Husayn Kassai: Onfido Sets New Identity Standards for the US
On today’s episode we meet with Husayn Kassai, the CEO of the identity standard testing company Onfido.
Founded in 2012, Onfido quickly expanded its offices outside of London, to include San Francisco, New York, Lisbon, Paris, New Delhi and Singapore. Husayn shares with us everything he’s learnt on his journey of expansion, and things he wished he knew before making the move across the pond.
Having offices on both sides of America gives Husayn two very different perspectives of running a business in the United States. He talks with us about the different benefits both spots have, and the importance of picking the right spot for your business's headquarters.
From getting investors in America, to the importance of adapting to American culture, Husayn tells it all.
“Frequent client feedback matters, and when you can’t deliver something let it be known straight away.”
Time Stamps:
01:22 - What Onfido does.
02:44 - Who their clients are.
03:32 - How the software at Onfido works.
06:43 - How money laundering regulations change across the globe.
08:36 - How the business started.
09:17 - Why Husayn wanted to open an office in the US.
11:51 - The importance of doing business in the US.
12:44 - How operating in America is different to operating in the UK.
15:22 - The importance of having a trustworthy brand.
16:45 - How to build trust and the importance of being honest.
19:12 - The kind of clients Onfido was focusing on.
21:11 - The importance of being blunt and to the point.
24:06 - The prevalence of suing in America.
27:15 - Opening up an office in New York, and how it’s different to San Francisco.
29:57 - The importance of picking the right location for your headquarters in America.
31:01 - Advice for companies that are looking for the right place in America to set up in.
33:57 - Getting seed investors in America.
37:30 - The key mistakes UK startups make when expanding to the US.
38:40 - Tips for dealing with American culture, and using your Britishness to your advantage.
41:05 - The importance of knowing local sports teams.
Send us questions you want answered to info@mtbonnell.com
Resources:
https://onfido.com
www.mtbonnell.com
Connect with Husayn Kassai: Twitter
Connect with Nastaran Tavakoli-Far: LinkedIn
Connect with Sebastian Sauerborn: Linkedin
Episode Transcript
My name Husayn Kassai I’m the CEO I’m one of the cofounders at Onfido.
Nas: Onfido are an ID verification service, that’s the CEO Husayn Kassai and this is Move Your Business to the United States from Mount Bonnell Advisors, the consultants who help you expand your business stateside.
I’m Nas or Nastaran Tavakoli-Far and every two weeks we’ll be talking to companies who’ve made the leap to find out more about their journey and any advice they have for those following in their footsteps. Mount Bonnell CEO Sebastian Sauerborn will also be answering your questions. So send them over to info@mtbonnell.com we’ve put that in the show notes.
This week Sebastian and I visited the offices of Onfido, who help companies verify ID. Now many services require ID verification and we users are increasingly asked to provide this using our smartphones. Onfido use AI based technology to assess if someone’s ID is authentic. The company was founded in 2012 by three students at Oxford University and they’ve made the leap to the US pretty quickly. We talked to one of their founders and the CEO Husayn Kassai to find out more and about how they set up their offices in San Francisco and in New York.
Nas: So what you guys do on Onfido?
Husayn: We help over 1500 businesses verify their government’s ID’s and official biometrics of their customers if they are on boarding. So if you’re signing up on online remittance platform for instance, at the point of registration you are asked to take a photo of your ID and a photo of your face and behind the scene we are using machine learning to ensure that the ID seems genuine and the photo of your ID matches your face, so that you can be on boarded.
Sebastian: That is actually a very good service, I mean, I’m partner in a firm of Chartered Accountants and we always have to do this onboarding process with clients, it’s required by law, that you have to identify your client, you know, to know your customers, essentially.
And nowadays, if you don’t have a system, like Onfido system, the client has to go and have their ID certified by notary to prove address, so it can be quite time consuming and also expensive to do that. So I think this solves an excellent problem, I assume that you have a lot of financial service providers, an accounting firm and similar and your clients are based in Europe.
Husayn: We do, correct, roughly 60% of the client base are financial services and it’s a broad range, so anything from loans, remittance, online banking payments, accounting is a smaller user case but it definitely is one.
Nas: Who are the other 40% of your clients?
