Joe Keeley is the CEO & Co-Founder of Justifi, a venture-backed business providing payments and fintech infrastructure for SaaS platforms.
Previously, Joe founded College Nannies + Sitters, the nation’s largest resource for customized nanny, sitter, and tutoring services.
A sampling of Keeley’s awards and accomplishments include being named the prestigious Ernst & Young “Entrepreneur of The Year”, the “Global Student Entrepreneur of the Year”, “Top 25 under 25 to Watch” by Business Week Magazine, “20 under 30 Who Will Change the World” by Citizen Culture magazine, one of the Minneapolis-St. Paul Business Journal’s “Young Entrepreneurs” and “40 under 40”, Glass Door’s Top 100 Companies to Work For, Minnesota Business 100 Best Companies to Work For, and Entrepreneur Magazine’s top 100 Franchise concepts many years running.
Joe is passionate about building revolutionary companies and encouraging the growth of education, arts, and entrepreneurship.
What you will learn
- How Joe turned his college side hustle into the nation’s largest resource for nanny services
- Discover why Joe implemented an app for College Nannies + Sitters
- Find out why Joe decided to exit his first business
- Learn what inspired Joe to start a fintech company
- Discover how Justifi provides fintech solutions to vertical SaaS platforms
- Learn more about the emerging global players in fintech
- Joe generously shares the biggest challenges he’s faced on his entrepreneurial journey
- Joe unpacks his top tips for entrepreneurs in the middle of their battle
- Plus loads more!
00:00:05 - 00:01:00
Hi everyone and welcome to The Jeff Bullas Show. Today I have with me, Joe Keeley. Now, Joe is dialing in from Minnesota where the winter is impending whereas we're in Sydney, Australia and the summer is making its presence felt. So this is what's great about Zoom, is we actually have these chats from all around the world. So, Joe is the CEO & Co-Founder of Justifi, which is a venture backed business providing payments and fintech infrastructure for Software as a Service platforms. And previously, Joe founded College Nannies + Sitters, the nation’s largest resource for customized nanny, sitter, and tutoring services, which he exited and has now moved on to starting Justifi.
Joe is passionate about building revolutionary companies and encouraging the growth of education, arts, and entrepreneurship.
So welcome to the show, Joe, it's great to have you here,
00:01:01 - 00:01:10
Great to be here. Thank you so much and I'm very jealous of the sunshine down in Australia, but you know, somebody's gotta live here, you know.
00:01:11 - 00:01:49
Yeah, I know. So we need to make sure the planet's balance, so we've got things happening on the different sides of the world. Yeah, so obviously we're very balanced today. So Joe, you went and did MBA and then you went to MIT and did a degree as well. But when did your entrepreneurial journey start? And was there an inspiration point, was it over a beer, how did he say I want to start a business, how did that happen?
00:01:50 - 00:03:59
Well, I grew up in a small rural town where there was entrepreneurs in hindsight all around me, but no one really called themselves that maybe it was too, you know, it was a farming community, maybe entrepreneur was too fancy of a french word or something that, and it wasn't quite in vogue, so when I started College Nannies while I was undergraduate university student and I started it, not over a beer, but perhaps to get beer money, it wasn't like, it was just sort of a way to make a buck to start, and I think that's really important because I don't know, I found it frustrating or maybe a little, you know, like unbelievable in a negative way, or maybe there was something wrong with me when I eventually would start trying to become a student of entrepreneurship, go to speakers and they would say, oh we had this idea and they sort of, and then we, you know, got together in our garage and then poof, you know, they had a public company at the end of the road and they skip over all the hard parts, you know, and for me, I was a reluctant entrepreneur, I wasn't thinking, you know, now's a great time to start, you know, the largest employer of nannies and babysitters in the country, that was my, in my first go round. It was simply like, I had a summer job. I was an ice hockey player in university and some parents asked me to work for their family and then other parents said, could you find me someone to watch my kids? And they said, we pay you like, okay, sounds great. And I think, you know, today's terms around starting a side hustle or you know, those sort of things, sometimes it's not so deliberate and sometimes it's not all that well planned out, but like many things, it takes a while for things to percolate and it takes a while to, you know, one step leads you to another. So I was very much a reluctant entrepreneur when I started and then evolved over time.
00:04:00 - 00:04:32
That's not, that's not an unusual story. Like I think even the Airbnb founders just wanted to have money for beer, just like you mentioned, maybe that was what you're after and rented out their room in their house or actually just a sofa, I think it was. And then end up being one of the biggest, was actually the biggest hotel system in the world basically, but virtual, so it sounds like you did much the same. So you started as a side hustle, which is fascinating.
