A Different Approach to Payments Infrastructure with Daniëlle Keeven of Paddle
How do you scale globally, while keeping up with tax legislation, infrastructure, and pricing? It can feel like an insurmountable task. In this episode, we sat down with Daniëlle Keeven VP of Finance at Paddle to talk about a different approach to payments infrastructure. Is this end-to-end solution the best-kept secret in the payment industry?
Payments & Fintech Insights In This Episode
- The challenges associated with scaling globally in alignment with tax and compliance requirements.
- The importance of implementing a sophisticated infrastructure foundation early in the start-up journey.
- How do reduce loss, including data loss as a company grows and scales.
- When to choose an end-to-end solution, v. a piecemeal or bespoke tech stack.
- And so much more!
Featured on the Show
- Connect with Daniëlle Keeven: LinkedIn
- Connect with Paddle: LinkedIn
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Daniëlle: You will also have the cross-country fees. And in this case, when the UK went through Brexit, you also have like interchange fees on top of those. So, it depends on where you are operating. Your fees can add up substantially if you’re don’t have somebody actually actively managing your payments set up, infrastructure, and contracting, and pricing. So, Paddle will do that for you.
Heather: Welcome to “PayPod,” the payments industry podcast. Each week, we’ll bring you in-depth conversations with leaders who are shaping the payments world, from payment processing to risk management, and from new technology to entirely new payment types. If you wanna know what’s happening in payments, you are in the right place.
Hi, everyone, welcome to PayPod. I’m your host, Heather Bodie. And today we are going to be talking about different approach to payments infrastructure. Joining me is Daniëlle Keeven, VP of finance of Paddle, the company payments tax and subscription solution for SaaS. Daniëlle, thank you so much for joining us today. How are you?
Daniëlle: Hi, Heather. Thank you for having me.
Heather: So, get us started by telling us a little bit about yourself. What does your career path look like, and what brought you to Paddle?
Daniëlle: I am Dutch-ish and I moved to Aruba quite young. I always say Dutch-ish because I was born here, raised in Aruba, and I studied in the U.S., and I think that kind of paved the journey for me as well professionally to step into the hospitality industry. So, my background isn’t the Hyatts and the Marriotts of the world, quite corporate. Then I wanted to pursue the myth that I heard the people in Europe work eight hours. So, I joined booking.com, which is a massive tech company in hospitality space.
And from there I’ve grown my career in several pillars of finance innovations over the past four years that I had been with them. And I was starting to wonder how much more of an impact I could have in a smaller or earlier stage scaleup in startup, which led me to make the transition to messagebird.com, which is in the C SaaS space. And then from there I was wondering how much more of an impact that could have if the product that we were selling was actually finance, which is how I landed at Paddle. So, at Paddle Finance Tax and anything related to accounting has not only a back of the house function but we’re also product leading, and work very closely with our engineering team, which for me really takes the finance role to the next level, which has me very happy, and excited to be here at Paddle today.
Heather: Before we started recording this conversation, you and I had a couple minutes to chat, and I was trying to gain clarity for myself. And so, I think it might be useful for our listeners. You said something along the lines of, “We don’t just do payments, we do everything.” Talk to me about Paddle, how does it work, and what are all the ways that Paddle can benefit a company?
Daniëlle: Because I think Paddle is quite an exciting company, and I know it sound extremely biased because I work here.
Heather: No problem.
Daniëlle: This is not what I’m being paid to talk about. But when I looked at Paddle from a finance perspective, my mind was blown in the sense of, I think one of the more challenging pieces of anyone entering the tech space today, and especially in software, is like how do you scale globally, and how do you make sure that you’re compliant globally, and how do you track all of these ever-changing legislation changes, and attack legislation and all of this stuff? It sounds like an insurmountable task.
And if you look at paddle.com, that’s exactly what we do for you. We basically take care of the invoicing process, the payment providers, the credit card chargebacks disputes, the fraud element of your business. We also make sure that the customer experience through checkouts and high acceptance rates and payments is quite high. So, you don’t even have to think about that. And on top of that, we assume full responsibility for all of your taxes, and ensure compliance globally in a marketplace that you’re competing in. So, for me, when I saw this, I was like, “Oh my God, is this like the best kept secret for software industries.” So, I’m quite excited about the product, as you can tell. I’ve been here at Paddle for about a year now, a year and a couple of days. And the excitement has not diminished. But I think the challenge is continually growing to make sure that we are one step ahead of all of the changes and the challenges in landscape in front of us.
