Adyen 联合 CEO Ingo Uytdehaage

Jason Calacanis (00:00:00): This has been one of the hottest growing areas of financial services. Chamath Palihapitiya (00:00:03): Adyen 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 Ingo Uytdehaage (00:00:13): our online platform has been very significant. We're investing for, for the future. If you work with newer technology, you get to better quality. We completely rebuild the infrastructure that typically is run by banks. And by doing that, we come to much better conversion rates, for our customers. Chamath Palihapitiya (00:00:31): Ladies and gentlemen, the co CEO of Adyen, Ingo Zhang. Ingo Uytdehaage (00:00:36): Hi, co CEO. Hi, good to see you. Hi, good to see you. Good to see you. Chamath Palihapitiya (00:00:41): Let me, give just a little brief overview for a second. So Ingo has been with Adyen since, 2011, first as the CFO and now as co CEO since May of 2023. Adyen is based in the Netherlands, founded in 2006, and is one of the largest payment processors in the world today. In 2023, Adient processed nearly a €1,000,000,000,000 in payment volume. They had net revenue of €1,600,000,000 and an EBITDA Jesus Christ. EBITDA, €743,000,000, a 46% EBITDA margin. Incredible. David Friedberg (00:01:21): It's a capitalist conference. We applaud for EBITDA margin. Oh my god. Chamath Palihapitiya (00:01:29): Be down. All of it. EBITDA. Yeah. The company reported a 24% year on year revenue growth in h 124. They just expanded into India, which is really interesting. I wanna talk to you about that. Your market cap is today, actually, I just checked about 45,000,000,000 American dollars. 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, Bingo. Ingo Uytdehaage (00:01:51): Thank you. Thank you for having me today. Chamath Palihapitiya (00:01:56): You're a former CFO. Yeah. I'm gonna put you on the spot. You're no longer the CFO, nor the co CEO of Adyen. You're an analyst at an investment bank. Yeah. And Jay Cal, your managing director says, put together a spread trade. You can be long or short one of Adyen and Stripe. How do we construct the business case? Ingo Uytdehaage (00:02:20): That's a really good question. Chamath Palihapitiya (00:02:21): Just just the parameters of how we construct the case. Ingo Uytdehaage (00:02:24): I would say if you look at this industry, for ourselves and Stripe, there is a lot to win because I think we are the only 2 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 are going to change this industry, that's how I look at Adyen versus Stripe, we come from different angles, but what I really appreciate about them is the fact that they also innovate and competition is good. We're a company of a lot of athletes. We like to compete, and, competition is good. Chamath Palihapitiya (00:03:14): So when you do compete in the marketplace, are you competing then with Stripe? Or you're competing more with incumbents where traditional players are looking for payments and then Ingo Uytdehaage (00:03:24): Yeah. I would say, like, of course, there are areas where we compete with Stripe. 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. So that's And Chamath Palihapitiya (00:03:36): and what do they find? They find both the cost is too high, and then they find the technology is too brittle for what you need to do today. Ingo Uytdehaage (00:03:42): Exactly. I think if you look at this industry, banks, incumbents haven't invested for for ages. We build everything from the ground up, so we have a single platform globally, and what we can do is we can basically lower total cost of payments and increase the authorization rates, and that combination is very powerful. And the reason why we can do that is because we have lots of data in a single platform. Chamath Palihapitiya (00:04:07): 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 David Friedberg (00:04:24): there is there enough like, specifically the networks like SWIFT, the banks themselves, what Jason Calacanis (00:04:30): role do they Chamath Palihapitiya (00:04:30): Why do these people Why David Friedberg (00:04:31): do they exist? Chamath Palihapitiya (00:04:32): Why do they exist? Yeah. Ingo Uytdehaage (00:04:32): Well, Well, it's a good question. I think indeed what we try to replace is the fundamental infrastructure. So in the U. S, we have our own access to the fact. We have a banking license in the U. S. So we don't need commercial banks to be successful. 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, and a lot of the software service providers they of course build banking as a service and there are only a few companies globally that can offer this. We want to be that player, that partner for these type Chamath Palihapitiya (00:05:10): of companies to help them sell financial products. 