How to Push Your Business over the Top with Drive, Grit, and Sheer Tenacity?
Thank you. Thank you very much.
So, tell us about the recent acquisition first. First of all, if you don’t mind, could you introduce White Payments?
Sure. I officially started White Payments in May 2014. I was not looking to start a payment company. I actually wanted to start something to solve the public transportation issues we’re seeing in Bahrain. You and I both know that if you don’t have a car in Bahrain, you’re not going to go very far, right? The idea was: what if there were an Uber-type solution, where you could move around and your credit card would get charged on the fly—you wouldn’t have to pay cash. It would be really convenient. I built a very simple site—something I put up in a few hours. It was meant to be an MVP, just to see if people would be interested in using a service like that. I set aside an hour to set up payments, because I know in the U.S., if you want to set up payments on your site, it might take like half an hour, maybe fifteen, twenty minutes. I set aside an hour, and as I was going through the process, I quickly realized that it was going to take a lot more time. I ended up doing a few hours of research, then realized I would actually have to physically meet with these companies. I ended up booking a trip to Dubai, to see how to do the setup for online payments. It became very clear to me that this was not, you know, the way it’s done in the U.S. or other places. There were many things that didn’t make sense .. like ridiculous security deposits. The first time they told me this, I almost passed out. It was a $30,000 security deposit, and it would take like a month and a half to two months to set up.
No, this was in the UAE, in Dubai. I realized, oh my God, this is a joke. I thought, What if this is a bigger problem? If so, it was something I should be focusing on. That’s how the concept behind White Payments started.
From the idea stage to actually working on and developing the concept, what steps did you go through?
I have absolutely no background in credit card processing, online payments, or any of that, so the first step was figuring out what this space was about. I spent about a week reading about credit card processing, specifically: how card networks work, how a transaction happens, what the fees are, who the different players are in the typical life cycle of a credit card transaction. Then I spent a few more days trying to understand the larger finance space in general: how banks work, how issuing banks and acquiring banks work, how fractional reserve banking works. I spent a couple of weeks trying to understand all of that. Once I got a good idea of how things actually functioned, I was able to compare how they worked in the U.S., and Europe, to our region. The next step was actually talking to banks, so I set up meetings with all of the acquiring banks in the UAE and Bahrain, to see how we might be able to forge a partnership. That was particularly challenging. A guy just walks into a bank—like who do you even talk to, right? And you’re telling them, “Hey, I have a better way of doing online payments.” I actually spent nine months trying to get an agreement with a bank. We were only able to go live after that time.
That was where you spent the majority of your time, in Dubai, right?
Yes, trying to sign on a bank.
How did you go about financing that total year of investment in the company?
I put $50,000 of my own money into the concept from day one, because I knew this would probably take a while. The rest of it was just following up consistently with all these different banks. Imagine calling up a bank every single day for nine months to get to an agreement.
Yeah. Not my favorite part of the entire startup experience, but that’s something we had to go through.
Why didn’t you consider an angel investment, a loan, or some other option?
I did. I actually pitched the MENA Angel Investors conference in May, and Dave McClure was there with a bunch of other investors. We had like eight investors from the conference approach us, and they were really interested; but once we sat down and talked, they were like, “Okay, we have two fundamental problems. One is that you don’t have a background in the online payments space. What is to say that you are not just making this all up?” The second was, “Okay. Let’s assume that you’re able to set this up. Is there a customer base? Are people willing to use this solution?”
I was talking to banks at the time, and they were telling me, “Okay, look, we’re going to need a security deposit of at least a hundred thousand dollars to get started. And investors were like “We need you to have a bank on board and customers before we can actually invest.”
Chicken or eggs.
Exactly. We were stuck.
Tell us how you got the motivation to actually move forward with your attempts at getting investors on board.
The more I got involved in this space and the more I learned about the problem, and the more I realized it was a much larger problem than I had initially thought. In the beginning, I thought it was merely an inconvenience; but later on, I realized that this was a bigger problem that was actually hindering entrepreneurship in the region, because the first step to starting an online business is getting
online payments set up. Because it was so difficult, a lot of people were just not doing it. I realized this was a fundamental problem that needed to be solved if we were going to be able to make a difference in people’s lives.
How did you actually convince your first bank? What happened?
I think it was largely a matter of them just wanting me to go away because I was…
Pestering every day.
