Founder Journey ft. Wayne Pommen

Host: So I'll just kick it off first by. If anyone has heard our podcast series called Founder Journey, um, we really try and dive deep into the authentic builder stories and get lots of great, actionable takeaways and insights for founders like yourselves and those who are really trying to make an impact in Canada and build something massively, uh, successful and scalable. So, um, I like to start these sessions out with asking what first, uh, was really the driving factor that made you interested in wanting to be a builder or part of building and scaling something massive here in Canada?

Wayne Pommen: Uh, well, thank you for the question and, uh, first of all, thanks for having me. It's pretty impressive what you've organized this week. There's a lot going on this week. There's a lot of, uh, competing demands and events going on, and the fact that you filled this room, and you're probably going to fill this room, uh, for a lot of hours this week. Congrats, and I'm honored to be kicking, uh, things off. Um, well, I guess I have always liked the idea of building something, right? Uh, uh, even as a kid, like building things in my garage, you know, the idea of creating, building. And then as I got older, I really enjoyed the process of building teams and bringing together groups of people to become greater than the sum of their parts and to create things and the joy and fulfillment that comes from working really hard alongside other people. You respect that. I is like the core of so many things for me, and a lot of that I picked up in my sports career, actually, uh, which we could talk about if you. If you want it.

Host: Yes, I'm very interested. It's. It's quite a great story, but, yeah, continue.

Wayne Pommen: Yeah, well, so I, um, I spent a lot of time rowing. I was, uh, a rower. I started rowing in Victoria, where I grew up, and ended up rowing in college and on the Canadian national team. And I had so many great teams that I was a part of and great coaches who fostered, uh, the most amazing environments where people would be able to do their best and accomplish something together. When people ask me like, oh, what do you lean on in your career? What do you look back on that you learned a lot from? I always think back to that, as opposed to what did I learn in this class or, you know, or from this company.

Co-host: So what did you learn and how did it play forward in your career?

Wayne Pommen: So there's a few things to it. I. One thing that I always come back to is, as a leader, what is the environment you're creating for people and what uh, does that allow them to do. And so I had my, the most impactful coach I had in college. He had this incredible way of setting an environment where the standards were high but sort of unspoken and people really could own what they were doing. And that led people to just pour forth so much uh, effort. And so I think a lot about how do I create those conditions in a team if I'm a CEO or an executive, how am I creating conditions that will make people really own their work, want to do their best, while also assembling uh, a team of people that they like, respect, trust. And so again a lot of that ties uh, to sports as well.

Host: So great takeaways like even just um, as like someone that is building and scaling a team in a company. So I find it interesting that there is often like an athletic connection to um, founders or people who are working as entrepreneurs. Would you say like, uh, before we get into obviously, um, affirm and why everyone is here, uh, uh, would you say just like the mentality as an athlete was something that has been really impactful in like your days now and your days just trying to scale and have grit. Um, um, how has that been like passed down?

Wayne Pommen: Yeah, I definitely think there's something there. Um, um, I mean for those of you that have been athletes at some point in your lives, you know that there's a huge amount of training and preparation that goes into getting to the result. There's a huge amount of delayed gratification. You have to have a growth mindset. Right. You have to believe you're going to be getting better, um, in the future and you have to overcome a lot of adversity and failure and uh, you have to be comfortable with that. And I think that relates to building uh, startups.

Co-host: Cool. Um, I imagine you've had a bit of adversity in your career. Just we all do. So take us from college to Paybright. You didn't go start, you didn't go join it right away. Um, what do you do after college? Why'd you do it? And then how did you come across the opportunity to basically join paper?

