Daniel Doderlein, CEO & Founder of Auka | Episode 23

Greg: My special guest this week is Daniel Döderlein. The CEO of Auka, the Auka payments platform is the technological foundation of Settle. It’s a secure and compliant transaction platform that offers all the necessary third-party connections for partners to join the scheme. The platform handles all types of use cases and funding sources ranging from cards and prepaid, to direct to account access. The creation of Auka mobile payments platform started in 2010, which makes Auka the first company to build mobile payments infrastructure in the Nordics. Daniel grew up right outside of Oslo, Norway. He was extremely interested in tech from an early age. His grandfather was a nuclear scientist, and when Daniel was very young, his grandfather bought a Macintosh computer and Daniel immediately fell in love with tech. Daniel has started many companies over the years and is truly a FinTech and mobile payments pioneer. He has an amazing and interesting journey. His latest product, Settle is a European mobile payment scheme that connects people and businesses. Daniel has a fascinating story. So let’s get started.

Hi Daniel. Thank you for being here and welcome to the Leaders in Payments podcast.

Daniel:

Hey Greg, thanks for having me. It’s my pleasure to be here.

Greg:

Yeah. Thank you so much. So let’s just dive right in. Tell our audience a little bit about yourself, maybe where you grew up, went to school, where you currently live a few things like that.

Daniel:

Sure. Yeah. So I’m Daniel Doderlein. I’m a native Norwegian. Although my last name is kind of Germanish, I guess. And I grew up in a small summer city where I still live, which is right outside of Oslo around one hour, South of Oslo, the capital of Norway. I went to the Rudolf Steiner School, which is what it’s called here in the Nordics. I guess it’s best known as the Waldorf School in the U.S. Lately I’ve read that it’s sort of been this poplar place where a lot of the entrepreneurs and tech people in the U.S. have sent their children as well. For me, it was a sanctuary because I played handball at sports with, I would say, normal friends that didn’t go to my schools. I got sort of two environments to grow up. And then I really saw the difference between normal school and that school.

I was fortunate to be sent to by my parents. And so that’s how I grew up. I was extremely interested in tech from a very early age. I was fortunate enough to have a grandfather. That was, he was a super smart guy and they lived in Oslo and it was quite seldom we sort of got to go to their apartment and visit them. And they were super strict and it was sort of weird that way, but he was also a nuclear scientist and he run the nuclear, the only nuclear reactor we’ve ever had in Norway, which was a research reactor. And he worked for a period of time in the U.S. and when he came home from the U.S. he brought back a Macintosh and 128K and I guess I was like five or six. I think I was six years old at the time.

And it was always like when we went to this apartment, it was like going to the big city to Oslo and sort of visit the grandparents? And we went out and looked at stuff in the big city. I mean, my hometown is like a 5,000 people place, so it was kind of quiet. So going to the big city, it was a big deal. And when we went to the apartments, like don’t touch anything, don’t play around. Except when he came home with that computer and he actually opened the door to the office and said, go in there and play with it Daniel. Blew my mind completely. And I fell instantly in love with this strange technical world behind this gray scale screen. And I guess that’s where it all started. So I played around with that. My father had the buy one, obviously later, as I was fortunate enough to grow up with computers.

And I vividly remember working in Photoshop. I think it was like a Siro point eight beta or something, and one undo and no layers. It was all just flat. Well, that’s where it all started for me. And I fell in love with the concept of tech and that stayed with me. So when I graduated, I started the company in the last year in school. I was 17. And I started my first formal company, which happened to be a tech company. So actually I set up the first accredited dot NO. So top level Norwegian domain name sales agent in Norway at the age of 17. So I think this is pretty early internet days. It was 1997 stepping into 1998. And that was my first business. So I had a firm belief in the concept of the internet, virtually none of my friends really understood what I was doing.

I started to code and I played around with web pages and HTML and I put together these web pages that have no views because no one was connected. But anyway, I believe that this was fairly important. And lo and behold, it was my first serve entrepreneurial journey. I did plenty of mistakes obviously, but I did enough things, right that actually became a quiet, profitable business. So we did enterprise solutions, basically selling domain names, doing email hosting and hosting, and then development back in the days. And there was no cloud back then, right? So we actually had, I think one of the first, if not the first like dedicated global access to megabit internet connection with a whole scene, that route that in my building, I was like 18 at this time felt that I was sitting on top of the internet and then dealing with that.

So that was quite fun. We maintained servers. It was also one of the sort of first things that I can look back on as a serial entrepreneur. Now today with a bit more of experience where it was quite clear for me, where I messed up, because I did mess up with that business. I mean, we never went bankrupt or anything, but I had a very sustainable enterprise business and I lost folks, right. Because I had, as I said, I felt like I was riding on top of them because I have this same of connection. We had servers, we had a lot of capacity. We had competence. And what we ended up doing in that company besides providing our enterprise solutions was to venture into the sort of portal gate, right? So we made news portals for email services, all kinds of funny and interesting and quite popular things and worked very early on with selling internet traffic.

