Shawn Flynn  01:51

Does that mean that the banks just haven’t modernized or changed at all over the years?

Marwan Forzley  01:57

Bank wire has been around for decades. I’ve seen very little innovation for many, many years. That’s an area that’s ripe for innovation. If you think of what you have to do today to move money on bank wire, as a payer, you have to think of when is the right time to do it during the day to do the transaction. There’s a form you have to fill, you got to figure out all the information about the receiver, the swift code, the currency pairs, you gotta figure out how to fill it out on the form. Sometimes you can do the form online, sometimes you have to show up and do the paperwork in person. After you fill all the necessary information, you have to provide a fee for the bank wire. You have to figure out foreign exchange, you got to make sure you do it before cut off time. And when you send them money, you don’t really know what happened to that money until the receiver tells you I received your money. Same thing for the receiver. The receiver doesn’t really know when they’re going to get paid. So they’re constantly checking their bank account, “Hey, is there money in my bank account?” And when they receive money, they discover that’s not exactly what they were hoping to receive, because they’re sending you an invoice in US dollars. They’re getting euros deposited in their bank account. And then they wake up and it’s like, “Okay, that’s not really the amount of euros I expected to get.” They have to figure out how to match the euros deposited with the invoice that has been sent.

Marwan Forzley  03:18

This whole thing is an awkward experience. It’s full of friction for both the payer and the receiver. Just change it completely.

Shawn Flynn  03:27

Then how are you disrupting it? What are you doing different than what the banks are doing?

Marwan Forzley  03:32

It is really based on the fundamental premise that the entire thing should be done in seconds. The way to imagine the experience, when you register online, you login, you enter the email address of the recipient that you’re sending money to, the amount of money you have sent. The entire thing is done in 10 seconds. The receiver gets a message that they’re getting paid. It displays the US dollar amount. It displays the local amount. When the receiver accepts the payment, we pick up money in one country, deposit money in another country. So the first level of innovation that’s completely different in the bank is that user design, the interactions between the payer and the payee, we make it really simple for the payer to send money, all you need is an email. And in the mail, we give a lot of data to the recipient so that when they receive the payment, they’re able to reconcile and make sure that they understand what payment belongs to what invoice. That’s on the user experience level.

Marwan Forzley  04:34

The second thing that’s very different than a bank, the way we move money. We designed something called multi-rail, which is essentially a payment router that routes money on different methods of moving money. The first rail, we call it Treasury, which is our own bank accounts in different markets around the world. So for example, in that setting, if I’m moving money to Germany, there’s *nothing that moves to Germany. I have a bank account in euros in Germany, then I use that bank account to remit euros to the recipient. We call that Treasury, that’s the first rail. The second rail is Crypto, we use it to move in and out of crypto to essentially cross from one currency to another. Think of it as a way to quickly flip from one currency to another, using crypto as an intermediary mechanism of moving money. The third type of rail that we use is access to payment providers around the world. And then we also have access to Swift. So we’re constantly going in and out between these different rails to figure out what’s the best way to move the money for the customer. The transactions are recorded on the blockchain, which makes it really interesting from tracking and making sure that the transactions are recorded on the ledger that can be made available to the customer.

Shawn Flynn  05:53

How are you allowing small businesses to compete on the global market?

Marwan Forzley  05:59

One of the things that’s fascinating about small business today versus small business years ago is that today, with the advent of technology, there’s a very good chance that when you start a business, your first customer is going to be in Singapore or China or Philippines. It used to be that you start a business and your customers are going to be local. Now, with the rise of eBay, Alibaba, Amazon, Google and YouTube, and all these technologies, it’s very simple to connect buyers and sellers around the world. So if you’re a small business, your market is not limited to the geography that you’re in. You can sell anywhere in the world. And tools make it really simple to conduct business, which is making these businesses become more and more global over time.

Shawn Flynn  06:50

Are the banking systems globally consistent, or are the banks in Russia, China, England, France, all completely different?

Marwan Forzley  07:01

Well, the correspondent banking system which moves money from one country to another is really duct taping of domestic payment systems around the world. And so every country has its own story in terms of what can be done or cannot be done. And so we find the experiences varied and are nuanced. Every country that you work with. 

