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Leaders In Payments
Leaders In Payments
Oban MacTavish, CEO of Spade | Episode 374
Unlock the secrets of real-time merchant intelligence with Oban MacTavish, the innovative co-founder and CEO of Spade. Discover how his early fascination with stock trading and technology laid the foundation for launching Spade in 2021. Oban reveals how Spade revolutionizes card payment data by integrating firmographic insights for fraud prevention and payment optimization, setting new standards in the US market. With ambitious expansion plans on the horizon, you'll learn how Spade is transforming the way card issuers comprehend consumer spending patterns.
Our conversation takes a deep dive into the world of data security, a crucial aspect of B2B operations. Oban details the significance of operating without personally identifiable information (PII) and achieving SOC 2 Type 2 compliance, ensuring rigorous security protocols are in place. From humble beginnings during the pandemic to creating a comprehensive data network for banks, Oban shares the challenges and triumphs that have defined Spade's journey. Beyond the professional realm, he gives us a glimpse into his personal life, sharing his passion for cooking and exploring culinary delights with his wife's baking prowess. This episode is a treasure trove of insights for anyone interested in fintech innovation, entrepreneurship, and the stories that drive groundbreaking ideas.
Hello everyone and welcome to the Leaders in Payments podcast. I'm your host, greg Myers, and on today's show we have a very special guest, oban McTavish, the co-founder and CEO of Spade. So, oban, welcome to the show.
Speaker 2:Thanks, greg, great to meet you.
Speaker 1:Great to meet you as well. So let's start off having you tell us a little bit about yourself, maybe where you're from, where you grew up, where you went to school, a few things like that, yeah, where you went to school, a few things like that.
Speaker 2:Yeah, I'm Canadian, which is a fun place to start. I grew up really in Vancouver, but when I was a kid I lived in San Francisco for a while as well. My story kind of starts when I'm pretty young, I think like 13, 14. I started trading in the stock market, which is like it's a normal thing for 13, 14 year olds to do with paper trading. I got my first job at 16 at a restaurant so I could afford to trade like real stocks. I didn't have any money before that and then went into college to study finance.
Speaker 2:I spent my summers at a tech company in the Bay Area in vertical SaaS, and then, as I graduated, I was really kind of debating do I want to become a investment banker which is a lovely career and then go off to a hedge fund or something like that? But I actually decided to start another company. So I started my first company right out of college. It was in vertical SaaS, the wealth management space I like to say I was the co-founder focused on how you make money in vertical SaaS. I was one of four, so sort of like the chief business officer or whatever kind of thing if we had titles at that point. We did that for two years, raised like 600, 700k, and then COVID-19 meant that I had to make a pretty hard decision Do I want to keep doing this? Do I want to move on? And I decided to move on. And some time away from starting a company, consulting with Fintechs led to me to start Spade in November of 2021. So it's been a while now.
Speaker 1:Okay, okay. Well, that's a good segue. So tell us what Spade is.
Speaker 2:Yeah, at Spade, we provide what we like to call is real-time merchant intelligence to the card ecosystem.
Speaker 2:But what that really looks like in practice is that we take in card payment data generated by issuers, generally sent to them by the network or their processor, and enhance it with dramatically better information, whether that be firmographic data from a network of information we have that covers 99.9% of card accepting businesses in the US, insights generated by ourselves and partners, or any other information you'd want to use in the auth stream or afterwards to make a really informed decision or do something critical. So, importantly, we are real time, like truly. Our P99 is under 50 milliseconds, so what that means is that every single transaction you send to us is going to get this enhanced information. And then our customers broadly, we work with three publicly traded companies, massive fintech customers like Stripe and others, and we really say, hey, we're going to help you do whatever is really important to you, whether that be fraud prevention, auth decisioning, payments optimization, rewards attribution. Really, we run the gambit of powering pretty much every critical piece of infrastructure a card issuer that leverages card data will build.
Speaker 1:Okay, and are there specific industries or verticals that you have the solution built for?
Speaker 2:Yeah, I mean. The beauty is we spend all of our time with anyone issuing a card, whether you're a consumer card program, a B2B card, small businesses, fleet fuel. The reality is, if you issue a card, you should probably be working with us to better understand where your customers spend their money.
Speaker 1:Okay, okay, and you said the company started a couple years ago. How big is it now?
