As part of my series about the “How to Navigate and Succeed in the Modern World of Finance,” I had the pleasure of interviewing Rafal Andzejevski.
Rafal Andzejevski is the co-founder and CEO of PayAlly. An entrepreneur at heart, Rafal has built several businesses from scratch in the fields of trade, agriculture, logistics and real estate. Rafal ventured into financial services and started PayAlly after experiencing the difficulties SMBs face in finding a high-quality service. With PayAlly, his mission is to provide an exclusive, customer-centric service to small and medium businesses that are unfairly ignored by banks with needs that impersonal fintech startups are unable to cover.
Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
Like many people in my generation, I started working quite early in life. I had moved to England from Lithuania to finish high school, and working at McDonald’s was a sort of rite of passage for me. The wage was good, the hours flexible, but the nature of the work itself was not for me. The experience was valuable though, as it led to the notion that ultimately I would not want to work for anyone else, no matter the condition others could offer me.
My real entrepreneurial journey began when I was still studying at the Stockholm School of Economics in Riga. Back then, I helped my father build a small company making car air fresheners. We had some makeshift machinery and we were doing most of the work ourselves (from creating the designs in CorelDraw to packaging). What I learnt in that business was that there are no “easy” lines of work. It’s humbling to understand that everyone — from cleaning providers to semiconductor manufacturers — have to know an endless list of specifics to make their business work. But I digress. We kept this business afloat for almost a decade and actually sold it just last year.
Then, in 2011, we ventured into a completely new field for us — used cooking oil recycling and collection. The operation quickly grew international, as we would be purchasing oil from restaurants in Russia, Ukraine and Belarus and selling it to biodiesel manufacturers in the CEE and Western Europe. The business then evolved into us trading in chemicals, like glycerin and methanol, agro products, feedstock and other products. We also got involved in real estate, waste management and logistics, which meant that our holding quickly became quite diversified when it came to revenue streams.
So, running multiple businesses and dealing with clients and suppliers from all around the world, I reached a point where I had 10+ bank accounts just to ensure on-time payments to everyone. Processes were extremely slow and the amount of administrative work involved was almost unbearable. And I was more than sure, based on the conversations I was having with my peers, that I wasn’t the only one in this boat, with SMEs across Europe getting the short end of the stick when it came to international payments. That’s what led to PayAlly getting established in 2017.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
I wish I had a truly funny story, but the mistake I remember the most actually cost me a lot of damaged nerve cells. Back when I was 25, and still quite new to the wholesale business, I lost €100,000. And when I say ‘lost’, what I really mean is I got scammed. I was dealing with one person from abroad, and we had a good working relationship, or so I thought. In around half-a-year we had over €1 million in turnover with this business partner of ours. And at the end of the day, it didn’t matter. One day, he just disappeared with what was and still is a huge sum of money. Only then it wasn’t even my own money, which only exacerbated the damage.
This mistake taught me a most valuable lesson. No, it’s not “don’t trust anyone”. It’s “always get to know the people you are dealing with”. From that time, I abided by the principle of never signing a big deal without having a proper meeting first. This might sound old-school, especially in the age of Zoom calls, but meeting people you are dealing with in person is as important today, as it was 50 years ago. If you matter, people will want to meet you. And if they avoid a face-to-face meeting, relying only on calls and emails, that immediately raises a red flag for me.
Is there a particular book that you read, or podcast you listened to that really helped you in your career? Can you explain?
There are many well-written books, but you have to understand the reason why they were written. A book written for educational purposes, a deep-dive into a business case from an impartial expert or a biography written without the meaningless glitter, will provide more value than a book “designed” to become a NY Times bestseller.
Books that have been written mainly to become bestsellers and earn their authors and subjects a lot of money, come polished, heavily edited and rarely reveal the real picture. Plus, you usually get to know the success story of one person — the face of the company. Should one be inspired by Richard Branson? I don’t know, perhaps. He worked hard, but after a certain point, all of his success stemmed from the great team he assembled. I doubt there’s a book telling their individual stories, though.