So, ads, impression based paid ads, worked with DoubleClick and all that was fun. But the key learning was that I lost focus, right? So our very sustainable cash cow business, the enterprise part, providing domains, email and design and hosting event pages that was sort of put on the side and part of the play with all of this cool stuff. And I was almost certain, I would become a millionaire, although in the region, kroners, not in dollars selling a very interesting piece of software, very early on remote desktop type of setup, I guess you would today compare that with also G-Suite or Office 365. So the concept of storing documents and working with them remotely in let’s call it the cloud, we’re on the server side with the same client in the browser. So we made something like that as a cool project.

And then we negotiated back and forth with Alta Vista back in the day, if you remember, Oh, I remember that. And I mean, not 18, 19 or 19 years old, we developed this fun thing. It was a side project. You know, our clients said, wow, this is really cool. And we started to negotiate them and sort of find ways to sell this on the back of that. I sort of lost focus on our core business. And that was a really important learning for me, becoming an entrepreneur and understanding how to build a business and focus, none of the dot com sort of crisis hit, the bubble burst. I mean, all of this stuff was sort of, they didn’t exist after that. I mean, clearly they did, but nobody knew them virtually because Google came in and sort of, you know, the rest I have to drop off and sort of sell off the different parts of that company.

So, so I mean, I’ve seen all sides of being entrepreneur, but that’s the first thing I did sort of setting up a real company. It was quite a journey. 

Greg: 

So, from there, somehow you got to your current company, which is Auka. So maybe tell how you went from there to Auka and how it got started. 

Daniel:

Yeah. So I think I’ve started so 12, 14 different businesses throughout my journey. I won’t bore you with all of them. Most of them have been tech oriented and I’ve always had this passion for solving problems, or at least supplying to some sort of problem or need on the end user side, the end users being either consumers or businesses, but the ways I’ve done the business, that’s typically been through some sort of distribution setup. So I don’t have all the clients, but I have a solution I believe is important for those flights entered into sort of set ups with partnerships, working with telcos, with media companies and so forth.

And after I did the portal business on the internet business made a decent amount of money from that journey. I started to venture into mobile. So as you may know, the Nordics are the Scandinavian countries as with many other things was also very early on adopting mobile, right? So obviously the Nokia phone was invented in Finland and virtually everyone in the Scandinavian countries was very quick to adopt mobile phones. And at this time, my next journey was to set up a company that did the value added services. So mobile entertainment things. So ringtones, logos, background images, chat auction, day thing, interactive TV, you name it. I’ve done all of it several times. And my wife now wife at that time girlfriend, and we got our first child and the sort of world changed a bit. Then I decided that I was sort of done with doing these fairly aggressively marketed entertainment services, and I wanted to sort of cash out.

So, I discontinued my journey down that path. And I guess you can call that luck because we’re nearing the time where I started the thing I’m doing right now, which is financial services, but also considering that mobile value added services obviously had a huge shift. Once the smartphone was introduced, you know, 2007. So this is 2006. I exited that bull market. It was pure luck, but I sort of saw that I either had to take these entertainment thing and sort of bring it internationally, very competitive space. Or I felt that I’ve sort of saturated the market in the Nordics. We were also doing the services in the UK and I saw that end. It was like, how can you exhaust this anymore? And when the fact that the mobile phones became ever smarter, it was a way to sort of download the ringtones and make your own some sort of that whole market started to fracture, right?

Not fully, but I saw it. So I decided this is not for me. And I would argue later that that’s, that’s just luck, but I was happy to exit that thing. So in 2006, to bring us to the outcome and what we’re doing now. So in 2006, I would say by random serendipity, I started my journey in the financial services space, the word Fintech that didn’t exist at the time. So, I mean, now today I can easily look back and say, it was, if not the first Fintech in our parts of the world, at least one of the first ones by the modern definition. Here’s the situation. A friend of mine sent me a text message saying that I owed some money for a gift that we were bartering on for another friend for a birthday party. And I answered back obviously instantly like fairly intimate communication using these devices we have in our, in our pockets, which at the time was like milk.

Your phones is still 2006. The smartphone wasn’t released yet, but still this was my game. I knew that device and how we could communicate. And I answered back. Yeah, sure. You know, I remember what’s, what’s your account number and what’s the amounts I owe you. And she sent me that. I said, yeah, I’m out playing with my kids at this playground. I’ll do this right away when I get home. Come home, log onto my computer, log into my internet bank using like an old OTP darn little thingy. And I looked at the Nokia screen. I type in, by reading this monochronic screen, typing the account number type in the amount, sign the payment order again with another security OTP thing. And then when it’s done, I send a text message to my friends saying, you know, I’ve paid you now. She says, thank you. And then I was stuck with this feeling.

I live allegedly one of the richest countries on the face of the planet. Everyone is greased up in oil and, you know, fish and everything. And we have all the money in the world, all the cool tech and still I have to, I can communicate in real time from my mobile device, peer to peer. And when I send money, I have to go on to this big clunky box and use external security things and sort of sending the money on what is perceived as like this freight train, the passes across the region, mountains on will arrive sometime later that nobody really knows. They just sent me, this is a terrible user experience. There has to be a better way. And that was my start for financial services. So I decided to figure out why no one had done this before. There has to be a reason I thought, and I have a tendency to go really deep into tech and try to fully understand what’s going on underneath.

