How JustiFi Raised $10.6M to Build Payments Infrastructure for Vertical SaaS Platforms (Interview with CEO Joe Keeley)

Introduction and Company Overview

Nathan Latka

00:00Folks. My guest today is Joe Keeley. He's the CEO and co founder of JustiFi Technologies, which exists to accelerate the potential vertical SaaS platforms with specialized payment infrastructure strategy and beyond and beyond payment fintech products. The company was founded in 2021 after the team founded multiple venture backed and had multiple venture backed SaaS exits. Investors in JustiFi include Emergence, Crosslink, and Rally. Joe, you ready to take us to the top?

Joe Keeley

00:25>> Very good. Thanks so much.

How JustiFi Compares to Stripe and Competitors

Nathan Latka

00:27Alright. So you're talking payments infrastructure. Are we talking Stripe, Paddle, Chargebee sort of space or something different?

Joe Keeley

00:32>> Yeah, that's right. I think if you think about us as like a Stripe Custom Connect with for vertical SaaS platforms where they don't have to build all of this stuff on top of it to get the best economics. We came from a vertical SaaS background. It took us a decade and a half to really get to what we would say sort of world class. And we said, well, you know, and thus the name. We said, well,

01:01>> was a great ending, but that was really complicated and that was really expensive and maybe that's not right. So let's build what we wish we had. Mhmm.

Nathan Latka

01:09It's interesting how you describe it, sort of a virtual Fintech department, of turn it on or off, almost like Rackspace and managed servers, right? Turn on the team on or off. Is that sort of how you're thinking about this long term? A service component, there's a SaaS component, there's maybe a percent of GMV component?

Joe Keeley

01:23>> That's right. So we have, you know, payment infrastructure for vertical SaaS that allows them to monetize payments and very quickly you're seeing that become frankly not that unique. There are a number of folks that are out there that do that. The cat's out of the bag if you're a vertical SaaS platform or marketplace that you ought to monetize payments.

Beyond Payments: Lending, Card Issuing, and Insurance

Joe Keeley

01:44>> You need to have the infrastructure to do that and we have that and we have some very interesting, I think, product features that make us different. What I think is really the next phase though is going beyond payments, and we can talk a little bit more about that, and bringing in lending and card issuing and insurance. But back to the service side of it is there's a big difference between doing something and doing something extraordinarily well.

02:10>> When I think about monetizing payments for a vertical SaaS platform, you can have all the infrastructure you want, but if 23% of your barbershops on your barbershop SaaS platform are using your payments, well, one could say you're not really meeting your full potential. So what you might need isn't actually a remarkable amount of new technology. You might have the stack you need, but what you need is sales enablement training.

02:40>> I think that and we have a platform that delivers that content and our virtual fintech team can lean in, but we think that it takes more than just an API. You have to have a really good API, but I think putting a team around things to achieve the goals, we shouldn't forget that it takes a lot of talent as well to win. We kind of model ourselves a little bit after the playbook. We're a Minneapolis St.

03:05>> Paul based company. There's another one called Arctic Wolf here that does, chief security officer, you know, and there's a lot of support that they offer that are, you know, powered by humans. I think we shouldn't forget the power of, humans plus tech.

Nathan Latka

03:20Of course. Now, I mean, you're riding a bit of a wave, which is over the past year and a half. SaaS founders know the closer they are to the transaction, the more likely there is for them to unlock sort of FinTech revenue, right, a percent of GMV. And if they go out to the markets, we're talking three months ago and the board deck sounds more like FinTech plus percent of GMV, valuations were higher. It's a sexier,

03:40there's more lock in, you're closer to the customers, etcetera. Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders. But imagine if we took all of the valuation data out from over 2,807 interviews I've done manually. Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access

04:04this in a second, but you log in, you connect your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on

04:28who's doing the buying of your SaaS company, you're gonna get a different valuation. A VC is gonna pay a different valuation. Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here, Right? So the teal is what a VC would pay. Yellow is what private equity and red is if you sold the whole

04:50thing outright. Now what's cool about this is this is not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founders share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that

05:15have been acquired the valuation and the multiple. Maybe you're going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. All We're right, gonna go

05:39back to the YouTube video here in a second, but if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I

06:05hope to see you there. Alright. Let's jump back into the interview. Do you anticipate the desire for folks to move into payments, right, with their current customers who already have a SaaS platform? Will that continue as markets sort of compress here and venture dollars are a little more reserved?