Speaker 2:Yeah, so we raised our series A at the end of 2023. We're about 18 people today, so still very, very small, which is great, but we do work with companies who are processing over hundreds of billions of card payments every single year.
Speaker 1:Okay, and is it US focused or global?
Speaker 2:As of today, we operate in the US. We're really focused on working with US card issuers. Our data primarily covers US businesses, so that's really where we're focused, but we are expanding into Canada and other geographies this year.
Speaker 1:Okay, and talk about maybe the business model. Is it SaaS-based, or how do you price your service?
Speaker 2:Yeah, we're consumption-based. So when we partner with issuers, they're sending us their entire stream of data. You know they're really trying to say, hey, like, who is this business or merchant that my customer is spending with? What do they do? You know we can flag. You know that their their MCC code says they are in fact a restaurant, but we can tell you that they sell firearms or other sort of like higher risk materials. Or you know even just that they're a gambling website, which really deserves a different sort of look from an agent or something like that. And we price per transaction. So when card issuers come to us, they're paying us fractions of a penny per card payment and they're able to get this dramatically improved performance in their products.
Speaker 1:Okay, okay, great.
Speaker 2:So what would you say differentiates you guys from your competitors out there?
Speaker 2:Yeah, I think one of the biggest differences and I'm sure you're familiar with other transaction enrichment vendors, people like Entropy or MX Personetics, others that have been around for a really long time, the reality is is that we do something a little different in that we're backed by real data, and what that means is we're using state registries and other information to give you verified and accurate information.
Speaker 2:It's not like, you know, we just cleanse the name of this transaction and gave you a pretty logo, and the other piece is that we're able to operate in real time. As I said, our P99s are under 50 milliseconds and we can even SLA to that. So what that means is that you can feel really comfortable leveraging our product in the auth stream, and I think that's a unique capability that really unlocks numerous high return on investment opportunities for issuers. Issuers have been paying for better data for a long time, but much of the time it's been for the purposes of, like, a user experience, but there's only so much you're willing to pay for that, because it's just a cost center. We can actually help you stop more fraud. We can help you cut fraud losses. We can help you increase auth rates Like we're really driving really important KPIs for your business and helping you increase those outcomes.
Speaker 1:Okay, so you mentioned a couple of use cases there fraud auth.
Speaker 2:Are there other use cases that you haven't mentioned you want to talk about? Yeah, I mean card-linked offers is a big one If you're trying to have a reward scheme that's rewarding on unique attributes or it is regulated, so you can't just claim you're giving someone 5% cash back and then not giving them 5% cash back and it's a massive cost center for issuers when they're dealing with customer complaints and things like that. Our ability to give you this enhanced data means that your rewards are more accurate. You're paying out when you say you're going to be paying out. You can even sort of prove that you're generating these things more accurately. So it's really we like to call it follow it to like authorization, attribution and then analytics.
Speaker 2:I think every single issuer is becoming more and more focused on deeply understanding their customer base, and so much of that is fueled by data. If you don't understand where your customers are spending, you know it's sort of the old adage, garbage in, garbage out, and that's becoming more and more important. It's actually a large opportunity we see with our customer base today.
Speaker 1:Okay, so where do you see the industry headed, say, in the next three to five years?
Speaker 2:You know, I think it's one of the most interesting times to be working in payments. Ever More than ever, we're seeing sort of novel and interesting approaches driven by increased demand in sort of the issuing space and on the acquiring side, to issuer connectivity. Payments optimization card programs have been around for a really long time. We're getting better and better at stopping fraud, and fraud is always going to be a problem. But the question is often these days is not just how do you stop fraud, but also how do you let more of the good guys in, how do you make sure that the transactions that should be authorized are getting authorized? And we really see ourselves as a core piece of the infrastructure there, driving increased payments acceptance rates for merchants by improving the ability for banks to understand what they do.
Speaker 2:Beyond that, I think it's impossible to talk about payments without talking about data and analytics and even things like AI, and one of the things we're really excited about is we're seeing more and more banks realize that the and just fintech companies realize that the opportunity that's presented in their data is massive. The better question is like how do you make sure that data is usable, effective, valuable, clean, structured, et cetera? And I think there's a huge opportunity for us to ensure that, like the data that these large issuers are leveraging is accurate, and do so in a way that's PII free, in a way that's verified and accurate, because I think banks are built on trust, issuers are really built on trust and you want to make sure that you know the data you're leveraging is high trust.
