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Leaders In Payments
Leaders In Payments
Alek Koenig, CEO & Founder of Settle | Episode 364
Join us as we chat with Alek Koenig, the visionary CEO and founder of Settle, who shares his journey from the streets of Poland and Texas to leading a groundbreaking company that is redefining backend software for CPG businesses. Alek dives into how his experiences at Capital One and various fintech startups equipped him with the skills to launch Settle, a platform that seamlessly integrates accounts payable, procurement, inventory management, and working capital solutions. Discover why Settle has shifted its focus from early-stage founders to finance executives as it scales, and how it leverages innovative go-to-market strategies like direct sales and partnerships with accounting firms.
Alek also offers a glimpse into the future of fintech, highlighting the industry's move towards integrated solutions that combine payments, accounting, and financing, while maintaining a cautious stance on blockchain due to regulatory challenges. He reflects on the entrepreneurial spirit that runs through his family, sharing insights on tackling meaningful challenges and maintaining a balance between work and family life. Aspiring fintech entrepreneurs will find Alek's advice invaluable - emphasizing the importance of gaining experience at successful companies to identify the problems worth solving. Tune in to learn how Settle is on a mission to revolutionize finance and operations for CPG companies and beyond and find out how you can become part of this exciting journey.
Welcome to the Leaders in Payments podcast, where we talk to C-level leaders from across the payments landscape. We'll be discussing the products and services that impact the payment space today, as well as trends and predictions for the future of payments. We will also hear stories from our guests about their journeys to the top.
Alek Koenig:Hello everyone and welcome to the Leaders in Payments podcast. I'm your host, greg Myers, and on today's episode we have a very special guest, alec Koning, the CEO and founder of Settle. So, alec, welcome to the show and thanks so much for being here. Thanks for having me. Absolutely, let's dive in. If you don't mind. Tell the audience a little bit about yourself, maybe where you're from, where you grew up, where you went to school, a few things like that.
Speaker 3:Born in Poland, grew up there for a few years and then my dad emigrated to Texas so we came with him. He got a job, kind of before the wall fell, so grew up most of my time in Texas, in Dallas specifically, went to school in Baltimore and then after school kind of came back to Dallas. I worked at Capital One where I really started to learn my credit chops, if you will. So I was doing auto lending, personal loans, retail banking.
Speaker 3:Every two years I decided to kind of move into a different product area just to expand my brain, and at that point I got really infatuated with startups. So I figured the best way to learn about them is to join one. So I joined a very small fintech startup in LA in 2013. Learned a lot there, learned a lot what to do, what not to do, and then I ended up joining a firm in the early days, when I was around 50 people, and that's where I was just trying to be a sponge and try to absorb as much information as I can from people who've done it before, who can build successful companies, and that kind of gave me the confidence to eventually start Settle information as I can from people who've done it before, who can build successful companies, and that kind of gave me the confidence to eventually start Settle.
Speaker 3:Well, I'm in the Dallas area, so we've got that in common. I'm in Prosper, by the way. Oh cool, it used to be Tiny Town Now I'm sure it's very much expanded it is.
Alek Koenig:Jerry Jones owns most of the land around here and he sold it, so it's growing very quickly. Let's just leave it at that. Yeah, thanks for sharing that. So let's talk about the company. So tell the audience what Settle does.
Speaker 3:Yeah, we're building backend software for growing businesses. We primarily focus on CPG companies so they can be selling online, offline into wholesale, whatever it is. So we're trying to build a very vertically integrated SaaS company. So today the product stretches from accounts payable software, so think of it like a betterbuildcom. We've added procurement so customers could generate purchase orders within Settle. We connect directly into the catalog of goods and we've also just launched inventory management a few weeks ago, as we kind of continue solving the real pain points for these brands and that will give you a direction of where we're going. So we're going to be launching inventory planning here fairly soon and then next year we have a lot of interesting product ideas cooking up.