Will Demand for Embedded Payments Accelerate?

Joe Keeley

06:21>> Well, I think it's going to accelerate because let's say that venture dollars are reserved, sure, but that vertical SaaS company, let's say dollars are reserved at this particular period of time for them acquiring new customers even. Then getting greater value out of wallet share of the customers they do have, that's a big part of embedded payments in fintech. If you have $100,000,000 or $10,000,000 of funds flow, how do you better monetize that with not just payments

06:54>> but other fintech products that you can offer them? Of course, always thinking about how can you add as a vertical platform value to the customer. Lending is a great example. A lot of times with these small and medium sized businesses, very quick hit embedded lending products

07:13>> are competing against them using their credit card, which really, as long as the UI and the UX is good,

07:21>> that shouldn't be very difficult from a rate standpoint. We like to think about, let's get payments right and then use that underwriting and all of that and take someone beyond because it's going to, at the end of the day, even if pre money gets compressed and other things, it's going to be a vertical SaaS platform is going to be judged on the stickiness of their customer and how deep they can go with those customers.

Nathan Latka

07:46So guys, just to make sure you're following along here with Joe and I, because I'm about to ask way more technical questions. If you're running a SaaS company right now and you're selling to construction workers or construction companies and they, you know, have to send invoices to buy lumber, right? And you add up all the potential lumber invoices and it's 1,000,000 a month. Joe's going, you should use JustiFi and add a payments process. Maybe you're advancing

08:07invoices. There's a lending play. Maybe you're doing something here. And Joe, they can use your technology to do that.

Joe Keeley

08:12>> That's right. Our technology and equally important, our team to help unlock what are the other opportunities because we have a toolbox just using the construction analogy here. We have a toolbox full of tools and not every tool is going to work for every job. But there are oftentimes

08:34>> we think that, one, on their funds flow, so that's all of the money that's flowing through the ecosystem. We believe wholeheartedly after being vertical SaaS veterans ourselves that the platform is creating the value, so they ought to share in the lion's share of that value that's created. That means 100 basis points in payments and another 100 basis points in other products, take

Nathan Latka

09:01Do that you take out your cut out of that first 100 basis points?

Joe Keeley

09:04>> No, we are operating on a very different model in so much as we think that there might be two twenty five or two fifty. So our goal is to first try to get the platform those 200 basis points plus. And then if we can make five or 10 or 20 basis points in addition to that as being that true deep partner. The great thing, of course, about vertical SaaS platforms and software sort of eating the world

09:34>> is that very quickly a small platform can see funds flow of 50,000,000 to $200,000,000 Yeah.

Nathan Latka

09:40Yeah. We see this all the time when we interview SaaS founders. It makes tons of sense. But just to be clear, I'm trying to break down your model, excluding some of the services that you sell, which I do think are important for this. Your sort of like percent of GMV model, the way you make money is you're you're gonna help the founder get 200 points and then you're gonna keep five to 20 points yourself.

Joe Keeley

09:57>> On top of that. That's right.

Nathan Latka

09:58Amazing. So help me understand, you know, it's where you find folks that have gone through VC saying services are really important. I think it's really important when you look at cohort analysis in terms of net dollar retention on folks that have done and paid you for services, it's always higher, almost always higher than folks that don't pay that setup fee or don't pay the service fee as well. How are you embedding services? Is it on the

10:20front end or the back end of them installing JustiFi in the first place?

Joe Keeley

10:24>> There's nothing to install it. It's more on a modular basis. We have insights dashboards. Insights is a scoreboard. If you're in the vertical SaaS business, your game is payments and embedded fintech. So if you're going to play a game, we think it's particularly important to keep score at the game. We've created one pane of glass for executives to say, How are we doing in the payments game? They can purchase that. Then we have Engage, which is

10:56>> if you're in a game, it's good to have coaches. It's good to have folks that help you sharpen the sword. Engage is our virtual fintech team where we have an LMS platform and a team that they can purchase. Then we have our usage based tech platform with the subaccount architecture. We have some very large platforms that are just purchasing insights and Engage right now because on their roadmap, it's not the time to do a migration.