So that actually was the start of a journey that lasts for about four years of my life. I was doing consulting work on the side because I didn’t really know what I wanted to be when I grew up. And I had money from my previous ventures to be fairly comfortable in setting aside time to understand the space. And I decided then to really figure out what is going on underneath the hood. Like what’s the deal with payments? And I was, I didn’t know anything about payments at the time. So I was just your average consumer. And so I looked at the payments from three different perspectives. So I started to deep dive into the tech side. So how does it really work under the hood? Like who’s playing what roles in the value chain, what type of tech is being used secondarily on the commercial side.

So what roles are being played by who would get pissed off if I tried to change something and who’s making what type of money and you know, who’s playing the different roles and then finally from a legal and compliance and regulatory perspective. So what’s allowed, who’s governing this, what type of licenses would you need to do stuff in all honesty and sort of pardon my English only to discover that most of it was crap. Right? Right. It was very legacy technology from a tech perspective. So old format, very batch oriented, and me being a techie, I used to code, I don’t code anymore. I’m not good enough for my own patients. I’ve acknowledged that, but I can still do a pull request if I have to. And I’m the behind our solutions. I’m deeply passionate about how we solve things from a technical perspective. I’m looking at what was out there.

It was very legacy, was not innovation problem. And then secondary from secondly, from a commercial perspective, it was obviously amazing for the people on the inside of the ecosystem, right? So the few parties that are governing this, they’re making a lot of money, but it’s again, not very open for others to come in and juggle the business models on facilitate payments from one person to another, as one example, the systems were not designed for that. And then finally from a compliance and regulatory perspective in 2006 and seven and eight and nine, which are the years I used to architect the system and do the research. There was no alternative licensing out there by so, I mean, still the word Fintech at that time didn’t exist. The role on the title of head of innovation was, was not invented inside banks at this time. So they were all fat and happy with the card revenue and everything was fine.

They didn’t need to innovate, or they decided not to, to a large extent. And there was no alternative way for me to play in this game unless I applied for a banking license at the time, which I saw as a crazy thing to do today, being one of the Fintech entrepreneurs out there, I would be able to apply for a banking license and set up a bank probably within six to nine months, both from a technical and compliance perspective, with what I know I’ve learned it over the course of almost 15 years, but back then that would be obscene, right? I mean, it’s a joke because it’s true. And everyone has said it before me, but this concept of, for the last hundred years, nobody had applied for and gotten the banking license in the UK at this time. Right. It’s true. You haven’t seen anyone new coming in.

So, I decided that I wanted to bring this technology forward. I was probably deemed as one of the most popular guys in the banking industry in Norway because I called everyone. I call like the Banking Federation and the technical players in our infrastructure value chain. So the equivalence of like First Data and other typical infrastructure providers. So in the Nordic region that would be different or bank controlled entities. So I knocked on all the doors. I pushed everyone, I got the functional descriptions, the technology information. And then finally I revealed my own idea of how to solve this, to build a brand new infrastructure that would connect consumers and businesses and the suppliers of the accounts. So what we define as funding sources, which could be banks or telcos or whoever, or wherever you have funds in this real time network for people to exchange information and money, they signed that from the ground up and weirdly enough, because it was the only language that I could write anything in properly.

At the time we wrote all of this in Python, I put together a small team. I had, I think 245 pages of functional description for this whole project, made a small team, put it together and made our MVP deployed it again by random serendipity because we thought PICA was cool. Google was cool. The idea of like running serverless was also one of the sort of things we did. We were very early on adopting the cloud. We didn’t perceive it as the cloud at the time, it didn’t have a cloud name. It was not an enterprise cloud strategy from Google that anyone knew of. But you know, in 2008 or nine, we got beta access to their Google app engine. We deployed our code there and we’ve never left. So it was a fun, fun time. And what we basically invented to sort of plow down to that, what we invented was mobile payments as you in the U S with no way with Venmo or cell. So we created an infrastructure, but on top of that, we created an interface. So in this case, an app for consumers to send and receive money in real time only using their mobile phone numbers, also the ability to send money to businesses or for businesses to accept payments in this network. So we, I invented that very early on in the Nordics and I got the patent for it and we built the system. Now that’s the start of the journey you want to hear the rest. 

Greg:

No, that’s fascinating. Yeah. Let’s, let’s keep going. This is, it’s very fascinating to hear the actual details of the story behind you often have people who just sort of fast forward to, okay, this is what we do today, but to know the story behind it, it’s really interesting, but yeah, let’s keep going.

Daniel:

Cool. I’m glad that you liked the Greg I’ll keep going. So we invented the tech we’ve made the MVP works. The first stage now was that we didn’t have a license, right? So we were dependent on some sort of partnership, some sort of setup. So we devised a system where we would work together with the banks as distribution partners. So I traveled the Nordics. I visited the different banks. I presented this concept, you know, today you would perceive this as Alipay Venmo or Zelle or whatever you want to call it, it’s more or less the same concept. Here’s an app. Consumers will manage their money on this screen. It will send and receive in real time. Business will enjoy this as well. It’s more efficient, more modern. It opens up opportunities. You know, the traditional payment, acceptance and networks. Doesn’t get you. You can own this.