Husayn: So it expands a pretty broad range, transportation is a large one, car rentals, asset sharing generally, so home sharing, for instance, but you could consider things that you may haven’t thought of, such as voting, or entering into offices, having prescription drugs delivered to your home, or even if you have an online doctor, sort of platform such as Babylon, even though you’re just speaking to a doctor, seeking health advice, you might think, “why would I need to be verified”, well the reason is if a health service his data needs to be pulled, they need to ensure you are old you claim to be, for instance.
Sebastian: Could you really explain quick what your software actually does. So let’s say I want to open a bank account somewhere and this bank happens to use your system, how does it work?
Husayn: Sure, so when we looked at the way people were verified, back when we started, back in 2012, we saw that business is tended to have two options, one was to see one face to face like you for example and getting a stamp for notarized the alternative is going to a bank branch for instance, and the other option is to be verified using a credit bureau. Now the challenge with both is that seeing face to face, having face to face interactions is going to be time consuming and even reliance on the credit bureau given some of the breaches you may even not be as secure as once was.
So what we are doing is just replicating that same process. So, when we see an ID, to your question how does this technology work, we are comparing the patterns and everything, all the data points on that ID with the tens of millions of checks that we’ve done.
So every time our machinated models see an ID they know what patterns to expect, the font style and type, so that we get very good at assessing as to whether it’s genuine or not, and there are certain fraudulent IDs that even the human eye will not be able to pick up, and certain machinated models can.
And then the second part of it, as for facial recognition goes, there is a selfie still photo option or there is a video liveness option. With the video liveness option the user is asked to read three randomly generated numbers so we assure there is a live person seating behind the camera either on their computer or on their phone. So once we ensure they are alive person, the second is to take that face and match it to the photo on the ID.
And as it is continuously evolving process as you can imagine because bad actors, there are many of them, and they are becoming more sophisticated. So what happens is, as our machinated models are satisfied that an ID seems genuine and the face matches it, the client receives it straight right away.
But if we’re not sure and if we suspect something, maybe forgenance, we have a team of fraud and forge experts that are double checking these IDs and faces. And when they’re double-checking them not only they are processing them, but they’re also labeling them, so that the models get accurate over time, and if you can imagine there are 195 countries or let’s call it 200, each one has three types of ID, typically, a passport, a driver license, a government ID, and so that sticks under already. But every couple of years there’s new version, so assume we end up with thousands and we cover just over a five thousand ID types, so it needs a lot of work to ensure that all of these are assessed to be genuine or not.
Sebastian: In the States, we have fifty states, fifty types of ID I guess.
Husayn: Yes, more than a hundred different versions in the US, exactly and now they have a real ID initiative so just in one country- the US is a little more complex than the norm but it is our number one market, so, we are particularly familiar with the US IDs.
Sebastian: Right, and particularly with the US of course I guess your use case heavily depends on KYC and other compliance regulation in that particular country. And that is different in the US than in Europe. Can you talk about that a little bit?
Husayn: Yes, of course, so, the general regulation is around anti-money laundering and you should put that into context, according to the UN up to 5% of the world GDP is laundered money. That’s almost two trillion dollars, and that is using human trafficking, drug trafficking and terrorists financing and all of these are very bad things, so in addition to that, what is probably a worse statistics, is that the United Nations estimate that only less than 1% of that is seized by authorities. So 99% of that is successful and that’s a pretty bad statistics for any industry. So this industry, this security ID space, we have 99% failure rates.
So as you can imagine there’s a lot of work to be done. Now, the legislation is coming in different parts there’s anti-money laundering directive, which is European directive and that stipulates ways and much businesses to ensure people that they are onboarding and they are identified as who they claim to be.
The US, similarly has its own regulation and they are globally, they are typically a few options given so that businesses could decide which option they choose to, they prefer to go with, most of all is called like a risk based approach, typically, now historically has been face to face or using credit bureau data, there’s also other things, like knowledge based questions, you know, what’s the third digit of your last electricity bill, for instance, but our approach is the governmental ID facial biometrics and the reason why we’ve been lucky and done so well is because it’s becoming the new norm and the new standard, as to get into the right balance between security ensuring a person is who they claim to be, and yet there is not too much friction as far as the user experience goes.
Sebastian: Great, sounds very interesting.
Nas: So, can you tell us a little bit about when you guys started and when you decided to expand to the US and how you’ve been doing there?