00:04:33 - 00:08:36
Yeah. And so I started just simply with a simple idea to, you know, respond to what some parents were looking for and saying, you know, looking for someone in this instance, it wasn't a college athlete to be a role model for their children for the summer. So College Summer Nannies was born, and then I got kind of sort of sucked into the entrepreneurship department at my university and they did what they're supposed to do is provide structure. And so this could be a really great business, and I said, no, no, no, you know, that's not what it is, I mean, because after all, you get good test scores to get into college and you go to college to get a job and you get a job, so you don't end up moving back in your parent's basement, I suppose. But, you know, I was on this sort of trajectory that was very traditional. It was, you know, you take the steps, so this idea of, you know, starting a business, becoming an entrepreneur as a chosen career path, you know, is maybe it's more in vogue today, but when I was doing it was still very, very unconventional, but lo and behold, I took one, put one foot in front of the other, and then, you know, one of the, and the great thing about having a business while you're a university student is that the bar is really low, actually, you know, anything you do above and beyond eating cold pizza and showing up for classes sort of viewed as extraordinary. And so I was fortunate enough to be able to go into formal, you know, the entrepreneurship education program, that's what my major, after this, I was a reluctant entrepreneur and then loan, you know, lo and behold there I was and then I was able to get a lot of press for the business initially because of that bar being low, I won some awards and it did exactly what it was supposed to do. In that when I was about to graduate, I had a decision to make, do I go down that road and take that corporate job or do I continue on with this side hustle that had become a school project that had now started to become maybe a real business and I'm not really sure what real business means. I think it was a real business from the beginning when one engaged in commerce, but you know, a business, I guess that could support me and have some sort of future. So that was a very, very challenging time in so much as, you know, it got real when you went outside of the safety of the quad of the university and said, I'm going to do this full time and I think for me, what was real about it in hindsight and this was, you know, a long, long time ago wasn't necessarily the fear of not being able to put food on the table or something, cause let's be honest that at 22, my table wasn't really full, I didn't, you know, it was just beer and burritos I needed to pay for unlike the risk, I think of some folks who start a business and leave a job and have a family to support, but what was more unnerving for me was the idea of, well if I go do this for reel outside of the safety of being a student, what happens if it fails? You know, and I don't think we all have ego, I had plenty of it and it was, you know, I didn't want to fail. So, but it was that fear that I would say not only almost stopped me from not doing it, but then propelled me forward, you know, and I do think, and there's been, you know, I think there's a book out there that talks about, The Gift of Fear and when you apply the gift of fear to the entrepreneurial environment, it can be a tremendous motivator, as long as it's not debilitating. So that really started a new chapter when I left school.
00:08:37 - 00:08:57
Yeah, if you can be a motivator can also be a, can also create paralysis. So yeah, now the other thing I'm curious about is how big was your business plan when you started? Did you write a business plan?
00:08:58 - 00:10:15
Well actually you know, when I first started, there wasn't one, but then because I started this inside of the halls of the university and an entrepreneurship program, I got to use it as my project. So my senior capstone project was to write a business plan, and I just wrote it on this project, this business that I had already started, and the original plan was I could add some services and I'd have to go dust it off, but maybe expand and get it to a certain size and it started to contemplate, well, is this a repeatable service, is this a product that could be used in other markets? I was in the twin cities of Minneapolis, St. Paul, Minnesota, and so I went out and I needed to think bigger is what I think in hindsight, but ultimately, for me, and then that's not for everyone, but at that moment it was about, you know, can I create this so that it's something that can be repeated and over the next 10 years of running the business, I would say that my real education actually began or my second education.
00:10:16 - 00:10:39
Yeah, so this is where I suppose, the amateur entrepreneur who started something almost by accident that didn't write a plan, but then said, okay, this is getting a little bit serious, I need to write a proper business plan now and then the other things that obviously start to come into the equation is if you're gonna scale this, you need systems and processes, don't you?
00:10:40 - 00:12:54
Right, right. And, and fortunately again, I had a lot of guidance by necessity in my classes that I took on how to write a business plan and I took some Franchising classes. So now I started to say, okay, if I'm going to do this full time and reel out in the wild as they, you know, full blown sort of quote adult, then I'm gonna have to make a go of it. And if I do that, my aspiration was not too, you know, run a single person nanny agency as a former ice hockey player, you know, it's like, this isn't what one aspired to do when I was little, I thought I'd play in the NHL or something and it turns out I'm too short, not good enough for that. So that is when I did start putting those systems in process in place. So I took a Franchising approach to this. And what we did is say, well, if our purpose as a company was to build stronger families and we provide and we do that by providing role models that happened to be nannies, babysitters and tutors and if that exists in the twin cities, then certainly that need exists in Houston and New York and Sydney and London and all over the world, so, but how can one take what is working in one place and replicated out? Well, fortunately there are a lot of ways to do that primarily, but it all requires systems and processes. So I decided with the lack of capital that I had personally, and I wasn't sort of open to the idea of raising copious amounts of investor capital that Franchising was the way to go. In other words, you know, we would go and find someone who had the same passion and saw the need and then put together those systems and processes and teach them. So now all of a sudden the business I was in was not running necessarily a childcare operation, it was running a business that was teaching other people how to start run and grow a business. It just happened to be in the child care business, but that's what franchising really is. So that was really the next phase of this journey.