Nathan Latka

11:22You call your dashboard insights, that's the name of the product?

Joe Keeley

11:24>> That's right. Yep.

Nathan Latka

11:25Okay. Okay. Okay. So just to be clear, again, to 20 points on the first product insights as a dashboard to see how you're doing. Is that like a SaaS fee?

Joe Keeley

11:32>> Yep, exactly.

Nathan Latka

11:33And then engage is your LMS tool. That's your FinTech. That's your coaching.

Joe Keeley

11:36>> That's right.

Nathan Latka

11:37Super smart. Okay. Now, origin story of the company, did you start off with one of these things or did you just launch with all three at the same time?

Joe Keeley

11:44>> So, if we go way back, I mean, my background is I grew it started as a service company and then we embedded our own vertical SaaS platform and real time booking for fifteen years in the babysitting and childcare space actually. We had 10,000 employees in The U. S. And UK and I sold that to Bright Horizons, a public company out of Boston. Then my co founder started SportsEngine. SportsEngine is a vertical SaaS platform that provided these

12:12>> software tools for youth sports teams. And it turns out that hockey and soccer is really expensive because they processed about $4,000,000,000 and they built this sort of this FinTech stack and this strategy where 85% of their revenue as a vertical SaaS platform came from what we're doing today. So we got together and said, there must be a better way than that sort of walk in the desert. That's why we started JustiFi to say, you know, something's

12:39>> not right. We started that in January '21.

Origin Story and Co-Founder Backgrounds

Nathan Latka

12:41Okay. So fairly recently, when did you sign up your first vertical software provider on the platform?

Joe Keeley

12:47>> We started building right away. The good news is we knew exactly what to build because our engineers are

Nathan Latka

12:53Been there, done that.

Joe Keeley

12:54>> Haven't done this for fifteen years. So we brought our first platforms in the late summer of twenty twenty one and we're in production with a couple dozen platforms today things are going remarkably well.

Nathan Latka

13:08That's great. So call it like 24, 36, 48, something like that platforms today actively using the platform. Are you seeing a pattern? Are you having just way more success with the LMS or the insights or the basis point model only? Or they're all using all of them?

Joe Keeley

13:21>> No, there's a mix and it depends on stage. I think when a platform's early, there isn't as much to analyze and help on the cost side. Really it's easier to embed processing platform right away. Then what we're often doing is really providing a discounted part of that strategy because we want to invest in emerging platforms because the catch-twenty two in the industry, of course, is, Well, come talk to us when you have $500,000,000 of volume. It's

First Customers and Current Platform Count

Joe Keeley

13:52>> like, Well, yeah. Can I get there if no one ever sort of helps me accelerate this? We really have a soft place in our heart for there. Then larger platforms tend to start. We have $500,000,000 a billion dollar platforms. They like to start on the strategy side really because there's more nooks and crannies to dig into. They might have multiple processor integrations. But ultimately, to go on this journey, and we do think it's a journey, we

14:20>> think of ourselves a little bit like payment and fintech Sherpas in a way. We're here to develop the map. We're here to carry the load.

14:29>> It oftentimes leads to using all of them together because the return is so material for a vertical SaaS platform.

Nathan Latka

14:37Mhmm. And and help me understand too, are people listening right now going, am I too early or too late for JustiFi? What's the what would you say the minimum amount of potential GMV is for a platform for them to, like, really consider and making it worth their while to sign up for JustiFi? Is it 10,000,000 annualized GMV or 100,000,000 or more?

Joe Keeley

14:52>> Honestly, we have pre revenue platforms and if they're a vertical SaaS platform that is convinced that said, Yes, I would like to monetize payments from dollar 1.

Nathan Latka

15:03Oh, wow.

Joe Keeley

15:04>> Okay. We would love to work with them. Then we have a platform, a couple of platforms that are over 1,000,000,000 that we're working with and anywhere in between. So it just really depends on, you know, we're having different discussions and there's different analysis for a much larger, more mature, but sometimes very large platforms aren't necessarily depending on when they were founded and what kind of payment stack they have, they're not necessarily that much more sophisticated sometimes

15:33>> in the payments game. So, it all depends on the team. So, have really anywhere in between.

