How Jumio Reached 26M Identity Verifications a Year and 350 to 400 Customers Across 40 Countries (Interview with CEO Stephen Stuut)

Host Intro and Company Overview

Nathan Latka

00:00From Stephen Stuut again joined Jumio as part of a venture round in 2015. The company was founded in two years prior in 2013. The company has since raised $60,000,000 helping drive identity verifications across the sharing economy with the biggest public customer you can articulate being Airbnb, they're serving between three fifty and four hundred paying customers across 40 different countries, their team of 1,500 is split between San Francisco and India. They're growing 46% year over year currently

00:33last year in 2016. A did 26,000,000 identity verifications in a good year in 2017. Stephen says he expects that might pass 30,000,000. Stephen This is episode seven thirty two. Coming up tomorrow morning, we talk with Zvi. His company has raised $55.00 dollars, and he's leading the cargo container software space. But first, here's today's episode. This is the top where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or

01:07that are

01:11that that ones

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Nathan Introduces Stephen Stuut

Nathan Latka

01:22And I'm your host, Nathan Latka. Hello, everybody. My guest today is Stephen Stuut. He is the founder of a company called jumio.com. Now he brings more than twenty five years of experience fueling corporate growth and leading technology businesses. Before Jumio, he served as a CEO of a company called TruePosition, a leader in location based services technology. Prior to that, he was president and CEO of Broadband Innovations, delivering digital interactivity services to cable TV providers. During

01:52his tenure, he raised over $30,000,000 in equity from venture capital firms and strategic investors and ultimately sold the company to Motorola in December 2005. Stephen, are you ready to take us to the top?

Stephen Stuut

02:03I am ready to go.

What Jumio Does and Its Business Model

Nathan Latka

02:04Very good. So tell us what Jumio does and what's the business model? How do you make money?

Stephen Stuut

02:09All right. We're a software as a service. Particularly, we do trusted identity as a service. So we do two, three things in that, ID verification, identity verification, and document verification. It boils down to with an ID verification, you take an image of your ID, passport, driver's license, use your laptop, use your phone, upload it. We don't care. We will then validate that it is not fraudulent.

Nathan Latka

02:37Okay.

Stephen Stuut

02:37And then if you do identity verification, we do a biometric facial comparison of your selfie with your device and the image of your face on the ID to say that, oh, you have a perfectly valid ID. Are you the same human, or did you steal it?

Nathan Latka

02:37Yep.

Stephen Stuut

02:37And then finally, we do a document verification, which for a lot of know your customer regulations is things like a utility bill or a bank statement. Do you have something

03:02that proves you live there?

Nathan Latka

03:04Interesting. So are... Who's your customer? Is it the government that people are sending their IDs to to validate something, or is it the consumer?

Who Are Jumio's Customers

Stephen Stuut

03:11We are... Our customers are merchants who do... They need to figure out who you are, whether for their own business model, like Airbnb is a big customer.

Nathan Latka

03:20Okay.

Stephen Stuut

03:20They don't have to do it, but they do actually need to have a trusted environment of landlords and tenants. And then we also have airlines. We have online gaming companies, Bitcoin companies, brick and mortar banks. A lot of them have a know your customer requirement, an anti money laundering requirement that they must fulfill, which we do for them.

Nathan Latka

03:41Are a lot of these companies you're seeing spring up right now where they're scaling internationally with a lot of independent contractors? I'm thinking Uber, Lyft, on demand food delivery programs, things like that. A lot of the friction with these companies moving into new locations is exactly this is the driver actually safe? Is it are they who they say they are? Do you have a lot of those kinds of customers or no?

Stephen Stuut

04:04We have a lot of customers of that nature. I won't say whether those are specifically customer of ours.

Nathan Latka

04:04Yep.

Stephen Stuut

04:04But I would... The way I would describe it is the world is moving to the Internet online commerce. And the idea that you have to walk into some building and flash your ID is a little inconvenient, especially

Nathan Latka

04:22It's very inconvenient.

Stephen Stuut

04:24Well, it's inconvenient, and some places don't even have them. Right? They don't have it online. I mean, a brick and mortar existence. So we fit them beautifully.

Nathan Latka

04:32I have to tell you too, I won't show it on screen here for security reasons. But if you look at my driver's ID, whenever I'm trying to go into, like, a place that cards people and I show it to them, they look at me twice because it's, like, cracked halfway and it's old and worn. And my reason is simple. I don't want to go back to the DMV. It's too it's it's it's a it's such a

04:51bad experience. Would rather just put up with a cracked almost unusable license.