Heather: Oftentimes I’m talking to founders or different folks inside of an organization talking about how they have decided to tackle a singular problem. And listening to you speak just now, I think you used the phrase, “It all sounds like an insurmountable task, and I could feel myself almost like breathing a little shallow.” I was like, “Oh, they do that, and they do this, and they do this.” How has Paddle…and I know you’ve been there a year, so, to what extent that you’ve been allowed behind the curtain a little bit, but how has Paddle gone about prioritizing growth areas when there are so many? Like how does that holistic vision look like inside the company?
Daniëlle: I think walking into Paddle, for me, it’s been exciting because you do identify, I would call them almost pillars of excellence, because as a business, if you’re offering an end-to-end solution, you have to make sure that you’re best in the space that you’re competing in. So, for example, you would look at just payments as a separate pillar, just tax compliance as a separate pillar. What does your invoicing product look like as a separate pillar? And I think Paddle has done that quite well. Whereas we do have focused effort, and focused resources on each pillar to be the best in class, I would say. On the other side, we also have such a close collaboration and a company culture is so open and collaborative, that all of these areas, while working on their focused areas, also collaborate very well on how they intersect with each other, and combine together and come together as a product overall.
Heather: Can you talk to me a little bit about the difference in your experience between working for a large player like booking.com, and then you had said you were looking to have a larger impact in a smaller tech company. What is the different…what has your experience been like between the two?
Daniëlle: I think not just looking at Booking, but many of the large SaaS players today that have grown to large scale, they didn’t think that were gonna be that large when they started out the gate. I think every software CEO hopes or founder hopes to grow that big. And there’s a lot of pains or growth pains that you encounter at a scaleup phase. And then when you’re actually growing into…I’m gonna call it what it is, even though it’s almost a curse word, a corporation, but at a certain point you are that big, and it is actually a corporation even though you think of yourself as a startup or a scaleup. And I think one of the things that I identify not only at Booking but at many companies or scaleup startups that I’ve walked into is that a great product is built, and nobody thinks end-to-end how to monetize it, or how to reduce any kind of loss from the moment you sell it to the moment you cash in, so to speak.
And there’s a massive data loss as well, which also makes being compliant challenging, especially now that regulation is getting sharper all around the world. So, with companies, whether it’s the size of Booking, or if a company is transitioning to a scaleup phase, I think that is almost a universal problem. It used to be, or actually it might still be, when you start or build a software, you’re so excited about the problem you’re solving, you’re not thinking about the additional problems that you may run into as you’re trying to make your solution available to everyone. And I think that’s where I was hoping to make a difference in entering into this startup and scaleup phase soon enough to lay the foundation. Even if we think about treasury and banking, generally if you start a software or a software startup, you’re like, “Oh, I’ll need a bank account to get cash in.” You’re not thinking about how to position your bank accounts, and at that level you don’t have to. But at a certain point as a scaleup, you do have to start thinking about, “Hey, how do I wanna operate in the future, and what is the best banking structure, for example, that would help me?”
So, that’s where I found that, getting in early, getting the foundations in right, both in how to monetize the products, as well as the data integrity, and setting in the infrastructures for payments, as well as banking, and automation for finance as a whole are critical, and they’re easier to do at an early stage versus when you are a sizable organization having to go back, and revisit pillars or foundations on which you’ve built pillars. If that makes sense.
Heather: It does. And it makes me curious who Paddle’s ideal customer is, because I’m curious, how often are Paddle customers coming to you as they are in those early days? They are looking to lay the foundation’s right, so to speak. And how often are people coming to Paddle because they have been attempting to scale globally in some capacity and running into a ton of roadblocks?
Daniëlle: Yeah, we cover both, I would say. So, we do have even a self signup version of our product that will help you completely set up your own account, so you can start as early as you start. We also do encounter larger organizations that have grown to the point of where now they realize the burden of compliance, and the burden of tax. And honestly then paddle.com sounds extremely dreamy, it’s like, “I promise, I’ll keep all of your headaches away.” And so, I think that our ideal customer is still in a software space. We are discovering to branch out further, but at any stage that a software company is in, I think Paddle is the perfect business to partner with you, to help you both grow globally, as well as ensure that you don’t get in trouble with authorities on taxes, and anything else related to that.
Heather: Because this solution that Paddle offers, I keep wanting to use the phrase you did, like, “We do everything, the invoicing, the payments, chargebacks, acceptance rates, the full responsibility for global taxes.” What does integration look like for clients? Are they having to sort of peel away other systems in place, and replace it with Paddle? Or is it more about integration?
