They Rejected Her Idea, She Turned it into a BILLION Dollar Business | Suneera Madhani

The Genesis of STAX: From Volkswagen Trunk to Fintech Innovation [00:00]

• Madani's journey began in the credit card processing industry, where she observed a problem and decided to create a solution.
• She started by selling credit card processing machines out of the trunk of her Volkswagen Beetle, a hands-on, ground-level approach to field sales.
• The "aha!" moment occurred during a snowstorm in Texas in 2012, when she was rerouting subscription boxes and realized the absence of a flat-fee subscription model for payments, similar to popular software services.
• This insight led to the concept of STAX, initially named Fat Merchant, which became the first subscription-based credit card processor offering flat-fee, unlimited processing.
• The company has since processed nearly $25 billion in payments.

"Holy [ __ ] why isn't there a flat subscription in payments? This like has to exist."

Entrepreneurial Roots and the "Why Not You?" Moment [02:02]

• Madani comes from a family of immigrant entrepreneurs, where starting a business was a necessity driven by the pursuit of the American dream, rather than a trend.
• Her parents, who immigrated from Karachi, Pakistan, ran various small businesses, instilling in her a deep understanding of the hard work, failures, and triumphs involved in building a business.
• She initially didn't intend to become an entrepreneur, as her parents hoped she and her brother would secure steady jobs.
• After her idea for STAX was dismissed by her employer, a family dinner conversation, where her family asked "Why not you?", sparked the realization that she could pursue the venture herself.
• Despite initial hesitations about not knowing how to start a software company, her parents encouraged her to give it a six-month trial.

"And then here we are now as entrepreneurs. And so, it's funny how that that story kind of unfolded."

Bootstrapping and Early Growth: The First 5 Million [09:42]

• Madani quit her job and moved back in with her parents, investing her limited savings and raising a small round of less than $50,000 from her now-husband and brother to start the company.
• A significant portion of this initial capital was immediately consumed by compliance fees for Visa and Mastercard.
• This lack of capital forced her to be creative, leveraging digital marketing, SEO, blogs, and investing $500 in Google PPC to acquire customers, which proved highly effective.
• The company achieved over $5 million in payments within its first six months.
• She utilized white-label solutions from banking institutions to launch an MVP and test the subscription model hypothesis without building custom technology initially.

"And so it's actually by not having capital it actually forced me to think how am I going to do this differently in comparison to the industry."

Building the Platform: Customer-Centric Iteration and Omni-Channel Vision [16:40]

• By not investing heavily in custom platform development initially, STAX was able to build its platform with its customers, iterating based on their needs.
• This approach attracted a different customer base, including those in healthcare and professional services, who required both in-person and online payment solutions.
• This led to the realization of the need for an omni-channel platform, a single hub for payments that accepted various methods and integrated across different channels.
• STAX evolved into a payments hub by integrating with leading software and solutions for e-commerce, QuickBooks, online shopping carts, in-person terminals, and mobile payments.

"We were able to build our platform with our customers. And honestly, the platform as it is today would not have happened if we hadn't gone to that route."

The Grind and the Journey: Resilience and Evolution Over a Decade [18:52]

• Building STAX over the past 10 years involved immense grit, hustle, hard work, resiliency, and overcoming constant rejection.
• Madani emphasizes that the journey has been incredibly rewarding, despite its difficulty, and continues to be surprising with its growth.
• The focus has shifted from chasing specific milestones to embracing the journey itself, especially after achieving significant success like becoming a unicorn.
• She highlights that the work doesn't get easier with growth; rather, one gets better through the experience.

"And so, I think like that's the it's the journey that I'm I'm here for. And I I've realized that it's not about the milestone anymore."

Declining the Buyout: Trusting Intuition and Long-Term Vision [22:07]

• In 2017, shortly after raising their Series A funding, STAX received a $17 million buyout offer from a strategic payments company.
• Madani's gut feeling indicated that the cultural and value alignment with the acquiring company was not right, despite the financial incentive.
• She attributes her decision-making strength to a combination of her analytical mind, heart, and gut intuition.
• The diligence process revealed significant red flags, and the offer was later re-traded down to $12.5 million, a move Madani viewed as predatory.
• She declined the offer, leading to initial friction with her board, but this decision was validated when the company later secured a $50 million term sheet and continued to grow significantly.

"My gut was not clicking. The people on the other side, they just it just wasn't the right fit value-wise, culture-wise."

Fundraising Lessons: Relationships, Intuition, and Execution [28:15]

• The key to successful fundraising lies in having the right advisory team and mentors who have relevant experience.
• Madani emphasizes the importance of trusting one's intuition and not discounting it, as well as focusing on execution above all else.
• She stresses that there is no such thing as a billion-dollar idea; it's solely about billion-dollar execution.
• Building long-term relationships with investors, akin to dating before marriage, is crucial for fundraising success.
• Consistency, showing up, and perseverance are vital for founders.

"And if you're able to build a successful business, the exit will happen, the outcome will happen, right? The success will happen as long as you focus on execution."

The Rebrand: Evolving from Fat Merchant to STAX [36:34]

• The company was initially named Fat Merchant, meaning "Fast Affordable Transaction Technology," a name that had served its purpose and developed SEO value.
• However, as the technology and customer journey evolved, the name no longer accurately reflected the company's broader offerings, which included integrated payments for financial institutions and SaaS companies.
• The rebrand to STAX in 2020 was a difficult but necessary decision to align the company's identity with its future direction as a payment stack provider.
• This evolution mirrors the challenges faced by other large companies, such as Facebook rebranding to Meta, highlighting the need for companies to adapt and reflect their growth.

"And it was time to reflect that evolution and where we were headed."