Admitting it "may be professional suicide" to take the reins in the midst of a global health crisis, Brady Harris says his role atop Dwolla's management chain will be "a real test of my leadership abilities."
The past month has been a struggle for businesses — even digitally focused fintechs like Kabbage have had to furlough workers as the coronavirus spread — so there is no guarantee that a digital payments company like Dwolla will fare any better than companies outside the technology space.
According to Harris, this situation puts him in the role of "a new battlefield commander just meeting his troops as they are dropping into Normandy."
Harris knows the economic challenge many companies in payments are facing. Major acquirers are telling him they have been experiencing a significant downturn in business for the past month, but the CEI sees Dwolla as having a diverse enough revenue to fare better. The Des Moines, Iowa-based payments technology company counts recurring payments for services as a significant contributor to its cash flow.
Harris' predecessor, Dwolla's longtime CEO Ben Milne, oversaw a fast-growing and fast-changing company over the past decade. Milne's "stamp" has been plastered all over Dwolla.
Harris, who took over the Dwolla CEO position this week while Milne stays on the company's board of directors, looks at Dwolla's past as the main reason he sought a leadership role there.
"There is this scramble for everyone to differentiate themselves, but it was all within the same pool of moving money from point A to point B, along with those using Visa or Mastercard rails," said Harris, who comes to Dwolla with 20 years of payments experience, including a role as president of Payscape, where he focused on market strategies.
Amid that scramble, Harris has seen many new payments use cases unfold and various roads in which Dwolla could travel to continue its growth. After all, it is a company that knows how to turn on a dime.
In the past decade, the company transformed itself from a mobile wallet and P2P provider, to one offering small banks an API-driven faster ACH option, and ultimately providing that same service for large companies.
"One of the things I am really excited about with the company is our core product has pivoted and changed focus over the years and that was largely due to various customers saying they wanted a certain type of feature or payments solution," Harris said. "Like most agile startups, the Dwolla research teams would be redirected to create solutions or develop products."
With that as a core strength, Harris expects to be able to consider just about any type of payments technology advancement from which he believes Dwolla and its customers would benefit.
"I look at the payment facilitator space as a big strategic focus for us," Harris said. "It is an unexplored opportunity in that Dwolla has created, in effect, a payfac product with its ACH rails. You are not underwriting all of the end users, and not all individuals are sending and receiving funds, but you are creating a highly programmable, customized payment on ACH rails."
With that viewpoint, Harris said, Dwolla is combining a payfac component with payment integration.
"I love that idea of taking the Dwolla product, white-label it and integrate into various independent software vendor platforms and delivering instant payments for a fraction of what you are paying with interchange fees," he added.
If Dwolla were to dip its toes into being under the hood of payfac merchant service models, it would likely open the door to advanced payments strategies for click-to-pay or internet of things technology.
"We have all kinds of robust development going on now," Harris said. "From our ACH product, there could be a lot of exciting appendages, where we can enter strategic partnerships, where sometimes the partners are using our product road map to respond to the marketplace."
With some clients on occasion requesting to augment the Dwolla ACH product with traditional payment solutions, Harris said he is open to discussions about augmenting a core product with Visa or Mastercard solutions.
But he would tread that water carefully. "We would leave some money on the table in those cases, and I am highly sensitive to not being distracted from our core product or focus," Harris said.
Because the payments technology space has become crowded with so many legacy companies and startups pushing and shoving to get firm footing, it still comes down to offering a product that lures banks, corporations, merchants and consumers.
"If you are going to be a payments engine for a payfac or anyone else, you have to be able to support transactions from a number of different payment networks and offerings," said Thad Peterson, senior analyst with Boston-based Aite Group. "That includes alternative payments beyond the card networks."
On that playing field, a company "has to have a differentiator" that makes enough people want to pay attention, Peterson said.
"Dwolla has been around a long time and its engine is proven, and that might be one of the key components for them," he added.
Harris knows that if Dwolla can remain as diverse as possible, while already growing at a near 60% clip as it did last year, it can implement a stronger go-to-market strategy.
"You have to hold an honest light up to the product you have today and ask if the marketplace and the customer want this," he said. "If it doesn't, you reconfigure it in a way that equips your go-to-market team in a way that it can go out and get new customers."
