Sramana Mitra: The workflow that you are facilitating is in the KYC AML in the context of trading.

Gabino Roche: A little bit. Everyone uses the term Kyc Aml and they imply tax, which is not necessarily KYC AML. They imply contractual legal agreements that are negotiated. For example, when you do derivatives trading, there are legal amendments and credit risk concerns. There are your setups with trading on Bloomberg versus market access and all these FX Connect. These are on top of KYC AML.

You wrap this all together to give this holistic experience for trading, but everyone just says KYC AML because they just remember the financial crisis and that’s the pain point. They ignore the other bits. That’s how we’re bringing a stronger value proposition. We’re creating this very streamlined deep knowledge in the finance industry even though it could be applied in healthcare. You’d need to know how to map all those data points together.

One last analogy I would give is I want you to imagine the airline industry where they always take safety precautions. A lot of the trades are manually set up and then the trade crashes. There’s no black box to put it together. We have the black box.

Sramana Mitra: What I observe is you, Gabino, have intense domain knowledge of the problem. In many ways, I’m seeing this theme come up over and over again across the board. In FinTech, in particular, you need that deep domain knowledge to come up with defensible market positions and solutions that have real depth. It’s staggering how much of the underpinning of your journey is your deep domain knowledge.

Gabino Roche: I’ve been wrong so many times. The truth is McKinsey says something where we test a hypothesis. Then you put the hypothesis out there. If you do pre-trade, can you also do soft post-trade? Everyone says no. You then answer the mini questions in between to see if you can prove the hypothesis or pivot against it.

Sramana Mitra: That’s fine but you have to know which hypothesis to start testing.

Gabino Roche: That’s true.

Sramana Mitra: There are nuances. Random people don’t know what hypothesis to start testing.

Gabino Roche: Talking to people who do the actual work, those people will share their experiences with you. You not only talk to the Ivory Tower people; you talk to people who do the work. You can piece all this together.

Sramana Mitra: In 2020, you had 25 POCs. How did that unfold into full-scale revenue deals? What kind of deal sizes have you been seeing?

Stephen Roche: It gets tricky to talk about deal sizes. A lot in the B2B finance business gets driven by investment managers. If you get large investment managers that want to use new technology and tools and you’re a broker-dealer and you want part of that business, the investment manager says, “You need to communicate with us quickly on a technology like Saphyre.” They’re willing to adopt and consider it. It’s associated with new revenue for them to capture as a broker-dealer.

This is an inter-company solution even though we do streamline efficiencies for operations. They always hear stories about ROI and technology efficiencies, that’s an old story. It’s hard to sell that internally to a CFO. But they will do it if it means they get new revenue. When you get some of those partners that are using us, the broker-dealer is more than happy to talk to us about that.

The same thing goes for the custodian side which is a separate story all together because there’s even less innovation that’s happening there. It’s very difficult and painful for investment managers or even asset owners to move assets from one custodian to another.

Gabino Roche: The bigger picture if they’re trying to understand how you move from POC to revenue. In everything that Stephen shared, it takes more to be patient and bite the bullet because you want to build confidence in the client that this is a solid product and service. For the big fish, we had to play the long game to make the market impact.

For most startups, you would be going on smaller deals. You can go to market faster. You can even get revenue within a year’s time if you have a good one-trick pony. The thing is, you want to think about how you’re selling your product and how you’re positioning it. You can quickly find out that you are capping your upside depending on how you sell it. There’s a little bit of product vision if you want to price it appropriately. What happens next is, we do press releases so that clients talk about you openly.