Matt began as a top consultant at McKinsey, where he witnessed the power of customer loyalty programs and immediately understood why large companies pay millions of dollars to create them. His vision for Fivestars was to make the power of a Fortune 500 customer loyalty program accessible to local businesses. Fivestars has gone from two guys in a garage to serving thousands of businesses across the country. In October 2021, Fivestars was acquired by global payments leader, SumUp.
Matt has led technology at FiveStars since its founding, spearheaded their transformation into a payments company, and drives ongoing business development and payments strategy. Before Fivestars, he volunteered with TechnoServe in Uganda, was a strategy consultant at McKinsey & Company, and an analyst at AVM, a 32-year-old global macro hedge fund.
On this episode, Chris & Matt discuss:
➡️ Their process for deciding what startup idea to pursue & why they chose a loyalty program for small businesses
➡️ Lessons learned while building a startup
➡️ The challenge of finding product market fit, even if the business is growing like a rocket ship
➡️ How AI will impact businesses and consumers
(00:03:00) From El Paso to the Tech world
(00:09:26) What does an entry-level person at McKinsey even do?
(00:11:17) Did you have a filter for easy no’s while in consulting?
(00:12:48) What’s an example prototype you were working on in Technology?
(00:15:07) How did you transform your skillsets to become a CTO?
(00:17:10) What did you get from Y Combinator and learn from Paul Graham?
(00:19:46) What was the origin of Fivetars?
(00:24:42) If you were building another company now is there a way to avoid the mistakes you made the first time?
(00:26:09) Finding Product Market Fit
(00:30:06) How do you avoid the trap of taking on too much overhead?
(00:36:13) How were you able to take the credit card fee and turn it into more CRM users?
(00:38:56) When did you begin to decide it was time to sell?
(00:43:10) What was the transition like going from start-up culture to integrating into a larger organization?
(00:47:32) How are you receiving the entrance of AI?
(00:50:29) Will the job of the VC change with AI?
(00:52:48) How Chris thinks AI will affect RE
(00:58:49) How should we simplify all of these different AI languages available?
(01:01:44) How is the American Customer right now?
(01:05:18) What are you predicting for the Startup scene over the next five years?
➡️ Fort Capital: www.FortCapitalLP.com
➡️ Follow Fort Capital on LinkedIn: www.linkedin.com/company/fort-capital/
➡️ Follow Chris on Twitter: www.twitter.com/FortWorthChris
➡️ Follow Chris on LinkedIn: www.linkedin.com/in/chrispowersjr/
➡️ Sign Up for our Newsletter: https://newsletter.thefortpod.com/
➡️ Subscribe to The FORT on YouTube
The FORT Podcast with Chris Powers is a place where you can find meaningful conversations about entrepreneurship, real estate, investing, and more.
Be sure to follow the podcast, so you never miss an episode!
The FORT is produced by Johnny Podcasts
Chris Powers:Matt, welcome to the show. Thank you for joining me today, my man.
Matt Doka:Happy to be here, Chris. Happy to be here.
Chris Powers:Matt and I grew up together in El Paso, and so we go way back. And so, today's a little bit extra special for me. Maybe let's start coming out of El Paso, like your career. Most people that come from El Paso don't get into tech. You are kind of an anomaly. How did you make that happen?
Matt Doka:That's pretty fair. I think there are all of maybe one other person I know from back home who got into tech, and that's because they joined us at FiveStars. So I think my story starts with growing up, both of my parents used their careers pretty extensively to serve south of the border. So they were really big into medical mission work. I thought medicine was really boring, a lot of memorization, but I thought it was really cool, this idea of having a career where you were both providing for your family but also making an impact. And so, the very first job- so I went to Penn. I studied, I was in the M&T program there. So I did engineering and finance, finance because I'd always been interested in entrepreneurship or business in general and investing, and engineering because people at Coronado, the high school that Chris and I went to, they said I was good at engineering, and I should do engineering. So, I said, alright, well, might as well let other people dictate your life anyways. And it was a way to keep optionality open. I remember looking at this map of like all the things you could do with one and all the things you could do with the other, like great, I can postpone my choice another four years of what I want to do with my life. I didn't realize it would come at a really high cost of a lot of extra work and maybe a more grueling college experience than most. But I think overall, it ended up being quite helpful to do both. So, my first job trying to find this kind of career like my parents had was working at a hedge fund. I pretty quickly learned that while it was really intellectually interesting work, I wasn't going to be making an impact in Latin America or other developing countries with that line of work. I was going to be making wealthy people wealthier and pension funds bigger, but that was about it. So, I went back to the drawing board. And then the next internship I did was going to look for something real high impact and very intellectually interesting. So I picked investment banking. And it wasn't that, for sure. So, at that point, I had to pick what I was going to do full time, and I still hadn't really found something that was both really engaging or kind of satisfied my intellectual curiosity but also would have this way to give back. And I almost went back to the hedge fund world. But a friend of mine had gone to McKinsey and said they have this program where if you do a couple of years at the firm, you can then go do development work in any one of these developing countries with this company, with this group called TechnoServe. So that sounds great, kind of like what my parents did where they had these medical careers and kind of went to developing countries to help folks, I was like that's awesome. So that convinced me to go to McKinsey when I graduated, and I landed there right at the beginning of the ’07, ’08 recession. So, it was an interesting time where we weren't so much doing high impact work as helping companies cut costs and lay people off into a recession. And it was also there that I met my co-founder. We had started this- We'd been in the same analyst class. And then we started this prayer group together with a few other people who all got dispersed, and it kind of us left holding the bag. But we would still meet and talk about life every Friday morning that we were back in town. And talking about life turned into talking about entrepreneurship. And it turned out we had a shared passion for just brainstorming ideas, trying to do something, and then we both realized about a year into McKinsey that we didn't want to make slides for a living either, because while they told us consulting would be really high impact and transformational work, high leverage, it was a lot of slide making, and maybe you did a lot of idea stuff, but there wasn't really much follow through. You kind of miss a lot of that. And so, we both decided we wanted to actually try to build something. And back then, you couldn't just go work for- there wasn't just 5000 startups hiring kids straight out of consulting. It was like Google, Facebook, and Dropbox. And we're like, well, none of those sound that interesting. So let's just try to build something. So, with nothing more than a list of 20 ideas, we finished our time at the firm, which we kind of committed to two years as part of the analyst program, I got the chance to do the development work. So, I went to Uganda for five months, which was an amazing experience. I got to see a lot of really interesting things happening in using business and market skills for development. I got to see a lot of really sad things happening, like corruption and people using some of these not-for-profits to take advantage of the poorest of the poor in some sense. I saw a lot of inefficiency. And that kind of gave me this conviction to build something in a place where business is conducted a bit more honestly and to do something in tech more than agriculture. And so, I left Uganda at the end of my program and moved out to San Jose, because I had gone to school on the east coast, but Victor was a Berkeley guy, and said if we’re going to do this startup thing, we got to do it right. I said, well, my parents would let us crash for free at our house in El Paso. No, no, we have to be in the Bay Area. El Paso is a no go. Like, alright, whatever. Well, that works. I can learn to- I can polish up my coding skills anywhere. And so, I put the business- Well, we had a bunch of these ideas. But really, one of the things we learned really early on was ideas are a dime a dozen, execution’s really tough. And you got two guys who had just spent two years doing kind of business work and making slides. It wasn't like we were going to find a bunch of engineers just to build whatever we wanted. And so, we realized we were going to be in tech for a while and also that nobody was just going to build what two random inexperienced business guys wanted to be built. Or if they were, they probably weren't the people smart enough, wise enough to work for us anyways. So, we learned, we taught ourselves how to code and how to build a product. And we had some basics in college and in high school, but really did our first hands on, real world software development those first few months back from my stint in Uganda, while we were in San Jose. And right around when I- we had applied for Y Combinator around the time that I was heading back, and we got an interview. And so, in addition to all this, like building the first versions of these ideas we had, we were like cranking and studying late night, up till one in the morning to get ready for YC. And that was really the beginning was this move from Uganda into this like the minute I land finding out oh, we got an interview in two weeks. This is like make or break. We’ve got to prep for this. That was my baptism by fire into tech and kind of the journey from El Paso to Penn to New York, and then finally, the Bay Area.