Husayn: So, we’ve started in August 2012, and pretty much after graduation and we were able to secure some funding, the first check was 25 000 dollars, which at the time felt like a lot, so we got going for about two years and towards the end of 2014 is when we signed our first US clients, and that is almost sort of five years ago now, and that is when I moved to the States to open our office there. And, I was partly fortunate in that my parents and some of my siblings live in California, so between the three cofounders I was the natural choice, and that’s- it’s been five years now.
Nas: Why did you want to open an office in the US?
Husayn: So we were pulled by clients into the US to some extent. Truth to be told we only have angel investment at the time, not venture back as such so we- and at the time our revenue was 25 000 pounds or let’s just call it 25 000 dollars. So we went to our angel investors and couple of board members at the time, and said, we have a client in the US we’d like to expand there, but our revenues at the time was only 20 000 pounds.
And they said, well, the rule of thumb is once you reach twenty million [smiling] in revenues, that’s when you go outside of Europe, your home market, so we explained we’re some way away from that but this is a bit of a race and we don’t have the time to get to twenty million and in fact if you want us to get to twenty million, the path to that is through the US.
Nas: And your angel investor was based here?
Husayn: We’ve had a few but of the two who were on our board, correct, they were here. So, we kind of went anyway and we raise a little bit more money but then we started in the States and it’s been tough and it should be tough, we can count, your know, probably it was countless actually, the number of companies that have tried to crack the US. So, I think the reason why we’ve been fortunate enough to have done it, is because of persistence and because we started early.
Nas: But, so you said that investors are telling you you’ve got to win twenty million in revenue?
Husayn: Correct that, so, these are angel investors that are super- we’re very grateful for their investment, I wouldn’t call it venture like experienced seasoned investors so that’s based on their research online they found out the statistics and they probably represent the statistics for established businesses, but startup nowadays from the outset a lot do have a global mindset and you need to. Maybe less so, five to seven years ago but absolutely now the more and more sightseeing is from the outset, it is digital world, so borders don’t make sense as far as scale goes, with the exception of considering local regulations and things in that nature.
Sebastian: Yeah, I totally agree, I mean we see this also for a lot of our clients, for a lot of clients it makes a lot more sense rather than to exploring all of Europe, to do like, one market in Europe, say the UK, and then go straight to the US because there is so much possibility of scale there, right, so the opportunities there are so much bigger because of the size of the market that you can grow the business a lot quicker if you go straight to the US rather than translating everything in ten different languages, having teams all over and dealing with different legal systems and everything, is that also you experience?
Husayn: In many ways the language helped, so, the next large English speaking country was US naturally, two years later the third market was India, for instance, but to the US, if you want to be taken seriously as a company now it seems you need to have, not as a rule, but on balance you need to have cracked the US, the very large investors, they are based in the US and most importantly a lot of companies that went global have headquarters in the US. So, when in the US it is kind of necessity from our mindset at least from the pretty much the outsets.
Nas: So what’s interesting is, you guys founded it 2012 and then two years later you’re in California opening an office, can you tell us a little bit about how things were different, you know, having the office in California and here, in terms of day to day operations.
Husayn: Yeah, sure, so, just to paint a picture, it was kind of, me with a backpack heading over there, our office was kind of like one desk, hot desk in We Work, on Second Street in San Francisco during the week and for the weekends I was down in LA.
There it wasn’t easiest, the start, just because it’s a different country [smiling] I guess you can probably notice given your podcast, so for instance I’d called a few day ago the suppliers for the assets and it took a little longer than I’ve expected, and then suppliers asked, you need to go through this compliance section and so I said okay give me the list and I can try and do what I can, and I wasn’t successful in getting a key date supplier for the first couple of months, so towards the end of that period I found one supplier who was willing to sort of compromise a little bit and work with me, and I had to explain myself, look, I’m in my mum’s house in my bedroom, there is- I only have my laptop, I don’t have a printer, I don’t have the things that you want, but in my situation it was absolute minimum that you need so that I can pay you money and you can give me data. He said, the non-negotiable are jaw with a locker, with a lock and a shredder. And I said okay that’s very doable.
So I went and bought both, brought it in, took a photo sent it to him, and he was actually very kind to. I guess signed an agreement with him. It was some other thing around the door had to be locked and so on and the inspector came to the house I wasn’t there and my parents had to show him that we have locks in the house and things of that nature. But anyway it was not large scale start but it was a start, I was always there and I was face to face with clients, and I would ensure I would go to their office just because we didn’t have one, and when they would come to ours I would just book a We Work room so it had to be very lean but what was important I was front in center, meeting clients, learning about needs and finding nuances.
