Plaid’s Zach Perret on developing an infrastructure for the fintech ecosystem

“Eventually, we realized that we were really on a losing path on the consumer side. So [we] made the pivot to building this B2B product. that for me was the kernel of insight of “you gotta listen to your users.” You gotta listen to your customers –  because it was our early customer that caused us to do this pivot that landed on the right business model.”

Today, it’s easy to take for granted the ease with which we can perform all kinds of financial transactions on our smartphones. Several years ago, this was not the case. Plaid played a key role in shaping this digital financial transformation. 

In this episode of Building One, we explore Plaid with Zachary Perret , its CEO and co-founder. Zach started building fintech as a personal passion. In the decade since its founding, Plaid has tremendously worked to modernize the financial industry and reduce the friction within it. 

Given how transformational Plaid has been as a B2B product, it’s amazing that the company started with a totally different B2C model that failed. Zach is very candid about early missteps and crucial lessons he’s still learning amid Plaid’s great success. One of the things I was most struck by in our conversation is how Zach’s inquisitive nature naturally dovetails with a learning mindset. 

Here are some of my favorite takeaways from our conversation:

Knowing where to find empathy

“The reason that we failed on the consumer side is because we didn't have the right level of customer empathy, and the reason that we were able to be successful at the beginning with Plaid is because we had a high degree of empathy with our B2B customers, with our developer customers.”

The best source of empathy in building products is self-empathy.  Empathy can be a bit of an overused term, but it all comes down to knowing and even feeling the experience of others…or yourself. At first, Zach and his cofounder struggled to build consumer-oriented finance apps…apps that, it turned out, consumers didn’t want. But when they switched to catering to businesses instead, that flipped. Zach and his co-founder deeply understood the pain points of the fintech business community, because - they too - had struggled with the same ones. This didn’t just result in building a better infrastructure, it also allowed them to relate to and anticipate the needs of their business customers.

Keeping it simple and narrowly-focused at first

 “We were trying to convince interested developers that this was a viable field to build in. And the way that we did that was we made it as simple as possible for them to create this new thing. So we also had to push on the simplicity because without it, we might not have had any customers. The market might not have ever formed around us.”

The financial services sector is made up of many systems with different standards - Zach could have spent a lot of effort trying to customize and connect them all in nuanced ways, but it turns out that a key part of Plaid’s value proposition is simplicity. In certain situations, a simple, even narrow, product that works well and consistently, even at the expense of losing a broad base of customers at first, might be worth more than a complex one that tries to serve everybody right away.

Building for developers

Zach started by focusing on creating a new category in fintech - one that would appeal to & empower developers to build new products. He could have started by focusing on solving for large companies. But his own experience drew him to focus first on lowering the barriers to entry so that entrepreneurs, like himself, can innovate. It was not about a new product launch. It was about supporting a whole ecosystem of Fintech developers.

The importance of always being willing to ask for advice

“I tried to reach out to, at the beginning, it was one person a week. Now it's one person a month that I don't know that can teach me something and just ask them, Hey, could you spend 15 minutes teaching me something? And half the time they respond, which is pretty amazing.”

Maintaining a mindset committed to constantly learning is incredibly important for any career, but especially for entrepreneurs who are building something completely new. Zach’s humility, tenacity, and aptitude for reaching out for advice has, no doubt, changed the trajectory of not only his career, but also of Plaid’s success.

Think about an area you find challenging or would love to learn more about. Who are experts in your field? What would it take for you to reach out to them today?

🎧 Check out the full episode of #BuildingOne for many more great insights. Listen, follow and rate the show on Spotify, Apple Podcasts or wherever you listen to podcasts.