Ingo Uytdehaage, Adyen | All-In Summit 2024

and this has been one of the hottest growing areas of financial services Adan is not just a normal payment provider while payments usually is a very unsexy piece of our industry you guys made it sexy growth in our Ona platform has been very significant we investing for uh for the future if you work with newer technology you get to better quality we completely rebuil the infrastructure that typically is run by Banks and by doing that we come to much better conversion rates uh for our customers ladies and gentlemen the co CEO of aen hi good see hi good see you hi good to see you good to see you let me um give just a little brief overview for a second so Ingo has been with aen since

uh 2011 first as the CFO and now as co- CEO since May of 2023 um aan is based in the Netherlands uh founded in 2006 and is one of the largest payment processors in the world world today uh in 2023 Adan processed nearly a trillion Euro in payment volume uh they had net revenue of 1.6 billion EOS and an e Jesus Christ a EIT 743 million EUR a 46% ea margin incredible um it's a capitalist conference we applaud for Eva oh my God can you just say it one more time the company reported a 24% year-on-year Revenue growth in h124 they just expanded into India which is really interesting we want to talk to

you about that um your market cap is today actually I just checked about 45 billion American dollars um so it's one of the most successful not just European tech companies of all time but frankly tech companies of all time so welcome Mingo thank you thank you for having me today um you're former CFO yeah I'm going to put you on the spot um you're no longer the CFO nor the co-ceo of Aden you're an analyst at an investment Bank yeah and J C your managing director says put together a spread trade you can be long or short one of Aden and stripe how do we construct the business case that's a really good question just just the parameters of how we construct

the case I would say if you look at this industry um for ourselves and stripe there is a lot to win because I think we are the only two companies globally that are investing in technology in financial technology and if you look at where most of the business currently is it is with the traditional players it's the banks it's incumbent players so I would certainly go for long for both of us because I believe that we together going to change this industry uh that's how I look at aen versus tripe we come from different angles uh but what I really appreciate about them is the fact that

they also innovate and uh competition is good we're a company of a lot of athletes we like to compete and competition is good so when you do compete in the marketplace are you competing then with stripe or you competing more with incumbents where traditional players are looking for payments and then yeah I would say like of course there are areas where we compete with stripe uh but if you see where we win most of our business it's with the traditional businesses so indeed the incumbents the banks that's where volume comes from U so that's and and what do they find they find both the cost is too high and then they find the

technolog is too brittle for what you need to do today exactly I think if you look at this industry um Banks incumbents haven't invested for for ages uh we build everything from the ground up so we have a single platform globally uh and what we can do is we can basically uh lower total cost of payments and uh increase your authorization rates and that combination is very powerful um and the reason why we can do that is because we have lots of data in a single platform now at the end of the day you guys still sit on top of these fundamental rails right like meaning is there a way where we are in a world where the traditional payment

infrastructure and then you know the traditional credit card rails is there a world soon where all of that disappears or will that will there is there enough like specifically the networks like Swift the banks themselves El what role why these people why ex why exist well it's a good question I think indeed what we try to uh to replace is the fundamental infrastructure uh so in the US uh we have our own access to the fat we have a li a banking license in the US uh so we don't need commercial Banks to be successful uh and I think that's very crucial in our development if you take long term also on the platform side a lot of small businesses they struggle to

work with banks uh and a lot of the uh software service providers they of course build banking as a service and there are only a few companies globally that can offer this and we want to be that player that that that partner for these type of companies to help them sell Financial products uh so that's also why we have expanded from payments to broader Financial technology do you have you ever had a conversation internally which said something along the following lines ah 46% DEA that's a lot we don't need that you know how much of that 743 million would grow the business if we just took it to zero to our investors for the next few years

like could I grow twice as fast is that better in the long run how why why be this profitable I guess maybe yeah I think profit is for me the same as value so if we deliver value and also have premium pricing uh Merchants are willing to pay a premium and pay the B basically for the value that we bring and I would be afraid that if we would just go for the lowest price because I think we potentially could uh we run at the lowest cost as an infrastructure um you would basically destroy a lot of value that's in uh still in there and um I'm not sure if you would just go for price um that you have the right conversations

about the value that you bring so that's the reason why we haven't done that so far um but it's of course a question that you should always ask yourself like can you invest more in the business to accelerate growth and that's still the trade of the making every day our main focus is on Revenue growth if we can invest if we see an opportunity we will but we have a long-term view there what's it like building a company based in the Netherlands what is it like hiring people where do you hire people do you make them come to the office yeah how the culture changed yeah so building an a company in the nland OR starting in the nland at least at least um makes you