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, 46% EBITDA, that's a lot. We don't need that. You know, how much of that 743,000,000 would grow the business if we just took it to 0, told 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? Ingo Uytdehaage (00:05:44): Yeah. I think profit is for me the same as value. So if we deliver value and also have premium pricing, merchants are willing to pay a premium and pay the pay 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. We run at the lowest cost as an infrastructure. You would basically destroy a lot of value that's in still in there, and I'm not sure if you would just go for price, 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, 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 off that we're 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. Chamath Palihapitiya (00:06:37): 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? How does the culture change? Ingo Uytdehaage (00:06:47): Yes, so building a company in the Netherlands or starting in the Netherlands at least, at least, makes you aware that you need to go international from day 1. Like the Netherlands is a super small country, you can never build a very successful business just based on population there. So we immediately went international, but in the beginning, we hired mostly into Amsterdam. So we had a very strongly focused Amsterdam operation and that shifted like 10 years ago. So 10 years ago we went to the U. S, we started to build our team here. There's a very significant base here now in the U. S. We have more than 800 people working in the U. S. So it's our largest market outside of Europe, growing faster, it's already 1 third of our total revenues in the U. S. And I find that very interesting to see also how that has changed our company. We have a different perspective on how we should serve merchants. I think not being local 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, we got more traction. And with the current setup with like over a third of our revenues already in the U. S, we see that we win a lot of domestic brands and I think we're also proving that payments is not a commodity because Chamath Palihapitiya (00:08:10): Do you find it, is there differences in employee issues, employee quality between America and Europe? Ingo Uytdehaage (00:08:18): I think there are very talented people in both markets. 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, so Top dog. Yes, it's relatively easy. We're our brand awareness in Europe is higher than in U. S. It'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 a business to business brand, so that requires additional push to show what we do, but we work for the largest companies globally whether that's online, we work for Google, Meta, Microsoft, for retail, H and M, Nike, Gap. So, 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. Jason Calacanis (00:09:10): If we were sitting David Friedberg (00:09:11): here sorry. Some of the, like, challenges with being based in Europe, maybe not on the commercial side, but just on the shareholder side. 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. You're Chamath Palihapitiya (00:09:40): It's a it's a 2 x gap. It's a 2 x gap. It's a 2 x gap. Look very similar. David Friedberg (00:09:43): And your numbers are similar. Some of your metrics are much better. Maybe, I don't know 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. Ingo Uytdehaage (00:09:53): Yeah. That's a good question. Like, when we, our biggest private round was in 2014, and then, we realized that we want to have a global investor base. That's when ICONIC, General Atlantic but also Demosac from Singapore came on board. They're still they have been very supportive in the years up till the listing. We listed in 2018. And when I worked on the listing, we were quite convinced that we would list in the U. S, given the fact that most technology stock list here. But when we looked at valuation and also index inclusion etcetera, we realized that listing in Europe was as easy as the U. S. Or even easier. 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 U. S. Almost like 60%, 65% at the listing US investor base, so it was almost like a US IPO. And we got a premium for being a scared tech stock in Europe, and I think that combination worked really well for us. There is a difference, I think, between, public and private markets, and I think that is that explains for me a bit the difference in in valuation. David Friedberg (00:11:03): You mean that will get rationalized over time? Ingo Uytdehaage (00:11:06): I think so. Ultimately, if David Friedberg (00:11:08): Spread trade. Ingo Uytdehaage (00:11:08): If we're if we're both public, you're going to compare the same numbers and it's a combination of growth rate and profitability. Chamath Palihapitiya (00:11:14): Do you David Friedberg (00:11:14): ever do a deal last night? Would you live in the U. S. Ingo Uytdehaage (00:11:16): As well? If I would live in the U. S, like if there would be no liquidity in Europe, I would live in the U. S. But there's sufficient liquidity in Europe. So, you need to have certain size, but we have the size. There is liquid liquidity, so it's not needed. Jason Calacanis (00:11:29): 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. Chamath Palihapitiya (00:11:38): I mean, private market is promise. These EBITDA margins are bananas. Jason Calacanis (00:11:42): Yeah. It's fantastic. So if we were sitting here 10 years ago, this entire conference, would be, you know, 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, and everything was going to go on blockchain. Chamath Palihapitiya (00:12:00): Yeah. Yeah. Jason Calacanis (00:12:01): It was just everything that's going to be solved by blockchain, and everything goes away. And obviously, none of that has happened. But one thing that has happened that's really promising, or interesting is stable coins. You have Circle in the United States doing really well, going public. I believe they're still on track to do that. Then you have Tether, obviously, banned in a bunch of countries, bunch of problems, and being used for a lot of 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 Stablecoins? Ingo Uytdehaage (00:12:52): 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 stablecoins in well developed markets, and ultimately, we are processing well developed markets at the moment. If it's about indeed