00:12:55 - 00:13:00
Yeah, so franchising was your growth model to help and that also helped fund it.
00:13:01 - 00:14:58
That's right, help fund it and help expand it because the franchising model is, you know, if you have those systems and processes and brand and the concept because a lot of people who want to become an entrepreneur want to run their own business may not have the idea or the spark to get started, but they are pretty good operators. So we started franchising and started, you know, replicating this across the country and then you know, it was sort of another a-ha moment that came along which is okay, well we have systems and processes systems in terms of like how are things done, but that's when we started working on technology in the business, you know, systems in like technology, systems that will help grow each of these businesses in a more scalable fashion because you know, being in the staffing business, that's largely what, you know, this child care business was, is only, you can only grow as equal the number of people that you have in the management labor that you can leverage. So we started building out our own vertical software platform that was allowing these franchises to do their work better and faster, right. And then we built out an iOS and android native mobile apps that took all of the, what ended up being 10,000 babysitters that were in our system that were screened and trained and available and we got all of their availability real time and we matched that with parents so that they could book a sitter anytime, anywhere. And that's really when I would say I learned the difference between growth and scale, right. Growth is when you add another few people and you grow incrementally to that, but scale is when it grows exponentially beyond just, you know, that next one foot in front of the other.
00:14:59 - 00:15:13
So what you're trying to do with the software is trying to remove friction so it makes it easy for both sides of the equation. In other words, some people wanted sitters and the sitters themselves did both use an app?
00:15:14 - 00:16:53
Yeah, that’s right. It is. And you know, mind you, when I first started this business in college, I went out and got my very first cell phone that actually had an antenna that popped up. So it wasn't like this was obvious, you know, there was a journey that this was over the last two decades. So, you know, it's sort of obvious today that one would insert technology to bridge together supply and demand. I mean there we can look countless businesses that have done that, but that was really the key to unlocking at the time and X factor where we would have 10x the sort of advantage over someone who didn't have that piece of technology, our competitors and will bring 10x the amount of utility to our customers and to our role models who were working for us. So that was really pivotal, you know, to understand on the journey and then as we looked to, you know, we continued to grow. We had a couple of 100 locations, 10,000 people across the US and we had a partner in a public company that was in the childcare, corporate sponsored childcare business. And ultimately, it came to a point where our network and our technology was just going, there was some amount of friction and how we can continue to work together. And naturally, typically the big public company buys the smaller entrepreneurial company and that's what happened with us as well. So that was in 2016 when we sold to Bright Horizons Family Solutions actually.
00:16:54 - 00:17:36
So I just want to go back quickly to the X factor you mentioned, which was using an app for both sides of the market, the nannies and tutors and also the people that needed them. So what year was it? Because this is what's interesting about the smartphone, the smartphone didn't start with an app store idea. The app came along afterwards and Steve Jobs with the Apple iPhone democratized what was previously an elite tool, which was the Blackberry. So what year did you implement your app? I'd be interested by what year that was.
00:17:37 - 00:19:58
The idea was sparked sort of around 2012, 2011 to 2013. Somewhere thereabouts. I remember when it happened, I was actually sitting on the couch talking to my wife, we had two children, one who was very, very young and I said I have to go to Chicago tomorrow and she said well our, you know, primary school daughter, she has something at school that I need to go to, who's gonna watch the baby. And I was sitting there thinking, well I'll shoot an email to one of my offices to see if we can get a sitter over here. And I'm thinking at present I'm the leader of the largest employer of babysitters in this city and beyond. How come this is so difficult, this is like the shoemaker's kids have no shoes. So then I went to Chicago and I was talking to someone in the industry I did a meeting with and I was telling him my vision of being able to hook up the need that I desperately was experiencing as a parent and then you know, all of this network of high quality role models are nannies or babysitters and this gentleman said well it's like Uber and at the time Uber was new, it had just gone from San Francisco to Chicago and it was only black cars if you remember when it first started. So he dialed up his phone and he ordered a black car, we got in it, we went to lunch and it was the closest thing to magic that I'd ever experienced. I'm like, yes, like that's what we're trying to do. So you know, we immediately started really, you know, working and studying the space and it was really the same. It's about linking supply and demand. In our instance, it was a closed loop system because we needed to screen and train these caregivers. But the thing about X factors in a business is that X factors have an expiration date. You don’t know when that expiration date is. But they all have them. So it's about identifying what makes your company service product etc, you know, have a 10x advantage over someone else. And then once you find that, recognize that it's fleeting and you know, run like heck to take advantage of that.