All provided. I will partner, please go partner with us and distribute this. They all said it was a really terrible idea. So I was miserable. Nobody wanted to buy. I mean, in hindsight, I know these people now there’s many reasons for this. And, you know, first and foremost, I was way too early, right? So the timing issue here, there’s a lot of learning in that. Secondly, our model obviously challenged a lot of the established revenue models. So the fact that we were addressing businesses as well, which we’re slowly but surely seeing now in the U S as an example, with both Venmo and Zelle. And we slowly but surely step into the business space, which is obviously challenging anyone that’s doing inquiry, right? So if you were a retail bank and a bit, or if you’re a bank and you’re doing both retail and business, and you’re doing acquiring, changing consumers, behaviors to an app is not that dangerous because you retain sort of the relationship in that app.

But if you’re changing their behavior to also use that app to pay to businesses where you are already doing card acquiring, you’re shifting the sort of revenue dynamics, there’s absolutely great ways to provide more and better services to these businesses and actually increase your revenue from it. But it requires a mental shift, right? To move from one type of doing acquiring services for businesses to another type, right? Because we’ve historically been so ingrained in the sort of Visa and Mastercard on the other large payments and networks type of scheme structure. It’s very hard to shift the way this is also one of the reasons I was unsuccessful partnering with banks at the time, because while they saw this as an interesting opportunity, which I know later that they did, they denied to sort of partner because we had a merchant proposition as well, which would move clients that are out of their control out of the card acquiring business at the time.

I don’t know if you’re familiar with the European setup. I mean, we have EU harmonized laws and regulation, including the MiFID regulation, which is, you know, strong restrictions on the revenue you can make on interchange. And back in the days, we didn’t have that, right? So there, there was no sort of limit or pressure from a regulatory environment on that stream of revenue. So we’re bringing in a new system to do something different, had no financial incentives, because you could just dial it up on the interchange side until your partners got blue in the face. So that was very challenging. So all in all that we were on successful selling the concept of mobile payments to the banks. And I went back to Norway. I was super sad, miserable, you know, kind of install my sort of co-founders or early teammates, but this is the best thing since sliced bread.

I couldn’t for the sake of my life, believe that people would not pay using their phone in the future, but nobody were doing it. Nobody wanted to partner with us. Nobody wanted to distribute. And I acknowledged, you know, it might be me or lo and behold, it might be the people on the other end of the table that they don’t know, or, you know, for some reason they don’t want to move down this path. So let’s just do it on our own. So I did my first ever sort of direct to consumer or direct to market high risk concept. So, um, I went back to Norway. As a result of the research that I’ve done on the regulatory and compliance side of this, I knew that the EU was about to implement the Payment Services Directive. The first iteration more famously known today as PSD2, because we’ve gotten a second version of this, but this is the first version, which would allow for some new license types as a payment institution on an e-money enterprise.

And I applied for the first license under that regulatory environment. And I got it. And I fundraised in 2013 as the only VC investment made in Norway that year, according to them, the Legion Venture Capital Association, I fundraised about 4 million euros. And I launched the first mobile payment service in Norway. And that was called mcash, which is the equivalent of Venmo or Zelle or to exemplify what, you know, in the U.S. so that’s what we did. We launched that on our own. We, you know, like we had, we were, we had zero customers from day one. We had Sierra Trust. Nobody the brand, the new service, new concept, like the first Fintech out there, call them, trust us with your money. And that was very fun. We did a lot of things wrong and learn a lot, but we also did enough things, right.

To get almost 300,000 consumers on the platform within one and a half years, which in the 5 million population market in 2014 is a number I’m actually quite proud of. I mean, it’s a higher saturation point in the market virtually any other Fintech that has ever launched, but in one year, and remember, this is 2014. So if you look at the, if you calculate it against the population, not being distributed by a bank, not having, I mean, we spent less than 200,000 euros in marketing, and we got some 10,000 businesses on Starbucks, TGI Friday’s, Pepper’s Pizza, which is equivalent to Domino’s over here. That’s one of the flaws we did. We tried to cover everything, right? So we really had the full, like Alipay style solution ranging from any type of consumer is prepaid funded by cards, funded by bank accounts. We connected to bank accounts and the direct debits and real time like Sal is doing now with our new ACH system.

We did that in 2014 and we also done on the business side or the merchant side. We have electronic enrollment of merchants, automated reconciliation, you know, revenue sharing, set ups, different acceptance types from no hardware to QR codes to contactless, the whole shebang. That’s one of the floss, right? We built a massive platform with everything your heart could desire, which we’re super happy with today, but at the time watching everything and pushing it through the door was a bit ambitious, but we did it. We were the first ones, correct in some of our flaws and learn by doing and we’re alone in the market for one and a half years. And we’re doing great up until, by some sort of freak of nature situation and lawsuit that someone in Germany figured out that there was some prior art that overlapped the original patent that we got. I’m not a big patent fan, but you know, our investors study, if you can patent it. That’s great. So we did, then we got it. So I have the patent for mobile payments that was issued to me in 2011 in Norway. It was kind of fun. So, I can say I’m an inventor.