cross border type of transactions, we still work with relatively old systems like Swift, with all their challenges they try to innovate, like that's the area where I would see there is a future for stablecoins indeed if you need to. Jason Calacanis (00:13:22): Would you ever consider launching 1? Ingo Uytdehaage (00:13:24): No, I think we would consider working with stablecoins. Chamath Palihapitiya (00:13:27): So you might partner with a partner? Ingo Uytdehaage (00:13:28): Exactly. Yeah. That's always been our model, like 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 why we want to help them. Chamath Palihapitiya (00:13:43): Ingo, one of the things that we talk a lot about is censorship. But beyond idea censorship, there's an even more probably corrupting thing, which is financial censorship and deplatforming. And the way that it I think it came on our radar was there was these truckers in Canada that were protesting COVID a few years ago, and they effectively got deplatform from financial services. 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? Ingo Uytdehaage (00:14:18): Yeah. I think one of the ways how we want to do this is work with a lot of platforms that basically have these 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 providing financial technology is a very good outcome, Because they have their knowledge about the industry, about the business data of these people, combined with what we know is needed in the financial industry, everything around money laundering prevention, terrorism financing, if you combine that, I think you have a very strong proposition. And I think that's the answer to the more traditional players like the banks that also don't always have the knowledge to do this at scale. I think that's what we have been automating 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 wanna offer to our company. Chamath Palihapitiya (00:15:18): Is it 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 really? Ingo Uytdehaage (00:15:29): No. I think we have really shifted from being a European company to a global company, and we need to comply with local regulations everywhere. We see ourselves as much as a U. S. Company as a European company. If you look at the operations that we've built here, we want to make sure that we can compete with each and every competitor here in the U. S. On the same level. So it's needed as you that you comply with Tell Chamath Palihapitiya (00:15:54): us, tell us, you're moving to India. I mean, not you personally, but the company. No. Ingo Uytdehaage (00:15:58): Yeah. The company. Yeah. So The Chamath Palihapitiya (00:15:59): exposure in India is incredibly dynamic as you know. Yeah. Lots of varying regulations. That you also have probably dealt with. Tell us about the journey in India. Ingo Uytdehaage (00:16:07): Yes, it's a long journey. 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. So if you have a global platform, we have dispute database around the world and then you need you realize that you can't store data in of Indian people outside of India. So we had to really replatform 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 are 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 a relatively niche play in India today, but it's a high need of our biggest customers. 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 6 years going on. Chamath Palihapitiya (00:17:12): I mean, to me, India is like China circa 2,005. So if you just close your eyes and just bought the entire country index in 2,005, you'd look back in 2,000 even now, and you'd be way, way ahead. And I think India is on the verge of that multi decade kind of renaissance with less regulatory risk on the back end. Ingo Uytdehaage (00:17:30): Yeah. Well, at least the regulatory rules are very clear from the start. 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 played it out well, we are in such a unique position. Chamath Palihapitiya (00:17:45): So everybody is, you know, blathering oh, sorry. Go ahead, Jason. Jason Calacanis (00:17:48): No. No. Finish. Go ahead. Chamath Palihapitiya (00:17:49): 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 Yeah. That really matters? And Absolutely. How do you think about the future? Ingo Uytdehaage (00:18:06): So one other thing so there are, I think, 2 angles to this. The first one is how we, optimize transaction routing. We just also launched a new way of U. S. Debit routing in the U. S. Where AI helps us to make the best trade off for merchants to lower the cost, so you get 20% plus lower cost, if you route that well and at the same time higher Chamath Palihapitiya (00:18:34): authorization rates. Ingo Uytdehaage (00:18:34): So, it's more Chamath Palihapitiya (00:18:35): intelligently figuring out these rails are cheaper in this moment process over here. And Ingo Uytdehaage (00:18:39): it's a, yeah, and it's of course a trade off with the authorization rate. Chamath Palihapitiya (00:18:42): Right. Ingo Uytdehaage (00:18:43): And yeah, we work with Ebay, Microsoft, etcetera to launch this, and very good results. Chamath Palihapitiya (00:18:51): And that's in production? Ingo Uytdehaage (00:18:52): That's in production, that runs. The other part, the other angle is of course what we do internal for our support functions, that's more on GenAI. We are we have always built a company around open source, also here we are open sourcing the models, but we have a lot of data, of course, internally that we can use Chamath Palihapitiya (00:19:11): for that. 