Philip Belamant is the founder & CEO of BNPL firm, Zilch. Philip started his career in mobile gaming in his native South Africa but quickly realised the potential of BNPL and decided to set up his own firm, which is now worth over £2bn.
Philip explains some of the challenges he faced when initially trying to break into the market, how Zilch’s offering differs from the incumbents and his thoughts on the competition. Philip also goes on to pull no punches when questioned on VC’s and their suitability when raising investment. We end the conversation by discussing the benefits or lack thereof, of different marketing mediums including television and social media advertising.
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James: [00:00:00] James: [00:00:00] Welcome to riding unicorns. The podcast about growth startups. On James Pringle and I'm a technology entrepreneur and investor and the founder of Pringle capital. My co-host is Hector Mason. Hector as a partner at B2B investor episode one ventures. Our mission is to uncover what it takes to build a unicorn business.
For season three, we're speaking to some of the best founders, many from unicorn companies and asking them about their journey, operational insight, tips, and lessons they've learned along the way.
Oh pleasure. Um, so for that, we're starting every episode in season three, by asking our guests, what does entrepreneurship mean to you?
Philip: Yeah, so for me, really entrepreneurship means action, ongoing and consistent action. That's really what it means to me. So, and why I say that is because. I think today, a lot of people almost glamorize this, this idea of entrepreneurship where people point to someone who's an in troponin and say, you know, I want to be one of those.
It's almost like I want to be a lawyer or I want to be a doctor, you know? And, and entrepreneurship is really not a thing it's, uh, it's really just ongoing and consistent action. Um, and [00:01:00] you know, the, again, the reason I say that is because a lot of people have got great ideas. Everyone's got fantastic ideas.
The question really is what have you done about it? And, and that's, that's how I think about intrepreneurship is that if you have an idea, that's great, but have you acted on it? Have you really moved to go and implement something and go and do something? I mean, at zilch, we actually see those a lot of the time with people say to us, oh, well, we maybe could do this.
Or someone says one of the big providers or institutions could copy you really? Okay. Well, let's see them go. Do. Um, because it's very different to say I'm going to do something and actually go and do it. And I say that by the way, not necessarily meaning that you need to be successful in your, in your actual doing, you may be unsuccessful rarely.
The trick is to get up again the next day and do it again and again, and again and again, until you finally, um, you know, pivot to the point that you make something work. And so for me, really, I feel like, [00:02:00] you know, in entrepreneurship is really action. That's, that's the way I think.
Hector: That's interesting. Cause I, I suppose as you're talking now, I was kind of putting together a Venn diagram in my head and on one, one circle was biased to action.
The other circle was, um, great ideas and the overlap was like, um, you know, entrepreneur. Um, and I think that's kind of what you're talking about.
Philip: Yeah, and I think kicked it, to be honest though, it's exactly that the question is how much overlap rate is that I actually would say that most of its action, um, you know, you, you could have a, a reasonable idea with lots of great action and you could be quite successful.
You could have a phenomenal idea with no action that you would achieve. Nothing. Yeah.
Hector: I think that, yeah, that's, that's really interesting to, and I think about this quite a lot, that the. You know, take, take, take any pre-seed company, um, you know, with a reasonable idea. Uh, there's probably a founder out that an amazing founder out there who could make that business, some sort of success to that varying [00:03:00] degrees.
Um, and so, yeah, that, that would point towards the sort of action first, um, approach, I suppose. Um, but the, yeah, so, so tell us about what, what was your inspiration for starting zilch?
Philip: I been ready. The inspiration comes from a little bit of the background. To what I've done previously. And that is, um, you know, I've always been an troponin and again, you know, I use the word, but really I've not thought of it as a thing.
I've, I've never worked for anyone else. And I'm not saying that, you know, that was actually an aspiration of mine. It just never happened. You know, I, I left university and I started a mobile gaming company, um, thinking about like Farmville, but I'm knocking at 33 tens and Samsung D 600, so pretty, pretty bad version of it.
Um, and really people could use prepaid. A time to buy items in the game and they could send us to one another into competitions. And needless to say, they kind of stopped playing the games, but with transferring this credit to one another. So we just removed the games [00:04:00] and ran with the credit transfer business.
And that became a mobile payments company. And really, we rolled this off into about 27 African countries. And one of the biggest products we moved into was, um, you know, financial inclusion services, one of which was access to. Credits, um, installment based credits and, and this was already sometime back, 14 years ago already.