Stephen Stuut

04:56You know, there's a lot of people like that or, you know, someone changes their hair or, like in my case, you don't have enough left. And, you know, let's face it. The ID on your driver's license is a crappy, tiny picture.

Nathan Latka

04:56Yep.

Stephen Stuut

04:56Are you the same human? And we use the technology in humans, and we figure it out.

Pricing and Contract Structure

Nathan Latka

05:13So what is the average... Again, I... I'm sure you have tons of different cohorts of customers, large and small, but what's the average customer paying you? And is it per month? Is it a SaaS business?

Stephen Stuut

05:23It is a SaaS business. Typically, people pay one year's worth of transactions in advance.

Nathan Latka

05:29Okay.

Stephen Stuut

05:29And then they just burn off their inventory. And then if they need to buy more, we do another agreement. Or we have different mechanisms. So it is pay as you go, but you pay in advance in a sense.

Nathan Latka

05:41And are most... I mean, can you give me an average? Are most of these, you know, a $100,000 contracts or 10,000 contracts or a million dollar annual contracts? What's an average?

Stephen Stuut

05:49You know, they range wildly. There's a minimum that we won't bother with because, to be honest, you're not worth the customer support effort.

Nathan Latka

05:55Which is what?

Stephen Stuut

05:56But we had

06:03It's really not worth our time. And then we had many multi million dollar customers and then

06:08a whole

Nathan Latka

06:08cut out there. Could you repeat that? So what was the minimum that you won't really mess with and then go forward up from there?

Stephen Stuut

06:18You're you're froze up again. Oh, yeah. Connections.

06:24Hear me?

Nathan Latka

06:25Yes, Stephen. And kill... Go ahead and kill the video. We'll edit this out, but kill your videos so the connection's stronger. Stronger entirely. Stephen kill your video so our connection stronger.

06:38Okay, good. So we'll edit this part out. Let me ask that question again. So Stephen, yeah, can you give me like an average contract size? Or is there a minimum you won't touch? And if so, what is that?

Customer Count and Contract Size Range

Stephen Stuut

06:47I'd say the minimum is probably on the order of $30,000 That would just be a let's get you started kind of purchase. But we have many multimillion dollar customers and a whole range in between. We have anywhere from three fifty to 400 customers right now.

Nathan Latka

07:02Okay.

Stephen Stuut

07:02And they're in 40 countries, four zero. So we're quite global.

Nathan Latka

07:07Yep. And what is the... So so now that we understand more of the economics and what the company does, take us back to the beginning of this thing. When did you launch it?

Founding Story and Stephen's Role as CEO

Stephen Stuut

07:15All right. So I should qualify one thing. I am not the founder.

Nathan Latka

07:18Okay.

Stephen Stuut

07:18I am the professional CEO who came in later. The founder had the classics experience that we've all had. I believe he was on a beach in France and arguing with a credit card company as to whether or not he was who he is. And he thought there has got to be a better way than the annoying questions that we all know. It's called knowledge based authentication. What's the size of your mortgage? What's the last transaction you

07:43did? What's your dog's name? All that stuff, which, by the way, is very easy to actually break into somebody's identity just by Googling and looking at their Facebook page and answer some of those questions. So he said there's got to be a better way. And he came up with this, which was a really great way to do it, which is make it so dead easy. Pull out your phone and take a picture.

Nathan Latka

08:05So what year was that?

Stephen Stuut

08:07That prod... This company was founded with some other products, but that was about three or four years ago.

Nathan Latka

08:13Okay. So let's call it 20... Call it '13. Now when did you come in?

Stephen Stuut

08:17I came in two years ago.

Nathan Latka

08:19Okay. So '15... About two years after it launched.

Stephen Stuut

08:22That is correct.

Nathan Latka

08:23And what did that look like? I mean, from an operational perspective, did they raise capital and you came in like through VC round? Or how did that work?

How Stephen Joined and Funding History

Stephen Stuut

08:32I came in, I was brought in by the investors at that point, which are Andreessen Horowitz, Citi Ventures, and Eduardo Saverin, the co founder of Facebook.

Nathan Latka

08:43Yep. And and what was the... How much total have you guys raised?

Stephen Stuut

08:47You know, the company had raised to that day probably about 60,000,000.

Growth Rate and Verification Milestones

Nathan Latka

08:52Okay.

Stephen Stuut

08:52So quite a quite a significant sum of money. And we are doing actually very well. We're probably growing. I think last quarter was a 47% revenue increase over the same quarter the previous year.

Nathan Latka

09:06K.