Wayne Pommen: Sure. Um, so there's, you will find no through line that makes any sense to my, my background. Um, I studied liberal arts, uh, in undergrad. I did a PhD in international relations where I wrote a thesis on NAFTA. Uh, throughout all this time I was doing a lot of rowing. Then when I finished my PhD, I had absolutely no idea what I wanted to do and so I did what a lot of people in that situation do. Is I went into consulting. So I joined Bain and Company. I was living in the UK at the time, joined in London, did that for a few years which was hugely valuable. You know, you working really hard alongside smart people and just getting exposed to tons of different types of business problems. Uh, but at some point that sort of runs its course and you have to decide do I want to be a consultant or do something else. During that time I moved to Toronto and then I went into the uh, private equity business for six or seven years at a firm in Toronto called Torquest Partners that some of you might have heard of. And uh, TorQuest basically focuses on acquiring mid market Canadian companies. And so partway through my time there I started specializing in like financial services. And, and in particular we had a thesis around non bank financial services. So this idea that in Canada the big banks suck up a lot of oxygen in financial services but there are certain things they don't do because it's uh, technically hard or it's not a focus or it's too small or whatever and you can have a real business uh, that maybe RBC is not interested in but it can be a great non bank business. And so we were going around trying to acquire um, companies in, in that space and one of the ones that we acquired was thinking uh, capital the small business lender. And then I spent the whole summer of 2013 trying to acquire a point of sale lending business in the home improvement space. And quick overview. Point of sale financing is you're going to go buy something and the retailer or the merchant offers a payment plan to you to help you uh, make that purchase. Uh through that process I really got a great understanding of the power uh, of that business model and got really excited about it. That acquisition never happened. So I wasted my summer.

Co-host: Could I guess which one that is? Would it be Finance It?

Wayne Pommen: No, but it is a company that Finance it. Later requirements it was Snap, Snap Finance It. Um, then fast forward a bit. I came across a tiny little company called Health Smart Financial Services which was a very small point, um, of sale lender in the healthcare space. So think dentists and fertility treatments and that type of thing. And they were doing interest free monthly payment plans for more expensive medical products and services. It had five employees and it was a tiny division of a larger company. I met with them, it was not an opportunity for TorQuest but we had a very nice coffee and a year later we reconnected and they said hey, there's all this fintech stuff going on and we feel like there's something we can do with our little health smart company and you know, let's talk about it. And one thing led to another. I joined as an investor and as the CEO in at uh, the very end of 2015. And that is what became Paybright over the next five years.

Co-host: Okay, you just glossed over that last 30 seconds. You know, here you are at a private equity firm, TorQuest, which is one of the more renowned ones in Canada. They're spinning out or leaving. So did you have to get permission from Torque Quest? What were you thinking? How did you sell this into yourself, into your family? Because it's quite a big change and I imagine there's a lot more people in this ecosystem that don't hypothetically found a company will help scale and come in at a pivotal point. I can think of Dan at clutch. So just take us back to that moment and tell us a bit more the details. What were you thinking? Why does jump. How do you get the challenges of buy in?

Wayne Pommen: Yeah, yeah, good question. You're right, I did gloss over it. But, but since you double clicked, um, so when I was at TorQuest, I discovered that I enjoyed. I was much more interested in like operating and building and company strategy than I was in investing. And some people love investing, like looking at different deals and how do you structure them and how do you get them done and that's. I sort of like that. But what I found is I was much more excited like once we'd acquire a company, like what's the strategy and how are we going to grow this thing? How are we going to double, how are we going to triple? And really getting to know the management team, like I enjoyed that more than, you know, the financing, the deals. Right. So I always felt like I'm a little bit of a fish out of water, you know, as a, as a private equity investor. And if I ever got the chance to operate something or lead something, I would like to do that. So then when this, this opportunity came up and it was, I had, I got along really well with, uh, existing shareholders. I felt like I understood the business and could add a lot of value. It was, to be honest, it was a little bit de. Risked. Right. Because it was not a blank sheet of paper. There was a foundation there, there was a revenue, thank God. And um, that sort of gave me the confidence to say, okay, I can leave my perfectly good private equity check job and take a, a bet on this thing without completely throwing my, you know, wife and kids in mortgage, uh, up in the air. So does that help well, and then

Co-host: how'd you convince the team that you're the person to do this? Did you bring financing in? Did you, you know, you came in as CEOs, like they had, like you said, they had revenue, they had something. So how do they know this was the perfect match?