Speaker 3:But one of the main differentiators for us as well is that we've embedded working capital into the product.
Speaker 3:Just as we've learned from these brands that one of the biggest problems and pain points is actually getting working capital into the product. Just as we've learned from these brands that one of the biggest problems and pain points is actually getting working capital, because these businesses are very cash intensive. You need a procurement inventory before you're able to sell it and that's the biggest expenditure. We provide working capital within the platform. So if you're paying a vendor, let's say your manufacturer or whoever else, we'll pay them directly with Settle's money, and then the brand could pay us back anywhere from 30 to 180 days later, just depending on their cash conversion cycle. So this really helps these companies scale. You know, not only by ordering more inventory can they, you know, get discounts from the suppliers themselves, but the best, easiest way they can actually grow top-line revenue is by selling more goods, and that's what we allow them to do and by integrating into the platform that we have today. That's how we look to separate ourselves from the pack as well.
Alek Koenig:So how did you decide to focus on the CPG area?
Speaker 3:Yeah, I think there's a lot of verticals where we could get product market fit, but I like to have a very focused effort and just build something very unique. I think that helps from a distribution perspective, but then also just how you talk about the product, the actual problems that you solve. Previously I worked at a firm. We worked with a lot of these same merchants in a different way of course where allowing them to add on the service to increase conversion rates and AOBs and things like that as a checkout option. So there was definitely some familiarity there.
Speaker 3:And the other thing that I've always believed is that I believe that e-commerce will at some point account for 50% of all retail. There's these natural tailwinds to the industry that there's going to be a lot more merchants than there are today. Same thing when Shopify was founded, the market size definitely grew. The TAM grew. I think that will continue here. Then we also have the tailwinds for just these brands succeeding. If we were to launch an industry that was flat or declining, that's a lot more challenging from a risk perspective. So growth in many cases solves all problems. So that's one area why we pinpointed. We definitely have ambitions for launching other verticals down the line, but right now it's really about being focused. We're only scratching the surface, so there's a lot of room to run for us here.
Alek Koenig:Okay, and so who within the company is your target? Is it the CFO, sort of? On the finance side? It differs by stage.
Speaker 3:So in the early days it's one of the founders. You won't have that kind of role specifically at the company. As the company scales, it's usually like a finance person or an external accountant, and then, as the company scales further, it's usually the VP of finance or things like that within the company. So it definitely depends on the stage. But that's something that's very important for us when we're actually targeting these customers If it's marketing or sales or just how we talk about it. That's how we break it apart.
Alek Koenig:And do you go to market through a direct sales team, through partnership channels? How do you go to market?
Speaker 3:Yeah, it's pretty diverse, so there's definitely direct inbound, outbound. We always have a nice, steady word of mouth from our customers, so I thank them for that. But one of our bigger channels are these accounting firms, where they become the day-to-day users of the product and we've had to spend a lot of our engineering effort in really fine-tuning the product for them. They have a different view exposure of the product than the normal customer does, so we have this one way they can work on it, one way customers work on it. It's just so crucial to our growth that we want to make it easy for them and if we can make them more efficient or become more valuable to the customers, then we all win in the long run.
Alek Koenig:Okay, and you mentioned that the working capital being built in is a differentiator. Are there other things that you would say? Differentiate yourself from your competitors.
Speaker 3:Yeah, I mean no one's doing exactly what we're doing. So that's great, but that does mean we compete with a lot of point solutions. So let's take Buildcom for one example. So 800-pound gorilla public company, still growing. They dominate the market. In our small business to mid-market area.