aware that you need to go International from day one like the nland is a super small country uh you can never build a very successful business just based on population there so we immediately went uh International but in the beginning uh we hired mostly into Amsterdam so we had a very strongly focused amdam operation and that shifted like uh 10 years ago so 10 years ago we uh went to the us we started to build our team here uh there's a very significant base here now in the US we have more than 800 people uh working in the US uh so it's our um largest Market outside of Europe uh growing fastest is already onethird of our total revenues the US and I find

that um very interesting to see also how that has changed our company we have a different perspective on how we should serve um Merchants I think not being local uh in the beginning did not help to solve the real problem so you need to have product and Engineering very close to where customers are and I think when we made that shift um we got more traction and with the current setup with like over a third of our revenues already in the US uh we see that we win a lot of domestic Brands um and I think we're also proving that payments is not a commodity because do you do you find it um is there differences in employee issues employee quality between America and Europe I think there are very

talented people in both markets um I think the honestly the technology Market of course in the US is way more competitive than Europe I think we benefit from the fact that in Europe we are one of the few companies um so yeah it's relatively easy we're our brand awareness in in in Europe is higher than in the US that's one of the things that we're working on right now to make sure that more people get to know us in the end we're business to business brand uh so that requires additional um push to uh show what we do but we work for the the largest companies globally whether that's online with we work for Google meta Microsoft for retail H&M Nike Gap so there we work for the Best Brands and

by also having them as referral customers it is better to get into a country like the us if we were sitting here sorry some of the like challenges with being based in Europe maybe not on the commercial side but just on the shareholder side uh American investors kind of public investors private investors are mostly investing mostly in private American and public American companies is it hard to attract a shareholder base does that affect the valuation because it's challenging to do so and if you look at the valuation difference in the private market for stripe versus your public valuation there's a gap there's a difference in the multiples your it's a 2X gap on

numers that look very similar and your numbers are similar some of your metrics are much better maybe I don't know if if you want to explain the valuation Gap difference or maybe just talk about the challenges of building a shareholder base and shareholder interest as a European company yeah that's a good question like when we uh our biggest private round was in 2014 and then uh we realized that we want to have Global investor base that's when iconic uh General Atlantic but also TASC from Singapore came on board there's still uh they have been very supportive in the Years up until the listing we listed in 2018 and when I worked on the listing we

were quite convinced that we would list in the US uh given the fact that um most of Technology stock list here but we when we looked at valuation and also index inclusion Etc we realized that listing in uh Europe was as easy as the us or even e easier um and that from a valuation perspective also if we benchmarked it to other IPOs at that time that we even got a premium for listing in Europe because we have a fully us uh almost like 60 65% at the listing us investor base so it was almost like a US IPO um and we got a premium for being a scare tax stock in Europe um and I think

that combination worked really well for us there is a difference I think between uh public and private Market and I think that is that explains for me a bit the difference in in valuation you think that'll get rationalized over time I think so ultimately if uhe TR if we're if we're both public um you're going to compare the same numbers and it's a combination of growth rates and profitability you ever do a deal would you list in the US as well if if I would list in the US like if there would be no liquidity in Europe I would list in the US but there's sufficient liquidity in Europe so um you need to have certain

size but we have the size there is liquid liquidity so it's not yeah these valuations will merge at some point when the people who are betting on promise versus performance you know one more the public market is performance priv Mark these EIT margins are bananas yeah it's fantastic so if we were sitting here 10 years ago this entire conference um would be you know uh centered around crypto and this amazing impact and how your business would absolutely be destroyed by crypto and there would be no need for banks or for countries or for nation states everything was going to be blockchain yeah it was just everything's going to

be solved by blockchain and everything goes away um and that obviously none of that has happened but one thing that has happened that's really promising um or interesting is stable coins you have Circle in the United States doing really well going public um I believe they're still on track to do that then you have tether obviously banned in a bunch of countries bunch of problems um and being used for a lot of um illegal activity I'm curious what your thoughts are though on the concept of stable coins and you know their their impact on the industry and the business because it does seem to be working especially internationally we don't see it here in the United States but in other countries