And most importantly I’ve made sure that my very first trip we signed our first clients which was pretty important to do and that was essentially a signal to everyone else, that, invest more because we had such limited resources as a shredder and a small cabinet like a lock, and my laptop, we’ve been able to sign our first client, just imagine what we can do if you were able to invest and give us the chance to hire more team members.
Sebastian: And would you agree that it’s necessity, at least when it comes to client expectations that you have boots on the ground that you have presence there, that they can see that you’re making an effort, you take it seriously, and you want to work with them, rather than doing it all from London.
Husayn: I think it does, it depends what country you’re in, the size of your client and what industry are in, so what we are doing is, you can put it in a more sensitive category, in a sense of, every single user that a business is on boarding, typically touches our system and it’s probably at the very early stages of the registration process and the users have to take photo of their ID and photo of their face. So there’s a real strong need to trust the brand, know the brand, and essentially it’s a trust relationship, so, knowing the sales person or cofounder and things in that nature really count.
For those reasons, that’s one reason why in our business, you need to kind of, if it was a simple messaging tool or CRM maybe, face to face interaction doesn’t matter, but because of the nature of what we’re doing until we have the most, I guess, an established brand, that relationship approach like you’re saying, that absolutely matters.
The second is if it’s a very large business. Call it a bank or mainstream bank or mainstream insurance company. Just because of the shared number of meetings and different stakeholders that you need to meet, if you’re local then that is significant accelerator, in that, and giving them comforts and that is why even now, nine of us as executives, all are enterprised on key accounts has an executive assigned to each one, so there’s- I guess anyone is ever only a phone call away from any questions.
Nas: And what was the nature of this trust building like, out in California?
Husayn: So it was- the truth of it is, it’s pretty much like honesty I think is the main thing. There is in the startup world this notion like, fake it until you make it, but you can’t do that with other startups you shouldn’t be able to, because the other startups probably in their own industries looking to fake it until they make it too [smiling] so we can’t all of us faking it all the time, so the thing is, but most startups we speak the same language right, whoever I spoke with, I don’t even have to say that I am the only one person in the country and I’m a We Work member, it’s a fair assumption they would’ve make so the point is like, look we’re small team there’s a dozen of us these are the products, we don’t have a lot of what you may get elsewhere but what you’ll get is executive attention, we’ll be very agile, you can be assured we’re hungry for your business because if we don’t get your business and show you a value you won’t pay us and we won’t get investment and we’re going to cease operating.
So you won’t get more driven agile tech company than us, you’ll be solving your specific need. So if you play on your shrinks in that way and you stay very, very focused and those early ones, that are good enough to get the opportunity, you work hard to impress them and then you take a step at a time, you then take that back to investor, you get more investment, you grow the team, and you go to the second client, third client, while you’re keeping them sort of fully happy and you’re absolutely delivering on every single thing that you say. Just because you want to own, first, early customers, otherwise they would be reference points they’re after, and this is not the key thing with the US which I like a lot, in that, if you work hard and you impress the company they will amplify your message and they will tell everyone.
The reverse is also true, if a company is not happy they do tell everyone, and generally they just speak a lot, and share, which is wonderful. In the UK I suppose probably across Europe, there’s this tendency for, people just not talk to each other as much, which is a shame, as you just said that is changing a little bit, as we have more and more US colleagues joining our company and this tendency for just startups to talk and share best practices and say this company is working this well, so one sort of overpromised or whatever it is, that is actually changing slowly here too.
Nas: So that’s interesting cause you’re turning back clients of yours who were also startups and I guess you kind of speak the same language culturally. What about when you’re approaching bigger clients in the US, maybe more established bigger companies who aren’t used to this whole culture.
Husayn: We didn’t do that until later, so we at the outset pretty much focused on fast going tech company and startups typically, so some eventually turned out to be quite large but we’ve still put them as a like a tech industry category. So it was closer to three years ago or five years in for us before we’ve started going to the very large mainstream institutions.
Sebastian: So, before you said that a number of your competitors tried to crack the US and they failed, what do you think you did differently so you’ve succeeded there?
