You can Splitit your way

Spiro Pappas is the Chairman of Splitit, the absolute phenomenon that is sort of a competitor to Afterpay; but not really - it does a different thing. 

The point about Splitit is that it listed a couple of months ago at 20 cents and is now $1.65 (on Tuesday 12 March, 2019), so it’s been by far the best performer in the market so far this year and it’s got a market cap of around $260 million dollars. 

The best way to explain it and the best thing to do is to listen to the whole interview, which is a very long interview, I must say, because there’s so much to explain about it and I thought it was worth really going into.

But I suppose the best simple way to explain it is that it’s PayPal on instalments. 

PayPal allows you to buy stuff online just using your credit card and that’s what Splitit does, except that you do it over instalments using your existing credit card, so there’s no credit checks, you’re just basically using your existing limit and it’s instant and it’s interest free. 

For shoppers, it’s a way of spreading your payments out without paying interest to Visa and Mastercard, and that’s covered by fees to the merchant. But the best thing to do is listen to Spiro. Here is his explanation of how the business works, what sort of cash burn they’ve got and who’s behind the company. 

Here’s Spiro Pappas who’s the Chairman of Splitit. 

What a fabulous couple of months you’ve had… Unbelievable!

Yes, it has been a pretty amazing couple of months.  As Chairman of the company – I mean it’s quality problem, don’t get me wrong, but I’d like to see some stability.  This is a long game for us and we want to see the shareholders rewarded and we’re happy to have happy shareholders and we’re very, very focused on doing what we’re supposed to do.  And it’s hard as you can appreciate, but we’re very, very focused on the day job of onboarding merchants and really sort of driving onboarding the best talent.  Keeping the thing focused on that is the focus.

No, I get it.  You’ve got people buying shares now at $1.69, I mean, Christ, they’re going to be demanding.

Yeah, and look, Alan, I think the key thing is – hopefully I’ll walk you through the business model and while we are truly complementary to all of what I call the consumer financing solutions that are out there in the instalment payments base, you’ll see that the game we’re playing is a fundamentally different game.  It’s a B2B proposition, not a B2C proposition, so it’s really a B2B2C proposition. 

Right, well why don’t you start by walking me through the business model – not the business model, so much as how the thing works, because I must confess I’ve been sitting here for a while trying to figure it out and my head’s hurting now, I just actually cannot understand it.

Alan, how familiar are you with the Mastercard and Visa schemes and how they operate?

Well, I’m a cardholder for a long time, so I’m hoping you can educate me as to how you – because you seem to be an overlay on top of Visa and Mastercard.

Right on the money.  Firstly, let me start by saying that instalment payment solutions have been around for eons.   They used to be store cards in Myer or whatever else, Walmart…  Around the world, big department stores had their own sort of lay-by service, etcetera… What we’ve done is obviously – entre into the digital era, we’ve been able to sort of fast-track that.  But in some countries just interestingly, particularly those that went into a deep recession and they wanted to promote a consumer-led recovery, probably 30 to 40 years ago Israel developed their own instalment payment solution, so did Brazil, so did parts of Europe – Greece has one, Turkey has one…

This is across the whole country, you mean?

Yes, but let’s take Israel, they had their own, what I call a ‘closed loop’ instalment payment solution because they had two major banks, Bank Leumi and I forgot the other one.  But one was a major Visa bank, card-carrying bank, and the other one was a major Mastercard carrying bank, and they ended up creating what I called a closed ecosystem.  They basically partnered up and agreed to share the spoils end to end.  Then because they controlled the issuing end and also the acquiring end, they were able to create an instalment pay solution that worked across the country. 