Chris Powers:Okay, I have like three questions out of that. The first is it’s always fascinated me how people with no experience, no offense, when you're young can go to a company like McKinsey, this huge consulting firm, and then go to all these businesses like they have all the answers on how to fix them. So, my first question is, what is your job as somebody early at McKinsey? Are you giving companies advice? Or are you just taking in all their data and then passing it off to a partner who diagnoses the problem? Because as you and I know, there's very few consultants that can't find a problem.
Matt Doka:I think, something I’ve thought about over 11 years, now having a lot of domain experience of my own, and I think the insight perspective and wisdom around what to look for is pretty exclusive at the senior levels in a consulting practice. But there's still a ton of legwork to get things to a place or to explore like, alright, I've been in XYZ industry for a long time, it's really important to know the sales funnel, like what's the sales funnel, is the right question to ask in a sales project, for example. But then actually running the survey, cleaning the data, reaching out to all the stakeholders in the company and then going back and reaching out to some who didn't do it again, kind of all that legwork from running the processes to analyzing the data to cleaning data to putting it in the first draft of slides, there's a lot that can be done without a partner being involved. And so, I think the partners really provide that insight and wisdom, but to put it into practice in a study still takes a lot of work to get everything together. So no, I was not telling companies what to do. I was running the- we were running the beast of the machine, the beast inside the machine, keeping it fed with data and everything.
Chris Powers:My next question, you had a list of 20 ideas. Walk me through how you knew something was a no immediately or how you kept an idea continuing to stay on the list? Was there a process y'all went through?
Matt Doka:Yeah, so the first thing we did was, like any good consultants, we had like an 8 by 20 matrix of all the different criteria, like our ability to execute this idea, what could the market be, what's its monetization, how excited are we about the idea, could we program it, and then we used that to sort of pick which one we would do first. So we had realized that trying to do two or more at once was a bad idea. So we had to pick one. So we had this filter. We started- and then the deal was we would only work on something for like two months before it had to be kind of kill or success. And so that meant we had to get a prototype done in like six weeks, even though we weren't experienced, and we had to then test it for the next two to see if there's anything there, so that you don't spend kind of this two years of savings we had just on one thing that doesn't work out. It turns out that's how a lot of folks do things now, so I think we were- that model is one I think is still really great to follow today for folks looking for their next idea. Don't- I see a lot of folks spend a ton of time building something to perfection only to kind of realize the market’s not there. Like spend four to six weeks building a prototype but use that time window to force you to make it simple enough to really understand if there's a market there, really understand if the markets there, then spend two or three years really evolving it.
Chris Powers:And a prototype from your perspective is what? We can talk about what you eventually built, which is FiveStars. But on any of those ideas, what is a prototype?
Matt Doka:Our first idea was kind of in the real estate space. So we wanted to build this- so a lot of our ideas were around this theme of fostering a community through tech, fostering more intimate, connected communities. But our first idea, I like to say, was an early predecessor to Nextdoor. We were going to create hyperlocal communities by selling property managers a portal to collect rent, make maintenance requests, but then it was going to like have stores could post deals for that group of apartments, people could connect with each other, there would be all these hyperlocal versions of Craigslist there. And that took us about six weeks to build something that would actually let you pay rent online, submit a maintenance request, get follow up for it. Well, actually eight weeks. But what we realized pretty quickly was that the one apartment complex that we had done the beta testing in, it was beta tested by the time we were actually at the YC interview. We had 40 or 50 people using it. And what we realized was most property managers, other than our friend Zant, who had let us in on the beta, were a lot harder to sell. It was going to be a really tough grind to actually go get a bunch of these small to medium size prop cos to use this product. And so, we had built something that we thought was great with a client that you can't really count as a true sales test. And then we realized we actually had put all this work into it. And it wasn't going to be marketable. It was going to be too expensive to try to sell. We were going to have such a low conversion rate. So, the next idea, which was the loyalty idea, like hey, let's build some thing- Victor had consulted with like Starbucks, Sephora, and Macy's on their loyalty programs at McKinsey. We’re like, hey, let's do this for the little guys. We actually, before writing a single line of code, we called like a hundred businesses around the US, we tried to sell them, we made up this whole- we basically made up the product, made a fake brochure, we made a fake website, and we made up with the product did. And then we'd say, oh, great, well, we're going to put you on the waitlist. It's not really in your area yet if they said yes. And I don't even know if we kept the waitlist. But it gave us a lot more conviction that the time we were going to spend the two months of kind of building the beta version wasn't going to be a wasted two months.
Chris Powers:Okay, and then before we get into moving on to Y Combinator, you guys were both business guys. And your title is now co-founder CTO; you clearly learned the tech side. Was that just a decision that the two of y'all made of, hey, I'm going to be CEO, you go ahead and learn tech? How did you transform yourself from a true business guy to CTO that stayed CTO all the way through building a massive company with a ton of infrastructure?