Husayn: I’d actually go back to the honesty point, that whenever- in our industry there were few attempts to do the ID identification before us, that didn’t do too well. They’ve overpromised and there have been serious issues and things basically breaking.
So whenever anyone heard that we are from the identity verification space, they’ve said oh we are not happy, this is not a good industry and the answer was, I was absolutely right we have 99% failure rate.
And we are all a very bad bunch let me just tell you from the outset I would like to think we’re the least bad but what we’re looking to do is build a partnership so that basically this- we are going to learn from your feedback loops and our system will get better and at the outset we’ve just had rolling contracts within one month notice essentially, it wasn’t even one month notice it was actually pay as you go.
So there are certain structures that you can make in place to make it a mitigated risk put it downside for any paying clients, and that’s the way we’re going. But we did, and we still have to prove the value at every step of the way, it’s crucial to be able to do that, on continuous bases.
Sebastian: That kind of bluntness and honesty do you think that’s a typical European approach of that no bullshit attitude, just telling it as it is, is that a virtue and a benefit that European entrepreneurs in general potentially could have in the US and that place to their strength?
Husayn: I find it with most successful companies it is the case just because, as I say startup world is unbalanced of fake it until you make it, as of early stages so they all know each other in a sense, they all know if you’re fake or not, the challenge becomes when it’s an experience good, and what we are selling is an experience good.
So we, let’s say, pay 10 000 dollars a month, we’ll do the checks for you and we will give you text and we will say which one is fake which one is not. You don’t know what we are doing so we just going to do- unless you do QFC in that nature so that is why so many have been burnt in some way, so they pay suppliers, they receive the results and they’ve picked out fakes and they thought, you’ve promised a hundred percent results that there will be no fakes, so our approach is, no we’re not like anti-virus software, we will miss fakes like anyone else, but we are using machine learning so our system will get better and faster than anyone else is but you’re going to let us know as when we miss fakes we’re going to train all of those and that’s how we sort of build on this feedback loops.
So it’s partly the approach of, A, not be hundred percent from the outset, and B, committing to them buying into your vision of the pace of improvements being by far more important than promising the outset which is not possible to deliver on.
Nas: And what do you find was that attitude to, you guys growing and also figuring how to perfect your product?
Husayn: They wanted responsiveness and this is the thing, especially very early, five years ago when we went in the US, very early stages, you can imagine request came and a lot of this request we didn’t have it and it took time for us to build, so that constant communication matters, and you have tools, Slack and others, there should be Slack with your early offset customers, daily updates is quite normal.
As a company right now, we try hard to source from suppliers, when there are startups available, just because we know, they will work really hard to sort of impress us, and it doesn’t always succeed but we have it, but from the onset whenever we sign we make it clear, look, we know that you’re our client number 3 or 4 if that is the case, but kind of don’t mess us around and keep us informed of everything.
So frequent client feedback matters, when you can’t deliver on something let it be known straight away and have that close relationship so that you can join work on what is best and what is achievable and they appreciate that.
Nas: You’re listening to Move your business to the United States from Mount Bonnell Advisors, the consultants who help you expand your business stateside, so we are in London, we are by the River Thames and I’m here with Mount Bonnell CEO Sebastian Sauerborn, we have been taking questions all season, send them us to info@mtbonnell.com we’ve put that in the show notes, so Sebastian we’ve been getting lots of questions, Jane from Bristol wants to know, is it true that everyone in US is always suing each other?
Sebastian: In my experience- well, first of all, that’s a great question, because we always hear these law suits and they buy McDonalds drink and they burn themselves and they get twenty million bucks you know, so in my experience, at least when it comes to small businesses this context, that is not the case.
I know very few people, if any was a business owner in the States, who had been hit by court case or had been sued. I mean I know one example, I guess, I know a woman she ran a pizza shop and then she had a boy delivering pizza and he fell from his bike, so then he sued her for damages, but it wasn’t really her fault anyway.
Anyway so they settled on 800 dollars, you know, that he got, but that is really the only example that I know, so no I would not say that US, especially when it comes to small businesses, then it is doing business in Europe, I mean, lawyers are extremely expensive in the United States, there is person injury lawyers that work for free, you know, only based on a success, they would only take on a case if there is a massive possibility to make a lot of money.
