's a good opportunity and that enables us to invest. That's been the strategy. You know, as I said, a third of our deals last quarter were from the EU.
Interesting. It's not that heavy a lift to get into a new market. That's why I wanted to ask you that as well. It's not like you got to go through a bunch of licensing, a bunch of nuttiness just to.
Depending on the model you're in. You know, if you're doing Powered by Marqeta and you really don't need a money lending license. You don't need any of... It can be relatively fast, depending on what the needs are. Yeah, you're right.
Fantastic. Terrific conversation.
Yeah. Thank you.
I really appreciate it. Thanks so much for being here.