That’s a solution within a country, but try to do that in a place like the US where you’ve got 1,500 issuing banks and 1,000 acquiring banks, it just won’t work, right, corralling all of those people.  But what Splitit does, is it does that work for Mastercard and Visa.  What we are is a card agnostic scheme that sits between the merchant and the payment gateway or processor that hangs off the acquiring bank, basically the acquiring bank being the bank that provides the merchant their banking services.  Then obviously you’ve got the issuing bank who issues within the Visa and Mastercard scheme.  The issuing banks are the people that issue the credit cards to the end shopper, and so the whole system and the flow of money and the way it all gets regulated is what Visa and Mastercard do. 

Their customers, if you like, and their members are the issuing banks and the acquiring banks, and they exist to facilitate both the credit card transactions and debit card transactions to police, if you like, this regulated industrial strength system. 

But what do you do that isn’t being done already?

Okay, so if you think about it, Mastercard had their own instalment payment solution and it probably still exists, but because by the virtue of the fact Mastercard – basically, their primary focus is on administering the rails and providing the services to the banks, not the merchants.  They don’t have the end interface with the merchants.  The solutions that they’ve provided are either presale or post-sale.  What Splitit does is it provides an enabling technology directly to the merchant. 

Number one, it’s card agnostic between Visa and Mastercard – and hopefully in the future others like China Union Pay, etcetera – and what it enables you to do either online, instore or via your mobile phone, if you’re hooked up with the merchant using Splitit, we sit between the payment gateway and the merchant, and at that magic moment at the point of sale, we enable the merchant to drive more sales, bigger sales in a frictionless way with their end customers, their end shoppers. 

I don’t understand – why does the merchant need that?  Because if I want to buy something for $500 bucks or $300 dollars, I just have my card and then I key in the pin number and that’s done.  I mean, what are you doing back to the merchant that he or she needs done? 

Yes, Alan, it’s really hard for you and I to understand because that’s the market we’ve grown up in, but in Brazil for instance, where it’s been operating for decades, 80% of all online credit card transactions are done by instalment and there’s a very good reason for that.  As consumers become more credit savvy and more savvy around how they use their finances, they’re less like you and I, i.e. we just pay off the monthly balance at the end of the month and don’t incur interest.  What they do is, if you’ve got a lumpy item that you need to pay, for instance, your kids school fees or elective surgery or a family holiday, instead of paying it all upfront on your credit card and then not having the capacity to make other purchases in that month – i.e. it’s a cash flow management tool.

But see if I buy a lumpy amount on the credit card and I don’t pay it off at the end of the month, obviously I’m incurring interest. 

That’s right.

When I start paying it off over time, over 12 months – if I pay it off over 12 months on my credit card, I’m incurring interest.

That’s right.

Your plan is interest free, so you’re converting an interest payment situation into interest-free, right?

Correct.

Somebody’s got to wear that margin, somebody’s got to wear that gap?

It’s the merchant.  We only ever charge the merchant and it’s not dissimilar to what Afterpay and others do.  All the consumer financing solutions charge the merchant and in addition to that they also charge a monthly fee to the merchant, and they also charge if there’s late fees which is obviously as you know, contentious, they charge the shopper late fees.  In our case, we never charge anybody other than the merchant, we never charge more than 2% to the merchant from our end.  We have two models, so let me qualify that 2%. 

Where we’re passing through the instalment payments to the merchant on their normal cycle from the customer, from the shopper, we only ever charge 2% to the merchant.  When we’re using a factoring arrangement, i.e. we borrowed the money through a credit provider to upfront the payment to the merchant, we’ll only ever receive our net 2% fee on average, but we’ll pass on the cost of the credit as well. 

Are you doing much of that one?

Yeah, at the moment it’s 60% on what we call the basic plan where it’s just a mirror payment and 40% upfronted, where we’re paying what we call the fully funded upfront model to the merchant.  But in time, as this captures hold with big merchants, we think that that will flip the other way, so it’s probably going to be 60/40 the other way in the future.  

Your 2% fee covers the interest on Mastercard and Visa, does it?