So, you know, so, so having done that very successfully on the African continent and then moving over to the UK about seven or so years ago now, um, you know, I was just surprised to see that here in the UK access to free or very low cost credit was still something that's not true. Um, you know, widespread.
And so, and so the inspiration for me was to build something, to build a sizeable business in a developed market, because obviously, you know, I come from emerging markets and to build something sizable in a developed market, but to solve a pain point that still [00:05:00] exists yet today that, that we really felt I did a great job of solving in the past in emerging markets.
And that was really just, um, you know, providing people with access to free or very low cost. And, and that's really where the inspiration came from. And of course, it's, it's, it's maybe a little bit playing it safe because it's defaulting to my strengths, you know? Um, you know, and what I know and that's payments, that's lending the financial services.
And so, and so really that's, you know, that's how I started thinking about, um, the space here in the UK. And obviously at the time I was looking into businesses like. Uh, Klarna or after pay, uh, companies like, uh, from, from the U S and I just found the model was quite interesting because these guys were doing sign.
That was really quite cool that we were doing 14 years ago in the middle of Africa, people were using our products, uh, to pay for food and clothing over time for. Um, and here you had these, these cool companies really doing, saying those quite 60 and they were doing [00:06:00] really installment payments for things like boot and pretty little thing.
And I saw sun and cool brands. And so what I just thought was, you know, this is, this is fascinating. It felt to me a little bit like the cloud versus server computing. Um, it's just, uh, uh, an iteration of something that's, that's really been around for some time. Um, and that's really, when I felt the opportunity would exist to build a BNP.
Version 2.0 or something to leapfrog what the incumbents were doing.
James: And we talked about action at the beginning. So what actions did you take in the first sort of 12 months that you think got you off to a good start? Or what did you do to kind of take from that inspirational idea and seeing that market opportunity through, to sort of your first 12 months?
Philip: Well, I mean, you know, rarely, I think the starting point was to. Not necessarily build a business plan because I don't think any of us have ever seen a business plan. That's been correct, and they're always wrong. But, [00:07:00] but what, you know, if you sit down and start to write what you're trying to achieve, it sometimes makes things clear for you.
And so, and so really the action that I took is you build a small financial model. Make unit economics on this thing work. How is it that I think I can make the unit economic work and then, and then from there, it's really all about the technical implementation of this. So, so for me, You know, you look at the incumbent model, which is fine, our pallet as a button on the checkout page.
And, and it was all about how is it that we overcome the known challenges to this model. We don't want to have to deal with retailers. We don't have to integrate, how are we going to worry about the compression, the downward pressure on the margin? How do we solve those problems with a technical solution?
And then we come back. You know, back, solve that into, into a product offering to a customer. So, you know, so really the action was you go back to partners and this is where I was fortunate. I had a business that was [00:08:00] successful before, and I worked with partners like MasterCard, et cetera, beforehand. So I knew them.
And then you need, and I could leverage that relationship and go back to them and say, Hey guys, I want to build. And installment product on your rails. Um, you know, is this something that interests you guys? And obviously they were saying, well, listen, if you want to do this, we, we love it. We'll, you know, let's partner up and make it happen.
And so the action ready was, you know, go out to people that I know and I can trust. And I've worked with before, around me, bring them into this new venture and say, Hey guys, let's get going. Let's go and start to build. So we went from zero to MVP in 45 days. That was, that was really the action that we took.
And for me, that's, that's the best way of doing things. Let's go and put a product in the market as fast as we can and begin iterating from that product. And that's really what we did. Yeah.
Hector: It'd be good to, um, to understand exactly how your product is differentiated. So, so I know that it is, but our listeners might not have come across seltzer.
Hopefully they have. [00:09:00] Um, but it's yeah, be good to understand. So what exactly is your product and what, what did that look? What did that partnership with? Was it MasterCard visa. Um, what, what did that
Philip: look like? That's right. It's MasterCard and rating. What we did here is traditional BNP L final Panetta. Um, Randy, what happens is the provider will go to a retail.
They will negotiate a commission per sale. They will integrate with that retailer and the retailer on sells them at the checkout page. This is the traditional model. So this is what you see in the incumbents. Now, now, by nature of that model, what these companies have done over the last number of years, you know, companies like Klarna are 16 years old, um, after pay is almost 12 years old.