Matt Doka:It's a good question. I think you've got to be interested in the technology side. And then I just had enough engineering and CS to have fundamentals and a couple of pieces- I did a materials engineering degree. But I did a bunch of CS courses. And so, it was enough to do most things in the software realm. And then I think just hiring great, talented engineers alongside to learn from was a huge piece of that. The other piece was just having a passion for it, like enjoying the work, enjoying technology work. When I was in high school, people would talk about oh, yeah, you don't want to do computer science because you'll be behind this really boring computer at HP in Dallas for eight hours a day, and it's terrible. So that scared me away, even though I kind of liked the projects I would do in high school. And then I realized doing software for a startup was totally different. It was really interesting work. You could spend four hours in the blink of an eye building some piece of the product and want to go back and do it again in the afternoon or the next day or between 12 and 4 in the morning, which is often how late we worked. And so that helped. And the third piece was a really good piece of advice we got from Paul Graham, was whoever raises the money is the CEO. That's the only- I think a misconception we all had before we're going to start was like vote on it, or you had to like debate it or it some kind of like, I don't know, there was going to be this angling and whatever. But we did this process, like everybody gets an equal share in a founding team, and that's actually fairly common. But the person who's the best at raising the money or the person who does the fundraising, that's the CEO. Super simple. And so that was how- Victor was an incredibly talented fundraiser even as we were just starting, and so it was just a natural choice for CEO.
Chris Powers:As you look back, I know it's been 12 years, what did you get out of Y Combinator? And if you can share any stories about maybe what you learned from Paul Graham, that might be interesting too.
Matt Doka:He told us to get our stuff out there even faster than- I think the way that they focused on coaching everyone to get prototypes out in front of customers, working versions, I think was necessary. It's not- doesn't come naturally. I don't know if it comes naturally to anybody. It definitely didn't- Even though we thought we were aggressive, it helped save us valuable time to be even more aggressive. The people that were in there were pretty incredible. Like we were with people who had created some of these open source packages and platforms that everybody's using to build startups. That was cool. Like, oh, I know this celebrity and I know like these software celebrities. And then I think just the network where anytime you had a question, during this accelerator or afterwards, there was always a dozen people who could give you an answer. Like, oh, we've got this engineer who wants to be- what's top comp? We really want to land this engineer, I’ve got this HR problem, what do you think? You could always get folks who were experienced to weigh in on it. So I think the network was valuable. The pacing and the way to think about doing a startup was valuable, and then definitely was helpful for fundraising, too.
Chris Powers:What’s pacing?
Matt Doka:This idea that move faster, get it out in front of customers faster, move faster, get out in front of customers faster. In some cases, kill it faster, or at least get to a decision point faster.
Chris Powers:Does that network, is it still valuable to you today? Are you still involved with the Y Combinator community at all? Or does it kind of die off after a couple years?
Matt Doka:Yeah, it's a good question. Once your company and startup matures to a certain extent, like you start to get to this point prior on Series B and C where you're hiring like experienced marketing product sales folks, and often with specialization in your verticals, so that part of the network, the advice part, I think, can diminish a lot, especially because the experts you need are usually not other founders, they're usually like- at that point, it's like I need to know somebody who set up a call center in the Philippines and really knows all the gotchas for that. So, it diminished a bit. And then, for fundraising as well, once you're past a certain early stage, it's really sort of your business, it comes down to your business and doesn't really matter as much who funded you way back in the seed round. But I've always enjoyed the network. And so, I try to stay involved and help other founders, whether or not they're YC, whenever I can. So, I guess I've stayed involved that way.
Chris Powers:Okay, describe the idea that eventually you did FiveStars. So what was it originally? And I'm assuming that's kind of how the idea is today, or was it a pivot along the way?
Matt Doka:The only pivots we made along the way or the only pivots I regretted are the ones we didn't make along the way. And there was this time, this seminal moment in 2012 where we were so infatuated with this idea of turning a transaction into a relationship and community that we didn't quite pay attention to the fact that small businesses really were clamoring for a next generation point of sale. And I think we could have done both. And around the same time, Toast and Rebel, a couple of really strong software companies, did lean into that trend. And so, while we ended up building sort of the leading business in our sector, like CRM, CDP, and loyalty, I think the point of sales opportunity was just so much bigger, and we had customers who wanted- who were almost asking us for that. So that's a pivot that I didn't make that I most regret. The ones that we did do is mostly the core business is still what it is today where people are signing up, they're earning points at a store by typing in their phone number, they're redeeming those points for different things, and then we're using all that data to automatically monitor the customer, the customer’s health and bring them back in. If it's your birthday, we do that all that stuff on behalf of the merchant to send you a surprise and delight birthday thing. Or if we detect you haven't been in in a while, and they're at risk of losing you as a customer, to try to do something really aggressive to get you to come back and restart the habit. So we're doing a lot of those marketing motions for merchants. And what we added about four years ago was building all that marketing into the payment flow. So, really, even today, most people are doing payment processing because they have to. You’ve got to take a credit card, you’ve got to pay 2%, you don't get much other value than like, well, you didn't offer it, people just pretty binary, but it's kind of a cost center. And we figured out a way to reengineer the payment flow where if they're doing payment processing with us, or even if they use us as a payment gateway with their existing processor, we can turn that payment experience into a way to supercharge adding people to the CRM. So they build a much large- so they're still paying the credit card company 2%. But as part of that flow that has to happen, they're building a database three, four, or five times larger than our historical numbers, which are already a couple times larger than most of the other competitors in the industry. So, you build this massive customer database, which, for anyone in marketing, the larger your database is, the more ROI you're going to get from it. And so that was the big expansion of the business I think four years ago that ended up leading to us being acquired by SumUp which is a big player in the payment space worldwide and loved what we had done with his intersection of identity, payments, and CRM.
Chris Powers: So just to kind of confirm, you were- like Starbucks, they have their loyalty and CRM program. Maybe they have it inhouse because they're so large. I don't know, maybe they outsource it. But you are saying, look, we want- it's not fair that Starbucks gets to have it, and not everybody else gets to have it. So we're going to bring it to Main Street.
Chris Powers:Okay. The second question is, you said there was a pivot you didn't regret- or that you do regret not taking. Was it something at the time- is it in hindsight that you regret? Or was it something that even as you were going through it, it was like this is going to be huge, but maybe we're too busy doing what we're doing, so we're just going to stick to that? Or is this in pure hindsight? Why did you miss it?
Matt Doka:In 2012, we thought- in 2012, the point of sale space was really fragmented. There was like a whole bunch of these different Windows point of sales. I mean, you probably knew folks in El Paso who were selling Aloha to businesses to run their restaurants. And a lot of folks still use Aloha and CR today, but the space was fragmented. And so, we thought the space would stay fragmented, that there wasn't really going to be a big market shift, it would kind of be this slow evolution. And we said, well, but we could own all the CRM; we could be the CRM dominant player that kind of unifies all these fragmented point of sales. And what we miscalculated was that the next generation point of sale companies are doing cloud based point of sale, that actually was going to drive massive market share consolidation. And people were going to jump on that and leave these old systems behind. And they would emerge as a couple of- a much smaller set of dominant players than this very big fragmented market was in 2012. So, we didn't know that at the time. But we saw the opportunity even within our own salesforce, like, hey, we could sell this, we could build it well, merchants would pay us more, in addition to our CRM, we could be delivering this. But we said no, we want to focus on the mission. Primarily, we killed it with like, well, the space is always going to stay fragmented, and it's not missional, what we called missional.