Speaker 3:We differentiate in a lot of ways. One is UI, ux. We feel like we're much easier to use, payments are quicker, we have procurement built into the product. For these companies, specifically these e-commerce brands, it's a big part of their job that they do that's built in and from that we're able to really do three-way matching automatically, which saves them a lot of time and, more specifically, saves them money. Inventory management obviously is a differentiator there as well. That's something a software company like that does not have Financing, as you mentioned. So it just kind of depends on who you're putting us against. There are standalone procurement companies but they don't have the payables or the inventory management or the financing. There's finance companies. They don't have the software that we do. There's inventory management companies, but they don't have the payable side of the house or lending. So that's how we kind of think about it. It's like really the value is really driven by having these all things working together seamlessly, vertically integrated, where we could derive most of the value for the customers.
Alek Koenig:So when you step back and look at the kind of broader industry payments, fintech and certainly you can answer this in the context of what you do but where do you see the industry headed, say, in the next three to five years?
Speaker 3:Yeah, the way I think about it is. B1 was payments, so a bunch of companies just make it easy to move money around. B2, I think, was the combination of payments and accounting. So for businesses specifically, any money that's moved it needs to be accounted for. So you could either create work for someone to do it or you could just automatically do it because you have all the information for that payment. So I think a lot of companies were born to combine those two.
Speaker 3:And my view on version three is that it's payments, accounting and financing. So really using financing to race the wheels there's a lot of. You know every company has some type of cash flow pinpoint, so being in there where you get the data, the payment flows, it gives you a lot of leverage to make better decisions there from a financing perspective. So that's how we kind of operate and I think generally as we move forward. I think this has been said by Angela Strange and others, but I think every company in one way or another becomes a fintech company just by you're able to add on these different things to make the product more powerful and then be able to monetize it better.
Alek Koenig:Right, right. Do you today use blockchain or have that in the roadmap?
Speaker 3:No, it's always something that we're thinking about, but I think we kind of need more regulatory clarity before we kind of dive into that. Payments is a highly regulated industry. Lending is a highly regulated industry. The last thing we want to do now is just add on additional risk exposure to us.
Speaker 3:So I think once there's kind of more clarity in that area, that's when we could honestly start thinking about introducing that within the product. I am a personal believer that that's going to provide better customer experiences, cheaper costs and so forth, so I am bullish on it. But we're not now in the business of just adding more risk to the company. What are your thoughts on that?
Alek Koenig:I think that's what I hear anytime I ask the question around crypto and blockchain. It makes sense. It's just the timing isn't right. The regulatory environment isn't there yet. I think most people are bullish on it and think that it's going to happen at some point, but it just needs maturity. Yeah, similar thing is what I typically hear. Well, let's change gears a little bit and talk about you. So you walked us through your professional journey a little bit earlier. Maybe talk about why you decided to go out, become a founder and you know how did you come upon Settle as the company and maybe a little background on the founder story.
Speaker 3:I feel like this is a psychology session, the why my dad was an entrepreneur, so I think I probably got the bug from him. After he came to the States he started his own company a few years later in the digital signal processing space and I think what was really instilled to me was his work ethic. So he'd be working all hours across the day and I think that just kind of rubbed off on me. I don't know if there's some type of DNA explanation to it Maybe, maybe not but it's always something that I wanted to do and I think also some of it comes to. I probably don't like reporting to other people. I just want to do what I think is best, so that probably plays some role into it. But I'm definitely a believer in being able to change the future and put your mark on it, and I think the best way to do that is actually through a for-profit company, because you're able to achieve much larger scales than a nonprofit could and generate your own revenues to drive the vision and mission of the company. So I've always wanted to do it. I never felt ready, but really around the third year at a firm I felt like okay, I feel like I know how to do this successfully, and that kind of gave me the confidence to start Settle.
Speaker 3:As for why Settle, I wouldn't say it's a passion project by any means. I just think we're able to identify a real problem for companies and an opportunity to create something better that doesn't exist today. So at the time of starting Settle, I was throwing around three different type of ideas that I think had legs, you know, but this one, I just thought, had the highest chance of success and we could actually build, you know, a multi-billion dollar company. Doing so, which, you know, if we're successful, that means we're solving a lot of problems for customers and making them better. So that's what kind of, you know, gave us the comfort that, hey, this is, I think, a bet worth spending the next 10 years or more of our life on that. We could actually change the world just from our perspective change small businesses and give them more tools to succeed.