tether and circle these things are being used for lots of transactions and people believe they'll ultimately be used for business transactions in a major way what are your thoughts on stable coins yeah so I think the question is like are you looking at indeed domestic payment flows and then of course I don't think that there is a high need for stable coins in well-developed markets and ultimately we are processing well-developed markets at the moment um if it's about inde crossborder type of transactions we still work with relatively old systems like Swift um with all their challenges they try to innovate like that's the area where I

would see there is a a future for stable coins indeed if you need to would you ever consider launching one no I think we would consider working with stable coins so you might partner with a ex yeah that's always been our model like we we want to bring Financial technology to our customers but also working together with the partners that we have because they are ultimately also making the a lot of success and and that's where we want to help them Ingo one of the things that we talk a lot about is censorship um but beyond idea censorship there's an even more probably corrupting thing which is financial censorship and deplatforming and the the way that I think it came on our radar

was there was these truckers in Canada that were protesting Co a few years ago and they effectively got deplatformed from Financial Services um how do you balance that as a company that becomes this critical artery to send you know money back and forth and process money for millions and millions of people yeah I think one of the ways how we want to do this is work with a lot of platforms that basically have these um truckers as an example as a customer and I think the unique thing of these platforms they have a lot of knowledge about these people and I think combining that knowledge with uh providing Financial technology is a very good

outcome because they have their knowledge about the industry about um the business data of these people uh combined with what we know uh is needed in the financial industry everything around uh money laundering prevention terrorism financing if you combine that I think you have a very strong proposition um and I think that that's the answer to the more traditional players like the banks that also don't always have the knowledge to do this at skill I think that's what we have been timating uh from the start like everything around AML machine learning we we've invested highly in that to to build something very scalable and that's what we want to offer to our companies

is is it complicated being a European company more than an American company in that context where there's a lot of points of view that Europe has and do they try to exert that pressure or not no I I think we have really shifted from being a European company to a global company and uh we need to comply with local regulations everywhere we see ourselves as much as a US company as a European company uh if you look at the operations that we've built here we want to make sure that we can compete with each and every uh competitor here in the US on a uh on the same level so it's needed as you that you comply with tell us um tell us you're moving to India I mean not you personally but the company

yeah the exposure in India is incredibly dynamic as you know lots of varying regulations as you also have probably dealt with tell us about the journey in India yeah it's a long journey um I think we started to work on this in 2018 2019 and one of the most difficult things is all the data localization rules in India uh so if you have a global platform uh we have distributed database around the world and then you need you realize that you you can't store data in of of Indian people people outside of India so we had to really rep platform the data infrastructure that we have but we did that we have local data

centers now in India we got all the licenses and we're one of the few International companies maybe the only one right now that can offer this to International companies that want to go domestic or International companies that want to go cross border and of course this is um a relatively Niche U play in India today today um but it's a high need of our biggest customers totally and and that's what we've always focused on we follow our customers if they want to go into a new country we make sure that we're ready for it and this is a long-term investment so this is already six years going on um I mean to me India is like China Circa 2005 so if you just

closed your eyes yeah and just bought the entire country index in 2005 you'd look back in 200 even now and you'd be way way ahead and I think India's on the verge of that multi-decade kind of Renaissance with less regulatory risk on the back end yeah well at least the regulatory rules are very clear from the start and I think that's what we appreciate like ultimately our company is a combination of Technology regulatory knowledge and the right banking licenses and if we play that out well we are in such a unique position so everybody is you know bling oh sorry Go go Jason no no finish go there everybody's talking about Ai and you

have to have an AI answer but what's the real on the ground experience of trying to build stuff with machine learning and and AI is there anything in production that really matters and absolutely how do you think about the future so one of the thing so there I think two angles to this the first one is how we uh optimize uh transaction routing uh we uh just also launched uh a new way of us debit uh routing in the US uh where AI helps us to make the best tradeoff for merchants to lower the cost so you get 20% plus lower cost uh if you route that well and at the same time higher is intelligently figuring out these rails

are cheaper in this moment process over here and it's a yeah and it's of course a trade-off with the authorization rate right and yeah we work with uh eBay Microsoft Etc to uh to launch this um and very good results so and that's in production that's in production that runs W the other part the other angle is of course what we do internal for our support functions that's more on gen um we are uh we've always built a company around open source also here we're open sourcing um the uh the models uh but we have a lot of uh data of course internally that we can use for that have you have you found enough motivation to displace or Reason to displace the humans that do the