Wayne Pommen: Well, we spent a lot of time together. I had many lunches with kind of the main, the main shareholder and we got along, um, which accounts for a lot. And I also think that they had been struggling a little bit with, because this wasn't the main focus of the bigger business, like, where do we take this thing? What's happening out there? How would you grow it, how would you finance it? Which is very important in uh, this type of business. And so I was able to share our observations from TorQuest and things I had learned about how do you scale these things and what could this become? And I think I was able to sort of provide a compelling vision based on the experience that I had in that particular sector.

Co-host: One more question and I'll let Riley take it back to the planned, um, just context. Roughly how large was it when you came in? And then you can either give us how large was it when Affirmed took over or today or something just like, how well did you deliver against expectations?

Wayne Pommen: So, um, the, the way we measured the business, the big headline metrics would be what is the loan volume every year and what is the revenue? So in 2015, where I came in, right at the end of 2015, we did just under $6 million of loans and generated about $800,000 of revenue. Um, five years later, when we sold to a firm, we had 220 million of volume and about 20 million of revenue. And the team went from like 5 to 200 in that time.

Host: That was going to be my next question, which is that is a massive amount of growth, obviously. So what was the strategy around just ensuring, like not only building and scaling the team rapidly, but sometimes with rapid growth comes difficulty in maintaining, you know, obviously culture aside, but of course, like a good product, a good business model. So what was your strategy and how did you grow so quickly and just maintain like a very strong team and foundation?

Wayne Pommen: Great question and, uh, I'll provide a little bit of context. So, so I got into this business that was focused in the health space and in my view they had never really tried to, to grow it at a maximum possible rate. There hadn't been a lot of investment. There was basically no sales team. Because the way you grow the business is you go out and find merchants to partner with to bring on the platform and then they start originating volume. And so all of 2016 we focused on health and we doubled the business the first year, but that was still a very small business. And we realized that in health, once you have like the biggest dental chain and the biggest fertility chain, etc. It peters off very quickly into this uber long tail of tiny businesses. And we realized we were all going to be old and gray before this thing was big. And so we were looking around saying what are, we have this installments platform that works. Where else is this relevant? And towards the end of 2016 we were, you know, we were looking at home improvement and auto repair and like how do we get into retail? And that's when we realized E Commerce installment payments work extremely well in E Commerce. And it was starting to be shown in the US and Australia and Europe. No one was doing this in Canada. And we said, we are going to be the first E Commerce installments player in Canada. And we kicked that off in 2017, rebranded to PayBright and we became Canada's first buy now, pay later firm. So that, that's important, um, context. Then we hit this huge inflection of growth, right? Just insane. Like 2017, 18, 19, we were right on this wave of BNPL. We were breaking the ground in Canada. Retailers were adopting it left, right and center. That is when things got very stressful, very exciting, very stressful. And so the business model is you're, you're signing up merchants, you have to deliver a great product to them. You have to deliver like a high performing, high availability product to like the biggest retailers out there. You're onboarding thousands of customers, you know, sometimes per day they're taking out loans. You need to have, you need to have the operations locked down, you need to have the capital to fund the loan book. And all of this is like cranking. And we had very stressful times. Right. It's one of those paradoxes of building companies. The pitch deck you put together is gorgeous right up into the right. Look at the volume, look at the revenue, look at the users, look at the engagement. Oh my God, where do I, where do I write my check? Inside total chaos. And I mean, you know, I've had people come to me in tears being like the customer service backlog is so large, I have no idea how we are, uh, going to deal with this, you know, and like many examples like that. And so I'm rambling a little bit, but giving you the context, all you can do is just keep showing up every day and Getting and going through it and you get through most of the problems. Um, that's the short answer. We could double click into lots of that. But you know, I think it's an under discussed aspect of how brutal it is to scale a company quickly.