Our job is to simplify all this, hide the complexity, and make it so that the experience is simple, unified, consistent, regardless of the country that you’re dealing with. We keep the same price, same experience, the same look and feel to the product, regardless of the country combinations you’re trying to work with.

Shawn Flynn  07:45

You’d mentioned before your multi-tiered system, and one of the tiers was Crypto. I see that in the news quite often with Bitcoin rising and falling. How does that affect the transfer payments when every day that’s such a volatile market?

Marwan Forzley  08:01

So one of the things we’ve done is we go in and out of crypto, regardless of the price of any of these instruments. We essentially don’t hold inventory and don’t care for the price because we’re going in and out, almost real time. So the price of the currency doesn’t really matter. We’re using it to cross between currencies, and we make sure that all the P&L adds up before the transaction is conducted. So we’re not necessarily… First of all, we’re agnostic to the type of currency that we use, and we’re not necessarily watching the price or holding inventory. We go in and out, real time. It’s like a utility to cross one from one currency to another.

Shawn Flynn  08:47

You have locations, offices around the world, how are you able to provide such services?

Marwan Forzley  08:53

Yeah, we operate in *110 countries that we can send money to. We can pick up money or enable to send from another 50 around the world. The way we work, we have exchange partners for the crypto rail that we can tap into. So for example, for sending money to the Philippines, we have access to exchanges on the ground in the Philippines that we have our own accounts in. We use that, we use the partners on the ground to move money to the recipient. When it comes to our own Treasury systems, we have bank accounts in different markets, covering Europe, pound, US, Canada, Australia, these are examples of countries where we have our own bank account infrastructure and our own wallet. And again, that’s what we have developed is the idea of actually routing payments between multiple rails to optimize the user experience so that it’s seamless to you when you’re sending money or receiving money.

Shawn Flynn  09:53

So at this point, are investors coming to you or are you still going out to them?

Marwan Forzley  09:58

It’s a combination. We have definitely have the flow of investors coming in and asking you about the company, and we also have relationships in the market that we maintain. You know, as you know, in this business, you’re always raising capital. And so both investors coming in and us reaching out are sort of a way that we keep doing this to keep the relationships going. When we started the company, the initial capital came from Kleiner Perkins. They did Series A, following that, we did Series B with Google Ventures and National Australia Bank. On Series A, we had Kleiner Perkins and Silicon Valley Bank. And then following the Google Ventures, Series B one, we ended up doing another round with Goldman. We have a number of bank investors. So Silicon Valley Bank, National Australia Bank, *SPI out in Japan, *inaudible out in China. So we have a fairly global diverse investor base and one of the things that we are interested in, given that this is a global company is having access to investors around the world. For example, when we’re looking for help in China, we have investors in China that can give us a good idea of what’s going on in the China local market. And so we think of investors as a way to help us get knowledge on what’s going on on the ground and the markets that they’re in.

Shawn Flynn  11:30

The investors from the past, how excited were they to hear of your new venture? Did they want to put money in? How are those relationships?

Marwan Forzley  11:39

You maintain relationships across the board, from the current company and the previous companies. Every time you *talk in a new company or a new way of doing things, you obviously engage the right investors to figure out how to help you build the company forward. So one of the things that I look for is figuring out who are the investors that can help us build the company forward and you’re looking for strategic help. So, you know, whether that’s access to people, access to companies, access to the industry, these are all different ways to get help to build the company forward.

Shawn Flynn  12:18

And your team from day one, how hard was it to recruit? How hard was it to get people on board to follow your vision?

Marwan Forzley  12:26

It’s an exciting space that we’re in FinTech in general is one of the happening markets. There’s a lot of activity in the space. It’s a sexy market to be in. And then on top of that, generally, cross border payments is another really good market to be in. It’s a large market with big pain points. blockchain is another interesting angle that attracts a lot of engineers and folks are curious on how the blockchain is going to evolve and develop over time. And so it has, you know, a lot of characteristics that are attractive to folks who are looking for new opportunities,

Shawn Flynn  13:02

How was it at the very beginning, trying to build the platform and actually get those first customers?