Chris Powers:Now that you've kind of learned that, let's just say you built another company one day, is there another framework or set of questions you would ask yourself when something like that occurs that maybe would lead you to make a new decision? Or is it just one of those things that was like nobody ever knew if Blockbuster knew that mailing DVDs was going to become the thing, they would have pivoted. But is there a way to not make that mistake again? Or is it pure in the moment, you just never know what the future has?
Matt Doka:No, I think a lot less hubris about this like sort of missional calling that almost let us be sheep in our thinking or a little bit- yeah, so I think that's one thing I'll take with me to whatever else I work on, this trying to be a bit more open to what is actually going on and the reality of the customer base you're serving. And in this space, in particular, one of the cool things about the company that acquired us is they have a couple of large point of sales that they acquired or built inhouse. And so, I get to play an active role in hey, we need to fund this, we need to- I beat the drum internally as to how important it is. It's sort of like my second chance to at least do my best to make sure that we stay on top of this trend and don't get left behind the way I felt like we kind of did by not investing in point of sale back in 2012.
Chris Powers:I was watching some stuff on you before we started. And I think you mentioned it with kind of what happened four years ago with understanding how to build a bigger CRM for your clients through the payment flow. And you basically said the first five years were like a rocket ship for the business, and then the next five years you were basically trying to find product market fit again. Can you explain what you meant by that? Did you have product market fit and lose it?
Matt Doka:One of the things in a lot of non-consumer tech businesses is the big channel that you're relying on is often sales or sales and marketing. And so, at different sizes of revenue, your product market fit differs, or maybe the flip side is to sell a customer when you're about a 50 person company is cheaper than to sell to the exact same customer when you're 100 person company than when you're a 200 person company. And so, the bar becomes higher to just keep that engine going as you become a larger company. And so, what worked at 50 really well, which was just a loyalty product at like 149 a month, loyalty and marketing automation product, like 149, 199 a month, as we grew, as overhead increased, the cost of maintaining everything we've done grew, you had the revenue you had to generate from your product per store per sale became higher. And so, it was like we had great product market fit, but as like the price point had to get higher because of all these like things that happen as you grow your company, our corresponding product market fit kind of didn't gap up as well. And so even though we were this dominant player in this loyalty CRM space, like yeah, it was the unit economics we were fighting against or fighting to grow. And so that was this five year journey of what other things do we build adjacent or into the CRM loyalty experience we already had that would ultimately sustain the cost of the go to market and the price point we needed to charge.
Chris Powers:Looking back- so that’s interesting. So it's like we had a good product, but because we had to grow the company and take on overhead, the actual product suffered because of it; is that what you're saying?
Matt Doka:Well, the product was fine. What suffered was we had to increase pricing, and so that was where customer- as you increase price, customers want more for- that distance was- I think to be fair, and I'm a bit of a overachieving, hardworking perfectionist, I think I should probably at least disclaim, most of my friends, and probably somewhere in there, like I think we still did a good job, like I got a lot to be grateful for. There's a hundred things I wish we had done better. But we built a great platform. It's done a lot of good for small business. Still decisions I regret. But yeah, we had these five rocket ship years and five years that I describe as like really hard and frustrating, not really having that- We had a business that was good, but not great. And then as we came out of that with this new payments product, COVID hit which added some challenge to it. And it was sort of just a challenging later stage part in our journey where we had all these factors in play. And then that ended up leading us to the process where we met SumUp, and not only was there a great strategic fit there, but they had these two point of sale systems, which was for us like, oh, this is the perfect way to build the next leading product in this space. Like yeah, we had missed point of sale. But then if we add CRM and their point of sale, we could become the next Toast, or we will step ahead of Toast or Square in that journey. And I'm very excited about what we can do as part of that platform today.
Chris Powers:I mean, let's not- you sold this business for over 300 million. That's a miracle for most people. So clearly, a lot went right. I think it's interesting to talk, from someone that was in something for 12 years, obviously, you're super smart, call it learn from mistakes or whatever. But I want to keep digging into this a little bit. Because like what you said, you said, there's things I wish I had done differently. Now, hindsight is 20/20. So leading in, I'm just pretending we start another company; I'm not saying you are or whatever. But if you even started FiveStars again, or maybe it's a different business, how do you avoid that trap of we're taking on overhead, the internet's technically getting cheaper, like products are actually- the cost of software is going down; is that fair to say? So, if we think about the companies of the future, how do they not face that problem where they have a great product that can't, kind of what you said, gap up as the company needs to expand? Because I think you see that often in other software companies. Like the more you look into this, there's a lot of things that are like, product was great, but the company could never be profitable because it took a ton of overhead to sustain it, and there was not enough products to sell through. And maybe I could tie that in with AI and how they're talking about how startups are now going to be created and overhead’s never going to expand the way it used to with new technology. I'm bundling a ton into this. And I think you kind of know what I'm talking about. But you said I learned a lot of lessons. Like how would you do it differently going forward? Was there a different way to do it?
Matt Doka:Yeah, I think on the sales scaling side, I actually think we were ruthlessly good at that. So aside from I think making a few different product decisions, or operating our product better so that we were just cranking out more stuff in general and could have hit some of those things in addition to what we did build, like there's some R&D operating lessons we learned along the way too, but that's just about getting more- those are incremental gains. I think had we paused when we- had we been maybe- it's hard to say. I think one thing we could have done is we could have paused growth at certain phases more when it was apparent that we were having these unit economic challenges or things, the formula just wasn't right rather than continuing to spend on that level of sales. We went through layoffs. So, we didn't not do it. Just I don't know if we did it early enough when we like scaled back.
Chris Powers:Did you really pause growth, though? Is it the VC that's breathing down your neck to grow? Or could you truly pause growth?
Matt Doka:No, no, no, we put the pressure on ourselves. But because the narrative- when you do pause growth, you've got to be confident that you will come up with that next product thing. Because you can grow at an okay level and still be alright. And that's ultimately the path we did. We grew with good- like unit economics were never crap. So, we grew with good unit economics, but we didn't grow with like $10 billion company unit economics. And so, we had these a couple of times. And the more conservative people on our leadership team were very in favor of pausing, like actually doing the more aggressive pause. But the downside of that and the reason we didn't do it was because if you pause, then even this decent, this okay growth you have is gone. And you better really hope that the product bets you're making with that bit of extra time and focus are going to pay off. And so, honestly, I think we- it's funny, Matt’s the other El Paso guy, he'd probably say we made the risky bet. But I actually think the riskier bet would have been to pause because you don't know if you're going to come up with that product innovation that closes the gap.