The fee that Visa and Mastercard charge, they will continue to charge all the participants that they charge.  What they call their merchant services fee and their interchange fees etcetera…

But what about the interest?  Because if someone’s splitting it and paying over 12 months or something, then aren’t Visa and Mastercard looking for interest on the delayed…?

No, no, because remember, the party that issues the card is the issuing bank.  They issue the credit card and they’re the people that charge the interest. 

Who’s taking the credit risk?

Well, all these sort of new innovations, other alternative payment mechanisms, digital wallets, your Google Pay’s, your Apple Pay’s, but also your instalment plan solutions like Afterpay, etcetera, because they are the merchant of record.  We’re never the merchant of record, but they are the merchant.  Basically, tracking is going off the rails of the credit schemes into alternative payment mechanisms, that’s what I mean.  What we do, we’re an enabling technology layer that helps bring traffic back on the rails of Mastercard and Visa.  Does that make sense?

Yes, I’ve got it, and you’re doing that by facilitating the process, making it easy for people?

Correct, and this is how we do it.  Let me use an example with say, a $1,200 purchase, because the average order size for us – and this is actually another very important point.  Unlike Afterpay, which is an incredible business but focused on smaller ticket sizes and it’s sort of effectively one product, it’s a fortnightly payment product that extends out to, I think from memory, 6-8 weeks, I can’t remember exactly, and there’s a lot of copy-cat products like them.  But it’s captured the hearts and minds of millennials and it’s smaller order sizes to say, $100 to $150 dollars, and they are the merchant of record and they’re taking the credit risk.

But they charge for it, right?

And they charge for it.  That’s their model, it’s a B2C model and it’s all about making sure they’re in, and they’re doing a fabulous job of getting out to the merchants in Australia and it’s early days but they’re making some good headway in the US.  In our case, by virtue of sitting on the rails of Visa and Mastercard, we’re obviously global day one.  We have the potential to sort of – we’ve processed transactions in 27 countries, the core focus initially, because this company only launched – they did a soft launch in the US in 2016, but literally they only really began in earnest in 2017.  Pretty small team, they bootstrapped the business, I think their total marketing spend was a couple hundred thousand dollars in that time and they’ve done over 100,000 transactions and over $100 million dollars’ of volume just through the sort of plucking the fruit from the tree type of strategy, the lowest lying fruit.

Now, they’ve obviously got some capital behind them, a listing, a decent size market cap, it’s giving them the credibility and the global recognition with merchants.  But the way it works, to answer your questions, is – let’s take a $1,200 dollar purchase, three monthly instalments.  The way it works is a customer pays for their purchase using Splitit and we create an instalment plan, beginning of day one.  Then on the first day, typically, the first instalment’s paid, the first $400 of the three instalments for a $1,200 dollar purchase.  We then take a hold on the remaining $800 dollars on your card.  No different to what you do when you go to a hotel and you stay there for a few days and they take a hold on your card.  In effect, we have a first charge on that $800 dollars, ahead of the bank.  Then, before the end of the first month obviously the customer makes their next instalment payment.  The hold, under the normal chain of events, the hold reduces from $800 to $400 and then the final payment, the third instalment, the following month, the hold reduces to zero.

Now, if after the second instalment, or if the customer doesn’t pay the second instalment then it just reverts back to the issuing bank and to your point at the beginning, it becomes like a – they start charging them like they normally would with a normal credit card transaction where they’ve missed and they haven’t paid the balance in full after a month.  

I see, so it actually does convert to a normal credit balance?

Correct.  Our sweet spot, Alan, if you step back and look at this – and I should have mentioned right at the beginning, I don’t know whether you know my background, but I’ve spent 28 years in banking in Sydney, London, New York, Singapore, and most recently I was the senior executive running the corporate institutional coverage side of the business and all of the lending products for those customers for National Australia Bank.  Afterpay and Zip Money were customers that were onboarded by my team, so I’m very well familiar with their models and in the case of Afterpay, we were the first bank to provide them with a loan. 