Co-host: So again I like Riley tees it up with the nice high level questions and I go deeper, uh, double clicks. Uh, imagine there's a bunch of different angles that you were getting stressed at. So let's maybe pick apart like financing. Like, because imagine you had to, you had to, you didn't have a balance sheet that could support all this. So in Canada the lenders aren't usually the most, let's say forward thinking or aggressive. So how did you handle that and was that an issue? And also making sure you're underwriting the right debts because when you're going fast, imagine it's easy to make mistakes.

Wayne Pommen: Yeah, 100%. Um, that made us a little bit of an unusual startup. Right? Cause there's this balance sheet, there's this risk. Um, I mean we did have VCs talk to us and then halfway through the call they're like, wait a second, we can't invest in this. You know, but, but so what we had is we had our equity capital and we had to raise debt to fund the loan book. And so I spent a lot of my time on that and I will say that my sort of background and relationships from private equity were super helpful. So we were able to get um, an early facility from Canadian Western bank when we probably had no business getting it. Um, we later got one from M equitable bank and then we at some point got a securitization facility from cibc. But it absorbed a lot of time uh, to get those things in place. And you're right, like we had to demonstrate the underwriting track record, demonstrate all kinds of compliance and policies and capacity. Um, and so, and if we screwed that up, it's game over. I mean if you, if you're growing that quickly and you run out of capital, that what that literally means is you can't send the merchants their money and you don't really get a mulligan. Like if you don't send Samsung or Hudson's Bay their money, they'll be like cool. See, uh, you're off the site and you're not getting back on. And so there were definitely a couple stressful points where the growth was accelerating and like we don't have the capital for this and then we're out, you know, patterning the pavement to line it up.

Co-host: And imagine there's also a point where you can't even throttle it. They don't want, because they don't want you to, you know, make your underwriting standards tighter because then you're rejecting customers and they're losing sales. So how did you, I'm curious, how did you manage that? Did you just take less merchants on? Did you like make the availability only 9 to 5, like a traditional, like how do you handle that?

Wayne Pommen: So we, we actually never got to the point where we had to throttle, we always were able to come up with the capital. Um, but you're asking a great question because if you're in the, let's suppose you're in the direct consumer loan business, you can throttle it. More customers will get declined, they'll be annoyed. But whatever, they'll carry on. The big merchants notice the instant you're throttling it and they're not happy. And so you, you, that is the last resort. Uh, so it's kind of a nerve wracking business that way. And, and many people have blown themselves up trying to do this and it creates a beautiful barrier to entry in the business.

Co-host: So, so on the non financial side, how did you prioritize what to tackle? Because I've seen this when product market fit happens, everything blows up because you keep on scaling so quickly. So you said you had the customer service backlog, imagining more employees. Imagine you wanted to get more merchants, you had to qualify them. So how did you, you come in? Yes. Uh, you work through, but did you prioritize? Like, how did you get through that period without, you know, blowing up yourself?

Wayne Pommen: Well, I mean, I could try to give you some like super sophisticated framework of how you evaluate.

Co-host: That's the truth.

Wayne Pommen: But you'd show up each day, you show up each day and deal with what's on your plate. The best you can is the honest truth. And I see people nodding. Um, and a lot of it goes to having the right team members in place who know their domain better than you and who own it and can run with the ball. Because at some point you as the founder or the CEO can't be in all of the places and you don't know all of the things. And so, you know, I was fortunate that by the time we got to that inflection point, I had some really good people in place that I could lean on. Um, but it doesn't mean that it still wasn't chaotic.

Host: And how do you find those people? Because as you said, like, you have to be very hands off. You can't be involved in everything. So was it a matter of, you know, you put people in situations and just saw like their progress and how they adapted to the rapid growth? Or was there, again, I say strategy a lot, but was there a strategy to who you were hiring, who you were looking for? Because you did need to have such a strong team for how fast you

Wayne Pommen: were growing, you know, it would only be a strategy. In hindsight, I would say that I was lucky to have a couple of seasoned folks, um, who had been around the consumer finance industry for a while and they knew things I did not know, especially like our head of risk, for example. And then my number two, uh, had been in the industry for a while and so super helpful, sort of mature, seasoned people. But then as we added to the team, we were often taking a bet on people that we thought were just really high potential, scrappy young people, like our head of product and, you know, like head of engineering. Um, and those people worked out great. Right? There's a few people that it didn't quite work out, but in some cases you saw these people just explode in terms of their capacity and capability when they got thrown the ball. And that was actually one of the most gratifying things about the journey.