So, we lost the sort of patent protection from this. And then the largest bank in Norway decided, okay, we need to launch something as well, as, rather than partnering or buying us. They launched a competing service. They did everything, right. Obviously they had all of the right people. And they spend a silly amount on marketing and it sort of flattened out. So you would, you would have this sort of Zelle slash Venmo dynamic in the Nordic market where I was Venmo and they were Zelle. Yeah. As a result of that, I decided, you know, I’m just a startup guy. I’ve invented this thing. I’ve learned a lot from doing this. And I believe that there should be an opportunity to scale this. If not globally, at least outside of Norway, I have the tech, I have the competence. How can I get out of this sort of pickle, where the largest bank in Norway is trying to run over me and lo and behold, many of the banks I’ve spoken to and tried to sort of partner with leading up to our launch directly to the market on our own.

They reached out and said, you know, we were wrong. You were right. This is actually quite a popular and interesting and important strategic thing for us to do. And is there anything we could do? You know, the business spinal reflex in me just said, okay, how much money do you have? So without spilling all the beans on that, what happened was that our service, which was called mcash flow licensed off for Norway only to the largest bank group in Norway, for them to compete with the largest standalone bank in Norway, we sold that to them for cash. And we also supported them in the competition in front of development. So we’ve sort of, we invented it. We tried to sell it to bank. We were unsuccessful. We applied for the first license, launched it directly to the market ourselves, and then were alone. Then the largest bank came in and tried to run over us.

We competed with them. Then we sold it to the largest bank group. And then we worked on the inside of the bank group where the banks were competing against each other, but like the Zelle, Venmo dynamic in the U.S. now, and then finally we adviced and we’re subject to the two schemes merging in Norway, which today is just one scheme called VIPs. And it is the number one. And the only like a monopoly situation payment serve a mobile payment service in Norway equivalent to what we have in Sweden and Denmark as well. They’re bank owned. And there’s no where on the face of the planet for mobile payment apps or what has been deemed as like alternative payment apps has the same saturation point in the population has in the Scandinavian countries. And I mean, many people talk about Alipay, right? They’re massive.

They’re huge. Absolutely. They have 1.2 billion users, if not more. But if you look at a saturation point in their population, they’re not at 80%. And that’s a reality in the Scandinavian countries, like 80% of the population, meaning everyone I know from diapers to diapers are using the stuff that I originally invented. So that’s very humbling. And with that situation, what we decided to do is that we sort of sold off this. We got out of the market in Norway and because the banks were not willing to pay enough, we didn’t sell the company. Right. Because I had a vision. I said, I could turn around and do this again on a larger scale outside of Norway, it’s a very small market. And again, it’s an affluent market. It’s an early adopter on the tech and it’s proven across a lot of different technologies and products and sectors that what works in the Scandinavian countries will eventually work elsewhere.

If you look at like internet adoption, smartphone adoption, digital TV solutions, I mean, it’s, it’s like a test bed for what will eventually ripple out throughout all of Europe. So with that in mind, we took the money we earned. We took the competence, the technology, we retain all the technology rights and we continue to harden that technology. And we decided we wanted to bring the power of these alternative payment apps to a larger audience. And we designed what today is Settle and Settle is equally to Zelle,  Venmo, submission VIPs and mobilepay and Alipay and ReachOut pay. It is the most rewarding way for people to send and receive money in real time away for them to manage their money. Especially if you consider the European regulation that provides peace too. So access to people’s bank accounts, who can actually make one app to rule them all.

That’s the ambition for this app. And equally then on the business side, a tool to deepen the connection and enable and valuable connections between businesses and new and existing clients. And we’re taking our 15 years of experience out of the Nordics and bringing it to the rest of Europe. So that’s Settle. We just launched it in Europe. We’ve turned it on technically in 21 markets. And we have a very special distribution model, which stems from our experience, looking at how the Nordics could be saturated to the point that they are right now at around 80%, it’s unparalleled anywhere in the world. And we believe that that happened because of collaboration. So all the competitors were competing in the market. It’s only when all the banks or the majority of the banks came together and decided we can. I mean, we need to protect our markets and do something we’ve done before, which is to collaborate across competitors, to bring into the market one scheme.

I mean, this is a blueprint copy of the concept of Visa and Mastercard. You mentioned two examples, which funny enough is like you have competing banks pushing another company’s brand, but they’re doing it because the network effect of doing that means that my clients can pay and interact with your clients and vice versa and the more people and businesses who does that, the more powerful and revenue generating that will become. So rather than competing and sort of splitting the market into selling, you know, Betamax versus VHS, you actually decide to go together and say, we agree on a standard. And then we will all compete inside that box. And that’s what we’ve learned from mobile payments as well, is that if you can facilitate beautiful products, that solves problems for real people and businesses, you can empower the businesses to connect with new and existing customers to sell more.

That’s great. So that’s a prerequisite, but that’s just product. If you don’t have distribution, if you can’t reach out to the market, you have nothing. And we’ve looked at the market and analyze it with our experience and also with the competitors and other markets and seen, we can’t do what Alipay does. Dude, we can buy our way into the market. We don’t have enough money to do that, but we can partner our way into the market. So we facilitate under a nice, subtle, we facilitate that beyond the technology and on the brand and the product and the features. We facilitate a local ownership model. So that allows the local stakeholders that own a piece of the settled set up in every single individual market. And we have constructed a scheme with let’s call it issuers and acquirers or in our system distributors who brings Settle forward to their clients, both on the consumer and the business side.