00:19:59 - 00:20:21
Yeah. And the app industry is just revolutionized business. It really has. And in fact the smartphone was the start of that and I remember my partner back in 2009, we woke up one morning and she pulled out a phone and she said I'm in love. And I went, thanks honey. And she said no, I mean the phone.
00:20:22 - 00:20:23
00:20:23 - 00:21:13
Yeah. She was just in awe of what the Apple phone did. She was and I remember that was about 2009. But you mentioned that you actually app, you didn't implement it to 2012. So the Apple store, you know, the app store certainly wasn't on the horizon back when Apple launched. So it's fascinating.
All right. So let's fast forward. You got your app kicking goals, you've removed friction. You made it easy for your customers to actually order a nanny or a tutor. So what happened in terms of, did someone turn up and say, look, we're interested in buying your business or did you go looking? How did the exit happen?
00:21:14 - 00:24:32
Sure. Well, we were a very material supplier for a large public company that was offering corporate benefits in child care. So they operate in the US, you know, Europe and I believe just entered Australia as well. So they offer childcare centers and nurseries and they also provide corporate backup care. So if you can't get to work today because one of the million reasons why you might not be able to with children, if you work for oftentimes a large company Microsoft, Goldman Sachs, someone like that, they will pay for a certain number of days to have a child care provider come into the home. And we were not only the lion's share of the volume, we're a strategic partner with them, but our technology was enabling a lot of things. So, we got, you know, uncomfortably big in terms of a supply chain for them and bringing innovation in and we had a great relationship with them. So there came a moment in, you know, no, oh 2015 or so where they decided internally that this partner of theirs would be better off if it was internal than external. So that began the discussions and the process to go through of ultimately selling the company in July of 2016. I then stayed on for what ended up being three years as part of an earn out and I did a project in the UK and taking our technology, so that was the journey and interestingly enough from when I started that it was a little poetic perhaps like, you know, a lot of people talk about starting their businesses, like their baby, you know, and when I ultimately left from starting of the company as a universe, the student to exiting after the turnout, it was just over 18 years, so I was a little bit poetic like I had launched a child, birth, a child, launched a child off to college and there they were out in the world so that's how the exit came to be, you know, if I think so, I think I was ready and I went, you know, there was definitely a goal that I wanted to, once I got through the university process and reluctant entrepreneur process and said, okay, I'm gonna do this and then I wanted to scale something and then I sort of learned and trip through the woods and you know, in the dark, so to speak. I definitely wanted to finish what I would call the full cycle of entrepreneurship. So the starting the middle and then the exit and exiting it hopefully in a good way that not only was good for all shareholders, myself included, but all stakeholders also, you know, because we had a lot of franchisees that weren't shareholders in the company we sold, but we're stakeholders and the brand and how we did things and I felt like we found a terrific long term, high quality operator with alignment of values and then I was sort of faced with, you know, what sounds like a great problem, which was now, what do you do with yourself after you sell a company and you know, you're in your mid thirties.
00:24:33 - 00:25:17
And that was gonna be my next question. Yeah, so you've sold the company, you've done the earn out the old golden handcuffs and so how did Justifi, the fintech company, where did that idea come from? Was it because you observed some issues regarding challenges at your previous company in terms of getting payments for example, and the cost of those payments because in the past you had banks to make payments and you had to turn up with checks and everything and then PayPal came along and sort of like global and digital made it easier. So where did the idea for starting Justifi come from?
