How Productfy CEO Duy Vo grew Productfy to $1.5M revenue and 50 customers in 2023.

hey folks my guest today is yuibo he started product five with the thesis that financial services is among the fastest is moving to the edge where the user experiences he's a product leader having spent much of his career at fintech and in suretex and is deeply passionate about financial services because he believes that the sector is both huge mass opportunity and a tremendous moral obligation to do societal good and it's largely failed our most vulnerable populations he believes the democratization of financial products and is committed to changing the way financial products are built for good you are you ready to take us to the top yes sir really appreciate the opportunity to be here nathan you bet okay so tell us about the product describe your customer who are you selling to yeah so um maybe i can give a little bit of a context before uh before that about the fundamental problem that we're trying to solve for is that right now financial services is a zero-sum game i take money from you i lend it to your neighbor i make as much money as i can in between that's how i earn my living what we fundamentally have to ask ourselves is that if we wanted to engender a kinder more compassionate more empathetic more socially just financial ecosystem there has to be a change in how people view financial services so we realized that that we needed to create a marketplace for companies who aren't into banking who aren't into financial services to better serve their end users imagine the power of a university that can offer a secure checking a secure credit card checking savings account to a student help them build credit so just to be clear is i'd love to talk about this through your customers is that one of your early customers or university no no our early customers are all fintechs at this point um we they basically have integrated with our apis but what we want to do is we want to expand beyond the world of fintechs and move into um and move into uh uh clients that are not uh solely financial services okay so so i guess just let's talk about where we are first then we can go talk about where you're going so so can you maybe name a customer that's paying you today and sort of explain how they're using you yeah so um uh actually uh nathan i actually i i need to double check um with with our commercial teams on like where we can name clients yet i'm not sure if we can name specific clients but i'm happy to talk about use cases if that yeah yeah only talk about what you can talk about i mean is is everyone under nda or i mean sometimes obviously you have case studies and things is there a real customer you can name yeah i mean we um again i i want to make sure i align with our commercial team on on what our our broader messaging is we we just historically have a named specific clients um on these calls and we just talk about use cases that we try to solve for them okay cool yeah it's it's way more effective to talk about an actual customer using it than sort of general high-level use cases which is why i'm digging there so if you can't talk about a specific customer that's fine we can talk about more of the back story yeah i mean we you know we like i can tell one of our customers they they're creating um a card that's optimized for for people who travel a lot right creating the right travel experience and so they're using us they're basically using our card rails um launching first with debit card and then eventually um in q1 they're going to be launching with a secure credit card and eventually unsecured credit card so right now they're live transacting our system we offer wires deposit accounts ach and um and uh and uh debit cards okay got it very interesting and so what does a customer like that pay your prompt to use the technology yeah so um we we try to be very very startup friendly so um we're talking very very minimal um program management fees in the hundreds of dollars until you go live and it's the low thousands and then uh per month and then we charge um on ach on kyc um on wires and then we we we split the the interchange on revenue uh we we split the interchange rev share okay so again usually like all this you know fintech you know there's like generally 300 bips up for grabs really anytime money moves hands and everyone sort of approaches it a different way right so when you say you make money on ach you explain to me how that might work yeah so so an ach we charge a flat fee okay of how much um it it varies by volume oh i see okay if i'm just getting started with you if someone listening right now wants to sign up for your platform what are they going to pay you on ach they're starting i think it's like 10 cents per stage oh interesting okay so super small and then obviously scales down with volume um which one of these is your is your most used tool by the way ach kyc wires interchange so um uh i i think when you say most use right like i want to make sure that that we're talking about the same thing because if you think about it um you cannot open a card until you do kyc right so technically kyc is the gateway to everything yeah so nothing is possible without kyc but obviously so how do you make money how do you make money there since that's the first step right so you know we we you know we we offer um you know we have a bsml department that does checks but then we have the full suite of automation around kba questionnaires um and around uh uh document verification so um every time you use one of those tools um you know we we charge you a small fee flat fee one time flat fee one time yes like like a dollar or under a dollar um it depends on it depends on where in the water flow you end up right if if you right off the bat we you know you know we have very clear indication if we know who you are then then you you don't have to go down further step but if like hey you know maybe maybe um you know there's not sufficient information here we have to go pull additional data we have to have you upload your driver license then that's additional steps in the waterfall assume the cheapest one so let's say i'm a really easy customer my information's out there you can find me you don't need needing to do extra steps yeah i i think i think our our big our first level kyc is i think something like 60 70 cents or something like that oh super super convenient okay got it cool all right great and then obviously you get into wires and interchange and what we're talking like 10 20 bips there yeah so wires flat fees as well um no no interchangeable wires like we try to be really really friendly with um with uh with with startups okay got it so flat i mean you're talking like under a dollar per wire um i don't remember that number off the top okay okay do you make a d are any of these structures as a percent or is it all flat fee um so uh interchange off of card spend is is bips everything else is structured as a as a flat fee okay so what were you able to carve out for yourself i'm always interested folks trying to carve out of the there's only 300 bits up for grabs right so what'd you carve out i think i think that depends on the use case commercial is very different than than personal and credit is very different than that so i think what we look at is we look at a per customer usage and and then we try to figure out like what what makes sense because we want to ultimately help our clients be successful so a lot of that is looking around their use cases um uh and figuring out like you know you know the bits you make when you go to a restaurant it's very different than the bits you make when you're shopping at a grocery store right um the you know there are certain requirements if you're going to do a uh you know a signature bin versus a non-signature bin so there you know and then obviously commercial and personnel are two very different bin types um secure versus debits or two very different dim types so it really really does depend on on our clients um uh uh like use cases okay i want to get off of pricing capture more of your stories or product vision your backstory here um so let's just take an average here right the average customer looking at all the product lines that you offer them are going to pay you what like a thousand bucks per month once they're onboarded um i mean in in terms of in terms of like flat fees or in terms of like because obviously occurring monthly right so that like what they pay us also if they're doing more ach volumes they're going to pay us more i understand that more kyc's i understand that that's what i'm asking so you would then have to do the calculation your head what is the average customer how many new kycs are they processing every month or how much interchange bips am i earning from like what's a sum it all up together it's like a sweet spot sort of one to 5k per month per customer um yeah i think i think it's probably safe to say one to 5k is probably the right the right number yeah and do you want to stay and sort of limit and you know do like high volume of customers but low rpu or do you anticipate moving like upstream and only working with people doing a million kycs per month what we actually want want to move more towards is is...