Speaker 1:Okay, so you kind of mentioned AI, which is something we always talk about. You know, the other thing that often comes up, you know it kind of came up a few years ago and then kind of went quiet, but the whole crypto and all that kind of space, maybe alternative forms of payment besides card, kind of how do you see that?
Speaker 2:Yeah, it's interesting. I think we spend a lot of time talking about alternative forms of payment. Obviously, in some ways I'm selling my own book, but I don't think cards are ever going away. So many of the protections that are built in that we as consumers take for granted whether it be charging back or the fact that really your bank is oftentimes responsible for making sure there's dollars to clear, especially in a credit type situation but we are exploring and launching soon I'm planning to launch ways of ingesting and working with data forms outside of cards. We're not touching the crypto universe, but we are touching things like RTP, ach wires, etc. You know, spade is fundamentally built on the idea that we should understand more about our payments data and you know, whether that be a card or another form of payment, I think it's important that we're going to be able to assist our customers there.
Speaker 2:I do think that in some ways, as I've spent more and more time in payments, I think every time a new form of payment appears, I think people forget the enormous amount of infrastructure that exists around older forms of payments. We all take for granted the fact that these charge back rights and things like that for cards and we're saying, oh my God, look how much cheaper a stable coin is or look how much more affordable RTP is, but the reality is that's because many of these protections or pieces of infrastructure that your bank and, broadly, you or the merchant are paying for don't exist yet. So I think there's going to be a convergence of the price of many of these things. There's only so you know what I mean. You can even see it right now in the baked in price for some of these new crypto products coming out of the PSPs where they're being priced at. It's not free. I think the assumption is like there's some price that comes out at, but that price is potentially gonna go up, even if it starts really low and there's a huge gap.
Speaker 2:Processing is an incredibly efficient industry. There's certainly middlemen, but any of these middlemen are actually. There's a huge competition to drive prices lower and lower, so you end up in these situations where prices will likely rise for any of these services. But I think it's a good thing, you know. The more competition we have for our dollars and where we process is, you know, the better.
Speaker 1:Okay, and I would assume, since it's kind of, you know, card issuer based, the B2B side is just as important as the consumer side.
Speaker 2:Absolutely yeah.
Speaker 1:Okay, so what would maybe a use case on the B2B side? What would they use the data for? Obviously, fraud not to talk about, but are there B2B use cases?
Speaker 2:Absolutely. It's in a case study we released with Mercury. But a big area of excitement was real-time categorization for P&Ls. If you're a business, you're offering a B2B card, a big feature that people want is like, hey, how can I close my books faster? One of the things we offer is accurate categorization. We can tell you, hey, this is Facebook ads. We can tell you, this is businesses like trucking repairs. You know what I mean. And all that feeds back into models that generate P&L codes or general ledger codes for people to then close their books faster.
Speaker 2:And again, it's just built on that core of like. We have this data. It's a messy asset. We, on that core of like, we have this data, it's a messy asset. We can turn it into this really clean, structured, accurate information that you can feed to become a feature or vendor locked cards or category locked cards. You know a good example. Another thing is also geographic locked cards. We do. You know we work with Corpay, the largest B2B MasterCard issuer in the United States. And you know, if we look at the logistics industry as a whole, there's huge opportunity in saying, hey, how can we help stop fuel fraud? You look at a truck, you know where it is Now I'm telling you where the gas station is. Are they matching up? Do we think this is fraud? Do we want to send a push note and say, hey, actually, is this, actually you, are you making this payment? Is the truck in the garage and you're saying you're filling up a thousand bucks? These are real problems getting solved by our data every single day, and for us, those are some handful of.
Speaker 2:B2B. Use cases that are really applicable, we see.
Speaker 1:Okay, okay, and you mentioned the PII and that kind of you know, the security side of the data.
Speaker 2:Yeah.
Speaker 1:Touch on that Cause. I think that's important for everyone to understand kind of the you know the, the security around it, the protections that you guys put in place to yeah make sure that data is protected so I think the beauty of it is we don't actually have any pi.
Speaker 2:We literally we require no pi to be sent to us for us to operate. So we operate in a pi free environment. Uh simulator and contracts don't send us those information, like we don't need any uh bins or pans or not. We don't need any tokenized information. We're really focused on that non-identifying, merchant focused information that comes out of the off stream. Regardless though, I mean we're SOC two type two compliant you know security is in our blood Every single time we're working with a large enterprise. You know we go through hundreds and hundreds of questionnaires, pen tests, et cetera, to make sure that, like, we run a really secure ship and you know if you're working in payments. I think security has to be top of mind at all times because you know this is you don't want to become a fraud vector for somebody Right.
