As part of its upcoming special report on the payment-processing sector in Atlanta, Global Atlanta in November convened a group of experts from the industry to discuss where it’s going and how it’s driving the broader technology landscape forward in Atlanta.
Paying Atlanta Forward was held at the offices of the law firm Arnall Golden Gregory LLP, the event sponsor, with participation from the American Transaction Processors Coalition.
AGG Attorney Edward Marshall gave a behind-the-scenes look at a typical payment transaction, outlining the variety of players and institutions involved in the complex web of interactions that occur in seconds after the simple act of swiping or inserting a credit or debit card. ATPC Executive Director H. West Richards showcased the coalition’s work in raising the profile of a largely unseen industry that accounts for 40,000 Georgia jobs.
The luncheon discussion focused on topics such as how payments firms approach global markets, how to attract and retain tech-savvy millennial workers, how metro Atlanta can keep its dominant position as “Transaction Alley” and how companies are approaching the concept of open innovation, partnering with schools and startups in newly launched innovation centers and sometimes even relocating their headquarters to what they see as the new centers of gravity for tech growth.
Panelists included:
- Joe Kleinwaechter, Vice President of Innovation and Design, Worldpay
- Blake Patton, Managing Partner, Tech Square Ventures
- Brian Mahony, Chief Strategy Officer, Elavon
- Grant Wainscott, Director of Technology Industry Expansion, Metro Atlanta Chamber
The conversation was moderated by Global Atlanta Managing Editor Trevor Williams and has been lightly edited here for clarity and brevity:
Trevor Williams, managing editor, Global Atlanta: Worldpay has just moved into Atlantic Station from the Perimeter. Why now, and why did Worldpay see fit to enter into a strategic partnership with Georgia Tech’s Advanced Technology Development Center to the tune of $1 million?
Joe Kleinwaechter, vice president of innovation and strategy, Worldpay: Your closeness to people makes a big difference in how you engage and how you benefit from each other. And then also the closer you are together the more willing you are create something, synthesize something new. And really this site is about propinquity for us. It’s got Georgia Tech just down the road. We’re in the heart of Transaction Alley. We’re in a space where a lot of the partners that we have to work with, need to work with, have to build payments solutions with, are a stone’s throw away for us. It’s so much easier when you’re near somebody that you can actually find something that maybe you didn’t expect, and that’s where a lot of innovation happens. It’s not the planned conversations; sometimes it’s the accidental conversations, and those conversations happen when you’re in the middle of where all those conversations are taking place. Georgia Tech was a natural draw for us and was one of the prime reasons, but also there were a lot of people that wanted — talent that wants — to stay down here now in Midtown, and we want to draw that talent.
Williams: What about specifically from a processing perspective? It seems there are, what, five or six companies that run the rails of payment processing, the infrastructure that makes that happen, so companies are having to innovate to move up the value chain in order to keep their customers. What’s Worldpay doing on that front and how are you recruiting along those lines with your employees?
Kleinwaechter: Our strategy is simple: It’s a partnering strategy. In colloquial terms, we want to help the disruptors disrupt, and the disruptors are down here. They’re at places like the ATDC and other incubators that are trying to disrupt the world. For us to partner with them, it helps us twofold: First of all, gives us access to what they’re thinking, what they’re seeing, what they’re knowing to keep us fresh and honest about what we’re seeing. And just as importantly, we can fuel them with rails and experiences that a lot of our companies that are down here are now giving.
Williams: Blake, companies are now looking outside their walls to innovate. Can you talk about that trend, how that’s developed and how that’s different from maybe the way companies have approached innovation before, especially in payments and fintech?
Blake Patton, managing partner, Tech Square Ventures: From my vantage point as a venture capitalist investing in these seed and early-stage technologies, what has been the big change for Atlanta and I think for the Southeast is that although it’s new here, it really hasn’t been new in the technology community.
Traditional technology hubs like Silicon Valley and Boston, their giant companies happen to be technology companies, and they’ve been doing this since the ’80s — this kind of ecosystem where the large companies interact with startups. They become their first customers. They acquire these companies. They invest in these companies. People leave these companies and start new companies, so it really forms the entire ecosystem, and that’s a little bit of what we’ve lacked in the Southeast because our giants haven’t been technology companies. But now we see more and more large companies starting to embrace open innovation, I think that’s also why you’re starting to see more innovation and startup activity here in Atlanta because it kind of completes that ecosystem. That’s been a piece that we’ve been missing.