If I had to name a role model, it would be my father, though. He always worked hard, despite multiple challenges life brought him. And when it comes to inspirational material, for me, the best inspiration and lessons come from my personal experiences.
Are you working on any exciting new projects now? How do you think that will help people?
As my holding is involved in multiple areas, from wholesale and real estate all the way to finance, there’s always an exciting project. Without excitement, people quickly lose interest in the business. And I’m not talking just about startups, but also about traditional businesses, even those that are sometimes mistakenly considered as simple.
If I had to name one thing I’m super excited about is PayAlly. We are seeking to make international payments reliable, predictable and secure for SMEs trading across borders. And rather than rely on soulless chatbots and automated onboarding systems (although we do use the latest tech as well), we base our business model on the dedication and a human touch.
Are we developing another Fintech? No. I see many flaws in the way many payments companies, especially those with a lot of funding behind them, operate. They onboard indiscriminately and offer extremely cheap services, but that all comes at a cost. They might have a million clients, so they wouldn’t really care if 1% or even 10% were having issues. Those customers either wait or leave, only to be replaced by new customers with hopefully fewer problems. And there’s also the rather lax way they approach AML Compliance that bothers me. Some Fintechs tend to simply tick the appropriate boxes rather than try and understand the nature of their clients’ business and transactions.
So what excites me is the ability to show businesses that there’s a better way. Every single one of our clients will know who to call in case of any issues. And it’s going to be a human, not a chatbot with a week’s waiting list.
Thank you for that. Let’s now shift to the central focus of our discussion. Extensive research suggests that “purpose driven businesses” are more successful in many areas. When you started your company what was your vision, your purpose?
Our vision is to deliver the best service to businesses that care about secure and reliable payments. And our purpose is inextricably linked to it. As the world of finance is rushing into non-personal communication, we strive to remain personable and offer an exclusive solution. This is based on the reality of what I saw in the industry, and what peers communicated to me. We lived through the pain points, and overcoming them became our purpose.
Do you have a “number one principle” that guides you through the ups and downs of running a business?
This might sound cliche, but I think it would be never giving up. I know it’s not for everybody, and everyone, including myself, has their limit. There might come a time in anyone’s life when the best way forward is taking a step back, but that’s not giving up, that’s just reevaluating your strategy!
Lead generation is one of the most important aspects of any business. Can you share some of the strategies you use to generate good, qualified leads?
In the modern world, many businesses that attract a lot of funding at the early stage are pushed to grow at any price. This is rarely sustainable and might actually lead to the founders being diluted or losing control of their business in other ways.
What always worked for PayAlly is word-of-mouth, with the majority of our clients coming as referrals from our existing ones. For this, of course, we, first of all, had to create a product that’s worth recommending. Having excellent service and providing an experience that would make you stand out from the rest is key here.
Not all businesses need to be constantly generating leads, but if you expect customers to just come on their own, you have to focus on either being truly unique product-wise or having a good but not extraordinary product with a great customer experience. People will pay more for convenience and peace of mind, even if they know someone else is cheaper. And if the price is the only competitive advantage you have, then aggressive lead generation is the only resort you have.
If a fellow business leader would ask you for advice about whether to bootstrap or to look for VC capital, how would you help them weigh the pros and cons of that decision?
I don’t want to sound like a contrarian, but I don’t see the mass appeal VCs have. Sure, in the case of really early-stage startups, the need for initial capital is understandable. And VCs are doing a good job at providing that first injection. But when the only source that’s fuelling your growth down the line is just more and more VC funding… That’s where I see a problem.
Before going VC shopping, you must clearly understand the consequences and have a bullet-proof business plan that will stay in place regardless of the plans the VC might have for you. And you have to have a clear vision when it comes to spending the money. It’s easy to raise a million, it’s much more difficult to use these funds to churn a profit.