Chris Powers:So what happens if you pause and don't come up with the product innovation that closes the gap versus what y'all ended up doing?
Matt Doka:In both cases, you get exited; you don't get to IPO in both cases. But in the former case, it’s going to be a smaller number because you build less, you just have less of a revenue base. And you didn't find that next piece of product to close the product market fit gap. So it's just going to be a lower number.
Chris Powers:How did y’all find the product?
Matt Doka:I don't know if we found-found it. I think it's still- well, the payments loyalty product was pretty incredible in terms of unit economics impact. We still- we were and are now incorporating that into- like the other piece is still needing the point of sale go-to market motion to actually get distribution in this sort of new product. It wasn't just as easy as our standalone loyal- kind of works. So, I'd say we kind of- had we truly like- had it been this massive- I think certain things in the sales channel play differently. Like maybe we would have IPOed instead of selling the company. I don't know if we quite- I guess all I'm saying is I wouldn't say we quite closed the gap. And one of the things that I'm very passionate and motivated by is closing that gap now at SumUp. I still want our legacy, like I want to build something that was really great for small businesses to bring people back. And I think we're still moving towards that, which is very motivating for me, even though we exited, whatever, we sold the company, like I'm loving life at SumUp. And a big piece of that is there is still this gap, nobody else is closing it, and I think we've got a shot at it. We're continuing that shot at it.
Chris Powers:And define that, closing that gap, like what would- if you closed that gap, then x would have happened, fill in the blank, then what would have happened?
Matt Doka:If we had closed the gap, we would still- like if we'd close the gap, we would-
Chris Powers:No, if you do today at SumUp, like if you do-
Matt Doka:Oh, it's going to be part of- it'll be a massive part of the SumUp IPO story. Like they're currently valued at 8 billion, like if we close that gap and go to market motion with it, I think it's a $50, 60, 70 billion company in the next five years.
Chris Powers:But what's the gap, I guess is my question, what gap are you closing?
Matt Doka:Point of sale bundled with CRM bundled with a consumer wallet. It's like the triumvirate. You've got the merchant’s operation, the marketing engine and then the consumer payment rails, like something to then really connect and incentivize, in a lot of cases, a consumer.
Chris Powers:I'm going to take a couple steps back. You said we created a payment flow where we can figure out how to use the payment flow to create- help our customers’ CRM grow three or four times more. Maybe this is your secret sauce, and you can't speak about it. And I'm a real estate guy in Texas. When I hear that, I'm like, I have no idea what you're talking about. What does that mean? How did you take the 2% credit card processing part of the business and turn that into a way to generate more CRM users?
Matt Doka:It’s a good question. So if you think about most of the terminals you're dipping your card on, even the ones that are in a piece of software, it's tap, tip, done. What we did was the minute we get a tap or a dip, we actually look that up in our CRM database to see if we've ever seen this card before. If we haven't, we immediately show, hey, do you want to earn your points today? There's like a new customer signup promotion, whatever we can to try to actually become a member of the store. And then without the cashier having to remember or even think- the cashier doesn’t have to think or say anything. So the $15 an hour or $10 an hour cashier doesn’t have to think about it, it just happens all on this like customer terminal and then continue with tip and pay. And that led us- and then if we detect the card, you don't have to think about it, just automatically we add the points to your account, whatever, everything's golden. And so that's the big difference between what we did and what everyone else out there offers. And if you look at a lot of the systems out there, they're not that great. We had to build our own hardware. We had to integrate directly with all six major payment processors. There weren't any players. I remember I talked to Verifone, I talked to Ingenico. I spent two years doing due diligence on different technology providers out there because it's not that efficient to always build these things from scratch. Like as a CTO, one of the biggest pieces of leverage a good CTO adds is, how do you buy it instead of build it? How do you ensure that your engineers don't have to do x? That's so much more valuable than executing well on x, or at least equally valuable. And so, I spent two years trying to find a way to do this flow without building a lot of this stuff ourselves. And I wasn't able to. So, we built it ourselves. Now we're opening it up to API partners. We're partners with a bunch of point of sale companies, even former loyalty competitors, because nobody's built this sort of payments plus marketing type of payment hardware and gateway. But that's the crux. The minute you tap, we see if we've seen you before. If we haven't, we try to get you to sign up. And we do it without involving the cashier.
Chris Powers:Okay, so 2021 rolls around, and you've kind of said this a couple of times. So maybe I'm going to unpack this a second. Maybe this is a more psychology like question. But you kept saying, well, if we closed the gap, we would have gone public, or you've kind of said maybe we would have gone public. Was there a point in time along this journey where maybe it was articles that were written about you or a huge round you raised or somebody that kind of led you to believe you guys are very close to like the ultimate exit that a startup is looking for? And maybe my question is, had your mind kind of bought into this idea of, oh shit, we're so close to doing the big thing that we set out to do, and does that change your psyche at all? Or did you never feel that way?
Matt Doka:No, it's a good question. The answer's no. What we found when we got into entrepreneur, like startup VC entrepreneurship was there's just a set of milestones that you hit along the way, along the happy path. And in our space, it's all tied to ARR. So, at certain ARR levels, there's just these events, and so the business unit economics, the sales scaling, that's what drives your ARR evolution. And we were in the late stage, like really the next big ARR hurdle, which is around 100 million of ARR. We were at 35 when we sold, but the 100 million ARR with decent economics behind it, that's when companies IPO, like Yelp, OpenTable, whatever. So really early on. And I think Vic did a really good job as he was doing fundraising kind of just understanding the map and explaining it. It's like you realize, once you start on a VC funded company, it is just okay, the A is in this range, the B is in this range, the C, or valuations, and you're like kind of in the tens of millions and the hundreds of millions. And then as you cross the billion, whether you- it's kind of like that's the IPO or growth equity, which is kind of like an IPO anyways, phase of things. And so, for us, we were like in the hundreds of millions of valuation. We never built the engine big enough to actually take us all the way to like 100 million to 200 million in ARR, which would have been like that's where most of these companies traditionally IPO. So, that's more what I mean. But it wasn't like you guys are so close, whatever. It was is like, okay, very early on, there's this clear map. You're solving for how do I get to these next levels of ARR and ARR growth. And once you get to a certain level, that's like the IPO phase.
Chris Powers:So, 2021 rolls around. Were you guys looking to be acquired? When did the discussion of we're going to sell this business kind of enter the discussion?