Our fund is Tech Square Ventures, and we’re located in Tech Square for all the reasons Joe just said — the serendipity of all the things that happen when you put all those things together and people bump into each other and new opportunities emerge. One of the neatest things to see in Tech Square over the past few years are these corporate innovation centers opening up — Worldpay and the ATDC partnership, but it’s also Coca-Cola, Delta was just announced yesterday, Home Depot, Thyssenkrupp, Panasonic, AT&T (and I’m probably forgetting a half-dozen others).
Part of it is just about being near this talent that otherwise doesn’t happen to walk through their front doors. Some of it’s about figuring out ways to have skunkworks operations and take their R&D efforts and put them in an environment that is more similar to what goes on in a startup environment … Some of it’s about investing in startups. And some of it’s about just creating an environment to engage startups that kind of de-risks that interaction before they hand them off to the business units internally recognizing that startups have a tough time selling … to big companies … I think it’s a whole bunch of activity and it’s been fantastic to see this development in Tech Square. I used to live in Boston, and it reminds me exactly of what saw in Kendall Square beside MIT in the ‘90s. So I started to think of this as kind of our Kendall Square, our Sand Hill Road in Silicon Valley.
Grant, I wanted to bring you in on this because you’re out in the technology world but you’re not specifically focused on fintech on its own. I’ve noticed that payments underpins a lot of other technological advancements and industries, and in particular I think there are two in Atlanta that are directly related when you talk about the future of payments. It’s mobility — everybody’s talking about how we can get more adoption on the mobile phone of payments, and Apple Pay has just come out — but also there’s cybersecurity, because everyone wants to make sure their payments are secure. Can you talk about how the FinTech sort of underpins and interacts with the other technology sectors that the chamber has been so intent on promoting?
Grant Wainscott, director of technology industry expansion, Metro Atlanta Chamber: That’s a good point. Those are great common threads, and I think that’s one of unique things about the metro Atlanta marketplace as opposed to some of these other markets that really focus on maybe one cluster, one sector — Hartford for insurance and New York for markets — but Atlanta has a large piece of all of the technology threads. We’re the health information technology capital of the nation. We have obviously been in mobility before mobility was really cool. And it’s great to have cybersecurity, B2B software and all these other technology threads that really are helping to attract not just one type of company but companies that service technology companies in general.
I spent the morning meeting with two Asian companies especially who are interested in some new markets. They’re here for a number of reasons, but we’re known globally as a great technology hub now, and as Blake was saying, that wasn’t really the case five or six years ago. On those list of innovation centers — in large part those aren’t technology companies. Those are our Fortune 500s, companies that made their money in bricks and mortar — Home Depot, AT&T.
Having companies like that realize innovation is the key to them maintaining their market share, let alone growing it, is amazing. And when you can find companies like Worldpay and Elavon and some of our others that are creating these centers and partnering up with a great resource like ATDC, it really gives us ammo as we go out and we market globally.
Williams: Does it detract a little bit from the reputation because there are so many different industries you can’t point to ‘We’re the biotech hub,’ like a Boston is, or does it give you a fuller offering?
Wainscott: I’d much rather have 50 arrows in the quiver than just one, and we are known as the nation’s health care IT capital. We are known as a center for mobility. So we already have calling cards. We are Transaction Alley. That’s indisputable. Seventy percent of transactions come through metro Atlanta and through a Georgia regional center, so when we go out and we market, we have our key clusters. We can throw out stats … but what does that really mean to the people you’re talking to, to the audience? Being able to talk about a broader technology landscape is extremely important. We don’t want to be a one-horse town.
Williams: Brian, part of innovation is doing so across your company and across the markets where you’re in. Can you talk about how Elavon approaches some of its international markets? In particular, I’m interested to know whether there are certain products or certain methodologies that you’ve found in some markets, say a Brazil or China or somewhere, that you’ve been able to bring back here and see some diversification of some of your domestic product offering.
Brian Mahony, chief strategy officer, Elavon: We learned about currency conversation in the European market first, and then brought that into other markets, so that one of our most well-known product is one called automatic currency conversion where a consumer can go to the point of sale and then have the option of paying in their home currency so it removes the doubt for them when paying for a good or a service.
Another example would be in Brazil. Because of the nature of the economy there, installments is a big deal, bigger than it is in other markets, so we’ve had to learn the hard way how to make installments work through our platform. Now that we’ve made it work, we want to export it into other markets.
One of the biggest new additions in our industry over the last several years is what mobile technology is allowing to happen at the point of sale, so we’re having to test with different mobile providers in different markets to see what works, what doesn’t work.