Daniëlle: It does depend on how you wanna onboard on our product. Like I said, we do offer the end-to-end. So, we do not offer a piecemeal solution. But a normal software company would want to look at, “How am I gonna run my billing?” They would probably go out and hire a company to do their invoicing. They would look at, “Hey, I need to have a payment provider.” So, they would go online, get a payment provider. Then they would be like, “Oh, but we have to manage this payment provider.” And, “Oh, we have these chargebacks coming through, so what do we do with those? And oh, what is this tax element?” And so, I think a lot of these software companies do try to start and piecemeal it because that would be the first and easiest approach. So, that’s where Paddle does come in to substitute these piecemeal solutions for one fix-all kind of approach to the process.
Heather: Does that ever create some pushback with people who are potential clients?
Daniëlle: In some instances some of them are like, “But we wanna manage our own tax.” So, we understand that.
Heather: Yeah, but why? Why?
Daniëlle: Some companies are large enough, they’re like, “Well, we feel comfortable managing our own tax,” and that’s great. So, however, Paddle does operate as a merchant of record. So, that can be either a benefit, or as you’re pointing out, it can be a little bit scary to let go.
Heather: Yes, change is never easy, but the irony is thick that, specifically in software companies, disruption is the mission and yet, so often, people are like, “I don’t wanna change.” So, what is on the horizon then for Paddle? Is the company currently in a phase where they’re looking to include even more verticals?
Daniëlle: Yes, most definitely. I think the most exciting thing that we are stepping into right now is what was announced a couple of months ago that we’ve acquired ProfitWell. So, in addition to offering the end-to-end solution for your business, we are also wanting to offer additional dimensions of our product in beefing up our data offerings to our customers, both in being able to analyze the market better, the competitors better, but also to evaluate what the behavior of your customers are, and enhance retention of their customers. Especially in this day and age where the market has shifted. I think retention of customers is a key element of success as you grow your business. And so, we are looking to expand into that space to offer even more support to our customer base as well as our new customers that are joining.
Heather: Oh, it’s so exciting. I heard you say that market is changing. Can you speak a little bit more about that? What exactly did you mean?
Daniëlle: We disclosed off series D beginning of this year, which was really exciting. We got a great valuation, unicorn status, and we celebrated this. Briefly after that, you could follow the economic shift in the market where SaaS industries were just not getting as high valuations anymore as we historically had, especially during COVID when we saw like a big boom of growth. And I think with that in mind, it is wise for us in a software space to take measures before they’re actually required. So, to be wiser about spending that dollar, not saying put a full stop on spend. I think as founders or as businesses that are growing, you should look at where is the opportunity to invest, and where should I be investing. I just think we should be more mindful about like our fixed expansive, or operating costs, or cost of goods sold, especially to make sure that we are spending or being as wise as we can with what we are spending.
So, renegotiate your cost of goods sold, and look at your OpEx, what is necessary, or what can be optimized in your spend versus just letting things run as they have run historically. So, I think that’s one element of it. The other element of it is definitely make sure that you’re doing the best you can to retain the customers you have. Onboarding a new customer, it costs you more than it is to retain them generally. And so, as you’re going out for new business and looking for investment opportunities, also make sure that your customers that you currently have are retained, and are optimizing the use of your software.
Heather: I heard you say it’s important to take measures before they were required, and yet not a full stop on spend. We know we want to get ahead of these problems, and part of what makes Paddle special is that if I implement Paddle in the very early days of my company, then I, like you said, have laid this sort of proper foundation for scalability. Let’s talk about the actual spend there. When you compare a cobbled together text tech versus your end-to-end solution, what’s the save on spend?
Daniëlle: If you piecemeal the businesses that you would have to invest in, like for example, acquiring or implementing a billing solution, you’re not only talking about the percentage of revenue that you’ll be paying them as a fixed fee, you are also looking at your own resources of implementation and maintaining. That’s just your billing solution. Then you step over into payments. The integration of payments are not super straightforward. They can be complex. As you’re diversifying your business in every new market that you’re going, you probably have to acquire additional resources to investigate if it’s more cost effective to do some local acquiring, or to keep your current payment setup as is. In some cases, especially if you look at, “Hey, I’m operating the in U.S., I might wanna operate in LatAm, or I wanna operate in Europe.” You might have to set up different legal entities to enable new contracts with the same payment provider that you’re already using to enable local acquiring, so that it would lead to a higher acceptance rate of your payment flows.