equivalent work or has that not happened yet or will it happen do you think or does the business just grow and everybody is growing and and like we've always had such a high uh focus on automation if if you ask where does iida margin come from that's because we if you look at our volumes and the number of people that we employ it's a it's a really low number relatively um and we will continue to do that so AI is going to help us to further scale um and I don't think that we are come on okay Engle I have to push you yeah I mean do you look at these American companies burning this kind of money to do a business that's smaller than yours of this and like do you

scratch your head thinking how do they what is going on over there do you think that these are huge Investments and we are uh closely following it like where can we benefit from it but we're always a bit of a smart follower I think that's that's always been our strategy yeah like what can we use and what can we actually apply in production we are so much focused on execution I think that's also the only way to prove to uh like we started the company with Enterprise Merchants the only way to prove to the biggest Merchants out there is to show that you can do it and just talking about it it's also not really European just to talk about it we are doers we

like to build things and that's how we've created it Ino I'm wondering um how you look at um authoritarian countries dictatorships monarchies whatever um and providing Services inside of those uh this has been a very polarizing issue obviously um some companies have chosen to not operate for example in China because of Human Rights issues and having to you know hand over dissidents in the case of a social network let's say or they're outright band in them um and then you have this Alliance starting uh the brick bricks has expanded and added a bunch of countries and there's talk about hey maybe Swift we're going to get off of Swift and we're going to create our own

brics version of Swift um are you operating in those countries how do you think about that and and there's a lot of hand ringing about oh we're going to be off the US dollar and and off of Swift um what what are your thoughts on that entire space take it where you'd like so the way how we uh approach this that we ultimately look at like what are the markets that we want to be active in China as an example I think the Chinese domestic Market is a super difficult Market to be active uh but we have a huge team in China selling basically to Chinese Merchants that want to go here in the US uh and that's a very successful route so we try to be

pragmatic here um ultimately if we can comply with the local rules uh we will um and it's it's a tradeoff like can you do business somewhere there are countries where we have chosen not uh to go so far also because the demand is limited also maybe it's an unstable country um it's we do it on a country by country bases at the moment now what about this sort of anti- Swift movement America has too much influence the West has too much influence over the movement of money they can do things like sanctions as David's talked about on the on the podcast a couple of times is that real is it is there really going to be an alternative to Swift I think there is a there is a

likelihood there will be Alternatives yeah and Al I think to your example on stable coins like that could be an alternative longer term also if there are issues with with SH with uh Swift it just may not be a legislative alternative it may be more technological like yours and others yeah yeah but I think there are companies that also try to solve this like to have less depandance on Swift even in in in this Western World yeah um do you guys run sentiment inside of all these payment flows or getting a sense of like the economic health of certain countries and um has there been any thought to sort of sharing those so that um you know like in America we go through these things

and Europe too unemployment rate comes out you revise it uh GDP numbers come out you revise it and nobody can actually act on these things until you're looking back 6 months which is a ridiculous way to run an efficient but I'm sure companies like your or stripe Shopify yeah have you guys ever thought of working together to create a a more Dynamic view of economies it's certainly something that we want to do with the data I think currently what our challenge is that most of our growth comes from um share of wallet winds so it's very hard to to um separate this from the underlying growth yeah the moment we become a more stable company and that that's years away then I think

that's more possible but it's like the data set that we sit on like we have I think over a billion unique Shoppers in our platform so it's a billion humans yeah that that's a in that's yeah so there there's certainly more to tell um and and and that's absolutely interesting topic do you ever see PayPal in the market I'm just curious what ever happened to it yeah well PayPal is an important partner of us so uh we work closely with them also offering um we just did a press release on their new Express checkout that we do together with them so we see them more as a partner as than a than a competitor I think that's how how we see

them yeah um last question you we've made a lot of fun of this whole thing this past week founder mode manager mode whatever um but precisely for you you work as a co-ceo yeah which is a bit of a unique setup um but when it works it can really work and can you just describe us to us how you guys have built such a great business and how you divide and share and conflict resolve and what does it mean founder mode versus manager mode yeah I think the way how we built the company together so Peter is the founder um he focuses currently more on culture of the company um and is doing a lot of founder conferences meeting our uh Merchants we all meet our Merchants quite often I see

a couple of merchants on on Thursday in San Francisco so that's an important part I think that's how we uh do this but it's a partnership already like for 13 14 years like that's the time that I know Peter so it's very natural way of doing things and we have both our strengths and we have both our weaknesses and we know it from each other and I think that makes it a successful combination thank you you guys please join me in thanking ino for joining app thanks