Alek Koenig:So what are some things you're passionate about? So, maybe one work-related passion and one personal passion.
Speaker 3:I think, from an industry's perspective, climate tech is very near and dear to me, something I might not be well-suited from a founder market perspective, but something I think I probably want to spend the later years of my life on. For Settle, specifically, what I think is useful is how Max Lefchin would say, that you want to work on problems that are hard, valuable and fun. So if it's an easy problem, then anyone can do it and there's probably going to be a lot of competition. So hard is generally like something worthwhile doing because then you'll have less competition and then more you know barriers to entry.
Speaker 3:Valuable, of course, kind of speaks for itself. It's like if it's not valuable, then don't spend your time on it. And then I think the last thing is you want to have fun doing it. You don't want to hate your life, you want to surround yourself by people who are also, you know, having fun doing it, and then you know it's going to be a lot more enjoyable for the ride. So that's how I kind of think about, for a personal life, what I'm passionate about. I do have two kids now, a lovely wife as well, so outside of running subtle, there's not probably that much time left to do anything. In a prior life I would play a lot of basketball, do a lot of skiing, but there's no more time for that.
Alek Koenig:Yep, yep, that's a very common answer when talking to a founder. His family and running a business pretty much take up all the time. So very, very common answer. It prioritizes your life, for sure? Oh yeah, absolutely, without a doubt. So, alec, if someone comes to you, maybe they're right out of college or maybe they're changing a career and they look at payments and FinTech and they say, hey, that's an industry I'd like to build a career in. Maybe even they want to come to work for you. What would you tell them they need to do to be successful in this business?
Speaker 3:Yeah, I think you know, join a company that you think is going to be successful. The best way to learn about problems to solve is to actually experience them. I think sitting in a room and just tossing ideas around you're probably going to misguide yourself. So I think the best way is to actually experience problems that spark ideas. So I think there's kind of two approaches join a growing fintech Some will be successful, some will not. So try to find signals if it's either through VCs or people specifically in the company that you think have chances of success, because I think it's much better to learn from success than failure.
Speaker 3:Also, I think some of these larger financial services companies are an awesome way to also get understanding. So my alma mater, Capital One, I'm definitely a big fan of. They invest a lot in training analysts from the ground up and giving you a clear career path there, so you can learn a lot, and then not only just in fintech or payments, but more specifically on just how to run a business. So I throw those out as opportunities as well. But I think when you're early on, the goal should just be about gaining experience, seeing how things are done, and if you identify things are done poorly or incorrectly, then there's an opportunity for you to actually solve a problem for a lot of either people or businesses.
Alek Koenig:Okay, well, before we wrap up the show, is there like one thing that you'd want people to take away from this conversation about Settle? So maybe summarize what the company does and give them that one takeaway.
Speaker 3:Yeah, we're building a cash flow management platform for businesses. We want to solve all the businesses' jobs that are either finance or ops. So that's what we're on a mission on. So if you want to help us succeed that mission, please reach out, come apply. I think we have a bunch of open roles in our mission to take over the world. So this is just the starting point. It gets a lot more exciting with the scale that we get and the other types of products we're able to build, and I think it's a very exciting time for Settle and the ecosystem in general.
Alek Koenig:Okay, great. Well, alec, thank you so much for being on the show today. I know your time is very valuable, so thank you so much for being here my pleasure, and to all you listeners out there, I thank you for your time as well, and until the next story.
Greg Myers:Thank you for joining us this week on the Leaders in Payments podcast. Make sure you visit our website at leadersinpaymentscom, where you can subscribe to the show and where you'll find our show notes. If you enjoyed listening, please share on your social channels as well.