Matt Doka:I mean, I think COVID was a really challenging time for marketing software in small business. Everybody's closed down, they're trying to cut marketing expense. We had a surprising amount of retention. Folks realized, hey, the only way I'm able to reach my customers now that they're not coming into stores is through FiveStars. So that actually was a saving grace for us during that time period. But people weren't opening new brick and mortar businesses, which is always a big source of growth for companies that sell to small business. They weren't spending money on new things or new software. Heck, their folks weren't even in the restaurant working. And so, we were able to still work on a lot of software and innovation, but we weren't able to continue that sales engine. We had to layoff some salespeople. We had to pay others less because they couldn't get commissions that they were used to getting. So then they left too. And so that was just a tough season where when we came out of COVID, we needed a big infusion of capital to kind of restart some of those sales motions and to get back on. And so, we evaluated our options. We were pretty sure at that point that finding the right strategic partner, like the right strategic acquirer was going to be the best. And so, we talked to folks in the space, and SumUp just ended up being a really great natural partner.
Chris Powers:Okay, so then how many employees did you have at the time you sold?
Matt Doka:About 250.
Chris Powers:That’s a lot of people. So now you're at a company that's over 3000 people, correct?
Matt Doka:Yep. Yep.
Chris Powers:So day of closing, we've closed the deal. What's it like going from startup culture to now working inside a large organization? Or have they kind of left you guys to still be your own business and they just own you? Or you integrated into a much bigger organization now?
Matt Doka:It's a great question. We were much more the latter, in some sense. I think the disclaimer I want to give to anyone on this journey is it's a huge degree of difference, like no acquisition, no acquiring company is the same. Like we became really good friends in the course of doing business in this space with the Clover Co founders, and their experience at Fiserv was just totally different than our experience at SumUp. And it's totally different than all these other friends that I have who sold their companies to XYZ. And I think SumUp had a particularly strong DNA in generally fostering these autonomous teams at the cost of honestly having a hard organization- not a hard organization to navigate, but almost like 14 different startups are all working together in like a collective way. But as a result, it's really enabled our folks to just continue to do what they- like people didn't have to reset a ton. It's like they kept their stride. I think the SumUp folks have a really good lens on EBITDA and profitability that, frankly, we lacked a bit at the leadership level. And so that's been, I feel like we've learned a lot or at least we've been challenged to great effect on running our business more efficiently as part of that ecosystem. But encouraged these startups, and they help facilitate them all working together, these 14 or 15 different divisions, but there's a lot of autonomy. And so, as a result, it's been a generally very motivating place to be. Whereas I was just talking to a friend of mine who founded another company, and he was over for dinner yesterday. And they had this post exit founders dinner that they had done the night before. He was like, yeah, you're the only person who's still working hard in this whole group. And like, well, okay, that's part of our Lebanese heritage. But also, it's been a really- I think it speaks not only to the great environment SumUp setup, but just the wide range of what you get. And you never know until after the deal is done what it's going to be like, whether- we had this one company we partnered with to do online ordering, and DoorDash fought this other startup we were friends with. They fought tooth and nail. They bought them for like 80 million. And within three months, DoorDash was so misaligned on this, this company called Vbot, there was so much misalignment, they laid everybody off. And that's pretty- that's the worst it can go where not only does your product die, but you have to lay all your people off. Like middle of the road is your product dies. And then, great is your product keeps going, but there's a lot of politics. And then in our case, our product gets to keep going, and there's not really politics. So I really lucked out. But it's a huge range of ways that can go down.
Chris Powers:Well, you kind of answered it. I was going to say, the majority of the stories end in maybe not the whole team, but a lot of times the founders, they try and get you out as quickly as possible, or it's a one year agreement, and then you're gone. But it sounds to me like call it a second bite at the apple, call it whatever you want, you kind of have maybe not a restart, but an ability to really get out of this company, like you said, close that gap, whereas maybe when other startups sell there is no gap to close. It's kind of like we bought you, we’re moving on. It sounds like you kind of have another bite at this apple.
Matt Doka:Yeah, we lucked out. They're going to fund us finishing that- and part of the reason they bought us was to finish that swing. So in that sense, I think during the process of meeting potential acquirers, their aligning with us on that vision was a key reason we wanted to work with SumUp. It was like, okay, we can go here and keep building and they really want to build this sort of tripartite network as well. So we had an inkling that that would be the thing. But yeah, I'm super grateful that we get to kind of try to finish this product experience and system we're trying to build.
Chris Powers:You're the first person I've talked to in the valley that's, I would call it, at the highest levels on the technical side. The last call it month or two we've been- AI is starting to really rush into the world. And now I'm just going to pivot the conversation a little bit. This has nothing to do with FiveStars. How are you receiving all this? What's it like to be kind of in the hub of the tech world? As I sit here in Texas, Elon Musk was on Fox News last night talking all about it. Like Sam Altman has been all over. Chat GPT is like the thing. How do you think about it from just a pure tech side? What's going through your brain?
Matt Doka:Well, I mean, so one of my hobbies is angel investing and advising early stage startups, I love that part of it. There's a lot of interesting opportunities out there. And we're always taking pitches and talking to folks, largely because it helps me stay sharp as a CTO. This particular wave of innovation is going to go to the incumbents. And I'm going to tell you why. Sort of my conviction really, I mean, not in general, but I think most of the people who are going to win this wave are going to be the big enterprise companies who have the client relationships. And here's a story that happened in FiveStars or SumUp. Everybody's been playing with Chat GPT. And so, there's a lot of great open source tooling out there. So a couple weeks ago, just independently, a few engineers were like for my evening weekend project, I just want to play around with this thing. And one of the guys, in the space of five hours, built a Chat GPT bot or like an Open AI bot that could answer a support ticket better than our support chat reps, we have some in the UK, we have some in Ireland, we have some in South America. And then this chat bot was as good or better. Like you type of question in, it was unmistakable, seems like a human answer. And it was high quality. It was fast. And because that time to do something that amazing, like because of this, it was a five hour project to do that, is why I think that the companies that win- there is a ton of efficiency that's going to come from this, but the companies that are going to win are going to be the ones that have the customer relationships already because it seems like it's so easy to get a lot of these working prototypes to deliver X value. They seem so much easier than other tech innovation waves I've seen. So I think Salesforce and ServiceNows of the world are going to benefit a lot more than a wave of next thousand startups. There'll be some startups that are going to win, too. Obviously Open AI has done an incredible job. A friend of mine is building some AI infrastructure, some infrastructure for Open AI, for LLMs. I think those are going to be great startups that come in this wave too. But I do think the incumbents are going to benefit a lot more than sort of your average wave.
