Fattmerchant: The New Netflix in Payments
Payments companies on the lookout for disruption need look no further than the intersection of Peachtree and 14th Street. From a WeWork office in Colony Square – the temporary Atlanta location of Orlando based Fattmerchant - Suneera Madhani and Sal Rehmetullah are not-so-slowly revolutionizing the payment processing business. The brother sister team – Suneera is the CEO & Founder and Sal is President & Co-Founder – have grown their company at a phenomenal rate and are confidently poised to continue doing so well into the future.
It started in Orlando in 2014 with a big differentiator ; they would offer integrated, easy to use payments technology to small businesses based on a comprehensible recurring fee rather than a jumble of charges that the smaller merchant could not understand. “I was working in payments,” says Suneera, “and I got tired of trying to explain all the unexpected fees and up-charges to merchant customers. Frankly, everyone was trying to figure out how to squeeze more juice from an old lemon.” In frustration, her first move was to try to get the company that she was working for to change their business model for greater transparency by offering a subscription based pricing model. “I was subscribing to everything under the sun, Netflix, Wine of the Month and the list goes on. My company at the time told me it was a ridiculous idea and why would we ever want to provide simplicity in our pricing model” she says.
Suneera has a definite point of view when it comes to transparency to the customer. “I found customer consideration, or voice of the customer, to be almost totally lacking in the small and medium size business space,” she says. “Incomprehensible bills that can’t be explained make people mad. You’re essentially saying ‘pay it because I said so,’ and those merchants are going to leave you as soon as they possibly can.”
Getting started wasn’t easy. Finding a backend processor to partner with was difficult. “They all said no at first,” says Suneera, “but Vantiv – now Worldpay – finally said that they would take a chance on us.” Today they partner with all major processors. “There were a lot of naysayers in the beginning,” says Sal, “but we kept working to prove them wrong.” At first, Suneera was the only full time employee. “I kept my consulting job in San Francisco,” says Sal, “and worked from there as CFO on finance and metrics while Suneera drove customers, marketing and traffic.” Lyndsey Lang, now VP of Business Development, was the first full time hire and worked side by side with Suneera and Sal in the early days. The struggle to get the word out about the company continued until December of 2014 when Fast Company magazine published an article on Suneera titled Meet the Woman Who is Trying to Change The Credit Card Industry.
The impact was immediate and intense. “There I was, in a little 12 by 8 office – that was the company – and the phone started ringing off the hook. Emails poured in,” says Suneera, “and they all wanted to sign up. We added hundreds of customers right away and knew we had something that was real. “We became the Fast Company #3 Best Business Lesson of 2015 right under Netflix and Spotify and the lesson was “Fattmerchant – Prove Everyone Wrong”
Real for sure, but a new business can always use more cash, so Suneera and the team started 2015 entering technology pitch contests all over central Florida. They won every contest that they entered. $10,000 here and $50,000 there, it all added up to over $200,000 for the year - all for a few minutes pitch on each occasion. ”It was a good thing that our method of raising initial capital didn’t take a lot of time,” says Sal, “because we didn’t have any to spare.”
Because the company was growing. In their second full year, 2016, they processed over $110,000,000. In 2017 they hit $1 billion in payments and this year will see them go over $2 billion. Offers from VCs started to come in and they had the luxury of being selective as they were already near breakeven. Atlanta based Fulcrum Equity Partners made the most sense to them and in 2017 they accepted an investment. “We liked the fact that the Fulcrum partners had great operational experience,” says Sal, “and the connection to Atlanta meant a lot as well. This is the center of the payments universe, and everyone has been so welcoming. We’re thrilled to be here.” Fulcrum partner Jim Douglass is equally expansive. “We’re thrilled that Fattmerchant founders are heads down in execution. They have a great team, and product, but most importantly they can execute. They continue to grow well over 100% annually and we look forward seeing that growth continue to increase in the coming years.”
Hard work and more employees played a role in the company’s success, but a lot of credit should be attributed to their three prong approach, which bears explanation:
1) Transparency and Savings – the merchant will easily be able to understand their bill and will receive the direct cost of processing known as interchange with no markups or basis points
2) Great Technology for Small Business - Small businesses now accept payments in a multitude of ways. In the past, a small business owner would need a different processor or tech solution for every type of transaction. In store purchases, online orders, on-the-go sales, and larger orders were all made using separate tools that didn’t talk to each other, making reconciling difficult, confusing, and time intensive. Fattmerchant’s integrated payment platform, Omni, connects all these tools under a single API so business owners can easily understand the true health of their business under one dashboard, one merchant ID, one flat rate, and most importantly one throat to choke.
3) The Best Damn Experience – Customer Service has to be great and personal, unlike no frills Square and the larger incumbents which either provide no customer support line at all or only provide service at an extremely high price. Fattmerchant’s retention rate for customers is over 98%, a true leader in their space and their 80+ NPS score reflects the satisfaction of their customers.
The company is attractive to investors for another reason having to do with a lot of hard work done early on. “As most companies continue to raise capital, they are geared for growth and focus on optimization as they scale,” says Sal, “but at Fattmerchant, we flipped the script and focused on being able to scale our marketing and sales functions by understanding our organizational KPIs for each partner, customer and product.”
“Having this figured out,” Sal continues, “allows us as an organization to fuel the business with growth and have the ability to truly understand the growth and potential outcome. Being able to understand the unit economics of each go to market strategy at Fattmerchant gives our investors a true sense of confidence in the direction of our company.”
So, to a certain extent, the immediate future is already planned. “What will happen for the rest of 2018 is done,” says Suneera. “Our focus right now is 2019 and 2020.”
Longer term, they see their job to be the same – delivering value to the small and medium sized business space. “We continue to innovate,” says Suneera. “We are in the midst of launching our virtual CFO product “Ben” , an AI integrated bot that allows you to understand the health of your business and serve as a partner to your payment needs which is integrated into our proprietary platform Omni. Our intention is to keep going, and create meaningful value for the SMB that goes one step ahead and before the transaction. “
Born two years apart, Suneera and Sal are equal partners – except that Suneera makes $2,000 more per year, has 2 feet more of office space and 2% more of the company. “I am the older sibling,” she says jokingly. “But, most importantly at the end of the day our focus is to stay two steps ahead of the competition”
Both are confident about the future.
“Because of how data driven our KPIs are, we don’t need money to figure things out – all capital goes to fueling growth and scale. One dollar in, yields us three dollars out” says Sal.
“We will continue to be at the heart of payments for small business, and we will continue to prove everyone wrong,” says Suneera.