[FH]: What is the problem Paynest is solving, and what motivated you to create the company?
[NP]: Our mission is to empower companies to give their employees a better financial future. We want to create a platform, an ecosystem of products, that allows companies to differentiate themselves from others and offer something that matters to their employees.
We started with two products. One allows companies to give back the salary that they retain for a full month to their employees. So if someone has any problem during the month, why not receive the money that they already worked for instead of getting a predatory loan? We built it in a seamless, transparent, and plug-n-play way, removing a lot of work HR teams have today to process existing advance requests. We also help companies improve their employees’ financial literacy. We assess how good or bad each person’s financial health is and then we create content, and we have coaches available via chat for free to help people with questions that they have today but might be shy to ask others.
Our vision is exactly this: How can we help companies be more competitive, in a plug-and-play fashion, by offering unique financial products to their employees than either they already give today but with a lot of work and manual way, like salary advances, or they don’t offer today but would love to, like financial education or pension plans, but it’s just too much work for them to do it.
As to what motivated me to create Paynest: I’ve worked in four different continents and I saw so many companies either struggling because they offer a lot of those products and it’s a lot of work for the HR teams to manage them, or, even worse, they just don’t offer it and lose in the battle for the best talent. And from the employee perspective, even with the companies that actually offer a lot of things, it’s fragmented. They have to log in to multiple Apps, websites or send emails to ask for an advance, and on and on – we want to be this glue that puts all of them together in a single app.
[FH]: How do you think your past experience in companies like McKinsey and Amazon has helped you build Paynest?
[NP]: To be honest, a great deal. I’m an engineer by background – in control & algorithms, or AI as it is now called – and I worked as an engineer for many years, but then when I joined McKinsey, I focused mostly on banking and fintech and I loved it. I was a “tech” nerd converted into “fin” and financial services. McKinsey was really critical for me, not only with the “usual” critical thinking, structuring, and communication but also getting me into fintech. My experience in “big tech” at Amazon was the ingredient missing.
[FH]: How do you balance the preparation of an investment round with the project development?
[NP]: I’m always balancing between strategy/ product (number one), building the team (number two), and spending time with clients (number three). So there will be months where I’m spending much more time in numbers two and three and others where I’m spending more time in one like during fundraising and defining the company’s direction over the next few years. So I just have to always balance those three things in my mind.
[FH]: And what’s your secret for building such a strong team?
[NP]: In the early days, the team should be the first priority, even before the idea. Without a strong core team, you cannot do anything nor build the execution speed which is so critical in the beginning.
McKinsey played a key role, not only to build a very strong network, my co-founder is actually another ex-McKinsey, but more importantly, to make me much more rounded and self-aware of what I’m good at and what I’m not so good at (or what drains my energy). You need a complementary team with people that know how to lead, know how to manage, know how to do, but if everybody’s a doer it won’t work, if everybody’s a leader it won’t work because you won’t get anything done. You need to find this rockstar complementary team and everything else is much easier.
[FH]: How do you envision Paynest tackling Portugal’s prominent financial literacy issue?
[NP]: The lack of financial literacy in Portugal is a very serious topic. I came back to Portugal after 12 years abroad, and it makes me feel good that I’m helping tackle a very big elephant in the room. Not only is Portugal the country with the lowest financial literacy in Europe, but also micro credit keeps growing reaching a record high of almost 2 billion. Plus we are in a situation where rates are growing and 92% of mortgages in Portugal are linked to variable rates, meaning that when rates go up, all the Portuguese families get in a difficult situation.
The long-term solution needs to include financial education from an early age for everyone in the schools. I personally learned the basics of finance well into my 20s. However, that measure is too late for anyone over 20 years old, we need another solution. Fortunately, employers are more aware than ever that people are struggling, and if they struggle, they also cannot be productive at work and everything else falls apart from mental health to physical health. Making people more self-aware of their own financial literacy and giving them opportunities to improve it is key. And we can help employers play a really important role instead of other B2C solutions that have a clear agenda – monetization via the employee.
[FH]: In what aspects do you think being a member of the Fintech House has helped you?
[NP]: Our team is spread across Europe, and then we did a get-together in Lisbon earlier this year I decided to come to the fintech house and work here for a week – we all just loved it and got convinced to stick around. The Fintech House built a very strong community that helps each other quite a lot. What we’re going through as startups and founders is already very hard to do alone. Plus in a setting where most people are actually remote, having a space like The Fintech House, with a strong community around everyone helping each other, going through similar issues, and sharing experiences, is very powerful. And the physical space is great!.
[FH]: What are some valuable lessons you’ve learned along the journey? Any advice for aspiring entrepreneurs in the fintech space?
[NP]: Number one is that the team is everything. People very often spend a lot of time discussing ideas, while almost everything changes once you go to the market, and you need the right DNA to find problem-market fit. People often under-discuss teams and over-discuss ideas.
The second is that the speed of execution is really important. We can all think on a whiteboard about what makes sense right here, but in the end, once you start having clients and revenue, things will change. You need speed of execution not only to navigate in the early days of the company but also to build defensibility long-term. Everything can be copied, there is no such thing as tech differentiation, you need to be able to move faster. Execution speed is not only the secret to navigating product-market fit but also defensibility in the long run.
The last one: founders, also including me, make decisions very often, and I think having a very thoughtful decision-making framework is really important. There are several tips that I’ve learned through my professional background, and a classic one comes to mind from Amazon – You need to be very clear what are one-way door and two-way door decisions and apply them consciously every single day. One-way door decisions have big consequences and are not reversible, you need to take time because the most important thing in these is to make the right decision. While on two-way doors, you shouldn’t care if the decision is right or wrong – you just want to have speed because you can reverse it and adjust it any time regardless of if you took the right or wrong decision from the get-go.
[FH]: In your opinion, what are the most promising fintech trends that are likely to gain traction in the Portuguese market over the next year?
[NP]: McKinsey recently published a report saying that the banking industry is a $6.5 trillion industry and fintech is only 3% of that. If you think about worldwide, forget Portugal, forget Europe, the opportunity for fintechs to grow is massive! If you think about other industries that were disrupted, like retail, for example, e-commerce is about 30% of the retail market. In other words, retail “startups” have already captured 30% of retail, while the Fintechs are only at 3% of banking. The opportunity to grow left, right, and center is unbelievable, so I’m very bullish about fintech and the opportunity for Portuguese startups in this space.
For us at Paynest, this is super exciting, and one trend that we see booming recently is the launch of many banking as a service, insurance as a service, and investment as a service players. All these technologies – how we build wallets, how we build cards, how we build lending – allow others to use these services and monetize on top and it’s super exciting for us at Paynest to be surfing this wave.