Interview with Patrick Loeffler (founder and manager of the givve)

In this video we talk to Patrick Loeffler (https://patrickloeffler.de), who is the founder and manager of the givve service (https://givve.com/en/). The main activity of this project is prepaid map production in Germany.

Dialogue topics:

  • How the givve was started?
  • Pivot into a successful model
  • The difference between B2C and B2B
  • The impact of COVID-19 on business
  • Innovation in Germany
  • Is it worth to do research before starting the project?
  • “Sales cures everything”
  • Future for FinTech startups
  • The conclusions from the mistakes
  • When is it worth selling the company?
  • Traditional visitor’s advice

Key dialogue insights:

  • Originally, the project was created to issue gift cards. But in this case their direct competitors were H&M, Zara, Amazon. For a small startup it is a very difficult and expensive task to try to win the competition with such big brands, because CAC (customer acquisition cost) is getting very high. 
  • It’s important to keep trying everything, even if you’re made a mistake. The results of previous attempts can help generate new hypotheses. After business did not go well and the investment was burned, Patrick and his partners noticed that they had requests for gift cards from companies for their employees. As a result, they decided to create a system to issue prepaid cards. In Germany, up to €44 per month is tax-free and for employees such cards are a nice bonus. 
  • Pivot was more difficult than expected, because B2C is very different from B2B. It took a lot of modifications. In particular, a system for managing and tracking payments, both front and backend, was developed from scratch. That is why givve is a FinTech company, not just a card reseller.
  • As a result, the idea was successful and a second product was developed – a mobile application to pay for lunches, these payments are also tax-free in Germany. 
  • The coronavirus affected givve a little, because there are regular customers who make payments on issued cards. However, the number of requests from new businesses has decreased significantly.  However, the situation allows them to keep employees without firing anybody.
  • Innovations are being adopted very slowly in Germany. Many banks work with very outdated systems, and people use cash very often (only one in four residents has a Visa or Mastercard). Other European countries are more used to digital payment methods.
  • Before the start of the project there was no significant research, however, there were conversations with clients who understood what product they needed. Patrick says that if there is one client who has a demand, there are others who may need it too.
  • “Sales cures everything,” quotes Patrick Mark Cuban, the American billionaire. If you already have sales and a certain cash flow, you do not need to rely only on investment, in addition, you have a proven value by client money. Even if you are not finished the product yet, it is still better to start selling. The full set of rules from Mark’s book here – https://www.inc.com/business-insider/mark-cuban-s-12-rules-for-entrepreneurs.html
  • For example, to confirm the value of the product, first make a few sales, saying that the project will be deployed later. Often you need some customization, or delay of implementation can be reasoned by a discount for an early prepayment.
  • In FinTech you can lose trust very quickly because of mistakes. There should be no delays in transactions, your system should work very stable. From a technical point of view, high-quality service is crucial. 
  • Due to the fact that banks are changing very slowly, the future looks very promising for FinTech startups. In the future, banks will not be the same as they are today. At the moment, banking applications in Germany have to be improved a lot in order to offer better user experience. Also technologically, even the backend is outdated in many banks.  
  • Slowly the German regulator (BaFin) is beginning to listen to the market participants, which is a good sign. It is now possible to discuss topical issues. 
  • Even if you are rejected by experienced big banks because you are a small startup, do not give up. There may be a more experiment-friendly partner, as in the case of givve. 
  • Givve doesn’t have many competitors, as creating a product requires a significant investment of time and money, and sales are mostly closed by large cycles. Not every startup can do this. 
  • After Patrick and his partner were almost bankrupt twice, they concluded that it is important to keep a clear focus on one project and one niche market.
  • Givve was sold to an international company. If you understand your strengths and weaknesses and see that as part of a larger company your project will grow faster, then selling it might be a good idea.
  • Guest traditional advice: Excel is neither a database nor a CRM system. Even if you only have 10 potential customers, you need to track how and when to interact with them. 

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