Stephen Stuut

09:07Growing very quickly. I think yesterday, we broke through a 150,000 identity verifications in a single day.

Nathan Latka

09:16Oh, wow. That's cool. That's amazing.

Stephen Stuut

09:18This is a very successful thing. And we're just beginning. There's a lot of competition, but there's a lot of business out there. If you think how many different ways and times you have to pull out your ID, hotel room, rental car, you know, online gaming, whatever you might need to do. There's a lot of transactions out there.

Nathan Latka

09:35Yeah. Now just so I understand the funding question real quick. So 60,000,000 has been raised in total, and you came in with the last tranche?

Stephen Stuut

09:42Effectively. The the history is more complicated than that, but that would be good enough.

Nathan Latka

09:48But if I'm using, my research team did some research here. But like in August 2016, sounds like Millennium Technology Value Partners led that round of financing. Were you an entrepreneur in residence at Millennium, and that's how you met the company? Or did you meet the founder some other way?

Stephen Stuut

10:02No. I was hired by, effectively, Andreessen Horowitz, if you're familiar with They have actually a recruiting firm internal, which is a very helpful thing to those of us in their portfolio. The actual largest investor at this point is Centana Growth Partners, who are a private equity firm based in New York and Menlo Park. And then Millennium came in after that.

Nathan Latka

10:23Okay, I understand now. Good. Okay, so a lot of success here. 60,000,000 raised founded in 2013. You came in in 2015. You're about 46% year over year growth. And you just said you recently passed 150,000 identity verifications in one day.

Stephen Stuut

10:40That's correct.

Nathan Latka

10:41It's amazing. And what do you... Like, in... Given... Give me a bigger number. In 2016, how many verifications did you process?

Stephen Stuut

10:4826,000,000.

Nathan Latka

10:50Wow. That's... What will you do in 2017?

Stephen Stuut

10:53My guess is closer to 30. I don't... I haven't got a forward forecast, but things are exploding. One of the things that's been happening recently is, the Bitcoin market is going crazy, and we are quite, deeply enmeshed in their need to do know your customer AML requirements.

Nathan Latka

11:11Yep. That makes a lot of sense. And then tell me more kind of about team here. So you came in, again in 2015. What was the team size then? What is it now?

Team Size and India Operations

Stephen Stuut

11:21The team size was probably around 90, 95 in the West

Nathan Latka

11:21Mhmm.

Stephen Stuut

11:21And is now about a 110, a 115 in the West, and about 500 in India, and now a thousand in India.

Nathan Latka

11:37So so total call it about 1,500.

Stephen Stuut

11:40Correct.

Nathan Latka

11:41Yeah. And what is the going into kind of user acquisition? Right? So I'm curious, the India team, is this kind of a software product that is then verified by a human that you pay very little in India to kind of make sure it all checks out? Like, why is that? What's that big team in India doing?

Stephen Stuut

12:00Well, interestingly,

12:03hybrid blend of computer vision, facial recognition, and industry experts in a single integrated system. This is not a did the automatic thing not figure it out, throw it to the humans. It's actually an integrated process. So a lot of the automation may be to assist an expert. Interestingly, which you didn't go over my background, I start off my life, which is incidental to why I was hired. I'm an optical engineer by training designed laser weapons.

Nathan Latka

12:03Oh,

12:29wow.

Stephen Stuut

12:29So I know a lot about optics. And a computer vision system can do a lot, but it really has a lot of trouble if the image isn't perfect. And let's face it, if I said you can take a picture wherever, people take crappy pictures at Starbucks in bad lighting with a laptop that has a fixed focus camera. A computer vision cannot figure that out. Someday, maybe. Yeah. So we do both. We just make sure we

12:56get

12:56it right.

Nathan Latka

12:56Yep. I think that's probably... And that's the best answer. Right? That's the best kind of solution. Okay, good. And then talk to me about growth. How are you driving growth? How are you finding new customers? What are you paying to get them?

Growth Strategy and Sales Force

Stephen Stuut

13:09In spite of the fact that most listeners won't have known about this company, we're quite well known in the fintech space and related, like, the shared economy space so that we get a lot of inbound leads. We do have a substantial sales force direct, and we do have partners.

Nathan Latka

13:28How many people are in your sales force?

Stephen Stuut

13:30My guess is there's probably twenty twenty five.

Nathan Latka

13:34Oh, in your San Fran office?

Stephen Stuut

13:35No, also in London.

Nathan Latka

13:37Oh, in London. Okay, got it. So 25 kind of inside sales force. And are you doing anything like like, you know, last month, how much did you spend on paid media? Are using any of the raised capital to do that?