And they do that for many reasons that they do it because especially in Europe, if you don’t bring a service like this to the market, someone else likely will, which is threatening your relationship with customers. Probably the reason why the U.S. banks are doing Zelle right, to try to fight the concept of other third parties coming in and serving their clients new open banking. So if anyone can connect your bank account, this is up to you who you want to bank with, right? Although you have an infrastructure underneath and your money sorted, some bank account, you use all kinds of other like over the top services to treat you every day. Um, obviously if you do, your bank just becomes infrastructure. It becomes rails that someone else is running on, it distances you from the relationship with your bank, which is problematic if you were a bank, because then you don’t have a channel to sell other services, right?

You don’t know when the customer needs insurance loans, consumer financing, whatever you’re selling. There’s no way for you to reach the client. So it’s, it’s very dangerous if you don’t retain that channel. So that’s what we’re selling on with our partnering banks is that we say we have a proven scheme. We have a program piece of technology. We have a proven set of products that are pleasing consumers and businesses. It will take you a year to five years to build something equal. Although there’s a lot of tech out there, but we’ve also brought in a scheme structure, which allows you to saturate your market in collaboration with your competitors, AKA the scheme structure. So, you can actually have a chance at controlling to some extent, one scheme, one, one business acceptance solution in your market, and then effectively protect your market from the outside competition.

For example, Alipay, whatever Facebook comes up with Google and others. This is an efficient way for the banks to protect themselves and saturate the local market. And the dimension we bring on top of that is obviously interconnecting these markets. So we now have 21 markets live. The ambition is to cover all of the EU within the end of 2025. And even if somebody would try to do something domestically, locally and separate that market, we would cover all the markets around it, which means that if you prefer to use Venmo, for example, and you’re happy with that. If Zelle works across all the markets where you would like to pay, let’s say your travel, or you have family that studying abroad, or, you know, for whatever reason you would like to transact the same convenient way, but outside of your home market, the ambition here is to be that service that covers all of them.

So even if one market is lost in saturated by someone else, we would cover all the other payments scenarios. So that was my monologue about Settle. I’m obviously extremely excited. I’m passionate about digitizing money and making it universally available and sort of democratizing access to money all across Europe. Thanks for listening. 

Greg:

Yeah. And those things that you just mentioned, I think, are they not the key differentiators? No one else, none of your competitors are necessarily doing that. 

Daniel:

Well, I think it’s a combination of three things. It’s the unique experience that we have with us coming from the Scandinavian countries, having done this so early and sort of experienced all sides of this, at least many sides of it. So that’s one unfair advantage, which is extremely hard to replicate because I mean, we have this under our nails, right? We’ve done this ourselves. You can call name any consulting company and they can give you some high-level statistics, some alleged insights.

We have this ingrained in our DNA because we’ve done it ourselves. We’ve been out on the street, we’ve recruited businesses, we’ve listened to what they need. We have to, that we’ve seen what happens. So that’s one thing. The other thing is the timing issue. So the fact that we actually come from the Nordic, some were so far ahead in terms of the adoption curve gives us not necessarily a huge advantage, but we believe we have sort of the crystal ball for many other markets. How will they develop? It’s a bit like looking towards like the adoption of mobile phones in Africa, right? They never had traditional phones. They never had copper wires. They just did this frog leap. And we believe that we sort of see that as well. And when we see other European markets or, or for that matter, all of the world coming in to this space, they will make logical shortcuts.

And the third thing is the model, right? So we have a fairly unique which you can copy, but we have a fairly unique distribution model that we’ve developed again, stemming from our experience and working very closely in sort of all angles with and without the banks. And we know the pains that many of the banks has, and we believe that we’ve constructed a scheme structured, backed by technology that addresses all of those concerns. There’s a lot of stuff I can, you know, we explain in detail, but it has to do with how revenue is shared, how you deal with this sort of competition dynamics, how you accelerate one distributor against another, because there’s some there’s concept of ownership of customers in the platform there’s access to advertising capabilities so that all of those separate is one brand one app, one solution. If you were part of the network, you will retain the ownership to your client through that technology so that you can sell them up, sell them services that you would normally sell on your own channel.

So while we’re very uniform in our communication, our brand and our service, you still have your own unique way to reach your client, which is extremely important for the ones who own the clients, the banks, in this example. So these are the sort of the technical and sort of product oriented things. When it comes to my vision and the passion I have for this sort of taking away the commercial side of it, it’s about the digitalization of money. And as I said, democratizing the access to that money because while we live in a very modern world, especially coming from the Nordics, I mean, in all honesty, we’re spoiled brats. And when we look at what’s happening around Europe, especially also exemplified very vividly from the pandemic situation, with the COVID-19 and the Corona virus, we see how fragile it is and how a lot of people are actually on the outside.

And one simple example of that would be, you may have a local bakery, which is quite successful. It’s not a million dollar type of business, but it’s a family business. And they rely 100% on the clients that they have. They’ve poured their heart and soul into building a fantastic business that is appreciated in the local community. But then something like this happens where they’re taking all the measures and can keep their production up and running cause that’s safe, but they can’t have people chewing up coming into the store to buy the stuff, the normal way that they would do, which is obviously catastrophic for the business. And it’s sad for the people enjoy the produce, our technology addresses situations like that. And I’m proud that we besides sort of generally digitizing and enabling businesses to solve these types of problems on a general basis. We also did specific things during the COVID-19 crisis.