00:25:18 - 00:30:06
The original idea for Justifi came from somebody else. It wasn't my idea and I didn't start it alone, I started it with partners, but before that I took a year off, I took a sabbatical and it happened to coincide with about half of it or so coincided with, you know, the launch of, you know, the global pandemic and the pandemic was, you know, there's so many negative things and it was a tragedy for sure. For me personally, once my family was safe and everything, it didn't provide a utility for me in so much as there was a lot of sort of anxiety about, you know, okay, now that I'm not working, that sounds great, it's what I wanted, but then you know, what am I going to do and you know, how do I stay relevant and you know, being an entrepreneur, you know, it isn't exactly like you go into the classified ads and look up jobs or something, I didn't need one, but it is really challenging to go from running a company to then not, and, but what the pandemic did is that it stopped everything and it turns out if there's no deals to be looked at or if there's no lunches to miss because no restaurants are open, your FOMO goes away pretty quickly. So that was helpful for me. And what I did during that time ultimately reflect back on my first 18 years of an entrepreneurial journey and started dissecting well. What was I good at? What did I like about that? What did I not like about that? How would I rank what parts of that were a success or maybe less of a success? And what I came up with for myself is number one, I needed to engage in meaningful work. And not just because you know, I was driving everyone at my house crazy, which might be true, but because that is part of me and you know, when you think about Maslow's hierarchy of needs, you know, it wasn't about, you know, shelter, putting food on the table, but it was about sort of self actualization and engaging and things. So I recognized that I needed to go out and do something and engage in that do something meaningful. Number two, well then what did I do? And I started analyzing what I really liked the most and what created value at scale in my last company was really once I started tapping into a larger market and when I started leveraging technology, so when I went out and started entertaining opportunities to buy, to invest, to start, I was looking at it through a lens of a matrix I put together and I wanted to find the biggest industry I could and I wanted to be able to lead and do something innovative and I wanted to do it with technology. So when some friends of mine started a vertical SaaS platform, a sports tech platform that actually made their economic model really to process payments and to their fintech company inside of a software company. And I had read and although I didn't fully appreciate or understand the power of how software companies can actually become fintech companies for financial technology companies. And they said we had a tremendous exit. They grew and they were processing over $4 billion dollars a year. They had built this software and were acquired by a public company for nearly a billion dollars. And then they said that's a great ending and I said yeah that was a very good ending.
However it took them a decade and a half and it was really complicated and really expensive and they said it doesn't need to be this way. In fact we have a playbook and we know how to do this for other software companies. So that was that really checked almost all the boxes of the things that got me excited and that I wanted to do. So we started getting together and white boarding out and talking about what was wrong with some of the, you know the finance and the payment industry as it relates to small business and other software companies and how might we fix it, in other words, I was there learning but also looking for the X factor because I knew in my self reflection that if you can align the right people, in the right purpose and have an X factor, you're gonna set yourself up certainly not for a guarantee of success, but you might dramatically increase the likelihood.
00:30:07 - 00:31:59
Yeah, it's fascinating the whole online payment area and on a small scale I've got a small company but paying people all around the world, PayPal take a lot of fees. Banks take a lot of fees, they hide exchange rates and they take a little skim off that actually sometimes not a little bit of big skim. So and then the other challenge comes also is like, okay, so this person wants to pay this way, this person was being paid that way and it starts to get complicated. So with Justifi, what big problem do you solve? What problems do you solve in that space? Because I am fascinated by it because I'm seeing the fragmentation of the finance industry as well. So what big problem or problems do Justifi solve?
00:31:00 - 00:33:21
Yes. So simply put, we help vertical SaaS or software as a service platforms make the most money on their funds flow possible. So let me break that down for you a little bit. So first of all, you know, vertical SaaS software as a service. These are platforms that serve other businesses. When we talked about, you know, there's a lot of famous quotes from, you know, Andreessen Horowitz, the famous venture capital firm and they talk about, you know, for software is eating the world. Okay, well what they're saying there is that software is coming in and being the system of record for small businesses all around the world. So barbershops use a software platform and dry cleaners use the software platform and sports organizations use a software platform. So we help those software platforms achieve the next buzzword that's out there, which is every company is gonna be a fintech company. Okay, well what does that mean? Financial technology, you know, it means that these platforms oftentimes receive a fee for use of their software, that makes sense. But the greater value in their platform is actually monetizing all the transactions that happen inside or around their platform. So for example, if I'm running, you know, a platform and I provide payments to my small business as a feature. So if you want to collect payments on your platform, you know, structuring the infrastructure that they can make money on the flow. So you talk about the little skim, we essentially help vertical SaaS platforms take a little skim off the payments and provide that service and then we provide, allow them to provide loans to the businesses that are on their platforms and offer insurance and do all of these sort of Fintech playbook, because ultimately in many, many cases, the becoming a fintech company inside of a platform is exponentially more valuable than actually selling the software to those customers itself, you know, so really, when you think about the business they're in is providing a great software platform, but the economic engine that they're leveraging is a fintech engine. So that's what we do.
00:33:22 - 00:33:27
So you provide a fintech plug onto vertical SaaS platforms?
00:33:28 - 00:34:57
That's right. So that and we do it in a variety of different ways, but ultimately we build infrastructure and we have a engaged fintech team, a tech enabled services team that comes in and helps them because, you know, most platform operators are really passionate, really knowledgeable about the vertical there in, you know, my family was in the roofing business and we build roofing software, my family was in, you know, I had experience in the child care space, we built a childcare software, but there and then they have a board member or investor that says you ought to be a fintech company, you know, because I read it somewhere and I have some ideas on how you're going to do that. But the truth is that it is complicated and it is expensive and the wrong infrastructure decision or the wrong, you know, partner decision can end up costing them down the road. So having gone through it ourselves, having build companies ourselves, we said, well if we could redo all of that journey and do it in a way that helps level the playing field and that's why we've chosen, you know, Justifi as a name, it's provocative on purpose that we think that things could, that it could be a little democratized. It could be a little bit more fair. So we service vertical SaaS platforms and we help them win and achieve the greatest amount of value out of their ecosystem as they can through a fintech cleanse.
