Adyen: A First Principles Payment Platform - [Business Breakdowns, EP. 50]

128 snips

Mar 9, 2022

Michael Willar, a portfolio manager at Stenham Asset Management, dives into Adyen's revolutionary approach to payment processing. He highlights how Adyen's unified platform challenges traditional systems and discusses their remarkable growth trajectory since 2006. The conversation reveals the intricacies of payment processing and why it's not a winner-takes-all market. Willar also shares insights on Adyen’s distinctive business model and its strategies for innovation and financial sustainability. A compelling look at the future of fintech!

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ANECDOTE

Adyen's Founding Story

Adyen's founders, including Peter van der Does, previously built and sold Bibit, a payments company acquired by RBS.
This acquisition formed Worldpay, a company Adyen now competes with, giving them unique insight into the industry's vulnerabilities.

INSIGHT

Adyen's Mission

Adyen's name, meaning "start again" in Surinamese, reflects their mission to rebuild the payments industry from scratch.
They focus on increasing authorization rates, viewing payments as a revenue driver rather than a commodity.

INSIGHT

Adyen's Profitability

Adyen's profitability stems from high operating leverage and low operating expenses, particularly in salaries.
Their in-house development of all systems, including data centers, contributes significantly to their cost efficiency.

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This is Zack Fuss and today we’re breaking down European-based payment business, Adyen. Adyen was founded in Amsterdam in 2006 by a group of payments entrepreneurs who had already built and sold a business in this space. Adyen was their chance to start afresh and build a modern solution to displace the patchwork legacy system that merchants were being forced to use.

To break down the business, I’m joined by Michael Willar, a portfolio manager at Stenham Asset Management. Our discussion covers Adyen’s single platform solution in detail, the driving force behind their track record of profitable growth, and why payments isn’t a winner take all market. Please enjoy this breakdown of Adyen.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Show Notes

[00:02:55] - [First question] What Adyen is and what they do

[00:05:54] - General overview of how payment processing works

[00:07:29] - Flow of a transaction and how they manifest

[00:09:52] - How the business generates revenue and their revenue model

[00:11:25] - Where Adyen sits in the industry and the size of it today

[00:13:37] - The reality of processing 50-60% of their addressable market

[00:16:19] - What about their culture and founding story makes them so nimble

[00:21:18] - The competitive strengths of the business and their innovative solutions

[00:24:07] - Key revenue drivers for Adyen

[00:26:01] - What is it about Adyen’s business structure that enables them to grow so rapidly while still being profitable

[00:29:34] - Key growth drivers

[00:32:44] - What gives Adyen its competitive advantage over other payment providers

[00:35:56] - Having one platform is beneficial but why isn’t it a more popular approach?

[00:37:42] - The secret sauce behind their successful growth trajectory

[00:39:25] - The essence of Adyen’s culture and how it manifests in their day-to-day work

[00:42:04] - What Adyen plans to do with all of the cash they produce

[00:43:35] - What keeps him up at night and potential threats to the business

[00:47:54] - Is there a chance anyone could build a platform comparable to Adyen?

[00:50:06] - Key differences between Stripe and Adyen

[00:56:23] - Lessons learned from studying Adyen and what payment service builders can learn from them