So I guess if you have a real case where a big truck of a big supermarket chain runs you over, you know, you would possibly, can make some money out of that, and it’s worth suing. But in most other cases it’s actually not so, I don’t find it a litigious nature at all.
Nas: Sebastian, it’s funny getting this question because we do always joke about how everyone in the US is suing each other. Does that scare any of your clients who are thinking of expanding, is that question they come to you with?
Sebastian: Yeah, definitely, so they all want to be extra safe, they all want to set up these unnecessary complicated company structures, at least sometimes, because they think that they essentially their house is on the line for some business mistake they make so that’s what their fear is and if course that’s not the case.
Nas: Cool, so send us your questions at info@mtbonnell.com we’ve put it in the show notes.
What is business anyway? Business is everything we see along the street and much more. It is any enterprise which is organized to satisfy our wants for goods and services. Men and women establish businesses in the hope of making a profit. They earn their livelihood by supplying goods and services which others desire. The world I so full of these goods and services, that we take them for granted, yet without them we could have almost none of the things that we have come to consider necessary for our comfort and safety.
Nas: So you guys also have an office in New York?
Husayn: Correct.
Nas: Can you tell us a little bit about when you moved there and also, were there any differences in setting up the office in New York versus San Francisco?
Husayn: So five years ago we moved to the US starting in California, and four years ago, one of our sales agents, early sales agents in California said, he would be open to moving to New York, so he went and opened a New York offices four years ago we’ve been building ever since and so when, your question on key differences being San Francisco and New York, there are many, the things that are material headquarter is to consider the time difference.
And an eight hour time zone difference and five hour time zone difference is quite material, because on the eight hour you typically have one or two hours overlap with the European headquarters, whereas a New York time zone means there is good five or six hours, and that can make a big difference, because product meetings, getting to know the products, getting to know the culture, whole range of things are much stronger and much better.
And for most, I guess companies in the US if you are New York headquartered it really doesn’t make that much of a difference to be in San Francisco headquartered one. So we have actually, especially over the last three years, put almost all our energy in growing our New York office, rather than San Francisco, then only it will be some cases so our chief product officer is there, our design director is there, we still have team of fifteen in San Francisco, but the majority of the hiring and wherever possible, we actually are doing that in New York.
Sebastian: And that includes all types of staff like developers, marketing, finance or is it just particular group of people you have in New York?
Husayn: We don’t have developers in the US so of the team of forty there are predominant team in sales and marketing in particular, our engineering base headquarters is London and our second office in Lisbon. In the US we have five sales engineers.
And in part because it’s quite tough to hire engineers in the US but I think it’s probably the number one being European headquarter is to access our talent pool here actually, specifically on engineers. But, back to the sales agents we have structured the team, for enterprise clients, which are very large, AI companies that earn 250 million of revenue or greater. We have account executives or sales agents in that region.
So we’ve divided the US into eight and every territory has its own agent on their ground but it tend to be more experience senior team members whereas working as an individual contributor works, or every team works, whereas the others are based in a hub, be it New York hub or San Francisco hub. And our sales agents there typically are selling to slightly smaller scale businesses.
Nas: Does it matter where your first hub is in the US?
Husayn: I’ve come to learn in the painful way that it’s absolutely does [smiling] and this is part of the reason, challenge, not getting great advice, when we went, when I went, I’ve actually registered a company first in California, I was later told that was not a good idea, then I went to register in Texas where I had a sister living there at the time, I was told I’m not doing the right thing and I ended up in Delaware at the end.
But it took about two years for someone on our team to basically track all the places that we had and all the paperwork. So it wasn’t a clean start to begin with, but usually getting good advice counts, and there are just so many companies out there doing that now. Examples like this podcast in particular has really helped, back to, doesn’t matter where your hub is, because I knew California more, it was more relevant for me, but if I were to do it again, I would start absolutely in New York.
Nas: And so what advice would you guys give to companies who are where you guys were when you moved in terms how they, you know, decide where to base themselves for their expansion?
Husayn: Based on the specific goals they are looking to achieve, and what you want to prioritize, what is sort of things that you want to optimize for, so naturally there are, US has many different cities that specialize in different things, so are you more San Francisco is a little bit more for tech, New York is a little bit more for finance, and so on and so forth, as media matter, as journalism matter, where do you want your investors too, for instance and on the investment side, New York and San Francisco no longer matters as much, because most of them have offices or at least travel so often is a less than an issue.