00:34:58 - 00:35:14
Now, the other question I have there is, did you have to get a banking license to start Justifi or is the banking payment system backed into a wholesale bank of some type of?
00:35:15 - 00:35:40
We are not a bank. But we have built an orchestration layer that allows us to link into multiple banks, multiple acquires, multiple lenders, multiple card issuers so we can bring and orchestrate the power of all these folks who are world class at what they do. We are the best that sort of coming in and being that partner for vertical SaaS to make all of that work.
00:35:41 - 00:36:07
So because there's been quite a lot of emergent payment systems that have come out like Square and PayPal. PayPal has been around for a long time and maybe it was the only one to use to do, but now PayPal seems to be increasing its fees and transparency seems to be disappearing a little bit as well. What are some of the emerging players in the financial payment area globally that you think are making a difference?
00:36:08 - 00:37:33
Well, you know, certainly, I think the leading bleeding edge that folks are talking about is you know, Bitcoin and Blockchain and crypto all the like and that's certainly true, but I would say that you know, the most recent juggernaut is Stripe and in many cases we compete with Stripe for platform business, the Stripe connect product, but what they solved was for e-commerce, being able to spin up a and collect payments without having to talk, they sold mostly to developers without having to talk to anyone at 11 o'clock at night. So you have, you know, the Square's and PayPal's and then the next generation is Stripe and we think that we're bringing something unique specifically to platforms by orchestrating things out there. But I think that this goes back to sort of the reflections I had from when I had my halftime between my entrepreneurial ventures and that is the good thing about this industry and there's lots of other industries like this as well is that it's not a zero sum game, you can be, you know, competitors and partners at the same time because there is few industries that are as large as the global payments and money flow fintech business, so there's so much room for nuance, you know, you in serving what one does in this space.
00:37:34 - 00:37:47
Yeah, it's certainly a big market. And also it's, I suppose is it, that's the other challenge comes in with a big market like that is regulation. Is that a challenge for the business?
00:37:48 - 00:39:25
Sure. I mean, you know, one needs to be whenever you're dealing with, you know, OPM which is other people's money there and you're moving that money perhaps, you know, in different currencies and across borders and things like that, there's a lot of regulation. So, but that's part of the complication that if we can solve that and solve that for a platform who's focused on their specific vertical with their product, that's when you can really bring value and so, you know, I think it's important when I started my first business, I was able to bootstrap this and I had some bank loans and some other things over time, but by and large, you know, it was not fueled by investor capital, you know, we franchised, which was a source of capital through expansion. This business cannot, it is not going to be possible to boot strap this business because of the regulation, because the bar that you must meet in order to simply process OPM or other people's money. So that's why I was also attracted to starting this with my partners, because on my own entrepreneurial journey, you know, before I started a company literally a service company out of my dorm room. This one we raised venture capital about $13.5 million from day one because we knew that we needed to hire very expensive, very talented engineers and we knew we needed to, you know, become world class in order to even have a seat at the table, let alone to, you know, have the right to provide a proposal to someone.
00:39:26 - 00:39:45
Yeah, so and that becomes part of the challenge too, is that you can get a bucket of money but sometimes too much money can be wasted on expensive offices and things like that rather than actually being spent frugally and carefully. So, your initial raised was 18 million, is that correct?
00:39:46 - 00:39:47
13 and a half.
00:39:48 - 00:39:56
13 and a half. Okay, cool. And you started Justifi back in 2000 and when was that?
00:39:57 - 00:40:07
We started getting together in 2020, but we launched it in 2021. January of 2021.
00:40:08 - 00:40:13
Okay, so how was the timing in the middle of the pandemic work for you? Is it good time?
00:40:14 - 00:41:14
You know, I think there is no worst time and no better time to start a business any time and that is, you know, it just sort of is what it is at this point, our eyes were wide open because that, you know, the world had now at least understood a little bit about what we were in, there wasn't an expectation that anyone was coming to the office, so we were able to start up and large, you know, we started this with folks that all had 10 to 15 year experience in this space, so we were able to go, you know, pretty quickly with some really talented people out of the gate, but then, you know, shortly thereafter, a year after, you know, the various started settling down and we were able to then open up an office where I'm sitting today, which was much more of a hybrid first environment and it's almost like our own coworking space, so in that regard it was a benefit because we were already sort of know what we were in and it didn't catch us by surprise.
00:41:15 - 00:41:35
So that raises another few questions for me, number one is what have been some of your biggest challenges in the entrepreneurial journey that have hit you around the head or raised fear and giving you sleepless nights, what are some of the biggest challenges you've had along the way, Joe?