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 Ingo Uytdehaage (00:19:24): This is just growing and and like we've always had such a high, focus on automation. If you ask where does the EBITDA 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, and we will continue to do that. So AI is gonna help us to further scale, and I don't think that we are Come on. Chamath Palihapitiya (00:19:45): Okay. Ingo, I have to push it. Yeah. I mean, do you look at these American companies burning this kind of money to do a business that's smaller than yours at this end? Are are you like do you scratch your head thinking, how did they what is going on over there? Do you think that? Ingo Uytdehaage (00:19:57): These are huge investments and we are closely following it like where can we benefit from it. Yeah. 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, 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. Jason Calacanis (00:20:31): Ingo, I'm wondering, how you look at, authoritarian countries, dictatorships, monarchies, whatever, and providing services inside of those. This has been a very polarizing issue. Obviously, 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 banned in them. And then you have this alliance starting, the BRICS 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. Are you operating in those countries? How do you think about that? And and there's a lot of hand wringing about, oh, we're gonna be off the US dollar and and off of SWIFT. What what are your thoughts on that entire space? Take it where you'd like. Ingo Uytdehaage (00:21:22): So the way how we, approach it is 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, but we have a huge team in China selling basically to Chinese merchants that want to go here in the U. S, and that's a very successful route. So we try to be pragmatic here. Ultimately, if we can comply with the local rules, we will, and it's a trade off like can you do business somewhere. There are countries where we have chosen not to go so far, also because the demand is limited, but also maybe it's an unstable country. It's we do it on a country by country basis at the moment. Jason Calacanis (00:22:08): 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. Yeah. Is that real? Yeah. David Friedberg (00:22:21): Is there really gonna be an alternative to swift? Ingo Uytdehaage (00:22:24): I think there is a there is a likelihood there will be alternatives. Yeah. And also, I think to your example on stable coins, like, that could be an alternative longer term. Also, if there are issues with with with, SWIFT. Chamath Palihapitiya (00:22:35): It just may not be a legislative alternative. It may be more technological like yours or another's. Ingo Uytdehaage (00:22:40): Yeah. Yeah. But I think there are companies that also try to solve this, like, to have less dependence on swift even in in in this western world. Yeah. Chamath Palihapitiya (00:22:48): Do you guys run sentiment inside of all these payment flows or getting a sense of, like, the economic health of certain countries? And, has there been any thought to sort of sharing those so that, you know, like in America, we go through these things in Europe too. Unemployment rate comes out, you revise it. GDP numbers come out, you revise it. And nobody can actually act on these things until you're looking back 6 months, which is Yeah. A ridiculous way to run inefficient. Yeah. But I'm sure companies like yours, Stripe, Shopify Yeah. Have you guys ever thought of working together to create a more dynamic view of economies? Ingo Uytdehaage (00:23:24): It's certainly something that we wanna do with the data. I think currently what our challenge is that most of our growth comes from, share of wallet wins. So it's very hard to to separate this from the underlying growth. The moment we become a more stable company, and 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 1000000000 unique shoppers in our platform, so it's a Chamath Palihapitiya (00:23:51): 1000000000 humans. Ingo Uytdehaage (00:23:52): Yeah, that's a Chamath Palihapitiya (00:23:53): That's an incredible story. Ingo Uytdehaage (00:23:54): Yeah, so there's certainly more to tell, and that's absolutely interesting topic. Do you ever see PayPal in the market? I'm just curious whatever happened to it. Yeah. Chamath Palihapitiya (00:24:08): No delays. Yeah. Ingo Uytdehaage (00:24:09): Well, PayPal is an important partner of us. So, we work closely with them also offering, we just did a press release on their new express checkout that we do together with them. So So we see them more as a partner than a competitor. I think that's how we see them. Yeah. Chamath Palihapitiya (00:24:25): Last question. You we've made a lot of fun of this whole thing this past week, founder mode, manager mode, whatever. But precisely for you, you work as a co CEO Yeah. Which is a bit of a unique setup. Yeah. But when it works, it can really work. Yeah. 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? Ingo Uytdehaage (00:24:50): Yes. I think the way how we built the company together, so Peter is the founder, he focuses currently more on culture of the company, and is doing a lot of founder conferences, meeting our merchants, we all meet our merchants quite often, I see a couple of merchants on Thursday in San Francisco, so that's an important part. I think that's how we, do it, but it's a partnership already like for 13, 14 years. Yeah. That's the time that I know Peter. So it's a 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. Chamath Palihapitiya (00:25:28): Thank you. Guys, please join me in thanking Ingo for joining us. Thank you. Jason Calacanis (00:25:35): Thanks.