So they've had a lot of money, a huge amount of time to go and build this big naked. Which has obviously, uh, quite difficult to, um, to disrupt as a challenger, assuming you're going to do the same thing. And so really what we did at zilch is we had a look [00:10:00] at this and we said, what could we innovate technically to give us an advantage?
Um, two ready go. And just into, to mediate this network effect that they've built. And that's really how we thought about this. Two-fold we need to disintermediate those so we can compete, but we also need to provide something that's much better in the market to the customer, the end consumer. And so, and so really what we did is, um, we thought a little bit about the.
The same way. You know, we've seen other companies do this to incumbents in the past, and if you've got a business with a big network effect, you can only really disrupt this in two ways. You either have to go and build your own network effect in a lower value market, something that's more niche. And then slowly in Corona.
On the incumbents, like for instance, let's say an Airbnb to booking.com. The other way you can do this much faster and more rapidly is you can do this, like zoom to Skype, right? Skype had built this big network effect you and I both had to have Skype [00:11:00] in order to speak to each other. And zoom came up with a technical.
Uh, solution, uh, or innovation that basically allowed them to disintermediate that and they say, well, hang on. Why can't I just send you a link that you can click on and speak to me, even if you don't have zoo. And that's how they made this entire network of fake seven nights. And so with zilch, we took a similar approach.
So what we did is we said, why don't we go direct
any way that online, offline, Anywhere they want find them, then make it the customer's problem. Which retailers can you go to? What can you pay for? What if you have a council tax bill that you would like to split, you can't do that. Why is all of that? The customer's problem was our question. Why don't we, why don't we take this?
So that's fundamentally the difference in how we approach things. [00:12:00] If you look at traditional BPL, the customer is actually the retailer. And by nature of that relationship, the in consumer uses the product. In our case, the customer is Chino. So all of the segments of the customer
with each and everyone, not customers. So, you know, initially. We a few months back was paying one with cash, you know,
at the time in the UK and 40% of our sales in a day right now. So we can come up with innovation, build it in a two-week period and roll it out to every customer we have for a dumb. And they can use it instantly at every retailer that we have, which is every MasterCard accepting retailer instantly when you look at the traditional model.[00:13:00]
So, so really that's the fundamental difference between the.
Hector: It's great to hear. And I love, I do love the, um, the, the comparison to zoom. I think it's interesting. Um, you know, displacing incumbents is difficult and that's a, it's an interesting approach. Um, w was it success after success from day one? Or were there some challenges that you came across that you can sort of think back to and, um, tell us about
Philip: I'm sure, like you guys know and listening to the podcast. I think the answer is pretty simple. It's just going to be right.
And maybe I have to say it's just,
you know, a lot of people think about this as [00:14:00] sort of inspiration or motivation. I think about it more as discipline. Um, you know, because things are not going to always go right. And what needs to get up the next day and really work to get something working that otherwise it's just be the case in this business, but businesses in the past, I mean, you know, everything from fundraising through to operations.
You're starting to actualize sending a product to the inputs, tumor capital markets. You have to raise money to fund the right out of the business. And, you know, we had, uh, a well-renowned, um, VC renege on a chair sheets of hours, really just before we went into COVID. Um, so it was done. We were like, great.
We've got this round done, actually reneged on the chair sheets. [00:15:00] As, as COVID ready yet. And that left us in a very interesting position where obviously we, um, you know, we had to double down to fund the business for ourselves and invest more so in the company and then come back to market six months later, at which point we were successful and then closing our series B sandwich points, we sort of, we will not be favoring VCs.
Um, Just to say, you know, on the funding side, there's been challenged off the chat, comfortable with hearing. No, uh, hasn't you to things maybe is the case. Um, and at the same time, the business operationally, there's just so many things to deal with on an ongoing basis that don't necessarily, you know, how has your, you have to change that business on the one going basis.
We then had COVID this. Wouldn't you what would happen? And of course [00:16:00] we're growing during this period, and that was a huge, um, you know, know how customers behave and so
together with the team. And this is where it happened.
Because there will always be something. What is that worrying about? There's a number of other people who are doing so, and be like, okay, you know what guys.
James: Yeah, it was really interesting. I'm sure we'll come back to hiring team and culture at some point, but you mentioned some of the fundraising challenges. Um, you know, Crunchbase will tell us that you've raised over $330 million from the likes of Goldman Sachs asset management and DMG ventures and people like that.
So can [00:17:00] you give us some insight into the process around raising such large sums of money and how does the series C differ from an earlier round, such as a seed or series a for example,
Philip: Yeah, I would say on this, it's always fundraising. It's just a complicated living and moving thing. And every business, I think it would be not could have a, a formula that works for every business, um, for us.