Williams: [I’ve heard that] most of the growth in the electronic payments space is going to happen using innovations from the developed markets being applied in markets that don’t even have mobile phones yet and don’t have the electronic infrastructure for payments yet. In some ways companies (in Atlanta) have lagged behind innovations that have happened in other markets — mobile payments is a lot stronger in places like Korea and Kenya even than it is here, for example — but how they can use those skills and the rails that run across the global economy to start tapping into growth in those other countries. Can you talk about how you approach entering a new market?
Mahony: At a certain level strategy is pretty easy; you figure out where growth is happening and then you go there. We tend to think ourselves, I certainly do, as being the center of the universe here in Atlanta, the U.S. and in North America. But when you look at population growth, and then you compare how we’re going to grow over the next 10-20 years, we’re actually a rounding error compared to other markets, and given where they’re coming from and where they’re headed to, for sure growth in our business, much of it, is going to happen overseas. If you have overseas ambitions, you have to be there, you have to be part of what’s happening and what will happen over the next several years.
So how do you enter a place like Brazil?
At a certain level, again, it’s pretty straightforward. As much as we like to abuse regulators and all the things that come with that, regulation actually matters a lot to us, and the rule of law matters a lot to us, so as we’re thinking about entering a new market, we look first and foremost to see whether they have a playing field where we can actually operate and we can win. In the end, our purpose is to yes, to enable payments, to grow commerce, but also to deliver returns to our shareholders. In order to do that you have got to gain entry into a market, into an economy where if you are successful in achieving a profit you can expect to repatriate that profit or reinvest it in your own business, and not see it expropriated away in ways that make your shareholders very unhappy. That’s key for us.
Beyond that, we look for the trends: Are consumer using credit cards? Is that growing quickly enough? Are merchants at the point where they’re ready to accept credit cards? Is that growing quickly? Is the infrastructure in place? And importantly, for the business that I’m in, we work largely through partners, through distributors. It would be unusual for us to enter a … market without a bank partner or some other partner working with us.
Trevor Williams: Where do you see the biggest innovations happening in the payments space, and how well-prepared are we here in Atlanta to take advantage of those?
Mahony: There’s a ton happening at the point of sale, with mobile technologies enabling niche providers to emerge and serve sectors. Whereas our experience in the past is that we would negotiate with a couple suppliers for equipment, now we negotiate with many, many more. And the reason we do that is because they’re in a position to offer services targeted more specifically to certain niches. You can actually get software and services that are specific to dry cleaners, to pharmacies, to dentists and doctors. You can sub-segment and go even deeper into industries. That’s a big change, for us…
Kleinwaechter: Coming from a U.S. background, I would say that innovation starts with the experience first. It all starts with an unmet need or a latent need or an expressed need that some of us don’t know. If we were to go through our payments experience right now we can all probably find the one thing that we just don’t understand why it’s not solved. That problem is where the next innovation is coming: It’s the thing that you can’t explain why we have to do this.
Authentication for me is a space that’s ripe for turning on its head right now. The fact that I have to remember something to type something in to prove who I am, when I already know who I am, is ripe to be solved. We’ve seen companies, if you’ve been at any of the conferences recently, Finovate or others, where people are figuring out how to identify who you are without you knowing that you’re identifying who you are, behaviorally. If the way I type on the keyboard or move the mouse have already identified me to that computer, then why do I have to prove that I’m anyone else but the person that has been using that computer all along? When we get that friction removed, to me that’s the big ambitious play.
Williams: There’s a company within the ATDC that’s creating a robotic bartender, and Blake, I think remember us talking about the fact that the customer’s experience with that machine is really going to be impacted by the payment experience.
Patton: You hear about the Internet of Things, but when you think about billions of devices becoming connected and transacting not just information but creating transactions across these networks, obviously that opens up a whole bunch of payments questions — all the sort of things that we’ve already been talking about — but now you’re talking about on an order of magnitude and a pace that’s incredible. That is going to be the next giant pivot point, kind of like the Internet and trying to figure out how we do transactions online, that’s going to become an opportunity for tons of innovation.
Mahony: If you talk about innovation you can’t leave the topic without talking about all the money that’s flowing into mobile wallets. It’s just amazing to us how much money is being spent right now by players of all sizes trying to figure out how to engage consumers, to get them to adopt, and the banks, technology companies and various others attempting to get their wallets to the point where they have enough mass that they can really exert influence over other players in the ecosystem. That’s a space I think that we’ll see a lot of evolution in over the next several years.