So once all those things are thought off I would say at the top of mind it should be, what is going on to be engagement in communication with the home base. If the home base is European, then that is a strong point for the East Coast to be prioritized or selected.
So based on those you run with your first hub, now withstanding it’s all about the team and all about the talent, so let’s say you decide East Coast and New York, you ought not to be too fixated, so for instance if you happen to have an incredible first hire in Chicago or Boston or elsewhere, there are those things that should come into the equation, and finally whereas in the US it’s kind of spread out.
It’s pretty normal for people to do Zoom calls or get a train, depends, East Coast maybe train but generally like flights, so it’s not as it would be, say, Paris in France or London in the UK to be centered in the capital, and in fact increasingly because there are tech giants being based in key cities, sometimes being in smaller cities, outside of main hubs, especially if you’re hiring engineering can help because it’s not more availability or maybe even less competition for those specific engineers.
Nas: Are there sort of any choice spots where you think there is great talent the more people should go, someone who is listening and thinking-
Husayn: There are many across the US, I can tell you which one not to and that’s San Francisco [smiling] San Francisco is actually across the board, I mean, talking to any founder, I have found to be very, very difficult, just because you have the competition at the two sides. Now you only have the two big tech giants that are hiring non-stop, looking for talents for anyone who wants to be in the vicinity of Bay Area.
But second, you have very new startups that come in, based on a Power Point presentation raise five million, sometimes and then with that five million, with that attitude of like, running fast, like pay whatever they need to pay to hire people, so you have competition from the two sides and as a result I would never base a company with an engineering base in San Francisco if I had the choice.
Sebastian: Now did you get an American investor, like VC investor?
Husayn: We did, like pretty so a couple years in, so this goes back like three-four years from now, I started talking to the investor, not on the outset cause it wouldn’t just take it to, may have not even take it to a meeting, but once you prove that you are in the marketing like you’re here to stay, there is some inbound trust and equally I proactively went and started speaking with some. It helps that if you have a client and you receive their investment and you’re close with that client to ask them for introduction, it typically helps if you have a partner at these firms and so choose their VC it was called crunch fund at the time, there were Maxwell Ventures, that was their old name now M12 Ventures, there is Sales Force ventures.
So we have VC and others but also as well angels like Charlie Songhurst and Hank Fitchett, so I started to, not to learn about the venture capital eco system but also bringing some key investors.
Sebastian: But your key message is essentially what you’re saying it was crucial in fact we are revenue generating in the US even though maybe small revenues, maybe handful of clients, but you were there, you had the business, and then you approach the investors.
Husayn: Correct, don’t get me wrong, if I felt that we could’ve got, receive the investments without those things I would definitely ask for it [smiling] but if you want the- like game changing heavy weights, you need to be seen as a serious company and for better or worse if you only have one or two clients in the US you’re kind of seen as European company, when you land some major brands then you’re seen as a more serious company.
We clearly demonstrated our early- in our hypotheses in our business, this is a global problem and it needs a global solution and no alternative to that. And that is a massive advantage of being European headquartered, A, because technology based and we named a dozen other examples of really strong European quartered tech businesses that have done well globally, especially in the US, and secondly European countries, by sheer nature being smaller tend to be better at expanding to other markets and therefore when they come to the US if they are to crack the US then they kind of, one, they can attend our model and scale it globally.
But if it is just US company that is just focusing on the US, they tend to find it much harder to expand globally, as, again, not an absolute rule but we are convincing and have arguments around that and that helped. So it turned into a massive advantage and the reason we went global, so quarter of all our revenue is not from Northern Europe and not from the US. It is actually from the rest of the world, specifically like places like Singapore and South East Asia. So, that is all what’s part of the message.
Sebastian: That’s very interesting, and the investors in the US they also saw those benefits that you were bringing to the table, like, having a big engineering base in the UK in Europe, they saw this as aq benefit, you know, benefit of your investment proposition.
Husayn: Very much so, so like, global company, our key executives are actually American but they’re either moved to the US but they’re still- our CRO is in the East Coast, our CPO in the West Coast. And, the product like the clients matter most so like where are our key clients based. So across all those metrics, we are now essentially seen pretty much as an American company.
Nas: Just to wrap up, what do you think the biggest mistakes are that startups from the UK make when they are trying to expand to the US?