Host: What was the most, um, if there even was one that you could call it probably the most important role or I guess, gap you had to fill just during that time.

Wayne Pommen: So like many companies, we did not have a formal product function at the beginning. Right. It was me and a couple of the other senior folks talking directly to engineering and building the things. And that was product management. And at some point was like, okay, we need a real product function. We need to bring in a product leader and build that out. And that's going to become the beating heart of the company as it is in so many places. Um, that was a key decision and, um, that was not easy to implement actually. Right. Because you're doing open heart surgery on sort of processes in the company to insert that and it took a while to kind of bed that in. It eventually became beautiful in terms of how well it worked, but it was a key decision. It had to be done. We probably did it a little late. Um, but again, it was not straightforward to do that surgery in the middle of the flight.

Co-host: To mix metaphors sounds like this was a pretty smooth ride. You come in, you have all the pressures, but you had product market fit. The Canadian financial markets, I think, are generally viewed as the consumers are pretty conservative. We have an oligopoly. You said at Torque west, you were looking for markets that weren't served. Was there any surprise reactions by the market? Was there resistance by the E commerce sites? Was the resistance by customers to say, who is this paid? Right. I'm lending money from? Was there a competitive reaction or was it just blue ocean? You could run for it.

Wayne Pommen: So I would say that, um, Canadian merchants were probably a little slower to adopt than in other markets, a little more conservative. Um, we also have very. We. I think Canada is the, the, the country in the world that has the highest credit card penetration of any country. And so when you go to retailers being like, you realize there's a bunch of people that you're probably not serving or they don't have enough purchasing power, you should really do this. Like, ah, I don't know, doesn't everyone have credit cards? You know, and so we had to overcome that. And that's not the same, quite the same in the US Especially post financial crisis. Um, so that was a source of sort of market conservatism to come over or overcome. But what we found was that US merchants operating in Canada adopted first and then the Canadian merchants came sort of quickly after. Consumer adoption was pretty smooth. Like once it's on the website of a major high volume merchant, it's presented there, you get sort of this trust halo, uh, you know, from the merchant. Consumers adopt it. Young consumers first. Right. Willing to try things sort of more digital native. But you know, I think once we broke through that merchant barrier, then things really scaled from there.

Co-host: So it sounds pretty smooth. You know, not surprised.

Wayne Pommen: Didn't feel that.

Host: Probably not at the time.

Co-host: But I'm going to say I'm not surprised U.S. merchants adopted first. We'll leave that comment out there. Won't go there. Um, so you're on this rocket ship and then you decide to exit. So tell us, was, did a firm reach out to you? Why sell when you did?

Wayne Pommen: So, um, things were going pretty well, notwithstanding the internal chaos. But those are champagne problems in some ways. Um, there was not a plan to sell the company. But here's what happened in 2020 after the initial shock of COVID which we overcame and we were actually quite successful coming out of COVID because of where people were shopping and what they were buying. Um, as everyone remembers, the, the world went to like full throttle, right, in terms of capital in the market and valuations and you know, you name it. And in a relatively short time we were approached by multiple international buy now, pay later competitors that were much bigger than us. And two Canadian banks about acquiring us. And so we had established Canadian market leadership, and it became clear that other players were coming into the market, either domestic players wanting to build it, or international players wanting to expand here. And so we had, all of a sudden, all this interest. And so we looked at everything and said, wow, there's a moment here where we're the leader, we're in demand. Um, if we say no, we could end up facing all this competition here. And we also looked around and said, can we catch up? Can we be a big international player? And when I looked at these multibillion dollar competitors, I thought, would love to bet on ourselves, but I'm not sure. Like, we're a little ways behind, right? Or significant ways behind in some ways. And so it became one of those things where maybe you need to know your moment and say, am I going to put it all on red and keep going here, or is the smart thing for us to do to become part of somebody else's story? And so, you know, discussed around the table with my investors and the board, and we thought, okay, we should probably entertain this. And then one thing led to another, and a firm rose to the top as sort of the winning bidder in the fall of 2020.