I’d left NAB in the middle of last year, Splitit was brought to my attention as an investor, pre-IPO, and I looked at this model and I interrogated it through my lens as a banker, as somebody who understands all the regulatory issues and all of the sensitivities, and what I loved about the model was it’s globally scalable day one, point number one.  Point number two, it delivers a solution at that magic moment that the merchant and the customer need it at the point of sale.  The approval rate – in effect, you’re utilising pre-approved credit limits from the issuing bank on your credit card, provided you have sufficient available credit limit. 

Let’s say your purchase is $5,000 and your overall limit is $50,000 and you’ve utilised maybe $10,000 of your limit, so this will take you up top $15,000 or less because you’re paying some of the purchase upfront.  Let’s say it’s five instalments, you’re paying $1,000 upfront, but you’ve got a lot of available credit capacity, that’s the point I’m trying to make.  For that type of borrow, this is a very great solution because there’s zero friction, unlike the consumer financing solutions.  This was always the Amazon model and the PayPal model.  One click, you get approval.  In our case it’s an instant approval, because you don’t need to apply for a new credit loan.  You don’t have to download an app. 

From the shopper’s point of view, what you’re doing is you’re sort of spreading your payments, interest-free, right?  Instead of having to pay it off in the month to get interest-free, you can pay it off over a longer period and still be interest-free, right?

Precisely, Alan.  You’re hitting the nail on the head and I think the key thing here is, it’s not going to be for everything, but for lumpier items, so $1,000-plus typically – I’ll give you an example.  Our CEO wanted to take a family holiday in Europe, go skiing with the family.  He’s obviously running a business that effectively, it’s his business and he’s not getting a big salary, and so everything he’s got he’s pouring back into the business, so cash flow is an issue.  He used the instalment payment plan so that he can effectively budget for his family holiday over say, three instalments, or I think in his case it was six instalments, rather than pay it all in one month and end up having a cash flow problem.

But you still have to sign up the merchants, right? 

We still have to sign up the merchants…

As you say, you’re kind of almost instantly global because you’re using Visa and Mastercard, you actually have to physically supply the merchants and you’ve only signed up I think less than 400 at this point, whereas Afterpay signed up 23,000.

Yes, the key point there is it’s active merchants and there’s a couple of points there, Alan.  You’re right, we basically only began in earnest from 2017, from a standing start.  There’s now probably comfortably over 400 active merchants, to your point, but the key word is active.  We’ve got more merchants than that, we’ve got well over 1,000 merchants, but unlike Afterpay and Zip Money, etcetera, we don’t report every single one of them.  We only report the ones that are active, because that’s what we care about.  Remember, our business model, it’s more like a B2B2C business, not a B2C business.  If we’ve got really active merchants, big global brands that are in 20 countries, that’s obviously going to drive a lot.  Provided, we’ve got the right merchants, all we need is 1,000 to drive a very, very exciting business model, do you follow me? 

And because the amounts are lumpy, typically over 1,000 Aussie Dollars per transaction, unlike Afterpay which is probably $100 per transaction – many of our transactions could be $20,000 - $10,000-type luxury item purchases on your credit card.  Mastercard tends to have double the limits of Visa, for instance.  You could have a wealthy, what we call a super-prime credit card borrower from the Middle East coming to London and using his Mastercard, could have over a $100,000 limit.  That’s just one extreme example, but we’ve seen purchases that have been $20,000, up to $30,000.   It’s hard to get your head around, but it’s a very different business model to Afterpay where the goal is to sign up tens of thousands of merchants and go for broke with them.  And they’ve done a fantastic job, don’t get me wrong, hats off to them! 

Our business model is very targeted, we want – with 1,000 active merchants but really good ones who are in multiple countries, our solution is tailor made for them, particularly if they’re in high-margin businesses, dealing with lumpier purchases.  Like, I’ll give you an example.  We signed a sporting equipment company out of Canada and soon thereafter a number of other of their competitors joined.  We signed the largest online bed mattress manufacturer in Europe called, Simba, and that was a huge success and the average order size has increased by more than 100% and our financing option ended up providing them with 10-15% of their sales in quick order. 