Husayn: Part of it is, not recognizing like the sheer dedication that it needs [smiling] in the sense that- in my view, you really need a cofounder, in my view, you really need a cofounder if you are an early stage startup, unless if you have an incredibly experienced executive that have worked with you in the past, it is a continued effort that requires a lot of patience and persistence, again, we’re five years in, so although we’ve kind of market now it really is taking us five years, it’s only been in the last twelve months that we’ve been established as like the go to partner in the US and another piece of advice is, it’s not going to be cheap [smiling] so-
Nas: Everyone seems to say this [smiling]
Husayn: Well that, it is true and that your typical conference in the US is 10x what it is in most European cities, you should take that as a general rule, but the client size and the returns are pretty much 20x at least in our industry. So, let’s just say that arithmetic work out.
Sebastian: What are your tips of dealing with Americans and American culture on a personal level? What are your tips?
Husayn: They love Brits, so don’t be shy about being a Brit, they also really like to know, I guess what makes a company special, so the fact that we have an engineering base and a talent pool of machine engineers and others, it’s really a strength and it’s seen as a strength. In the early days we’ve pitched ourselves like, the unknown company from Europe that has come to the US kind of thing and that kind of message kind of works.
I would- those are some of the key- oh one last point, in the US not just companies talking to each other, but being a lot more collaborative generally is a big deal and it is encouraged, so for example, if we say to a US company or partner, that our design team come in and have whiteboard session as you can structure your workflow, there are fraud consultants come in and train your share with your compliance team that you should be mindful and so on, that is absolutely very much encouraged.
In the UK, especially three or four years ago, for example can we have our designers come and meet with you, they would say why would you want to do that, whereas now, again, probably because the culture learning, that sort of culture is becoming more, I guess, global, and then also, again, US colleagues and citizens coming and working in Europe, it is becoming that cross-collaborative work but it is much stronger in the US and it is something that is not as celebrated but actually used for any European company that’s headed out there.
Nas: And just on the cultural thing, any further parts, things to be aware of?
Husayn: That is a good question.
Sebastian: Don’t drink alcohol for lunch [smiling]
Husayn: [smiling] Well generally like, San Francisco people are more breakfast people and not dinner, and New Yorkers are kind of, a little bit of both, and what things not to do-
Nas: Things that are fine here just like Sebastian is saying, a drink or two at lunch, are there any things that you realize this is going down, badly [smiling]
Husayn: Well, the cultural references [smiling] the TV shows that they see obviously will be different to the ones you see in the UK, but sometimes it’s hard for us to know, like Friends, everyone knows what Friends is, everyone has access to Netflix and things in that nature, but, some of the cultural references I suppose-
Sebastian: I think it’s just the age thing I think you’re too young to know Friends [smiling]
Husayn: Well I think, I can think of one now [smiling] like, you need to know the local sports team, right, soccer and this is a big talking point, so you get to know the local club a little bit, maybe visit, cause that kind of thing comes out all the time.
Sebastian: And I think on that note, you know they take like the local sport, like even college sport so seriously, even high school sport, a lot of money in there, they pay a lot of money, for, I mean, often in the local high school, the football coach is the highest paid employee. Wherever a teacher makes 40 grand, he makes 120, I mean that’s incredible, yeah, it takes credit seriously.
Husayn: It’s very competitive, I’m very interested to watch cause the quality is so high.
Nas: Is there anything you wanted to say about expanding to the US we haven’t talked about?
Husayn: Start early and if your business can expand in the US in any way, make it a priority.
Sebastian: Where can our listeners learn more about Onfido?
Husayn: So, we have a Twitter account believe it or not, but my personal is just my name Husayn Kassai on Twitter.
You’ve been listening to Move Your Business to the United States from Mount Bonnell Advisors, I’m Nastaran Tavakoli-Far and this episode we heard from Husayn Kassai from the ID verification service Onfido, we’ve put their details in the show notes. Our sound engineer is Emmett Glynn and our podcast manager is Nevena Paunovic. We used some samples from the Prelinger Archives, they’ve got some really cool historical material from the US. We’ll be back in two weeks with more from another company who’ve made the move. Send us your questions to info@mtbonnell.com see the show notes for more. Okay, we’ll speak to you soon.
Listen to the full episode Husayn Kassai: Onfido Sets New Identity Standards for the US
