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I sat down with Ricardo Josua, CEO/Co-Founder of Pismo, a global tech company that builds banking and cards solutions for digital banks and large financial institutions. Headquartered in Sao Paulo, Brazil, the company has operations in Latin America, Southeast Asia, Europe, and the US and processes $210 billion dollars in annual transaction volume. Pismo’s investors include Redpoint Brazil, Softbank, Amazon and Accel.
Importantly, back in June 2023, Visa announced a definitive agreement to acquire Pismo for $1 billion in cash. Making it one of the largest fintech acquisitions announced this year worldwide, and certainly the largest one outside of the US. The transaction is still subject to regulatory approvals so we couldn’t talk that much about it.
In this episode, we discuss:
From Brazil to the world – the importance of having a global mindset from day one
"We decided that that we wanted to be a global company from the get go and that had implications in Brazil, right? So first of all, all our documentation, everything is written in English. So even for Brazilian clients in the beginning, you only have Brazilian clients, why do I have to train my team to speak English? Why do I need to see your guides and English?"
From the very beginning, Pismo decided to be a global company. This decision influenced operations even in Brazil, their home country. All their documentation and guides were always written in English, which is the de-facto global lingua franca, essential for international interoperability. Moreover, after launching in all continents, opening offices in multiple countries, and hiring people all over the world, Ricardo challenges the idea of significant cultural differences across borders. He believes that in today's interconnected world, entrepreneurial traits and desires are consistent across various geographies. He emphasizes that people globally share more similarities than differences, underscoring Pismo’s unified approach to serving diverse markets.
Partnering with fintechs and large banks – how Pismo went from mostly fintech clients to selling to some of the largest banks in the world
"We have many more FinTech clients than we have incumbent clients. However, our revenue still comes at a disproportionate level from incumbent players. Even when you get very exciting and well-funded fintechs."
Original Vision vs Reality: While Pismo's original vision was largely consistent, their strategy shifted over time. Initially, they aimed to enable fintechs and new market entrants, but they soon realized the importance of serving enterprise companies and incumbents in the sector. Despite the growing familiarity and prevalence of fintechs, incumbents still dominate most financial markets. Fintechs account for only 2% of public revenues for financial services so for a fintech infrastructure company like Pismo, selling to incumbents is a matter of survival. Although Pismo currently has a large number of fintech clients, a disproportionate amount of their revenue comes from incumbent players.
Building a modern system while still connecting to legacy technologies
"If you look at most of the protocols for banking today, they were built 30, 40, 50 years ago, we still use them. This is pre-internet and certainly pre-smartphones in all cases. And you can use and communicate with those systems, but those shouldn't define how your system is built."
Fintech companies are known for innovative user experiences and customer-centric solutions, but they often encounter challenges and bottlenecks when relying on outdated infrastructure and legacy systems. To address this issue, the Pismo team designed the company with the primary strategy of continuous recycling of services. To future-proof the technology, they devote significant resources to replace or update the existing infrastructure regularly, ensuring the technology remains current and effective. In fact, 20-40% of the engineering team's time is allocated to refactoring existing functions, rather than solely creating new ones or expanding existing functionality.
In order to build an international and portable platform, Pismo created a universal layer that addresses the core components of banking and financial services globally, rather than specific local or regulatory demands. This underlying layer consists of universal components like ledgers, transaction processing, event-driven networks, and entity management systems. They also understood the importance of connecting to existing and new technologies without allowing those technologies to dictate the design of the system, and just because protocols are decades old doesn't mean a modern system should not be built around them.
Advice for company builders and leaders to navigate both great times and choppy weathers… and a lot more!
“If you're growing 100% a year, and then you start growing 20% a year, that will change how you manage your business. That will change your perception, because it's easy to be a manager where everyone's getting a promotion every three months. It's easier to be a manager when the company only celebrates successes and doesn't have to learn from much failure.”
Ricardo has been through multiple crises and bull cycles and knows first-hand that managing a fast-growing company or navigating a bull market differs significantly from managing during slow growth or a bear market. He reminds founders to be aware that they may need to adapt their strategies based on external market conditions or internal company dynamics. There's a clear tendency among leaders to overly credit themselves during periods of growth, but when growth rates decline, even slightly, it can dramatically alter management's perspective and challenge their entire strategy. Managing in a scenario where promotions and successes are frequent is easier, but real managerial skills are tested when facing market downturns or internal company struggles. To build a lasting company, you have to prioritize the basics, regardless of market conditions.
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Miguel Armaza is Co-Founder & Managing General Partner of Gilgamesh Ventures, a seed-stage investment fund focused on fintech in the Americas. He also hosts and writes the Fintech Leaders podcast and newsletter.
Ricardo Josua, CEO of Pismo – Visa’s $1B Acquisition, Going Global From Day One, Building Trust With Fintechs & Large Banks