As soon as their competition got whiff of that, they obviously jumped onboard as well.  James Allen, the, if you like, signature brand or the prestige brand for the Signet Group, the largest jewellery retailer in the world, James Allen is their premium online brand.  As soon as they signed up they saw immediate traction as well, an increase in average order sizes and overall sales, so that’s been another success story, and their competitors immediately followed.  Of course, we’ve got to onboard the merchants, but there is a sort of a halo effect here, because we are the only one that can offer a global solution day one.  If you’re a big global brand and you want to be able to tap into people’s Visa and Mastercard available limits, then we’re the only real option for you in a card agnostic way, which is what the merchants want. 

I can see a future, Alan, where we can happily coexist with all of the consumer financing solutions, but they can’t happily coexist with the other.  One will eat the other’s lunch, but we’re not fighting that game.  We’re basically – when you go to pay you could have your existing channels like Visa and Mastercard, credit and debit, then PayPal and then ourselves.  Visa and Mastercard by instalment.  Then an alternative payment methodology, so whether that’s Afterpay or somebody else, because Afterpay deals with smaller tickets and it is really complementary.  In fact, when we get merchants sending us through their $30 to $50 orders and they’re sort of lower margin type business, we just refer them.  At the moment, we refer them to the likes of the Afterpay’s, because that’s just not our sweet spot.  

You mentioned the CEO before, can you just take us through who’s behind this company and what’s their background?

Yeah, absolutely.  That was the other thing that attracted me as a pre-IPO early stage investor, the two co-founders are Israeli, but they’ve got collectively over approaching 50 years’ of experience in enterprise sales with global experience.  Gil Don, the CEO, has over 20-odd years of experience in sales and management for US corporations.  He previously served as the regional manager for one of Dell’s product divisions, and was also served as their Vice-President of sales for a leading technology system integrator for a big global cyber-tech company as well.  Very well versed in the technology and platform based, SAAS based solutions and the sales of those to major multinationals. 

Who’s the other person?

The other person is Alon Feit and Alan was a veteran of the financial services industry.  Both these guys are well into their 50s, so they’re not your typical Israeli start-up type entrepreneurs.  Alon’s basically been in the financial services industry for more than 25 years and he was a CEO of Mastercard in Israel and then Brazil.  Then he also served as the CEO of a big consumer financing subsidiary in Israel and then served as an executive director of Unibanco cards, the biggest bank in Brazil.  He’s got very detailed and relevant experience with the schemes.  Obviously, I gave you a little bit about my background as Chairman. 

The other people that we’ve assembled on the board have, again, global experience and strong execution capability with relevant global skillsets.  Thierry Denis, one of the NEDs who’s based in Sydney, spent more than 20 years building Ingenico’s business, he had a very distinguished career at Ingenico which is the largest point of sale terminal business in the world emanating from France.  He basically was the MD who built out their business in North America and then Australia and South East Asia and became a strategic adviser to the board at Ingenico before he retired. 

Dawn Robertson is a world-class retailer.  She used to be the CEO of Myer well before private equity got involved and it was actually making good money.  Then she moved back to New York because she’s from there and she’s got over 27 years’ experience in leading retail businesses.  She was a CEO of Bloomingdales.com, Macey’s Online, Stein Mart, Old Navy… She launched the Sean John brand in the US as well.

I remember Dawn.