Chris Powers:As far as startups, I was listening to the All In pod the other day, and they were just having this discussion that you're not going to need as big of technical teams to start companies anymore, you're going to be able to start to products much quicker with much lower overhead. And then Chemoth said something that was interesting, and you said that you started, but he said the last 10 years, it's been about raising these multibillion dollar funds. And he's just like these smaller companies just aren't going to consume as much capital as they were 10 or 15 years ago. The next great fund might only need to be $50 to 100 million. Maybe my question isn't more around how much money you raise, but does the job of the VC change? Or are we just going to eliminate a lot of VCs that maybe should have never been VCs in the first place? It seemed like by 2020, everybody was an angel investor or a VC. Does AI kind of accelerate that you got to differentiate or the industry is going to change? Or does it stay the same?
Matt Doka:Good question. So, maybe the way I would think about this for the direct chatbot app, like the direct LLM chatbot applications is the incumbents win. But you're right, I completely agree, it makes building any product easier. Like all of our engineers now have GitHub’s version 1 of co pilot, and just they would not use it, because it saves- there are certain types of work where it just saves you a ton of very expensive engineering time, which I think, therefore, the cost of launching any new product in any space is going to go down. I mean, it's absolutely true. I almost look at the capital flows as different than the cost to start something. I don't know if they're exactly correlated. But the reason we had so many VCs in all that wasn't because the cost of a startup was pegged at a certain amount, it was because there's just so much capital in the system from 10 years of 0% interest rates. I don't think those two cycles go so much hand in hand because many of these companies that raised so much, it wasn't actually because they were even going to be able to spend that much money, it's just there's so much capital, and it's a great insurance policy. It’s like well, why not? And I think there's something to be said for well why not, if I can ensure my existence for five years and I'm raising at a billion valuation and XYZ, like well, it's a pretty hard offer to refuse. And the reason they were getting those offers was not because it actually costs a quarter of a billion to build x, it's because there was just so much money seeking high returns. I'm curious where you think AI is going to affect real estate? What are the cool AI driven or even just general prop tech things you think about?
Chris Powers:I think there's the common things like you said, the chat bots that can talk to tenants, that can answer tenant requests. I think there is- real estate's not that hard. But I think things that just you can run a model really quickly, you don't have to have a financial analyst that runs the whole model and does everything. You can have something that is not only maybe helping build the models, but then if it's all in a database, it's helping start learning what's made a good deal and what's made a bad deal. And so, you can start going back through the- in our point at Fort Capital, we've generated thousands of models. It would be interesting to me to go through all those models and maybe have AI learn why we did a deal, why we didn't or just being able to start offering up this deal you're looking at is very similar to that deal you did two years ago, which we might know that in our head, but if you have new people starting at the company, maybe they don't know that. Maybe they have no- if an analyst starts tomorrow, they have no idea the seven years of things we've underwritten in the past. So I think about it from that perspective. Obviously, automating workflows, just like any company, I mean, it's just inevitable.
Matt Doka:Have you thought about hiring folks to play with that stuff? Or are you waiting for vendors to come along or existing vendors to offer you those tools to play with that data?
Chris Powers:I need to introduce you to our CTO. So we have actually six full time people on our tech team at Fort. I think we are quickly- and we are working on AI. We've been building something called Fort Operating System, which is how we run our company. It's proprietary. But that's now kind of built, and now we're building on top of it. And we are starting to think about AI and machine learning, especially as it comes to how to underwrite a city, like how to go into, where are you, Oakland right now, to where we could go into Oakland, use our algorithms and our models to overlay over the city. And it basically starts showing us- which is not- at the surface level, it's like, oh, anybody could do that, like where the hot areas are, but also where the hot areas are headed. And then within those hot areas, who owns portfolios, the buildings that aren't obvious. So maybe you have six buildings that are owned by an owner, but since they're in separate entities, the naked eye couldn't immediately tell you, oh, this is a portfolio, they own all of this. You might think you're just looking at one building, when in reality, you could be talking about six or seven buildings. And for a lot of companies, that's really important because as you grow larger, the deal sizes you do grow larger. And so, seeing larger deals is huge. And so, one thing we're using AI to do right now is help us see portfolios that you can't see just by searching ownership records or government records. So, I'm sure the term fuzzy logic or fuzzy matching. Fuzzy matching. I'm going to sound like I'm really smart; I'm using, I'm stealing the words of people at our company that are much smarter. But they're using fuzzy matching to take a data set of buildings and in any one market go these are all the buildings that are correlated, either by ownership, maybe they have a similar LP in them. Just how are they correlated so that we can start seeing cities not as individual buildings but as portfolios around the city. So that's another way that we're starting to think about it. But then most importantly is how does the AI learn our workflow through our FOS system, learn how we're making decisions, and then become something to where we imagine in a year or two, just like probably a lot of companies, our employees almost can talk to our system and say, this is what I need, and the system knows how to generate it and go gather it based on watching thousands of tasks and things happen within our Fort operating system. And I might be losing you because you haven't seen Fort Operating System. But we think the real value is can it learn our company better than we know ourselves, and can it make each person's job easier as they can basically benefit off the thousands of things that have been done in the history of Fort, and they just kind of keep getting better and better at their job without necessarily having to get much smarter.
Matt Doka:Yeah, I agree. I think that line- for us, there's definitely a lot of value in accelerating support, or augmenting support, augmenting bug research, things like a lot of the daily block and tackle stuff that I think we will see a lot of cost saving type stuff come from that. And it's surprising how easy it is to put something, like yeah, five hours was pretty crazy.
Chris Powers:Do you think there's the like 10 million people about to lose their jobs? Is that just a fun headline, or you think we're nowhere close to that?
Matt Doka:No, I don't think we're close to that, especially in a lot of- at least in a lot of tech businesses, support’s not a huge piece. And even then, I mean, most of them are just going to redeploy that human talent to just better coaching the bots. You'll just be able to deliver a higher- businesses don't change on a dime. And most of the layoffs have happened already. So people, I think, will be more apt to redeploy the talent to just adding higher service levels, or in our case, we're saving time; we're not going to go layoff 30% of engineers, we're going to actually just have them do the 30% more product innovation. So, I think companies will get more productive first. And the ones that are already- if you're under cost pressure, you've got a tough business already, like I don't think Chat GPT is your savior. You’ll probably have to do layoffs anyway. And it's not that revolutionary, and there is still so much around anything in support, like support, customer success, even engineering, there's so much of everything else around it, that it takes a lot of human wisdom and insight of how do you plug it in? How do you weave it in? How do you make it great? I don't see it as this instant type of people get laid off transformation.
Chris Powers:This is a dumb question, but I'm full of them, so here we go. There's the AI language and models that you can create internally. So you basically, at your company, create your own language. But then when you think about Chat GPT, or I think Google's is called like Bong or Bark or something like that, and now Elon Musk wants to create his. Are we just going to have all these different languages? Like, what is the language? If you don't like what one says, do you just bounce to the other?