Williams: Grant, the Metro Atlanta Chamber has just announced its intention to create a FinTech task force. Can you talk about the motivation behind that? Why now?
And I’ll sort of open it up to a discussion about how we can keep this industry here given that it’s mostly bits and bytes; it’s data moving really across wires anywhere in the world, so there’s not really an imperative other than from the talent perspective to really be in a place like Atlanta.
Wainscott: I’ll agree and then take a bit of an exception. It is bits and bytes and in theory that can be generated anywhere, but it’s generated in a place like Atlanta for all the reasons we’ve been talking about. It is talent. Talent’s drawn by our educational partnerships, having ATDC, having Georgia Tech and all the other universities. We’re known as one of the largest university towns in the hemisphere, and that’s a huge marketing tool for us. And you get that point when you have a critical mass of students and intellect who wants to stay in the area.
The Task Force is still in its early infancy. We’re yet to have our first full meeting. Our members are now being invited, but in the first part of Q1 we’ll be pushing forward with a really aggressive plan with help from our partners and going to shows like Money 2020, which we just came back from, and Finovate in February, and taking not just the transaction and payments story on the road, but really pushing toward that tier-one financial services situation that we really want to find ourselves in, growing the entire financial services community. We want to keep payments here and do everything that we can to keep our phenomenal companies here, but it’s also good for them to have insurance, reinsurance, credit, risk, cloud, mobility — you name it. When you have that critical mass continuing to grow, then you’re finding venture capital that’s paying attention, and I think that’s phenomenal for the entire ecosystem. The task force is simply an effort to help elevate the story to a global scale.
Williams: I was recently at the office of a company called ParkMobile— this sort of gets at the retention of talent; this is why I’m telling this story. They have a putting competition every week, and if you make it all the way across the office into a cup on the other side on their stained concrete floor, you win a bottle of whiskey. I don’t know how many of these big Fortune 500 companies have anything like that, but [one of the executives said] this is all about drawing millennials and being near the talent of the future. Are you seeing that being more important in the companies that you’re seeing set up, Blake?
Patton: Companies are starting to think about that very early. They have a vision for their culture and they’re starting to be very proactive in building it. Putting across the concrete floor for a bottle of whiskey is really about getting those employees together to interact with each other and to collaborate together, so I think it’s super important, and tying it to your earlier question, what we do really is all about betting on people and betting on a market. And so what makes Atlanta great is not just the talent that these guys are talking about wanting to be near. It’s the other way around too. These innovators absolutely require access to the domain expertise in an industry like fintech where entering new markets, distribution, credibility, regulation — all those things are huge barriers for early stage innovators, so to be able to align with companies and have access to that locally is huge. I know the question was on culture, but it’s kind of that whole combination and a really big topic in startups now is how to create that.
Kleinwaechter: I will add to that too: There was a time 5-8 years ago when the West Coast swing came out this way in terms of, ‘If you want to draw talent you get a ping pong table.’ And it was totally backwards. We thought that getting a ping pong table was going to draw talent. No, talented people that share the same vision want to play together. They didn’t get that one was a symptom of the culture, not an attractor of the culture, and I think we’re starting to get that now. You can build all those things after you’ve got the vision right and you’ve got the strategy right and people want to be together. There’s nothing worse than playing ping pong with people you can’t stand.
Mahony: To reinforce, what matters is that the work has a purpose, No. 1, so people will come and join you if they feel that they’re going to make a difference in the world and it’s something that’s important. No. 2, it matters how the work gets done and committing to a method of doing the work that attracts people. We use Agile in our innovation center and it was a departure for us. We had tried it before and it hadn’t done well … but committing to it and sending that signal to the marketplace made a difference in how we recruited into our innovation center.
Patton: I will point out: I’m the only one wearing jeans.
Wainscott: I was with the Japanese this morning or I’d be wearing jeans too.
Mahony: We are at a law firm, after all…
Kleinwaechter: I have no excuse.
Williams: Grant, close us out with your final thoughts.
Wainscott: Fifteen years ago it was “play time” when you heard about company thinking outside the box, and it wasn’t adopted in the South. And now it’s not about the pingpong table, it’s not about the bottle of whiskey — although, man, that would be a cool company to work for — it’s about how that adds to the ecosystem and about the quality of life. I don’t care if your’e a millennial or if you’re older, there are certain things you want in your community …I think that we’ve really come full circle from play time to a workspace and an environment and teams that are far more productive and are, frankly, far more enjoyable to go to work with.
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