Yes, so she’s obviously a great retailer and visionary leader in the online… If you remember, she’s been the one sort of talking about online and retail embracing online well before the whole disruption happened with Amazon, etcetera…  Mark Antipof is the other recent NED appointment.  He was a senior executive in payment software technology in financial services industries.  His most recent role, he spent half of his career at Visa and his last role there was, he was a Chief Commercial Officer, so the most senior frontline executive in Europe for Visa, and he just left them in December and joined our board and obviously advises on a bunch of other big multinational companies around payments.  Then to complete the picture, we have Michael De Franco, he’s sort of the guy – as we’ve built out our omni-channel capability, he’s our sort of mobile telephony guru.  We’ve got somebody who understands the point of sales, so on the physical instore type of solution supremely well in Thierry.  We’ve got a great retailer in Dawn, a visionary one.  We’ve got Mark who obviously covers off the schemes with Alon, the co-founder, one from Visa, one from Mastercard, and we’ve got Michael who’s a mobile telephony guru, and we’ve got Gil who’s a very, very seasoned sales executive, and myself.

To complete the picture, all of the growth that we’ve had from 2017, Alan, to date, until end of last year that was reported, was done with a combined marketing budget, I kid you not, of $200,000.  It was all inbound.  Now we’ve just raised $12m and unlike the consumer finance solutions, we don’t have all of these late fee – because it’s a B2B model and because we have a sort of a first charge ranking and we’re not running the same credit risk, i.e. we’re an enabling technology.  We can front-end to drive sales and growth with merchants.  We can invest most of that money we’ve raised in adding features to the products that make them really attractive and reduce friction with the merchants and provide sort of more seamless integrations, etcetera.  And most importantly, onboard merchants faster with really good sales and marketing.

Let’s take Afterpay, for an example, last year they reported $25 million dollars in late fees.  Let’s just be generous and say that there were 365 business days last year and the average order size was $100.  If you do the math that means there was basically $5,000 phone calls that needed to be made today to chase up people with late fees.  Obviously, that’s a key part of their business mode, it’s a B2C model, they’re taking the credit risk so they have to do that, and I’m sure they do it well.  But we don’t have any of that because we’re an enabling technology.  We’re never the merchant of record, we’re never lending the money, we’re just facilitating the instalment payment solution on the rails of Visa and Mastercard.

I get that, I just wanted to know how much of the company Gil and Alon own?

It’s meaningful.  They’re both substantial shareholders.  Last time, in the Prospectus report it was roughly – Alon was just under 10% and Gil was just hovering around 4.75%, around that.  But most importantly, they have performance shares, so Gil, just to give you an example, for his performance shares, a third of his performance shares – he signed up to a milestone that he has to meet in 2021 which basically requires him to increase the transaction volume ten-fold, so go from $100,000 to $1 billion dollars in transaction volume, for him to meet those performance shares milestone.  

It’s not based on share price, it’s based on transaction volume?

Correct.

Can you just take us through where the company’s at in cash flow terms at the moment, how much are you burning?

I think the burn rate, Alan, is – we don’t provide that number in there, you’ve got to sort of glean it, but basically it was operating at around $350,000, obviously we’ve onboarded some recent executives and are growing the business and I’ll talk about the recent executives that we’ve onboarded because it is about onboarding the right talent and the right leaders.  Let’s say we started, were probably operating at around $350,000 dollar burn per month.  By the end of the year, it’s probably going to ratchet up to about $750,000.  In order to – if you look at those numbers, basically in order to breakeven on a cash flow cycle, the last report, we’re operating for the last Q, on an average volume of about $10.25 million per month.  We need to get to about $35 million per month to breakeven.  If you look at the trajectory and the way we’ve been growing, if you look at what Gil signed up to in terms of his own performance milestone hurdles, that should give you a sense of how confident management is that they’re going to meet those targets. 

Of course.  When do you think you’re going to breakeven?

Look, I think, Alan, it’s a fair question but the challenge we’ve got is, in the absence of any other developments it’ll be relatively quick.  If you look at the trajectory – obviously, I can’t forecast, I’m not allowed to, but in reasonable order you’ll see that you’ve got to take a view on how quickly we’re going to grow from $10 million plus a month to $35 million plus a month. 