There are many examples of companies you read about in Forbes Magazine that are constantly raising funds, and spending them mostly on secondary objectives, like marketing, while leaving their product stagnant. Theranos is a good cautionary tale to have in mind here.
My advice to other entrepreneurs would be — bootstrap what you can. And don’t be afraid to consider loans. Sure, it’s not as “sexy” as raising a VC round, but it’s a good tool that provides leverage. The banks won’t care how fast you grow or how many vanity points you gather. Neither do they care about your market value, as intangible assets mean little when analysing your financial health. The banks will care about your business being sustainable and profitable, something VCs care less about. They’ll want their money back, but they won’t interfere with your business like a VC would. Having someone who is always double-checking your profitability is a good thing for any business.
The way I see it, VCs earn on perceived value growth, not the success of your business. And in my book, it’s better to be unknown but profitable (like many billion-dollar family businesses in Germany) than a superstar burning money (like WeWork).
The majority of companies these days care more about market value than the profits or losses they’re making. There’s nothing wrong in having an exit plan and working towards it. Just don’t act that your clients or the product you sell is the most important thing in the world. If, however, having a sustainable business that is actually creating value to clients, then profit, and not VC injections, is the right marker of success for you.
What measure do you use to determine the value of a company? What advice would you give to other leaders about how to get an optimal evaluation of their business?
Profit is where it’s at. Everything else is bells and whistles. Projections and forecasts can tell a very pleasant story, but you don’t need to look much further than your balance sheet to get the real picture.
What would you advise to a founder who initially went through years of successive growth, but has now reached a standstill. From your experience do you have any general advice about how to boost growth and “restart their engines”?
My question would be — do you actually have to restart your engines? Growth, seen as the end results, can be misleading. If your business is growing slower than it used to, there’s probably a very clear reason you need to understand, before you start muddying the waters.
And you shouldn’t be measuring your success by numbers alone. Of course, sales and profits are the best indicators of a businesses’ health. But what’s behind the numbers? What risks are involved? Maybe your product is not as good as it used to be, maybe your competitors have become smarter, or maybe there’s simply no room for growth. Start asking yourself questions and don’t stop until you get to the bottom of things.
Beyond that, if you seek growth as a challenge, you can always start another business. Or find a demanding hobby. As I said before, you have to be excited about what you do, otherwise… What’s the point?
What are the most common finance mistakes you have seen other businesses make? What should one keep in mind to avoid that?
As I’ve mentioned, loans are a great instrument, overlooked by businesses who start searching for an investor their first week in business. But you have to be smart with loans and clearly understand how much you can take at what stage. If we’re talking about purely financial mistakes, that’s probably going to be the most significant and common.
Another mistake, and this is a broader one, is when shareholders, directors or other people in charge of the company lose track of the day-to-day. It’s not enough to skim through the reports your department managers send you. You need to really “feel” the company and understand what is happening on all levels. Losing control, in my opinion, is what leads to big corporations crashing in record short times.
Ok, here is the main question of our discussion. Based on your experience and success, what are the five most important things one should know in order to succeed in the modern finance industry? Please share a story or an example for each.
The principles I’m going to outline are going to be applicable beyond the finance industry, as they are kind of universal, no matter the business you are in.
1: Personal touch
Story behind it:
Impersonal services are usually quick and convenient. That’s why many of us choose the self checkout lane at supermarkets. But any supermarket will have that area staffed and closely monitored, as customers oftentimes face an issue (item not scanning, discount code not working) that only a shop attendant can solve.
The problem with app-based services is, of course, that you can’t have actual human beings attending to all issues. One of my business associates was fond of a popular fintech app and used it frequently for personal needs. Once, before going on holiday, he topped up his account. Only the money never came through. He wanted a quick solution or even just an answer but he was time after time reverted to chatbots. The back and forth lasted for several weeks, and throughout that time it was mostly automated answers he received.