Shawn Flynn  13:08

The early days is more engineering heavy, because you’re building stuff. And then the sales are strategic, you’re just trying to get the first set of customers to work with the product and give you feedback on what the product is like and what they want to change. Over time, as you start building up, it sort of shifts and changes and becomes more customer centric. It becomes more heavy on product and marketing. Because you know, at the end of the day, this is an idea when you’re trying to scale it, it needs to be scaled through marketing and product efforts. And so the company over time starts to index more towards sales, marketing product, you know, skill set, early days is more engineering skill set.

Shawn Flynn  13:53

So where in that life cycle is Veem right now?

Marwan Forzley  13:57

Yeah, we’re beyond product market fit and initial traction. We’re definitely into large growth and scalable growth. That’s the stage we’re in.

Shawn Flynn  14:07

Out of all the options around the world, why did you pick San Francisco to be your headquarters?

Marwan Forzley  14:14

A lot of new ideas are here in San Francisco, novel approaches to payments and different ways of making changes to an experience. Also, you have access to capital in San Francisco. There is a large number of VCs that have seen success and I’ve seen large companies built and seen scale.

Shawn Flynn  14:38

Do you have any customer stories from people that have used Veem?

Marwan Forzley  14:43

A customer that sent money to Brazil and it was like $70,000. And it took, I think, like 10 days for the money to show up in Brazil and that customer was telling me that it would have been faster to just hop on the plane and drop off and get it over with. Actually that customer was asking me if bank wire is electronic. And I said to him, yeah, it is electronic. And so he was asking me, why if it’s bits and bytes, how the bits and bytes get stuck so long for some place to deliver, because he was thinking, when I send an email to Brazil, I mean, that email is there. Why is it that email and information and content move so quick, but money sits all these days on the way to Brazil? That’s an interesting, simple question. So what I explained to him was that with so many intermediaries, the funds are sitting in batch processes overnight, and there’s many hops, and so it takes longer for the money to show up to a destination.

Marwan Forzley  15:48

We have a customer here in California that wanted to send money to China. And the bank won’t let him do it online. He had to actually show up in person. This is like 2019 we’re talking about. So the guy drove to that branch of the wire form. When he was there at the branch, he was doing it in the middle of the day and China was like sleeping because of the time difference. He needed to get information about the recipient to add to the wire form. So he had to, you know, search his mobile phone to pick up all the information necessary. And one of them was a Swift code. He couldn’t figure out like what actually is the Swift code that he needs to put in the field to send money to China. 

Anyway, he got the information, he filled in on the form. I think he had the wrong information on the form and gave the data to the teller to send the money. Two or three days later, it turns out that money got declined and so he had to drive back to the branch to do it again. You know, he was really frustrated because every time he goes to the branch it’s like half an hour to get there, half an hour to come back. Plus the time it takes to do this transaction. He’s a busy guy. I mean, these guys are just busy trying to figure out how to sell and to service their customer. The last thing that they want is figuring out how payments work, like they just want to do it. And so we explained to him that, you know, with Veem like, all you have to do is enter the email address of the recipient, which he had on his mobile phone, the amount of money that he held, which he remembered by heart, he got the transaction done. It was like really a simple experience that he could have done in his sleep in his bed, instead of going to the branch and doing this transaction. That’s an example of analog, old fashioned ways of doing things, versus a more modern technology.

Shawn Flynn  17:44

Is there any insurance on the money?

Marwan Forzley  17:48

We’re a money service business, so we’re essentially because we have to be registered in the various states in the US, there is bundling requirements that you have to submit to guarantee or to back up the volume that you move. You know, that whole process in the US takes two to three years to get it done. It’s fairly expensive as well. But you know, you have to do it in order to move money. And the thing is, there aren’t that many companies in the US, all the licenses. So it’s definitely an asset that’s valuable.

Shawn Flynn  18:22

Venmo, PayPal and the other payment methods out there, how are you different from them?

Marwan Forzley  18:30

Venmo is a domestic payment option in the US for consumers. PayPal is international consumer to consumer e-commerce. We’re specialized in B2B transactions that tend to be larger in size. So we’re not dealing with you know, hundred dollar payments, we tend to deal with $10,000 payments, they’re more like wire replacements. So that’s how we’re different than Venmo and PayPal. We’re actually like Venmo for businesses international.