00:41:36 - 00:43:43
Sure, I think that, you know, when I think back to the biggest challenges, of course, are the ones that, you know, you often learn from in hindsight the most, that might be the most painful at the time, like that school teacher that was, you know, such a stickler, but then you look back and lo and behold your favorite teacher was that one, that was the hardest. So I would say understanding the nuance between management and leadership, so what franchising as a mechanism and my first half of my career and entrepreneurial journey many times, franchisees say I'm gonna go start my own business, they buy a franchise and they start their own business because they don't want to work for someone else, but a franchise has rules and agreements. So very quickly I learned like, oh someone's coming to this, you know wanting to run their own business and call their shot and stick, you know, stick it to the man and suddenly I was the man and that wasn't gonna work out very well if I treated them as if they were, you know, I couldn't fire them, That's right, and so they don't have to listen to you and in fact they were predisposed not to listen to things. So I had to really draw on some of my experience in sport and leading and that, you know franchising was one of the greatest lessons and truest forms of leadership that I experienced and by hopefully you know, mastering it more days than I didn't, I was able to lead and grow and get, you know, otherwise reluctant sort of, team members to follow. And, it's a lot more difficult to do that when you don't have paycheck authority. And so being able to, you know, sort that out and then apply that to growing this company, because at the end of the day, you know, very, very few people want to be managed, but many want to be led, right.
00:43:44 - 00:43:56
Yes. And you want to feel that they're part of a team and have a greater vision. So what's the, so Justifi has been running just over a year now, formally
00:43:57 - 00:44:00
A couple of years.
00:44:01 - 00:44:04
A couple years. So what's the plan for world domination?
00:44:05 - 00:45:05
Well, you know, we have achieved really, really great traction. We have dozens of vertical saaS platforms, that our purpose is to accelerate potential. And, we are helping those platforms accelerate potential and specifically their fintech potential. So, you know, we're growing pretty rapidly. We have another year, we'll continue at this fundraising stage and then we'll go out for our series a day. And so we're gonna keep on growing, keep on expanding the potential and bringing in other partners to help those vertical SaaS platforms do more good in the world that they do, which is a effectively enabling small and medium sized businesses to serve their customers. So it's really continue to, you know, do good work and bring more value to them and then we think that the things are gonna happen.
00:45:06 - 00:45:21
Well, and the really good thing about the world we live in today, the digital world, the global digital world is that your market is not restricted to a location or a region. It's actually global, and that's where it gets rather exciting, isn't it?
00:45:22 - 00:45:51
It is, and when I when I look back and, you know, from a couple of years in from making that transition from my first stage of my journey sabbatical to my next, you know, time will tell to see, you know, what the last, you know, half of the book is written on the journeys, but I think so far so good in so much as I, you know, I had the blessing to, you know, be deliberate about that next phase and we're having a blast.
00:45:52 - 00:46:03
And it's really fascinating that we've heard a lot about the great resignation in terms of people leaving their jobs, but I think what you had was the great reflection.
00:46:04 - 00:47:07
That's right, That's right. And I think that it was a luxury to be able to do it. I would encourage others to attempt to, you know, even if it's an afternoon once a quarter or once a year to just sort of stop and reflect and, you know, maybe you have a personal business plan, maybe you don't, I would encourage you to do so, and maybe it's not a business plan, but more of a life plan. Am I doing the type of work I want to be doing with the type of people I want to be doing it with and is it gives me energy and I think if it's not, it's not as easy for everyone to just, you know, pull anchor and do something else, but it is, you know, typically easy to start thinking about it and that is the first step towards, you know, that journey. So, it's been a pleasure.
00:47:08 - 00:48:38
That's great. And I remember someone I chatted to who started a business at college as a side hustle on how to write business plans. Okay. I interviewed an American entrepreneur who did start a side hustle and had to write business plans because he found out he was actually quite good at them and asked him, so how do you write a business plan? And one of the things he mentioned, which is really fascinating, he said sit down,okay, so write in one sentence what your business is about. So can you basically, in one sentence describe what your business does? And he said, the other thing that you need to do is then sit down and work out why am I uniquely qualified to do this and that I did that for a recent business startup I’m involved with.
And I sat down, I wrote down 10 things where I was uniquely qualified. And then it really helped me define what I wanted to do. Just writing, that was really powerful, and I think I wrote 10 things down that was uniquely qualified and that then also comes from strength rather than weakness. And I think basically it sounds like that's what you did in that you had time for the great reflection and you wrote down what did I love about it, what did I hate about the past things I did and what do I want to do in the future. In other words, you took the time to actually think and ask questions, which often isn't done right.