For example, if you’re running payments with, say, a country that does not have 3DS verification on a credit cards, that might flow through faster, but if you do implement 3DS, your acceptance rate might go down. On the flip side, it will reduce your fraud. So, I think it’s a delicate balance, and the payment space is quite complex to manage, and you’re paying your own fees to them. If you’re not broken up into entities, you will also have the cross-country fees. And in this case, when the UK went through Brexit, you also have like interchange fees on top of those. So, it depends on where you are operating. Your fees can add up substantially if you don’t have somebody actually actively managing your payments setup, infrastructure, and contracting, and pricing. So Paddle would do that for you. So, we would even optimize that in that sense.
We also manage the acceptance rate, so you wouldn’t have to think about that. So, that is one bit of it. So, you have your invoicing that you’re already paying for, if you’re doing it by yourself, you’re paying your payment providers, potentially higher fees because you don’t have someone to optimize it yet. Then in addition, you will have to hire additional accounting resources to manage your chargebacks. Either you hire for tax or you outsource your tax to another team or company that will run your tax for you. That’s additional cost as well. The cost for this vary depending on where you’re doing business, and where your customers are based.
In addition to that, you also have to manage your fraud rating. You do not wanna get on, as we call it the MasterCard blacklist or the Visa blacklist, etc. So, you also have to have somebody monitoring your fraud. Who are your customers coming through? What does your fraud rate look like? Because that can also drive additional payment expenses up. So, if you take a piecemeal approach, you’re gonna be paying all of these separate fees to separate providers, and you are likely to have to hire in-house both in your engineering team as well as your finance team to maintain these solutions that you’ve implemented. So, that is actually what paddle.com is looking to solve.
Heather: Incredible. I don’t even have a personal need for Paddle, I’m sold.
Daniëlle: And I’m not on a sales team. I’m in finance.
Heather: So, if you were to look into a crystal ball sort of 10 years down the line, what do you see for, I suppose Paddle specifically, but for the implementation of these end-to-end solutions for SaaS companies?
Daniëlle: I think paddle.com is forward-looking in the sense that, like I mentioned, we do have piecemeal solutions in the space, but there’s nobody taking on a responsibility as we have it structured currently. And I do think Paddle will be the key business partner for any software company, particularly coming out the gates. We are also right now investigating and expanding our service offerings. I’m going to not go into too much detail as yet as we’re…
Heather: Oh, come on, give us the secrets.
Daniëlle: But you know, as I shared right now, just looking at software tax complexities and compliance alone, it is quite a business to run. And even so, we’re just like, “Okay, we’re doing this well, we wanna expand on it, we wanna perfect it, we wanna refine it, and we wanna start looking at how or what does software also tie into.” And I think if we look at some of the blended products right now for software space, they do already start touching two areas. If we look at all of these calls that we’re having now that are digital, in some states it is considered telecom. So, there’s telecom tax. In other states it’s considered software. So, there is some tax or there is no tax. So, I think it’s super interesting to see how software itself is evolving into different categories of the business. So, we are definitely evolving with the software founders and CEOs and developers to make sure that we are ahead of them, so to speak, to meet them in the future needs that they might have.
Heather: Amazing. Daniëlle, I like to close out our show the same way each episode, so, I’m gonna put you on the spot a little bit. What is the best piece of business advice you’ve ever received and from whom?
Daniëlle: I think the best piece of advice was from a very early on mentor that I had. Whenever I would take way too long on any given task, back then it was reconciliations when I started early in my career, she would always come in and check on me and say, “Make sure you don’t make a career out of it.”
Heather: I love that.
Daniëlle: And I think I really appreciated that because it did focus on…there are tasks to what you’re doing, but focus on the big picture, and make sure to get that done first. So, that was invaluable to me, always to keep going.
Heather: And not spend days and days on a single reconciliation project.
Heather: Appreciate it, Daniëlle, that does it. Thank you so much for joining us today. If folks wanna get in touch with you or if they wanna learn more about Paddle, where should they go?
Daniëlle: Linkedin is definitely the most common channel that I’m available on. So, I would definitely encourage LinkedIn.
Heather: Great. Thank you so much for joining us today. I really appreciate it.
Daniëlle: Thank you for having me, Heather.
Heather: If you enjoyed this episode and wanna hear more, head on over to soarpay.com/podcast to subscribe on your podcast listening platform of choice. That’s soarpay.com/podcast.
Paddle offers SaaS companies a completely different approach to their payments infrastructure. Instead of assembling and maintaining a complex stack of payments-related apps and services, we’re a Merchant of Record for our customers. That means we take away 100% of the pain of payments fragmentation, meaning a faster, safer, cheaper, and, overall, better option. We have over 230+ talented employees serving over 3000 software sellers in 245 territories globally. Backed by investors including FTV Capital, Kindred, Notion, and 83North, Paddle aims to define the next wave of B2B SaaS leaders.