Nathan Latka

15:40So, if we add up all of the GMV that you guys are sitting on, because that's ultimately gonna power how good you can build your AI engine, right, and your dashboards and things, is that above sort of 5,000,000,000 at this point?

Joe Keeley

15:50>> We're flirting with it.

Nathan Latka

15:54This year.

Joe Keeley

15:55>> This It's still early days, but,

16:00>> And I think that the GMV is really interesting because, yes, you can oftentimes monetize the same funds flow in different ways because a platform can get best of breed of payments that come in on the processing side, but then there are opportunities on the payout side. We're doing a project for one of our platforms that is paying some of their sub account customers out on the card issuing side. They're making money coming in and they make

Who Is JustiFi For? Platform Size and GMV Range

Joe Keeley

16:30>> money coming out too. So we're looking at both sides of the coin and do take a little bit more of a bespoke approach. We don't feel like we need or necessarily want to work with thousands of platforms right out of the gate, just really leaning into this notion of taking a team approach to, you know, some select few platforms that really want a partner is really where we find, we deliver and get the most value.

Nathan Latka

17:00You mentioned Joe unlocking at least 200 bps for these platforms when they sign up with you. You know, if you're flirting with 5,000,000,000, let's be conservative and say there's 3,000,000,000 right now on the platform. It's fair to say we can multiply times, call it 2%. You've unlocked something like $60,000,000 of potential GM, you know, new revenue for these platforms you're working with. Correct?

Joe Keeley

17:15>> That's right. So it's, you know, it's all about we exist to accelerate potential. And I think that done well and there is, again, a very big difference between doing something and doing something well, we really have a lens on the world that says vertical SaaS platforms are literally worth three to five to 10 times more if this strategy is implemented well with the right technology. That's

Three Products: Insights, Engage, and Infrastructure

Nathan Latka

17:44why I we think anyone listening disagrees. I would totally agree with you. Deeper customers, bigger wallet share, ARPU expansion, net dollar retention higher, stickiness, all of it.

Joe Keeley

17:54>> You got it all. You got it.

Nathan Latka

17:55So, we

Joe Keeley

17:56>> exist to accelerate that potential. So let's look at quarters not years.

Nathan Latka

18:01Yep. Yep. No, this makes a lot of sense. Okay, cool. So talk to me about how you guys have funded the business. You bootstrapped or you decided to raise?

Joe Keeley

18:07>> So we, the CEO founder of Sports Engine is at Rally Ventures. So one of my co founders. So we, we incubated this inside of Rally Ventures, which has offices in Minneapolis and Silicon Valley. Then we went out for a seed raise and we brought in Emergence Capital in the late summer fall of last year and then a fast follow by Crosslink. So this has been really predominantly venture backed really from the beginning. We've raised a 10,600,000

Funding History: Seed Round and Investors

Joe Keeley

18:44>> seed round and we're off and running.

Nathan Latka

18:48What was the sorry. The round you raised last year was 10.6 seed?

Joe Keeley

18:53>> Correct.

Nathan Latka

18:53And the round you raised this year was your series A and how much was that?

Joe Keeley

18:57>> No. That was just an extension on the we it was a slight so we did 6.6 and then we added four to it.

Nathan Latka

19:03Got it.

Joe Keeley

19:05>> We had been talking, with the same investors all along and it was just more of a timing thing as part of the seed race.

Nathan Latka

19:12I see. I see.

Joe Keeley

19:13>> We'll look to do a series A. We have, we have plenty of runway, which is always a good thing, but the timing on it, we'll, we'll see.

Nathan Latka

19:21How many folks are on your team today full time?

Team Size and Engineering Breakdown

Joe Keeley

19:24>> We have about 27 folks on our team today.

Nathan Latka

19:26And what's the breakdown?

19:28How many engineers?

Joe Keeley

19:30>> A little over half.

Nathan Latka

19:32And then I imagine you probably staff up pretty heavily in your LMS side, right? A bunch of coaches, trainers, tech folks?

Joe Keeley

19:38>> Yeah, exactly.