Speaker 1:Right, okay, well, let's switch gears a little bit and talk about you. So give us a little bit of your kind of professional journey and why you started the company, how you started it and give us that little bit of professional journey.
Speaker 2:Yeah, I mean I've never really. The only other job I've ever had in starting companies is working as an intern at this as a tech company in the Bay Area in college. So I don't know, professional journey is a little bit of a it's a very generous way of describing it. But I mean, I think from my perspective I was always driven by doing things that you know, learning and doing things that were really challenging and when I looked at sort of what I want to after school, starting a company just made sense it was an interesting I had the opportunity to try and I'm so lucky to have had a second opportunity.
Speaker 2:So, you know, for me it really started as like a belief in wanting to build something really interesting. I fell in love with Silicon Valley when I lived in San Francisco during my summers in college and it was like wow, there's like you can just do things.
Speaker 2:You know, you can just wake up and say I'm going to try to build a company and if you're lucky enough and if you sometimes put in the work, you can end up in a position where you're really, you know, changing an industry or building something great. And I think for me, I'm just feel so lucky to be able to have the opportunity to build something like Spade and work with incredible people every single day to solve real problems for massive, massive companies.
Speaker 1:So how did Spade come about? What's the startup story?
Speaker 2:I think, spade. When I left my first company, I was trying to figure out what I wanted to do with my life, as many people do, especially during COVID a lot of time for introspection and I was consulting for fintech companies to help pay my bills. Literally, I had just moved in with my then girlfriend, now wife, in our first ever apartment together and you know I had very little money to my name and it was COVID-19. So I had even fewer job prospects at the time and I was consulting for people in FinTech. Like hey, I've met a lot of people in my last job like, hey, do you need help doing business development, building pitch jacks, you know, talking about your product, like messaging whatever you want. Just like, hey, pay me all the money, pay my rent, et cetera. And I kept hearing the same problem Everyone's like our data sucks, like the data we were promised or being given by our you know, whether it be like a banking as a service player, super modern one like Marquetta or Galileo or unit, or you know something on the, you know an old school one like an ITC, like the reality is the data sucks.
Speaker 2:And I just confounded me. I was like I don't understand. Why is this the case? This has been around for so long? Why is it that you know banks? How is it that a bank doesn't understand where we're actually spending our money? Like that, just like makes no sense to me. I started digging and realized you know there was and all of its bad data. It's just crazy to me. And what started as a small API that would clean a transaction and give you a logo became something that gave you more business information, became where we are today a real data network that shares really valuable information with banks in real time. So I think it was very much driven by. I wish there was some like my last company. I saw the pain myself, but it really was like just talking to people and being like wait a second. This seems ridiculous and if I don't do it, someone else will.
Speaker 1:Right, okay, great. So what are your passions in life? So, maybe one business related passion and one personal passion.
Speaker 2:Passions in life. I mean Spade, I think it's probably the one, but no, uh, I think um it. Personally, I think I love to cook, um, and I definitely so. My wife is a incredible baker. Me I'm okay, I'm really passable but oftentimes, like something we do is like I'll cook a meal and like she'll have made dessert or something like that. But I think it's really like cooking is something that I always I wish I could do more of, and I definitely did more of when I was younger, in college. You know you could take time to like make really like fancy, like molecular gastronomy, like crazy things. Invest all that time, hours and hours and hours and hours braising things. And you know, you get a little older and you're like I don't have time, you got to take the dog out, you got to go to work, but I think cooking is.
Speaker 2:I feel so lucky to be working in payments. Like it sounds silly, but I didn't come from a payments background, you know. But you, you get into this industry where not only is it like a relatively small industry, which is incredible you meet the same people, you build these really incredible friendships and relationships. So there's a shared passion around what you do, which is great, but I think you also.
Speaker 2:It's like the biggest game on the planet and all of the rules are being set by like in the cards, at least the networks. So there's standardized rules and we're all playing in it and incentives are very clear and I think it's very interesting to play in like what almost feels like a human made environment versus, like you know, some other markets. You know, if you're, if you're in, you know, oil and gas, you gotta find the. You know that's your playing field is the planet, which is very natural. Payments is like a human driven, human created environment and we're all sort of playing by these rules and trying to optimize and like create value for people. I think that's just such a I'm so. I feel so lucky to be working in that every single day.