Matt Doka:It is, but maybe the way to simplify this for anyone who's not technical, the most important thing about any bot or any GPT you’re talking to or any LLM is what they call them, language learning model, what data set was it trained on. And so, for that reason, there's going to be some that are trained on specialized small data sets, like our support bot, it only needs our support thing, but it's the only person who's going to get all of our support data. So we will have a very unique niche, whether we use Google's model or Open AI model or whatever model, really, it's like whose data set is it being trained on? And these big public ones, well, they're just being trained on the public data set. So they're like search browsers. You can ask it anything you would a search browser, it's just a nicer experience, I think, or at least a different angle, and you get good answers from it. And so businesses think about being competitive, then your unique, your models and the notes you took on your deal diligence and the stuff you have in your CRM, that will be the unique set that yours is trained on that's going to make it have a unique perspective to any other bot out there. And in addition, a lot of these large players are going to sell the public or the massive- So these big guys are going to sell their datasets, or they're going to sell their datasets plus the model on top, so you could put your stuff in without having your competitors access it. And so, there'll be- that going to be the business model there. But really, it comes down to what's the data set that this thing was trained on is going to affect the answer, like how useful it is for whatever domain you're trying to do. And then a bit around personality or maybe the specific algorithm you use, or kind of the mandate you shape it with. But really, it's all about what's the data set that the thing is trained on. So you're right, I was going to say your investment in plugging- like finding a way to get your models, your deal notes into a system that you can then ask questions and see what it can spit out, that's a unique data set, checks the box, differentiates, sure. I'd say you’ve got to run a couple of pilots and see what it spits out, for how actually useful it's going to be. But you definitely have all the right ingredients of some reason to build something that you can't find anywhere else.
Chris Powers:So that's what we're most excited about on the real estate side. And then obviously, there's a ton of use cases for just how- like if you wanted to build a third party application that different customers, we could go through a list of those ideas. But I think how I wanted to end this conversation is on the American customer. Like you have had a direct insight for 11 to 12 years into how Americans are spending money. And so maybe we'll start with today, but then I want to roll it back a little bit. How is the American customer right now? Are things moving and shaking? Are things slowing down? Like what are you seeing right now in how people are spending money? You have a front row seat to this.
Matt Doka:I think a couple of thoughts, people are- the restaurant industry is still- and restaurant is one of our biggest verticals, like restaurant, retail, and salon spa are the big three. But the restaurant industry is still up over 2019. There's been significant growth even beyond inflation. So we aren't seeing massive growth, but we're seeing growth. We're not seeing any negative signs. It’s something we're paying attention to, but definitely not a massive recession. I think in some parts of the world, there might be a slight- you could argue there's a slight slowdown. But I don't think we're super concerned about it. But also, as the technical leader and as somebody who's also spends a lot of time doing tech partnerships and innovation partnerships, I don't spend as much time as my co-founder does thinking about the fundamental US consumer and their effect on our business and their business, I spend a lot of time thinking about how do we build better marketing mousetraps to bring them into the businesses we serve.
Chris Powers:Then this might be not a good question. You don't have to answer it. But is there anything you've seen since you started working with these customers in 2012, like how the customer might have changed over the last 12 years, or any key insights and things?
Matt Doka:The biggest is especially down market, people want more things from single vendors. Like they want a single throat to choke much more and more and more. And so the more they can get from a single platform or a single integrated platform, the happier they are.
Chris Powers:Okay. Are people tipping more? I know that everything's a tip now. Everywhere you go, they ask for 10, 20% no matter whether they did-
Matt Doka:Yeah, it's funny. I think it's a function of all this consumer- That's a good example, though, I think of the power of better consumer facing payment experiences. So just like tipping has grown, I think largely because of the user experience around it now, these new user experiences around it. I think that's similar to the bet we've placed on CRM growing because of the user experience that we've built. And I think they're both a factor for sure. And I think the technology and user experiences is why tipping has grown so much.
Chris Powers:When I'm sitting and I've just gone in and ordered a coffee, and they turn that damn screen in my face, and I swipe my card, and then it says 15, 20, or 25% tip or no tip, it's like a psychological mind death. I'm like, I got to leave one. I can't press no tip. I'd be an asshole.
Matt Doka:Now it's 20, 25, 30 is what it's gone up to, yeah. I mean, it was surprising. That's like everybody adopted it, and it happened so quickly, that it just became kind of a forced change of culture. I think eventually, what does it mean? Like, well, they have to pay their workers less. So, in 10 years, prices may not rise as much as they otherwise would have. Because there was more tipping money. I think it all comes down in some supply demand wash, but definitely a temporary jump in the consumers’ felt prices for that reason.
Chris Powers:Alright, my last question for the day. These like texts in a down cycle, I think probably we can all argue again, hindsight is 20/20, there's probably a lot of startups that got funded over the last five years that maybe shouldn't have or maybe shouldn't have been given as much money. What are you thinking about the next five years? Are we still going through kind of a cleansing process and maybe it'll be rough before it gets better? What do the next five years look like for startup scene?
Matt Doka:What I would always say is good products always win. It's a perennial. It's like a little black dress is always beautiful as having a great product and product market fit. And so I would encourage people to be just as aggressive about trying the next startup idea they have that they have conviction about than they would have two years ago. Sure, things were overfunded and I think that cycles. But good businesses are still getting plenty of funding, they have plenty of options because they've got good businesses, they can make profitability happen if they want to. And fortunately, SumUp’s in that place. And so, I think it actually affects the good startups much less than maybe a lot of stuff that wasn't any good. But to anybody who's got enough conviction to start something, I'd say don't wait, do it, and if you find an idea you believe in, invest now, don't wait either, or join now, and don't wait. At the end of the day, the horizon is like owning a house, the entry price matters much less than the location or the product you're in or the product market fit.
Chris Powers:Okay, you angel invest. If anybody's listening to this with an idea, how would they get with you and your group? How do they contact y'all?
Matt Doka:Shoot me an email,firstname.lastname@example.org. Always happy to give advice, look at- mostly it's around small checks, big help. We're not leading rounds. We intentionally don't. But we're always happy to give fellow founders advice, hear what cool stuff they're working on and maybe be part of some raise they're doing.
Chris Powers:Man, this has been great. Thank you very much for being open and honest with the last 10 years. It's been really cool to watch and congrats on all your success. Who would have thought two Lebanese guys from El Paso could make it happen?
Matt Doka:A lot of hard work. The startup life is hard. Technically, it was hard work, humbling work, but I've definitely learned a lot. I'm glad I did it. But it was not an easy- It's not been an easy road.
Chris Powers:We both have gray hair.