Lithic's 10-Year Anniversary Episode

Lithic's 10-Year Anniversary: Insights from Co-Founders

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This episode of Fintech Layer Cake podcast features a contrarian take on Visa Flex, Fintech VC, and more with Lithic’s Nikil Konduru. Listen to the show on iTunes, Spotify, or your favorite podcast app and find the transcript, below.

Intro

Welcome back to Fintech Layer Cake, where we uncover secret recipes and practical insights with fintech leaders and experts. I'm your host, Reggie Young, Senior Product Lawyer at Lithic. Today, we have a very special episode. We're celebrating Lithic’s 10-year anniversary by having the company's co-founders on as guests. In this episode, I'm joined by Bo Jiang, CEO; Jason Kruse, CTO; and David Nichols, Chief Design Officer, to talk about their journey and all the lessons they've learned in the company's first decade.

Lithic is a developer-first payments infrastructure company that helps fintech software companies issue prepaid debit and credit cards. Lithic started 10 years ago in 2014 as Privacy or Privacy.com, which is a virtual card product that helps you stay safe when shopping online. For the initial launch, the company worked as the legacy card issuer processor.

What is a Card Issuer Processor?

You may be familiar with how Square or Stripe provide infrastructure that enables businesses to accept payments. What about the other side of that transaction? What about the cardholders? Someone has to create those cardholders’ cards and manage all the transactions for the cardholder, right? That's where the issuer processors like Lithic come in.

Where Square and Stripe help businesses acquire payments, Lithic helps issue and process the transactions for the cards that are actually used at those businesses.

The Journey So Far

Circling back, Privacy launched in 2014, but they used a legacy card issuer. The issuer sucked for a lot of reasons. The tech broke often. It behaved in unanticipated ways. Documentation was indecipherable. Customer support was well unsupportive. These legacy providers built their tech before the internet even existed, so it's not surprising they couldn’t support a modern 21st century card program.

Lithic’s co-founders realized that they needed to build their own card issuing platform if they really wanted to deliver on their vision of an innovative cardholder-friendly virtual card experience. So they did just that. And long story short, in 2021, they publicly rebranded as Lithic after getting organic interest in the processing tech that they built and raising over $100 million. Since then, Lithic has grown support card programs for Mercury, Novo, Parker, and many others, with steadily expanding money movement and related services.

Key Insights

I always enjoy chatting with Bo, Jason, and David. I hope you find this podcast as fun as it was to record. Nothing in this podcast can be construed as legal or financial advice.

Full Transcript

Reggie Young: Bo, Jason, and David, thanks for finally coming on the podcast. I've been trying for years to get you on. Excited for this conversation. Obviously, it's been a big decade for you all, 10 years of building Privacy.com and Lithic.

The place I'd love to start is which function at Lithic is your favorite, and why isn't the legal team? The actual place I'd like to start is looking back, you founded Privacy 10 years ago. You guys have known each other for much longer than that, right? High School? Am I remembering correctly? They've known each other since high school?

Bo Jiang: That's right.

Reggie Young: Crazy. So Privacy.com, founded 10 years ago.
Listeners can find all the details of the origin online or in the podcast. I don't want to spend a ton of time on those details. In those early years of Privacy, what were some of the big unexpected lessons that you all learned about running a card program, other than that the legacy providers you had to work with at the time were exactly going to meet your needs?
What surprised you the most or what was a lot harder or different than you expected when you started Privacy.com?

Bo Jiang: This is a bit of a cop out answer, but it feels like almost everything was harder. Back in the day, when we started, we were like, oh, we're going to start with a card program, we're going to launch it. That's going to take us six months to build. We'll get to market, we'll scale it, and then we'll move on to building a whole suite of other tools to help people stay safe online.

I think the thing that we didn't realize is how much customization, how much bespoke work you wind up having to do to build a really successful card program. I think a lot of that's actually influenced how we think about our Lithic offering and how we have constructed our technology stack so that you can kind of mix and match and swap out different partners as you scale.

Reggie Young: Jason or David, anything that surprised you about starting a card program?

David Nichols:
I have this one feeling or thought, which kind of struck me, which was the sense of nobody really follows the rules. Maybe it's kind of naive going in. As we have come from a software engineering background, and you're sort of beat over the head with this idea of building something reliable and predictable, it was very eye opening to see how little structure it felt like there was, how few guardrails there were for us when we started.

Jason Kruse: I think those are really good data points. I think maybe one specific thing that I found surprising early on was fraud and transaction losses, and that there’s just a cost of doing business. But also the ingenuity by which these fraudsters operated was exceptionally impressive and actually kind of fun to see in a weird way.

Building for the Future

Looking back at the past 10 years, if you were to build Privacy from scratch today, is there anything that you would invest in more or less than you did 10 years ago? Jason Kruse:
If I could go back in time, I would probably think we should have engaged with the card network sooner. Bo Jiang: Yeah, I definitely agree. I think the broader point is, in my mind, one thing that, coming from just a pure software engineering background, sometimes folks under-appreciate is how much the industry is partnership oriented. So the networks are super important partners. Sponsor banks are super important partners. Processing platforms are really important partners as well in building and scaling a card program.

Shifts and Changes

A lot of it was like, hey, this platform isn't working for us. We're just going to find someone that's been around for longer, more subtler, has a broader feature set. And whereas we should have been really evaluating, like, hey, where do our ambitions extend as a business, and does that align with where this processing partner’s ambitions are?

Customer-Centric Approach

The biggest shift was really around supporting our customers. You go from basically supporting consumers where it's a really important part of their lives. But it is, in some ways, acceptable to make mistakes occasionally as long as you remediate quickly and you're responsive to servicing businesses who are built on top of the platform.

Conclusion

I love to chat about the practical implications of this shift in mindset. I'd love to chat about what that shift practically entailed.

Reggie Young: If listeners want to find out more about Lithic, they can check out Lithic.com or get in touch with us by visiting lithic.com/contact. Thanks for tuning in to the episode!