Philippe Gelis is the CEO and cofounder of Kantox which provides currency and risk management solutions for SMEs in Europe. I spoke with Philippe about how he started Kantox, some from the problems he faced on the way and how to fire and hire people in order to build a great foundation for a great company that powers over 2,000 businesses in 30 countries with over 5 billion USD exchanged.
Throughout the interview, Philippe radiated trust, honesty and transparency making the interview more of a conversation than an interview and I’d like to thank him in advance for that.
I hope you feel these characteristics in the text below as much as I did.
Here’s it is:
Luka: How did you go about validating that your idea was worth pursuing?
Philippe: In order to validate what we were doing, we did two things. My cofounder and I were strategy consultants at Deloitte and we were working with a lot of SMEs. So we had a very good gut feeling that [Kantox] was a value proposition that would benefit a lot of SMEs.
We also spoke about the idea to a lot of people. But most people were skeptical about the idea.
But then we spoke to potential customers and we got positive results—this is the most important type of validation because these are the people who will make a purchase.
My advice would be let the market decide whether it wants to buy your product. Speak to customers. It’s better than getting “expert opinions.” Experts know how to understand the industry but they have no idea how to predict where an industry will be in 5-10 years
Luka: How did you get your first user?
Philippe: We pitched to ALL the companies that we had an opportunity to speak with. Without exaggeration, we were knocking on doors and pitching to as many people as possible.
You have to really be in front of clients or potential customers as much as possible in order to improve your offering and to get your first customers.
Luka: How did you get your first funding?
Philippe: We ultimately got funding the same way we got our first customers. We pitched to everyone we knew as well as business angels. We spoke to 100 - 200 people that could have potentially put some money (even small amounts!) into our startup. After some time we slowly started convincing people to invest. But it was quite a challenge... One of the problems was that fintech was COMPLETELY under the radar. People thought it was impossible to compete with the banks.
But in the end that’s what makes this all exciting. We were one of the only players on the market. Now, there is more competition and people know the industry. But when we started Kantox, people had no idea what was going on. "You really want to compete with the banks?” they would ask “But this is impossible! This can't work!"
Luka: How do you retain the customers that you already have?
Philippe: It’s really about the value that you provide to your customers that makes the difference. What I think is important is to show them that you are much better than your competition.
When we first started, our product was 10x cheaper than other products. Now we're developing more sophisticated technology that allows us to streamline transactions and eliminate risk related to currency volatility, both through API. It’s important to be on the forefront of innovation. You have to constantly evolve to make a difference. Which turns into getting more customers and retaining the existing ones you have.
Luka: What’s the story of starting Kantox? Was it an easy decision to start it?
Philippe: One of the hardest decisions that people can make is to start a business. You have to stop and decide to change your life and quit your job in order to start your business.
We continued working at Deloitte for one year in 2010 while we were getting things up and running with Kantox. Then we got really lucky when we met our third cofounder, our CTO. That's when things got serious. We spent a few months building a Beta product. We then won 25K in a startup contest where we decided "ok, let's do it" and so we quit our jobs and decided to take this adventure together.
But even if you’re young and have a stable life, without a family to sustain, it’s still a very complex decision to make.
Luka: With all this talk about “fake news” going around, how do you feel about the media considering you have to deal with PR in your company?
Philippe: What I learned and discovered is that the media is usually very, very superficial in the way they cover the tech industry— including fintech. Because it's complex. I would say, in the beginning it was hard to get media coverage because the sector wasn't hot. The word “fintech” didn’t exist. Then it became easy because the sector got hot and the media got excited.
Getting media coverage can be very exciting but there are now a lot more players in the industry, so it's harder to catch people’s attention—especially the media’s. But if you do something different, then you can get media coverage pretty easily.
Luka: Did you ever use the media to the disadvantage of your competition?
Philippe: We have always tried to never speak about our competitors. Never to speak about anyone in particular even. Speaking about others is a very non constructive way of building your brand image and getting media coverage.
And if you do, at some point it will cost you. Because instead, you need to focus on getting clients and focus on your visibility, credibility which as a result makes you better than your competition. Forget your competitors. Focus on yourself and building a great value proposition.
Luka: Have you fired people? If so, how do you do it?
Philippe: I’ve fired many. But there are many things that I also learned throughout this process.
The first thing to remember is that when you need to cover a position you need to understand that it's better to not have anyone in the position than to hire quickly.
Secondly, you have to ask yourself what the objective of the role is.
Third, the candidate needs to understand that the job is demanding and challenging. If they can’t keep up, they will not stay.
Concerning firing people, when you have to fire someone you have to explain to them why you fired them. But before you do, you need to give them one or two warnings or constructive criticisms. People cannot just discover they will be fired without any previous feedback to help them improve. People sometimes also don’t really understand what the expectations are.
Sometimes it's also intuitive. When you start having doubt you should wait a bit and see if the situation is not improving. If it doesn’t then you should fire them right way before it’s too late. It’s very importantly to be clear with the person.
Firing is a science and an art.
Luka: What’s your opinion on VCs and associates in VCs?
Philippe: VCs make investments in order to make returns. They have 20-30 portfolio companies that they expect to generate them returns. So, firstly, they consider the financial side of your business when they are thinking of investing in you. “Will it generate us the returns we need?” They are not necessary in love with startups and companies for the sake of supporting entrepreneurs. They have investors to please and numbers to hit.
Founders should have a good understanding of the motives of VCs when pitching.
Concerning associates, yes associates do market research and waste your time. It’s hard to know this when it’s your first company. But I don’t lose much time with associates. You pitch, they ask questions, etc. And often times nothing comes out of it. If the partners or important people in the fund are not involved, you are probably losing your time.
Luka: What mistakes did you make because you were too naive?
Philippe: Retrospectively I would say that the main learnings I’ve had were hiring well, firing fast and raising enough money to really make a difference.
With hiring I was hiring the wrong people and not firing them quickly enough. It's part of the process. But it’s also the most challenging part of any startup or company.
Regarding funding, we always had this philosophy of not trying to raise too much money and being reasonably lean. But in the beginning, we raised too little money. Because you need to have enough cash to operate for at least 18 months. But in the beginning we were raising only for 12 months. For the first six months we were focusing on the business and then for the next six months we were focused on raising the next round. When you raise for 12 months you can’t make a difference because you’re constantly raising money. I’d recommend trying to raise enough money for 18 months.
Luka: What's the biggest sacrifice you've made for your company?
Philippe: It’s a massive sacrifice to start a startup because it's both physically and mentally exhausting in the long run. It really impacts your health. It's not something that people from outside of the company can understand.
It's a never ending story of being always under pressure. Pressure to hire, fire, make the numbers. You have to understand that you will definitely be under pressure 24/7 all along your startup journey. Maybe when you're already consolidated (we're not there yet, but soon we will be hopefully) then it starts to be a bit calmer.
But while you’re in startup mode which usually lasts a few years, it's constant pressure and stress.
Luka: Have you ever done something that you're not proud of?
Philippe: Not really. I just spoke to friends recently about that.
There are many small things that I would have done differently. Sometimes I was too pushy with some people for example. But I feel that I did nothing that was unfair for anyone like my clients or investors. I feel that I have been fair.
I’d recommend always being fair because in the long run if you are not fair with people you will pay for it. It’s important to be well respected.
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