19:42>> My operational co founders, our Chief Payments Officer, Casey Kipfer, he led the payments team at SportsEngine and then NBC Comcast acquired them. He's really leading that team and it's an awful lot of fun to lean in with other entrepreneurs because even very large GMV, vertical SaaS companies can be not so large businesses. And for me personally, and with Casey, it's terrific to just really lean in and get to know their business and be more than just

Onboarding and Migration Flexibility

Joe Keeley

20:14>> providing them with technology because I think technology enables us as entrepreneurs to do great things. The human part is very real too.

Nathan Latka

20:23Joe, is the onboarding zero or one very black or white? In other words, if someone does a billion in GMV already, do they have to onboard all of that revenue through JustiFi on day one or they can, can they run a test with a little bit of it to start?

Joe Keeley

20:33>> Yeah, definitely a test and we can run alongside existing processors too. So, you know, first and foremost is, you know, the, the

20:43>> migration and the larger, the more material certainly a migration might be. But

20:52>> we have a 300,000,000 platform that started integrating and migrating six weeks ago and is in production.

Revenue Model: Basis Points on GMV

Nathan Latka

21:00Yep. But I wanna make sure I understand your model where you're going here. If you serve your customers well and you get to the point where you are sitting directly on top of $5,000,000,000 of GMV, right? And you've created 200 BPS of value for your customers, that's a $100,000,000 of ARR basically unlocked. Your ability to revenue, you know, monetize that is effectively 20 BPS on that. So about a $10,000,000 run rate for you once you're sitting

21:21on 5,000,000,000 of GMV. Is that about right?

Joe Keeley

21:24>> Yeah. And our BPS will vary and it'll depend on the other products that are brought in as well. So, you know, that'll be a bit of a journey,

21:36>> but yeah, it's directionally correct.

Nathan Latka

21:38Very interesting. All right. Anything else I missed before we wrap up?

Joe Keeley

21:41>> No. Been great to talk to you. Thanks for the invite and look forward to accelerating potential together out there.

Nathan Latka

21:49Alright, Joe. Famous five here, rapid fire stuff. Number one, favorite book?

Joe Keeley

21:54>> Traction.

Nathan Latka

21:55Number two, is there a CEO you're following or studying?

Joe Keeley

21:59>> Tim Cook.

Nathan Latka

22:01Number three, is there a favorite online tool you have for building JustiFi?

Joe Keeley

22:10>> Grow.

22:11>> Grow. Yeah. That's good one. Just acquired recently. I don't know if you know that. I think that's public. Yeah. But just acquired. I hope that's public. Yeah. I think Rob Rob told me the other day, I'm pretty sure it's public.

Nathan Latka

22:21Number four, how many hours of sleep are you getting every night?

Joe Keeley

22:25>> 7.25.

22:27>> 7.25. The Oura Ring or something.

Nathan Latka

22:28And I saw a ring on, so I think you're married. Any kids?

Joe Keeley

22:32>> I do. 16 and 12.

Nathan Latka

22:34Ah, two kiddos. How old are you?

Joe Keeley

22:37>> 41.

Nathan Latka

22:37Alright. Take us home. Something you wish you knew when you were 20.

Joe Keeley

22:40>> Say again?

Nathan Latka

22:41Something you wish you knew back when you were 20.

Joe Keeley

22:49>> Can get it done in eight hours a day.

Nathan Latka

22:53Guys, you don't have to overwork yourself. Justifi sitting on a very interesting opportunity, which is all of you guys have great relationships with your customers already, your SaaS platforms. You sit close to payments. You should launch a GMV model, right? Deeper wallet share, more revenue for you, more value for them. They enable you to do that much faster, much quicker. They're working with, call it 24 to 48 platform SaaS companies right now. Their model is to

23:13take bips on the value they create for you. Also train you with a with an LMS tool, and then also give you dashboards and insights with the SaaS fee if you want them. Take one of them, take all three of them, you pick. But just getting going, they've raised 10,000,000 $10,600,000 to build this bad boy out. Team of 30 sorry, team of 27 right now as Joe scales. Joe, thanks for taking us to the top.

Famous Five Rapid Fire Questions

Joe Keeley

23:32>> Thanks so much.

Nathan Latka

23:34One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers. They try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU CAC, LTV, you name it, they share it. And the buyers try and make a deal live. It is fun to watch every Thursday one

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