Speaker 1:Yeah, and you're one of that fell into payments and then can't get it right.
Speaker 2:Exactly exactly, which doesn't happen often.
Speaker 1:Yeah, you know, that's what happened to me. I wasn't looking for a job in payments, but 20 years ago started at JPMorgan Chase and here I am doing a podcast going on the sixth year about payments. So it's kind of crazy. So one more question. So someone comes to you, they're right out of college and they say Oben, what do I need to do to be successful in payments? How do I build my career here in payments and fintech? What advice would you give them?
Speaker 2:I think curiosity is just so important in payments and fintech and in entrepreneurship but, like I think, in payments in particular, it is a small enough industry that the people, who people know more than you, if they've been around for a lot longer than you, I think having like a humble and very curious attitude allows you to learn, because people are willing to share information, like as someone who did stumble in you know and someone who's been in it for you know. Under 10 years, under five years even. I know I have so much to learn.
Speaker 2:I really try to remain curious, I think, in payments in particular, being willing to just admit you don't know, or ask questions or ask why things have been doing that, because there are people who have been doing this for far longer than you've depending on how old you are, you've been alive or for certainly how long you've been in the industry and remaining humble and curious about their perspectives and why things are the way they are. Because it's easy coming in from the outside and say, oh, it's all broken, none of it works, and as you peel back the layers, like, oh, this is why this is the way it is, and as much as you want to sort of rip it all down and start from the ground up. I think being humble and curious about why things are the way they are help you, inform your path forward and how you can change the industry and improve the industry, while still realizing that some things aren't going to change and the reason they are for for a really good reason.
Speaker 1:That might not have been evident to you because you've only been in payments for two years yeah, I think curiosity is a is great advice to stay curious, especially, like you said, in this industry so open. We've covered a lot of ground about you and the company and the industry as a whole. Is there anything else you'd like to talk about before we wrap up?
Speaker 2:I think the only thing that I mean is interesting from my perspective, or at least it's taught me, is like, on the AI thing. I think I you know, we spend a lot of time with banks, we spend a lot of time with fintech and it's very interesting to see payments broadly, like something so built on trust is trying to wrestle with the idea of how can we make AI work in an industry where the mistakes are so costly. You know, if you're even, you know we love customer, the customer success examples Great, it's a great, okay, perfect. You have this bot that will talk to people, but there are regulations that if your bot promised something to someone like you're going to be held accountable. And I think I get so interested in seeing how the banking industry broadly, but all payments companies, can adopt some of these very modern cutting edge AI tools, because I think it's clear Everyone is sees the value, but it's not quite clear who the buck stops with. And you know as much as you know, we love as consumers, we love the idea of getting access to these things and the seamlessness of talking to something having it done, but we also really hate the bad outcomes in payments, I mean at the micro scale.
Speaker 2:It's like, well, why did my card get declined? You're pissed. People change banks Like that's. You talk to someone, they're like, yeah, my card got declined three or four times. I literally walked away Like that's crazy. But that's the reality of the industry we work in. So mistakes are so costly, costly. So I'm so I get really excited and I don't know if I have a great answer, but I'm very curious to see where the industry goes and the adoption, because I think everyone is excited by the idea but everyone's very cautiously approaching because no one really knows what happens when things go wrong. Yet and I I find that very fascinating.
Speaker 1:yeah I have really started to get into ai and trying to understand actual use cases and and I always you know, as I'm talking to people like you and other CEOs of payments companies and it's like everyone knows the value it's just kind of bringing that to life around this regulated industry to your point that, I think, can be a little bit challenging.
Speaker 1:I think everyone gets. There's marketing use cases and there's fraud use cases and data use cases, and those all make sense, but then you know what else is there that that you can do with it and and how do you do it in a way that remains compliant and within these? Yeah and regulations that we have as an industry. So it's going to be interesting. I think there's going to be, you know, a lot more that's going to come out over time and we'll see, but it's a great topic, I think.
Speaker 2:Yeah, sweet Well thanks so much for taking the time.
Speaker 1:Yeah, Oben, thank you so much for being here. I know your time is very valuable, so again, thank you so much for being on the show.
Speaker 2:Great.
Speaker 1:And to our listeners out there. I thank you for your time as well. Until the next story.