Co-host: So do you want to open up to Q and A from the audience? But before I do, I have to ask you. That was 2020. We're now 2025. So it's five years. Most times after an acquisition, the leadership team stays. One or two people stay long time, but you're still there. So tell us the good, good things. I've gone.

Host: You rarely hear, obviously, that the role evolving.

Co-host: So what's gone. Right?

Wayne Pommen: And yeah, yeah. So I did not expect to stay this long. Um, we had a two year earn out as part of the purchase price, and we hit the earn out. And then after two years, I thought, okay, you know, I'll go off and do something else. And right around the time that I was thinking about doing that, um, the chief revenue officer of a firm left and Max Levchin, who's founded a firm and is now my boss, came and said, hey, I want you to do this. So it was like perfect timing to jump into another role. And I thought to myself, okay, you know, I'll do that. And, um, we'll see how it goes. I don't know, do it a year or two. But it has been so much fun. Like, the company's doing great. Working with Max and the team has been amazing. Uh, there's so much opportunity, so many interesting things to work on. That it has not made any sense to leave. And the longer I stay, the more I enjoy it. So I feel kind of lucky that it, uh, that it worked out that well.

Co-host: I'm going to ask one question more before you open the audience. Sorry, Alex. Um, what have you learned from the team? Because, like, Max Levchin is part of the PayPal mafia firm, seems to be one of those firms that, like you said, grew really big really fast. Is there anything you've learned by being exposed to this that you did not expect to learn and that, you know, you might want to share with the ecosystem?

Wayne Pommen: So there's lots of things we could talk about. One thing that was really interesting was so we were 200 odd people at Pave, right? And then when we got acquired, it was like we jumped to being in a 2000 person company and we like skipped over all the stages in between. In terms of the depth of the team that you would build, the maturity of the processes, um, you know, the, the depth of things like, you know, the compliance, the capital markets, the operations, the, the depth of the, the technology resilience that was needed. And at times it was like, well, this is, this is bureaucratic, this is, this is crazy. But that, but you realize that is where we would have gotten had we carried on that journey. But it was interesting to do like the Star Trek transport from one to the other. And so it was jarring initially. And then you're like, okay, this, this actually makes a lot of sense. That's one thing. I think another thing would be. So Max is an engineer, computer scientist, uh, the president Lebor, uh, also an engineer. They were together at the University of Illinois and they built a couple companies together. Really interesting to be in such an engineering first culture at paybright Tech was a big part of it, but it was a more commercial culture, really. Just interesting to see that Silicon Valley eng first mindset. Everything is everything. If something can be solved as an engineering problem, it will be. And so that's been really interesting for me to see up close.

Host: I could have asked you a million more questions. But just one really quick to kind of cap it off because I want to open up the floor. This is a room full of founders and people that are building right now. Um, what is your best piece of advice that you could share with anyone that is building or wanting to build today, especially in today's market?

Wayne Pommen: I was hesitant to, uh, dish out too, too much advice because no two examples, you know, no two companies are the same. I mean, the only thing I could say is If I look back on what advice I would give myself, it's like, be prepared to just not, not quit, not stop, keep going, keep going, keep going through all the things that solves so many problems. The other thing I would have told myself is like, aim big. Don't be, you know, obviously protect yourself in terms of, you know, how you manage your capital and your Runway and all those things, but still aim big. Like have a bigger vision. Because the big vision attracts capital, it attracts the team, it attracts creativity. And there were times where we were too conservative and like nervous about what we were, you know, were we making a mistake and what was going to go wrong? And I think a lot of that ended up not being needed. And we could have actually got farther in the five years that we had than we, than we did if we had been a little bolder. Um, so that's one of my standard pieces of advice.