However, I think it solves is that we're very fortunate to actually be in London in the UK. And, and, you know, there is a huge deal of support ready for entrepreneurship in this country. Everything from you've got, you know, so, so government investing heavily radiant in Trump and his, and the adventures.
And then on top of that, you've have Hynek with ultra high net worth, and then you move to sort of VC institution [00:18:00] that doesn't so on and so forth. So there really is a massive ecosystem. Funding in this country, which doesn't exist in a lot of other countries. Particularly if you look at emerging markets like South Africa, you just don't have the high net worth ultra high net worth.
You have no government support and the VC capital to that side of the business. So small, you know, if you don't have backing from fans as well, you described it to do it. It's just difficult. It's that something that you kind of rate.
You know really is you don't really want to go. That, that we think is a meeting between myself and my co-founder, you know, we really take a view to this and we say,
you should just go, right. You really want to. That's what the capital that you [00:19:00] need to go and execute your plan because country to a lot of VCs believe they don't actually know how to run your business. Uh, you do so
really I'll talk with money. If you can do this through your eyes, that would be great financial service products. Of course we don't. But if he did.
On your sheet, trying to find
Philip: funding for this, this type of methodology. Gotcha. Model those angels in use that best you can. And then maybe go to, start to look at engage. You see? And just to answer your question more specific to James, I mean the differences, right? If you look at.
and rounds of up to let's say [00:20:00] maybe 10 versus paying and raising, you know, a hundred million dollars plus a very large valuations. They just fundamentally different, um, you know, different experiences. And so for us, that early experience bots very much the team, this team, this team is, is, is they get the idea, of course, make some savings.
And is this. It's early on BNC. Of course, it's more becomes about unity economics. Can we really see that the product market fit here and opportunity? And so that's where so innovating in a space where actually you can point to. It's quite useful for you to be able to do so to point to and say, this is what we believe we could build.
We'll maybe even build something larger than those, if you're really [00:21:00] innovating in your own space. And it's completely greenfields that that sometimes can also be very difficult because no one really knows how to put you how to play issue. Um, so, so really I would say, you know, using what we did with.
Oh, of which we started to more bringing
table. And since then, that's been huge of huge assistance and help to us.
But I think.
Hector: It's interesting. And I'm really pleased to have someone on the podcast who, who really is, um, you know, talking about the alternatives to VC money, because most of the founders that we've had on, um, uh, have taken a fairly typical path of raising venture pretty early on. Um, [00:22:00] and so they don't feel like just because, um, the two of us are VCs that you have to be nice to VCs.
It'd be good to, to really add. Um, the, the, the horror stories and, um, whatever BS you have on deal bonnet about VCs. But, um,
James: so we also both have things where we're trying to democratize angel investing and promote angel investing and things like that. And we both agree with Phillip that if the UK has this amazing ecosystem, which has actually grown.
Of people who know how to build tech companies who now have the wealth to invest in early stage. And there's more and more operators who are becoming investors. And with the seed stage, we've had Turner Pringle, capital angel network, you know, we're part of trying to foster those communities. So, um, yeah, it's very important.
Part of the.
Hector: Yeah, absolutely. But I think the, um, I think the, the other thing to add potentially and up, I don't know if you have a sort of sense [00:23:00] of this, but I think when you clearly had a company that. It was going well. And I think, um, you know, raising angel money, raising family office money is good. If the company is going well, because you'll then be able to move on to VC money, um, and sort of get on that, um, hype train if we, if we risk calling it that.
Um, but I suppose if a company is not got explosive traction, Then part of the benefit of raising VC money is that okay? You raise a pre-seed from a great VC. You raise a seed round from great VC. Suddenly you have this like halo cost over your head, where all the later stage VCs with more money looking at you, you're on their radar and they can invest in you and give you the war chest.
You need to sort of execute, I suppose. If you've only raised family office money and things don't fly, you know, that there are VCs out there who would be skeptical of coming in off the family office money and all that. I dunno if you sort of, whether you experienced that or whether, whether there was any skepticism [00:24:00] about raising from VCs or from sort of institution investors after you raised only angel and, and family office money.