Exactly. In the beginning, they didn’t say yes. One bank said maybe, but all the other banks had said no. So the maybe was all I had. I would sit with the banks compliance teams and risk teams, and eventually, with time, we were able to get to the point where they were happy. It was just the fact that I kept persisting and following up.
Okay, and after you convinced that bank, what happened next?
Before we had the bank, I would glue temporary solutions, process some money and then get shut down and then find another provider to process the money and get shut down. I lost something like $10,000 just doing this testing, but I was able to gain validation before the bank agreement went live. When we went live in February, it was great, because this was something we’d been working out for a long time. We built a very nice, clean, reliable solution from the ground up. My CTO was amazing. He’d actually built production-ready payment solutions before, and he’d been doing it over a period of eight years. He is world-class. In the first month, we were able to process six figures.
Everything was going great. You know, we were live. People were loving it, they were, you know—
Talking about it.
They were tweeting about White Payments. We were finally up. It was awesome. With the several hundred people we had in our backlog, we were easily going to break seven figures the second month. Then one day, I woke up and looked at Slack, which is what we use for communications. I was looking at the error log, and saw that there were a lot of transaction errors. We dug into them and realized, okay, they’re being blocked by the bank. There was something wrong with our bank connection, so I called them up immediately, and they told me, “Oh, yeah, we shut down your account. We had an executive committee meeting, and they decided that we were no longer going to be processing aggregators.”
Imagine hearing this after nine months spent talking to these people, just to get the account up and running. I immediately drove over to the bank. I walked over to the CEO and said, “Look, I’m not leaving until we get an answer. We need to know what’s going on. I have customers who can’t process payments because you shut down our account. I need to know why.” He was friendly, and said, “Okay, this sounds wrong. I’m going to get to the bottom of this.” It was very stressful, because we had customers calling us saying, “I can’t get paid. What’s going on?” And we weren’t sure ourselves.
It was shocking that a bank this large would conduct itself this way. I mean, we were live, we had customers, and yeah—it was a very, very stressful time. I didn’t have a backup solution, because we weren’t going to spend another nine months trying to get another bank on board. The one thing that could go wrong
and just cripple our entire business did go wrong.
What happened next?
We immediately put the fundraising efforts on hold and told our investors, “Look, we have an operational issue with our bank, and we’re going to be putting fundraising on hold until we sort it out.”
And did you put your customers on hold, as well?
We had no choice. We told our customers, “Hey listen, we’re having an issue with the bank.” That was done from the very beginning, when we realized something was wrong.
Were you able to offer an alternative, even if it was from outside of this region—for example, integration with PayPal or another payment gateway?
It became clear that we were not going to be able to do this legally. Because of the nature of the financial space, there are certain things you can’t do, because you put yourself at an enormous level of risk.
Did you actually have a trade license in Dubai?
Yes. By then, we definitely had a trade license. We had everything set up. From a paperwork standpoint, we were covered, but we had gone dangerously low on the initial 50K I had put up. I started taking money out of my personal bank account just to be able to sustain the business. It looked to me like we were very close to surviving, and that’s why we pushed through.
Once that went down, I immediately started talking with a few other banks, and it looked to me like they were more open to the idea, since we’d already signed up with a bank before. It was also clear that this process would take months. I didn’t have money to pay my CTO, the rent, or for anything else we needed.
Eventually, we were able to get the money from the bank, and I was dying of hunger. That was around the time I started talking to a number of people in the payment space, including Omar, CEO of PayFort. We didn’t have any immediate solutions. We had no choice but to stop processing across all of our merchants.
When you started approaching other banks, you were able to go back live, no?
We couldn’t. That was a big worry for me, and thankfully, we only had like 10 merchants live. We had a bunch of people who were integrating, but we’d stopped those immediately. Our customers were actually very supportive. They said, “Okay, you know what? Once you figure your stuff out, we’d be happy to come back online with you. In the meantime, we’re going to consider other alternatives.” We would try and help them find another solution that worked for their needs. I knew all the different payment providers in the region, so I was able to make recommendations for some of the customers so they could switch over.
How did the discussions with PayFort proceed?
We started talking about how we might be able to work together so that they would be doing the processing for us. They were supportive initially, and I think that was pretty cool on their end. At some point, it became clear that they were really interested in the space we were in. They wanted to help us, but it looked like because of the nature of the payment space, they wouldn’t be able to do that without gaining control of the company.