We created a new product altogether that we called Settle Quick and Settle Quick without pitching the product, just wanted to explain sort of how it was impactful. Was it a simple tool for businesses to create custom deals like bundles? So let’s say, you know, coffee and a bagel just to make up one and they can market that in any channel. So they can publish that offer in the Settle app to consumers. They can also post this on their web page to Instagram, their Facebook, you know, wherever they communicate with their clients or potential new ones and using the satellite really simply without any advanced menus or like any ordering system customers were able to sort of snap up that offer and remote order and pay it. So it’s prepaid. So there’s no risk on the business side that people will not show up and you will, once the order is ready for you receive instructions on where to go and how to get it. And you have an order number and there’s a safe exchange of the goods and the sanitized environment, meaning that clients can do good deals, but also good do good deeds and support their local businesses while the local businesses will survive and provide to their local community empowered by digitalization of money. And in this case simple quick. So we’re very proud of that. I think that really drives us and me on this journey, which has now become my longest journey ever.

Greg:

Right? No, that’s a, that’s sorta admirable these days to really focus on a product that’s helping, you know, in a crisis like this and to be able to develop it and roll it out quickly, like that is obviously meeting a challenge that a lot of people didn’t know what to do or how to do it, or kind of sat around and waited on things to happen. But it sounds like you guys really took the bull by the horns, as they say, and develop something meaningful and needed in the industry. So that’s, that’s really neat. If you don’t mind we’ll… let’s switch gears a little bit and let’s talk about you. We talked about your journey already a little bit, how you got to where you are today. So you used a word a couple of times during the conversation called passion, and that’s always something I’m interested in is learning about what your passionate about that maybe is one thing work-related, which I think I know what that is, but maybe also something not work-related that you’re passionate about.

Daniel:

Sure. I’ll start with work again. But I mean, my advice and sort of, I got an award from the Norwegian Venture Capital Association some years back for entrepreneur of the year, which was, I was very flattered to get that, but I make a point out of it because I knew what it stood for. For me, it was not sort of the shiny thing to show off to others. For me, it meant against all odds, this one single weird guy who decided to spend a lot of time really figuring out how stuff works actually made it. And to me, that was, I was so proud and I didn’t want to tell anyone else that was not the point. The point was that I was proud of myself because it was a really hard journey, right? It was against all odds. Nobody wanted to share information. The payments ecosystem is extremely hard.

There’s, you know, this ecosystem of people, they change jobs between these companies, but it’s a very hard and like circle of people, information is horded. That’s how it was when I entered this journey. I think passion wise, work wise, what I’m most proud of was the sort of persistence in doing the research really deep diving, because what we’ve ended up creating, I believe it’s something you can’t really fundamentally create unless you do it fundamentally. If you just make something on top of other rails, if you just sort of make it yet the mother card, that’s just tilted, you know, vertically instead of horizontally, that might look nice, but it’s not like fundamental. It doesn’t change anything at the core. And that’s probably one of the deep passions I’ve had with this. And throughout this whole journey is that it is very complex. It has a lot of moving parts.

I love solving problems. I like it when it’s hard. I think that’s sort of universal for passionate entrepreneurs that we become weird animals when things go smooth, right? We like the pain. We liked the challenge. We like the sort of suffering of trying to solve problems. It is a weird thing to spend four years and deeply diving into payments. I know that now that I’ve done it right, but so that’s one side of it. It’s a work passion wise, it’s solving hard problems and really understanding what goes on under the hood. And that would be an advice to others as well. If you’re considering starting a business or want to solve a problem, really deep dive into like try to know everything you can about that problem. It gives you a unique angle to solve it. That aside more privately. I mean, I love to fly weirdly enough.

I’ve traveled know around the world with this particular company and then this journey and it might look good on social media. And I tell my friends this all the time, it’s not as glamorous as it looks. I mean, I mostly see the insides of airports, airplanes, some, you know, various types of hotels and meeting rooms back and forth. And you know, you don’t sleep well, you don’t eat well, but it might look good on social media. So I’ve sort of stopped posting that stuff. Now during the pandemic, I miss those work travels anyway, but weirdly enough, what I do as my hobby to sort of shut off my work and entrepreneurial brain is actually to fly. So I’m a pilot, I’m a private pilot and I’m bringing my family, my beautiful wife now for, um, we’ve been together for 20 years actually this year. So we’re celebrating 10 year anniversary as a married couple and 20 years anniversary, uh, girlfriend and boyfriend.

And we have two beautiful kids and tried them the most I can to bring them. They don’t necessarily share the passion all the time to fly everywhere, but that’s what I do. And for this summer, I’m actually bringing two of my friends and we decided to see more of Norway. Norway is obviously a beautiful country. I’m very proud of our country and the nature we also here, but I have to admit that I’ve seen most of Norway in terms of the city centers of the largest cities going for business. And so this summer where I’m actually bringing my two friends and we’re flying South to North, throughout all of Norway, given that the weather is on our side. So that’s my passion on the side of financial services.