Philip: Okay. Yeah, yeah. A hundred percent. Right. And the point is, and that's why I mentioned this. The. Every business is different. And I think that that Capitol mall, so we can call it that side is just, um, you know, from, from this, they all different searches, but to you specifically, um, is an interesting thing because you have a lot of VCs and in fact,
They follow it. Right. And, and, and I'm not saying there's anything wrong meeting them because all they do is they say to you, what else is in the road? And if you have something great, that's leading, they follow. If you don't, they don't do it. So in other words, they are even capable of making their own [00:25:00] decisions.
For your business. Why does that? They host any meetings in fact, but needless to say, um, you know, what, what certainly getting an, any VC into the business is attracting following money. There is no doubt about that. So good, good institutional. You will more easily attract. Um, and that even by the way, may maybe family offices too.
Cause you do get a lot of family offices that don't necessarily have the infrastructure to do their own due diligence, et cetera. And so they,
right. I think also from an execution point of view, if they also have some VCs that do, in fact, some of them can add that. Operationally or with deal flow. And that may be another good example of. So why don't you [00:26:00] try and get a VC in earlier, if you don't feel confident in your execution ability or there's just gaps in your, in your knowledge base or what you've may have done in your pause?
So, so that's why, like I said, for me, every business needs to be assessed on merit, but ultimately what we do find by and large still today, and it's getting a significant fee, I would say it's getting better, but what you found in the past, With all the structuring and the terms that you typically tend to preference, how does that look?
Is there a discount in the round? What's the valuation? How does this look? And before you know, it, you know, actually the founders of some of these companies work all day, all night, their whole lives and for the VCs, because patient preferences, there's an entire. Model before they even get into the money.
And actually they've been diluted out of sight because this will still be in negotiations [00:27:00] on, on, you know, on value the weight too. So not only have you not done it as a percentage, but actually there's a bunch of liquidation preference on top of you as well. And, and, and, you know, honestly, um, you know, people to stay away from, I think you can do better within the negotiation of these tips.
High net worth ultra hundred money. You found the office money, which is why by the way. And I think you guys even mentioned this now, James, we starting to see these types of offices because they can offer better terms, the actual exam case. They want a bigger balance sheets and some of these VCs. So, you know, so every business.
In my experience at these so far, the majority of VCs who believe they can assist. Cause you have a [00:28:00] strong minded view to how you want to execute a company, your business and your plan. You know, my feeling would be do your best to go ahead and just get that done and do it just have everyone suggest that they can help you normally becomes.
Hector: Yeah, I think I broadly agree. I mean, the market is so hot now that there are, you know, VCs are having to compete on terms. It is quiet. It's the market is becoming more perfect. And I think th th the VCs out there who are good, uh, probably going to be more valuable to companies than like a family office, um, you know, Equal say they're investing on equal terms, but it's a, it's a really interesting debate.
I think I always like having it, but it's kind of a nice segue into, um, hiring because, you know, I suppose the abundance of money in this market as has meant that actually. There's so much to be spent on hiring people that, you know, the hiring market is become [00:29:00] so tight and it's been really difficult to hire good people over the last 12 to 24 months.
Um, with all of these well-funded startups, paying huge salaries and options or all the rest that goes with it. Uh, have you guys seen that experience and how are you, um, sort of thinking about it and continuing to attract the very best talent?
Philip: I mean, you know, you hit the nail on the head. The hiring market is very calm and we all fortunate to be as, as for instance, zilch, London, which has been tested and it's great, but it also comes with the challenge.
You know, we got Google actually downstairs from us in the same building, but Facebook. And so it is competitive. Um, you know, and what we have certainly found. And I, and perhaps, maybe this is obvious, but in the beginning, no one knows who you are. So even if they go Google you, once the recruiter or whomever says to them, this is an opportunity.
They just don't know who [00:30:00] you are. So it's really, you know, quite a tough sell in the beginning. And that's where you need to really leverage your personal relationships, uh, before and bring it back in, which is what I typically left. And then their colleagues or ex-colleagues they've had, and that's really how we be.
But then once the profile of the business starts to build, particularly since we announced our unicorn round, certainly what we find is the interest of the, in the business becomes a lot, a lot. Great. So, you know, so in the beginning and I would say all the way through people and what they're all about, what are we trying to achieve as a.
Really critical because the market's so competitive. Great talent can actually sit and say, well, I know you'll probably match the salary, but what is it that you guys are all about? You know, what am I going to spend my time? For customers, I really believe in that vision. And so I think if you have something compelling, like we do in [00:31:00] zilch, that's an easiest sell.