Stephen Stuut

13:49We do different things at trade shows. I don't know what the numbers are offhand. But we are at all the kind of trade shows you want to be at. We do various things in the marketplace.

14:03I'd love to have you... Give you a better answer, but I don't have those numbers to answer.

Nathan Latka

14:07I mean, sounds like you're running an organization that's fairly large. You you have other people like your CMO that probably know those exact numbers. But do you know off top of your head a key acquisition channel for you guys is going to these kind of shared economy trade shows.

Unicorn Customers and Word-of-Mouth

Stephen Stuut

14:19Yeah. I mean, interestingly, those are probably the least relevant. It happens to be that we are known, for instance, in Silicon Valley. If you are... We have three or four of the top unicorns or customers of ours, which I I can name Airbnb because everybody knows about that one.

Nathan Latka

14:19Yeah.

Stephen Stuut

14:19But we're very involved with a lot of those kinds of businesses, and people talk to each other and say, how do you solve this requirement of knowing

14:41who these people are

Nathan Latka

14:41Yep.

Stephen Stuut

14:41Whether by regulator or by my own business model.

Nathan Latka

14:45Last few questions here before we wrap up with the famous five. So you mentioned you mentioned a large range in your annual contract values, you know, between you said 30,000 on the low end up to way over 1,000,000 on the high end. Is that accurate?

Stephen Stuut

14:59Correct.

Nathan Latka

14:59And you said that variation is based mainly off their prepaying for a number of kind of identity verifications. And then as they use the inventory over the year, they pay that down. Is that right?

Stephen Stuut

15:09Basically, yes.

Nathan Latka

15:10Okay. So how do you I mean, do you do you do the same pricing per identity verification across all your customers, or does it differ from 5¢ on one to 10¢ on another or something like that?

Pricing Philosophy and Market Share

Stephen Stuut

15:23Well, I very specifically won't talk about price. That is competitive information that I don't wanna disclose.

Nathan Latka

15:28Sure.

Stephen Stuut

15:29And I also won't disclose whether the prices vary. Having said that, different markets have different value that they see from this kind of activity. And we're into the, get grabbing of market share as we should.

Nathan Latka

15:29Yep.

Stephen Stuut

15:29It's a new space, so we're in the front. So we're gonna grab as much as we can. And I... As far as I can tell, we're probably anywhere from four to 10 times the size of the next biggest guy growing

15:50faster than them.

Nathan Latka

15:51Yeah. Stephen, just to be clear, I mean, of the reasons I asked that question is is for that exact reason, right to grab market share. Sometimes it makes sense to vary pricing, because you're delivering different amounts of value people customers are willing to pay more or less, depending on their cohort, or their stage in life. So I mean, it sounds like, again, you're just based on the growth numbers you just articulated, you're using that very effectively.

16:14Okay.

Stephen Stuut

16:14Let's just face geographies also vary. What you do sell to somebody in Vietnam versus selling to somebody in London, very different economic situations.

Nathan Latka

16:24Yep. It is helpful to understand, though, what what what... One thing that I think a lot of entrepreneurs struggle with is finding that one key usage metric that you know, provides ultimate value that you can tie pricing to it sounds like you are crystal clear on that, you know, your number that you're, you're optimizing for a number of identity verifications. And you know that as that number increases, it has a direct correlation to your revenue increasing.

Stephen Stuut

16:48Absolutely. This is a... This is very much a grab the market share and its transactions.

Nathan Latka

16:48Yep.

Stephen Stuut

16:48So as a service.

Nathan Latka

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Famous Five Rapid-Fire Questions

Nathan Latka

17:36Very good. Stephen, let's wrap up here with the famous five. You ready?

Stephen Stuut

17:39Sure.

Nathan Latka

17:40These are these are easy, I promise. Number one, what's your favorite business book?

Stephen Stuut

17:45My favorite business book. Interestingly, it's a book from McKinsey when I worked there, and it describes how you go about analyzing a marketplace.

Nathan Latka

17:55What's it called?

Stephen Stuut

17:55Think of the name of it. Well, it's an internal book. There's a term in it they have called MECE, which is mutually exclusive, conceptually exhaustive, which means don't make a structure for analyzing a market that you don't have it thought through carefully.

Nathan Latka

18:10Yep. Because then you use the wrong structure to analyze it, but it's based off the wrong assumptions.

Stephen Stuut

18:14Correct.

Nathan Latka

18:15Interesting. Is there a book you can name that people can access publicly?