Greg:

Oh, that’s cool. It sounds like an interesting summer you have scheduled there. You mentioned a little advice already, but I always like to ask this question and I think you’ll have a unique perspective given your background. But you know, when I started in the Fintech or payments space, going back about 15 years, it wasn’t really a career path. I mean, it was more like people fell into it and then you really could never get out of it. But I think that’s changed. I think with the sexy name Fintech and the amount of investment that’s been made in payments. I mean, just globally, even it’s become an area where people coming out of college or maybe in career transition, they look at payments or Fintech as a potential career path. So what would your advice be to someone like just maybe right out of college, they’re looking to get into payments. What would you tell them to do? What should they focus on? What would your advice be?

Daniel:

Wow, big questions. I’ll actually refer to something I did here in Norway. So being the entrepreneur, but the story of an invited to certain setups, I’ve been invited to the business school here in Oslo. Um, I actually decided to name my presentation for these students. These were grad students. The professors are regrets because I assume he would regret in my thing. Me and I guess that’s sort of the summary of that presentation was two words quit school. And I’m not sure that I’m going to vouch fully for that recommendation. But if you’re curious about something, right, if you want to get into something again, back to what I did, and that’s the best advice I can give is to really deep dive into the details, right? When I did this, these details are not as easily accessible as they are today. I’m looking at my kids.

They’re 15 and 17 returning 15 and 17 this year. And I see the access. They have to information. I mean, it’s just astonishing how you can learn anything by watching YouTube and virtually every type of programming language, some training and exercises and assignments and everything is like, it’s free, it’s accessible. And the tools are so accessible. I mean, we’re recording this beautiful podcast through virtually free tools available everywhere for everyone. And I think that, you know, looking at how music has been produced today, it’s no longer something where you have to bring 10 people into a studio somewhere, physically people can record stuff, just using their Macbook. And so I would, my recommendation would be stopped doing stuff you don’t like and deep dive into something that you care about. And when it gets tough, when you get bored or it’s hard, that’s where you succeed, right?

That’s when you need to continue, don’t give up, don’t quit. Even if it’s hard, even if you fail. I mean, look at my journey. I failed several times with the same thing. I had the same product, the same vision, the same concept, the same technology. I just didn’t, you know, construct the commercials around it in a way where it was appealing enough for the parties I was relying on. So rather than giving up, I hammered at it all over and over and over again. And now it seems like it’s working okay. And we’ve done fine before as well, but that would be my recommendation. Find something you’re really passionate about. Let everything else go and deep dive into it. Once it gets hard, that’s when you continue and become the best version of yourself in that perspective. And don’t give up, I mean, knowledge is extremely powerful.

So, with the fact that that information and hence the knowledge that you can obtain from that information is so easily accessible. That’s where you can differentiate. I’ll have one other comment as well, which I’ve also learned, which is sort of contrary to just knowledge. I’ve seen many times, and I’ve been affected by this myself. And I’m trying to sort of share some of my entrepreneurial learnings with others in my network here in Norway. I’m part of sort of a governmental initiative as a mentor for young entrepreneurs. And one of the things that I also say, and this is not my quote, I’ve stolen from someone, I don’t remember who this is. Concept of mediocre idea executed well, beats a good idea any day. And it’s not to be put in contrast to fully understanding every single minute detail, because I still believe that that’s extremely powerful, the best thing you can do, but it’s also about exposing it to reality and sort of getting it out the door and executing.

There is a lot of really good ideas that are being horded and protected them, you know, polished the extent that, you know, a mediocre idea executed well, passes it instantly. And I’ve suffered that, that faith myself with my mobile payment thing once, right? Because I saw someone, I wouldn’t say directly copying it, but at least making something which was very similar, but it was executed completely differently from a completely different point of view, with massive distribution, you know, bought marketing, lots of spending. They basically executed me out of the market. There’s a lot of learning there. So finding that balance is very important. 

Greg: 

Yeah. I’m chuckling inside because I’ve had many ideas that I didn’t move on and later someone else did, they did quite well. Right. So, it’s something that’s very near and dear to my heart, because it’s happened to me many, many times.

Daniel:

There’s plenty of listeners out there. who has done the same thing. It’s like, well, I thought that, you know, I it’s, it’s, it’s a good old Columbia egg. I don’t know if you know the story. If you put the egg off, like, well, he boiled it and then they cracked the bottom and it’s there. Everyone says I could have done that. And just like, well, I did it right.

Greg:

Exactly. Exactly. Well, we’re about to wrap up your Daniel. So is there anything else you wanted to add before we go? 

Daniel: 

It’s been a pleasure to be here, Greg. I really hope people enjoyed this. If you want to reach out, you know, information, shouldn’t be hoarded, it should be shared. So I encourage everyone to connect. If you, if you like anything on the story that I’ve told you, find me on LinkedIn, there probably be some, some links in the description of this podcast. So feel free to reach out.

Greg:

Daniel, thanks for being on the show today. I know your time’s very valuable, so I want to be sensitive to that, but I really appreciate you being here. 

Daniel: 

Thanks a lot, Greg. 

Greg:

And to all you listeners out there, I thank you for your time as well. And until the next story.

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