And that, and that really is what helps us quite a bit. So people believe not only in our vision, but also in the business and what they think the business can become in terms of value. So, so we are able to offer a combination of cash and equity, which really gives, um, you know, Great talent, a huge incentive to come and work for us, um, where we don't necessarily look to match only cash.
You know, we, we actually people believe in us and our business and where we hit it, so they will take equity in our businesses and really look at that and say, I believe in that.
James: Yeah, that's, that's really interesting. I know, I know firsthand from speaking to our portfolio at the same as true, you know, hiring can be really hard, then they do a funding announcement.
Suddenly they've got an inbox full of, um, you know, new candidates that they have to sift through. And it can, that is one of the side benefits of raising rounds and announcing them, which is funny. Um, Um, so for that, you've, you've grown really [00:32:00] quickly. You've got your teams big now. So, um, if there was one role that you wish you'd hired earlier in the process, um, what sort of role would that be?
Philip: I mean, great to be quite interesting. So.
And then we have about 160 people through COVID, which was a challenge in and of itself, you know, or just doing zoom calls. Back eventually into the office. We had a bit of an event to welcome everyone back. The initial 50 people kind of felt a bit lost. So it was quite funny because no one recognizing one, but it's um, but, but for us really, I would say if I'm looking at the order in which you hire, I don't think you ever really get it right.
You kind of go and you say, well, I've built a business before, and this is sort of what I needed, [00:33:00] but you ready? You know, get a true sense of what's what's missing in a hurry. When you begin onboarding customers. Uh, you know, we probably, from a fraud perspective, we probably would've moved to higher that a little bit in here.
Then we did, secondly, in the game that we're in a fortunate space right now. Um, and then actually from a, from a people point of view and internal talent acquisition. So this is intentional in hiring, you know, we started the normal way you go and just. Well, here we go, you know, 20% on annual and, and it's just going to be a cost we're going to have.
And, um, you know, so in the beginning you're doing your own outreach and you're selling the dream on LinkedIn and you're hoping people will come. You then sort of move into this phase of what we need to hire. Quite a lot of people, we can't do this all day every [00:34:00] day. And that's when things really start to get.
And that really the best decision we've taken. So open house talent acquisition team that goes out to the market directly and approaches it. Wasn't a big decision and I think we should have done it sooner. That's probably one of the.
So, you know, it's just one other team and it's a high five inches. Okay. Well, the problem is
the type of tech blacks. Do they believe the business?[00:35:00]
Hector: Great idea. I wonder when, um, it would vary for every company because, you know, I suppose there's always priorities to be sort of jostling where there's a, as a founder and a management. When do you think in a night, in, in retrospect, when would you have started building out that internal hiring team in terms of sort of stage of funding and size of team?
Philip: I would say you definitely need at least. A year and a half runway. If you think about funding, you need to at least have 18 to also plus months of runway, uh, in terms of now and size. I guess everyone does things differently for me, 20 people to 25. You're already at that point where you like, look, let me hire one person.
That's great at this. And you can take care of this. It doesn't mean that you give up all of the interviewing and you're not involved at all of course, but it really does save a great deal of time. Sure that you can build your culture through your hiring because this person is in the business, they living, [00:36:00] sleeping, eating, breathing, how we do things, how we speak, how we interact with one another.
So I would say around that mark 20 to 25 people and about, you know, a runway over these 18 months.
James: Yeah. It was really interesting, Felix, as well from ghost student episode five, I think the series said almost the same thing. You know, he wished he'd caught into. Recruitment team earlier. Um, cause they put a big emphasis on hiring the best people as I'm sure what you do as well.
Hector: Yeah. Very, um, very good to hear.
Um, I want to the, the sort of, um, question I'm sure you thought we would probably ask is, um, it's about competition and like it's a hot market and, um, everywhere, everywhere you look, someone's entering the, the MPL market and Monzo are doing it. That's how I bank with and they're doing their flex thing now.
So how do you think about competition and differentiation and, and, um, you know, maybe. Part of your vision kind of comes into [00:37:00] this conversation around vision and how you build out beyond the MPL. I'm not sure.
Philip: Yeah, really. I'll be honest. You know, we don't spend a great deal of time worrying about what the competition.
They seem to spend quite a bit of time worrying about what we're doing, but we don't really spend much of our time worrying about what we're doing. And, and really, I think, you know, it's good to be aware. I mean, you know, I use all of these products. If I see any new one of these products I like to, and try it out and check it out.