How did valuation happen, considering the fact that the product was more or less non-operational, and you really had no clear indicator of how this was going?
Considering that we’d only been online for a very short period of time, our revenue was not high. It was less than $10,000 a month at that stage. The valuation discussion considered things like, okay, what’s the potential for the company?
How long did the acquisition process take?
It happened in a short period of time—about month and a half.
It seemed to me like a lifetime, because at the time, we were dying, our customers were complaining, and it was hell—but yeah, I guess looking back at it now, it does seem like a reasonable amount of time.
That’s a good question. The number one concern we had was okay, we’re going to join this larger company. We’re just going to dissolve inside the company. In the course of the discussion with PayFort, we were clear about this concern. They felt like it was valid. We came to an agreement. PayFort is really good at attracting big customers, and we’re really good at attracting smaller customers: startups and small- to medium-sized businesses. We’re complimentary from a marketing and technology perspective, because the technology we built is designed around the customer experience.
Is it going to remain White Payments, or is it going to be rebranded?
The fundamental technology will be deployed within PayFort, and it’s going to be rebranded. We’ll remain fairly independent within PayFort. We’re still able to rely on the larger company for resources, shared support, and expertise. What I like about PayFort is that we’re going to be able to build a solution, deploy it within a short period of time, and reach a large number of customers.
Did PayFort acquire the company fully? Or do you still have some shares?
They acquired the company fully. Essentially, they own 100% of the company, and we joined.
What convinced you to join PayFort as an individual after being an entrepreneur?
I think a big reason why the PayFort deal made sense was because fundamentally, we’re about solving problems for real people. We felt like we’d be able to continue doing that within PayFort.
How soon is the product going to be ready for the market?
In a matter of weeks. We’re hoping to start processing for a small subset of test merchants before we actually take it live to the general public.
Tell us a little bit about your personal life. The amount of stress you’ve gone through with this business seems to be massive, especially when the bank decided to pull the plug. How do you manage stress?
At some point, you just need to say, “Okay, this sucks. What am I going to do about it?” I stop worrying about how I feel about it, and just try to figure out what I’m going to do. To me, it’s two things: self-reflection and reading. Every morning, I
used to write down my biggest worries and the things I was excited about. Out of five stars, how did I feel? When I was in a bad situation, I’d look back at my previous entries and see how it fluctuated. One day, I’d have a five; another day, I’d be a zero. You begin to realize that no matter how bad the problem, you’ll eventually figure it out—and that’s what keeps me going. I also like reading a lot. There are certain writers who can explain the experiences they’ve gone through in such vivid detail that you feel like you’re living those experiences. You realize that no matter how bad your situation, there are others who have gone through similar or even worse situations, and you’re able to feel better as a result.
Interesting. Looking back on your journey, what would you do differently if you had the chance?
I’d make sure we had a backup plan. Sure, there are some things we could’ve changed, but I still feel like we’re going to be able to continue this journey, so it’s not over.
What’s your advice to people just about to start up? Or who are thinking about starting up, and maybe stuck?
I found that people are actually very helpful if you ask.
Starting out on your journey, talk to other people who have done it before. Make sure you’re solving a real problem, not just making one up in your head. Make sure you’re starting with a problem and not a solution.
Anything else you’d like to say, think about, or mention? People who’ve helped you along the way?
There are so many people who have helped me, even though they got nothing out of it. I’ll give you an example. Before I went to San Francisco, I shot out random emails to people I’d love to meet. I thought, I’m going to be in San Francisco, it would be great if I could meet these people. I didn’t expect any response at all. Then I met one of the co-founders of Balanced Payments in the U.S. They recently closed down, but they were processing something like six hundred million a year, so they were a pretty large company at the time. He said, “Hey, I’d love to help you out. Tell me how I can help you out.” And then he ends up introducing me to a partner at Y Combinator in the U.S. He also introduced me to this other guy who was doing international payments for Airbnb. I was able to have a conversation with him, and this was someone I had just blind-emailed, right? I didn’t have an introduction, but I just reached out to him, and he was incredibly helpful as a result.
I would say definitely give it a shot. It’s very exciting knowing that you can reach out to anyone you want. Think about it critically, and try to figure out a way to make it happen. Don’t give up too easily.
Thank you so much, Yazin, for this.