Shawn Flynn  19:04

For banks that see what you’re doing right now, how come they just don’t copy you or try to compete with you or who knows, maybe acquire you very soon?

Marwan Forzley  19:13

I think there’s an opportunity for the banks to look at what we’ve built as a model for what next generation payments are going to look like. And there’s an opportunity to team up with the banks to offer functionality to their business audience to simplify the function of paying and getting paid for the customer base. So I see quite a bit of opportunity with the banks to team up with them, both for payment processing and also for access to a customer base that is looking for a different way of moving money around the world.

Shawn Flynn  19:55

And what do you think is the future for FinTech and the banking system in general?

Marwan Forzley  20:02

I think there’s a lot of innovation coming through that whole, to the entire FinTech space. I mean, this is a space that has not seen innovation for such a long period of time. It’s been ripe for different ways, different experiences. And technology has enabled now a way to simplify these FinTech experiences and only simplfying them by reducing the cost structure, reducing intermediaries, reducing the back and forth, which simplifies the entire way businesses experience any of these FinTech services. So I think for what we’ve seen so far, it is really the tip of the iceberg. I think we’re going to see a sustained innovation for a long period to come in all aspects of FinTech, from payments, to banking, to lending, to *inaudible acquiring… The entire area, the entire segmen is up for quite a bit of disruption.

Shawn Flynn  21:03

What do you think is the future for digital currency?

Marwan Forzley  21:06

The power is really in the blockchain. And I think that’s a foundational technology that’s going to disrupt a lot of industries. Because the blockchain, really at the heart of it, removes the concept of a middleman, and connects endpoints directly, the payer and the payee, the buyer and the seller. And so we’re big fans of the technology itself that we use to essentially move money around the currency, the concept of a digital currency that can be used around the world. It has its own investors and audience and fans. We’re bigger fans of the actual technology behind that which is the blockchain. So think of the blockchain as a distributed ledger or distributed spreadsheet. Think of spreadsheets running around the world on all kinds of servers and they are all talking to each other. So every time you make an entry on one spreadsheet that propagates the changes to other spreadsheets, and this is basically what the blockchain is. It’s a system of tracking entries on the ledger and synchronizing these entries on servers around the world. 

And that technology essentially allows for value to be transferred from one point to another without having a middleman that coordinates that movement. And so it ends up disrupting all kinds of industries. Payments is the first industry that benefited from this technology. But if you think of this more holistically, it’s a way to disrupt insurances, lending, trade, finance, mortgages, real estate, you know, all these industries that have a series of companies in the middle that used to add value, because of the complexity of the environment they’re in. Now they can benefit from this technology to simplify the interactions and connect the endpoints together, peer to peer.

Shawn Flynn  21:52

So with all these past successes, what’s it like, the process of when your company is about to get acquired?

Marwan Forzley  23:18

So process of discovery of, you know, what you’ve built is connecting and valuable to other products within the company that’s essentially buying. So you’re always looking to see what the synergies are between products, geographies, markets, people to then figure out how to connect the dots and provide value to the new buyer.

Shawn Flynn  23:46

So have you already started thinking about your next idea?

Marwan Forzley  23:49

Well, this one is, you know, fairly, the market is sizable and large and the pain point is big. And so we’re focusing on simplifying this experience and making sure that we can benefit business user so that they’re not using wire anymore and they’re using a similar technology. So we’re quite focused on this mission.

Shawn Flynn  24:13

So in other words, you’re going to keep doing more and more startups till you’re in the grave?

Marwan Forzley  24:17

I guess, yeah.

Shawn Flynn  24:20

Marwan, thank you for your time today on Silicon Valley. And we also want to thank Alan Tien who made the introduction that allowed this interview to happen. His information will also be in the show notes. So once again, Marwan, thank you, and we look forward to having you on the show in the future.

Marwan Forzley  24:35

Thank you for having me.

Outro 24:37

Thank you for listening to TIP. To access our show notes, courses, or forums, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decisions, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permissions must be granted before syndication or rebroadcasting.