Host: I think that's great. Uh, so the floor is open to, um, audience Q and A. So whoever has any questions for Wayne, just raise your hand and we'll run.

Co-host: Someone running the mics. Okay, there we go. Maybe stand up when you ask the question so we can see you.

Host: Yeah.

Co-host: Hi, how are you? Slide it up, slide it up.

Host: Oh, perfect. Hi, I'm Natasha Akwin. Thanks so much for sharing today. In an economy where debt is rising, how do you approach growth in a way that still protects long term consumer well being?

Wayne Pommen: Awesome question. One that we think about a lot. So, so, and we, we actually didn't get into this much yet. But one of the things that attracted me to this business is how different it is and how much better it is for the consumer than traditional consumer credit. So most consumer credit certainly in this country has been based on the credit card model where you're given a line of credit, the bank says good luck. And what ends up happening is close to half of Canadians carry a balance each month. When you carry a balance, you're racking up this compounding interest. And a meaningful percentage of those people only make the minimum payment. Right. In addition to late fees and in some cases on store cards like deferred interest. Our model doesn't have any of that. It's a very simple installment plan. What you are going to owe is shown up front and you can never owe more than that because there are no late fees, no combat pounding interest, no revolving account, no deferred interest. So very transparent. Uh, and then the other thing that's very important is we don't underwrite lines of credit. We don't Say, here's your five grand. Good luck. We underwrite every single purchase individually at the time of the transaction. Uh, and say, do we think this customer for this purchase is likely to repay? And if we don't think so, we say no. And we feel that our interests are very aligned with the consumer because we have no possible way of benefiting from a customer falling behind on their payments because we don't have any of these late fees or compounding interest or anything. So it is only bad for us if a customer falls behind. We do not want them to. And so we have a lot of. The short answer to your question is we have a lot of incentives and structure built into the product that's meant to limit the customer taking on too much debt because it's bad for us if they do.

Co-host: Your product is beneficial for the consumer

Wayne Pommen: because it's better than say, racking it up on a.

Co-host: Sorry, would you, by this logic, is

Wayne Pommen: it ethical to offer your product because you aren't being as, well, one might

Co-host: say, extortionate as the banks with their

Wayne Pommen: credit cards and late fees and all of that?

Co-host: Jaz.

Wayne Pommen: So our strong view is that anytime that a customer is using our product instead of credit card, where they might have taken the risk of paying late fees and racking up compounding interest, they are better off. So we consider this to be a very sort of pro consumer product relative to the traditional alternatives that have been out there, which makes it much easier to sell.

Co-host: Right.

Wayne Pommen: Because you can speak with that ethical authority of a sort. That is definitely a selling feature for merchants. Right. So when we go talk to merchants about adopting our product, literally the first slide is here is how we operate, here is our mission, here is our incentives, and here is why this is good for the consumer and why by extension, this will reflect well on you as a business like that. That is fundamental to what we do.

Co-host: After this. Can I speak to you?

Wayne Pommen: I might become a customer. I love it. Let's do it.

Host: Okay.

Co-host: You know, do stuff that on scale always. Right? More questions?

Host: Yeah, a couple more. Uh, we got one in the front here.

Co-host: Thank you.