And, you know, we encourage all of our teams to do the same.
Hector: Basically, you're going to find yourself on a black list of new NPL, um, products. And
Philip: by the way that you may have me, I actually have not had approval yet. So I'm wondering if that's the case, but, um, but, but needless to say, we encourage the team to do this as well. The, the idea for us is if we make it easy for you to switch from zilch to one of these others, [00:38:00] And if the answer is yes, and it's an easy answer, then we just don't have a good enough product.
And that's really the way we see it. So, so the first thing I will say is the market is, and so. The opportunity is huge. If you really look at BNP LL, isn't an infancy. I mean, if you just talk about numbers and even if you just look at, for instance, you know, you look at the state's e-commerce numbers, just as an example, you know, at 1.1 trillion in e-com penetration of BMPs, like 1.8%.
And in a few years, they're looking at about 1.7 of e-com. Even if BNPs aren't even six or 7%, you look. You know, a hundred plus billion. And today it's at about 18 20 billion. So, you know, the market is so massive. We just don't think this is a winner, takes all to win. It takes most, we think that there's room for a number of major players and we of course believe we're one of those with that said, you know, a competition of course is a good thing for consumers.
It drives all of us to [00:39:00] sharpen our pencils and make sure that we do that's enough. Know, that's all sorry. That's innovative. And that's obviously providing a 10 X better proposition than, than anyone else for us. A lot of see today, you know, Randy, we think of focusing on something a bit different to what we all, a lot of them are starting to focus on sort of shopping experience and.
Have you always come to us and this type of thing. And I just have to say we don't buy it. Um, yeah, we might be wrong, but we don't buy it. Um, we are the consumer, we use these products. We discovering products. We shopping every day. And guess what? We don't do that on your app. We do that on Instagram. We do that on YouTube.
We do that with our mates. We do that, you know, soon in augmented slash virtual reality, we do that on snap. We do that on T this is where we discover. Let's be honest, guys. To find that thing. I'm just not. And so, you know, we feel like we sitting in the cinema, almost watching a movie [00:40:00] repeated, maybe it used to start a couple of companies called AOL, AltaVista and Yahoo.
Right. And you guys remember this story there, are we going to be the web portal of the world? You're going to come to us, I'm going to show you everything. You're going to have these stocks and business news and celebrity gossip and all this stuff on my own page that you don't care about. Yeah, that company Google has sort of said, well, we're not going to do that because we don't do that stuff better than these other guys.
What we do is we're going to answer your question the best, even if it means we must show you the answer from Yahoo. And that's the way we think about zilch. So the way we going is we're going to double down on what we do better today than everyone else in this space. And that is that you can use zilch to pay over time for.
Better than anyone. So we going to double down the focus on this and make sure that we stay committed to providing that service better than anyone else in the market. [00:41:00] And that's really how we think we will win. Of course, we will innovate around that core proposition. So today, for instance, you compare the time with stilts with yet tomorrow, we may introduce other ways to pair at a time via currency, and we will introduce of course, cool deals and discounts in.
Not spending rather than saying to you, you must come to us. You must come to us to discover this stuff. That's just not what you think is going to win yet. So, so for today in terms of vision and where we headed today, we want to be that product that our customer relies on. And an interesting stat for you guys to know, you know, we look at that.
Our customers. And when customers discover zilch, they start to use our product more and more often than any other product in the market in just three months off, did they discover us? And that really tells us something that means something yet. So customers really love what we do. And clearly it's more convenient than any of the other propositions.
And so that's why I'm saying we doubling down on this. So today it's all about doubling down on [00:42:00] that lots of icterus of innovation on top of this coming soon as we've already begun to do. And then really in the future we moving towards, um, really just the lack of ownership. Generally, we think today cash flow to pay for things.
And in the future, of course we will not really own lots of things. And that's where it is headed. Ultimately.
James: Really, really, really interesting. Um, and so some of our audience, and I certainly have seen zilch TV ads. And I wanted to ask you a bit about that because I'm sure some of our listeners will be sort of going through the process of thinking about how they attract new customers.
He has a channel. So at what point do you think is the right time to take on TV? And did you use an agency? How much does it cost? And, um, and, and what impact does it have? Like, did it just change the business overnight? [00:43:00] What, what was the feeling like when you had your first TV ads? Go off,
Philip: to be honest, I think above the line.