00:48:39 - 00:49:41
Yeah, because I think we're often, you know, life is busy, whether it's you know, work, kids, other family, friends obligation, you know, you sort of put one foot in front of the other, but I think that and also reflecting what you hear about all these businesses that fail in such a low percentage that succeed, well what makes them successful or not so successful. And I think that when I looked back in to say, you know, that is why some of the things both one of my uniquely qualified to do, but when I talk about looking at something the size of the market, you know, how fast is it growing, you know, is there a single winner, a winner take all or can there be multiple winners? These are all attributes that went into essentially a matrix of our own rating and opportunities that would come my way.
00:49:42 - 00:50:55
And that raises a couple of things that I find fascinating especially for startups in the technology space, is that there's two battles going on. One battle which you're in a race for is market share cannot dominate the industry. Number two, the other race which you learned along the way is a technology race. In other words, can I develop technology that's going to make a difference and make me stand out from my competitors? Is that two things cross your mind regularly and the leadership team? In other words, how do we dominate a market and how do we keep investing in tech? And you know, as a little aside Facebook with Metaverse is trying to basically dominate technology and are spending I think $30 billion on Capex for R&D which is just astonishing. So those two areas, in other words, how can I dominate my market? And number two, how can I continue to invest in my technology. So it will help me dominate the market. So there's actually two battles going on from my reflection on what tech startups are in a war for.
00:50:56 - 00:52:30
Yeah, I agree. And I think it's a function of really spending some time on each one of those in a detailed fashion. So like when I say how do I dominate my market, what first you have to define what your market is and I think that the more narrowly defined that you can have it while still being a big enough tam or total addressable market, the better, because then that will lead you to, you know, it's not just building technology for technology's sake, but how can your technology, you know, be new, different and better, faster, less expensive whatever it happens to be, because that's what's I think really, really exciting, particularly for entrepreneurs today, is that never before has it been easier or more accessible for even a solo individual or a small team to go head to head in a market against, you know, very, very large companies because of the accessibility of technology, what you needed to, you know, you needed to buy expensive servers before and now you can spin a, you know, AWS or as you you're in your, you know, in the cloud, you needed to go through all these banking licenses and payment infrastructure, you know, becoming a payment facilitator and now you can use someone, you know like Justifi to provide all that infrastructure as well as the fintech team. So you know, there are different ways of doing that and you don't need to build it all yourself.
00:52:31 - 00:53:29
No, and I think you just hit something that's really important and that's the democratization software is enabled, it's never been easier or faster and cheaper to actually start a business and what you're doing is you're democratizing fintech for vertical SaaS companies essentially. So and not only that you're adding value by giving something back by allowing them to actually make more money on other services wrapped around that, which is very, very cool. So just to wrap it up, Joe, what two or three top tips you would like to share with other wannabe entrepreneurs or may be about to start people wanting to start a side hustle or entrepreneurs are already in the middle of the battle. So what are two or three top tips, business tips that you would like to share with our audience?
00:53:30 - 00:55:44
I would say that really narrowing in on why you're doing what you're doing or or why, you know, in my first company our purpose as an organization was to build stronger families and our purpose that Justifi is to accelerate the potential or accelerate potential of vertical SaaS companies. So understanding your purpose and then letting things flow from there is sort of number one. I have found it to be one of the greatest ways to attract customers, employees that you want, right. Because it's authentic and it's like a magnet to then once you have that identify and articulate the values in your organization that you have and you want to have around you and these aren't just the permission to play values like honesty, integrity that are more like, you know, we want to be committed partners, we want to be, you know, undaunted problem solvers. And, and the reason is that not every, although it doesn't feel like it in the beginning, not every employee, not every customer is going to be a good fit. So you need to have a way to our, you know, filter out, you know, those that aren't and filter in those that are so, you know, if you start with a purpose and then you have a few simple rules and that is how we conduct ourselves in our core values.
The right answers start coming after that and then whether it's personally professionally, what we talked about, I would say is what's been helpful for me is, you know, taking a little bit of time periodically and I think, you know, it could be quarterly annually and taking stock in, you know, where am I today? Where do I want to be? And what needs to happen for that to happen. Those are the three most important questions and strategy, you don't have to have all the answers. In fact you won't have all the answers. But If you can have the right three questions I found that you, you know, do better more often than not.
00:55:45 - 00:56:28
I think there's some real words of wisdom there and thank you very much, Joe, for sharing your story. It's quite an amazing story, I think that I look forward to seeing Justifi grow and I'll be keeping an eye on it. So, and thank you very much for your wisdom. What I love about doing the podcast is actually sitting down with some of the smartest people in the world, entrepreneurs. I love the creativity. Where does this idea come from? And also then their courage to step into the gap and do it. I think that's and thank you very much for sharing your courage and your insights. It's been an absolute pleasure. Thank you, Joe.
00:56:29 - 00:56:31
Thank you for having me.
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