I suppose the more important question that concerns you, operating leverage – I mean, it’s really a question of what sort of money are you going to be able to make in five or ten years, I guess.

Yes, it’s a very scalable platform.  As we touched on earlier, we’re truly global and so, we’re playing a very different game to the other consumer financing solutions and most importantly, Alan, I’d rather be in our position than the consumer financing solutions.  Obviously, the Senate Inquiry came out and said this segment of the market is going to be regulated, so we don’t know what that means.  If Labor gets into power it might mean something very different to the Liberals, for instance.  But one thing’s for sure, there’s going to be more regulation, not less, and that could, for them, for the consumer financing solutions, that could present quite a challenge and hence why I’m guessing there’s a race to try to diversify into other countries.  But every regulator around the world is looking at this as well because it’s been a bit of a phenomenon. 

I imagine your biggest threat would be competition, surely.  I mean, if you’re doing something relatively simple over the top of Mastercard and Visa, then surely anyone could do that?

Well, these guys had the foresight to apply for the patents in all the big markets and then patents pending around the world in 2008.  They lodged the patents and as soon as they received the major ones in the US and Europe, etcetera, in 2012, they started investing in the technology.  They spent well over $10-12 million on the technology from memory and counting – this is US Dollars.  The barriers to entry are far greater than you’re indicating. 

What do the patents cover?

The patents cover two things, they cover two aspects.  They cover the underpinning technology and most importantly, the methodology and the payment process as it relates to instalment process.  If anybody else in the countries where we have patents or patents pending, if anybody else tries to do what we’ve done, utilising this pre-authorisation in the first charge or the first call on that hold that we take, then they’re in breach of our patent.  It’s not just the technology, it’s the methodology.  The other point, Alan, the point that it’s easier to replicate than obviously the patent protection, but it’s still very, very hard to achieve, in order to get onto the industrial grade rails of Visa and Mastercard, you need to be approved as a third party service provider.  It took Splitit four years to get to that point. 

Why aren’t you the same as PayPal?

That’s a great question.  We could be, for instalment payments we could end up becoming.  When people think about instalment payments…

Actually, PayPal is not instalments.  You’re the same as PayPal, except you’re instalments, right?

I didn’t say that, you said that.  [Laughs]

PayPal are going to buy you.

I didn’t say that either. 

No, of course you didn’t! [Laughs]

And I’m not allowed to project or forecast or do anything of the like, but it’s interesting, the senior executive that we hired in Australia is a gentleman by the name of Andrew Pipolo.  If you do your homework on him, you’ll see that he has fantastic experience.  He basically was the MD of PayPal in Australia when it exploded under his leadership back in the mid-2000s.  Then he did such a phenomenal job, because they were owned by eBay at the time, the CEO of eBay sent him up to Japan to build out the business there because that was a big business for eBay up there.  He became the MD of PayPal in Japan and built it from zero to a $20 billion transactional business. 

He wrote the playbook in Australia and Japan and he executed on it for PayPal.  That’s the senior executive we’ve just hired to run Asia-Pacific for us out of Sydney, and in North America we’ve hired Nathan Mairs from Klarna.

We’re obviously going to assemble a team, we’re going to use our money wisely and most of it, as I said, 70% of the proceeds will be focused on front end sales and marketing.  The rest will be on product development and new product development, just making the product work better and better, in mobile phone and a whole bunch of other applications, to reduce further friction and make it even more user friendly for global adoption.  There’s a very thoughtful process here and we’re going to go laser-like into those industry verticals where we see great adoption, high margins and higher order sizes.  That’s our sweet spot.  And our target audience – and I don’t want to be quoted on this, but I’ve heard from when I’ve gone and spoken to investors, this investor basically said we are a instalment payment solution for grown-ups.

It’s been fascinating, Spiro, I really appreciate you giving us so much time and it’s been great. 

No, Alan, thank you very much for the opportunity and thank you to you and your viewers.

That was Spiro Pappas, the Chairman of Splitit.