Stephen Stuut

18:20You know, there is one that I got off of the iTunes website, but it's called McKinsey of the... Some sort of... You just type in McKinsey, you'll find a book, and it'll describe this in there. I've got the internal information. It was just very valuable. Right.

Nathan Latka

18:37So they can search McKinsey book.

Stephen Stuut

18:40Yeah.

Nathan Latka

18:41Okay. Number two, is there a CEO you're following or studying currently?

Stephen Stuut

18:44Well, interestingly, the last company I managed is a portfolio company of Liberty Media, and that is John Malone's company run now by Greg Maffei. And one thing I liked about the way they go about things, they take a calculated risk and they go straight down the middle of the fairway in terms of we're gonna go buy, in this case, they did recently is buy Formula One. They're not like hiding in the bushes or anything, they go

19:11straightforward and say, this is how we're going to make it worth something more than what we paid. So I like that kind of approach. Having said that, you know, you've got the Steve Jobs, which is let's create a market dislocation and do it very covertly until no one can respond very quickly because we got there first. So I'd like both approaches, to be honest.

Nathan Latka

19:31Number three, is there a favorite online tool you have like Acuity Scheduling?

Stephen Stuut

19:37Well, I'm sorry, I'm an old school guy. I'm using Outlook on a Mac.

Nathan Latka

19:42Stephen, come on.

Stephen Stuut

19:44I know, I know. I would go into the detail of what I use. It's very good. But you get used to your tool and I've got an invested amount of information in it.

Nathan Latka

19:44Yep.

Stephen Stuut

19:44What I do use as a tool, which is something I thought I would share is, I spent time researching my competitors, particularly the executives, and what they say and do in the marketplace that's been recorded like this conversation you and I are having.

Nathan Latka

20:10Yep. Now, do you have a tool that helps you quickly find that information or that's just a practice you like to do?

Stephen Stuut

20:15That's a practice. It's called Google.

Nathan Latka

20:17Yeah. I will tell I will tell you. I don't know if this is gonna be live yet, but I am actively building a tool which scrapes all of the audio data from these podcast interviews I do and makes it in a readable, almost like pitch book form for people like you to go analyze.

Stephen Stuut

20:32That's interesting. Well, that will be helpful to me.

Nathan Latka

20:34But we'll see.

Stephen Stuut

20:35And so the insight that those two examples of CEOs, right, are they're gonna state what they're doing, but they also might make some hint to the other things that they're thinking of.

Nathan Latka

20:35Mhmm.

20:45No. Makes sense.

Stephen Stuut

20:45When

20:46a you're new space, there's not a lot of secrets. Right? Every plunging forward.

Nathan Latka

20:50Number four, Stephen. How many hours of sleep do get every night?

Stephen Stuut

20:54Eight. How's that sound?

Nathan Latka

20:56That's pretty good. And what's your situation? Married, single, you have kiddos?

Stephen Stuut

20:59Married, four kids.

Nathan Latka

21:00Wow. Okay. And how old are you?

Stephen Stuut

21:02I am 61.

Nathan Latka

21:0461 years young, Stephen.

Stephen Stuut

21:06I explained the outlook thing.

Nathan Latka

21:07Take us take us home here. Take us back forty one years. What do you wish your 20 year old self knew?

Stephen Stuut

21:14Travel just a little bit less when the kids are young. But

Nathan Latka

21:14Travel less

21:17when the kids are young?

Stephen Stuut

21:19Travel less than I did

Nathan Latka

21:19Okay.

Stephen Stuut

21:19When the kids were young. I did a lot of travel. I do a lot of travel. That's kind of why I'm good at this. But I wouldn't change a lot from when I was 20.

Nathan Latka

21:19Yep.

Stephen Stuut

21:19I would do the same things over again.

Nathan Latka

21:32There you guys have it from Stephen Stuut. Again, joined Jumio as part of a venture round in 2015. The company was founded in two years prior in 2013. The company has since raised $60,000,000 helping drive identity verifications across the sharing economy with the biggest public customer you can articulate being Airbnb. They're serving between three fifty and four hundred paying customers across 40 different countries. Their team of 1,500 is split between San Francisco and India. They're growing

22:0346% year over year currently. Last year in 2016, they pro... Did 26,000,000 identity verifications. In a good year in 2017, Stephen says he expects that might pass 30,000,000. Stephen, thank you for taking us to the top.

Stephen Stuut

22:18Thank you very much.

Nathan Latka

22:19If you enjoyed Stephen today, go back and listen to Paul yesterday where him

22:23and I debate ferociously. Should you

22:25call people customers if they aren't paying you? I feel like it's a lie, but you give me your opinion. Go tune in and tell me what you think.