Above line through line by line and really the way we think about you got to think about the zoo at really cool breath. And if you think about buying a product that costs tens of thousands of pounds, you're outlaying cash to buy car, you really want to. That that call is going to arrive, right? Because really that's a lot of need to be out late.
And so you can understand a brand like this may need to go above the line. And I want to see that on a, on a, on a Jersey, on a football pitch or whatever that may be scenes in, you know, but, but not necessarily that doesn't necessarily make sense in every scene. So for me, you know, social advertising is so powerful.[00:44:00]
Today, digital is so awful today. Really for us, it's just, you know, TV is something that we tasting set top box targeting is something that we, you know, we've been playing with and tasting, which is where you will have seen something like, uh, but really when, so that's really where we believe. And this we can control.
You can measure, you can impact, you know, we can change campaigns over day. We at any given time are running 1,250 different ads at any given time, we create about 160 different iterations of ads every day, split testing, AB testing, and we track LTV of the customer. And this is how we cook. So the one thing I would say is that if you're launching a direct to consumer proposition today, Got to have an amazing, unbelievable ad buying, you know, social ads, a direct response ad team.[00:45:00]
You need to have that. And my district would not would say, you should not use an agency for this, right? Because if you using an agency and as a zilch has our own in-house team, you paying a premium on every click of about 20 to 30%, just, you know, we just, you'd never going to compete with. And so, you know, direct response would be my suggestion and that's what we've done.
So we have a team of 20 people actually out of Canada. One of our co-founders runs this team for us and really is just the absolute experts to come from the days of kickoff and charge, understanding the cost of clicks and impressions. And. To have. So I would certainly say if you are into consumer, having someone join your business that come from click arbitrage background, or for instance, um, uh, for the lead generation background, well, it would be enabled to have in your company from when [00:46:00] you look at TV,
We want it to taste a little bit more of it off the line, very positive response. But of course,
have a good response for something as simple as that TV.
So that's really where you got to stop playing. But for me, you either that means trust because you will something high, you know, high, transactional value, or you are above the line. It's probably more a case of, at which case. This is not the direction of travel. Um, and then you'd go from the other BNP.
Well, just to make the final point yet, [00:47:00] we very different painted a buy. Now pay that traditionally is on the checkout page. One of many things like Christmas treat so-so, it's just one of many zilch. Customer directly ourselves and our, and we bring that customer to the webpage and they transact, or the install on their trunk.
If you're a brand that's on the checkout page, you might want to run some paint, some taxis and some billboards, that connection. So.
And I understand that, but that's very expensive. It's an expensive game. It's hard to measure and it's just not really a game we lost. So that is why, again, we don't like the tradition. We pretend what we've rolled out. So I hope that answered the question. [00:48:00] It
Hector: definitely does. And it's got another, another interesting thing found is to think about, I think, yeah, absolutely.
It just varies by company. Um, it, it, it kind of feels like we're just getting going, but, um, we should really wrap up because, um, we tend to keep episodes to like 40 minutes, but, um, we we've had such a. So much fun talking to you and it's been great kind of diving into a whole load of operational stuff and, you know, hearing about how you hire great people hearing about, know a bit about the vision and how you see competition and, um, you know, some anecdotes around, um, around company building basically.
Um, but we do have to wrap up, um, and. Before we wrap up, we always ask, um, our guests about a dinner party guest game. And we ask them if you were to have a business lunch or dinner, who would you invite to that dinner?
Philip: So I'd probably say maybe I could, so I could split it into [00:49:00] two and say, well, if I did, if I do maybe one that's around, you know, sort of the inspiration I've always got, I've just got to go with. Pretty high due to the iPhone and trying to put one up across,
I was really thankful for the app store. So I would say Steve jobs, Elon Musk and Richard Branson, um, probably for, uh, for inspiration. But if I wanted to also learn a little bit more about failure and how you can pivot that to some success. So of course, some of what you need to look out for are. Travis Keller
James: really interesting eclectic mix of really fascinating characters. Um, so yeah, definitely be interesting to hear what the questions you ask them and what their [00:50:00] responses would be. Um, well, thank you so much for coming on and telling us your writing unicorn story. Um, Really fascinating how quickly you guys have grown and how well you've done to really differentiate and become a big player in the BMPs space.
It's very, very exciting. And, um, you're sort of credit to the UK FinTech scene as a result. Um, so thank you so much again for coming on and, uh, we wish you all the success going forwards.
Philip: Thanks for having me. We'll speak definitely.
Hector: Right. Cool. I will.