Wayne Pommen: Um, how do you treat, uh, let's say collections, Because I know you've said all these things and I. Fintech is like, uh, a thing that fills a gap. Is everybody's interested in now late account receivables, all these other things. So do you actually collect? Do you sort of build it into the pricing and say, you know what, we just write it off. They're never getting calls, we're never handing it over to an agency. So there's a couple of percent, despite our best efforts in our underwriting, there's a couple of percent in any given month, year, et cetera, that won't repay. And we just have to build that into the economics of the program. Um, if a customer doesn't make a payment, we have a set of steps that we go through, like reminder email, reminder text, et cetera. Um, if after 120 days somebody has not paid, we write it off and it's gone. The main, um, consequence to the consumer is that they can't use our product again for quite some time. Um, but we, we are really not into any sort of aggressive collections. That's not part of the model. Uh, we don't think that would reflect well on the consumers. And also the merchants are not interested in that either. And so we, we go through our steps so we underwrite as accurately as we can. If the customer doesn't pay, we go through these series of steps and then we write it off at 120 days. And to your point, the cost is built into the product reported to a credit agency or, uh, we do, we've started to, um, now in the vast majority of the time, because the vast majority of customers are repaying, that's good for them because they can build credit using our product. Right. And so if you're in your 20s and you're using our product successfully, that is going to help your credit score and ultimately it's going to help you buy a car, get a mortgage, whatever it is down the road.

Co-host: I'm going to jump in here quickly. So it's interesting, there seems to be one thing I didn't realize to hearing this answers is seems like the retailers view you as a net benefit like they look at, hey, credit card payments, just a way of doing a business, but you represent the brand even though you're branded. There's also a bit of goodwill or bad will for the retailers. So they're very careful with how they work with you. And did you know that at the beginning?

Wayne Pommen: Um, well, I think retailers are always saying, well, if I'm going to put your logo on my site and you are going to be handling the payments for, you know, a decent chunk of my customers, I need to understand how you operate and what are you going to be positive or negative for me. So I think that's been there since the beginning. But what we do find is that now that a firm has served, you know, over 40 million consumers and has 22 million active in the last 12 months and that on average, those customers do 5.6 transactions a year. There is this, uh, brand effect that we have that is, that is positive for retailers. Like, oh, affirms on this site, I'm going to continue my shopping journey. That would not have been as big an effect seven or eight years ago, but it is now. And so we find that our. It's to the point where a number of retailers look at us and say, okay, this is a payment method that if I don't have it yet, I should probably just have because of the brand and because of the consumer reach.

Co-host: I think there was one more question.

Wayne Pommen: Hello.

Host: Um, so you mentioned about hiring a product manager. Um, in your experience, when would have been a perfect time to bring in a product manager? And while we added, like, when would have been a perfect time to bring in an HR person to your company?

Wayne Pommen: Oh, such great questions. I think that if you're founding a company, I would recommend trying to be the head of product for a while to make sure you really own and understand and feel the product and the value proposition in your bones. But if I were doing it all again, I would be hiring someone to be with me on the product side pretty early because there is like a, uh, discipline to product management that it's hard to uphold as a founder with everything else you're doing or as a CEO. So I would have done it probably as soon as I could afford it, probably. And then ideally, that person can spread their wings and become like a true head of product as you as the CEO, kind of reallocate your time as the company grows. Um, we inserted it a few years in and that there was enough established process that it was disruptive to bring in product. In the end, it worked out great, but it was very disruptive at that point to bring it in later. Head of HR is a great question. I don't know what exactly the right rule of thumb is. I think we brought someone in when we were probably 50 or 60 people, and I probably would have started earlier. Um, there's a lot of things we were kind of doing off the cuff from an HR standpoint, which got very quickly professionalized when we brought somebody in, somebody who'd actually been in multiple startups. The one thing that was actually instantly noticeable was how much better our hiring became. Because when we had the executives or the hiring managers doing their own recruiting and hiring, the quality of the pipeline was not as good as. Because like, oh, thank God, you know, you look like a warm body. I'm going to hire you. Whereas if you have, uh, you know, people can relate, right? Whereas if you have a, an HR function that is really focused on bringing in a high quality pipeline and leverage, and giving leverage to the hiring managers time, you can massively uplevel your, um, you know, your hires. And you can have way better onboarding, too. That, that was another thing. Like, once the hiring in any given month got a pretty high percentage of our staff, onboarding became so critical. Otherwise, it was, it was just chaos of trying to get people up to speed. And so, uh, that's another thing I would have done sooner for sure.

Host: Wayne, thank you so much for all your knowledge and insights. Can we get a round of applause, please?