The CEO and co-founder of payments fintech GoCardless jokes that his work life is currently more relaxing than his home life.
This is because the 37-year-old has two young children, aged one and three, the former having, “taken it upon himself to wake up every day between 4:30 am and 5:30 am, which is far too early” says Hiroki Takeuchi, the man behind the $2 billion-plus valued London startup.
His early mornings, he says, are spent looking after his son while “trying to get caffeine into my system as quickly as possible”.
Whether due to parenthood, Takeuchi has more grey hairs these days, but the face remains boyishly innocent.
Hanging out with Monzo co-founder
Takeuchi co-founded GoCardless in 2011 when he was just 23, along with Monzo co-founder Tom Blomfield and Matt Robinson, the co-founder and CEO of Proptech Nested.
The three are still close, says Takeuchi, who is meeting Robinson tonight while he will meet Blomfield a “handful of times a year”.
“There is a tie between us that will never disappear,” he points out.
GoCardless- some numbers
Recurring B2B direct debit payments might not be the sexiest fintech sector but it has powered GoCardless to unicorn status, offices around the world, a workforce of around 800 employees, and the handling of billions of pounds in transactions.
GoCardless is a payment platform that lets businesses collect one-off and recurrent payments, such as subscriptions and membership fees, via direct debit, rather than credit cards or bank transfers.
Headquartered in London, it also has offices in France, Latvia, Australia, and the US, and its services are used by close to a hundred thousand customers, including sole traders, scout and swim clubs, and well-known companies like DocuSign, TripAdvisor, and the Guardian.
It was valued at around $2 billion last year when it raised $306 million from investors including private equity firms Permira and BackRock Private Equity Partners.
According to its latest financial figures, in the year to June 2022, its UK business generated revenues of £70.4 million and operating losses of £60.9 million.
International play
Revenues have been helped by GoCardless's international growth, shouldered by its creating a single direct debit payment global network, nullifying country-to-country differences.
The startup can now collect payments in over 30 countries, covering the bulk of recurring payments globally.
Payments is a giant of the fintech sector, including the likes of e-commerce heavyweight Stripe, valued at $50 billion, PayPal, boasting nearly $30 billion a year in revenues, and Dutch payment powerhouse Adyen.
But it’s also a market that is varied both in terms of user cases and geographically.
For now, Takeuchi says GoCardless is fixed on its core direct debit market and has no plans to move, for instance, into the card space.
“We are quite clearly focused on the bank payment space. We think there is a lot going on there and a big opportunity," he says.
Open Banking push
One area where GoCardless is making a big play is Open Banking — broadly speaking the sharing of financial data between banks and third parties through the use of Application Programming Interfaces (APIs) — believing it will have a big impact over the long term on payments.
GoCardless has been making inroads into this hot fintech trend in recent years and this was accelerated earlier this year when it acquired Latvian open banking provider Nordigen.
Takeuchi said: “The core reason for acquiring Nordigen was that we felt that in the future all of this Open Banking technology was going to be quite fundamental to the offering that we have.
“Nordigen started out on the data side, offering freemium data services and quite quickly built direct connectivity across over 2,500 banks.”
Since the Nordigen purchase, GoCardless has added almost 500 bank connections on the payment side and is leveraging Nordigen’s tech to power its open banking transaction volume.
On the broader question of the potential of Open Banking, he says:
“What we are seeing at the moment is still the nascent stages of this. I think the banks are doing a good job of creating the experiences that people feel ‘ok, this is something that is safe to use.’
“As people get more and more used to transacting this way, then I think it will become a very natural way of paying for other things.”
On the road to profitability
Amid a fintech landscape, in which investors are no longer swayed solely by a startup’s growth potential, GoCardless, like others, is aiming to swing into the black.
In July this year, GoCardless announced the appointment of former top SAP executive Franck Cohen as chair, saying it would “accelerate its profitability path”.
Asked whether GoCardless will make a full-year profit within two to three years, Takeuchi says “for sure”.
“We’re on that path, we are accelerating our way towards it,” he adds.
Valuation dip?
With the drying up of fresh capital amid volatile markets, the days of fintechs undertaking waves of funding rounds to ever-higher valuations are long gone.
GoCardless was last valued at over $2 billion but what would its value be today? Presumably significantly less? “I don’t pay much attention to that,” he says.
Likewise, Takeuchi swats away a question about whether acquirers have been sniffing around GoCardless. “We don’t have anything to talk about on that," he says.
London has taken a bit of a kicking this year, as several fintech luminaries have hit out at it, including the accusation that the capital is anti-business.
The GoCardless CEO says:
“In our experience, the UK financial regulator has been pretty progressive and forward thinking and enabled quite a lot of innovation."
He adds that UK regulators compare favourably with many international regulators.
Learnings from cycle accident
In 2016, Takeuchi suffered devastating injuries in a cycle crash three weeks after getting married (he met his wife on his first day at the University of Oxford in 2005).
He was left paralysed from the waist down after colliding with a parked car on an early morning ride with his brother.
Takeuchi says he was thinking about the accident recently, and realised he’s been running GoCardless post-accident longer than pre-accident.
What did the accident teach him about himself? He says:
“It made me realise I am quite resilient. I was able to get through that experience relatively smoothly.”
“I use it as a reminder,” he adds, thoughtfully.
“If you can get through that, then you can get through most things.”
And how did it impact the way he managed GoCardless? He says he finds it hard to differentiate between how his management style has evolved due to the accident or how his management style has changed due to the growth of the business.
But being “severely disabled”, he says, has given him better judgment and a different perspective on things.
The accident, he says, has also shone a light on the importance of diversity for him, not “superficial” diversity measures like the ethnicity and gender diversity of boards.
“What I have come to the conclusion of is what really makes diversity important is the difference of experience, ways of thinking, and perspectives. Having those different perspectives around the table leads to better outcomes," he adds.
New GoCardless culture
In the summer of this year, GoCardless cut 17 percent of its workforce, reducing staff numbers from 900 to below 800, amid a challenging economic environment.
“We are going to realign our business by focusing on fewer things and reducing our cost base,” Takeuchi wrote at the time.
Will there be more job cuts to come? “I am not commenting on that,” he adds.
Coinciding with the job cuts, and amid a dash to reach a profit, GoCardless set forward cultural changes to the organisation.
These included “setting higher expectations for each other and taking more accountability to deliver results” and being “more ruthless about stopping things when they aren’t working so that we can focus our efforts on the things that do work".
It also offered voluntary redundancy to those who felt this new culture wasn't what they signed up for.
Why did he feel the need to introduce a culture change?
He says:
“For me what I noticed is that we increased the size of the company very quickly but I didn’t think we were getting the corresponding increase in output.
“We were growing our cost base faster than our revenue base.”
He says the startup needed to “drive more accountability”.
He admits there was a “little bit" of pushback to the new culture from some employees but says “what was very humbling for me was for the vast, vast majority of people in the company, they did want to be part of that and they are willing to go through that change".
Plans for the rest of the year
On the fintech's agenda for the rest of the year, he says:
“It is really about continuing the expansion of the business and doing so in an increasingly efficient and more profitable way.
“Strategically we are focused a lot on Open Banking, we think that is a really big area for us.”
Lead image: GoCardless co-founder and CEO Hiroki Takeuchi. Photo: Uncredited.
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