Interestingly, the top up he tried to initiate was performed via PayAlly, and we could confirm that the money left our account. We happily corresponded with the bank and, even though we weren’t able to retrieve the money for him, we let him know that we care. I wouldn’t even call it going the extra mile, as this is the kind of service I expect from everyone. As a result, the business associate in question cancelled his account with that fintech company but stayed with us.
Story behind it: You have to be honest with all of your clients, as any lie or even half-truth can be detrimental to your business. Reputation is built slowly but can be lost in a few minutes. In finance, though, honesty is a bit trickier than you might realise. The reason why most responses coming from PSPs who have issues handling your payment is the vague “AML-related procedures” is simple. Disclosing too much information might mean tipping the client off, and that might have unforeseen consequences. At the same time, it is all too easy to use this line whenever that’s convenient for you. So, my advice would be to always err on the side of caution, but at the same time try to disclose more information when possible and never ever resort to “it’s not our fault”. Admitting blame is the first step to an honesty-based relationship.
3: High quality
Story behind it: It might be an unorthodox view, but I view financial services very much like commodities. A payment can’t be good or bad, it’s either there or it’s not. And if you dig deep enough, the core services that different banks and Fintechs offer don’t differ that much. The quality that your client will judge you by is all the surrounding services and add-ons you can offer. Think hard about your customers’ experience, improve it whenever possible, and you will stay competitive, even if your core product does not differ much from what others are offering.
4: Playing by the rules
Story behind it: In the world of finance, not playing by the rules is simply not an option. At the same time, you have to really understand the rules set by regulators. Otherwise, you’ll be just covering everything with red tape. Or you’ll get reckless, like many Fintechs do, and get fined.
At PayAlly, we are trying our best to find the best balance between compliance and convenience. For instance, we ask our clients to attach the relevant invoice information when they’re making a payment. That way, if our AML team has any suspicions, they can check the payment right away. That’s a small tweak, but it helps a lot. We’re also trying to set our own standards of getting information, like recorded video calls.
5: Having a team of professionals
Story behind it: The problem I see with many players in alternative finance these days is the lack of actual finance experience. Imagine a restaurant run not by chefs, but by the people who build kitchen equipment. Fintechs fit this metaphor perfectly, as it’s usually a financial company run by IT professionals. There’s nothing wrong with having a stable, well-functioning app or platform, but if the majority of your team knows next to nothing about the way banking and finance works, well, that’s a problem.
Coming from our experience, I can safely say that 90% of our team members have significant banking experience. Why banking and not finance in general? Well, for one, banks have a set of procedures that someone from the outside would have a hard time to understand. People with several years of working experience in an actual bank already know how banks think.
By tapping into that talent pool, we know that the people we hire will know the rules and, most importantly, know how to stick to those rules. Sure, a banking background can also mean that the person is a tad less customer-centric than we want them to be, but this is something that we can teach them. In fact, it’s much easier to teach that than the inner workings of the banking system.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
As an entrepreneur, you will have to learn how to sometimes work through burnout. For us, work is an integral part of life, not something that happens between 9 and 5. So, if your work is your passion, it’s hard to get burned out from what you really like, from what basically is your lifestyle. And if you do feel symptoms of burnout, you have to reevaluate the way you live and have an honest look at the things that really bother you. You might even be surprised when you find the real reason you’re feeling burned out (losing interest in your business is one common example).
Employees have holidays to avoid burnout, but founders and leaders never stop working. When you are running a business, work is not something you “go to”, it’s something that’s always happening in the back of your mind. Great ideas might come to you at a BBQ party, after all.
If you could start a movement that would bring the most amount of good to the most amount of people, what would that be?
I don’t think I would be where I am today if not for the education I received. Giving more people access to education opportunities would make for a society of more independent people living more fulfilling lives.
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